[Federal Register Volume 63, Number 73 (Thursday, April 16, 1998)]
[Notices]
[Pages 18885-18891]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10168]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration
[C-489-502]


Certain Welded Carbon Steel Pipe and Tube and Welded Carbon Steel 
Line Pipe From Turkey; Final Results and Partial Rescission of 
Countervailing Duty Administrative Reviews

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

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

-----------------------------------------------------------------------

SUMMARY: On December 9, 1997, the Department of Commerce published in 
the Federal Register its preliminary results of administrative reviews 
of the countervailing duty orders on certain welded carbon steel pipe 
and tube and welded carbon steel line pipe from Turkey for the period 
January 1, 1996 through December 31, 1996 (62 FR 64808). The Department 
has now completed these administrative reviews in accordance with 
section 751(a) of the Tariff Act of 1930, as amended. For information 
on the net subsidy for each reviewed company, and for all non-reviewed 
companies, please see the Final Results of Reviews section of this 
notice. We will instruct the U.S. Customs Service to assess 
countervailing duties as detailed in the Final Results of Reviews 
section of this notice.

EFFECTIVE DATE: April 16, 1998.

FOR FURTHER INFORMATION CONTACT: Stephanie Moore or Maria MacKay, 
Office of CVD/AD Enforcement VI, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 
482-3692 or (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

    Pursuant to 19 CFR 355.22(a), these reviews cover only those 
producers or exporters of the subject merchandise for which a review 
was specifically requested. Accordingly, the review of the order on 
certain welded carbon steel pipe and tube (pipe and tube) covers

[[Page 18886]]

Borusan Birlesik Boru Fabrikalari A.S. and Borusan Ihracat Ithalat ve 
Dagitim A.S. (Borusan Group). The review of the order on welded carbon 
steel line pipe (line pipe) covers Mannesmann-Sumerbank Boru Endustrisi 
T.A.S. (Mannesmann). These reviews cover the period January 1, 1996 
through December 31, 1996, and 21 programs.
    The Department also received a timely request from Wheatland Tube 
Company and the Maverick Tube Corporation (the petitioners) to conduct 
reviews of Erciyas Boru Sanayii ve Ticaret A.S. (Erbosan), Yucel Boru 
ve Profil Endustrisi A.S. (Yucel Boru), Bant Boru Sanayii ve Ticaret 
A.S. (Bant Boru), Erkboru Profil San ve Tic A.S. (Erkboru). These 
companies did not export pipe and tube or line pipe to the United 
States during the period of review. Therefore, in the preliminary 
results notice, we rescinded the reviews with respect to these 
companies.
    Since the publication of the preliminary results on December 9, 
1997 (62 FR 64808), the following events have occurred. We invited 
interested parties to comment on the preliminary results. On January 8, 
1997, a case brief was submitted by the Government of the Republic of 
Turkey (GRT), Mannesmann, which exported line pipe, and the Borusan 
Group, which exported pipe and tube to the United States during the 
review period (the respondents). On January 15, 1998, a rebuttal brief 
was submitted by the petitioners.

Applicable Statute and Regulations

    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 these administrative reviews in 
accordance with section 751(a) of the Act. Because these administrative 
reviews were initiated on April 24, 1997, 19 CFR Part 355 is 
applicable.

Scope of the 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 
more than 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 more than 16 inches, 
and with a wall thickness of not less than 0.065 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) as 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.

Analysis of Programs

    Based upon the responses to our questionnaire and written comments 
from the interested parties, we determine the following:

I. Programs Conferring Subsidies

A. Programs Previously Determined to Confer Subsidies
    1. Pre-shipment Export Credit. In the preliminary results, we found 
that this program conferred countervailable subsidies on the subject 
merchandise. We did not receive any comments on this program from the 
interested parties. However, a review of the record has led us to 
modify the calculations. In the preliminary results, we inadvertently 
did not calculate the benefit on two loans for the Borusan Group. We 
also amended our calculations of the benefit from all loans of the 
Borusan Group to conform with the term of the commercial loans obtained 
by the company. Accordingly, the net subsidies for this program have 
changed from the preliminary results and are as follows:

------------------------------------------------------------------------
                                                                  Rate  
            Manufacturer/exporter of pipe and tube             (percent)
------------------------------------------------------------------------
Borusan Group................................................       0.22
Mannesmann...................................................       0.29
------------------------------------------------------------------------

