[Federal Register Volume 64, Number 186 (Monday, September 27, 1999)]
[Notices]
[Pages 51954-51958]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25073]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-508-605]


Preliminary Results of Full Sunset Review: Industrial Phosphoric 
Acid From Israel

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

ACTION: Notice of preliminary results of full sunset review: industrial 
phosphoric acid from Israel.

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SUMMARY: On March 1, 1999, the Department of Commerce (``the 
Department'') initiated a sunset review of the countervailing duty 
order on industrial phosphoric acid from Israel (64 FR 9970) pursuant 
to section 751(c) of the Tariff Act of 1930, as amended (``the Act''). 
On the basis of the notices of intent to participate and adequate 
substantive responses filed on behalf of the domestic and respondent 
interested parties, the Department is conducting a full (240 day) 
review. In conducting this sunset review, the Department preliminarily 
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 ``Preliminary Results of Review'' section of this 
notice.

FOR FURTHER INFORMATION CONTACT: Kathryn B. McCormick or Melissa G. 
Skinner, Office of Policy for Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street & 
Constitution Avenue, NW, Washington, D.C. 20230; telephone: (202) 482-
1698 or (202) 482-1560, respectively.

Effective Date: September 27, 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 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

    This order covers shipments of Israeli industrial phosphoric acid 
(``IPA''). The subject merchandise was originally classifiable under 
item number 416.30 of the Tariff Schedules of the United States 
Annotated (``TSUSA''); currently, it is classifiable under item number 
2809.20.00 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). Although the TSUSA and HTSUS item numbers are provided for 
convenience and customs purposes, the written description remains 
dispositive.
    This review covers all producers and exporters of industrial 
phosphoric acid from Israel.

History of the Order

    The Department published its final affirmative countervailing duty 
determination on industrial phosphoric acid from Israel in the Federal 
Register on July 7, 1987 (52 FR 25447) and issued the countervailing 
duty order on August 19, 1987 (52 FR 31057). The Department found the 
following programs to confer subsidies:

(1) Encouragement of Capital Investments Law Grants
(2) Long-Term Industrial Development Loans
(3) Bank of Israel Export Production, Shipment, and Import-for Export 
Fund Loans
(4) Exchange Rate Risk Insurance Scheme
(5) Encouragement of Research and Development Law Grants

    The Department determined the estimated net subsidy to be 19.46 
percent for Haifa Chemicals Ltd.(``Haifa'') and 6.02 percent for all 
other producers and exporters of IPA from Israel. In this case, the 
Government of Israel (``GOI'') provided to eligible exporters 
preferential short-term financing in local and foreign currencies 
through the Bank of Israel Export Production, Shipment, and Import-for 
Export Fund Loans programs. However, the Department verified that, 
since 1985, the loans under these funds were provided only in foreign 
currencies and were no longer at preferential terms. In cases in which 
program-wide changes have occurred prior to a preliminary determination 
and where the changes are verifiable, the Department's practice is to 
adjust the duty deposit rate to correspond to the eventual duty 
liability. Accordingly, the Department did not include the BOI export 
loan benefits in the duty deposit rate, for which the final results 
were 15.11 for Haifa and 5.36 percent for all others. 1
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    \1\ See Final Affirmative Countervailing Duty Determination: 
Industrial Phosphoric Acid from Israel, 52 FR 25447, 25449 (July 7, 
1987).
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    The Department has conducted the following administrative reviews 
since the issuance of the order:

------------------------------------------------------------------------
                                                             Net subsidy
          Period of review                  Citation           (percent)
------------------------------------------------------------------------
(1) 5 Feb 87-31 Dec 87.............  56 FR 2751............         5.96
(2) 1 Jan 88-31 Dec 88.............  56 FR 50854...........         9.18
(3) 1 Jan 89-31 Dec 89.............  56 FR 50854...........        11.26
(4) 1 Jan 90-31 Dec 90.............  57 FR 39391...........        12.11
(5) 1 Jan 91-31 Dec 91.............  59 FR 5176............         6.98
(6) 1 Jan 92-31 Dec 92.............  61 FR 28841...........         3.84
(7) 1 Jan 93-31 Dec 93.............  61 FR 28841...........         5.49
(8) 1 Jan 94-31 Dec 94.............  61 FR 53351...........         8.06

