[Federal Register Volume 60, Number 148 (Wednesday, August 2, 1995)]
[Notices]
[Pages 39360-39363]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19014]



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DEPARTMENT OF COMMERCE
[C-201-505]


Porcelain-on-Steel Cookingware from Mexico; Preliminary Results 
of a Countervailing Duty Administrative Review

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

ACTION: Notice of Preliminary Results of Countervailing Duty 
Administrative Review

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the countervailing duty order on porcelain-

[[Page 39361]]
on-steel cookingware from Mexico. We preliminarily determine the net 
subsidy to be de minimis for Acero Porcelanizado, S. A. de C.V. (APSA) 
and 0.53 percent ad valorem for all other companies for the period 
January 1, 1993 through December 31, 1993. If the final results remain 
the same as these preliminary results of administrative review, we will 
instruct U.S. Customs Service to assess countervailing duties as 
indicated above. Interested parties are invited to comment on these 
preliminary results.

EFFECTIVE DATE: August 2, 1995.

FOR FURTHER INFORMATION CONTACT: Norma Curtis or Kelly Parkhill, Office 
of Countervailing Compliance, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; Telephone: (202) 
482-2786.

SUPPLEMENTARY INFORMATION:

Background

    On December 12, 1986, the Department published in the Federal 
Register (55 FR 51139) the countervailing duty order on porcelain-on-
steel cookingware from Mexico. On November 26, 1993, the Department 
published in the Federal Register a notice of ``Opportunity to Request 
Administrative Review'' (58 FR 62326) of this countervailing duty 
order. We received a timely request for review from APSA, a respondent 
company.
    We initiated the review, covering the period January 1, 1993 
through December 31, 1993 (POR), on January 18, 1994 (59 FR 2593). We 
conducted a verification of the questionnaire responses on September 7, 
1994 through September 14, 1994. The review covers two manufacturers/
exporters of the subject merchandise, APSA and Cinsa, S.A. de C.V. 
(Cinsa), which accounted for all exports of POS cookware during the POR 
and ten 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 provisions as 
they existed on December 31, 1994.

Scope of the Review

    Imports covered by this review are shipments of porcelain-on-steel 
cookingware from Mexico. The products are porcelain-on-steel 
cookingware (except teakettles), which do not have self-contained 
electric heating elements. All of the foregoing are constructed of 
steel, and are enameled or glazed with vitreous glasses. During the 
review period, such merchandise was classifiable under item number 
7323.94.0020 of the Harmonized Tariff Schedule (HTS). The HTS item 
number is provided for convenience and Customs purposes. The written 
description remains dispositive.

Calculation Methodology for Assessment and Cash Deposit Purposes

    We calculated the net subsidy on a country-wide basis by first 
calculating the subsidy rate for each company subject to the 
administrative review. We then weight-averaged the rate received by 
each company using as the weight its share of total Mexican exports to 
the United States of subject merchandise, including all companies, even 
those with de minimis and zero rates. We then summed the individual 
companies' weight-averaged rates to determine the subsidy rate from all 
programs benefitting exports of subject merchandise to the United 
States.
    Since the country-wide rate calculated using this methodology was 
above de minimis, as defined by 19 CFR Sec. 355.7 (1994), we proceeded 
to the next step and examined the net subsidy rate calculated for each 
company to determine whether individual company rates differed 
significantly from the weighted-average country-wide rate, pursuant to 
19 CFR Sec. 355.22(d)(3). APSA had a significantly different net 
subsidy rate during the review period pursuant to 19 CFR 
Sec. 355.22(d)(3). This company is treated separately for assessment 
and cash deposit purposes. All other companies are assigned the 
country-wide rate.
Analysis of Programs

