[Federal Register Volume 63, Number 105 (Tuesday, June 2, 1998)]
[Rules and Regulations]
[Pages 29945-29948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14737]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

15 CFR Part 2013


Developing and Least-Developed Country Designations under the 
Countervailing Duty Law

AGENCY: Office of the United States Trade Representative.

ACTION: Interim Final Rule and Request for Comments.

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SUMMARY: This rule designates a list of members of the World Trade 
Organization (``WTO'') that are eligible for special de minimis 
countervailable subsidy and negligible import volume standards under 
the countervailing duty law.

DATES: This rule is effective June 2, 1998. Comments on the Interim 
Final Rule should be submitted by July 31, 1998.

ADDRESSES: Comments may be submitted to William D. Hunter, Office of 
General Counsel, Office of the United States Trade Representative, 600 
17th Street, NW, Washington, DC 20508. Attn: Eligible Country List.

FOR FURTHER INFORMATION CONTACT:
William D. Hunter, (202) 395-3582, [email protected].

SUPPLEMENTARY INFORMATION:

General Background

    In the Uruguay Round Agreements Act (``URAA''), Pub. L. No. 103-
465, Congress amended the countervailing duty (``CVD'') law to conform 
to U.S. obligations under the Agreement on Subsidies and Countervailing 
Measures (``SCM Agreement'') administered by the WTO. Under the SCM 
Agreement, WTO members that have not yet reached the status of a 
developed country are entitled to special treatment for purposes of 
countervailing measures. Specifically, imports from such Members are 
subject to different standards for purposes of determining whether 
countervailable subsidies are de minimis and whether import volumes are 
negligible.
    Under section 771(36) of the Tariff Act of 1930, as amended (``the 
Act''), 19

[[Page 29946]]

U.S.C. 1677(36), Congress delegated to the United States Trade 
Representative (``USTR'') the responsibility for designating those WTO 
members whose imports are subject to these special standards. In 
addition, section 771(36)(D) requires USTR to publish a list of such 
designations (hereinafter referred to as ``the list''), updated as 
necessary, in the Federal Register. The list that is set forth and 
described below implements the requirements of section 771(36)(D).

Explanation of the List

Introduction

    For purposes of countervailing measures, the SCM Agreement extends 
special and differential treatment to developing and least-developed 
members in the following manner:
     De Minimis Thresholds: Under Article 11.9, authorities 
must terminate a countervailing duty (``CVD'') investigation if the 
amount of the subsidy is de minimis, which normally is defined as less 
than 1 percent ad valorem. Under Article 27.10(a), however, for a 
developing member the de minimis standard is 2 percent or less. In 
addition, under Article 27.11, the de minimis standard is 3 percent or 
less for (a) a least-developed member; or (b) a developing member that 
has eliminated its export subsidies prior to the expiry of the 8-year 
phase-out period provided for in Article 27.4
     Negligible Import Volumes: Under Article 11.9, authorities 
must terminate a CVD investigation if the volume of subsidized imports 
from a country is negligible. Under the CVD law, imports from an 
individual country normally are considered negligible if they are less 
than 3 percent of total imports of a product into the United States. 
Imports are not considered negligible if the aggregate volume of 
imports from all countries whose individual volumes are less than 3 
percent exceeds 7 percent of all such merchandise. However, under 
Article 27.10(b), imports from a developing or least-developed member 
are considered negligible if the import volume is less than 4 percent 
of total imports, unless the aggregate volume of imports from countries 
whose individual volumes are less than 4 percent exceeds 9 percent.
    In the URAA, Congress incorporated these standards into the CVD 
law. Section 703(b)(4)(B)-(D) of the Act, 19 U.S.C. 1671b(b)(4)(B)(-
(D), incorporates the de minimis standards, while section 771(24)(B), 
19 U.S.C. 1677(24)(B), incorporates the negligible import standards. 
However, in the statute itself, Congress did not identify by name those 
WTO members eligible for such special treatment. Instead, section 267 
of the URAA added section 771(36) to the Act, which delegates to USTR 
the responsibility for designating those WTO members subject to special 
de minimis and negligible import volume standards. In addition, section 
771(36) requires USTR to publish in the Federal Register, and update as 
necessary, a list of those members designated by USTR as eligible for 
special treatment under the CVD law.
    The effect of these designations is limited to Title VII of the 
Act. Specifically, section 771(36)(E) of the Act provides that the fact 
that a WTO member is designated in the list as developing or least-
developed has no effect on how that member may be classified with 
respect to any other law.
Data Sources
    In making the designations set forth in the list, USTR relied on 
data on per capita gross national product (GNP) and certain social 
development indicators contained in the World Bank's Selected World 
Development Indicators, and on trade data contained in the 
International Monetary Fund's Direction of Trade Statistics.
Designation of TWO Members Eligible for 3 Percent De Minimis Standard 
\1\
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    \1\ The discussions in this section and in the following section 
address the 2 and 3 percent de minimis standards only. However, a 
WTO member that is eligible for either the 2 or 3 percent de minimis 
standard also is eligible for the special negligible import standard 
under section 771(24)(B) of the Act.
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    Section 771(36)(B) of the Act describes those WTO members eligible 
for a 3 percent de minimis standard by incorporating the standards 
contained in Annex VII to the SCM Agreement. Annex VII provides that 
the following categories of members are eligible for a 3 percent de 
minimis standard:
     WTO members designated as least-developed countries by the 
United Nations (Annex VII(a)); and
     A WTO member named in Annex VII(b), provided its per 
capita GNP has not reached $1,000 per annum.
    Applying Annex VII, the following WTO members are eligible for a 3 
percent de minimis standard:

