[Federal Register Volume 64, Number 157 (Monday, August 16, 1999)]
[Notices]
[Pages 44496-44501]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21198]


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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; Final Results of Countervailing Duty 
Administrative Reviews

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

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SUMMARY: On April 7, 1999, the Department of Commerce (the Department) 
published in the Federal Register its preliminary results of 
administrative reviews of the countervailing duty orders on certain 
welded carbon steel pipes and tubes (pipe and tube) and welded carbon 
steel line pipe (line pipe) from Turkey for the period January 1, 1997 
through December 31, 1997 (64 FR 16924). 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 Review section of this 
notice. We will instruct the U.S. Customs Service to assess 
countervailing duties as detailed in the Final Results of Review 
section of this notice.

EFFECTIVE DATE: August 16, 1999.

FOR FURTHER INFORMATION CONTACT: Stephanie Moore or Eric Greynolds, 
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

    Pursuant to 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 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), and the review on line 
pipe covers Mannesmann--Sumerbank Boru Endustrisi T.A.S. (Mannesmann). 
These reviews also cover 21 programs during the period January 1, 1997 
through December 31, 1997.
    Since the publication of the preliminary results on April 7, 1999 
(64 FR 16924), the following events have occurred. We invited 
interested parties to comment on the preliminary results. On May 7, 
1999, case briefs were submitted by the Yucel Boru Group, which 
exported pipe and tube, and Mannesmann, which exported line pipe, to 
the United States during the review period (respondents). On May 12, 
1999, a rebuttal brief was submitted by Maverick Tube Corporation and 
Wheatland Tube Company (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 in April 1998, 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 .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.

[[Page 44497]]

Analysis of Programs

    Based upon the responses to our questionnaires 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. Our review of the 
record and our analysis of the comments submitted by the interested 
parties, summarized below, has not led us to change our findings from 
the preliminary results. 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)
------------------------------------------------------------------------
Yucel Boru Group............................................        0.84
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                                 Rate
             Manufacturer/exporter of line pipe                (percent)
------------------------------------------------------------------------
Mannesmann..................................................        0.19
------------------------------------------------------------------------

2. Foreign Exchange Loan Assistance
    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. In 
the preliminary results, we stated that Mannesmann received foreign 
currency loans that were used for shipments to the United States and 
Germany. For the denominator, we used the indexed monthly total exports 
of the subject merchandise to the United States, and the company's 
total export sales (unindexed) of the subject merchandise to Germany. 
We subsequently requested the monthly total export sales of the subject 
merchandise to Germany so that we could index for inflation, as we had 
indexed sales of subject merchandise to the United States. We have now 
indexed the monthly total exports of the subject merchandise to the 
United States and to Germany to account for Turkey's high rate of 
inflation. See Preliminary Results, 64 FR 16924, 16926, where we found 
that Turkey experienced an inflation rate of 81 percent during the POR. 
Accordingly, the net subsidies for this program changed from the 
preliminary results and are as follows:

------------------------------------------------------------------------
                                                                 Rate
           Manufacturer/exporter of pipe and tube              (percent)
------------------------------------------------------------------------
Yucel Boru Group............................................        0.00
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                                 Rate
             Manufacturer/exporter of line pipe                (percent)
------------------------------------------------------------------------
Mannesmann..................................................        0.58
------------------------------------------------------------------------

3. 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, has not led us to change our findings from 
the preliminary results. 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)
------------------------------------------------------------------------
Yucel Boru Group............................................        0.00
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                                 Rate
             Manufacturer/exporter of line pipe                (percent)
------------------------------------------------------------------------
Mannesmann..................................................        3.43
------------------------------------------------------------------------

II. Program Found Not To Confer Subsidies Special Importance Sector 
Under Investment Allowances

    In the preliminary results we found this program did not confer 
subsidies during the POR. 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 from the preliminary results.

III. 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:

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
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)

    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.

IV. Program Found To Be Terminated

    In the preliminary results we found the following program to be 
terminated and that no residual benefits were being provided:
Export Incentive Certificate Customs Duty & Other Tax Exemptions
    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 our 
findings from the preliminary results.