I. Programs Conferring Subsidies

A. Programs Previously Determined to Confer Subsidies
1. BANCOMEXT Financing for Exporters
    Banco Nacional de Comercio Exterior, S.N.C. (Bancomext) is a 
government program through which short-term financing is provided to 
producers or trading companies engaged in export activities. In order 
to be eligible for Bancomext financing a company must be established 
according to Mexican law, 30 percent Mexican national owned, and be an 
exporter. Bancomext provides two types of financing to exporters, 
denominated in either U.S. dollars or in Mexican pesos: working capital 
(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 Porcelain-on-Steel Cookingware From Mexico; 
Preliminary Results of Countervailing Duty Administrative Review (56 FR 
48163; September 24, 1991) and Porcelain-on-Steel Cookingware From 
Mexico; Final Results of Countervailing Duty Administrative Review (57 
FR 562; January 7, 1992)). In this review the Government of Mexico 
provided no new information that would lead the Department to alter 
that determination.
    Both APSA and Cinsa had Bancomext loans on which interest was due 
during the POR. We found that the annual interest rates that Bancomext 
charged to borrowers for certain loans on which interest payments were 
due during the review period were lower than the commercial rates. The 
dollar-denominated Bancomext loans under review were granted at annual 
interest rates ranging from 6.0 percent to 8.75 percent. For these 
loans, we used the average quarterly weighted-average effective 
interest rates published in the Federal Reserve Bulletin, which 
resulted in an annual average benchmark of 6.5 percent in 1993. This is 
the same benchmark calculation methodology that has been applied in 
prior reviews (See Porcelain-on-Steel Cookingware From Mexico; 
Preliminary Results of Countervailing Duty Administrative Review (56 FR 
48163; September 24, 1991) and Porcelain-on-Steel Cookingware From 
Mexico; Final Results of Countervailing Duty Administrative Review (57 
FR 562; January 7, 1992)).
    The peso-denominated Bancomext pre-export loan under review was 
granted at an annual interest rate of 14.8 percent. As a basis for our 
benchmark for this loan, we have relied in part on the effective rates 
for the years 1981 through 1984, as published monthly in the Banco de 
Mexico's Indicadores Economicos y Moneda (I.E.), because the Banco de 
Mexico stopped publishing data on nominal and effective commercial 
lending rates in Mexico after 1984. We calculated the average 
difference between the I.E. effective interest rates and the Costo 
Porcentual Promedio (CPP) rates, the average cost of short-term funds 
to banks, for the years 1981 through 1984. We added this average 
difference to the 1993 average annual CPP rates. For the peso-
denominated loan on which interest was due during 1993, we 