                                 Table 1                                
                                                                        
  Column A WTO Members Included in     Column B WTO Members Included In 
  the UN's List of ``The 48 Least    Annex VII(b) with per capita GNP of
     Developed Countries'' \1\               less than $1,000 \2\       
------------------------------------------------------------------------
                                                                        
Angola             Maldives          Bolivia                        $800
Bangladesh         Mali              Cameroon                        650
Benin              Mauritania        Congo                           680
Burkina Faso       Mozambique        Cote d'Ivoire                   660
Burma              Niger             Egypt                           790
Burundi            Rwanda            Ghana                           390
Central African    Sierra Leone      Guyana                          590
 Republic                                                               
Chad               Solomon Islands   India                           340
Djibouti           Tanzania          Indonesia                       980
Gambia             Togo              Kenya                           280
Guinea             Uganada           Nicaragua                       380
Guinea-Bisseau     Zambia            Nigeria                         260
Haiti              Dem. Rep. of the  Pakistan                        460
                    Congo                                               
Lesotho                              Senegal                         600
Madagascar                           Sri Lanka                       700
Malawi                               Zimbabwe                        540
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\1\ United Nations Statistical Yearbook: Forty-First Issue, pp. 869-870 
  (1996), referring to General Assembly Resolution 49/133.              
\2\ Selected World Development Indicators (1997), <http://
www.worldbank.org/html/iecdd/wdipdf.htm                    


[[Page 29947]]

    In addition to those WTO members described in Annex VII to the SCM 
Agreement, under section 703(b)(4)(C)(ii) of the Act, if USTR notifies 
the Department of Commerce that a developing member has eliminated its 
export subsidies on an expedited basis, that member is eligible for the 
3 percent de minimis standard. Under section 771(36)(C)(i), the list 
must identify any such members. Currently, no developing member of the 
WTO meets this criterion. Therefore, no such member is included in the 
list on the basis of that section.

