[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Notices]
[Pages 9429-9434]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5440]
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DEPARTMENT OF COMMERCE
[C-301-003, C-301-601]
Roses and Other Cut Flowers From Colombia; Miniature Carnations
From Colombia Final Results of Countervailing Duty Administrative
Reviews of Suspended Investigations
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Countervailing Duty Administrative
Reviews of Suspended Investigations.
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SUMMARY: On August 16, 1995, the Department of Commerce (``the
Department'') published the preliminary results of its administrative
reviews of the agreements suspending the countervailing duty
investigations on roses and other cut flowers (roses) from Colombia and
on miniature carnations (minis) from Colombia. We gave interested
parties an opportunity to comment on the preliminary results. After
reviewing all the comments received, we determine that the Government
of Colombia (``GOC'') and producers/exporters of roses and minis have
complied with the terms of the suspension agreements during the period
January 1, 1993 through December 31, 1993.
EFFECTIVE DATE: March 8, 1996.
FOR FURTHER INFORMATION CONTACT: N. Gerard Zapiain or Jean Kemp, Office
of Agreements Compliance, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Ave., 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 Although the Department has withdrawn the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 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 (January
3, 1995)).
Background
On August 16, 1995, the Department published in the Federal
Register (60 FR 42535) the preliminary results of its administrative
reviews of the agreements suspending the countervailing duty
investigations on roses and minis from Colombia (See Roses and Other
Cut Flowers From Colombia; Suspension of Investigation, 48 FR 2158
(January 18, 1983); Roses and Other Cut Flowers From Colombia; Final
Results of Countervailing Duty Administrative Review and Revised
Suspension Agreement, 51 FR 44930 (December 15, 1986); and Miniature
Carnations from Colombia; Suspension of Countervailing Duty
Investigation, 52
[[Page 9430]]
FR 1353 (January 13, 1987)). We have now completed this administrative
review 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 this administrative review constitute two
``classes or kinds'' of merchandise: roses and minis from Colombia.
During the period of review (``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.
This review of the suspended investigations involves over 450
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 (``CERT''); (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) Financiero 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. The POR is January 1, 1993 through
December 31, 1993.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received comments from the respondents, the GOC
and Associacion de Flores (``Asocolflores''); and the petitioners, the
Floral Trade Council (``FTC''). Comments submitted consist of
petitioner's case brief of November 17, 1994 and rebuttal brief of
November 28, 1994; and respondent's rebuttal brief of November 28,
1994. Petitioner and respondents resubmitted identical comments to the
issues addressed previously in the 1991-1992 administrative reviews of
these suspension agreements. Therefore, the parties' comments refer to
the record of the 1991-1992 reviews of these agreements. The Department
has addressed the substance of parties' comments as they pertain to
this POR.
Comment 1: The FTC contends that the GOC is unable to monitor the
ultimate shipment destination of exports for which CERT rebates were
granted and therefore unable to monitor compliance with the suspension
agreements with regard to the CERT program (See Miniature Carnations
from Colombia; Final Results of Countervailing Duty Administrative
Review and Determination not to Terminate Suspended Investigation, 59
FR 10790, 10793 (March 8, 1994); FTC Public Factual Submission at
Exhibits 9 and 10 (August 1, 1992); FTC Public Request for Verification
(July 23, 1993) submitted as part of the 1991-1992 reviews of these
agreements).
