[Federal Register Volume 64, Number 108 (Monday, June 7, 1999)]
[Notices]
[Pages 30313-30316]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-14341]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-351-504]


Final Results of Expedited Sunset Review: Heavy Iron Construction 
Castings From Brazil

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

ACTION: Notice of Final Results of Expedited Sunset Review: Heavy Iron 
Construction Castings from Brazil.

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SUMMARY: On November 2, 1998, the Department of Commerce (``the 
Department'') initiated a sunset review of the countervailing duty 
order on heavy iron construction castings from Brazil (63 FR 58709) 
pursuant to section 751(c) of the Tariff Act of 1930, as amended (``the 
Act''). On the basis of a notice of intent to participate and 
substantive comments filed on behalf of the domestic industry, as well 
as inadequate response (in this case, no response) from respondent 
interested parties, the Department determined to conduct an expedited 
(120 day) review. As a result of this review, the Department finds that 
termination of the countervailing duty order would be likely to lead to 
continuation or recurrence of a countervailable subsidy. The net 
countervailable subsidy and the nature of the subsidy are identified in 
the ``Final Results of Review'' section of this notice.

FOR FURTHER INFORMATION CONTACT: Jason M. Appelbaum or Melissa G. 
Skinner, Office of Policy for Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th & Constitution, 
Washington, D.C. 20230; telephone: (202) 482-5050 or (202) 482-1560, 
respectively.

EFFECTIVE DATE: June 7, 1999.

Statute and Regulations

    This review was conducted pursuant to sections 751(c) and 752 of 
the Act. The Department's procedures for the conduct of sunset reviews 
are set forth in Procedures for Conducting Five-year (``Sunset'') 
Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516 
(March 20, 1998) (``Sunset Regulations'') and in 19 CFR Part 351 (1998) 
in general. Guidance on methodological or analytical issues relevant to 
the Department's conduct of sunset reviews is set forth in the 
Department's Policy Bulletin 98:3--Policies Regarding the Conduct of 
Five-year (``Sunset'') Reviews of Antidumping and Countervailing Duty 
Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset Policy 
Bulletin'').

Scope

    The merchandise covered by this review are shipments of certain 
heavy iron construction castings from Brazil. This merchandise is 
defined as manhole covers, rings and frames; catch basin grates and 
frames; and cleanout covers and frames. The DGO700 frame and the DG0641 
grate from Southland Marketing are outside the scope of the order. This 
merchandise is currently classifiable under item number 7325.10.00 of 
the Harmonized Tariff Schedule (``HTS'') of the United States. The HTS 
item number is provided for convenience and customs purposes only. The 
written description remains dispositive.

History of the Order

    On March 19, 1986, the Department issued a final affirmative 
countervailing duty determination with respect to imports of certain 
heavy iron construction castings from Brazil.1 The 
countervailing duty order on heavy iron construction castings from 
Brazil was published in the Federal Register on May 15, 1986 (51 FR 
17786). In the final determination the Department found an estimated 
net subsidy of 5.77 percent ad valorem during the review period based 
on three programs: 2.85 percent under the preferential working-capital 
financing for exports program; 1.86

[[Page 30314]]

percent under the income tax exemption for export earnings program; and 
1.06 percent under the FINEX export financing program. However, the 
cash deposit rate was adjusted to take into account program-wide 
changes in the preferential working capital financing for exports 
program, which reduced the program-specific subsidy from 2.85 percent 
to 0.48 percent. On May 15, 1986, the Department issued a 
countervailing duty order establishing the cash deposit rate at 3.40 
percent ad valorem.2
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    \1\ See Final Affirmative Countervailing Duty Determination; 
Certain Heavy Iron Construction Castings From Brazil, 51 FR 9491 
(March 19, 1986).
    \2\ See Countervailing Duty Order; Certain Heavy Iron 
Construction Castings From Brazil, 51 FR 17786 (May 15, 1986).
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    Since the issuance of the order, the Department has conducted one 
administrative review covering the period January 1, 1990 through 
December 31, 1990, six programs, and the three companies that produced 
and exported the subject merchandise to the United States.3 
In the final results of administrative review, the Department 
determined the benefit from the income tax reduction for export 
earnings program was 0.33 percent. However, the Department also found 
that Decree Law 8034 of April 12, 1990 eliminated this tax reduction 
and, therefore, for purposes of cash deposits of estimated 
countervailing duties, the Department determined the benefit from this 
program to be zero. The Department also found that the CACEX 
preferential working capital financing for exports program has been 
terminated effective August 30, 1990, by Central Bank Resolution 1744. 
Finally, the Department found that the FINEX export financing program 
was not used by respondents during the period of review. The three 
other programs reviewed by the Department were either not used or 
eliminated.
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    \3\ See Certain Heavy Iron Construction Castings From Brazil; 
Final Results of Countervailing Duty Administrative Review and 
Determination Not To Revoke the Countervailing Duty Order, 57 FR 
2252 (January 21, 1992) and Certain Heavy Iron Construction Castings 
From Brazil; Preliminary Results of Countervailing Duty 
Administrative Review, 56 FR 58879 (November 22, 1991).
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    This review covers all producers and exporters of heavy iron 
construction castings from Brazil.

