[Federal Register Volume 61, Number 177 (Wednesday, September 11, 1996)]
[Notices]
[Pages 47886-47888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23230]


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DEPARTMENT OF COMMERCE
[C-421-601]


Standard Chrysanthemums From the Netherlands; Final Results of 
Countervailing Duty Administrative Reviews

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

ACTION: Notice of Final Results of Countervailing Duty Administrative 
Reviews.

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SUMMARY: On May 6, 1996, the Department of Commerce (the Department) 
published in the Federal Register (61 FR 20406) its preliminary results 
of administrative reviews of the countervailing duty order on standard 
chrysanthemums from the Netherlands for the periods January 1, 1992 
through December 31, 1992 and January 1, 1993 through December 31, 
1993. We have completed these reviews and determine the net subsidies 
to be 0.43 percent ad valorem for the period January 1, 1992 through 
December 31, 1992, and 0.80 percent ad valorem for the period January 
1, 1993 through December 31, 1993. The Department will instruct the 
Customs Service to assess countervailing duties as detailed in the 
Final Results of Reviews section of this notice.

EFFECTIVE DATE: September 11, 1996.

FOR FURTHER INFORMATION CONTACT: Lorenza Olivas or Anne D'Alauro, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

    On May 6, 1996, the Department published in the Federal Register 
(61 FR 20406) the preliminary results of its administrative reviews of 
the countervailing duty order on standard chrysanthemums from the 
Netherlands (Preliminary Results). We invited interested parties to 
comment on the preliminary results. The Floral Trade Council, 
petitioner, and the Government of the Netherlands (GON), respondent, 
submitted both case and rebuttal briefs. The Department has now 
completed these administrative reviews in accordance with section 751 
of the Tariff Act of 1930, as amended (the Act).
    The periods covered by the reviews were January 1, 1992 through 
December 31, 1992 and January 1, 1993 through December 31, 1993. These 
reviews were conducted on an aggregate basis and involve 13 programs.

Applicable Statute and Regulations

    The Department is conducting these administrative reviews in 
accordance with section 751(a) of the Act. Unless otherwise indicated, 
all citations to the statute and to the Department's regulations are in 
reference to the provisions as they existed on December 31, 1994. 
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 (Jan. 3, 1995).

Scope of the Reviews

    Imports covered by these reviews are shipments of Dutch standard 
chrysanthemums. Such merchandise is classifiable under item number 
0603.10.70 of the Harmonized Tariff Schedule (HTS). The HTS item number 
is provided for convenience and Customs purposes. The written 
description remains dispositive.

Analysis of Programs

    Based on our analysis of questionnaire responses, verification, and 
written comments from the interested parties, we determine the 
following:

I. Programs Conferring Subsidies

A. Programs Previously Determined To Confer Subsidies

1. Aids for the Creation of Cooperative Organizations
    In the preliminary results, we found that this program conferred 
countervailable benefits on the subject merchandise. We received no 
comments on our preliminary results, and our findings remain unchanged 
in these final results. On this basis, the net subsidy for this program 
is 0.07 percent ad valorem for 1992 and 0.04 percent ad valorem for 
1993.
2. Glasshouse Enterprises Program
    In the preliminary results, we found that this program conferred 
countervailable benefits on the subject merchandise. We received no 
comments on our preliminary results, and our findings remain unchanged 
in these final results. On this basis, the net subsidy for this program 
is 0.17 percent ad valorem for 1992 and 0.09 percent ad valorem for 
1993.
3. Aids for the Reduction of Glass Surface
    In the preliminary results, we found that this program conferred 
countervailable benefits on the subject merchandise. We received no 
comments on our preliminary results, and our findings remain unchanged 
in these final results. On this basis, the net subsidy for this program 
is less than 0.005 percent ad valorem for 1992 and less than 0.005 
percent ad valorem for 1993.
4. Steam Drainage System
    In the preliminary results, we found that this program conferred 
countervailable benefits on the subject merchandise. We received no 
comments on our preliminary results, and our findings remain unchanged 
in these final results. On this basis, the net subsidy for this program 
is less than 0.005 percent ad valorem for 1992 and less than 0.005 
percent ad valorem for 1993.

B. New Program Found to Confer Subsidies Stimulation for the Innovation 
of Electric Energy Program

    In the preliminary results, we found that this program conferred 
benefits on the subject merchandise. Our analysis of

[[Page 47887]]

the comments submitted by the interested parties, summarized below, has 
not led us to modify our findings from the preliminary results for this 
program. On this basis, the net subsidy for this program is 0.18 
percent ad valorem for 1992 and 0.66 percent ad valorem for 1993.

II. Programs Found Not to Confer Subsidies

    In the preliminary results, we found the following programs to be 
non-countervailable.

