[Federal Register Volume 65, Number 213 (Thursday, November 2, 2000)]
[Notices]
[Pages 65835-65838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28190]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-357-813]


Notice of Initiation of Countervailing Duty Investigation: Honey 
From Argentina

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

EFFECTIVE DATE: November 2, 2000.

FOR FURTHER INFORMATION CONTACT: Dana S. Mermelstein at (202) 482-1391 
or Doug Campau at (202) 482-1395, Office of CVD/AD Enforcement VII, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, Room 1870, 14th Street and Constitution Avenue, 
N.W., Washington, D.C. 20230.

Initiation of Investigation

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
regulations codified at 19 CFR part 351 (2000).

The Petition

    On September 29, 2000, the Department of Commerce (the Department) 
received a countervailing duty petition filed in proper form on behalf 
of the American Honey Producers Association and the Sioux Honey 
Association (the petitioners). Supplements to the petitions were filed 
on October 5, 11, 17 and 19, 2000. In addition, we received submissions 
from the parties with regard to industry support on October 16, 18, and 
24.
    In accordance with section 702(b)(1) of the Act, petitioners allege 
that manufacturers, producers, or exporters of honey from Argentina 
received countervailable subsidies within the meaning of section 701 of 
the Act.
    Pursuant to section 702(C)(1)(b), the Department extended the 
deadline for initiation to no later than October 27, 2000.
    The Department finds that petitioners filed the petition on behalf 
of the domestic industry because they are interested parties as defined 
under sections 771(9)(C) and (D) of the Act. The petitioners have 
demonstrated sufficient industry support with respect to this 
countervailing duty investigation, which they are requesting the 
Department to initiate. See Determination of Industry Support for the 
Petition below.

Scope of the Investigation

    For purposes of these investigations, the products covered are 
natural honey, artificial honey containing more than 50 percent natural 
honey by weight, preparations of natural honey containing more than 50 
percent natural

[[Page 65836]]

honey by weight, and flavored honey. The subject merchandise includes 
all grades and colors of honey whether in liquid, creamed, comb, cut 
comb, or chunk form, and whether packaged for retail or in bulk form.
    The merchandise subject to these investigations is currently 
classifiable under subheadings 0409.00.00, 1702.90, and 2106.90.99 of 
the Harmonized Tariff Schedule of the United States (``HTSUS''). 
Although the HTSUS subheadings are provided for convenience and U.S. 
Customs Service (``U.S. Customs'') purposes, the Department's written 
description of the merchandise under investigation is dispositive.
    During our review of the petition, we discussed the scope with the 
petitioners to ensure that the scope in the petition accurately 
reflects the product for which the domestic industry is seeking relief. 
Moreover, as discussed in the preamble to the Department's regulations 
(Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27323 (May 19, 1997)), we are setting aside a period for parties to 
raise issues regarding product coverage. The Department encourages all 
parties to submit such comments by November 9, 2000. Comments should be 
addressed to Import Administration's Central Records Unit at Room 1870, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, D.C. 20230. The period of scope consultations is intended 
to provide the Department with ample opportunity to consider all 
comments and consult with parties prior to the issuance of the 
preliminary determination.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the Government of Argentina (GOA) for 
consultations with respect to the petition filed. The Department held 
consultations with the GOA on October 13, 2000.