[[Page 51955]]

 
(7) 1 Jan 95-31 Dec 95.............  63 FR 20612...........         8.77
(9) 1 Jan 96-31 Dec 96.............  64 FR 2879............         5.89
(10) 1 Jan 97-31 Dec 97............  64 FR 49460...........         5.65
------------------------------------------------------------------------

    In the first administrative review (56 FR 2751), the Department 
determined that Israeli producers of IPA benefitted from the following 
countervailable subsidy programs: (1) Encouragement of Capital 
Investments Law (``ECIL'') Grants; (2) Long-Term Industrial Development 
(``LTID'') Loans; (3) the Exchange Rate Risk Insurance Scheme 
(``ERIS''); and (4) Encouragement of Research and Development Law 
(``EIRD'') Grants. The Department continued to find net subsidies from 
ECIL and ERIS Grants, and LTID Loans in the administrative reviews from 
1988 through 1991.2
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    \1\ (Haifa: 19.46).
    \2\ See Industrial Phosphoric Acid from Israel; Final Results of 
Countervailing Duty Administrative Reviews, 56 FR 50854 (October 9, 
1991); Industrial Phosphoric Acid from Israel; Final Results of 
Countervailing Duty Administrative Reviews, 57 FR 39391(August 31, 
1992); Industrial Phosphoric Acid from Israel; Final Results of 
Countervailing Duty Administrative Reviews, 59 FR 5176 (February 3, 
1994).
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    In the 1992 period of review, the Department found benefits flowing 
from (1) ECIL Grants, (2) LTID Loans, and (3) EIRD Grants; in 1993, the 
programs (1) ECIL Grants, (2) LTID Loans, and (3) ERIS, were found to 
confer subsidies (61 FR 28841).
    In the administrative reviews of periods after 1993,3 
the Department found no further benefits from the ERIS; however, 
continued net subsidies were found under the ECIL Grants program and 
the resumption of net subsidies under the EIRD program. In 1999, the 
Department completed its administrative review (64 FR 2879) for the 
1996 period of review, and again, net subsidies were found under the 
ECIL and EIRD Grants programs. Additionally, the Department found net 
subsidies from two new programs: the Infrastructure and Environmental 
Grants programs (id.).
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    \3\ See Industrial Phosphoric Acid from Israel; Final Results of 
Countervailing Duty Administrative Reviews, 61 FR 53351 (October 11, 
1996); Industrial Phosphoric Acid from Israel; Amended Final Results 
of Countervailing Duty Administrative Reviews, 63 FR 20612 (April 
27, 1998); Industrial Phosphoric Acid from Israel; Final Results of 
Countervailing Duty Administrative Reviews, 64 FR 2879 (January 19, 
1999); Industrial Phosphoric Acid from Israel; Final Results and 
Partial Recission of Countervailing Duty Administrative Review, 64 
49460 (September 13, 1999).
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Background