Analysis of Comments

Comment 1: Appropriate Benchmark Interest Rates

    The Yucel Boru Group argues that the Department's use of monthly-
average interest rates is inconsistent with the Department's policies 
and practices in antidumping cases. They argue that it is the 
Department's policy, in high inflation economies, to require 
contemporaneity for measurements that are affected by inflation. In 
support of their argument, they cite the Final Determination of Sales 
at Less than Fair Value: Certain Pasta from Turkey, 61 FR 30309, (June 
14, 1996), in which the Department used daily exchange rates for 
currency conversion. Therefore, according to the Yucel Boru Group, 
because currency exchange rates and interest rates reflect the degree 
of inflation in the economy, they both should be treated the same way 
under the principle of contemporaneity in antidumping cases, as well as 
countervailing duty cases, as provided for under 19 CFR 351.415 
(Currency Conversion). Thus, they argue that the Department should use, 
as a benchmark, the weekly short-term interest rates rather than the 
monthly average short-term interest rates based on a simple average of 
the weekly figures corresponding for that month.
    The Yucel Boru Group also argues that the Department selected the

[[Page 44498]]

incorrect short-term weekly rates from The Economist. Therefore, they 
argue that if the Department elects to retain the monthly average 
methodology, the Department should select the correct short-term weekly 
rates from The Economist.
    Department's Position: We disagree with the Yucel Boru Group's 
contention that the Department should use the weekly short-term 
interest rate rather than the average monthly rate in calculating the 
benefit from the pre-shipment export credit program. First, the Group 
is incorrect in equating antidumping duty practice and the currency 
conversion regulation (351.415) (only applicable in antidumping duty 
cases) with countervailing duty practice. In antidumping duty cases 
because we are comparing costs and prices in different markets, 
contemporaneous comparisons are necessary to ensure that the 
comparisons are appropriate and not unduly influenced by exchange rate 
fluctuations. With regard to prices, our regulation on currency 
conversion effectuates this purpose. See 19 CFR 351.415. In 
countervailing duty cases we are not comparing prices or costs, rather, 
in choosing a benchmark interest rate, we are determining whether a 
benefit exists to the extent that the amount a firm pays on a 
government-provided loan is less than the amount the firm would pay on 
a comparable commercial loan obtained during the year in which the 
government-provided loan was given, in accordance with section 
771(5)(E(ii) of the Act. If the government-provided loan is a short-
term loan, the Department calculates a single, annual average benchmark 
interest rate, unless short-term interest rates in the country in 
question fluctuated significantly during the year in question. Because 
we determine that Turkey continued to experience a high rate of 
inflation, based on a Wholesale Price Index rate of approximately 81 
percent during the POR, we find that using an average monthly rate as 
the short-term benchmark interest rate sufficiently accounts for such 
inflation. It has been the Department's practice in countervailing duty 
cases to use the average monthly interest rate for purposes of deriving 
a benchmark interest rate in an inflationary economy. See e.g., Final 
Affirmative Countervailing Duty Determination: Certain Pasta from 
Turkey, 61 FR 30366, 30367 (June 14, 1996). In prior countervailing 
duty reviews of subject merchandise, the Department has consistently 
used, as the benchmark interest rates, the monthly average interest 
rates. See Certain Welded Carbon Steel Pipes and Tubes and Welded 
Carbon Steel Line Pipe from Turkey; Preliminary Results of 
Countervailing Duty Administrative Reviews, 62 FR 16782,16783 (April 8, 
1997) and Final Results, 62 FR 43984 (August 18, 1997) (1995 Pipe and 
Tubes and Line Pipe), and Certain Welded Carbon Steel Pipes and Tubes 
and Welded Carbon Steel Line Pipe from Turkey; Preliminary Results and 
Partial Recission of Countervailing Duty Administrative Reviews, 62 FR 
64808, 64809 (December 9, 1997) and Final Results, 63 FR 18885 (April 
16, 19998) (1996 Pipes and Tubes and Line Pipe). Moreover, we note that 
Mannesmann, the other producer of subject merchandise in the instant 
reviews, supplied the Department with the monthly average cost of its 
company-specific borrowing rates during the POR.
    We also disagree with the Yucel Boru Group's contention that the 
Department used the incorrect benchmark interest rate. The Group's 
contention appears to stem from their argument that interest rate 
benchmarks should be contemporaneous with when the interest payments 
are made. As discussed above, in selecting an appropriate benchmark, we 
are not comparing prices or costs. Instead, we are determining what the 
interest rate would have been had the company obtained a commercial 
loan comparable to the government-provided loan. Therefore, the 
Department bases its benchmark interest rate on the date the 
government-provided loan is taken out because the interest rate on a 
comparable commercial loan would have been established at the time the 
loan is given, and not on the date the interest payment is made, as 
argued by the Yucel Boru Group. See 1996 Pipes and Tubes and Line Pipe, 
62 FR 64308, 64809.