Designation of WTO Members Eligible for 2 Percent De Minimis 
Standard

Introduction

    Based on section 771(36)(D) of the Act, in determining which WTO 
members should be considered as developing and, thus, eligible for the 
2 percent de minimis standard, USTR has considered appropriate 
economic, trade and other factors, including the level of economic 
development of a country (based on a review of the country's per capita 
GNP) and a country's share of world trade. USTR developed the list of 
members eligible for the 2 percent de minimis standard based primarily 
on per capita GNP due to the availability of reliable indices, with 
share of world trade and other factors used as supplemental analytical 
tools in determining whether a particular member should be moved from 
one GNP-based classification to another.
Per Capita GNP
    In developing its interim final list, USTR relied on the World 
Bank's dividing line separating ``high income'' countries from those 
with lower per capita GNPs.\4\ This means that WTO members with per 
capita GNP's below $9,386 were treated as eligible for the 2 percent de 
minimis standard, subject to possible change based on other factors as 
discussed below. The advantages of this approach are that it (1) is 
straightforward to apply; (2) is based on a recognized GNP dividing 
line between developed and developing countries for purposes of the 
world's primary multilateral lending institution; and (3) conforms to 
the test for beneficiary developing country status set out in the U.S. 
Generalized System of Preferences statute, section 502(e) of the Trade 
Act of 1974.
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    \2\ The most recent World Bank data set this dividing line at 
$9,386.
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Share of World Trade
    USTR considered whether any of the countries with per capita GNPs 
below $9,386 account for a significant share of world trade and, thus, 
should be treated as ineligible for the 2 percent de minimis standard. 
USTR considered a share of world trade of 2 percent or more to be 
``significant'' for these purposes because the Administration committed 
in the Statement of Administration Action (``SAA'') approved by the 
Congress along with the URAA that Hong Kong, Korea, and Singapore would 
be ineligible for developing country treatment, and each of these 
countries accounts for a share of world trade in excess of 2 percent.
    There are no current WTO members with per capita GNPs close to 
$9,386 that account for a share of world trade above 2 percent. 
Accordingly, while USTR finds that share of world trade is a relevant 
factor to consider, at present this factor does not warrant any changes 
to the designations based on per capita GNP.
Social Development Indicators
    Because the URAA and the SAA do not limit USTR to an analysis of 
per capita GNP and world trade shares, USTR also took into account the 
social development indicators of infant mortality rates, adult 
illiteracy rates, and life expectancy at birth, as reported in Selected 
World Development Indicators (1997). However, in the case of those WTO 
members with per capita GNPs below $9,386, these social development 
indicators do not provide a sufficient basis for finding such members 
to be ineligible for the 2 percent de minimis standard.

Other Factors

    Section 771(36)(D) contemplates that USTR may consider additional 
factors. To that end, for purposes of this interim final list, USTR 
took into account membership in the European Union (``EU''). Membership 
in the EU indicates a relatively high level of economic development. In 
addition, under section 771(3) of the Act, the EU may be treated as a 
single country for purposes of the CVD law and, while not common, there 
have been CVD investigations against merchandise from the ``European 
Communities.'' Because the EU is indisputably ineligible for the 2 
percent de minimis standard, it would be anomalous to treat an 
individual EU member as eligible for that standard. Accordingly, USTR 
has concluded that all EU members be designated as developed for CVD 
purposes. Thus, Greece is ineligible for the 2 percent de minimis 
standard, notwithstanding the fact that, based on the most recent World 
Bank data, Greece's per capita GNP is below $9,386.
    USTR also took into account OECD membership. The characterization 
of the OECD as a grouping of developed countries has been confirmed 
throughout its existence in a number of published OECD documents, and 
the OECD consistently has been viewed as, and acts itself in the 
capacity of, the principal organization developed economies worldwide. 
Thus, by joining the OECD, a country effectively has declared itself to 
be developed. Consistent with this self-designation, USTR has 
determined that an OECD member should not be eligible for the 2 percent 
de minimis standard.
    Furthermore, USTR has not included in this interim final list WTO 
members that in the past have been (or could have been) considered as 
nonmarket economy countries not subject to the CVD law. Because there 
are no pending CVD investigations involving any of these members, USTR 
has not designated such countries at this time.

Immediate Effect and Request for Comments

    USTR has determined that there is good cause for the publication of 
this rule with an immediate effective date and without prior notice and 
comment. Publication of the rule implements treaty obligations of the 
United States under the Marrakesh Agreement Establishing the WTO. Delay 
in the effective date of the rule may adversely affect the trade 
relations of the United States with countries subject to designation 
under this section. In addition, the absence of a rule designating 
countries under the URAA may prevent another Federal agency from being 
able to timely adjudicate one or more pending CVD proceedings on its 
docket. Due to these factors, and because prior notice and other public 
procedures with respect to this action are impracticable, USTR finds 
good cause under 5 U.S.C. 553 to make the rule effective upon 
publication in the Federal Register.
    Because this action is in the form of an interim final rule, 
comments are invited on the rule. Interested persons are invited to 
comment on this rule by submitting such written comments by July 31, 
1998. Each person submitting a comment should include his or her name 
and address, and give reasons for any recommendations. After the 
comment period closes, USTR will publish in the Federal Register a 
final rule on this subject, together with a discussion of comments 
received and any amendments made to the interim rule as a result of the 
comments.
    To simplify the processing and consideration of comments, 
commenters

[[Page 29948]]

are encouraged to submit documents in electronic form accompanied by an 
original and two paper copies. All documents submitted in electronic 
form should be on DOS formatted 3.5'' diskettes, and should be prepared 
in either WordPerfect format or a format that the WordPerfect program 
can convert and import into WordPerfect.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 
606(b)), USTR certifies that this regulation will not have a 
significant impact on a substantial number of small entities.