    2. Freight Program. In the preliminary results, we found that this 
program conferred countervailable subsidies on the subject merchandise. 
Our review of the record and our analysis of the comments submitted by 
the interested parties, summarized below (see comments 3 and 4, 
Adjustment of the Freight Program Denominator), has led us to modify 
our calculations for this program from the preliminary results. 
Accordingly, the net subsidies for this program have changed and are as 
follows:

------------------------------------------------------------------------
                                                                  Rate  
            Manufacturer/exporter of pipe and tube             (percent)
------------------------------------------------------------------------
Borusan Group................................................       2.43
Mannesmann...................................................       3.28
------------------------------------------------------------------------

    3. Foreign Exchange Loan Assistance. In the preliminary results, we 
found that this program conferred countervailable subsidies on pipe and 
tube. We did not receive any comments on this program from the 
interested parties, and our review of the record has not led us to 
change any findings or calculations. Accordingly, the net subsidy for 
this program remain unchanged from the preliminary results and are as 
follows:

------------------------------------------------------------------------
                                                                  Rate  
            Manufacturer/exporter of pipe and tube             (percent)
------------------------------------------------------------------------
Borusan Group................................................       0.43
------------------------------------------------------------------------

    4. Incentive Premium on Domestically Obtained Goods. In the 
preliminary results, we found that this program conferred 
countervailable subsidies on pipe and tube. We did not receive any 
comments on this program from the interested parties, and our review of 
the record has not led us to change any findings or calculations. 
Accordingly, the net subsidy for this program remain unchanged from the 
preliminary results and are as follows:

------------------------------------------------------------------------
                                                                  Rate  
            Manufacturer/exporter of pipe and tube             (percent)
------------------------------------------------------------------------
Borusan Group................................................       0.01
------------------------------------------------------------------------

    5. Investment Allowance. In the preliminary results, we found that 
this program conferred countervailable subsidies on pipe and tube. We 
did not receive any comments on this program from the interested 
parties, and our review of the record has not led us to change any 
findings or calculations. Accordingly, the net subsidy for this program 
remain unchanged from the preliminary results and are as follows:

------------------------------------------------------------------------
                                                                  Rate  
            Manufacturer/exporter of pipe and tube             (percent)
------------------------------------------------------------------------
Borusan Group................................................       0.02
------------------------------------------------------------------------

    B. New Program Determined to Confer Subsidies
    Deduction from Taxable Income for Export Revenues. In the 
preliminary results, we found that the Deduction from Taxable Income 
for Export Revenues conferred countervailable benefits on the subject 
merchandise. We did not receive any comments on this program from the 
interested parties.

[[Page 18887]]

Accordingly, the net subsidies for this program remain unchanged from 
the preliminary results and are as follows:

------------------------------------------------------------------------
                                                                  Rate  
            Manufacturer/exporter of pipe and tube             (percent)
------------------------------------------------------------------------
Borusan Group................................................     <0.005
Mannesmann...................................................      0.16 
------------------------------------------------------------------------

II. Programs Found To Be Not Used

    In the preliminary results, we found that the producers and/or 
exporters of the subject merchandise did not apply for or receive 
benefits under the following programs:
    1. Resource Utilization Support.
    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. Export Incentive Certificate Customs Duty & Other Tax 
Exemptions.
    11. Resource Utilization Support Premium (RUSP).
    12. Regional Subsidies.
    (a) Additional Refunds of VAT (VAT + 10%).
    (b) Postponement of VAT on Imported Goods.
    (c) Land Allocation (GIP).
    (d) Taxes, Fees (Duties), Charge Exemption (GIP).
    We did not receive any comments on these programs from the 
interested parties, and our review of the record has not led us to 
change our findings from the preliminary results.

