[Federal Register Volume 62, Number 67 (Tuesday, April 8, 1997)]
[Notices]
[Pages 16782-16788]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8955]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-489-502]


Certain Welded Carbon Steel Pipes and Tubes and Welded Carbon 
Steel Line Pipe From Turkey; Preliminary Results of Countervailing Duty 
Administrative Reviews

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

ACTION: Notice of preliminary results of countervailing duty 
administrative reviews.

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SUMMARY: The Department of Commerce (``the Department'') is conducting 
administrative reviews of the countervailing duty orders on certain 
welded carbon steel pipes and tubes and welded carbon steel line pipe 
from Turkey. For information on the net subsidy for each reviewed 
company for each class or kind of merchandise, as well as for all non-
reviewed companies, see the Preliminary Results of Reviews section of 
this notice. If the final results remain the same as these preliminary 
results of administrative reviews, we will instruct the U.S. Customs 
Service to access countervailing duties as detailed in the Preliminary 
Results of Reviews section of this notice. Interested parties are 
invited to comment on these preliminary results. (See Public Comment 
section of this notice.)

EFFECTIVE DATE: April 8, 1997.

FOR FURTHER INFORMATION CONTACT:
 Stephanie Moore or Cameron Cardozo, Office of Countervailing Duty/
Antidumping Enforcement VI, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
2849 or (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

    On March 7, 1986, the Department published in the Federal Register 
(51 FR 7984) the countervailing duty orders on certain welded carbon 
steel pipes and tubes (pipe and tube) and certain welded carbon steel 
line pipe (line pipe) from Turkey. On March 4, 1996, the Department 
published a notice of ``Opportunity to Request Administrative Review'' 
(61 FR 8238) of these countervailing duty orders. We received timely 
requests for reviews, and we initiated the reviews, covering the period 
January 1, 1995 through December 31, 1995, on April 25, 1996 (61 FR 
18378).

[[Page 16783]]

    In accordance with 19 CFR 355.22(a), the review on pipe and tube 
covers Erciyas Boru Sanayii ve Ticaret A.S. (Erbosan), a pipe and tube 
producer and exporter, who specifically requested the review. The 
review on line pipe covers Mannesmann-Sumerbank Boru Endustrisi T.A.S. 
(Mannesmann), a line pipe producer and exporter, who specifically 
requested the review. These reviews also cover 28 programs.
    On November 6, 1996, we extended the period for completion of the 
preliminary results pursuant to section 751(a)(3) of the Tariff Act of 
1930, as amended. We extended the preliminary results to no later than 
March 31, 1997 (see 61 FR 57398). The final results will be issued no 
later than 120 days from the date on which the preliminary results are 
published.

Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions of the Tariff Act of 1930, as amended by 
the Uruguay Round Agreements Act (``URAA'') effective January 1, 1995 
(the Act). The Department is conducting this administrative review in 
accordance with section 751(a) of the Act.

Scope of Reviews

    Imports covered by these reviews are shipments from Turkey of two 
classes or kinds of merchandise: (1) Certain welded carbon steel pipe 
and tube, having an outside diameter of 0.375 inch or more, but not 
over 16 inches, of any wall thickness. These products, commonly 
referred to in the industry as standard pipe and tube or structural 
tubing, are produced to various American Society for Testing and 
Materials (ASTM) specifications, most notably A-53, A-120, A-135, A-
500, or A-501; and (2) certain welded carbon steel line pipe with an 
outside diameter of 0.375 inch or more, but not over 16 inches, and 
with a wall thickness of not less than .065 inch. These products are 
produced to various American Petroleum Institute (API) specifications 
for line pipe, most notably API-L or API-LX. These products are 
classifiable under the harmonized Tariff Schedule of the United States 
(HTSUS) item numbers 7306.30.10 and 7306.30.50. The HTSUS item numbers 
are provided for convenience and Customs purposes. The written 
description remains dispositive.

Verification

    As provided in section 782(i) of the Act, we verified information 
submitted by the Government of Turkey (GOT), Erbosan, and Mannesmann, 
We followed standard verification procedures, including meeting with 
government and company officials and examination of relevant accounting 
and financial records and other original source documents. Our 
verification results dated March 17 and March 25, 1997, are outlined in 
the public versions of the verification reports, which are on file in 
the Central Records Unit (CRU) (Room B-099 of the Main Commerce 
Building).

