[Federal Register Volume 60, Number 158 (Wednesday, August 16, 1995)]
[Notices]
[Pages 42535-42539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20300]
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DEPARTMENT OF COMMERCE
[C-301-003; C-301-601]
Roses and Other Cut Flowers From Colombia; Miniature Carnations
From Colombia; Preliminary Results of Countervailing Duty
Administrative Reviews of Suspended Investigations
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Preliminary Results of Countervailing Duty
Administrative Reviews of Suspended Investigations.
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SUMMARY: The Department of Commerce (the Department) is conducting
administrative reviews of the agreements suspending the countervailing
duty investigation on roses and other cut flowers (roses) from Colombia
and the countervailing duty investigation on miniature carnations
(minis) from Colombia. These reviews cover the period of review (POR)
January 1, 1993, through December 31, 1993, and eleven programs. We
preliminarily determine that the Government of Colombia (GOC) and the
signatories/exporters of roses and minis have complied with the terms
of the suspension agreements. We invite interested parties to comment
on these results.
EFFECTIVE DATE: August 16, 1995.
FOR FURTHER INFORMATION CONTACT:
Jean Kemp or Stephen Jacques, Office of Agreements Compliance, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230, telephone: (202) 482-3793.
SUPPLEMENTARY INFORMATION:
Applicable Statute and Regulations
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. 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 Although the Department has withdrawn the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
[[Page 42536]]
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 of the Uruguay Round
Agreements Act (See 60 FR 80 (January 3, 1995)).
Background
On January 5, 1994, the Department published in the Federal
Register (59 FR 564) a notice of ``Opportunity to Request an
Administrative Review'' for the 1993 review period. On January 31, 1994
the Colombian Association of Flower Exporters (Asocoflores) requested
administrative reviews of the suspended countervailing duty
investigations covering roses and minis for the 1993 period. On
February 17, 1994, the Department initiated these reviews (59 FR 7979).
The Department is now conducting these reviews in accordance with
section 751 of the Tariff Act of 1930, as amended (the Tariff Act), and
19 CFR 355.22.
Scope of Review
The products covered by these administrative reviews constitute two
separate ``classes or kinds'' of merchandise: roses and minis from
Colombia. During the POR, such merchandise covered by these suspension
agreements was classifiable under Harmonized Tariff Schedule (HTS) item
numbers 0603.10.60, 0603.10.70, 0603.10.80, and 0603.90.00 for roses,
and 0603.10.30 for minis. The HTS item numbers are provided for
convenience and Customs purposes. The written descriptions remain
dispositive.
These reviews of the suspended investigations involve over 800
Colombian flower growers/ exporters of roses, over 100 Colombian flower
growers/exporters of minis, as well as the GOC. We verified the
responses from six growers/exporters of the subject merchandise: Flores
La Conchita German Ribon E. en C. (roses and minis); Tuchany, S.A.
(roses); Flores de Exportacion, S.A. (roses and minis); Queen's Flowers
of Colombia Ltda. (roses and minis); Florval, S.A. (roses and minis);
and Flores de Funza, S.A. (roses and minis) (collectively, the six
companies). The suspension agreement for minis covers ten programs: (1)
Tax Reimbursement Certificate Program; (2) BANCOLDEX (funds for the
promotion of exports); (3) Plan Vallejo; (4) Free Industrial Zones; (5)
Export Credit Insurance; (6) Countertrade; (7) Research and
Development; (8) Instituto de Fomento Industrial (IFI); (9) Financier
de Desarrollo Territorial (FINDETER); and (10) Fondo Financiero de
Proyectos de Desarrollo (FONADE). The suspension agreement for roses
covers the ten programs listed above, as well as (11) Air Freight
Rates.
Analysis of Programs
We examined the following programs subject to the suspension
agreements:
(1) Tax Reimbursement Certificate Program
The ``Certificado de Reembolso Tributario'' (CERT) or Tax
Reimbursement Certificate program allows exporters to receive a full or
partial rebate on indirect taxes based on the value of their exports of
specific products to specific destinations. The GOC determines the CERT
levels based on product and market conditions.
Under the terms of the suspension agreements, Colombian flower
growers/exporters will be apply for, or receive, tax certificates or
other rebates, remissions, or exemptions under the CERT program for
exports of the subject merchandise to the United States and Puerto
Rico. Moreover, since 1987, when the GOC restructured the CERT program,
the level of CERT payments for exports of the subject merchandise to
the United States and Puerto Rico wee set at zero. Therefore, exporters
of the subject merchandise are no longer eligible to receive
countervailable benefits.
