[Federal Register Volume 64, Number 66 (Wednesday, April 7, 1999)]
[Notices]
[Pages 16924-16929]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8627]


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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 certain welded carbon steel 
line pipe from Turkey for the period January 1, 1997 through December 
31, 1997. 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 assess 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 7, 1999.

FOR FURTHER INFORMATION CONTACT: Stephanie Moore or Eric Greynolds, 
Group II, 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) 482-6071, respectively.

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 11, 1998, the Department 
published a notice of ``Opportunity to Request Administrative Review'' 
(63 FR 11868) of these countervailing duty orders. We received a timely 
request to conduct a review of pipe and tube from Yucel Boru ve Profil 
Endustrisi A.S., and its affiliated companies, Cayirova Boru Sanayi ve 
Ticaret A.S., and Yucelboru Ihracat Ithalat ve Pazarlama A.S. (Yucel 
Boru Group). We also received a timely request to conduct a review of 
line pipe from Mannesmann--Sumerbank Boru Endustrisi T.A.S. 
(Mannesmann). We initiated the reviews covering the period January 1, 
1997 through December 31, 1997 on April 24, 1998 (62 FR 20378).
    In accordance with 19 CFR 351.213(b), these reviews cover only 
those producers or exporters of the subject merchandise for which a 
review was specifically requested. Accordingly, the review on pipe and 
tube covers the Yucel Boru Group and the review on line pipe covers 
Mannesmann. These reviews also cover 21 programs.
    On December 7, 1998, we extended the period for completion of the 
preliminary results pursuant to section 751(a)(3)(A) of the Tariff Act 
of 1930, as amended. See Certain Welded Carbon Steel Pipes and Tubes 
and Welded Carbon Steel Line Pipe from Turkey: Extension of the Time 
Limit for Preliminary Results of Countervailing Duty Administrative 
Reviews (63 FR 67460). The deadline for the final

[[Page 16925]]

results of this review is no later than 120 days from the date on which 
these preliminary results are published in the Federal Register.

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 this administrative review in 
accordance with section 751(a) of the Act. All citations to the 
Department's regulations reference 19 CFR Part 351 (1998), unless 
otherwise indicated.

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 
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 .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 descriptions remain dispositive.

Calculation of Benefits

Foreign Exchange Difference (``Kur Farki'' Accounts)