Department's Position: We disagree with petitioner. At verification
for the 1993 POR, the Department reviewed documentation provided by the
six companies and by the Banco de la Republica (the Central Bank),
including applications and records of official government approval and
disapproval for CERT payments. The Department also examined export
documents (``DEX'') and other shipping documents to determine
destinations of shipments receiving CERT payments, and verified that no
shipments of the subject merchandise received CERT payments. We also
verified documentation at the six companies confirming that the GOC did
not grant CERT payments on subject merchandise (See verification
reports for each company). Thus, we have determined that the GOC has
adequately monitored the suspension agreements and has provided the
Department the relevant reports in accordance with the terms of the
suspension agreements (See also Miniature Carnations from Colombia;
Final Results of Countervailing Duty Administrative Review and
Determination not to Terminate Suspended Investigation, 59 FR 10790
(Comment 7) (March 8, 1994) and Roses and Other Cut Flowers from
Colombia: Miniature Carnations from Colombia: Final Results of
Countervailing Duty Administrative Reviews of Suspended Investigations
60 FR 42540 (August 16, 1995).
Comment 2: The FTC asserts that export documents offer no objective
support for the conclusion that CERT payments were made only for third-
country exports. The FTC contends that the GOC granted CERT payments on
certain shipments which may either have been transhipped to the United
States without traveling the entire distance to Canada and Europe or
have been reshipped to the United States from the Netherlands Antilles
and Panama. Moreover, the FTC cites the BANCOLDEX annual report for
1992 and asserts that the GOC admitted that Panama and the Netherlands
Antilles ``have been traditionally identified as destinations for
fictitious and over-invoiced exports'' in order to receive CERT
rebates, and that ``it was precisely for this reason that the CERT
program was abolished for these countries in early 1992.'' The FTC
asserts that the sheer volume shipped to Panama and the Netherlands
Antilles indicates that it was a substantial conduit for transhipment.
Consequently, the FTC alleges that this is a prima facie breach of the
suspension agreements, which are no longer in the public interest, and
that the Department is required pursuant to 19 U.S.C. 1671c(i) to
resume the investigation and/or issue countervailing duty orders.
The GOC argues that the value of total exports of all Colombian
products to Panama (or even the Netherlands Antilles) does not indicate
that a single flower was transshipped through the Netherlands Antilles.
Department's Position: The suspension agreements obligate Colombian
growers/exporters to renounce CERT payments on exports of the subject
merchandise to the United States and Puerto Rico. Additionally, in
January 1987, the GOC set the level of CERT payments at zero percent
for exports of the subject merchandise. (See Roses and Other Cut
Flowers from Colombia: Miniature Carnations from Colombia: Final
Results of Countervailing Duty Administrative Reviews of Suspended
Investigations FR 42540 (August 16, 1995). At verification for the 1993
POR, the Department fully verified the non-receipt of CERT payments on
exports of the subject merchandise by reviewing the Central Bank's CERT
printouts by destination. At the six companies examined at
verification, we examined several third-country sales, including sales
to Panama and the Netherlands Antilles, by reviewing the DEXs, the
receipt of payments, and airway bills. In addition, we examined the
ultimate destination of specific sales of the subject merchandise.
Based on the findings of verification, we found no evidence to support
the allegation of transshipment or reshipment of the subject
merchandise (See verification reports
[[Page 9431]]
for each company). As a result, we have determined that with respect to
this issue the GOC and the flower growers/exporters were in compliance
with the suspension agreements during the POR.
Comment 3: The FTC argues that because CERT rebates are not
necessarily tied to third-country exports, the Department should
reconsider its position that ``rebates tied to exports to third
countries do not benefit the production or export of the subject
merchandise.''
Department's Position: It is the Department's policy that rebates
tied to exports to third countries do not benefit the production or
export of the subject merchandise destined for the United States. We
found no evidence in the questionnaire responses or at the most recent
verification that would cause us to reconsider our position. (See
Miniature Carnations from Colombia; Final Results of Countervailing
Duty Administrative Review and Determination not to Terminate Suspended
Investigation, 59 FR 10790 (Comment 7) (March 8, 1994), and Roses and
Other Cut Flowers from Colombia; Miniature Carnations from Colombia;
Final Results of Countervailing Duty Administrative Reviews of
Suspended Investigations, 60 FR 42541 (Comment 4) (August 16, 1995)).