At verification, we examined documentation at the GOC and found
that this program was not used by exporters of the subject merchandise
for exports to the United States and Puerto Rico during the POR. In
addition, at verification of the six companies, we examined
documentation and confirmed that they did not use the program for
exports of the subject merchandise to the United States and Puerto Rico
during the POR. Therefore, we preliminarily determine that the GOC has
eliminated the subsidy on the subject merchandise by abolishing this
program for exports of the subject merchandise to the United States and
Puerto Rico and that this program did not confer any countervailable
benefits upon exports of the subject merchandise to the United States
and Puerto Rico during the POR.
(2) BANCOLDEX
On January 2, 1992, the former Fondo de Promocion de Exportaciones
(PROEXPO) transferred from a government-administered fund to a
commercial bank and was renamed Banco de Comercio Exterior de Exterior
(BANCOLDEX). The same resolutions continued to govern export loans
granted by BANCOLDEX as previously granted by PROEXPO.
There are six major BANCOLDEX credit lines: Short-term working
capital Colombian peso (peso) loans; medium-term working capital peso
loans; short- and long-term working capital U.S. dollar (dollar) loans;
long-term capitalization peso loans; long-term capitalization dollar
loans; and long-term fixed investment loans. In accordance with
Departmental practice, we will treat medium-term working capital peso
loans as long-term working capital peso loans.
Under the terms of the suspension agreements, Colombian flower
growers/exporters will not apply for, or receive any export financing
for BANCOLDEX other than that offered on non-preferential terms, and at
or above the established Department benchmark interest rates. For the
roses and minis suspension agreements in the Roses and Other Cut
Flowers from Colombia and Miniature Carnations from Colombia: Final
Results of Countevailing Duty Administrative Reviews of Suspended
Investigations, (published concurrently with this notice), the
Department established new benchmark interest rates for all short- and
long-term peso loans. The Department's short-term benchmark interest
rate is nominal DTF (the Colombian Central Bank time deposit rate, the
``Depositos a Termino Fijo'') plus 3.66 percentage points, and for
long-term loans nominal DTF plus 3.66 percentage points and 0.25
percentage point for each additional year after the first. This change
in the benchmark interest rates will be effective 14 days after
publication of the final results for the administrative reviews 1991
and 1992 (See Roses and Other Cut Flowers from Colombia and Miniature
Carnations from Colombia: Final Results of Countevailing Duty
Administrative Reviews of Suspended Investigations, (published
concurrently with this notice). As discussed below, we preliminarily
determine to maintain those benchmark rates.
Colombian Peso Loans
At verification, we examined GOC documents and confirmed that
BANCOLDEX charged interest rates on its short- and long-term peso loans
above the established Department benchmark interest rates in effect
during the POR. In addition, we found that BANCOLDEX issued the loans
on non-preferential terms. We also examined the six companies'
accounting records which confirmed that the companies received
BANCOLDEX peso loans for the subject merchandise on non-preferential
terms and at interest rates at
[[Page 42537]]
or above the Department benchmark rates for exports of the subject
merchandise to the United States and Puerto Rico in effect during the
POR. Therefore, we preliminary determine that BANCOLDEX did not confer
any countervailable benefits upon exports of the subject merchandise to
the United States and Puerto Rico during the POR.
In order to update previous benchmark rates determined by the
Department, we reviewed interest rates in Columbia to define what
interest rate benchmarks were appropriate for future BANCOLDEX loans.
In the case of short- and long-term peso BANCOLDEX loans, the
Department confirmed at verification that the GOC adopted rates based
on the Colombian fixed deposit rate, DTF, because the DTF rates more
accurately reflect interest rate fluctuations in the market. While the
Department verified that there is no single, predominant source of
alternative financing in Columbia, we have determined that the
independent government agency, FINAGRO (Fondo para el financiameinto
del Sector Agropecuario), a major intermediary lender to the
agricultural sector, is an appropriate alternative source of financing
for the Department's benchmarks. FINAGRO is the successor to the Fondo
Financiero Agropecuario (FFA).