[[Page 39362]]
calculated an annual benchmark of 29.79 percent. This is the same 
benchmark calculation methodology that has been applied in prior 
reviews (See Porcelain-on-Steel Cookingware From Mexico; Preliminary 
Results of Countervailing Duty Administrative Review (56 FR 48163; 
September 24, 1991) and Porcelain-on-Steel Cookingware From Mexico; 
Final Results of Countervailing Duty Administrative Review (57 FR 562; 
January 7, 1992)). 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; such loans were obtained 
between December 1992 and September 1993.
    During verification at APSA, we discovered one short-term loan that 
appears to be a Fomex loan which was not reported in the questionnaire 
responses. Fomex was a program previously found countervailable by the 
Department and operates much like the Bancomext program which the 
Department has also found countervailable (See Porcelain-on-Steel 
Cookingware From Mexico; Preliminary Results of Countervailing Duty 
Administrative Review (56 FR 48163; September 24, 1991) and Porcelain-
on-Steel Cookingware From Mexico; Final Results of Countervailing Duty 
Administrative Review (57 FR 562; January 7, 1992)). However, the 
interest rate for this loan is higher than the benchmark and, 
therefore, there is no benefit to APSA.
    During verification at the Government of Mexico, we discovered one 
Bancomext loan for Cinsa that had not been reported in the 
questionnaire responses, and for which the company did not provide the 
interest rate upon request at verification. (See Bancomext Section of 
the Government of Mexico's Verification Report dated May 9, 1995 and 
Short-Term Loan Section of Cinsa's Verification Report dated May 9, 
1995, on file in the public file of the Central Records Unit, Room B-
099 of the Department of Commerce). Section 776(c) of the Act requires 
the Department to use best information available (BIA) whenever a party 
or any other person refuses or is unable to produce information 
requested. Furthermore, 19 CFR 355.37 (1994) requires the Department to 
use BIA ``whenever the Secretary: (1) does not receive a complete, 
accurate, and timely response to the Secretary's request for factual 
information; or (2) is unable to verify, within the time specified, the 
accuracy and completeness of the factual information submitted''. Since 
the interest rate for this loan was not reported in the questionnaire 
responses nor provided at verification when requested, we must use BIA 
to calculate the benefit from this loan. Therefore, as BIA we are 
assigning this loan a zero interest rate, and have used that rate to 
calculate the benefit from this loan. The interest rate we are applying 
as BIA is zero percent because it is the most adverse interest rate.
    To calculate 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 principal and then 
multiplied this amount by the term of the loan divided by 365. Because 
one company's monthly sales figures are indexed to account for 
inflation, we adjusted that company's benefit amounts to be on the same 
terms as the sales figures. Since neither APSA nor Cinsa was able to 
tie their loans to specific sales, we divided the benefit by total 
export sales. On this basis, we preliminarily determine the subsidy 
from this program to be 0.02 percent ad valorem for APSA and 0.60 
percent ad valorem for Cinsa.
2. FONEI Long-Term Financing
    The Fund for Industrial Development (FONEI) was a Government of 
Mexico trust administered by the Banco de Mexico until its dissolution 
on December 31, 1989. FONEI was a specialized financial development 
fund that provided long-term loans at below-market rates. FONEI was 
designed to foster the efficient production of services and industrial 
goods by Mexican companies.
    The Department has previously found this program to confer a 
subsidy because it provides loans on terms inconsistent with commercial 
considerations and restricts loan benefits to companies located in 
specific regions (See Porcelain-on-Steel Cookingware From Mexico; 
Preliminary Results of Countervailing Duty Administrative Review (56 FR 
48163; September 24, 1991) and Porcelain-on-Steel Cookingware From 
Mexico; Final Results of Countervailing Duty Administrative Review (57 
FR 562; January 7, 1992)). In this review the Government of Mexico 
provided no new information that would lead the Department to alter 
that determination.
    Cinsa had a FONEI loan outstanding during the review period. 
Because this peso-denominated loan had a variable interest rate, we 
treated it as a series of short-term loans, as we have done previously 
in Porcelain-on-Steel Cookingware From Mexico; Preliminary Results of 
Countervailing Duty Administrative Review (56 FR 48163; September 24, 
1991) and Porcelain-on-Steel Cookingware From Mexico; Final Results of 
Countervailing Duty Administrative Review (57 FR 562; January 7, 1992). 
To calculate the benefit from this loan, we used the same benchmark as 
for the peso-denominated Bancomext pre-export loan. We compared this 
benchmark with the interest rate in effect for each FONEI loan payment 
made during the review period and multiplied the difference by the 
outstanding loan principal. We divided the benefit by the company's 
total sales to all markets during the review period. On this basis, we 
preliminarily determine the subsidy from this program to be 0.01 
percent ad valorem for Cinsa.

II. Programs Preliminarily Found Not to be Used

    We also examined the following programs and preliminarily determine 
that the exporters of the subject merchandise did not apply for or 
receive benefits under these programs during the review period:

(A) Certificates of Fiscal Promotion (CEPROFI)
(B) PITEX
(C) Other Bancomext Preferential Financing
(D) Import Duty Reductions and Exemptions
(E) State Tax Incentives
(F) Article 15 Loans
(G) NAFINSA FOGAIN-type Financing
(H) NAFINSA FONEI-type Financing

Preliminary Results of Review

    For the period January 1, 1993 through December 31, 1993, we 
preliminarily determine the net subsidy to be 0.02 percent ad valorem 
for APSA and 0.53 percent ad valorem for all other companies. In 
accordance with 19 CFR 255.7, any rate less than 0.5% ad valorem is de 
minimis.
    If the final results of this review remain the same as these 
preliminary results, the Department intends to instruct the U.S. 
Customs Service to assess the following countervailing duties:

------------------------------------------------------------------------
                                                                  Rate  
                    Manufacturer/exporter                      (percent)
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APSA.........................................................       0.00
All Other Companies..........................................       0.53
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    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 

[[Page 39363]]
of the subject merchandise from APSA, and 0.53 percent of the f.o.b. 
invoice price on all shipments of the subject merchandise from all 
other companies entered, or withdrawn from warehouse, for consumption 
on or after the date of publication of the final results 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. 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. Parties who 
submit written arguments in this proceeding are requested to submit 
with the argument (1) a statement of the issue and (2) a brief summary 
of the argument. 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 section 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: July 26, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-19014 Filed 8-1-95; 8:45 am]
BILLING CODE 3510-DS-P