Comment 2: Countervailability of Exempted Loan Fees

    The Yucel Boru Group argues that the Department's inclusion of loan 
fees in the benchmark interest rate used to calculate the benefit of 
the pre-shipment loan program is contrary to both the World Trade 
Organization (WTO) Agreement and section 771 of the Tariff Act of 1930. 
Specifically, they argue that while section 771(5)(E)(iii) of the Act 
and Part V, Article 14(c) of the Agreement on Subsidies and 
Countervailing Measures (SCM), dealing with loan guarantees, include 
provisions for adjusting for fees, the statutory provisions addressing 
loans in section 771(5)(E)(ii) of the Act and part V, Article 14(c) of 
the SCM contain no such provision with respect to fees incurred on 
direct loans. Thus, they argue that because the statute and the WTO do 
not explicitly include a provision for adjusting for fees in the case 
of loans, the Department should not include fees in benchmark interest 
rate used to calculate the benefit under the pre-shipment export credit 
program.
    Petitioners counter that the Yucel Boru Group's contention is not 
tenable. Rather, according to petitioners, the waived fees are export 
promotion subsidies and are prohibited. Petitioners also counter that 
the adjustment for loan guarantee fees is necessary to prevent a 
finding of a subsidy where the net effect of the guarantee transaction 
provides no interest benefit to the loan recipient. However, the waiver 
of fees, which would otherwise be applicable to a loan, but for the 
fact the loan finances export sales, is an export subsidy in its own 
right. Therefore, to exclude the fee from the benchmark interest rates 
would ignore the subsidy benefit.
    Department's Position: We disagree with the Yucel Boru Group's 
contention that the Department's inclusion of loan fees in the 
benchmark interest rate used to calculate the benefit under the pre-
shipment export credit program is contrary to law. Although there is no 
explicit reference to adjusting for fees on direct loans in either 
Articles 14(b) and 14(c) of the SCM, and sections 771(5)(E)(ii) and 
771(5)(E)(iii) of the Act, the Department has interpreted language 
contained in both provisions as permitting the Department to add 
exempted fees to benchmark interest rates used to calculate the benefit 
in appropriate circumstances. Section 771(5)(E)(ii) of the Act defines 
the benefit in the case of loans as,

    ``* * * [the] 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.''

    The Department believes that this interpretation is in compliance 
with the SCM and the Act because the inclusion of loan fees in the 
benchmark interest rate to calculate the benefit accurately derives the 
amount that the recipient would pay on a comparable commercial loan.
    While section 351.505 of the Department's regulations are not in 
effect for the instant reviews, the Preamble restates the Department's 
practice of using the ``effective interest rate'' rather than the 
``nominal interest rate'' because effective interest rates are intended 
to take account of the actual cost of the loan, including the amount

[[Page 44499]]

of any fees, commissions, compensating balances, government charges or 
penalties paid in addition to the nominal interest. See section 
351.505(a)(1); Preamble to the Regulations, 63 FR 65362 (November 25, 
1998).
    As explained in the Preliminary Results at 16926, the pre-shipment 
export credit program 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. In 
light of the exemption granted under this program, the only way to 
determine the amount that the recipient would normally pay on a 
comparable commercial loan would be to factor in the fees a recipient 
would incur on this type of transaction. For this reason, consistent 
with the Department's practice, we compare effective rates rather than 
nominal rates. See e.g., Certain Iron-Metal Castings from India: Final 
Results of Countervailing Duty Administrative Review, 60 FR 44843 
(August 29, 1995) (Castings from India).