    On March 1, 1999, the Department published a notice of initiation 
of a sunset review of the countervailing duty order on IPA from Israel 
(64 FR 9970), pursuant to section 751(c) of the Act. The Department 
received a Notice of Intent to Participate on the behalf of domestic 
producers Albright and Wilson Americas Inc. (``A&W''), FMC Corporation 
(``FMC''), and Solutia Inc. (``Solutia'') (hereinafter, collectively 
``domestic interested parties'') and respondent interested parties, the 
Government of Israel (``GOI'') and Rotem Amfert Negeve Ltd. 
(``Rotem''), an exporter of industrial phosphoric acid, on March 15, 
1999, within the deadline specified in section 351.218(d)(1)(i) of the 
Sunset Regulations. The domestic interested parties claimed interested 
party status under sections 771(9)(C) of the Act, as domestic producers 
of IPA. The GOI is an interested party pursuant to section 771(9)(B) of 
the Act as the government of a country in which IPA is produced and 
exported; Rotem is an interested party pursuant to section 771(9)(A) of 
the Act as a foreign producer and exporter of subject merchandise.
    The GOI has participated in every segment of the proceeding before 
the Department related to the subject merchandise. Rotem, the 1992 
successor to Negev Phosphates Ltd. (``Negev''),4 the initial 
respondent interested party, has participated in every administrative 
review after 1990.
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    \4\ See Industrial Phosphoric Acid from Israel; Final Results of 
Antidumping Changed Circumstances Review, 59 FR 6944 (February 
14,1994).
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    Of the domestic interested parties, FMC and Monsanto Company 
(``Monsanto'') were the petitioners in the original countervailing duty 
investigation,5 and they requested and participated in each 
administrative review through 1994. A&W joined with FMC in requesting 
and participating in each review thereafter.
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    \5\ In the United States, there is a newly created company, 
Solutia, that is now responsible for the IPA business previously 
operated by Monsanto (see March 31, 1999 Substantive Response of 
domestic interested parties at 3).
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    We received adequate substantive responses from the domestic and 
respondent interested parties on March 31, 1999, within the 30-day 
deadline specified in the Sunset Regulations under section 
351.218(d)(3)(i). As a result, pursuant to 19 CFR 351.218(e)(2), the 
Department determined to conduct a full review.
    In accordance with 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). 
Therefore, on June 21, 1999, the Department determined that the sunset 
review of the countervailing duty order on IPA from Israel is 
extraordinarily complicated, and extended the time limit for completion 
of the final results of this review until not later than January 25, 
2000, in accordance with section 751(c)(5)(B) of the Act.6
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    \6\ See Industrial Phosphoric Acid from Israel (C-508-605) and 
Industrial Phosphoric Acid from Belgium (A-423-602): Extension of 
Time Limit for Final Results of Five-Year Reviews, 64 FR 34189 (June 
25, 1999).
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Determination

    In accordance with section 751(c)(1) of the Act, the Department is 
conducting 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 
and 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 it is a subsidy described in Article 3 or Article 
6.1 of the 1994 WTO Agreement on Subsidies and Countervailing Measures 
(``Subsidies Agreement'').
    The Department's preliminary determinations concerning continuation 
or recurrence of a countervailable subsidy, the net countervailable 
subsidy likely to prevail if the order is revoked,

[[Page 51956]]

and nature of the subsidy are discussed below. In addition, 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 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).

Interested Party Comments

    The domestic interested parties assert that the history of the 
order and the nature and extent of the subsidies show that revocation 
of the countervailing duty order on IPA from Israel will result in the 
continuation or recurrence of a countervailable subsidy. They assert 
that, in the last ten years following the issuance of the order, Rotem 
has continued to receive significant benefits under a variety of 
countervailable subsidy programs (see March 31, 1999 Substantive 
Response of domestic interested parties at 12). As noted earlier, in 
the 1996 administrative review, the Infrastructure and Environmental 
Grant programs were two new programs found to confer subsidies on 
Israel producers of IPA.
    The GOI and Rotem (Negev) do not argue that there is no likelihood 
that revocation of the order will lead to continuation of a 
countervailable subsidy. Rather, they argue that revocation of the 
countervailing duty order will have no effect on the U.S. producers of 
industrial phosphoric acid (see March 31, 1999 Substantive Response of 
respondent interested parties at 3-5).
    In their rebuttal comments the domestic interested parties argue 
that the respondents failed to address the question of likelihood and, 
therefore, the Department should conduct an expedited review on the 
basis of facts available and find that revocation of the countervailing 
duty order would result in continuation of a countervailable 
subsidy.7
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    \7\ See April 8, 1999 Industrial Phosphoric Acid from Israel; 
Comments Submitted in Rebuttal to the Substantive Responses of the 
Government of Israel and Rotem Amfert Negev Ltd. at 2.
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Department's Determination

    Although the Department found that the Exchange Rate Risk Insurance 
Scheme was terminated and provides no current benefits,8 and 
that the Long-Term Industrial Development Loans Program was not used 
during the 1996 review period (64 FR 2879 (January 19, 1999)), the 
Department did find evidence of programs that continued to confer 
countervailable subsidies on Israeli producers of IPA. The programs 
include the Encouragement of Capital Investments Law and the 
Encouragement of Industrial Research and Development Grants. In 
addition, the Department found new programs determined to confer 
subsidies: the Infrastructure Grant Program and the Environmental Grant 
Program. Therefore, it is reasonable to assume that these programs 
continue to exist and are utilized. Pursuant to the SAA at 888, the 
Department concludes that continuation of these programs are highly 
probative of the likelihood of continuation or recurrence of 
countervailable subsidies.9
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    \8\ See Industrial Phosphoric Acid from Israel; Final Results of 
Countervailing Duty Administrative Reviews, 61 FR 28841, 28844 (June 
6, 1996).
    \9\ See Industrial Phosphoric Acid from Israel; Final Results of 
Countervailing Administrative Reviews, 64 FR 2879, 2881 (January 19, 
1999).
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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 as the net countervailable subsidy 
likely to prevail if the order is revoked, 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 noted that this rate may not be the most 
appropriate rate 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 administrative review.10
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    \10\ See section III.B.3 of the Sunset Policy Bulletin.
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Interested Party Comments