Analysis of Programs

I. Programs Conferring Subsidies

A. Programs Previously Determined To Confer Subsidies
    1. Pre-Shipment Export Credit. The Export Credit Bank of Turkey 
(Turk Eximbank) provides short-term pre-shipment export loans to 
exporters through intermediary commercial banks. The program is 
designed to support export-related industries from the initial stage of 
production. Loans are made to exporters who commit to export within a 
specified period of time. Generally, loans are extended for 120 days 
for industrial goods and cover 50 to 75 percent of the FOB export 
value. During the period of review (POR), both companies under review 
were eligible for pre-shipment export loans amounting to 50 percent of 
the FOB value of exports, for a maximum of 120 days. These loans are 
denominated in Turkish Lira (TL) and repaid in TL. The interest rate 
charged on these pre-shipment loans is established by Turk Eximbank and 
is tied to the Central Bank's rediscount rate.
    In the Final Affirmative Countervailing Duty Determination: Certain 
Pasta from Turkey 61 FR 30366 (June 14, 1996) (Pasta), the Department 
found this program specific and, therefore, countervailable because 
receipt of the loans is contingent upon export performance and the 
interest rate paid on these loans is less than the amount the recipient 
would pay on a comparable commercial loan. In Pasta, we found that 
these loans were tied to specific destinations; however, in these 
reviews, we find these loans to be untied. Although an exporter files a 
loan application in which the export destination is listed, we verified 
that the actual destination of the shipments may be different from the 
one(s) stated in the loan application. The exporter has to only show 
that an export has taken place, and provide the foreign currency 
exchange receipts from the commercial bank to close out the loan with 
Turk Eximbank. Because the loans are not specifically tied to a 
particular destination at the time of approval, we preliminarily 
determine that the pre-shipment loan program is an untied export loan 
program. For further discussion, see the GOT and the company 
Verification Reports (Public Versions) dated March 17 and March 25, 
1997, which are on file in the CRU.
    Section 771(5)(E)(ii) of the Act states that, in the case of a 
loan, if there is a difference between the amount the recipient of the 
loan pays on the loan and the amount the recipient would pay on a 
comparable commercial loan that the recipient could actually obtain on 
the market, then a countervailable benefit is bestowed. In this case, 
as the benchmark interest rates, we are using company-specific interest 
rates on comparable commercial loans to calculate the benefit for any 
pre-shipment loans that were taken out by Erbosan or Mannesmann in 1994 
and repaid in 1995, and any pre-shipment loans that were taken out in 
1995 and repaid in 1995. (See company Verification Reports). Because 
the Department considers Turkey to be hyper-inflationary based on a 
Consumer Price Index rate of approximately 67 percent during the POR. 
(see Pasta at page 30367; see, also, Preliminary Results of Antidumping 
Duty Administrative Review: Gray Portland Cement and Clinker from 
Mexico, 61 FR 51676, 51681 (October 3, 1996)), we also preliminarily 
determine that it is appropriate to use monthly average short-term 
interest rates. Where monthly company-specific interest rates for 
Erbosan or Mannesmann are unavailable, we have used the monthly average 
interest rates charged by a commercial bank in Turkey on domestic TL 
loans. See commercial bank Verification Report (Public Version) on file 
in CRU. Using these benchmarks, we continue to find these pre-shipment 
export loans countervailable because the interest rate charged is less 
than the rate for comparable commercial loans that the company could 
actually obtain in the market.
    Government Resolution Number: 94/5782, Article 4, effective June 
13, 1994, allows for the exemption of certain fees that are normally 
charged on loans provided that the loans are used in financing 
exportation and other foreign exchange earning activities. For pre-
shipment loans, which are denominated in TL, the fees that are exempted 
are the Bank and Insurance and Services Tax (BIST) of 5 percent of the 
interest rate, and the Resource Utilization Support Fund (RUSF) fee of 
6 percent of the interest rate. The Department's current practice is 
normally to compare effective interest rates rather than nominal rates. 
The ``effective'' interest

[[Page 16784]]

