[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Notices]
[Pages 9426-9429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5439]



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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, 
Commerce.
ACTION: Notice of Preliminary Results of Countervailing Duty 
Administrative Reviews and Intent To Terminate 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. Termination of these two cases has been 
requested by the Government of Colombia (``GOC'') pursuant to 19 CFR 
355.25(a)(2) and the procedures specified in 19 CFR 355.25(b)(2), and 
by certain producers and exporters of subject merchandise pursuant to 
19 CFR 355.25(a)(3) and the procedures specified in 19 CFR 355.25(b)(3) 
in the event the Department denies the GOC's request to terminate. 
These reviews cover the period of review (``POR'') January 1, 1994, 
through December 31, 1994, and eleven programs. We preliminarily 
determine that the GOC and the producers/exporters of roses and minis 
have complied with the terms of the suspension agreements. We also 
preliminarily determine that the producers/exporters of subject 
merchandise have not used any program under review for a period of at 
least five consecutive years. Additionally, we preliminarily determine 
that the GOC and producers/exporters of the subject merchandise 
(respondents) have provided sufficient evidence for the Department to 
determine that it is likely that producers/exporters of subject 
merchandise will not in the future apply for or receive any net subsidy 
on the subject merchandise from those programs the Department has found 
countervailable in any proceeding involving Colombia or from other 
countervailable programs. Therefore, we preliminarily determine that 
respondents have met the requirements for termination of the 
countervailing duty suspended investigation on roses and other cut 
flowers and on miniature carnations as outlined in the Commerce 
Regulations.
    We invite interested parties to comment on these results. Parties 
who submit arguments in this proceeding are requested to submit with 
any argument (1) a statement of the issue and (2) a brief summary of 
the argument.

EFFECTIVE DATE: March 8, 1996.

FOR FURTHER INFORMATION CONTACT: Rick Johnson or Jean Kemp, Office of 
Agreements Compliance, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 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 or after January 1, 1995, the effective date of amendments 
made to the Tariff Act in accordance with the Uruguay Round Agreements 
Act.

Background

    On January 12, 1995, the Department published in the Federal 
Register (60 FR 2941) a notice of ``Opportunity to Request an 
Administrative Review'' for the 1994 review period. On January 31, 1995 
the GOC and the Colombian Association of Flower Exporters 
(Asocolflores) requested administrative reviews of the suspended 
countervailing duty investigations covering roses and 

[[Page 9427]]
minis for the 1994 period. On April 14, 1995, the Department initiated 
these reviews (60 FR 19017, 19018). 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 only. The written descriptions remain 
dispositive.
    These reviews of the suspended investigations involve approximately 
600 Colombian flower producers/exporters of roses, over 100 Colombian 
flower producers/exporters of minis, and the GOC. The suspension 
agreement for minis covers ten programs: (1) BANCOLDEX (funds for the 
promotion of exports); (2) Plan Vallejo; (3) Instituto de Fomento 
Industrial (IFI); (4) Fondo Financiero de Proyectos de Desarrollo 
(FONADE); (5) Financiero de Desarrollo Territorial (FINDETER); (6) Tax 
Reimbursement Certificate Program (``CERT''); (7) Free Industrial 
Zones; (8) Export Credit Insurance; (9) Countertrade; and (10) Research 
and Development. The suspension agreement for roses covers the ten 
programs listed above, as well as (11) Air Freight Rates.

Verification

    As provided in Section 776(b) of the Tariff Act, we verified 
information provided by the respondents by using standard verification 
procedures, including inspection of programs at the appropriate 
administering agencies, onsite inspection of the manufacturers' 
facilities, the examination of relevant sales and financial records, 
and selection of original documentation containing relevant 
information. We verified the responses from four producers/exporters of 
both classes or kinds of merchandise under review for the period 
January 1, 1994 to December 31, 1994: Flores Condor de Colombia, Ltda, 
Flores Las Palmas, S.A., Splendid Flowers, Ltda, and Flores del Rio, 
S.A. Our verification results are outlined in the public versions of 
the verification reports.