1. Arrangement for Stimulation of Innovation Projects
2. Arrangement for Structural Improvements and the Complementary Scheme 
for Investment in Agricultural Holdings
3. Natural Gas Provided at Preferential Rates
4. Income Tax Deduction
5. Value Added Tax (VAT) Reduction of 6 Percent for Natural Gas Users 
and Partial Restitution of VAT for Mineral Oils, Fuels, Bulk or Bottled 
Gas
6. Guarantee Fund for Agriculture

    Our analysis of the comments submitted by interested parties, 
summarized below, has not led us to modify our findings from the 
preliminary results.

III. Programs Found to be Not Used

    We determine that producers and/or exporters of the subject 
merchandise did not apply for or receive benefits under the following 
programs:

1. Investment Incentive (WIR)--Regional Program
2. Loans at preferential interest rates

Analysis of Comments

    Comment 1: Respondent contends that the Department improperly 
determined the Stimulation for the Innovation of Electric Energy (SES) 
program to be countervailable. Respondent states that the Uruguay Round 
Agreement Act (URAA) exempts from countervailability assistance to 
promote adaptation of existing facilities to new environmental 
requirements.
    Petitioner disagrees that there is a general exemption for 
subsidies which provide environmental benefits. Instead, the petitioner 
notes that Article 8(c) of the Agreement on Subsidies and 
Countervailing Measures lists certain non-actionable subsidies 
benefitting the environment and that one of the criteria necessary for 
the exemption is that the new environmental requirements are imposed by 
law or regulation. Petitioner argues that the GON program encouraging 
the installation of cogeneration equipment is not pursuant to a new 
environmental requirement imposed by law or regulation.
    Department's Position: The Department disagrees with respondent. 
The URAA amendments to the Act, including amendments pursuant to 8.2(c) 
of the Agreement on Subsidies and Countervailing Measures, apply to 
reviews initiated pursuant to requests for administrative reviews filed 
after January 1, 1995. As such, the provisions of the URAA referenced 
by respondent do not apply to these reviews because these reviews were 
initiated prior to the enactment of the URAA. Therefore, the Department 
properly determined the SES program to be countervailable.
    Comment 2: Respondent argues that, if the Department continues to 
find the SES program countervailable, the Department should change the 
calculation methodology. Respondent alleges that the Department's 
decision to allocate the total value of all grants provided under the 
SES program in 1993 to that year was entirely arbitrary and contends 
that the Department should, instead, allocate those grants over the 
average useful life of assets in the industry.
    Petitioner, on the other hand, argues that the Department properly 
expensed the benefits received in 1993 in the year of receipt in 
conformance with its prior practice.
    Department's Position: The Department followed its practice, in 
accordance with the Proposed Regulations, of expensing non-recurring 
grants in the year of receipt when the sum of grants provided under a 
particular program is less than 0.50 percent of total sales in the year 
in which the grant was received. In this case, the amount of SES grants 
provided to greenhouse growers in 1993 was less than 0.50 percent of 
total greenhouse sales in that year. Therefore, under long-standing, 
established Department practice, these grants were expensed in the year 
of receipt, 1993. See, e.g., Final Affirmative Countervailing Duty 
Determination; Oil Country Tubular Goods from Austria (60 FR 33534, 
33535; June 28, 1995).
    Comment 3: Petitioner argues that the Department should reverse its 
determination that the reduced VAT rate and VAT rebates, applicable to 
purchases of mineral oils, fuels, or gas for greenhouses are not 
countervailable. Petitioner argues that the VAT reduction and rebates 
provide greenhouse growers with preferential gas prices and that these 
benefits are targeted to greenhouse growers and, therefore, are 
countervailable. Other reasons noted in support of its argument are 
that recipients must produce affidavits attesting that the gas is used 
only to heat greenhouses and that inspection programs ensure that the 
reduced rate only benefits greenhouse production. Petitioner further 
contends that, absent this program, flower growers would pay the higher 
VAT. Therefore, according to petitioner, the program is specifically 
targeted to greenhouse growers. In support of its arguments, petitioner 
cites Bicycle Tires and Tubes from Taiwan, 46 FR 53201 (October 28, 
1981) (tax ceiling for bicycle manufactures); Certain Steel Products 
from Belgium, 58 FR 32273 (July 9, 1993) (exemptions for companies in 
development zone); Certain Steel Products from Brazil (58 FR 37295; 
July 9, 1993) (tax rebates to a specific industry); and Certain Steel 
Products from Italy, 58 FR 37327; July 9, 1993) (increased VAT 
deduction for a firm in a specific region).
    Respondent disputes petitioner's argument that the special VAT 
regime is countervailable. Respondent argues that the special regime is 
available to the entire agricultural sector and that the administrative 
procedures that reduce the VAT on oil and natural gas are necessary to 
arrive at the reduced VAT level and rebates to which the recipients in 
the entire agricultural sector are entitled.
    Department's Position: Section 771.5 of the Act and section 
355.43(b)(1) of the Proposed Regulations require the Department to 
countervail a subsidy that is limited, in law, or in fact, to an 
enterprise or industry or group thereof. However, section 355.43(b)(8) 
provides that the Department ``will not regard a program as being 
specific, within the meaning of paragraph (b)(1) of this section, 
solely because the program is limited to the agricultural sector.'' 
(See Proposed Regulations at 23380.) In the final determination of the 
original investigation, the Department found that if a program is 
available to virtually all agriculture and is not limited to flower 
growers or otherwise limited to a specific enterprise or industry, or 
group of enterprises or industries, within agriculture, then the 
program is not countervailable. See Final Affirmative Countervailing 
Duty Determination; Certain Fresh Cut Flowers From the Netherlands (52 
FR 3303; February 3, 1987) (Final Determination). See also, Final 
Affirmative Countervailing Duty Determination and Countervailing Duty 
Order; Lamb Meat from New Zealand (50 FR 37708; September 17, 1985). In 
Lamb Meat, we found that the examined program was not limited to a 
specific enterprise or industry, or group thereof, because it was 
available to and used by a wide variety of agricultural producers.