The most recent FINAGRO short-term rate is equal to DTF plus up to
6 percentage points. Because the Department is unable to set the
benchmark as a range (i.e., DTF plus up to 6 percentage points), the
Department established a benchmark rate applying the methodology used
in the final determination for the 1991 and 1992 administrative reviews
(See Roses and Other Cut Flowers and Miniature Carnations from
Columbia; Final Results of Countervailing Duty Administrative Reviews
of Suspended Investigations; (published concurrently with this notice).
In calculating the prospective benchmarks for short- and long-term peso
loans, the Department preliminarily determines that the most recent
verified weighted-average interest rate on all loans financed by
FINAGRO through Caja Agraria, i.e., DTF plus 3.66 percentage points is
the appropriate benchmark for short-term financing.
Consequently, the Department preliminarily determines that the
appropriate benchmark for the short-term peso loans rate is the nominal
DTF plus 3.66 percentage points. The Department also preliminarily
determines that the appropriate benchmark for long-term peso loans is
the nominal DTF plus 3.66 percentage points, plus an additional 0.25
percentage points for each year after the first, including any grace
period, reflecting the spread between BANCOLDEX short- and long-term
loans. Loans provided at or above the benchmark will not be considered
preferential.
U.S. Dollar Loans
At verification, we examined GOC documents and confirmed that
BANCOLDEX issued short- and long-term dollar loans. In the case of
short- and long-term dollar loans, there were no benchmark rates in
effect during the POR, because these loans were introduced in 1991,
i.e., after the last completed reviews of the suspension agreements.
In order to establish dollar benchmark rates. we followed the same
calculation methodology as in the final notice for Roses and Other Cut
Flowers and Miniature Carnations from Columbia; Final Results of
Countervailing Duty Administrative Reviews of Suspended Investigations;
(published concurrently with this notice). We confirmed at verification
that during the POR, BANCOLDEX loan interest rates on dollar loans
charged to Colombian flower growers/exporters were based upon the
London Interbank Offered Rate (LIBOR) plus a variable spread. The
Department determines that LIBOR will be the basis of the benchmark for
dollar loans, because LIBOR is used as the basis for dollar loan
interest rates in Colombia. Therefore, the Department preliminarily
determines that for the short-term dollar loans the Department's
benchmark for dollar-based loans in Colombia will be the six-month
LIBOR rate in effect at the time of the loan plus 1.52 percentage
points. Based on the same methodology used for short-term dollar loan
benchmark, we preliminarily determine that for long-term dollar loans
the Department's benchmark for dollar-based loans in Colombia will be
the six-month LIBOR rate in effect at the time of the loan plus 2.82
percentage points.
It should be noted that the rate specified here was calculated
based on effective, not nominal, interest rates; the effective rate is
the equivalent to the nominal rate calculated on the basis of interest
being payable at the end of the quarter. BANCOLDEX should set the
nominal interest rate for dollar-based loans at a level that is high
enough to ensure that the effective interest rate of these loans are at
or above the Department's new benchmark.
(3) Plan Vallejo
Plan Vallejo was established in 1967 under decree 444. Its purpose
is to exempt exporters from certain indirect taxes and customs duties
assessed on imported capital equipment used to produce finished
products for export. The Instituto Colombiano de Comercio Exterior
(INCOMEX) administers the Plan Vallejo program.
Under the terms of the suspension agreements, Colombian flower
growers/exporters will not apply for or receive any benefits from duty
and tax exemptions for capital equipment under Plan Vallejo for exports
of the subject merchandise to the United States and Puerto Rico. At
verification, we examined the GOC's documentation and confirmed that
this program was not used by the exporters of the subject merchandise
for exports to the United States and Puerto Rico during the POR. Also,
GOC officials stated that, during the POR, no flower producer applied
for Plan Vallejo benefits. In addition, we verified that the six
companies did not use the program for capital equipment during the POR.
Therefore, we preliminarily determine that this program did not confer
any countervailable benefits upon exports of the subject merchandise of
the United States and Puerto Rico during the POR. In addition, we
preliminarily determine that Plan Vallejo has been abolished for the
subject merchandise in Resolution 1212 since flower growers are
ineligible to receive benefits for exports to the United States and
Puerto Rico.
(4) Free Industrial Zones
In December 1985, Law 109 established Free Industrial Zones (FIZs)
for industrial and service sector purposes. Certain regions in Colombia
are designated as FIZs.
At verification, we examined documentation at the Ministry of
Foreign Trade and determined that there were not any flower producers
located in FIZs. Therefore, we preliminarily determine that this
program did not confer any countervailing benefits upon exports of the
subject merchandise to the United States and Puerto Rico during POR. We
also preliminarily determine that during the POR the GOC had eliminated
the subsidy on this merchandise by abolishing this program for the
merchandise.