Analysis of Comments

Comment 1: Measurement of Countervailable Benefit: Earned Versus 
Receipt Basis

    The respondents argue that the Department's preliminary finding 
that exporters could not ``predict at the time of export what the 
benefit would be'' under the Freight Program was in error and is 
contrary to the Department's long-standing practice. The respondents 
state that the Department's practice is to measure benefits on the date 
of export in cases where the benefit is earned on a shipment-by-
shipment basis, and the exporter knows the amount of the benefit at the 
time of export. Thus, because the exporters earned the benefit on a 
shipment-by-shipment basis upon exportation, and knew the precise U.S. 
dollar amount of the benefit at the time of exportation, the benefit 
should be measured on an ``earned basis.''
    The respondents also cite, but do not discuss, several cases to 
demonstrate the Department's practice of measuring benefits on the date 
of export in cases where the benefit is earned on a shipment-by-
shipment basis, and the exporter knows the amount of the benefit at the 
time of export. Therefore, since the Freight Program encompasses these 
facts, they argue that, in order to apply this rule consistently, the 
Department must calculate the benefits under the Freight Program on an 
``as earned'' basis, or explain the reason for the methodological 
change.
    In addition, the respondents claim that in Certain Welded Carbon 
Steel Pipes and Tubes and Welded Carbon Steel Line Pipe from Turkey; 
Preliminary Results of Countervailing Duty Administrative Reviews, 62 
FR 16782, 16787 (April 8, 1997) and Certain Welded Carbon Steel Pipes 
and Tubes and Welded Carbon Steel Line Pipe from Turkey; Final Results 
of Countervailing Duty Administrative Reviews, 62 FR 43984 (August 18, 
1997) (Pipe and Tube and Line Pipe 1995), the Department countervailed 
benefits provided under the Export Performance Credit program, which 
are similar to those provided under the Freight Program, on the date 
the merchandise was exported. The respondents state that the Export 
Performance Credit program provided credits to exporters based on a 
percentage of the f.o.b. value of their exports, and the Freight 
Program provided rebates to exporters in the amount of $50 per ton for 
merchandise exported on Turkish vessels, and $30 per ton for non-
Turkish vessels. They argue that the exporters did not know, at the 
time of export, the exact rate of exchange that would be used to 
convert the dollar amount to Turkish Lira (TL) under either of the 
programs and, therefore, the exporters did not know the ``precise'' 
amount of the benefit in TL that they would receive at a later date.
    The respondents also claim that, in designing the Freight Program, 
the GRT was well aware that Turkish companies invoice their export 
shipments in U.S. dollars. Because both the benefit and the sales value 
were expressed in U.S. dollars, they claim that a benefit denominated 
in U.S. dollars would directly affect the price Turkish companies 
charged their customers. By contrast, a benefit denominated in TL that 
would be given at an unspecified later date would, in a 
hyperinflationary economy, have been of unknown value at the time of 
export and would have had little or no effect on the price or volume of 
goods exported. Therefore, they argue that a benefit amount expressed 
in U.S. dollars clearly provided the exporters with a far more certain 
knowledge of the true ``value'' of the benefit, because U.S. dollars 
hold their value, than if the benefit had originally been expressed in 
TL because of high inflation in Turkey.
    The petitioners argue that, on the date of export, the exporters 
knew only the U.S. dollar-denominated amount that would be used to 
calculate the TL benefit at some uncertain future date, and that the 
participants were not assured that they would ultimately receive the 
equivalent of the U.S. dollar-denominated amount in TL. Instead, the 
conversion of the benefit into a TL amount was accomplished using an 
exchange rate that was not contemporaneous with either the date of 
export or the date of payment. Between the exchange rate date and the 
date of payment, the real benefit eroded from hyperinflation. As a 
result, the amount the exporters received was not the TL equivalent of 
the dollar-denominated benefit. The petitioners further argue that, in 
fact, the Borusan Group and Mannesmann did not ultimately receive a 
benefit of $30/$50 per ton. At the time of payment, the lira-
denominated benefit was worth no more than $17.10/$28.50, respectively.
    The petitioners also claim that none of the cases cited by the 
respondents argues for a different result from that in the preliminary 
determination or the Department's decision in Pipe and Tube and Line 
Pipe 1995. The petitioners point to the Final Affirmative 
Countervailing Duty Determinations; Certain Welded Carbon Steel Pipe 
and Tube Products from Turkey, 51 FR 1268, 1273 (January 10, 1986) 
(Final Affirmative 1986) (wherein the Department enunciated its general 
rule for assessing benefits on an ``as earned'' basis where the benefit 
rebates a fixed proportion of the value of the shipment and is known to 
the exporter), noting that the rationale for countervailing amounts 
received applies when the recipient could not anticipate precisely how 
much would be received and hence could not make business decisions 
based upon benefits received at a future date. Thus, they argue that 
the Department's position in the Final Affirmative 1986 is consistent 
with its treatment of the Freight Program in this review because the 
exporters did not know and could not have known precisely the amount of 
the benefit at the time of export.