(I) Background
    In prior reviews, the respondent companies argued that, in order to 
correctly calculate the ad valorem subsidy rates, the Department should 
include foreign exchange gains and losses (kur farki) resulting from 
their foreign sales in the denominator because such exchange 
differences are actual sales revenue. In support, respondents cited the 
Turkish generally accepted accounting principles (Turkish GAAP) 
requirement to include foreign exchange differences in their gross 
sales in the income statement. Respondents also submitted a Government 
of the Republic of Turkey (GRT) Standard Accounting Plan, explaining 
that the Turkish GAAP indicates gross sales include commodities sold or 
services rendered as a result of a company's main operations, as well 
as exchange rate differences related to export sales within the 
relevant period. (See, GRT, June 22, 1998 questionnaire response, 
Exhibit 23). However, in past reviews, the Department determined that, 
although the foreign exchange differences were included in the 
companies' income statement as part of the total revenue figure for tax 
purposes, foreign exchange differences are not sales revenue. See e.g., 
Certain Welded Carbon Steel Pipe and Tube and Welded Carbon Steel Line 
Pipe from Turkey; Preliminary Results and Partial Recission of 
Countervailing Duty Administrative Reviews, 62 FR 64808 (December 9, 
1997) (1996 Preliminary Results), and Certain Welded Carbon Steel Pipe 
and Tube and Welded Carbon Steel Line Pipe from Turkey; Final Results 
and Partial Recission of Countervailing Duty Administrative Reviews, 63 
FR 18885, 18890 (April 16, 1998) (1996 Final Results). See also 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 (April 8, 1997) (1995 Preliminary Results), 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) (1995 Final 
Results).
    In reviewing U.S. and international accounting standards, we find 
that foreign exchange differences are not viewed as sales income 
generated by a company's main operations. Rather, foreign exchange 
differences are viewed as ``other income,'' which results from foreign 
exchange rate changes that take place between the date a company 
records a sale denominated in a foreign currency at the exchange rate 
in effect on that day, and the exchange rate in effect on the day that 
the company records receipt of payment that is denominated in that 
foreign currency. The Financial Accounting Standards (FAS) No. 52--
Foreign Currency Transactions of the Financial Accounting Standards 
Board (FASB) indicates that a change in exchange rates between the 
functional currency (Turkish Lira) and the currency in which an export 
transaction is denominated (e.g., U.S. dollars) increases or decreases 
the amount of functional currency expected upon settlement of the 
export transaction. That increase or decrease in expected functional 
currency is a foreign currency transaction gain or loss that is 
generally included in determining net income. (Items such as currency 
hedging, and transactions of a long-term investment nature are excluded 
in determining net operating income.) (See FASB, Volume I, June 1, 
1997). Foreign exchange gains or losses are reported in the company's 
income statement as a non-operating item or ``other income,'' i.e., 
income derived from other sources, such as a sale of a fixed asset, 
which, in turn, is reported in net income. Wiley, Interpretation and 
Application of Generally Accepted Accounting Principles, at 767 (1998); 
see also International Accounting Standard Financial Reporting in 
Hyper-inflationary Economies (IAS 5) (foreign exchange gains or losses 
should be included in net income, which encompasses ``other income''). 
Therefore, inclusion of foreign currency exchange gains and losses in 
gross sales is inconsistent with international accounting standards. 
See also Price Waterhouse, Doing Business in Turkey, Chapter 11 (1992, 
as amended July 31, 1995) (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). Additionally, we note that World 
Accounting, Matthew Bender, Volume 3, p. TRK-11 (1998) states that 
receivables denominated in foreign currency should be recorded at the 
original national currency value and should be valued again at the end 
of the accounting period using the exchange rate of that date 
established by the Ministry of Finance. The difference in national 
currency value should be recorded under foreign exchange gains and 
losses account. More importantly, foreign exchange gains and losses 
have to do with financing activities and not sales activities. 
Therefore, consistent with U.S. international and Turkish accounting 
standards, we continue to determine that kur farki amounts are foreign 
exchange differences and not sales revenue. However, we have 
preliminarily determined to index both the subsidy benefits (numerator) 
and sales revenue (denominator) to account for the impact of high 
inflation in Turkey (see below).

[[Page 16926]]

(II) Modification of the Calculation Methodology
    In prior reviews, to determine the benefit for each program, we 
deducted the foreign exchange differences, which resulted from the 
changes in the U.S. dollar/Turkish lira exchange rates, from the sales 
figure. Normally, where a country is experiencing high rates of 
inflation, we may make adjustments when companies index for inflation. 
In this case, however, despite a persistently high rate of inflation in 
Turkey, Turkish companies do not index any of the figures (other than 
fixed assets) in their financial statements to account for inflation. 
In the past, we have not indexed the numerator and denominator.
    Upon further review, the persistently high rate of inflation in 
Turkey leads us to conclude that we should index the benefit 
(numerator) in the month of receipt and index the monthly sales 
(denominator) for each program. During the period of review (POR), the 
inflation rate in Turkey was 81 percent, as published in the 1997 
Quarterly Bulletin by the Central Bank of Turkey. Indexing the benefit 
and the sales figures will neutralize any potential distortion in our 
subsidy calculations caused by high inflation and the timing of the 
receipt of the subsidy. We indexed the sales values and the benefit 
using the Wholesale Price Index (WPI) for 1997, as reported by the 
Central Bank of Turkey.