(5) Export Credit Insurance
Decree 444, issued in 1967, established the Export Credit Insurance
program. Under the Export Credit Insurance program a company may
receive insurance to cover certain commercial expenses (transportation,
custom duties, insurance expenses, etc.) that it would have difficulty
covering as a result of the insolvency of its foreign
[[Page 42538]]
client. Several commodities are ineligible for the program: coffee in
certain forms, crude leather, oil and by-products, precious and
semiprecious stones, gold, perishable goods, and others. The subject
merchandise is classified under the ``perishable goods'' category which
renders all exports of the subject merchandise ineligible for the
program.
Under the terms of the suspension agreements, Colombian flower
growers/exporters shall notify the Department in writing prior to
applying for any benefit from the Export Credit Insurance program for
exports of the subject merchandise to the United States and Puerto
Rico. Because we did not receive any such notification and confirmed
that subject merchandise is ineligible for this program, we
preliminarily determine that this program did not confer any
countervailable benefits upon exports of the subject merchandise to the
United States and Puerto Rico during the POR. We also preliminarily
determine that the GOC has eliminated the subsidy by abolishing this
program for the subject merchandise.
(6) Countertrade
Law 48 of 1983 established a special system for three types of
exchange arrangements: (1) countertrade; (2) compensation offsets; and
(3) three-way trade. GOC officials have stated that in 1986, Decree
1459 terminated the exchange system and there has been no follow-up
legislation which would re-establish the exchange system. We confirmed
that this program had been terminated on that date. Therefore, we
preliminarily determine that this program did not confer any
countervailing benefits upon exports of the subject merchandise to the
United States and Puerto Rico during the POR. We also preliminarily
determine that the GOC has eliminated the subsidy by abolishing this
program for the subject merchandise.
Other Programs
Although not specifically listed in the suspension agreements, we
examined the following programs:
(7) Research and Development
Columbian flower exporters, on a voluntary basis, allowed the
Central Bank to withhold a certain percentage of the CERT rebates
earned on exports of the subject merchandise to the United States and
Puerto Rico and other countries for research and development from
January 1983 (the effective date of the original suspension agreement)
through November 1985, when the rebate rate for roses and other cut
flowers subject to the suspension agreement was reduced to zero. In
1985, the GOC issued Resolution 10, which established a fund from the
CERT payments that were withheld for the cultivation of and general and
technological research on all flowers. The resolution requires that any
funds expended under this resolution be disbursed in a manner
consistent with the suspension agreements. The resolution 10 account
was officially closed in October 1991 and no contributions were made to
the account during the POR. Therefore, we preliminarily determine that
this program did not confer any countervailable benefits upon exports
of the subject merchandise to the United States and Puerto Rico during
the POR. We also preliminarily determine that the GOC has eliminated
the subsidy on the merchandise by abolishing this program for the
subject merchandise.
(8) Instituto de Fomento Industrial (IFI) Loans
The Instituto de Fomento Industrial, or Institute for the Promotion
of the Industrial Sector, is a branch of the Colombian Ministry of
Economic Development. It provides financing to all sectors of the
Colombian economy and to large and small companies. Companies with
assets above 1.25 billion pesos may borrow directly from IFI, while
smaller companies may borrow funds from IFI which are rediscounted
through financial intermediaries.
Two IFI credit lines are available to only exporters. These include
a credit line for new exporters and relocation of export enterprises,
and the ANDEAN Trade Preference Act (ATPA) line of credit. The other
IFI credit lines are available to all enterprises. These include a
commercial sector line of credit, a line of credit for free zones, a
line of credit for working capital, a line of credit for capital
equipment, a capitalization line of credit, ordinary resource loans, a
line of credit for motel and tourist projects, and a line of credit for
market studies. Loans are available in both pesos and dollars.
Loan terms and rates vary by credit line and length of the loan.
Fixed asset dollar loans are available for five-year terms at LIBOR
plus five percentage points. Peso working capital loans are available
for terms of up to three years at TCC (DTF) plus five percentage
points. Long-term peso loans are available for terms up to seven years
at TCC plus six percentage points plus a 0.25 percentage point for each
additional year after the fifth. ATPA loans are available in pesos for
up to four years at TCC plus five percentage points for working capital
loans and for terms of up to twelve years for fixed asset peso loans at
TCC plus five percentage points plus a 0.25 percentage point for each
year after the fifth. In addition, ATPA fixed asset loans are available
in dollars at LIBOR plus five percentage points plus 0.25 for each year
after the fifth.
