[Federal Register Volume 61, Number 241 (Friday, December 13, 1996)]
[Notices]
[Pages 65546-65548]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31727]


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DEPARTMENT OF COMMERCE
[C-791-001]


Ferrochrome From South Africa: Preliminary Results of the 1992 
Countervailing Duty Administrative Review

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

ACTION: Notice of preliminary results of 1992 Countervailing Duty 
Administrative Review.

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SUMMARY: The Department of Commerce (the Department) is conducting the 
1992 administrative review of the countervailing duty order on 
ferrochrome from South Africa. We preliminarily determine the net 
subsidy to be 0.27 percent ad valorem, which is de minimis, for all 
companies for the period January 1, 1992 through December 31, 1992. If 
the final results remain the same as these preliminary results of 
administrative review, we will instruct the U.S. Customs Service to 
liquidate entries without regard to countervailing duties. We invite 
interested parties to comment on these preliminary results. Parties who 
submit an argument in this proceeding are requested to submit with the 
argument (1) a statement of the issue, and (2) a brief summary of the 
argument.

EFFECTIVE DATE: December 13, 1996.

FOR FURTHER INFORMATION CONTACT: Cynthia Thirumalai, Office 1, Group I, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, Washington, D.C. 20230; telephone: (202) 482-
4087.

SUPPLEMENTARY INFORMATION:

Background

    On April 9, 1981, the Department published in the Federal Register 
(55 FR 11417) the countervailing duty order on Ferrochrome from South 
Africa. On March 12, 1993, the Department published a notice of 
``Opportunity to Request Administrative Review'' (58 FR 13583) of this 
countervailing duty order. We received timely requests for review from 
Chromecorp Technology (Pty) Ltd. (Chromecorp), Consolidated 
Metallurgical Industries Ltd. (CMI), Ferralloys Limited (Ferralloys), 
and Samancor Ltd. (Samancor), all South African producers/exporters of 
ferrochrome.
    We initiated the review, covering the period January 1, 1992 
through December 31, 1992, on May 6, 1993 (58 FR 26960). This review 
covers three producers/exporters of the subject merchandise (CMI, 
Ferralloys, and Samancor), which account for all exports of the subject 
merchandise to the United States from South Africa, and the following 
eight programs:

(1) Export Incentive Program
(2) Regional Industrial Development Incentives
(3) Preferential Rail Rates
(4) Government Loan Guarantees
(5) Beneficiation Allowances--Electric Power Cost Aid Scheme
(6) General Export Incentive Scheme
(7) Industrial Development Corporation Loans
(8) Rail Transport Rebate on Outgoing Goods (subprogram of the Regional 
Industrial Development Incentives)

    One company, Chromecorp, reported having no exports to the United 
States during the review period, although Chromecorp received benefits 
pursuant to export subsidy programs for which there was no program-wide 
measurable change. In cases where a company does not ship to the United 
States but benefits from export subsidies for which there are not 
measurable program-wide changes, we do not include the company in the 
review (see, e.g., Certain Electrical Conductor Aluminum Redraw Rod 
From Venezuela; Final Results of Countervailing Duty Administrative 
Review, 57 FR 41918, September 14, 1992). Therefore, we have not 
included Chromecorp in this 1992 review.

Applicable Statute

    The Department is conducting this administrative review in 
accordance with section 751(a) of the Tariff Act of 1930, as amended 
(the Act). Unless otherwise indicated, all citations to the statute and 
to the Department's regulations are references 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, (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

[[Page 65547]]

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.)

Scope of Review

    The imported product covered by this review is ferrochrome from 
South Africa which is currently classifiable under items 7202.41.00, 
7202.49.10 and 7202.49.50 of the Harmonized Tariff Schedule of the 
United States (HTSUS). The HTSUS item numbers are provided for 
convenience and Customs purposes, but our written description of the 
scope of this proceeding remains dispositive.