    The domestic interested parties assert that the Department should 
use the net subsidy rates determined in the original investigation as 
the rates likely to prevail if the countervailing duty order were 
revoked. As noted above, the net subsidy rate determined in the 
original investigation was 19.46 percent for Haifa, and 6.02 percent 
for all other imports of IPA from Israel. The domestic interested 
parties argue that the original duty deposit rate of 15.11 percent is 
appropriate for Haifa in light of its lack of cooperation and the 
Department's authority to use an adverse inference (see March 31 
Substantive Response of domestic interested parties at 19). Further, 
the domestic interested parties suggest that the Department could use 
for Rotem the 12.11 percent rate from the 1990 review, since it 
indicates that subsidies have been and can be made available to Israeli 
producers (id.). However, the domestic interested parties argue that 
the Department should not adopt for Rotem any rate lower than 5.89 
percent, the rate determined by the Department in the administrative 
review of the 1996 period (id.).
    The respondent interested parties assert that the countervailing 
duty rate that is likely to prevail is the current rate of 5.89 percent 
or less. They note that, in the last several reviews, the Department 
has determined that (1) Rotem has been the only exporter of the subject 
merchandise to the United States and that (2) there is only one subsidy 
program providing benefits to Rotem's production of the subject 
merchandise: the Encouragement of Capital Investment Law (ECIL) 
program, under which Rotem received infrastructure grants, some of 
which have been found to benefit subject merchandise (see March 31, 
1999 Substantive Response of respondent interested parties at 7). Of 
the 5.89 percent subsidy found in the last review, 5.58 percent of that 
amount was from ECIL grants (id.).
    The respondent interested parties argue that ECIL grants are 
domestic subsidies not contingent upon exports or exporting, and 
therefore, do not provide an incentive to export (id.). Further, since 
they are non-recurring grants, under the Department's grant 
methodology, grants given in earlier years provide diminishing benefits 
throughout the benefit stream, and

[[Page 51957]]