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) At least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. In addition, section 702(c)(4)(D) of the 
Act provides that if the petition does not establish support of 
domestic producers or workers accounting for more than 50 percent of 
the total production of the domestic like product, the administering 
authority shall poll the industry or rely on other information in order 
to determine if there is support for the petition as required by 
subparagraph (A). Because the petitions at issue did not establish 
support of domestic producers or workers accounting for more than 50 
percent of the total production of the domestic like product, the 
Department has relied on other information in order to determine 
whether they meet the statutory requirements for industry support.
    Section 771(4)(A) of the Act defines the ``industry'' as ``the 
producers as a whole of a domestic like product, or those producers 
whose collective output of a domestic like product constitutes a major 
proportion of the total domestic production of the product.'' Thus, to 
determine whether the petition has the requisite industry support, the 
statute directs the Department to look to producers and workers who 
produce the domestic like product. The International Trade Commission 
(``ITC''), which is responsible for determining whether ``the domestic 
industry'' has been injured, must also determine what constitutes a 
domestic like product in order to define the industry. While both the 
Department and the ITC must apply the same statutory definition 
regarding the domestic like product (section 771(10) of the Act), they 
do so for different purposes and pursuant to separate and distinct 
authority. In addition, the Department's determination is subject to 
limitations of time and information. Although this may result in 
different definitions of the like product, such differences do not 
render the decision of either agency contrary to the law. (See Algoma 
Steel Corp. Ltd. v. United States, 688 F. Supp. 639, 642-44 (CIT 1988); 
High Information Content Flat Panel Displays and Display Glass from 
Japan: Final Determination; Rescission of Investigation and Partial 
Dismissal of Petition, 56 FR 32376, 32380-81 (July 16, 1991)).
    Section 771(10) of the Act defines the domestic like product as ``a 
product that is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
    The domestic like product referred to in the petitions is the 
single domestic like product defined in the ``Scope of Investigation'' 
section above. The Department has no basis on the record to find the 
petitioners' definition of the domestic like product to be inaccurate. 
The Department, therefore, has adopted the domestic like product 
definition set forth in the petition.
    Moreover, the Department has determined that the petition (and 
subsequent amendments) and supplemental information obtained through 
the Department's research contain adequate evidence of industry 
support; therefore, polling is unnecessary. It is undisputed that 
parties expressing support for the petition represent more than 25 
percent of domestic production, and thus meet the requirements of 
section 702(c)(4)(A)(i). Moreover, knowing the 1999 total production of 
the domestic like product, and the portion of production represented by 
those supporting the petition, as well as those who have explicitly 
declined to take a position, the Department is able to conclude that, 
even if all parties whose production is not accounted for were to 
oppose the petition, parties expressing support for the petition would 
represent more than 50 percent of those expressing support or 
opposition. Therefore, the petition meets the requirements of section 
702(c)(4)(A)(ii). For a detailed discussion of this analysis, see 
Attachment to the Initiation Checklist, Re: Industry Support, dated 
October 26, 2000.
    Accordingly, the Department determines that these petitions are 
filed on behalf of the domestic industry within the meaning of section 
702(b)(1) of the Act.

Injury Test

    Because Argentina is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) applies to this 
investigation. Accordingly, the ITC must determine whether imports of 
the subject merchandise from Argentina materially injure, or threaten 
material injury to, a U.S. industry.

Allegations and Evidence of Material Injury and Causation 

    The petition alleges that the U.S. industry producing the domestic 
like product is being materially injured, and is threatened with 
material injury, by reason of the individual and cumulated imports of 
the subject merchandise. Petitioners explained that the industry's

[[Page 65837]]

injured condition is evident in the declining trends in (1) U.S. market 
share, (2) average unit sales values, (3) share of domestic 
consumption, (4) operating income, (5) output, and (6) sales.
    The allegations of injury and causation are supported by relevant 
evidence including U.S. Customs import data, lost sales, and pricing 
information. The Department assessed the allegations and supporting 
evidence regarding material injury and causation and determined that 
these allegations are supported by accurate and adequate evidence and 
meet the statutory requirements for initiation. See Attachment to 
Initiation Checklist, Re: Material Injury and Causation (October 26, 
2000).

Allegations of Subsidies

    Section 702(b) of the Act requires the Department to initiate a 
countervailing duty proceeding whenever an interested party files a 
petition, on behalf of an industry, that (1) alleges the elements 
necessary for an imposition of a duty under section 701(a), and (2) is 
accompanied by information reasonably available to petitioners 
supporting the allegations.