Analysis of Programs

    We examined the following programs subject to the terms of the 
suspension agreements:

(1) BANCOLDEX

    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 
exporters will not apply for, or receive any export financing from 
BANCOLDEX other than that offered on non-preferential terms, and at or 
above the established Department benchmark interest rates. For the 
period of review, the benchmark interest rates in effect for minis were 
nominal Depositos a Termino Fijo (DTF)+1 for short-term peso loans, and 
nominal DTF+1+.25/year for long-term loans. See Miniature Carnations 
from Colombia; Final Results of Countervailing Duty Administrative 
Review (1989), 56 FR 14240 (April 8, 1991). For roses for the period of 
review, the benchmark interest rates in effect were 22.5% for short-
term peso loans and 21% for long-term peso loans. See Roses and Other 
Cut Flowers from Colombia; Final Results of Countervailing Duty 
Administrative Review and Revised Suspension Agreement (1983), 51 FR 
44930, 44932 (December 15, 1986). There was no applicable benchmark for 
U.S. dollar loans for the POR.
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 four 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 or above the established Department 
benchmark rates for exports of the subject merchandise to the United 
States and Puerto Rico in effect during the POR. Therefore, we 
preliminarily 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. We also preliminarily 
determine that no countervailable loans under the BANCOLDEX loan 
program have been used by exporters of the subject merchandise for a 
period of five consecutive years.
U.S. Dollar Loans
    For the period of review, there were no applicable benchmark 
interest rates for U.S. dollar loans. However, for the purposes of 
determining whether termination of the suspension agreement is 
appropriate, we examined whether BANCOLDEX conferred any 
countervailable benefits upon exports of the subject merchandise to the 
United States and Puerto Rico during the POR with regard to BANCOLDEX 
U.S. dollar-denominated loans. We preliminarily determine that 
BANCOLDEX did not confer any countervailable U.S. dollar loans on 
subject merchandise during the POR (See Memorandum to the File, 
February 28, 1996). We also preliminarily determine that no 
countervailable loans under the BANCOLDEX loan program have been used 
by exporters of the subject merchandise for a period of five 
consecutive years.

(2) 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 
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 exporter applied 
for Plan Vallejo benefits. Therefore, we preliminarily determine that 
this program has not been used for subject merchandise for a period of 
five consecutive years.
    In addition, we verified that the four companies we examined at 
verification did not use the program for capital equipment during the 
POR. Therefore, 

[[Page 9428]]
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. In addition, we 
preliminarily determine that Plan Vallejo has been abolished for the 
subject merchandise in Resolution 2386 because flower exporters are 
ineligible to receive benefits for exports to the United States and 
Puerto Rico.

(3) 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 only to 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 the tasa de captacion para 
corporaciones (``TCC'') 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 percent 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 percent 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, 
therefore, are not countervailable.
    Furthermore, we verified that no Colombian flower exporters 
received loans under the two export credit lines during the POR. We 
preliminarily determine that the GOC and the Colombian flower exporters 
of the subject merchandise were in compliance with the suspension 
agreements because IFI's export credit lines were not used by Colombian 
flower exporters of the subject merchandise during the POR. As we noted 
in Roses and Other Cut Flowers From Colombia; Miniature Carnations From 
Colombia; Preliminary Results of Countervailing Duty Administrative 
Reviews of Suspended Investigations (60 FR 42535, 42538, August 16, 
1995) (1993 review), because flower exporters of the subject 
merchandise were eligible to apply for and receive IFI's export credit 
lines, the same short- and long-term benchmarks as for BANCOLDEX peso 
financing applied for the POR (See Section 1 above).
    At verification, we determined that Colombian flower exporters did 
not apply for or receive any IFI short- and long-term export credits 
for the subject merchandise to the United States and Puerto Rico. 
Therefore, we preliminarily determine that IFI loans did not confer any 
countervailable benefits upon exports of the subject merchandise to the 
United States and Puerto Rico during the POR. Although no loans at 
preferential rates were received by exporters of the subject 
merchandise, the program itself has not been abolished. Rather, the 
above scenario constitutes non-use of the program. Therefore, we 
preliminarily determine that IFI's export credit line program has not 
been used by exporters of the subject merchandise for the period of 
review. We also preliminarily determine that exporters of the subject 
merchandise have not received countervailable loans under this IFI 
program since the Department began examining this program, in the 1993 
review.