rates are intended to take account of the actual cost of the loan, 
including the amount of any fees, commissions, compensating balances, 
government charges or penalties paid in addition to the ``nominal'' 
interest rate. Therefore, we have added the exempted customary banking 
fees to the commercial bank's benchmark interest rates. See e.g., 
Certain Iron-Metal Castings from India: Final Results of Countervailing 
Duty Administrative Review, 60 FR 44843 (August 29, 1995) (Castings).
    To determine the benefit, we calculated the countervailable subsidy 
as the difference between actual interest paid on pre-shipment loans 
during the POR and the interest that would have been paid using the 
benchmark interest rates plus the customary banking fees. This 
difference was divided by the company's total export sales during the 
POR. On this basis, we preliminarily determine the countervailable 
subsidy to be 1.77 percent ad valorem for Erbosan, the pipe and tube 
producer, and 0.73 percent ad valorem for Mannesmann, the line pipe 
producer.
B. Other Programs Preliminarily Determined To Confer Subsidies
    1. Investment Allowance. The General Incentives Program (GIP) is 
designed to increase investment in Turkey and to expand the Turkish 
economy. Under the GIP, companies may apply to the Undersecretariat of 
Treasury (UT) for investment incentive certificates. The investment 
incentive certificates entitle the holders to a number of specified 
benefits, such as investment allowances, related to an investment 
project. The investment allowance provides companies with a corporate 
tax exemption of between 30 percent and 100 percent of their total 
fixed investment depending upon the geographical location, sector and 
the value of the investment. During the POR, for purposes of GIP, 
Turkey was divided into four types of geographic regions: (1) 
Developed; (2) normal; (3) priority two; and (4) priority one. 
Companies located in first or second priority regions for development 
within Turkey, which are lesser-developed regions, are entitled to 
higher rates of deduction than companies located in the developed or 
normal regions.
    Both companies were approved in 1994 for GIP investment 
certificates. They claimed an investment allowance on their corporate 
income tax returns filed during the POR. Erbosan, because it is located 
in a normal region, is eligible for an investment allowance of 40 
percent, while Mannesmann, because it is located in a development 
region, is only eligible for the minimum investment allowance of 30 
percent, which is the minimum investment allowance provided to all 
companies under GIP regardless of location or type of industry. See 
e.g., Certain Welded Carbon Steel Pipe and Tube Products from Turkey; 
Preliminary Results of Countervailing Duty Administrative Review, 52 FR 
47621, 47622 (December 15, 1987) and Certain Welded Carbon Steel Pipe 
and Tube Products from Turkey; Final Results of Countervailing Duty 
Administrative Review, 53 FR 9791 (March 25, 1988), Because the 30 
percent investment tax is not limited to a specific enterprise or 
industry or group thereof, nor limited to companies located in specific 
regions, pursuant to section 771(5A)(D) we preliminarily determine that 
the 30 percent minimum investment allowance under GIP is not 
countervailable.
    However, because the investment allowance of 40 percent received by 
Erbosan (designated for companies located in a normal region) is 10 
percent higher than the minimum 30 percent allowance provided to all 
sectors and geographic regions within Turkey, the difference results in 
a higher tax savings to the company due to its geographic location. 
Therefore, we preliminarily determine that the provision of a higher 
investment allowance of 40 percent to certain regions is specific and, 