Analysis of Programs

I. Programs Conferring Subsidies

A. Pre-Shipment Export Credit
    The Export Credit Bank of Turkey provides short-term pre-shipment 
export loans to exporters through intermediary commercial banks. The 
program is designed to support export-related industries. 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. 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 1996 Preliminary and 
Final Results, 1995 Preliminary and Final Results, and Final 
Affirmative Countervailing Duty Determination: Certain Pasta from 
Turkey 61 FR 30366 (June 14, 1996) (Pasta), the Department found this 
program 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 1996 Final Results and 1995 Final Results reviews, we found 
these loans to be untied and available for exported merchandise because 
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 determined that the pre-shipment loan program is an untied export 
loan program. See 1996 Final Results 63 FR at 18886 and 1995 Final 
Results, 62 FR at 43986. In these reviews, no new information or 
evidence of changed circumstances has been submitted to warrant 
reconsideration of that finding.
    Pursuant to section 771(5)(E)(ii) of the Act, a benefit shall be 
treated as conferred ``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.'' In this case, to 
calculate the rate the recipient would pay on a comparable commercial 
loan that could actually be obtained by it, i.e., the benchmark 
interest rate, we are using company-specific interest rates on 
comparable commercial loans for all pre-shipment loans that were taken 
out by Mannesmann in both 1996 and 1997, and repaid in 1997. The rates 
on commercial loans, used as benchmarks, provided to Mannesmann include 
the customary Bank Insurance and Services Tax (BIST), which is equal to 
5 percent of the interest amount paid, the Resource Utilization Support 
Fund (RUSF) fee equal to 6 percent of the interest amount paid, and a 
stamp tax equal to 0.6 percent of the principal. The Yucel Boru Group 
did not obtain any commercial short-term loans during the POR.
    In addition, because the Department continues to consider Turkey to 
have high inflation based on a WPI rate of 81 percent, we also 
preliminarily determine that it is appropriate to use monthly average 
short-term interest rates (see 1996 Preliminary Results, 62 FR at 
64809; 1995 Preliminary Results, 62 FR at 16783, and Pasta, 61 FR at 
30367). Therefore, where monthly company-specific interest rates for 
Mannesmann were not available for benchmark interest rates, we used the 
short-term interest rates published in The Economist. For all months 
for the Yucel Boru Group we used the short-term interest rates 
published in The Economist. The source cited in The Economist for its 
weekly short-term interest rates for Turkey is Akbank, which is a large 
privately-owned commercial bank in Turkey. We based the monthly 
interest rates used in our calculations on a simple average of the 
weekly figures corresponding for that month as reported in The 
Economist. While we considered other sources for short-term interest 
rates, including the International Monetary Fund (IMF) and the 
Organization for Economic Cooperation and Development (OECD), The 
Economist was the only source we found that published short-term 
lending rates for Turkey. Using these benchmark rates, 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. Therefore, 
this program provides both a financial contribution under section 
771(5)(D)(i), and confers a benefit under section 771(5)(E)(ii) of the 
Act to the respondents.
    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. As discussed below, we have 
previously determined these exempted fees to be countervailable. For 
pre-shipment loans, which are denominated in TL, the fees that are 
exempted are the customary BIST, RUSF, and the stamp tax as described 
above. The Department's current practice is normally to compare 
effective interest rates rather than nominal rates. ``Effective'' 
interest 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 benchmark interest rates obtained from 
The Economist. See e.g., Certain Iron-Metal Castings from India: Final 
Results of Countervailing Duty Administrative Review, 60 FR 44843 
(August 29, 1995) (Indian Castings). See also 1995 Preliminary Results, 
62 FR at 16784.
    To determine the benefit in these reviews, 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. This difference on the 
loans for each

[[Page 16927]]