[[Page 18888]]

    Moreover, all the other cases cited by the respondents, the 
petitioners argue, did not deal with hyperinflationary economies. See 
Certain Iron-Metal Castings from India (Indian Castings), 60 FR 44843 
(August 29, 1995); Cotton Shop Towels from Pakistan (Shop Towels), 61 
FR 50273, 50275 (September 25, 1996), (rebates earned on a shipment-by-
shipment basis upon export with no diminution of value due to 
hyperinflation). See also, Carbon Steel Butt-Weld Pipe Fittings from 
Thailand (Butt-Weld Pipe Fittings), 55 FR 1695 (January 18, 1990) 
(benefits under the Tax Certificates for Exports program assessed on 
``as earned'' because the benefits were payable on a fixed percentage 
of the f.o.b. value of export); Certain Carbon Steel Products from 
Brazil, 49 FR 17988 (April 26, 1984). However, the petitioners argue 
that in a hyperinflationary economy, a delay in receiving payment can 
render the amount of the eventual benefit uncertain, unless it is tied 
to a stable currency.
    Department's Position: As we have already stated in Pipe and Tube 
and Line Pipe 1995, it is the Department's long-standing practice to 
countervail an export subsidy on the date of export on an ``earned 
basis'' rather than on the date the benefit is received where it is 
provided as a percentage of the value of the exported merchandise on a 
shipment-by-shipment basis, and the exact amount of the countervailable 
subsidy is known at the time of export. Contrary to the respondents' 
assertions, we have not departed from our practice. In Pipe and Tube 
and Line Pipe 1995 at 16785, and in these preliminary results, we 
stated that although the benefit under the Freight Program is 
calculated based on export tonnage and not as a percent of the f.o.b. 
value, it is possible that the value of a benefit determined by tonnage 
could be known at the time of export and, thus, the countervailable 
benefit could be earned upon exportation. However, as we previously 
determined in Pipe and Tube and Line Pipe 1995, and as the facts in 
these reviews establish, with regard to the Freight Program, the 
exporter did not know the amount of the benefit at the time of export. 
The benefits under the Freight Program were stated in U.S. dollars per 
ton at the time of export, and were converted to TLs when they were 
paid at a later date. Because the GRT did not commit to use the 
exchange rate prevailing on the day the payment was made, as in the 
Export Performance Credit Program, the exporter could not have known 
the value of the benefit at the time of export, neither in U.S. dollars 
nor in TLs. In fact, the GRT announced in February 1995, two months 
after the shipments took place, that it would convert the dollar amount 
of the freight benefits using the exchange rate that was in effect on 
the last day in December 1994. Thus, the exporter ultimately received 
in 1996 an amount in TLs that did not correspond to the U.S. dollar 
value of the benefit granted by the government in 1994 at the time of 
shipment; under the circumstances, it is also obvious that, at the time 
of shipment, the exporter was in no position to predict what the amount 
of the final payment would be. See Pipe and Tube and Line Pipe 1995 at 
43991. Indeed, the respondents concede that ``[h]ad the benefit been 
denominated in TL, the value of the ultimate benefit received, as 
measured in constant TL, would not have been known at the time of 
export due to the high inflation in Turkey at the time.'' Case Brief p. 
7-8.
    Contrary to the respondents' argument that the Freight Program is 
indistinguishable from the Export Performance Credit Program, we found 
that the programs are distinguishable. Under the Export Performance 
Credit Program, the value of the benefit was tied to the U.S. dollar. 
Exporters would receive a percentage of the U.S. dollar value of their 
exports in TLs based on the foreign exchange rate prevailing at the 
time of payment. Thus, although at the time of receipt the exporters 
received more TL than they would have been paid upon exportation, 
because the benefit was tied to the U.S. dollar, the value of the TL 
amount remained the same in U.S. dollar terms. However, under the 
Freight Program, the GRT converted the U.S. dollar value in TL using an 
exchange rate that did not reflect the full U.S. dollar value of the 
benefit at the time of payment. Therefore, we have determined that in 
the case of the Export Performance Program, the value of the benefit 
was known at the time of export, and therefore can be calculated on an 
``as earned'' basis, but in the case of the Freight Program, the value 
of the benefit was not known at the point of export because the 
exporters did not know the exchange rate that the GRT would use to 
convert the U.S. dollar benefit into TLs. As such, for the Freight 
Program, the calculation must be based on an ``as received'' basis.
    As petitioners point out, the cases cited accord with the 
Department's measurement of the benefits for the Freight Program. In 
Shop Towels and in Indian Castings, export rebates were earned on a 
shipment-by-shipment basis, and the exact amount of the rebate was 
known at the time of export because the rebate was set as a percentage 
of the f.o.b. value of the exported merchandise. See also, Butt-Weld 
Pipe Fittings; Certain Textile Mill Products and Apparel from Colombia; 
Certain Textile Mill Products from Thailand; Certain Carbon Steel 
Products from Brazil. Further, in Paint Filters and Strainers from 
Brazil, 52 FR 19184 (May 21, 1987) (Paint Filters), the Department did 
not countervail the benefit from the IPI export credit premium program 
because we found that the program was terminated prior to the 
initiation of that case, and companies could no longer receive benefits 
after the date of termination. We did make a statement in Paint Filters 
that, the Department had consistently calculated the benefit under the 
IPI export credit premium program in prior cases based on the date the 
premium was earned. However, as noted in Certain Carbon Steel Products 
from Brazil, the IPI export credit premium was based on the f.o.b. 
value of the exported merchandise, and the amount of the benefit was 
known at the time of export.