therefore, countervailable within the meaning of section 771(5A)D)(iv) 
of the Act. See also Industrial Phosphoric Acid from Israel; 
Preliminary Results of Countervailing Duty Administrative Reviews, 61 
FR 8255, 8257 (March 4, 1996) and Industrial Phosphoric Acid from 
Israel; Final Results of Countervailing Duty Administrative Reviews, 61 
FR 28841 (June 6, 1996).
    We preliminarily determine that the benefits under the investment 
allowance program are ``recurring'' because once a company has a fixed 
asset investment project approved, it becomes eligible to deduct an 
investment allowance from its corporate income tax returns; therefore, 
the receipt of the benefit is automatic and continues year to year. To 
calculate the benefit for Erbosan, we first multiplied its total fixed 
investment by 10 percent, the amount Erbosan receives about the 30 
percent allowance available throughout the country. We then computed 
the company's tax rate. The company paid four separate corporate taxes. 
These included a 25 percent corporate tax, an interim tax in the amount 
of 10 percent of the corporate tax, a ``stopaj'' tax equal to 10 
percent of 75 percent of its net taxable income and a fund tax equal to 
10 percent of the ``stopaj'' tax. The sum of these taxes equals a total 
corporate tax rate of 35.75 percent. We the multiplied the 
countervailable portion of the investment allowance deduction by the 
tax rate of 35.75 percent, and obtained the tax savings for the 
company. Next, we divided the tax savings by the company's total sales. 
On this basis, we preliminarily determine the countervailable subsidy 
to be 0.02 percent ad valorem for Erbosan, for pipe and tube.
    2. Export Incentive Certificate Customs Duty and Other Tax 
Exemptions. Under Turkey's duty drawback program, companies are 
permitted to import spare parts free of customs duties and other taxes 
levied on imports used in the manufacture of goods to be exported. To 
obtain these benefits, companies must file a project application with 
the Undersecretariat for Foreign Trade (UFT) that describes the spare 
parts to be imported and the FOB value of the exports that they will be 
used to produce. The CIF value of the imported spare parts cannot 
exceed two percent of the FOB export commitment. On July 17, 1995, the 
program was changed to permit spare parts to be imported provided that 
the CIF value of the spare parts did not exceed 5 percent of the FOB 
export commitment. The UFT subsequently issues duty drawback 
certificates to the companies that describe the spare parts and 
instructed Customs that these items are to be free of duties. However, 
the companies must pay value added tax on the imports.
    We preliminarily determine that this program is a subsidy and is 
specific within the meaning of section 771(5A)(B) of the Act, because 
eligibility for the program is contingent upon export performance and 
the spare parts imported under this program were utilized in machinery 
that produces, among other things, the subject merchandise. See e.g., 
Ball Bearings and Parts Thereof from Thailand: Final Results of 
Countervailing Duty Administrative Review, 62 FR 728, 731 (January 6, 
1997).
    To calculate the benefit, we divided the total amount of duties and 
taxes exempted on spare parts imported during the POR for each company 
under review, by the total value of exports during the POR. On this 
basis, we preliminarily determine the benefit from this program to be 
0.06 percent ad valorem for Erbosan for pipe and tube, and 0.02 percent 
ad valorem for Mannesmann for line pipe.
    3. Foreign Exchange Loan Assistance. The GOT Resolution Number: 94/
5782, Article 4, effective June 13, 1994 concerning the encouragement 
of exportation, allows commercial banks to exempt certain fees provided 
that the