month was indexed for inflation (as described above), and the result 
divided by the company's total export sales, which we also indexed for 
inflation. On this basis, we preliminarily determine the 
countervailable subsidy to be 0.84 percent ad valorem for the Yucel 
Boru Group for pipe and tube, and 0.19 percent ad valorem for 
Mannesmann for line pipe.
B. Foreign Exchange Loan Assistance
    As discussed above, GRT Resolution Number: 94/5782 allows 
commercial banks to exempt certain fees on loans used in export related 
activities. We previously determined that use of this program is 
contingent upon export performance and, therefore, countervailable 
within the meaning of section 771(5A)(B). See 1996 Preliminary Results, 
62 FR at 64810, and 1995 Preliminary Results, 62 FR at 16784.
    During the POR, Mannesmann received and paid interest on foreign 
currency loans from a commercial bank in connection with merchandise 
exported to the United States and was exempted from paying the 
customary BIST equal to 5 percent of the amount of interest paid, the 
RUSF fee equal to 6 percent of the principal, and the stamp tax equal 
to 0.6 percent of the principal. Unlike pre-shipment loans that are 
denominated in TL where the RUSF fee is 6 percent of the amount of 
interest paid, the RUSF fee for foreign currency loans is calculated as 
6 percent of the principal.
    We have previously determined that the BIST and RUSF fee exemptions 
are financial contributions within the meaning of section 771(5)(D)(ii) 
of the Act in the form of revenue foregone that is otherwise due, which 
provides a benefit in the amount of the exemption. See, 1996 
Preliminary Results, 62 FR at 64810, and 1995 Preliminary Results, 62 
FR at 16785. We have also determined in the 1996 and 1995 reviews that 
the benefits are recurring because, once the company obtains a foreign 
currency loan, it is automatically exempted from paying the fees.
    During the POR, Mannesmann obtained foreign currency loans that 
were tied to destinations other than the United States, and loans that 
were received for both U.S. and German shipments. The Yucel Boru Group 
did receive foreign currency loans in connection with merchandise 
exported to the United States during the POR.
    To calculate the benefit for this program, we computed the exempted 
fees based on the amount of interest or principal paid during the POR 
for the foreign currency loans that Mannesmann received in connection 
with merchandise exported to the United States and Germany. We then 
indexed this benefit and divided the resultant amount by the company's 
(indexed) monthly total exports of the subject merchandise to the 
United States, and the company's total export sales of the subject 
merchandise to Germany. On this basis, we preliminarily determine the 
net subsidy to be 0.66 percent ad valorem for Mannesmann for line pipe, 
and zero for the Yucel Boru Group for pipe and tube. We have requested 
that Mannesmann provide its monthly total export sales to Germany in 
order to index these sales for inflation and more accurately calculate 
the ad valorem benefit for this program in the final determination.
C. Freight Program
    Decree number 93/43, effective October 13, 1993, provided freight 
rebate payments to exporters expressed as $50 per ton for merchandise 
exported on Turkish vessels, and $30 per ton for merchandise exported 
on non-Turkish vessels, capped at 15 percent of the FOB value of the 
goods. Benefits under this program were provided in the form of 30 
percent TL cash and 70 percent Turkish treasury bonds with one and two-
year maturity dates. 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 were no payments on shipments made after 
January 1, 1995.
    In the 1996 and 1995 reviews, we determined that these cash grants 
and bonds are countervailable export subsidies within the meaning of 
section 771(5A)(B) of the Act because the benefit is contingent upon 
export performance. The grants and bonds are a direct transfer of funds 
from the GRT providing a benefit in the amount of the cash grants and 
bonds. We also determined that the benefits under the Freight Program 
are ``recurring'' because, once a company exported and submitted 
documentation to the Central Bank, it became eligible to regularly 
receive cash grants or bonds. The receipt of benefits is automatic and 
continued throughout the life of the program. (1996 Preliminary 
Results, 62 FR at 64811 and 1995 Preliminary Results, 62 FR at 16785). 
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, Mannesmann received cash and bonds under the 
freight rebate program based on exports made in 1994. The one-year bond 
matured in 1997, and the two-year bond matured in 1998. During the POR, 
the Yucel Boru Group did not receive any benefits under this program in 
connection with exports to the United States. Normally, the Department 
countervails the benefit on the date of receipt because that is when 
the benefit affects cash flow and business decisions. See e.g., 
Ferrochrome from South Africa; Final Results of Countervailing Duty 
Administrative Review, 56 FR 33254, 33255 (July 19, 1991). However, the 
Department makes an exception in the case of an export benefit that is 
calculated as a percentage of the FOB value on a shipment-by-shipment 
basis, and the amount of the benefit to be received is known at the 
time of export. See e.g., Indian Castings, at 60 FR 44843. Although the 
benefit under the freight program is calculated based on tonnage and 
not as a percentage of export value, we have said that a benefit 
determined by the amount of the tonnage may also be known at the time 
of export.
    However, as previously determined in the 1996 review, the facts in 
this case establish that the exporter did not know the amount of 
benefit ultimately to be received at the time of export. Although the 
freight payments were stated in U.S. dollars per ton, the benefit was 
not tied to the U.S. dollar. Thus, because of high inflation in Turkey, 
the GRT's initial decision not to commit to the exchange rate existing 
either on the date of export, or on the date payment was received by 
the exporters, demonstrates that exporters could not know with 
certainty the value of the benefit at the time of export. In fact, it 
was not until February 1995, two months after the termination of the 
freight program, that the GRT announced that the benefit from this 
program would be based on the exchange rate that was in effect on 
December 31, 1994, regardless of when the shipments occurred.
    Therefore, because the GRT only committed to an exchange rate after 
the date of export, given the high rate of inflation in Turkey, there 
was no way Mannesmann could have predicted at the time of export the 
amount of TL benefit that would be received. As a result, because 
Mannesmann could not know the exact amount of the TL benefit, or the 
U.S. dollar value of that TL benefit on the date of export, Mannesmann 
could not make business and pricing decisions until the actual receipt 
of the TL benefit. The TL amount ultimately received by