(4) 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. At verification, 
we found no evidence that Colombian flower producers/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 producers/exporters of the 
subject merchandise during the POR. Furthermore, we preliminarily 
determine that FONADE financing has not been used by producers/
exporters of the subject merchandise since the Department began 
examining this program, in the 1993 review.

(5) Financiera de Desarrollo Territorial (FINDETER)

    The Department has previously found Financiera de Desarrollo 
Territorial (``FINDETER'') financing to be not countervailable for 
exports of the subject merchandise (Roses and Other Cut Flowers from 
Colombia; Miniature Carnations From Colombia; Preliminary Results of 
Countervailing Duty Administrative Reviews of Suspended Investigations, 
60 FR 42535-38, August 16, 1995). For the current review, the 
Department has examined this program and preliminarily finds it to be 
unchanged and therefore not countervailable for the subject 
merchandise.

Other Programs

    In past reviews, the Department has found the following programs to 
have been abolished for the subject merchandise for a period of at 
least three consecutive years (see, infra, Roses and Other Cut Flowers 
from Colombia; Preliminary Results of Countervailing Duty 
Administrative Review and Intent Not To Terminate Suspended 
Investigation, 58 FR 52272-5, October 7, 1993; Miniature Carnations 
From Colombia; Preliminary Results of Countervailing Duty 
Administrative Review and Intent Not To Terminate Suspended 
Investigation, 58 FR 52269-72, October 7, 1993):

(6) Tax Reimbursement Certificate Program (``CERT'');
(7) Free Industrial Zones;
(8) Export Credit Insurance;
(9) Countertrade; and
(10) Research and Development.
    For the current review, the Department has examined these programs 
and verified that they are unchanged from earlier reviews. Therefore, 
they remain abolished for the subject merchandise. 

[[Page 9429]]


Program Specific to the Suspension Agreement on Roses and Other Cut 
Flowers

(11) Air Freight Rates

    The Civil Aeronautics Board (Departmento Administrativo de la 
Aeronautica Civil, hereafter referred to as ``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.
    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. Although no subsidies 
were received by exporters of the subject merchandise through this 
program, the program establishing minimum and maximum rates itself has 
not been abolished. Rather, the above scenario characterizes non-use of 
the program. Therefore, we preliminarily determine that this program 
has not been used by exporters of the subject merchandise for a period 
of five consecutive years.

Preliminary Results of Review

    We preliminarily determine that the GOC and the producers/exporters 
of the subject merchandise have complied with all the terms of the 
suspension agreements during the period January 1, 1994 through 
December 31, 1994. We preliminarily determine that no countervailable 
benefits have been bestowed on subject merchandise, and furthermore, 
that producers/exporters of subject merchandise have not used the above 
programs for at least five years (or, in the case of programs only 
recently created, for the life of the program). Additionally, we note 
that the GOC has stated for the record that it will institute or 
maintain appropriate measures to ensure that export loan programs will 
be administered to guarantee that loans granted to recipients are 
comparable to commercial loans that a flower producer/exporter could 
obtain in the market, such as those alternative sources of financing 
available to agriculture in Colombia, and will not confer any loan 
program countervailable subsidies on flower producers/exporters. 
Furthermore, the GOC has certified that, for the subject merchandise, 
it shall not reinstate those programs which the Department has found 
countervailable, and it shall not substitute other countervailable 
programs. Finally, producers/exporters have certified that they will 
not apply for or receive any net subsidy on exports to the United 
States of subject merchandise from those programs that the Department 
has found countervailable in any proceeding involving Colombia or from 
other countervailable programs.
    Therefore, we preliminarily determine that the GOC and the 
producers/exporters covered by this agreement have met the requirements 
for termination of the suspended countervailing duty investigations on 
roses and other cut flowers and miniature carnations, as required by 19 
CFR 355.25.
    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: February 28, 1996.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-5439 Filed 3-6-96; 8:45 am]
BILLING CODE 3510-DS-P