benefits afforded by these grants cannot increase if the countervailing 
duty order is eliminated. Moreover, the respondent interested parties 
argue that the subsidy from the grants has further diminished as a 
result of a series of privatizations of Rotem (id.).
    Respondent interested parties assert that higher subsidy findings 
for Rotem's IPA were the result of the Department's finding that 
another program, the Exchange Rate Risk Insurance Program provided 
substantial export subsidies to Rotem. They argue that, since the 
latter program has been terminated, it should not be considered in the 
Department's determination of the countervailing duty rate that is 
likely to prevail (see April 8, 1999 Substantive Response of respondent 
interested parties). With respect to the Long-term Industrial 
Development Loans, the respondent interested parties note that this 
program provides no residual benefits (id. at 9). Further, the 
respondent interested parties argue, the Encouragement of Research and 
Development Grants, and Infrastructure and Environmental Grants were 
found to provide very minimal subsidies (id.).
    The respondent interested parties assert that if the Department 
uses the rate from the original determination, the starting point 
should be the deposit rate of 5.36 percent adjusted for terminated 
programs. Likewise, with respect to Haifa Chemicals, Ltd., the 
respondent interested parties argue that the original deposit rate of 
15.11 percent for Haifa should be adjusted for terminated programs (id. 
at 11).
    In their rebuttal comments, the domestic interested parties 
disagree with the respondent interested parties' argument that 
Department should adjust the rates from the original investigation 
downward by subtracting the amount of the subsidy arising from the now-
terminated Exchange Rate Risk Program.11 The domestic 
interested parties argue that, if the Department were to exercise its 
discretion to adjust the net original net subsidy rates, then, in the 
interest of accuracy, the Department would also have to adjust for 
every change to every program found to provide a subsidy in the 
original investigation. Moreover, if the Department determines an 
adjusted rate, then actions, such as grant and loan deferrals, could be 
taken temporarily to lower that rate in order to have an impact on a 
scheduled or pending review.12
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    \11\ See April 8, 1999 Industrial Phosphoric Acid from Israel; 
Comments Submitted in Rebuttal to the Substantive Responses of the 
Government of Israel and Rotem Amfert Negev Ltd at 5.
    \12\ Id. at 6.
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    In their rebuttal comments, the respondent interested parties 
reiterate that the Department should use the original deposit rate as 
the starting point for determining the rate likely to prevail. They 
argue that, in determining the rate for Haifa, the Department should 
subtract from the original rate of 15.11 percent 8.87 percent 
represented by the Exchange Rate Risk Insurance Scheme, a program that 
has been terminated and provides no current benefits.13 
Thus, the deposit rate should be 6.24 percent. Further, the respondent 
interested parties argue that, on account of the termination of the 
Exchange Rate Risk Insurance Scheme, the Department should also adjust 
Rotem's original deposit rate. As such, 4.78 percent representing 
ERIS's benefits should be deducted from the original margin of 5.36 for 
all others, with a result of 0.58. However, respondent interested 
parties acknowledge that this rate is untenable in light of the most 
administrative review for the 1996 period, and that the Department 
should provide to the Commission the rate of 5.89, the rate from this 
review.14
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    \13\ See April 8, 1999 Sunset Review of Countervailing Duty 
Order on Industrial Phosphoric Acid from Israel; Comments on U.S. 
Producers' Substantive Response at 4.
    \14\ Id.
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Department's Determination

    Consistent with the SAA and House Report, the Department normally 
will select a rate from the investigation as the net countervailable 
subsidy likely to prevail if the order is revoked, 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. In some instances, however, the rate from the 
original investigation may not be the most appropriate rate 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 administrative review.15
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    \15\ See section III.B.3 of the Sunset Policy Bulletin. 
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    As noted above, since the issuance of the order, the Department has 
determined that the Exchange Rate Risk Insurance Scheme was terminated 
(61 FR 28841, 28844 (June 6, 1996)). Furthermore, in the 1996 period of 
review, the Department determined that two new programs, the 
Infrastructure Grant Program and the Environmental Grant Program, 
confer countervailable subsidies on Rotem.16 Therefore, 
consistent with section III.B.3 of the Sunset Policy Bulletin, the 
Department preliminarily determines that the rate from the original 
investigation is not probative of the net countervailable subsidy rate 
likely to prevail if the order were revoked.
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    \16\ See Industrial Phosphoric Acid From Israel: Final Results 
of Countervailing Duty Administrative Review, 64 FR 2879 (January 
19, 1999).
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    Sections III.B.3.a and III.B.3.c of the Sunset Policy Bulletin 
provide that the Department may adjust the net countervailable subsidy 
where the Department has conducted an administrative review of the 
order and found that a program was terminated with no residual benefits 
and no likelihood of reinstatement, or where the Department found a new 
countervailable program. Additionally, section III.B.3.d of the Sunset 
Policy Bulletin provides that where the Department has conducted an 
administrative review of an order and determined to increase the net 
countervailable subsidy rate for any reason, the Department may adjust 
the net countervailable subsidy rate determined in the original 
investigation to reflect the increase of the rate.
    The Department agrees with respondent interested parties that the 
deposit rates from the original investigation should be adjusted to 
reflect that, after 1993, the Exchange Rate Risk Insurance Scheme was 
terminated without residual benefits after 1993. Therefore, we are 
subtracting the rate from the investigation for this program. 
Additionally, the rates should be adjusted to reflect the 
identification of two new countervailable programs: the Infrastructure 
Grant Program and the and the Environmental Grant Program. Therefore, 
we are adding the rates from these programs as first identified in the 
1996 review (64 FR 2879).
    Finally, we agree with the interested parties that the 
countervailable subsidy rate from the Encouragement of Capital 
Investments Law Grants program has significantly increased since the 
original investigation. Over the life of this order, there has been a 
consistent pattern of increased usage of the grants provided under this 
program. Because of the continued increase in usage of this program, 
despite the existence of the order, we preliminarily determine that the 
rate for this program from the original investigation should be 
adjusted to reflect this increased usage of the program. Therefore, we 
are adding to the original investigation rate the rate from this 
program, as found in

[[Page 51958]]

the 1996 review (id.). As a result, the Department preliminarily 
determines that the net countervailable subsidies that would be likely 
to prevail in the event of revocation of the order are 10.93 percent 
for Haifa and 5.97 percent for all others, including Rotem (see 
September 21, 1999, Memorandum to File Regarding Calculation of the Net 
Countervailable Subsidy).