[[Page 16928]]

Mannesmann in 1997 did not correspond to the U.S. dollar value of the 
benefit granted by the GRT at the time of export. Therefore, we 
preliminarily determine that the benefits under this program are 
bestowed when the cash is received with respect to the cash payments, 
and not on the date of exportation. 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, 61 FR at 
30369).
    With regard to the bonds portion of the rebate, we previously 
determined that the benefits from the bonds are bestowed on the date of 
maturity. See 1995 Preliminary Results, 62 FR at 16785. Although there 
were no restrictions on the sale or transfer of the bonds, there has 
been no secondary market to allow exporters to convert their bonds to 
cash because of the rate of inflation. Therefore, the exporters have no 
choice but to hold the bonds until maturity. See also Pasta, 61 FR at 
30368.
    The benefits under the freight program are made on a shipment-by-
shipment basis. 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 Colombia, 52 FR 
48847, 48848 (December 28, 1987). We have calculated the benefit for 
Mannesmann from this program by dividing the total amount of cash 
payments, which includes interest on the bonds and matured bonds 
(indexed for inflation) by total exports to the United States during 
the POR (indexed for inflation). On this basis, we preliminarily 
determine the net subsidy to be 3.43 percent ad valorem for Mannesmann 
for line pipe, and zero for the Yucel Boru Group for pipe and tube.

II. Program Preliminarily Determined To Be Not Countervailable

Special Importance Sector Under Investment Allowances
    During the POR, the Yucel Boru Group was entitled to receive a 100 
percent investment allowance because it made an investment in a 
``special importance sector.'' The special importance sector is a 
provision under the Investment Allowance program that allows companies 
a 100 percent corporate tax deduction of their fixed investment, 
regardless of the region in which the investment is made.
    In order to determine whether the ``special importance sector'' 
benefits are specific, in law or in fact, to an enterprise or industry, 
section 771(5A)(D) directs the Department to consider the following 
factors:
    1. whether the enabling legislation expressly limits access to the 
subsidy to an enterprise or industry;
    2. whether the actual recipients of the subsidy, whether considered 
on an enterprise or industry basis, are limited in number;
    3. whether an enterprise or industry is a predominant user of the 
subsidy;
    4. whether an enterprise or industry receives a disproportionately 
large amount of the subsidy; and
    5. the manner in which the authority providing the subsidy has 
exercised discretion in the decision to grant the subsidy indicates 
that an enterprise or industry is favored over others.
    An analysis of the first factor shows that the enabling legislation 
does not expressly limit access to an enterprise or industry; 
therefore, the subsidy is not specific as a matter of law.
    With respect to whether the benefits are specific, the GRT provided 
information regarding the total number of certificates issued to the 
various industries within each sector, the total investment, and the 
total fixed investment for each industry and sector. This data shows 
that more than 4,500 certificates were issued to different companies in 
numerous and varied industries and regions throughout Turkey. The data 
also shows that the iron and steel industry was not a predominant user, 
nor did it receive a disproportionate share of the benefits during the 
POR. Therefore, we preliminarily determine this program not to be 
countervailable.