Comment 4: The FTC asserts that both suspension agreements allow
the Department to terminate the suspension agreements if producers/
exporters account for less than 85 percent of the total exports of the
subject merchandise to the United States and Puerto Rico. Further, the
FTC claims that there is effectively no suspension agreement for the
minis because the GOC does not have an up-to-date list of signatories
during the 1991-1992 PORs (See Roses and Other Cut Flowers From
Colombia; Final Results of Countervailing Duty Administrative Review
and Revised Suspension Agreement, 51 FR 44930, and 44933 (December 15,
1986); and Miniature Carnations from Colombia; Suspension of
Countervailing Duty Investigation, 52 FR 1353, and 1356 (January 13,
1987)).
Department's Position: The suspension agreement on minis states
that should exports to the United States by the producers and exporters
account for less than 85 percent of the subject merchandise imported
directly or indirectly into the United States from Colombia, the
Department may attempt to negotiate an agreement with additional
producers or exporters or may terminate this Agreement and reopen the
investigation under 19 CFR 355.18 (b)(3)(c) of the Commerce
Regulations. (See Roses and Other Cut Flowers from Colombia: Miniature
Carnations from Colombia: Final Results of Countervailing Duty
Administrative Reviews of Suspended Investigations, 60 FR 42540 (August
16, 1995).
We have found that the GOC has not maintained an up-to-date list of
signatories for both suspension agreements. Nonetheless, the record
evidence indicates that signatories have been in full compliance with
the agreement. At verification for this review, we analyzed the
Colombian Customs Authority's export statistics of all flower companies
exporting minis to the United States and Puerto Rico. The Department
reviewed and verified at each GOC agency information for all producers
of the subject merchandise, despite their signatory status. At the
Central Bank, we checked computer records of exports with U.S. and
Puerto Rican country identification codes showing that no CERT payments
were made to any flower growers/exporters for shipments of the subject
merchandise.
At BANCOLDEX, we reviewed and verified all PROEXPO/BANCOLDEX loans
issued and outstanding in the POR (See also Government Verification
Reports of May 27, 1994 and August 11, 1995) and we have determined
that the Colombian flower growers/exporters have complied with the
terms of the suspension agreements during the POR. Similarly, we
verified that no countervailable benefits were granted to or received
by any flower growers/exporters for Plan Vallejo, Air Freight Rates,
Free Industrial Zones, and Export Credit Insurance Program. Based on
this evidence, the Department verified more than 85 percent of the
Colombian flower growers/exporters of the subject merchandise during
the POR. Consequently, the Department will neither renegotiate the
minis suspension agreement with the GOC and the growers/exporters of
the subject merchandise, nor terminate the suspension agreements and
reopen the investigations.
Comment 5: The FTC claims that under the terms of the suspension
agreements, the Department is forced to apply outdated/subsidized
benchmark interest rates to determine ``compliance'' with the
suspension agreements. The FTC objects to the Department's practice in
setting prospective and outdated benchmark interest rates to determine
compliance with the terms of the suspension agreements and argues that
the Department should either terminate the suspension agreements with
respect to the BANCOLDEX program, or, at least, amend the agreements by
prohibiting Colombian growers from receiving loans at non-preferential
rates. The FTC asserts that the Department should refrain from
establishing fixed benchmark interest rates, and instead the Department
should determine a benchmark for each review period by adhering to the
precedents set in the Final Affirmative Countervailing Duty
Determination and Countervailing Duty Order, Steel Wire Rope from
Thailand, 56 FR 46299 (September 11, 1991); and Final Results of the
Administrative Review for Rice from Thailand, 59 FR 8906, and 8907
(1994).
The FTC claims that the suspension agreements are not in the public
interest because Colombian flower growers/exporters can ``technically''
comply with the terms of the suspension agreements while at the same
time receive loans at preferential interest rates. Because the
benchmarks are outdated, the FTC asserts, they are incapable of
eliminating the net subsidy on flowers. Thus, the FTC contends that if
Colombian flower growers continue to receive loans at preferential
interest rates, the Department should either impose countervailing
duties or fashion a suspension agreement that eliminates the subsidy,
offsets the subsidy completely, or ceases the exports.
