[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]
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