Comment 2: Policy Considerations for Measurement of Benefits

    The respondents argue that policy considerations dictate that the 
Freight Program should be countervailed based on the date the benefit 
was earned because benefits should be countervailed when they will have 
the greatest potential effect on a company's export volumes or pricing 
to the United States. Since, they argue, the countervailing duty law is 
intended to offset export subsidies, it makes no sense to now 
countervail benefits under the Freight Program, which was terminated at 
the end of 1994, because there were no longer any incentives for 
companies to export during the period of review.
    In proffering this policy argument, the respondents claim that, 
because the benefits under the Freight Program were intended to offset 
freight charges incurred on export shipments, the benefit should only 
be countervailable on the date of export because the freight charges 
were payable immediately after the goods were exported. In support, the 
respondents point to section 351.514(b) of the Countervailing Duties: 
Notice of Proposed Rulemaking, 62 FR 8818 (February 26, 1997) 
(Department's proposed regulations), which deals with freight charges. 
The respondents argue that under this proposed regulation, the 
Department will consider the benefit to have been received as of the 
date on which the firm pays or, in the absence of payment, was due to 
pay the

[[Page 18889]]

transport or freight charges. Therefore, because section 351.514(b) 
countervails freight benefits when they are actually incurred, they 
argue that the Freight Program benefits should be countervailed on the 
date the freight charges were incurred, and not when the reimbursements 
for these charges were later received.
    The petitioners counter that it is incorrect for the respondents to 
suggest that there is any support for their position in section 
351.514(b) of the Department's proposed regulations. Section 351.514 
corresponds to paragraph (c) of the Illustrative List of Export 
Subsidies (Illustrative List), annexed to the Agreement on Subsidies 
and Countervailing Measures and deals with preferential internal 
transport and freight charges on export shipments. The petitioners 
argue that neither subsection (c) of the Illustrative List nor section 
351.514 can apply to the Freight Program, because the Turkish Freight 
Program does not involve the provision of internal transport at 
preferential rates. Rather, petitioners claim that the Freight Program 
provides a bounty, which may lower the exporter's costs, but the actual 
freight charge payable is not altered. They claim that where the 
benefit consists of providing freight at preferential rates, the 
exporter reaps the benefit at the time of shipment. Therefore, it makes 
sense to assess duties on the basis of shipment when there is a 
simultaneous discount in a fixed amount. However, it is another matter 
to provide a bounty of an indeterminate amount at some later time, 
particularly in a hyperinflationary economy.
    Department's Position: We disagree with the respondents' argument 
that, as a matter of policy, the Department should countervail benefits 
under the Freight Program on the date of export because benefits should 
be countervailed when they have the greatest potential to affect the 
exporters' volume and pricing decisions. The countervailing duty law 
does not examine when benefits will have the greatest potential effect 
on exports to the United States. Pursuant to section 771(5)(C), ``the 
administering authority is not required to consider the effect of the 
subsidy in determining whether a subsidy exists * * *.'' Moreover, 
under the Act, a benefit that is contingent upon export is an export 
subsidy and, thus, countervailable. See section 771(5A)(B). Therefore, 
in accordance with section 771(5A)(B), we found the Freight Program to 
be a countervailable export subsidy because the benefit is contingent 
upon export performance, regardless of whether we measure the benefit 
on an earned or received basis.
    Moreover, we disagree with the respondents' argument that once a 
program is terminated, benefits received thereafter should not, as a 