Nature of the Subsidy

    In the Sunset Policy Bulletin, the Department states that, 
consistent with section 752(a)(6) of the Act, the Department will 
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 domestic and respondent 
interested parties did not address this issue in their substantive 
responses of March 31, 1999.
    Because the receipt of benefit under the Bank of Israel Export 
Loans program is contingent on exports, this program falls within the 
definition of an export subsidy under Article 3.1(a) of the Subsidies 
Agreement. The remaining programs, although not falling within the 
definition of an export subsidy under Article 3.1(a) of the Subsidies 
Agreement, could be found to be inconsistent with Article 6 if the net 
countervailable subsidy exceeds five percent, as measured in accordance 
with Annex IV of the Subsidies Agreement. The Department, however, has 
no information with which to make such a calculation, nor do we believe 
it appropriate to attempt such a calculation in the course of a sunset 
review. Rather, we are providing the Commission with the following 
program descriptions.
    The Encouragement of Capital Investments Law (ECIL) Grants. In the 
1987 original investigation, the Department found that Negev 
Phosphates, Ltd. (``Negev'') and Haifa Chemicals, Ltd. received 
countervailable subsidies from this program, the benefits of which 
depend on the geographic location of the eligible enterprises. ECIL 
Grants were found to confer subsidies in each subsequent administrative 
review.
    Long-Term Industrial Development (``LTID'') Loans. Funded by the 
GOI, this program enabled approved enterprises in a number of diverse 
industries to obtain LTID Loans. Like ECIL grants, these loans are 
project-specific and the interest rates charged on these loans depend 
on the Development Zone location of the borrower. The Department found 
LTID Loans to confer subsidies in the administrative reviews for the 
periods 1988 through 1993.
    Exchange Rate Risk Insurance Scheme (``ERIS''). Operated by the 
Israeli Foreign Trade Risk Insurance Corporation (``IFTRIC''), ERIS 
insures exporters against losses which result when the rate of 
inflation exceeds the rate of devaluation and the new Israeli shekel 
value of an exporter's foreign currency receivable does not rise enough 
to cover increases in local costs. The ERIS is optional and open to any 
exporter willing to pay a premium to IFTRIC. The Department determined 
that subsidies from this program were terminated in 1993.17
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    \17\ See Industrial Phosphoric Acid from Israel; Final Results 
of Countervailing Duty Administrative Reviews, 61 FR 28841, (June 6, 
1996).
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    Encouragement of Research and Development Law (``EIRD'') Grants. 
Israeli manufacturers, producers or exporters of IPA may benefit from 
research and development grants under this program. With the exception 
of the 1988, 1989 and 1991 administrative reviews, the Department found 
the EIRD Law Grants to be countervailable in each yearly review since 
the issuance of the order.
    Infrastructure Grant Program. In the administrative review of the 
1996 period, the Department found that this program enables the GOI to 
establish new industrial areas by partially reimbursing companies for 
their costs of developing the infrastructure in certain geographical 
zones.
    Environmental Grant Program. Additionally, in the 1996 
administrative review, the Department found that the GOI administers 
this countervailable subsidy program to provide for companies financial 
assistance for the adaptation of existing industrial facilities to new 
environmental requirements.

Preliminary 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/exporter                      (percent)
------------------------------------------------------------------------
Haifa, Ltd..................................................       10.93
All Others..................................................        5.97
------------------------------------------------------------------------

    This five-year (``sunset'') review and notice are in accordance 
with sections 751(c), 752, and 777(i)(1) of the Act.

    Dated: September 21, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-25073 Filed 9-24-99; 8:45 am]
BILLING CODE 3510-DS-P