Initiation of Countervailing Duty Investigation

    The Department has examined the countervailing duty petition on 
honey from Argentina and found that it complies with the requirements 
of section 702(b) of the Act. Therefore, in accordance with section 
702(b) of the Act, we are initiating a countervailing duty 
investigation to determine whether manufacturers, producers, or 
exporters of honey from Argentina receive subsidies. See the October 
26, 2000, Memorandum to the File; Initiation of Countervailing Duty 
Investigation: Honey from Argentina (C-357-813) (public document on 
file in the Central Records Unit of the Department of Commerce, Room B-
099 (CRU)).
    We are including in our investigation the following programs 
alleged in the petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in Argentina:

I. Government of Argentina Programs
    A. Argentine Internal Tax Reimbursement/Rebate Program 
(``Reintegro'')
    B. National Income Tax Exemption for Corporate Profits Tied to 
Export Sales Pursuant to Article 20(1) of Law 20,628
    C. Law 24,467 Programs for Small and Medium-Sized Enterprises 
(PyMES)
    1. Investment-Expenditure Credits for Exports
    2. Law 24,467 Short- and Long-Term Export Financing
    3. Law 24,467 Short-Term Financing, Including Pre-Financing of 
Export Sales
    4. Law 24,467 Line of Credit for the Acquisition of new Capital 
Goods of Argentine Origin
    5. Law 24,467 Preferential Line of Credit to Increase 
Agricultural and Agro-Industrial Production in the Southern 
Argentine Provinces
    6. Law 24,467 ``Production Poles'' Program for Honey Producers
    7. Law 24,467 Credit for Small Business Establishments
    8. Law 24,467 Preferential Lines of Credit for Working-Capital 
Purposes
    9. Law 24,467 Program for the Enhancement of Regional Production
    10. Law 24,467 Enterprise Restructuring Program (``PRE'')
    11. Law 24,467 Government-Backed Loan Guarantees
    12. Law 24,467 Global Credit Program
    D. Preferential Export Financing Based on Warrants
    E. Fundacion Export*Ar
    F. Honey-Specific Line-of-Credit Program for the Pre-Financing 
of Development Expenses Associated with Export Sales
    G. PROMEX Consortium for Honey Exportation
    H. PROMEX/PROAPI Development Plan for the Enhanced Exportation 
of Honey
    I. Additional Lines of Credit to Foment the Purchase of Capital 
Goods of Argentine Origin
    J. Regional Promotional Scheme--Reimbursement ``Patagonico'': 
Exemption of Import Duties on Capital Goods
    K. Law 22,913 Emergency Aid
II. Government of Argentina/Provincial Government Program
    A. Buenos Aires Honey Program
    B. Province of San Luis Honey Development Program
III. Provincial Government Programs
    A. Exemption from Municipal Gross Income Tax Contingent on 
Export Activity Pursuant to Article 116(12) of Law 150 (Buenos Aires 
Tax Code)
    B. Formosa Honey Project
    C. La Pampa Lines of Credit
    D. Entre Rios Honey Program: Law No. 7435/84
    E. Province of Chubut Law No. 4430/98
    F. Province of Chaco Line of Credit Earmarked for the Honey 
Sector
    G. Province of Santiago del Estero: Creditos de Confianza (Trust 
Credits)
    H. Province of San Luis: Creditos de Confianza (Trust Credits)