Analysis of Programs

I. Export Incentive Program

    The Export Incentive Program (EIP) provides assistance to exporters 
through a number of different subprograms. Because the availability of 
this program is limited to exporters, the Department previously 
determined that the benefits available under this program constitute 
bounties or grants within the meaning of the Act. See, Ferrochrome From 
South Africa; Preliminary Results of Countervailing Duty Administrative 
Review (58 FR 59988, November 12, 1993) (1991 Ferrochrome Preliminary 
Results); Ferrochrome from South Africa; Final Results of 
Countervailing Duty Administrative Review (60 FR 7043, February 6, 
1995) (1991 Ferrochrome Final Results). In this review, neither the 
Government of South Africa nor the respondents provided new information 
which would warrant reconsideration of this determination.
Category A of the EIP
    Category A of the EIP allowed exporters to claim a rebate of 50 
percent of the import duties applicable to inputs used in the 
production of goods for export. Exporters could claim this rebate 
regardless of whether the inputs were actually imported or obtained 
domestically. Additionally, Category A benefits were independent of 
normal duty drawback which operated under section 4703 of the Customs 
and Excise program.
    Although the Category A program was terminated on March 30, 1990, 
two companies received residual benefits under Category A during the 
review period. These benefits resulted from the Department of Trade and 
Industry's practice of using promissory notes to pay claims. The 
companies had received promissory notes pursuant to claims filed in an 
earlier period, but the notes either matured or were discounted by the 
company during the review period. Therefore, consistent with the 
Department's practice of recognizing the occurrence of the benefit at 
the time that the benefit has a cash-flow effect on the recipient (see 
section 355.48(a) of the Proposed Regulations), we determine that 
promissory notes which either matured or were discounted during the 
review period constitute a bounty or grant within the meaning of the 
Act.
    Two companies reported receiving benefits under Category A of the 
EIP; both claimed that the benefits were tied to exports to countries 
other than the United States. In each case, the company calculated its 
full, potential Category A claim applicable to all exports, and then 
multiplied this amount by the percentage of exports to countries other 
than the United States.
    The Electrical Power Cost Aid Scheme (EPCAS), a program providing 
rebates of electricity costs looked at in previous reviews, is similar 
to the Category A program in that benefits are not directly linked to 
sales to particular markets but, instead, are allocated. However, 
claims for rebates under the EPCAS program are required by the GOSA to 
be externally audited. There is no comparable auditing procedure for 
Category A. Since Category A benefits must be allocated in some 
fashion, we find that, in the absence of government oversight, we 
cannot be assured that the benefits claimed are tied, in fact, to 
markets other than the United States. Therefore, we find that benefits 
received pursuant to Category A benefit all export sales.
    To calculate the benefit, we divided the total amount of the value 
at maturity, or the discounted price of the promissory notes, by the 
recipient companies' total exports of all products to all markets 
during the review period. We then weight-averaged the resulting rate by 
each company's share of exports of subject merchandise to the United 
States during the review period. On this basis, we preliminarily 
determine the benefits from Category A promissory notes to be 0.27 
percent ad valorem for all companies.
Category D of the EIP
    Category D of the EIP provided exporters an additional tax 
deduction for marketing expenses related to export sales. Based on 
export performance, an exporter could deduct from taxable income an 
additional 75 or 100 percent of export marketing expenses, in addition 
to the deductions normally allowed.
    Section 355.44 (i)(1) of the Proposed Regulations states that the 
countervailable benefit conferred by a tax program is the amount of 
additional taxes a company would have paid absent the use of the 
program. All of the responding companies either did not file a tax 
return during the review period or experienced operating losses and 
were not, therefore, in a taxable position before taking into account 
the Category D deductions. Since the tax liability of each company 
during the review period was unchanged by the Category D deductions, we 
preliminary find that no company received benefits pursuant to Category 
D of the EIP (see Certain Iron-Metal Castings From India: Final Results 
of Countervailing Duty Administrative Review, (60 FR 44843, 44847 
August 29, 1995) and Extruded Rubber Thread From Malaysia; Preliminary 
Results of Countervailing Duty Administrative Review, 61 FR 29534, 
29536, June 11, 1996).

II. Regional Industrial Development Incentives

    The Government of South Africa offered several incentives to 
companies located in geographically remote areas designated as 
Industrial Development Points. These incentives were: the Labor 
Incentive, the Interest Concession and the Subsidy on Housing for Key 
Personnel.
    We determined in our previous review of this order that, as 
regional subsidies, these incentives constitute bounties or grants 
within the meaning of the Act. (See 1991 Ferrochrome Preliminary 
Results; 1991 Ferrochrome Final Results.) In this review, neither the 
Government of South Africa nor the respondents have provided new 
information which would warrant reconsideration of this determination.
Labor Incentive and Interest Concession
    No ferrochrome exporter under review claimed to have received 
benefits pursuant to the Labor Incentive or the Interest Concession 
during the review period. (See Programs Not Used section below.)
Subsidy on Housing for Key Personnel
    The Regional Industrial Development Authorities subsidize housing 
for key personnel at regional development points for a maximum of 20 
years on new mortgage loans and the outstanding principal of existing 
loans. Companies pay an interest rate that is a fixed amount (e.g., 
4.25% per annum) less than the Official Building Society rate, subject 
to a floor of 6.00% per annum. The Regional Industrial Development 
Authorities pay the difference between the interest paid by the 
companies and