In addition, the FTC asserts that the Department cannot predict
future interest rates, especially because interest rates fluctuated
widely between 19 and 32 percent during the 1991-1992 PORs, or predict
what Colombian flower growers/exporters could receive in non-peso based
interest rates years after establishing benchmarks which may not be
applicable to unforeseen loan programs.
Department's Position: We disagree with petitioner. The Department
determines that suspension agreements are forward-looking, and that the
Department sets benchmark interest rates prospectively. (See Miniature
Carnations from Colombia: Final Results of Countervailing Duty
Administrative Review; 56 FR 14240 (April 8, 1991), Miniature
Carnations from Colombia; Final Results of Countervailing Duty
Administrative Review and Determination Not To Terminate Suspended
Investigation, 59 FR 10790, (March 8, 1994), and Roses and Other Cut
Flowers from Colombia: Miniature Carnations from Colombia: Final
Results of Countervailing Duty Administrative Reviews of Suspended
Investigations, 60 FR 42541 (August 16, 1995)).
At verification for the 1993 POR, the Department examined
documentation that indicated that BANCOLDEX
[[Page 9432]]
charged interest rates on its short- and long-term loans above the
Department's established benchmark rates in effect during the POR. The
Department also found that the companies received BANCOLDEX loans on
terms consistent with the suspension agreements. Consequently, we have
determined that signatories were in compliance with the terms of the
suspension agreements for the BANCOLDEX programs. Because BANCOLDEX
loans were above the benchmark rates, the Department determines that
the GOC did not confer any countervailable benefits through the
BANCOLDEX programs during the POR. The Department finds that
signatories complied with the suspension agreements' benchmarks and
avoided receiving countervailable benefits during the POR, resulting in
a situation analogous to non-use for the BANCOLDEX programs by
Colombian flower growers/exporters of the subject merchandise.
Therefore, there is no basis for petitioner's claim that the suspension
agreements are not in the public interest.
To ensure timely updates of the benchmarks for BANCOLDEX financing,
the Department requests information on FINAGRO, commercial dollar loans
and other alternative sources of financing in Colombia outside of the
annual administrative review process (See Section III, ``Monitoring of
the Agreement'' in Roses and Other Cut Flowers from Colombia: Final
Results of Countervailing Duty Administrative Review and Revised
Suspension Agreement, 51 FR 44930 and 44933 (December 15, 1986) and
Suspension of Countervailing Duty Investigation: Miniature Carnations
from Colombia, 52 FR 1353 and 1355 (January 13, 1987)).
Comment 6: Petitioner asserts that the GOC did not comply with the
suspension agreements regarding Colombian peso (peso) loans for the
following reasons:
First, the FTC claims that were the Department to compare the
interest rates on 1991 and 1992 PROEXPO/BANCOLDEX (``BANCOLDEX'') loans
to the weighted-average commercial lending rates published by the
International Monetary Fund (``IMF'') or the (FFA/FINAGRO ``FINAGRO'')
rates during those PORs, the Department would have found that Colombian
flower growers/exporters received loans at preferential interest rates.
Second, the FTC asserts that the Department should not equate
compliance with pre-established benchmark interest rates with
compliance with the terms of the suspension agreement covering minis,
because under the minis suspension agreement the Colombian flower
growers/exporters have two distinct obligations: (1) not to apply for
or receive financing at preferential terms; and (2) not to apply for or
receive financing other than that offered at or above the most recent
benchmark interest rates determined by the Department.
Finally, the FTC argues that if the Department's 1989 benchmark for
minis were to be applied to 1991 and 1992 loans received for roses, the
Department would likely find Colombian producers/exporters receiving
BANCOLDEX loans at preferential rates during the PORs. Consequently,
the FTC asserts that the suspension agreements should either be revised
or found unworkable.