Comment 4: Measurement of Countervailable Benefit: Earned Versus 
Receipt Basis

    Mannesmann argues that the Department deviated from its long-
standing practice of measuring benefits on an earned basis, i.e., on 
the date of export where the benefit is earned, either as a fixed 
percentage of the f.o.b. value or as a fixed amount per ton, on a 
shipment-by-shipment basis, and the exporter knows the total amount of 
the benefit at the time of export. Mannesmann cites several cases, 
which they claim demonstrates that the Department has taken this 
approach even in cases where the benefit was denominated in local 
currency, in high inflationary economies, and in cases where there were 
long delays between the date of exportation and the date of actual 
receipt of the benefit.
    They argue that the Department measured the benefits on an earned 
basis in Brazilian, as well as Mexican cases in the 1980's, a period in 
which both countries experienced high inflation, although the benefits 
could not have been known at the time of export because of the ongoing 
currency devaluations. Further, Mannesmann argues that because the 
Department is not applying its long-standing practice in the instant 
case, it is arbitrarily changing its methodology without an 
explanation, which is contrary to the principle of administrative law.
    According to Mannesmann, the fact that the benefit was fixed for a 
period of time in U.S. dollars before being converted into local 
currency means that the value of the benefit was more stable during 
that period in the Turkish case than it was in the Brazilian and 
Mexican cases. In the Brazilian and Mexican cases, the value of the 
benefit was converted into local currency at the time of exportation 
and began immediately to lose value during the period between the date 
of export and the date of receipt of the benefit because of the effects 
of inflation. Furthermore, Mannesmann argues that in the Turkish, 
Brazilian and Mexican cases, the ``real'' value of the benefit that 
would ultimately be received by the exporters was not known at the time 
of export. Thus, the benefits from the Freight Rebate program should be 
measured on the same basis as the Brazilian and Mexican cases.
    Mannesmann states that in 1995 Pipe and Tube and Line Pipe, the 
Department countervailed benefits received under the Export Performance 
Credit program on the date they were earned, and not when they were 
received. Mannesmann argues that despite the Department's attempts to 
distinguish the Freight Rebate program from the Export Performance 
Credit program, the two programs were virtually identical. Mannesmann 
also argues that the exporters did not know, at the time of export, the 
exact exchange rate that would be used to convert the dollar amount to 
Turkish Lira (TL) in either program; therefore, the exporters did not 
know the ``precise'' amount of the benefit in TL on the date of export. 
On the other hand, they argue that under both programs, the exporters 
knew the exact U.S. dollar amount of the benefit on the date of export, 
and the exporters expected to receive the equivalent value in TL at a 
later date. Therefore, they argue that the price effect and the volume 
effect of the benefit were exerted at the time of export and not at a 
later date.
    Petitioners counter that the Brazilian cases cited by Mannesmann do 
not contradict the Department's finding in the instant case. In the 
Brazilian cases, the respondents knew the exact amount of local 
currency they would receive as a benefit at the time of exportation. 
However, in the instant case, the amount of local currency to be 
received was not known at the time of export. Petitioners also contend 
that the focus on local currency is critical because this is how the 
benefit was paid. According to petitioners, in inflationary economies, 
valuing a benefit at the time it is earned, where conversion from U.S. 
dollars to local currency will occur at some future date, understates 
the value of the benefit received. Furthermore, because the conversion 
to local currency occurred at a future date renders the value of the 
benefit uncertain at the time it is earned.
    Department's Position: The Department has previously addressed the 
arguments raised by Mannesmann. See 1996 Pipe and Tube and Line Pipe, 
63 FR at 18887-88. No new information has been presented that would 
warrant reconsideration of the Department's prior findings. Our normal 
practice is to countervail benefits when they affect the firm's cash 
flow, usually when the company receives the benefit. See e.g., 
Ferrochrome from South Africa, Final Results of Countervailing Duty 
Administrative Review, 56 FR 33254, 33255 (July 19, 1991) (Ferrochrome 
from South Africa). However, the Department has deviated from its long-
standing practice to countervail an export subsidy on the date the 
benefit is received on an ``earned basis'' where the benefit 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. See e.g., Castings from India, 
60 FR at 44844. As stated in 1995 Pipe and Tube and Line Pipe, and in 
1996 Pipe and Tube and Line Pipe, the exporter could not have known at 
the time of export the exact amount of the countervailable benefit from 
the Freight Rebate program because the freight payments were only 
stated in U.S. dollars per ton, but the benefit was not tied to the 
U.S. dollar. The Government of Turkey (GRT) did not initially commit to 
use the exchange rate existing on the date of export. Therefore, 
because of the high rate of inflation in Turkey, the exporters could 
not have known the amount of the benefit ultimately to be received at 
the time of export. See 1996 Pipe and Tube and Line Pipe, 63 FR at 
18888. In the Brazilian and Mexican cases cited by Mannesmann, the 
benefits in these high inflationary economies were paid at the time of 
export, thus exporters knew with certainty the benefit to be received 
in the local currency at the time of export. See e.g., Final 
Affirmative Countervailing Duty Determinations: Certain Stainless Steel 
Products from Brazil, 48 FR 21610, 21612 (May 13, 1983) and Toy 
Balloons (Including Punchballs) and Playballs from Mexico: Final 
Results of Administrative Review of Countervailing Duty Order, 49 FR 
45039, 45040 (November 14, 1984).
    We also disagree with Mannesmann's arguments that the Freight 
Rebate program is indistinguishable from the Export Performance Credit 
program. We previously determined that the