    We are not including in our investigation the following programs 
alleged to be benefitting producers and exporters of the subject 
merchandise in Argentina:
1. Other Potentially Countervailable Law 24,467 Subsidies
    Petitioners allege that the GOA offers more than 70 subsidy 
programs pursuant to Law 24,467, including those specifically named and 
discussed above. Petitioners allege that the main vehicle used to 
confer government benefits under Law 24,467 is the bestowal of 
subsidized lines of credit and short- and long-term loans through 
Argentina's three principal state-controlled banks: the Banco de la 
Nation (GOA Bank of the Nation); the Banco de la Provincia de Buenos 
Aires (Bank of the Province of Buenos Aires); and the BICE, Argentina's 
second-tier Development Bank. Petitioners provided excerpts from a 
report on the operation of the PYMES programs as well as a ``Guide for 
Small Businesses'' as support for their allegations that these 
additional programs exist and requested that the Department investigate 
any other programs established under Law 24,467. Because petitioners 
did not provide specific information supporting their allegations, we 
are not initiating on these allegations.
    2. Argentine Drawback Regime: Excessive Duty Drawback
    Petitioners allege that the Argentine Duty Drawback regime has a 
built-in allowance for an excessive rebate. According to petitioners, 
Argentine customs law requires that drawback claims be examined by 
GOA's National Institute of Industrial Technology (``INTI''). 
Petitioners allege that if INTI finds that the difference between the 
value presented in the exporter's sworn declaration versus its own 
analysis is less than five percent, then by law, the ``excessive'' 
rebate stands. Thus, according to petitioners, the law expressly allows 
exporters to claim five percent more in duty drawback than actually 
paid in duties and taxes. Petitioners have provided excerpts from the 
1998 financial statements of two Argentine honey exporters which they 
allege show that both may have received at least the automatic 
excessive rebate of five percent under the statutory scheme, as well as 
relevant sections of Argentine customs law.
    Petitioners have established that Argentina operates a duty 
drawback system. However, the excerpt of the law provided by 
petitioners does not indicate that the GOA routinely pays drawback up 
to five percent in excess of the allowable amounts. The excerpt 
apparently establishes the level of accuracy which the GOA uses to 
evaluate exporters' compliance with the law. According to the 
translated excerpt, for exporters filing duty drawback claims which are 
found by INTI to be within five percent of the correct amount ``the 
appropriate credit or debit will be effected.'' This appears to explain 
the administrative procedure by which the GOA does not penalize 
companies for minor errors in their duty drawback claims. This language 
does

[[Page 65838]]

not suggest that exporters receive more in drawback than the amount to 
which they are entitled. Thus, petitioners have not provided sufficient 
information to support their allegation that there is a benefit to 
exporters under Argentina's duty drawback regime, and we are not 
including this program in our initiation.
3. Regional Promotional Scheme--Reimbursement ``Patagonico'': 
Reimbursement of Argentine National Income Tax
    Petitioners allege that the GOA administers a regional promotion 
scheme for the Patagonian region (La Pampa, Rio Negro, Neuquen, Chubut, 
Santa Cruz, the National Territory of Tierra del Fuego, the Antarctic, 
the Falkland Islands and part of the Patagonian region located in the 
Province of Buenos Aires). According to petitioners, pursuant to Law 
2,333/83, the GOA offers reimbursement of national income taxes to 
companies in the named region.
    Petitioners have provided information supporting their allegation 
of import duty exemptions for capital goods under this program (See 
section I.J. above). However, petitioners have not provided information 
establishing that there is also an income tax reimbursement program 
under this regional promotion scheme. Therefore, we are not including 
this program in our initiation.

Distribution of Copies of the Petitions

    In accordance with section 702(b)(4)(A)(i) of the Act, copies of 
the public version of the petition have been provided to the 
representatives of Argentina. We will attempt to provide copies of the 
public version of the petition to all the exporters named in the 
petition, as provided for under section 351.203(c)(2) of the 
Department's regulations.

ITC Notification

    Pursuant to section 702(d) of the Act, we will notify the ITC of 
this initiation.

Preliminary Determination by the ITC

    The ITC will determine by November 20, 2000, whether there is a 
reasonable indication that an industry in the United States is 
materially injured, or is threatened with material injury, by reason of 
imports of honey from Argentina. A negative ITC determination will 
result in the investigation being terminated; otherwise, the 
investigation will proceed according to statutory and regulatory time 
limits.
    This notice is published pursuant to section 777(i) of the Act.

    Dated: October 26, 2000.
Troy H. Cribb,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-28190 Filed 11-1-00; 8:45 am]
BILLING CODE 3510-DS-P