The GOC argues that all Colombian flower producers/exporters of
minis and roses have fully complied with the terms of their respective
suspension agreements. Furthermore, the GOC asserts that the FTC
incorrectly applies the minis benchmark interest rates to loans for
exports of roses. The GOC explains that the current benchmarks for
roses and minis differ, not because there is a defect in the suspension
agreements or because of the Department's approach, but instead because
the FTC had requested a review of only the minis suspension agreement
in 1989. Regardless, the GOC claims that loans issued to roses growers/
exporters met the benchmarks established under the minis suspension
agreement.
Department's Position: We disagree with petitioner. The Department
has determined in previous reviews that any changes to benchmark
interest rates for the suspension agreements should be set
prospectively, because suspension agreements are forward-looking. (See
Roses and Other Cut Flowers from Colombia: Miniature Carnations from
Colombia: Final Results of Countervailing Duty Administrative Reviews
of Suspended Investigations, 60 FR 42542 (August 16, 1995)).
Furthermore, the Department verified that the Colombian flower growers/
exporters of the subject merchandise have fulfilled the two distinct
obligations in the suspension agreements during the 1993 POR: (1) not
to apply for or receive financing at preferential terms; and (2) not to
apply for or receive financing other than that offered at or above the
most recent benchmark interest rates determined by the Department (See
verification reports for each company).
At verification for this review, the Department reviewed all loans
issued by BANCOLDEX during the POR, in particular the six companies we
examined at verification, and found that the loans granted were on
terms consistent with the suspension agreements. Additionally, because
BANCOLDEX loans were pegged to the floating DTF rate, and the DTF rate
fluctuated widely over the review period, we did not compare the rate
on an individual loan with the annual average DTF rate (See
verification reports for each company). Therefore, Colombian flower
growers/exporters did not apply for or receive financing at
preferential terms, and the Department determines that the GOC did not
confer any countervailable benefits during the POR, and that
signatories complied with the terms of the suspension agreements for
the BANCOLDEX programs during the POR.
Finally, the Department agrees with the respondents that because
the suspension agreements are two separate agreements, it would be
erroneous to apply the 1989 minis benchmark interest rates to the roses
suspension agreement during this POR. We have applied the benchmark
interest rate of each suspension agreement appropriately.
Coincidentally, the rates in effect for each agreement are now
identical. (See Roses and Other Cut Flowers from Colombia: Miniature
Carnations from Colombia: Final Results of Countervailing Duty
Administrative Reviews of Suspended Investigations 60 FR 42542 (August
16, 1995)).
Comment 7: The FTC asserts that the Department should reconsider
its use of the subsidized FINAGRO interest rate, when establishing new
short- and long-term benchmarks. The FTC argues instead that the
Department use weighted-average interest rates of available non-
government-related financing at commercial lending rates maintained by
the Central Bank. In addition, the FTC asserts that the Department is
not required to look to interest rates available to the agricultural
sector, when the rates are not available to flower growers/exporters
(See Rice From Thailand; Preliminary Results of Countervailing Duty
Administrative Review, 57 FR 8437, and 8439 (March 10, 1992)).
The FTC asserts that if the Department decides to base its peso
loan benchmarks on FINAGRO interest rates, then it should use the
maximum interest rates for large producers, i.e., DTF plus 6 percentage
points. In addition, the FTC argues that the Department should adjust
the interest rates to reflect the spread between short- and long-term
BANCOLDEX loans. The FTC argues that the Department should not
establish a two-tier benchmark system, or a range of interest rate
benchmarks,
[[Page 9433]]
because there would be no criteria by which the Department could
determine what is preferential.