Background

    On November 2, 1998, the Department initiated a sunset review of 
the countervailing duty order on heavy iron construction castings from 
Brazil (63 FR 58709), pursuant to section 751(c) of the Act. The 
Department received a Notice of Intent to Participate on behalf of the 
Municipal Castings Fair Trade Council (``MCFTC'') and its individual 
members 4 (collectively ``the domestic parties''), on 
November 17, 1998, within the deadline specified in section 
351.218(d)(1)(i) of the Sunset Regulations. We received a complete 
substantive response on behalf of the domestic parties on December 2, 
1998, within the 30-day deadline specified in the Sunset Regulations 
under section 351.218(d)(3)(i). The individual members of the MCFTC 
claimed interested party status as manufacturers of domestic like 
products and MCFTC claimed interested party status as a trade 
association representing the domestic industry.
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    \4\ The MCFTC is comprised of Allegheny Foundry Company, Bingham 
& Taylor, Deeter Foundry Inc., East Jordan Iron Works, Inc., LeBaron 
Foundry, Inc., Municipal Castings, Inc., Neenah Foundry Company, 
Tyler Pipe, and U.S. Foundry & Manufacturing Co. Bingham & Taylor 
and Tyler Pipe are manufacturers only of so-called ``light 
castings'' and thus are not interested parties in the review of this 
order, which covers only so-called heavy castings.
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    The Department did not receive a substantive response from any 
respondent interested party, including the Government of Brazil. 
Therefore, pursuant to the regulations, the Department determined to 
conduct an expedited review.
    The Department determined that the sunset review of the 
countervailing duty order on heavy iron construction castings from 
Brazil is extraordinarily complicated. In accordance with section 
751(c)(5)(C)(v) of the Act, the Department may treat a review as 
extraordinarily complicated if it is a review of a transition order 
(i.e., an order in effect on January 1, 1995). (See section 
751(c)(6)(C) of the Act.) Therefore, on March 2, 1999, the Department 
extended the time limit for completion of the final results of this 
review until not later than June 1, 1999, in accordance with section 
751(c)(5)(B) of the Act.5
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    \5\ See Heavy Iron Construction Castings From Brazil: Extension 
of Time Limit for Final Results of Five-Year Review, 64 FR 10992 
(March 8, 1999).
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Determination

    In accordance with section 751(c)(1) of the Act, the Department 
conducted this review to determine whether termination of the 
countervailing duty order would be likely to lead to continuation or 
recurrence of a countervailable subsidy. Section 752(b) of the Act 
provides that, in making this determination, the Department shall 
consider the net countervailable subsidy determined in the 
investigation and subsequent reviews, and whether any change in the 
program which gave rise to the net countervailable subsidy has occurred 
that is likely to affect that net countervailable subsidy. Pursuant to 
section 752(b)(3) of the Act, the Department shall provide to the 
International Trade Commission (``the Commission'') the net 
countervailable subsidy likely to prevail if the order is revoked. In 
addition, consistent with section 752(a)(6), the Department shall 
provide to the Commission information concerning the nature of the 
subsidy and whether the subsidy is a subsidy described in Article 3 or 
Article 6.1 of the Subsidies Agreement.
    The Department's determinations concerning continuation or 
recurrence of a countervailable subsidy, the net countervailable 
subsidy likely to prevail if the order is revoked, and nature of the 
subsidy are discussed below. In addition, the domestic parties' 
comments with respect to each of these issues are addressed within the 
respective sections.