[[Page 16785]]

loans are used in the financing of exportation and other foreign 
exchange earning activities. We preliminarily determine that this 
program is specific and, therefore, countervailable within the meaning 
of section 771(5A)(B) because the exemption of the fees is contingent 
upon export performance.
    Both companies received and paid interest on foreign currency loans 
from commercial banks and were exempted from paying the customary BIST 
of 5 percent of the interest rate and the RUSF fee of 6 percent of the 
principal. Unlike pre-shipment loans that are denominated in TL where 
the RUSF fee is 6 percent of the interest rate, the RUSF fee for 
foreign currency loans is calculated as 6 percent of the principal. At 
verification, we found that Mannesmann's foreign currency loans were 
tied to destinations other than to the United States. We found that 
Erbosan's foreign currency loans were provided for both U.S. and non-
U.S. shipments, and were not tied to a particular destination. For 
further discussion, see the companies' Verification Reports.
    We preliminarily determine that these fee exemptions are a direct 
transfer of funds from the GOT providing a benefit in the amount of the 
exemption. (See discussion of the ``Pre-shipment Loans'' program 
above). See also, Castings at 44843. We also preliminarily determine 
that the benefits are recurring because once the company obtains a 
foreign currency loan it is automatically exempted from paying the 
fees. To calculate the benefit for this program, we computed the 
exempted fees on the interest or principal of Erbosan's foreign 
currency loans. These loans are dollar denominated. Therefore, we 
converted these exempted fee amounts to TL using the exchange rate in 
effect during the month in which the loans were repaid or interest 
paid, and divided the result by the company's total exports. On this 
basis, we preliminarily determine the net subsidy to be 1.14 percent ad 
valorem for Erbosan for pipe and tube.
    4. Freight Program. The GOT Decree number 93/43, effective October 
13, 1993, provided freight rebate payments to exporters in the amount 
of $50 per ton for merchandise exported on Turkish vessels, and $30 per 
ton for merchandise exported on non-Turkish vessels, capped at 10 
percent of the FOB value of the goods. In February 1994, Decree number 
94/4 raised the cap to 15 percent of the FOB value of the goods. 
Benefits under this program were provided in the form of 30 percent 
cash and 70 percent treasury bonds with a two-year maturity. Companies 
were eligible to receive interest on bonds on the one-year anniversary 
date of the issuance of the bonds and on the date of the maturity of 
the bonds. The program was terminated on December 31, 1994, and there 
will be no payments on shipments made after January 1, 1995.
    We preliminarily determine that these export grants and bonds are 
countervailable export subsidies within the meaning of section 
771(5A)(B) of the Act. The grants and bonds are a direct transfer of 
funds from the GOT providing a benefit in the amount of the cash grants 
and bonds. We further preliminarily determine that the benefits under 
the Freight Program are ``recurring.'' Once a company has exported and 
submitted documentation to the Central Bank it becomes eligible for the 
cash grants or bonds. The receipt of benefits is automatic and 
continued throughout the life of the program. (Pasta at page 30369). 
See also Allocation Section of the General Issues Appendix in Final 
Affirmative Countervailing Duty Determination: Certain Steel Products 
from Austria (58 FR 37217, 37268-69, July 9, 1993) (``General Issues 
Appendix'').
    During the POR, Erbosan received cash and bonds under the freight 
rebate program based on exports made in 1994. The bonds were received 
by Erbosan on May 1, 1995 and mature on May 1, 1997; interest was 
payable on May 1, 1996 and on the date of maturity. During the POR, 
Mannesmann received cash and bonds for exports made in 1994, but we 
verified that the company did not receive any payments under the 
freight program during the POR for exports to the United States.
    The Department's practice has been to deem the benefit to be 
received at the time of export countervailable if the benefit is 
calculated as a percentage of the FOB value and the amount of the 
benefit is known at the time of export. See e.g., Castings at 44843. 
Although the benefit under the freight program is calculated based on 
tonnage and not the percent of exports, we note that a benefit 
determined by the amount of the tonnage may also be known at the time 
of export.
    However, the facts in this case establish that the exporter did not 
know the amount of benefit at the time of export. Although the freight 
payments were stated in U.S. dollars per ton, the exporter received the 
benefit in TL. The exporter did not know at the time of export what 
exchange rate would be used to convert the dollar equivalent payments 
into TL. Given the high inflation rate in Turkey (based on a CPI rate 
of approximately 65 percent in 1993, and 114 percent in 1994), there 
was no way for the exporter to predict at the time of export what the 
dollar equivalent in TL would be. In February 1995, the GOT announced 
that it would convert the dollar amount of the freight payments using 
the exchange rate that was in effect on December 31, 1994. Thus, the 
exporter did not know the amount of the benefit at the time of export. 
See the GOT Verification Report (page 12). This position is consistent 
with the Department's analysis of a similar program in Pasta where we 
determined that the benefit should be treated as having been bestowed 
when the cash was received rather than earned. (See discussion of 
Payments for Exports on Turkish Ships program in Pasta at 30369). As 
such, we preliminarily determine that the benefits under this program 
are bestowed when the cash is received with respect to the cash 
payments, and not when the benefit is earned.
    With regard to the bonds portion of the rebate, we preliminarily 
determine that the benefits from the bonds are bestowed on the date of 
maturity. This is due to the fact that, even though there were not 
restrictions on the sale or transfer of the bonds, because of the rate 
of inflation, there was no secondary market to allow exporters to 
convert their bonds to cash (see GOT, company, and commercial bank 
Verification Reports). Therefore, the exporters have no choice but to 
hold the bonds until maturity. (Pasta at page 30368).
    The benefits under the freight program are made on a shipment-by-
shipment basis. Because the benefits are shipment-specific, and we are 
able to segregate the shipments according to the country of 
destination, we preliminarily determine that they are tied to a 
particular destination. Therefore, where a benefit is tied or can be 
tied to exports to the United States, we calculate the ad valorem 
subsidy rate by dividing the benefit by the firm's total exports to the 
United States. See, e.g., Notice of Final Results of Countervailing 
Duty Administrative Review: Roses and Other Cut Flowers from Columbia, 
52 FR 48847, 48848 (December 28, 1987). We have preliminarily 
calculated Erbosan's benefit from this program by dividing the total 
amount of grants received for exports to the United States during the 
POR by Erbosan's total exports to the United States during the POR. On 
this basis, we preliminarily determine the net subsidy to be 1.02 
percent ad valorem for Erbosan for pipe and tube.
    5. Resource Utilization Support Premium. a. Program Description. 
Under the Resource Utilization Support Premium program (RUSP), a 
company can request benefits for a proposed