The GOC asserts that the FTC offers no basis upon which the
Department could support a change from a FINAGRO based benchmark to a
weighted-average interest rates on available non-government-related
financing at commercial lending rates. The GOC argues that FINAGRO
lending rates are appropriate because the rates are not enterprise or
industry specific, which otherwise would make them a countervailable
subsidy (See Final Affirmative Countervailing Duty Determination;
Miniature Carnations from Colombia, 52 FR 32033, and 32037 (August 25,
1987); and Roses and Other Cut Flowers From Colombia; Final Results of
Countervailing Duty Administrative Review and Revised Suspension
Agreement, 51 FR 44930, and 44,932 (December 15, 1986)).
Department's Position: We have determined that FINAGRO is a major
intermediary lender to the agricultural sector, and therefore is an
appropriate alternative basis for the Department's benchmarks. Because
there is insufficient information on the record about non-government-
related financing at commercial rates, we have determined that it is
inappropriate to weight average the commercial interest rates. (See
Roses and Other Cut Flowers from Colombia: Miniature Carnations from
Colombia: Final Results of Countervailing Duty Administrative Reviews
of Suspended Investigations 60 FR 42542 (August 16, 1995)).
The most recent FINAGRO short-term rate is equal to the Colombian
fixed deposit rate, DTF, plus up to 6 percentage points. We agree with
petitioner that by establishing a range of interest rate benchmarks
(i.e., DTF plus up to 6 percentage points), as suggested by
respondents, there is in effect no benchmark because this would be
equivalent to setting the benchmark (minimum rate) at DTF--a rate that
does not reflect commercial rates or an alternative rate of financing.
Therefore, the Department determines that, as verified, the most recent
average official interest rate on all loans financed by FINAGRO through
Caja Agraria, i.e., nominal DTF plus 3.66 percentage points, is the
appropriate benchmark for short-term financing. (See Calculation
Memorandum for Interest Rate Benchmark Methodology for BANCOLDEX Peso-
and Dollar-Denominated Loans, January 17, 1996, and Government
Verification Report, Exhibit BR-1). Because BANCOLDEX also administered
long-term loans, we determine that the same nominal DTF plus 3.66
percentage points, plus an additional 0.25 percentage point for each
year after the first, is the appropriate benchmark. Furthermore, loans
provided at or above the benchmark will not be considered preferential
(See Comments 6 and 10).
The Department determines not to adopt the two-tier interest rate
system (borrowers can receive different interest rates depending on the
size of the company) because BANCOLDEX interest rates are not
determined on the basis of the size of flower growers (See BANCOLDEX
resolution 007, article 6, paragraph d (June 16, 1993)).
The Department determines that the short- and long-term benchmarks
for peso-denominated financing will become effective 14 days after the
date of publication of the final results of these administrative
reviews.
Comment 8: The FTC requests that the Department weight-average Caja
Agraria interest rates with FINAGRO rates as done in previous reviews.
In the case that there is conflicting data, the FTC suggests rejecting
such data and using commercial lending rates maintained by the Central
Bank as best information available.
In response, the GOC claims that the reported Caja Agraria interest
rates are lower than reported FINAGRO rates (Submission of June 3,
1994) and further argues that the submitted information does not
conflict with rates provided in the questionnaire response, which were
reported as applicable rates for different denomination loans.
Department's Position: We disagree with petitioner. FINAGRO is the
major alternative source of agricultural financing in Colombia that
provides rediscount rates to intermediary banks in Colombia. We have
determined that because information submitted by respondents about Caja
Agraria's rates conflicts with what we found at verification and
because Caja Agraria's interest rates are similar to the rates offered
by FINAGRO, FINAGRO's interest rates represent the best alternative
source of financing for agricultural entities in Colombia (See Roses
and Other Cut Flowers from Colombia: Miniature Carnations from
Colombia: Final Results of Countervailing Duty Administrative Reviews
of Suspended Investigations, 60 FR 42542 (August 16, 1995).