Continuation or Recurrence of a Countervailable Subsidy

    Drawing on the guidance provided in the legislative history 
accompanying the Uruguay Round Agreements Act (``URAA''), specifically 
the Statement of Administrative Action (``the SAA''), H.R. Doc. No. 
103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt.1 
(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the 
Department issued its Sunset Policy Bulletin providing guidance on 
methodological and analytical issues, including the basis for 
likelihood determinations. The Department clarified that determinations 
of likelihood will be made on an order-wide basis (see section III.A.2 
of the Sunset Policy Bulletin). Additionally, the Department normally 
will determine that revocation of a countervailing duty order is likely 
to lead to continuation or recurrence of a countervailable subsidy 
where (a) a subsidy program continues, (b) a subsidy program has been 
only temporarily suspended, or (c) a subsidy program has been only 
partially terminated (see section III.A.3.a of the Sunset Policy 
Bulletin). Exceptions to this policy are provided where a company has a 
long record of not using a program (see section III.A.3.b of the Sunset 
Policy Bulletin).
    In addition to considering guidance on likelihood provided in the 
Sunset Policy Bulletin and legislative history, section 751(c)(4)(B) of 
the Act provides that the Department shall determine that revocation of 
an order is likely to lead to continuation or recurrence of a 
countervailable subsidy where a respondent interested party waives its 
participation in the sunset review. Pursuant to the SAA, at 881, in a 
review

[[Page 30315]]

of a countervailing duty order where the foreign government has waived 
participation, the Department shall conclude that revocation of the 
order would be likely to lead to continuation or recurrence of a 
countervailable subsidy for all respondent interested 
parties.6 In the instant review, the Department did not 
receive a substantive response from the foreign government or from any 
other respondent interested party. Pursuant to section 
351.218(d)(2)(iii) of the Sunset Regulations, this constitutes a waiver 
of participation.
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    \6\ See also 19 CFR 351.218(d)(2)(iv).
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    In their substantive response, the domestic parties argue that it 
is likely that a countervailable subsidy would continue to be provided 
to manufacturers and exporters of the subject merchandise if the 
countervailing duty order were revoked. (See December 2, 1998 
Substantive Response of the domestic parties at 42.) The domestic 
parties argue that, even though the Department, in the lone 
administrative review of this order, found a de minimis net 
countervailable subsidy, this alone is not sufficient grounds to 
conclude that there is no likelihood of continuation or recurrence of a 
countervailable subsidy. Citing to the SAA at 888, the domestic parties 
assert that the Department must carefully examine the legal method by 
which the Government of Brazil terminated any of its subsidy programs. 
(See Substantive Response of the domestic parties at 49-50.)
    The domestic parties argue that, with respect to at least one 
program (preferential working capital financing for exports), 
termination was accomplished through administrative action rather than 
a legislative measure. The domestic parties argue that this is 
precisely the type of circumstance recognized by the SAA as one in 
which a program may more likely be reinstated.
    The Sunset Policy Bulletin, at section III.A.3.a, states that, 
consistent with the SAA at 888, continuation of a program will be 
highly probative of the likelihood of continuation or recurrence of 
countervailable subsidies. Temporary suspension or partial termination 
of a subsidy program also will be probative of continuation or 
recurrence of countervailable subsidies, absent significant evidence to 
the contrary. Additionally, the Sunset Policy Bulletin provides that, 
where a program has been officially terminated by the foreign 
government, this will be probative of the fact that the program will 
not continue or recur if the order is revoked. (See Sunset Policy 
Bulletin at section III.A.5.)
    As noted above, the Department, in its final affirmative 
determination, determined that Brazilian producers of castings were 
benefitting from three countervailable subsidy programs. In the lone 
administrative review of the order, the Department found that two of 
the original three programs had since been terminated. Additionally, 
the Department also found two other programs that had not previously 
been used by producers of castings to be terminated. Finally, the 
Department found that the third of the original three programs was not 
used during the review period.
    As noted in the Sunset Policy Bulletin, where a foreign government 
has eliminated a subsidy program, the Department will consider the 
legal method by which the government eliminated the program and whether 
the government is likely to reinstate the program. With respect to the 
income tax exemption for export earnings program, the program was 
eliminated by Decree Law 8034. Therefore, since this program was 
terminated through legislative action we find that this program was 
eliminated and cannot easily be reinstated. With respect to the 
preferential working capital financing for exports program, we agree 
with the domestic parties that the program was terminated by Central 
Bank resolution. Loans made under this program were authorized by 
resolution of the Central Bank. Therefore, we determine that 
termination of this program by Central Bank resolution is sufficient 
for us to consider this program terminated and that it cannot be easily 
reinstated. Further, we note that, although the domestic parties 
requested that we consider whether the preferential working capital 
financing for exports program may be easily reinstated, they offered no 
reason to believe that the program has, or will be reinstated. 
Therefore, for purposes of this review, we determine that both of these 
programs have been eliminated.
    On the basis of information submitted during this sunset review, 
however, we have no reason to believe that the FINEX export financing 
program has been eliminated. The SAA, at 888, states that continuation 
of a program will be highly probative of the likelihood of continuation 
or recurrence of countervailable subsidies. Additionally, as noted 
above, according to the Sunset Regulations, where the foreign 
government has waived participation in the review, the Department will 
normally determine that revocation of the countervailing duty order 
will likely lead to continuation or recurrence of a countervailable 
subsidy. Therefore, absent significant evidence to the contrary, and 
because the foreign government has waived participation in this review, 
we find that revocation of the countervailing duty order would likely 
result in the continuation or recurrence of countervailable subsidies.