matter of policy, be countervailed because the effect of such benefits 
on the exporters' decision to export has passed. Under the logic of the 
respondents' argument, the Department would never be able to 
countervail export subsidies unless the benefit from such subsidies 
could be measured at the time of shipment. Clearly this proposal 
conflicts with the statute and our long-standing practice. Our standard 
methodology is to countervail subsidies at the time the subsidy affects 
the cash flow of the company. See, e.g., Ferrochrome from South Africa; 
Final Results of Countervailing Duty Administrative Review, 56 FR 
33254, 33255 (July 19, 1991). Generally, that can only be determined 
when the subsidy is paid or received by the company. The only exception 
to this general proposition has been when export subsidies are paid as 
a percentage of the f.o.b. value of the exported merchandise. See the 
Department's Position on Comment 1. Only in these situations does the 
company know with precision at all times what the benefit from the 
subsidy is. Only under these circumstances is the Department able to 
determine the subsidy rate on an ``as earned'' basis.
    Because the respondents received benefits during the period of 
review, we have properly included these benefit amounts in our subsidy 
calculations. The fact that the program was terminated prior to the 
period of review is not material. It is the Department's practice to 
countervail residual benefits from a terminated program. See, e.g., 
Live Swine from Canada; Notice of Preliminary Results of Countervailing 
Duty Administrative Reviews; Initiation and Preliminary Results of 
Changed Circumstances Review and Intent to Revoke Order in Part, 61 FR 
26879, 26889 (May 29, 1996) and Live Swine from Canada; Final Results 
of Countervailing Duty Administrative Reviews, 61 FR 52408 (October 7, 
1996); Pipe and Tube and Line Pipe 1995 at 43991. Furthermore, we note 
that, in the instant case, because the benefits were provided in cash 
and bonds with a two-year maturity, benefits will continue to accrue 
beyond this period of review.
    Finally, the respondents also argue that the Department should 
countervail the benefits under the Freight Program on the date the 
freight charges for exportation were payable and not when the 
reimbursements for these charges were received. In support of their 
argument, the respondents cite to section 351.514 of the Department's 
proposed regulations. First, we note that the proposed regulations have 
not yet been finalized, and, thus, are not controlling in these 
reviews. However, even in citing to those proposed regulations, the 
respondents have erred in their interpretation. Section 351.514(b) of 
the Department's proposed regulations corresponds to paragraph (c) of 
the Illustrative List, and deals with preferential internal transport 
and freight charges on goods destined for export. Paragraph (a)(1) 
restates the general principle that a benefit exists to the extent that 
a firm pays less for the internal transport of goods destined for 
export than it would for the transport of goods destined for domestic 
consumption. Therefore, the financial contribution is provided when the 
payment for the freight charges occurs. Consequently, we would 
countervail the benefit at the time of payment of the reduced freight 
charges. As stated in the proposed regulations, ``the Secretary 
normally will consider the benefit as having been received by the firm 
on the date the firm paid, or in the absence of payment, was due to 
pay, the charges.''
    The Freight Program, on the other hand, does not involve the 
provision of transport services at preferential rates. Rather, 
according to the enabling legislation, the Freight Program was a 
freight bonus, i.e., a benefit contingent upon export. See, 
Questionnaire Response, Volume II--Exhibit 9, dated June 30, 1997. 
Therefore, we continue to countervail this benefit at the time the 
financial contribution affects the cash flow of the company, which is 
when the company receives the payment of the subsidy to which it is 
entitled as a result of prior exportations.