[[Page 16786]]

investment project, as well as other General Incentives Program (GIP) 
benefits, at the time it submits an application to the General 
Directorate of Incentive and Applications (GDIA) for an investment 
incentive certificate (see discussion of the ``Investment Allowance'' 
program above). If the GDIA approves the investment project described 
in the application, it will issue to the company an investment 
incentive certificate which lists the GIP benefits bestowed. During the 
POR, Erbosan received RUSP payments for an investment project related 
to the production of standard pipe and tube.
    RUSP payments were given to companies to encourage them to use 
their own equity, rather than loans or credit, to finance their GIP 
investment project. The amount of the benefit is applied to that 
portion of the fixed investment which is financed by the investor's own 
resources. Erbosan is located in a region designated as a normal region 
by the GDIA. All companies located in normal regions are eligible for 
RUSP payments of 15 percent of their investment. Companies located in 
developed regions are not eligible for RUSP payments. Mannesmann is 
located in a developed region and is not eligible for RUSP payments, 
and we also verified that Mannesmann never received RUSP payments.
    The RUSP was terminated in 1991, and GIP investment incentive 
certificates issued after 1991 were no longer eligible to receive RUSP 
payments. Erbosan's investment incentive certificate was issued in 1990 
and expired on December 31, 1994. Erbosan received its RUSP benefits in 
1994 in the form of treasury bonds with a maturity date in 1995. During 
the POR, Erbosan received the full amount of the face value of the 
bonds, plus interest.
    Because RUSP assistance is provided by the GOT only to industries 
located within specifically designated geographical regions of Turkey--
i.e., in this case, the normal region--we preliminarily determine that 
this program provides a countervailable regional subsidy within the 
meaning of section 771(5A)(D)(iv).
    b. Claim for ``Green Light'' Subsidy Treatment of RUSP. Section 
771(5B) of the Act describes subsidies that are non-countervailable 
(``green light'' subsidies). Among these green light subsidies are 
subsidies to disadvantaged regions. The GOT requested that the RUSP 
program be considered non-countervailable under section 771(5B)(C) of 
the Act because the benefit is provided only to disadvantaged regions.
    The RUSP program is one of many programs that distribute benefits 
on a regional basis under the umbrella of the General Incentives 
Program (GIP). Under GIP, provinces were categorized by the GOT into 
one of the following four types of development regions: developed; 
normal; priority two; and priority one according to their level of 
development. By offering an increasing level of benefits to lesser 
developed regions, regional assistance programs under GIP were designed 
not only to further development, particularly in the two priority 
regions, but also to reduce the disparities among the four regions. As 
stated in the Fifth Five Year Development Plan (1984-1989), the GOT's 
goal was to ``develop the Priority Development areas * * * and reduce 
and, in time, eradicate, the difference of development existing between 
these and other regions.'' (See Attachment 1 of January 21, 1997 GOT 
response.) The various economic incentive programs would complement 
other development activities such as housing and infrastructure 
projects.
    According to the questionnaire responses, Turkish provinces are 
classified into these development regions based on the results of the 
Principal Component Analysis, an econometric model that generates a 
development coefficient based on the selected socioeconomic development 
variables. The State Planning Organization (SPO) conducts a Principal 
Component Analysis for every province and creates an index that ranks 
the provinces from most to least developed according to the development 
coefficients generated by the Principal Component Analysis.
    Section 771(5B)(C) of the Act specifies the conditions that must be 
met for a program to qualify for green light status: it is part of a 
general regional development policy and each region is a clearly 
designated contiguous geographical area with a definable economic and 
administrative identity; the assistance is generally available; the 
assistance is not for regions suffering only temporary disadvantage; 
the eligibility criteria are clearly stated in law or an official 
document and capable of verification; and the eligibility criteria are 
neutral and objective, and include a measurement of economic 
development. The SAA states that the green light provision governing 
assistance for disadvantaged regions must be strictly construed and 
that the Department must determine that all of these statutory criteria 
have been satisfied. (See Statement of Administrative Action 
accompanying the URAA, reprinted in H.R. Doc. No. 316, 103d Cong., 2d 
Sess. 919 (1994)) (SAA).
    In order to examine the criteria regarding economic development, 
section 771(5B)(C)(ii) of the Act instructs the Department to examine 
the respondent's measurement of economic development over a three-year 
period. Although it received benefits under this program during the 
POR, Erbosan was approved for receipt of these benefits in 1991. The 
Department's standard practice when analyzing the countervailability of 
programs is to examine data from the time period when the subsidy was 
approved. In this case, the RUSP was in effect from 1989-1991, and this 
time period serves as our three-year period for analysis.
    In their January 29, 1997 questionnaire response, the GOT provided 
an excerpt from a 1991 SPO publication which listed the 53 economic and 
social variables used in the Principal Component Analysis to generate 
the socioeconomic development index that is the basis for the SPO's 
ranking of the provinces from most to least developed. The excerpt also 
included a list of 67 provinces ranked by the SPO from most to least 
developed. Respondents claimed that this list, originally published in 
a 1973 SPO publication, was still valid for the 1989-1991 period.
    At verification, we requested to see documentation, such as the 
index generated by the Principal Component Analysis, the Principal 
Component Analysis for that period, or SPO publications or reports that 
supported the ranked list of 67 provinces described above and the 
classification of provinces into the four development regions during 
the relevant 1989-1991 period. Although respondents had supporting 
documentation for a 1996 Principal Component Analysis used to reexamine 
the regional designations, no supporting documentation was available 
for the Principal Component Analysis used to designate provinces into 
development regions during the applicable 1989-1991 period. According 
to respondents, the supporting documentation for that period was no 
longer available. For further discussion, see the GOT Verification 
Report (pages 10-11).
    Using the limited information provided in the response and at 
verification, the team sought to examine whether the 1989-1991 
Principal Component Analysis rankings (based on the list from the 
January 29, 1997 submission) corresponded with the provinces' regional 
designations for 1989-1991. The provinces were rank

[[Page 16787]]