Comment 9: The FTC asserts that the Department should use effective
rather than nominal interest rates. The FTC contends that effective
rates are a more accurate measure of a subsidy and reflect a
considerably higher rate. The FTC asserts that nominal rates vary
widely, because commissions and other surcharges can add to the cost of
a loan. In addition, the FTC asserts, the GOC has not established that
the financial intermediary does not assess surcharges for its services
or use of its own funds in financing loans.
In response, the GOC argues that the nominal and effective interest
rates are equivalent, because the nominal rate is the rate expressed as
if interest were due at the beginning of each quarter, while the
effective rate is the equivalent rate calculated on the basis of
interest being payable at the end of the quarter. Furthermore, the GOC
argues that there are no surcharges by financial intermediaries on
BANCOLDEX loans for the portion of the loan provided by the financial
intermediary.
Department's Position: We agree with respondents. The Department
determines that the nominal and effective interest rates are
equivalent. In addition, the Department verified that there are no
surcharges by financial intermediaries on BANCOLDEX loans for the
portion of the loan provided by the financial intermediary. Therefore,
we will continue using nominal interest rates (See Roses and Other Cut
Flowers from Colombia: Miniature Carnations from Colombia: Final
Results of Countervailing Duty Administrative Reviews of Suspended
Investigations, 60 FR at 42542 (August 16, 1995).
Comment 10: The FTC contends that the Department must determine
whether Colombian flower growers/exporters have received U.S. Dollar
(Dollar) loans at preferential interest rates. To the extent that the
suspension agreements restrict the Department's ability to administer
the law, the FTC asserts that the agreements must be terminated or
amended for the POR.
Respondents state that, as noted in its original case brief in
connection with the 1991-1992 annual review periods, BANCOLDEX's
dollar-denominated loans are not financed by the GOC and are therefore
non-countervailable.
Department's Position: We disagree with respondents. It is long-
standing Department policy that loans from certain international
institutions, such as the World Bank or the Inter-American Development
Bank (IADB), are not countervailable subsidies. However, Dollar loans
administered by BANCOLDEX are potentially countervailable and the
Department has calculated dollar benchmarks accordingly (as discussed
in Comment 11 below) (See Roses and Other Cut Flowers from Colombia:
Miniature Carnations from Colombia: Final Results of Countervailing
Duty Administrative Reviews of Suspended
[[Page 9434]]
Investigations 60 FR at 42543 (August 16, 1995).
Comment 11: The FTC asserts that, by using the annual weighted-
average effective U.S. prime lending rates reported in the Federal
Reserve, rather than one quarter of 1994 as done in the preliminary
determination for the 1991-1992 review periods, the Department would
find that the dollar-denominated BANCOLDEX loans issued during these
PORs were preferential (the weighted-average U.S. lending rate for 1992
was 8.72 percent, compared to the dollar denominated loans issued to
the five leading exporters of roses and minis in 1992) (See Public
questionnaire response). Consequently, the FTC requests that the
Department either terminate the suspension agreements or remove their
reference to benchmarks and determine compliance with the suspension
agreements based on current rates for the review period.
Department's Position: The Department in its final results in
connection with the 1991-1992 annual review periods agreed with
respondents that the calculation of the dollar loan benchmark in the
Department's preliminary results was incorrect because it was not
necessarily representative of dollar-based interest rates in Colombia.
(See Roses and Other Cut Flowers from Colombia: Miniature Carnations
from Colombia: Final Results of Countervailing Duty Administrative
Reviews of Suspended Investigations, 60 FR 42543 (August 16, 1995). We
corrected this error in the 1993 preliminary results of review.
Consequently, this issue does not apply to the current POR.
Comment 12: The FTC asserts that according to 19 CFR 355.19(b), the
Department can revise the suspension agreements if it ``has reason to
believe that the signatory government or exporters have violated an
agreement or that an agreement no longer meets the requirements of
section 704(d)(1) of the Act.'' The FTC claims that respondents have
violated the terms of the suspension agreements during the PORs (See
Comments 6 and 10).