III. Programs Preliminarily Determined To Be Not Used

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

A. Resource Utilization Support Fund
B. State Aid for Exports Program
C. Advance Refunds of Tax Savings
D. Export Credit Through the Foreign Trade Corporate Companies 
Rediscount Credit Facility (Eximbank)
E. Past Performance Related Foreign Currency Export Loans (Eximbank)
F. Export Credit Insurance (Eximbank)
G. Subsidized Turkish Lira Credit Facilities
H. Subsidized Credit for Proportion of Fixed Expenditures
I. Fund Based Credit
J. Investment Allowances (in excess of 30% minimum)
K. Resource Utilization Support Premium (RUSP)
L. Incentive Premium on Domestically Obtained Goods
M. Deduction from Taxable Income for Export Revenues
N. Regional Subsidies
    1. Additional Refunds of VAT (VAT + 10%)
    2. Postponement of VAT on Imported Goods
    3. Land Allocation (GIP)
    4. Taxes, Fees (Duties), Charge Exemption (GIP)

IV. Program Preliminarily Determined To Be Terminated

Export Incentive Certificate Customs Duty & Other Tax Exemptions
    Communique No. 96/1 dated January 5, 1996, rescinded Communique No. 
95/7, which provided export incentive certificates for the exclusion of 
taxes and duties, effective January 1, 1996. There are no residual 
benefits accruing from this program. Therefore, we preliminarily 
determine that the program has been terminated.

Preliminary Results of Review

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated an 
individual subsidy rate for each producer/exporter subject to these 
administrative reviews. For the period January 1, 1997 through December 
31, 1997, we preliminarily determine the net subsidy for Mannesmann to 
be 4.28 percent ad valorem for line pipe, and 0.84 percent ad valorem 
for Yucel Boru for pipes and tubes. If the final results of this review 
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 would also instruct Customs 
to collect cash deposits of estimated countervailing duties as 
indicated above based on the f.o.b. invoice price on all shipments of 
the subject merchandise from reviewed companies, entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
the final results of this review.
    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

[[Page 16929]]

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 
351.213(b). Pursuant to 19 CFR 351.212(c), 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). 
Therefore, the cash deposit rates for all companies except those 
covered by this review will be unchanged by the results of this review.
    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 under the Act, as amended 
by the URAA. If such a review has not been conducted, the rate 
established in the most recently completed administrative proceeding 
conducted 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 Review, 53 FR 9791 (March 25, 1988). 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, 1997 through December 31, 1997, 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.

Public Comment

    Pursuant to 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding any calculations performed in connection with 
these preliminary results within five days after the date of 
publication of this notice. Pursuant to 19 CFR 351.309, interested 
parties may submit written comments in response to these preliminary 
results. Case briefs must be submitted within 30 days after the date of 
publication of this notice, and rebuttal briefs, limited to arguments 
raised in case briefs, must be submitted no later than five days after 
the time limit for filing case briefs. Parties who submit argument in 
this proceeding are requested to submit with the argument: (1) a 
statement of the issues, and (2) a brief summary of the argument. Case 
and rebuttal briefs must be served on interested parties in accordance 
with 19 CFR 351.303(f). Also, pursuant to 19 CFR 351.310, within 30 
days of the date of publication of this notice, interested parties may 
request a public hearing on arguments to be raised in the case and 
rebuttal briefs. Unless the Secretary specifies otherwise, the hearing, 
if requested, will be held two days after the date for submission of 
rebuttal briefs. 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 are issued and published in accordance 
with section 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1) 
and 19 U.S.C. 1677f(i)(1)).

    Dated: March 31, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-8627 Filed 4-6-99; 8:45 am]
BILLING CODE 3510-DS-P