ordered from first, most developed, to 67th, least developed. 
Presumably, the actual designations of the provinces--developed, 
normal, first priority, and second priority--should have closely 
followed the Principal Component Analysis index of economic 
development. However, the designation of provinces into development 
regions did not track closely to the Principal Component Analysis 
rankings. For example, Bilecik and Ordu provinces, respectively ranked 
at 52 and 58 (out of a possible 67) were listed as normal regions, 
while Zonguldak, ranked at 13, was listed as Priority One in 1990 and 
1991. In addition, four provinces, Zonguldak, Erzincan, Artvin and 
Sanliurfa, were reclassified between 1989 and 1991 without any 
Principal Component Analysis being undertaken.
    GOT officials accounted for these discrepancies by explaining that 
the Principal Component Analysis is not the only basis for determining 
a province's regional designation. The Principal Component Analysis is 
only one step (albeit the primary one) toward determining the regional 
designations. The final determination is made by the Council of 
Ministers, taking into account factors that cannot be enumerated by the 
Principal Component Analysis, including the promotion of other 
development policies and goals (e.g., privatization,), the impacts 
upon, and relationships with, other regional and non-regional 
development policies and programs, and the Ministers experience in 
development issues and programs. (For a further discussion, see the GOT 
Verification Report (page 11).)
    In order for a subsidy to be considered non-countervailable because 
it is provided in a disadvantaged region, section 771(5B)(C)(i)(II) of 
the Act states that ``[e]ach region is considered a disadvantaged 
region on the basis of neutral and objective criteria indicating that 
the region is disadvantaged * * *.'' On this basis, the RUSP assistance 
is not entitled to green light treatment. The information on the record 
indicates that the designations of disadvantaged regions do not 
correspond with an analysis based on neutral and objective criteria, 
purportedly the Principal Component Analysis. Rather, the GOT can make 
the final decisions regarding the designation of economic development 
regions based on criteria that are neither neutral nor objective. Since 
the SAA states that all of the green light criteria, listed above, must 
be met, we do not intend to analyze the GOT's compliance with the 
remaining criteria. As a result, benefits provided under the RUSP 
program do not qualify as non-countervailable green light subsidies. 
See e.g., Preliminary Affirmative Countervailing Duty Determination; 
Certain Pasta from Italy, 60 FR 53739, 53742 (October 17, 1995) and 
Final Affirmative Countervailing Duty Determination: Certain Pasta from 
Italy, 61 FR 30288 (June 14, 1996).
    c. Subsidy Calculation. Although Erbosan received the RUSP bonds in 
1994, the cash flow was realized in 1995 when the principal and 
interest from the bonds were paid. We verified that there is no 
secondary market for the resale of treasury bonds in Turkey and, 
therefore, Erbosan could not realize a cash flow until 1995 (the POR) 
when the bonds reached maturity. See Erbosan Verification Report (page 
7). We also preliminarily determine that the RUSP benefits are non-
recurring because they are exceptional and the recipient cannot expect 
to receive benefits on an ongoing basis. However, because the amount 
received under this program is less than 0.50 percent of Erbosan's 
total sales, we are allocating the total benefit to the POR. See e.g., 
Industrial Phosphoric Acid from Israel; Preliminary Results of 
Countervailing Duty Administrative Review, 61 FR 28845, 28847 (June 6, 
1996) and Industrial Phosphoric Acid from Israel; Final Results of 
Countervailing Duty Administrative Review, 61 FR 53351 (October 11, 
1996). We calculated the benefit for the POR by dividing the RUSP 
payments by Erbosan's total sales of subject merchandise during the 
POR. On this basis, we preliminarily determine the benefit from this 
program to be 0.05 percent ad valorem for the POR.
    The GOT terminated the RUSP program in 1991 and GIP investment 
incentive certificates issued after 1991 were no longer eligible to 
receive RUSP payments. We verified that Erbosan has no investment 
incentive certificates that were issued before 1991 that are still 
valid. Therefore, we consider this program terminated with no residual 
benefits. The termination of RUSP constitutes a program-wide change; 
and because there are no residual benefits, the cash deposit rate for 
Erbosan will be adjusted to zero for this program. See e.g., Pasta, 61 
FR 30370.

II. Programs Preliminarily Determined To Be Not Used

    We examined the following programs and preliminarily determine that 
the producers and/or exporters of the subject merchandise did not apply 
for or receive benefits under these programs during the period of 
review:

1. Resource Utilization Support Fund
2. State Aid for Exports Program
3. Advance Refunds of Tax Savings
4. Export Credit Through the Foreign Trade Corporate Companies 
Rediscount Credit Facility (Eximbank)
5. Past Performance Related Foreign Currency Export Loans (Eximbank)
6. Export Credit Insurance (Eximbank)
7. Subsidized Turkish Lira Credit Facilities
8. Subsidized Credit for Proportion of Fixed Expenditures
9. Fund Based Credit
10. Regional Subsidies
    a. Additional Refunds of VAT (VAT+10%)
    b. Postponement of VAT on Imported Goods
    c. Incentive Premium on Domestically Obtained Goods (Rebate of 
VAT on Domestically-Sourced Machinery and Equipment)
    d. Land Allocation (GIP)
    e. Taxes, Fees (Duties), Charge Exemption (GIP)

III. Programs Preliminarily Determined To Be Terminated

    We preliminarily determine that the following programs have been 
terminated and there are no residual benefits:

1. Export Performance Credits

    The Export Performance Credit program, which was administered by 
the Central Bank of Turkey, provided credits to manufacturers and 
exporters based on a percentage of the FOB value of their exports. 
The certificates were issued for shipments made between March 7, 
1994 and December 31, 1994. It is the Department's practice in the 
case of an export benefit provided as a percentage of the value of 
the exported merchandise that the benefit is bestowed on the date of 
the export. See e.g., Castings at 44843. Under this program, the 
exporters received the TL equivalent of a fixed percentage of their 
U.S. dollar exports. Although at the time of receipt, the exporters 
received more TL than at the time of export, the value of the TL 
amount remained the same in U.S. dollar terms. Therefore, we 
preliminarily determine that the benefit occurred at the time of 
export in 1994.