Paperwork Reduction Act

    This rule contains no information collection or recordkeeping 
requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 
et seq.).

Executive Order 12866

    This rule has been and reviewed by the Office of Management and 
Budget in accordance with Executive Order 12866, Sec. 1(b), Principles 
of Regulation.

Executive Order 12612

    This notice does not contain federalism implications described in 
Executive Order 12612 warranting the preparation of a Federalism 
Assessment.

Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule as defined by Sec. 804 of the Small 
Business Regulatory Enforcement Act of 1996. This rule will not result 
in an annual effect on the economy of $100,000,000 or more; a major 
increase in costs or prices; or significant adverse effects on 
competition, employment, investment, productivity, innovation, or on 
the ability of United States-based companies to compete with foreign-
based companies in domestic and export markets.

List of Subjects in 15 CFR Part 2013

    Countervailing duties, Foreign trade, Imports

    Dated: May 29, 1998.
Charlene Barshefsky.
United States Trade Representative.

    For the reasons stated, a new Part 2013 is added to 15 CFR Chapter 
XX to read as follows:

PART 2013 DEVELOPING AND LEAST--DEVELOPING COUNTRY DESIGNATIONS 
UNDER THE COUNTERVAILING DUTY LAW

    Authority: Section 267, Pub. L. 103-465; 108 Stat. 4915 (19 
U.S.C. 1677(36))


Sec. 2013.1  Designations.

    In accordance with section 771(36) of the Tariff Act of 1930, as 
amended, 19 U.S.C. 1677(36), imports from members of the World Trade 
organization are subject to de minimis standards and negligible import 
standards as set forth in the following list:
De Minimis=3%; Negligible Imports=4%; Section 771(36)(B):
    Angola
    Bangladesh
    Benin
    Bolivia
    Burkina Faso
    Burma
    Burundi
    Cameroon
    Cent. Afr. Rep.
    Chad
    Congo
    Cote d'Ivoire
    Dem. Rep. of the Congo
    Djibouti
    Egypt
    Gambia
    Ghana
    Guinea
    Guinea-Bissau
    Guyana
    Haiti
    India
    Indonesia
    Kenya
    Lesotho
    Madagascar
    Malawi
    Maldives
    Mali
    Mauritania
    Mozambique
    Nicaragua
    Niger
    Nigeria
    Pakistan
    Rwanda
    Senegal
    Sierra Leone
    Solomon Isl.
    Sri Lanka
    Tanzania
    Togo
    Uganda
    Zambia
    Zimbabwe
De Minimus=2%; Negligible Imports=4%; Section 771(36)(A):
    Antigua & Barbuda
    Argentina
    Bahrain
    Barbados
    Belize
    Botswana
    Brazil
    Chile
    Colombia
    Costa Rica
    Dominica
    Dominican Republic
    Ecuador
    El Salvador
    Fiji
    Gabon
    Grenada
    Guatemala
    Honduras
    Jamaica
    Malaysia
    Malta
    Mauritius
    Morocco
    Namibia
    Panama
    Papua New Guinea
    Paraguay
    Peru
    Philippines
    South Africa
    St. Kitts & Nevis
    St. Lucia
    St. Vincent & Grenadines
    Slovenia
    Suriname
    Swaziland
    Thailand
    Tunisia
    Trinidad & Tobago
    Uruguay
    Venezuela
De Minimis=1%; Negligible Imports=3%:
    Australia
    Austria
    Belgium
    Brunei
    Canada
    Cyprus
    Denmark
    European Communities
    Finland
    France
    Germany
    Greece
    Hong Kong
    Iceland
    Ireland
    Israel
    Italy
    Japan
    Korea
    Kuwait
    Liechtenstein
    Luxembourg
    Macao
    Mexico
    Netherlands
    New Zealand
    Norway
    Portugal
    Qatar
    Singapore
    Spain
    Sweden
    Switzerland
    Turkey
    United Arab Emirates
    United Kingdom
[FR Doc. 98-14737 Filed 5-29-98; 2:48 pm]
BILLING CODE 3190-01-M