[[Page 65548]]

the Official Building Society rate monthly.
    As stated above, one company reported having loans under this 
program. Because the loans received under this program were long-term 
variable rate loans, we calculated the interest differential in 
accordance with section 355.49(d)(1) of the Department's Proposed 
Regulations. Consistent with our methodology in Ferrochrome From South 
Africa; Preliminary Results of Countervailing Duty Administrative 
Review (61 FR 19259, May 1, 1996) (1994 Ferrochrome Preliminary 
Results), and in accordance with section 355.44(b)(5) of the Proposed 
Regulations, we used as our benchmark rate the Official Building 
Society Rate, as reported in the questionnaire response. To calculate 
the benefit, we compared the amount of interest which was actually paid 
during the review period to the interest which would have been paid at 
the benchmark rate. To the extent that the interest actually paid was 
less than that calculated using the benchmark rate, we took this amount 
and divided it by the company's total sales of all merchandise during 
the review period. We then weight-averaged the resulting rate by the 
company's share of exports of subject merchandise to the United States 
during the review period. Based on the above, we preliminarily 
determine the ad valorem subsidy rate for benefits received pursuant to 
this program to be 0.003 percent ad valorem for all companies.

III. Programs Not Used

    We also examined the following seven programs and preliminarily 
determine that producers/exporters of ferrochrome to the United States 
did not use them during the review period:

(1) Industrial Development Corporation Loans
(2) Export Incentive Program
    (a) Category B
    (b) Category C
(3) Regional Industrial Development Incentives
    (a) Labor Incentive
    (b) Interest Concession
(4) Preferential Rail Rates
(5) Government Loan Guarantees
(6) Beneficiation Allowances--Electric Power Cost Aid Scheme
(7) General Export Incentive Scheme
(8) Rail Transport Rebate on Outgoing Goods (subprogram of the Regional 
Industrial Development Incentives)

Preliminary Results of Review

    As a result of our review, we preliminarily determine the net 
subsidy to be 0.27 percent ad valorem, which is de minimis, for all 
companies for the period January 1, 1992 through December 31, 1992. If 
the final results of this review remain the same as these preliminary 
results, we intend to instruct the U.S. Customs Service to liquidate, 
without regard to countervailing duties, all shipments of subject 
merchandise exported on or after January 1, 1992 and entered on or 
before December 31, 1992. Because the countervailing duty order was 
revoked effective January 1, 1995 (see Revocation of Countervailing 
Duty Orders (60 FR 40568, August 9, 1995)) pursuant to section 753 of 
the Act, as amended by the Uruguay Round Agreements Act, no other 
instructions will be sent to the U.S. Customs Service.
    Parties to this proceeding may request disclosure of the 
calculation methodology and interested parties may request a hearing 
not later than 10 days after the date of publication of this notice. 
Interested parties may submit written arguments in case briefs on these 
preliminary results within 30 days of the date of publication of this 
notice. Rebuttal briefs, limited to arguments raised in case briefs, 
may be submitted seven days after the time limit for filing the case 
briefs. Any hearing, if requested, will be held seven days after the 
scheduled date for submission of rebuttal briefs. Copies of case briefs 
and rebuttal briefs must be served on interested parties in accordance 
with 19 CFR 355.38(e).
    Representatives of parties to the proceeding may request disclosure 
of proprietary information under administrative protective order no 
later than 10 days after the representative's client or employer 
becomes a party to the proceeding, but in no event later than the date 
the case briefs are due under 19 CFR 355.38(c).
    The Department will publish the final results of this 
administrative review including the results of its analysis of issues 
raised in any case or rebuttal brief or at a hearing.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)).

    Dated: November 25, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-31727 Filed 12-12-96; 8:45 am]
BILLING CODE 3510-DS-P