[[Page 44500]]

programs are distinguishable. See 1995 Pipe and Tube and Line Pipe, 62 
FR at 43991, and 1996 Pipe and Tube and Line Pipe, 63 FR at 18888. 
Under the Export Performance Credit program, because the value of the 
benefit was tied to the U.S. dollar, the benefit remained the same in 
U.S. dollar terms. Therefore, the value of the benefit from the Export 
Performance Credit program was known at the time of export, and could 
be calculated on an earned basis.

Comment 5: Policy Considerations for Measurement of Benefits

    Mannesmann argues that policy considerations and the Department's 
Regulations require the Freight Rebate program be countervailed on the 
date the benefit was earned because the benefits should be 
countervailed when they will have the greatest potential effect on a 
company's export volumes or pricing to the United States. Mannesmann 
states that since the Freight Rebate program was terminated at the end 
of 1994, there were no longer any incentive for companies to export. 
Therefore, they argue that because the countervailing duty law is 
intended to offset export subsidies, it makes little sense for the 
Department to countervail a benefit once a program has been terminated.
    In support of its policy argument, Mannesmann points to section 
351.514 of the Department's regulations, which deals with freight 
charges. Mannesmann states that although this provision relates to 
domestic freight charges on export shipments, it is instructive in that 
it specifically recognizes that freight-related benefits should be 
countervailed on the date that the subsidies were actually used to 
encourage shipments to the United States. Therefore, they argue that 
the Department should follow this policy when countervailing benefits 
from the Freight Rebate program.
    Petitioners counter that regardless of whether a countervailable 
program has been terminated, the Department should not ignore the 
residual benefits received under the program.
    Department's Position: The Department has previously addressed the 
arguments raised by Mannesmann. See 1996 Pipe and Tube and Line Pipe, 
63 FR at 18888. No new information has been presented that would 
warrant reconsideration of the Department's prior findings. We continue 
to disagree with Mannesmann's argument that it makes little sense for 
the Department to countervail a benefit once a program has been 
terminated. As we stated, under section 771(5)(C), we are not required 
to consider the potential effect of a subsidy. Moreover, under the Act, 
a benefit that is contingent upon export is an export subsidy and thus 
countervailable. See Section 771(5A)(B). Finally, under the logic of 
respondents argument, we could never countervail export subsidies 
unless the benefit could be measured at the time of shipment. This 
clearly conflicts with the Act and our long-standing practice to 
countervail benefits at the time the subsidy affects the company's cash 
flow, which includes residual benefits from a terminated program. See 
e.g., Ferrochrome from South Africa, 56 FR 33254, 33255 (July 19, 
1991).
    Mannesmann's citation to section 351.514 is not applicable to the 
instant reviews. However, Mannesmann's argument that this section of 
the regulations is instructive is flawed. We previously determined that 
the Freight Rebate program was a freight bonus, i.e., a benefit 
contingent upon export. Therefore, we continue to follow our normal 
practice and 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. See 1996 Pipe and Tube and Line Pipe, 
63 FR at 18889.