We verified that the non-export lines of credit provided by IFI
were granted to a broad range of Colombian industry sectors including:
agriculture, mining, textiles, metallic products, financial
establishments, and chemicals, rubber and plastics. Therefore, we
preliminarily determine that IFI's non-export lines of credit are not
provided to a specific enterprise or industry or group thereof and that
they are not countervailable.
Furthermore, we verified that no Colombian flower growers/exporters
received loans under the two export credit lines during the POR. We
preliminarily determine that the GOC and the Colombian flower growers/
exporters of the subject merchandise were in compliance with the
suspension agreements because IFI's export credit lines were not used
by Colombian flower growers/exporters of the subject merchandise during
the POR. However, flower growers/exporters of the subject merchandise
are eligible to apply for and receive IFI's export credit lines. Any
such loans must be on non-preferential terms, and at or above the
Department's most recent benchmarks (See Section II.c of the suspension
agreements). We preliminarily determine that the short- and long-term
benchmarks for IFI loans are the same as those for BANCOLDEX peso and
dollar financing apply (See Section 2 above).
(9) Financiera de Desarrollo Territorial (FINDETER)
FINDETER, a government financial entity, finances state and
municipal governments and governmental entities to promote urban and
regional development projects relating to infrastructure and
development in the public sector. The Department verified that all
projects are aimed to improve the public sector, and that Colombian
flower growers/exporters are not eligible to receive FINDETER loans.
Therefore, we preliminarily determine that FINDETER financing is not
countervailable for exports of the subject merchandise to the United
States and Puerto Rico during the POR.
[[Page 42539]]
(10) Fondo Financiero de Proyectos de Desarrollo (FONADE)
FONADE is an industrial and commercial state entity owned by the
National Department of Planning. FONADE finances feasibility studies on
pre-investment projects that are not conditioned on exporting. The main
client is the National Institute for Road Development. We verified that
no Colombian flower growers/exporters of the subject merchandise
applied for or received financing from FONADE during the POR.
Therefore, we preliminarily determine that FONADE's financing was not
used by Colombian flower growers/exporters of the subject merchandise
during the POR.
Program Specific to the Roses and Other Cut Flowers' Suspension
Agreement
(11) Air Freight Rates (apply only to the roses suspension agreement)
The Departmento Administrativo de la Aeronautica Civil (DAAC) is
the government agency that develops, maintains and regulates air
transport and air space activities. Section D(3) of the suspension
agreement states that the Department may consider rescinding the
agreement if the air freight rates paid by cut flower exporters
approach the government-mandated maximum rates set by the DAAC because
such rates might be indicative of government control rather than the
result of competitive forces.
At verification, we examined the companies' air freight bills and
found that the rates negotiated between the flower producers and air
freight carriers were between the minimum and maximum rates permitted
and did not approach the maximum. Therefore, we preliminarily determine
that this program did not confer any countervailable benefits upon
exports of the subject merchandise to the United States and Puerto Rico
during the POR.
Preliminary Results of Review
We preliminarily determine that the GOC and signatory companies
have complied with all the terms of the suspension agreements during
the period January 1, 1993 through December 31, 1993. In addition, we
preliminarily determine that the peso and dollar benchmarks established
in the 1991 and 1992 administrative reviews of these suspended
investigations will continue to apply to loans after the date of
publication of the final results of these administrative reviews, and
until revised by the Department (See Roses and Other Cut Flowers and
Miniature Carnations from Colombia; Final Results of Countervailing
Duty Administrative Reviews of Suspended Investigations; (published
concurrently with this notice).
Interested parties may submit written comments on these preliminary
results within 30 days of the date of publication of this notice and
may request disclosure and/or a hearing within 10 days of the date of
publication. Rebuttal briefs and rebuttals to written comments, limited
to issues in those comments, must be filed not later than 37 days after
the date of publication. Any hearing, if requested, will be held 44
days after the date of publication or the first workday thereafter. The
Department will publish the final results of its analysis of issues
raised in any such written comments or at a hearing. This
administrative review and notice are in accordance with section
751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.
Dated: August 8, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-20300 Filed 8-15-95; 8:45 am]
BILLING CODE 3510-DS-M