Net Countervailable Subsidy

    In the Sunset Policy Bulletin, the Department stated that, 
consistent with the SAA and House Report, ``the Department normally 
will select a rate `from the investigation, because that is the only 
calculated rate that reflects the behavior of exporters and foreign 
governments without the discipline of an order or suspension agreement 
in place.' '' The Department went on to clarify that this rate may not 
be the most appropriate if, for example, the rate was derived from 
subsidy programs which were found in subsequent reviews to be 
terminated, there has been a program-wide change, or the rate ignores a 
program found to be countervailable in a subsequent review (see section 
III.B.3).
    Citing to the SAA at 890 and the Sunset Policy Bulletin, the 
domestic parties suggested that the Department select the 5.77 percent 
subsidy rate from the original investigation because it is the only 
calculated rate that reflects the behavior of exporters and foreign 
governments without the discipline of the order in place. We disagree 
with the domestic parties. Rather, consistent with the Sunset Policy 
Bulletin and SAA, we have taken the termination of programs into 
account. Because the income tax reduction for export earnings and the 
CACEX preferential working capital financing programs were found to be 
terminated, we have adjusted the original countervailing duty rate to 
reflect these terminations. Further, Brazilian exporters/producers of 
castings have not been found to have benefitted from any additional 
countervailable programs. Therefore, the Department determines that the 
net countervailable subsidy likely to prevail if the order were revoked 
is the rate attributed to the FINEX export financing program as 
determined in the original investigation. The net countervailable 
subsidy that will be reported to the Commission is contained in the 
Final Results of Review section of this notice.

Nature of the Subsidy

    In the Sunset Policy Bulletin, the Department stated that, 
consistent with section 752(a)(6) of the Act, the Department will 
provide information to the Commission concerning the nature of the 
subsidy and whether the subsidy

[[Page 30316]]

is a subsidy described in Article 3 or Article 6.1 of the Subsidies 
Agreement. The domestic parties did not specifically address this 
issue.
    Because receipt of benefits provided under the FINEX Export 
Financing by the Fundo de Financiamento a Exportacao program are 
contingent upon exports, this program falls within the definition of an 
export subsidy under Article 3.1(A) of the Subsidies Agreement.

Final Results of Review

    As a result of this review, the Department finds that revocation of 
the countervailing duty order would be likely to lead to continuation 
or recurrence of a countervailable subsidy at the rates listed below:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporters                     (percent)
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All producers/manufacturers/exporters......................         1.06
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    This notice serves as the only 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 351.305 of the Department's regulations. 
Timely notification of return/destruction of APO materials or 
conversion to judicial protective order is hereby requested. Failure to 
comply with the regulations and terms of an APO is a sanctionable 
violation.
    This five-year (``sunset'') review and notice are in accordance 
with sections 751(c), 752, and 777(i)(1) of the Act.

    Dated: June 1, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-14341 Filed 6-4-99; 8:45 am]
BILLING CODE 3510-DS-P