Comment 6: Treatment of Foreign Exchange Difference (Kur Farki)

    The Yucel Boru Group argues that the Department's statement that 
``we find that foreign exchange differences are not viewed as sales 
income generated by a company's main operations,'' is contrary to 
Turkish accounting principles, as well as the Turkish government's own 
Standard Accounting Plan. The Yucel Boru Group also argues that the 
Department's quote from Price Waterhouse's publication, Doing Business 
in Turkey (1992, as amended July 31, 1995) that ``the 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'' has nothing to do 
with income classification issues. The Group claims that the same 
article directly addresses the treatment of exchange gains and losses, 
and states that ``exchange gains and losses are part of normal trading 
income and expense to be taken into account when realized.'' Thus, they 
argue that kur farki should be considered as trading revenue for 
purposes of the denominator of subsidy calculations (total net sales).
    The Yucel Boru Group also discusses the Department's treatment of 
costs, interest expense, and price adjustment in the context of two 
antidumping cases that involve cost issues, both in a high inflationary 
economy (Turkey) and a non-high inflationary economy (Germany). The 
Group argues that in those cases, the Department treated the foreign 
exchange gain as sales income, and that the Department should do 
likewise in the instant case.
    Petitioners counter that the Yucel Boru Group points to one source 
cited by the Department. However, the Group does not address the 
extensive citations the Department provided from other publications 
regarding the treatment of income obtained from foreign exchange gains 
and losses. Petitioners also counter that there is overwhelming support 
in the record that foreign exchange gain or loss is not related to 
sales activities, and is therefore ``other income.''
    Department's Position: The Yucel Boru Group mistakenly argues that 
the Department excluded foreign exchange gains and losses from the 
total sales figure used as the denominator for the calculation of the 
subsidy. However, we note that we used the total sales denominator 
reported by the companies. In addition, as stated in the preliminary 
results, the Department departed from how it had treated such gains and 
losses in earlier reviews of subject merchandise, and in the instant 
reviews the Department has indexed both the subsidy benefits 
(numerator) and sales revenue (denominator), as reported in the 
questionnaire responses. See Preliminary Results at 16925-26. Thus, the 
Group's argument regarding whether foreign exchange gains or losses 
constitute sales revenue or other income and should be included in the 
sales denominator is not germane to the Department's calculation of the 
net subsides in the instant reviews.
    The Group's discussion of the antidumping cases also lacks merit. 
In the instant case, we are examining neither cost issues nor price 
adjustments. However, as discussed above, to account for high inflation 
in Turkey, the Department has used indexation in the instant case, as 
well as in the Notice of Final Results and Partial Recission of 
Antidumping Duty Administrative Review: Certain Pasta from Turkey, 63 
FR 68429, 68435.

Final Results of Review

    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, 1997 through December 
31, 1997, we determine the net subsidy to be as follows:

[[Page 44501]]



------------------------------------------------------------------------
                                                                 Rate
           Manufacturer/exporter of pipe and tube              (percent)
------------------------------------------------------------------------
Yucel Boru Group............................................        0.84
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                                 Rate
             Manufacturer/exporter of line pipe                (percent)
------------------------------------------------------------------------
Mannesmann..................................................        4.20
------------------------------------------------------------------------

    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) 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 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, 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.
    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 C.F.R. Sec. 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 and notice 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)(7)).

    Dated: August 5, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-21198 Filed 8-13-99; 8:45 am]
BILLING CODE 3510-DS-P