[[Page 47888]]

In the preliminary results of these reviews, we found that under the 
Dutch National Tax Law, farmers in the Netherlands pay the reduced VAT 
rate on purchases of virtually all the goods and services required in 
agriculture, including natural gas and oil. The application procedure, 
noted by petitioner, for obtaining the reduced VAT rate and rebates is 
merely a mechanism which enables farmers to receive the reductions to 
which they are entitled under the Dutch National Tax Law.
    The cases cited by petitioner in its brief are not relevant to the 
issue at hand. The issue in those cases dealt with benefits limited to 
specific industries or to specific zones or regions. The issue in these 
reviews is whether the reduced VAT rates are applied to virtually all 
of the goods and services used within the agricultural sector and 
whether there is any limitation within agriculture to provide benefits 
to specific commodities under this program. The issue is not whether 
the agricultural sector pays lower VAT rates on its purchases than the 
other industries in the Netherlands. We found that the reduced VAT rate 
is applied to a wide variety of goods in the agricultural sector; such 
as, foodstuffs, cereals, seeds, cattle, sheep, goats, pigs, horses, 
breeding eggs, veterinary medicines, water, gas and mineral oil, 
beetroot, agricultural seeds, fertilizer, feed, round wood, flax, wool, 
agricultural tools, bulbs and plants, as well as to services in the 
agricultural sector; such as, contracting, repairs, breeding, 
inspections, accounting, drying, cooling, cleaning and packaging of 
agricultural products. Therefore, since virtually all goods purchased 
by and required in the agricultural sector receive the reduced VAT 
rate, we determine that this program is not specific. As such, the 
reduced VAT rate for agriculture does not provide a countervailable 
benefit.
    Comment 4: Petitioner argues that the Department understated the 
benefits derived from the SES program by allocating the grants received 
over estimated greenhouse sales, rather than floricultural sales. 
Petitioner claims that because the GON did not provide data regarding 
disbursements to flower growers or chrysanthemums growers, the 
Department must apply best information available.
    Respondent, on the other hand, agrees with the Department's 
allocation methodology. Respondent argues that aid from the program is 
spread over the entire horticultural sector and is not specific to 
flowers or standard chrysanthemums.
    Department's Position: Petitioner incorrectly asserts that the 
Department understated the benefits from the SES program. We are 
conducting this review on an aggregate basis due to the large number of 
growers of the subject merchandise. Therefore, we collected information 
on program usage from the government rather than from individual 
producers. The GON does not maintain records on the grants provided 
under this program on a product-specific basis. However, the grants 
under this program were provided to greenhouse growers, and we 
allocated the value of the grants over the value of greenhouse sales. 
Therefore, the Department has not understated the benefits under this 
program attributable to the subject merchandise.

Final Results of Reviews

    For the period January 1, 1992 through December 31, 1992, we 
determine the net subsidy to be 0.43 percent ad valorem. For the period 
January 1, 1993 through December 31, 1993, we determine the net subsidy 
to be 0.80 percent ad valorem. In accordance with 19 CFR 355.7, any 
rate less than 0.5 percent ad valorem is de minimis.
    The Department will instruct the U.S. Customs Service to liquidate, 
without regard to countervailing duties, all shipments of the subject 
merchandise exported on or after January 1, 1992 and on or before 
December 31, 1992, and to assess countervailing duties of 0.80 percent 
ad valorem of the f.o.b. invoice price on all shipments of the subject 
merchandise exported on or after January 1, 1993 and on or before 
December 31, 1993.
    Because this notice is being published concurrently with the final 
results of the 1994 administrative review, the 1994 administrative 
review will serve as the basis for setting the cash deposit rate, as 
provided for under section 751(c)(1) of the Act.
    This notice also serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 355.43(d). Timely written notification of 
return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    These administrative reviews and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.

    Dated: August 30, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-23230 Filed 9-10-96; 8:45 am]
BILLING CODE 3510-DS-P