The GOC argues that all Colombian flower producers/exporters of
minis and roses have fully complied with the terms of their respective
suspension agreements and that it supports the Department's past policy
of having suspension agreements be forward-looking, and that the
Department sets benchmarks interest rates prospectively. The GOC
asserts that there is no need to amend or clarify the suspension
agreements and it was inappropriate for the Department to have
requested comments from interested parties for the following reasons:
first, the suspension agreements cannot be unilaterally amended or
clarified by the Department or the Colombian flower growers/exporters.
Second, the Department has no power to amend or clarify the agreements
without the consent of all signatories. Third, the Department should
first raise the issue with the signatories and negotiate an amendment,
which then can be subject to public comments (See 19 CFR 355.18(g)).
The GOC contends that there is no basis for considering to amend
the suspension agreements. Because dollar loans were provided by
international financial institutions, the GOC asserts that the loans
are non-countervailable and there is no need for the Department to
determine whether these loans were granted on non-preferential terms.
The GOC argues that based on FTC's proposed amendments of the
suspension agreements (See Comment 5), no Colombian flower grower/
exporter would sign such an agreement where signatories would agree to
a blanket commitment that all PROEXPO/BANCOLDEX loans have to be ``non-
preferential'' without any understanding as to how the Department would
interpret that term. Further, the GOC argues that suspension agreements
are supposed to provide certainty so that when BANCOLDEX loans are
issued, the GOC knows what rate must be charged to comply with the
suspension agreements.
Department's Position: The Department has determined not to
initiate an amendment to the suspension agreements, based on the
information received. The Secretary has no reason to believe at this
time that the exporters of the subject merchandise have violated the
suspension agreements or that the agreements no longer meet the
requirements of section 704(d)(1). Consequently, the Department will
not currently renegotiate the suspension agreements with the GOC and
the producers/exporters of the subject merchandises nor will it
terminate the suspension agreements, nor will it reopen the
investigation. (See Roses and Other Cut Flowers from Colombia:
Miniature Carnations from Colombia: Final Results of Countervailing
Duty Administrative Reviews of Suspended Investigations 60 FR 42544
(August 16, 1995).
Refinancing Outstanding Dollar and Peso Loans
At the time of the final results of the 1991-1992 reviews, the GOC
asserted that if any dollar loans needed to be refinanced or repaid,
the Department should grant 90 days after the publication of the final
results for the process of refinancing to occur. This is the same
period initially established in the minis suspension agreement (See 52
FR 1355, para. II.B., 1986, and Roses and Other Cut Flowers from
Colombia; Miniature Carnations from Colombia; Final Results of
Countervailing Duty Administrative Reviews of Suspended Investigations,
60 FR 42544 (Comment 11) (August 16, 1995)).
For the 1993 POR, the Department determines that the effective date
for completing the repayment and/or refinancing of any outstanding
dollar and peso loans to meet the new short and long-term dollar and
peso benchmarks is 90 days after publication of these final results in
the Federal Register.
Final Results of Reviews
After considering all of the comments received, we determine that
the GOC and the Colombian flower growers/exporters of the subject
merchandise have complied with the terms of the suspension agreements
for the period January 1, 1993, through December 31, 1993. In addition,
we determine that the peso and dollar benchmarks established in this
final notice will be effective 14 days after the date of publication of
this notice. Moreover, the Department determines that the effective
date for completing the repayment and/or refinancing for any
outstanding peso and dollar loans to meet the new short- and long-term
benchmarks is 90 days after publication of these final results in the
Federal Register.
This administrative review and notice are in accordance with
sections 751(a)(1)(C) of the Tariff Act (19 U.S.C. 1675(a)(1)(C) and 19
CFR 355.22 and 355.25.
Dated: February 28, 1996.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-5440 Filed 3-6-96; 8:45 am]
BILLING CODE 3510-DS-P