Comment 3: Adjustment of Sales Values for Foreign Exchange Difference 
(Kur Farki)

    The respondents argue that the Department's decision to adjust the 
sales value by the amount of the foreign exchange difference (kur farki 
account) reduced the export sales amount in the denominator, which led 
to an erroneous increase of the countervailable benefit for each 
company under review.
    The respondents state that the Department specifically requested 
that the respondents provide total sales as booked and recorded in 
their accounting records, which included the sales revenue account plus 
the sum of the values in the kur farki account. This accounting 
practice is consistent with the standardized Turkish accounting 
principles. They state that the Department's explanation for deducting

[[Page 18890]]

the foreign exchange difference from the sales value is based on a 
fundamental misunderstanding of what the kur farki account actually 
represents. They argue that it does not represent an inflation 
adjustment, but actual revenue earned on export sales. They claim that 
the Department incorrectly assumes that the benefits initially 
denominated in dollars are received precisely on the date of export and 
are converted to TL on that date, whereas the income from the sale is 
converted at a later date and is therefore ``inflation adjusted.'' 
Specifically, they claim that the kur farki account reflects the 
difference between the estimated TL amount recorded on the invoice 
date, when the sale is booked, and the TL amount actually received upon 
receipt of payment from the customer. Depending on the date that the 
payment is received, the exchange difference can increase or decrease 
the invoice value. Therefore, the total amount in the kur farki account 
and the sale revenues account represents total actual income received 
from export sales transactions.
    Finally, the respondents argue that if the Department insists on 
reducing the total export value by the foreign exchange difference, 
then it must compute and deduct from the numerator (the countervailable 
benefit) the foreign exchange difference included in the benefit 
calculated from the date of exportation generating the benefit until 
the date the benefit was converted to TL. The respondents conclude that 
such an adjustment would more than offset the adjustment to the 
denominator.
    The petitioners counter that the issue is not whether the foreign 
exchange difference amounts are actual revenue; the issue is how to 
treat an adjustment that is made solely to reflect differences in the 
relative value of currencies over time in a highly inflationary 
economy. The initial invoice price represents the true price in terms 
of the currency as it was valued on the date of the invoice, while the 
foreign exchange difference represents the true price in terms of the 
currency as it was valued on a different date. Both prices are 
``actual'' prices but are expressed in currencies having different 
values. Thus, they argue that the Department would not wish to use 
dollar-denominated benefits in the numerator and lira-denominated 
benefits in the denominator, it also cannot allow the differing values 
of the TL over time to distort the results of its calculations.
    Department's Position: The same arguments were discussed in the 
prior review. Although there was further explanation of the accounting 
system in this review, basically, the facts are the same and our 
position remains unchanged. See Pipe and Tube and Line Pipe 1995. We do 
not agree with the respondents that the amounts in their kur farki 
account are actual sales revenue. When the exporter makes a sale, the 
invoice amount in TL is recorded in the company's sales ledger. Payment 
of the invoice is subsequently received in U.S. dollars which are 
converted into TL based on the exchange rate prevailing on that date. 
Any difference between the invoice amount in TL and the actual payment 
in TL is recorded in the kur farki account. Therefore, we conclude that 
the adjustment recorded in the kur farki account is income derived from 
fluctuations of the relative value of the dollar versus the TL, rather 
than additional sales revenue, as respondents claim.
    Such foreign exchange difference becomes particularly significant 
in Turkey's highly inflationary economy. As such, it is inappropriate 
to include it in the denominator. We understand that the amounts in the 
kur farki account are included in the companies' total revenue figures, 
in accordance with Turkey's generally accepted principles. However, 
although the amounts recorded in the kur farki account may be included 
in the companies' income statement as part of the total revenue figure 
for tax purposes, this does not detract from our finding. See Price 
Waterhouse, Doing Business in Turkey, Chapter 11 (1992) (lack of 
clearly defined commercial accounting principles and the predominance 
of tax law mean that Turkish law should be treated with extreme 
caution, and international accounting standards are preferred). 
Therefore, it is proper for the Department to exclude the amounts in 
the kur farki account from the sales figures (denominators).
    We also disagree with the respondents' argument that the Department 
must compute and deduct from the numerator the foreign exchange 
difference included in the benefit calculated from the date of export 
until the benefit was converted to TL. As discussed in the Department's 
Position on Comment 1, the countervailable benefit under the Freight 
Program is the actual amount of TL measured at the time of receipt. 
Therefore, benefits from this program in the numerator reflect the TL 
received at that time. For these reasons, the Department's position 
remains unchanged from the preliminary results.

