[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 Although the Department has withdrawn the 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