2. Deduction from Taxable Income for Export Revenues
3. Preferential Export Financing Under Decree 84/8861
4. Interest Spread Return Program (GIP)
5. Export Credits Under Communique No. 1
6. Corporate Tax Deferral
7. Payment of Certain Obligations of Firms Undertaking Large 
Investments
8. Subsidized Credit in Foreign Currency

Preliminary Results of Review

    In accordance with 19 C.F.R. 355.22(c)(4)(ii), we calculated an 
individual subsidy rate for each producer/exporter subject to each 
administrative review. For the period January 1, 1995 through December 
31, 1995, we preliminarily determine the net subsidy to be as follows:

[[Page 16788]]



------------------------------------------------------------------------
                                                              Assessment
             Manufacturer/exporter of line pipe                  rate   
                                                               (percent)
------------------------------------------------------------------------
Mannesmann..................................................        0.75
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                              Assessment
         Manufacturer/exporter of line pipe and tube             rate   
                                                               (percent)
------------------------------------------------------------------------
Erbosan.....................................................        4.06
------------------------------------------------------------------------

    If the final results of these reviews remain the same as these 
preliminary results, the Department intends to instruct the U.S. 
Customs Service (``Customs'') to assess countervailing duties as 
indicated above.
    The Department also intends to instruct Customs to collect cash 
deposits of estimated countervailing duties as indicated below of the 
f.o.b. invoice price on all shipments of each class or kind of 
merchandise from reviewed companies, entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of the 
final results of these reviews.

------------------------------------------------------------------------
                                                                  Cash  
                                                                deposit 
              Manufacturer/exporter of line pipe                  rate  
                                                               (percent)
------------------------------------------------------------------------
Mannesmann...................................................       0.75
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                                  Cash  
                                                                deposit 
            Manufacturer/exporter of pipe and tube                rate  
                                                               (percent)
------------------------------------------------------------------------
Erbosan......................................................       4.01
------------------------------------------------------------------------

    Because the URAA replaced the general rule in favor of a country-
wide rate with a general rule in favor of individual rates for 
investigated and reviewed companies, the procedures for establishing 
countervailing duty rates, including those for non-reviewed companies, 
are now essentially the same as those in antidumping cases, except as 
provided for in section 777A(e)(2)(B) of the Act. The requested review 
will normally cover only those companies specifically named. See 19 CFR 
section 355.22(a). Pursuant to 19 CFR 355.22(g), for all companies for 
which a review was not requested, duties must be assessed at the cash 
deposit rate, and cash deposits must continue to be collected, at the 
rate previously ordered. As such, the countervailing duty cash deposit 
rate applicable to a company can no longer change, except pursuant to a 
request for a review of that company. See Federal-Mogul Corporation and 
The Torrington Company  v. United States, 822 F.Supp. 782 (CIT 1993) 
and Floral Trade Council v. United States, 822 F.Supp. 766 (CIT 1993) 
(interpreting 19 CFR 353.22(e), the antidumping regulation on automatic 
assessment, which is identical to 19 CFR section 355.22(g)). Therefore, 
the cash deposit rates for all companies except those covered by these 
reviews will be unchanged by the results of these reviews.
    We will instruct Customs to continue to collect cash deposits for 
non-reviewed companies under each order at the most recent company-
specific or country-wide rate applicable to the company under that 
order. Accordingly, the cash deposit rates that will be applied to non-
reviewed companies covered by these orders are those established in the 
most recently completed administrative proceeding. See Certain Welded 
Carbon Steel Pipe and Tube Products from Turkey; Final Results of 
Countervailing Duty Administrative Review, 53 FR 9791. These rates 
shall apply to all non-reviewed companies until a review of a company 
assigned these rates is requested. In addition, for the period January 
1, 1995 through December 31, 1995, the assessment rates applicable to 
all non-reviewed companies covered by these orders are the cash deposit 
rates in effect at the time of entry.

Public Comments

    Parties to the 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. Rebuttal 
briefs, limited to arguments raised in case briefs, may be submitted 
seven days after the time limit for filing the case brief. Parties who 
submit 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. 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.
    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, under 19 CFR 355.38, are due. The Department will 
publish the final results of these administrative reviews, including 
the results of its analysis of issues raised in any case or rebuttal 
brief or at a hearing.
    These administrative reviews and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)).

    Dated: March 31, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-8955 Filed 4-7-97; 8:45 am]
BILLING CODE 3510-DS-M