Comment 4: Adjustments of the Freight Program Denominator

    The respondents contend that the Department made a clerical error 
in calculating the denominator used to determine benefits received by 
the Borusan Group under the Freight Program. The respondents also argue 
that, if the Department continues to incorrectly adjust the sales 
values by the foreign exchange difference, then the Department must 
correct a clerical error it made in calculating the ``adjusted'' value 
of Mannesmann's total exports of the subject merchandise to the United 
States. The respondents state that Mannesmann reported a negative 
foreign exchange difference in connection with export sales of the 
subject merchandise to the United States, and because the value is 
negative, they argue that the Department should have added the negative 
foreign exchange difference to the original sales value rather than 
subtracting it.
    The petitioners claim that the ``error'' in calculating 
Mannesmann's denominator could not have been ministerial unless the 
Department was clearly informed previously that a negative amount in 
the ``kur farki'' account was intended to reflect the fact that 
Mannesmann received payment from the customer prior to the date that 
the invoice was issued. The sole source cited by Mannesmann for this 
alleged factual information is a letter submitted to the Department on 
November 20, 1997, one month after the deadline for submissions of 
factual information. Therefore, the petitioners argue that because 
Mannesmann's factual information is untimely, the Department should not 
consider it in its final results.
    Department's Position: We agree with the respondents that a 
clerical error was made in calculating the benefit to the Borusan Group 
from the Freight Program. In calculating the ``adjusted'' denominator, 
the Department did make a typographical error. We have now corrected 
the error and calculated a benefit of 2.43 percent ad valorem for the 
Borusan Group.
    We also agree with the respondents that we incorrectly calculated 
the denominator for total exports of the subject merchandise to the 
United States for Mannesmann. In instances where the foreign exchange 
difference was a positive amount it was deducted, therefore, in 
instances where the foreign exchange difference is denoted as a 
negative amount, which was the case for Mannesmann, the amount should 
be added back to the total sales figure. See Pipe and Tube and Line 
Pipe 1995. We

[[Page 18891]]

disagree with the petitioners that the respondents' comment is an 
untimely submission of factual information. The calculations were based 
on information that was requested by the Department. We have now 
corrected the calculation and obtained a net countervailable subsidy 
under the Freight Program of 3.28 percent ad valorem for Mannesmann.

Final Results of Reviews

    In accordance with 19 CFR 355.22(c)(4)(ii), we calculated an 
individual subsidy rate for each producer/exporter subject to these 
administrative reviews. For the period January 1, 1996 through December 
31, 1996, we determine the net subsidy to be as follows:

------------------------------------------------------------------------
                                                                  Rate  
            Manufacturer/exporter of pipe and tube             (percent)
------------------------------------------------------------------------
Borusan Group................................................       3.10
Mannesmann...................................................       3.73
------------------------------------------------------------------------

    We will instruct the U.S. Customs Service (``Customs'') to assess 
countervailing duties as indicated above. The Department will also 
instruct Customs to collect cash deposits of estimated countervailing 
duties in the percentages detailed above 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.
    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 Sec. 777A(e)(2)(B) of the Act. The requested review 
will normally cover only those companies specifically named. See 19 CFR 
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); 
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 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 at the most recent company-specific or country-
wide rate applicable to the company. Accordingly, the cash deposit 
rates that will be applied to non-reviewed companies covered by this 
order will be the rate for that company established in the most 
recently completed administrative proceeding conducted under the URAA. 
If such a review has not been conducted, the rate established in the 
most recently completed administrative proceeding pursuant to the 
statutory provisions that were in effect prior to the URAA amendments 
is applicable. See Certain Welded Carbon Steel Pipe and Tube Products 
from Turkey; Final Results of Countervailing Duty Administrative 
Reviews, 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, 1996 through December 
31, 1996, the assessment rates applicable to all non-reviewed companies 
covered by this order are the cash deposit rates in effect at the time 
of entry.
    This notice 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 355.34(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 are issued and published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 
1675(a)(1)).

    Dated: April 8, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-10168 Filed 4-15-98; 8:45 am]
BILLING CODE 3510-DS-P