[Federal Register Volume 66, Number 151 (Monday, August 6, 2001)]
[Notices]
[Pages 40987-40996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19624]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-475-819]


Certain Pasta From Italy: Preliminary Results and Partial 
Rescission of Countervailing Duty Administrative Review

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

ACTION: Notice of preliminary results and partial rescission of 
countervailing duty administrative review.

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SUMMARY: The Department of Commerce is conducting an administrative 
review of the countervailing duty order on certain pasta from Italy for 
the period January 1, 1999, through December 31, 1999. We have 
preliminarily determined that certain producers/exporters have received 
countervailable subsidies during the period of review. If the final 
results remain the same as these preliminary results, we will instruct 
the U.S. Customs Service to assess countervailing duties as detailed in 
the ``Preliminary Results of Review'' section of this notice.
    Because the requests for review were withdrawn, we are rescinding 
this review for the following companies: Pastificio F.lli Pagani, 
Commercio-Rappresentanze-Export S.r.L., Tamma Industrie Alimentari di 
Capitanata. S.r.L., Molino e Pastificio, La Molisana Alimentari S.p.A., 
Arrighi S.p.A. Industrie Alimentari, Industria Alimentare Colavita, 
S.p.A., Isola del Grano S.r.L., Italpast S.p.A., Italpasta S.r.L., 
Labor S.r.L., Pastificio Guido Ferrara, Pastificio Campano, S.p.A., 
Indalco, Audisio Industrie Alimentari de Capitanata, S.p.A., Pastificio 
Fabianelli, S.p.A. and Pastificio Di Martino Gaetano & F.lli S.r.l.
    Interested parties are invited to comment on these preliminary 
results (see the ``Public Comment'' section of this notice).

EFFECTIVE DATE: August 6, 2001.

FOR FURTHER INFORMATION CONTACT: Craig Matney, Sally Hastings, Andrew 
Covington, or Meg Weems AD/CVD Enforcement, Group I, Office 1, Import 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC. 20230; telephone (202) 482-
1778, 482-3464, 482-3534, or 482-2613, respectively.

SUPPLEMENTARY INFORMATION:

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''). Unless otherwise indicated, all citations to the 
Department's regulations are to the regulations codified at 19 CFR part 
351 (2000).

Case History

    The Department published the countervailing duty order on certain 
pasta from Italy on July 24, 1996 (Notice of Countervailing Duty Order 
and Amended Final Affirmative Countervailing Duty Determination: 
Certain Pasta From Italy, 61 FR 38544). On July 20, 2000, the 
Department published a notice of ``Opportunity to Request 
Administrative Review'' of this countervailing duty order for calendar 
year 1999 (Notice of Opportunity to Request Administrative Review of 
Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation, 65 FR 45035). We received review requests for 29 
producers/exporters of Italian pasta. We initiated our review on 
September 6, 2000 (Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Requests for Revocation in Part, 65 FR 
53980).
    Due to administrative resource constraints, the Department decided 
to limit the number of producers/exporters it would review. On 
September 18, 2000, the Department issued its ``Respondent Selection 
Memorandum'' stating that it had selected the largest 12 exporters as 
mandatory respondents. (See September 18, 2000 Memorandum to Deputy 
Assistant Secretary Richard W. Moreland regarding Respondent Selection. 
A public version of this memorandum is available in the Central Records 
Unit (``CRU'') in Room B-099 of the main Department building).
    On September 21, 2000, Borden Foods Corporation (one of the 
original petitioners in this proceeding) withdrew its request for 
review of those producers/exporters that had been included in its July 
31, 2000 request for review but were not selected as mandatory 
respondents. On October 18, 2000, Pastificio Di Martino Gaetano & F.lli 
s.r.l. (``Di Martino'') withdrew its request for review, and on 
November 6, 2000, Tamma Industrie Alimentari, S.r.L (``Tamma'') 
withdrew its request for review. We are rescinding this administrative 
review for all of these companies (see, the ``Partial Rescission'' 
section, below).
    Thus, this administrative review of the order covers the following 
producers/exporters of the subject merchandise: Agritalia, S.r.L. 
(``Agritalia''), F.lli De Cecco di Filippo Fara S. Martino S.p.A. (``De 
Cecco''), Delverde S.p.A. (``Delverde''), De Matteis Agroalimentare 
S.p.A. (``De Matteis''), Pastificio Antonio Pallante S.r.L. 
(``Pallante''), Pastificio Maltagliati S.p.A. (``Maltagliati''), P.A.M. 
S.r.L.--Prodotti Alimentari Meridionali (``PAM'') (PAM is also 
responding for Pastificio Liguori dal 1820, S.p.A.), Pastificio 
Riscossa F.lli Mastromauro S.r.L. (``Riscossa''), N. Puglisi & F. 
Industria Paste Alimentari S.p.A. (``Puglisi''), Rummo S.p.A. Molino e 
Pastificio (``Rummo''), and 28 programs.
    On September 29, 2000, we issued countervailing duty questionnaires 
to the Commission of the European Union (``EC'') and the Government of 
Italy (``GOI''). We received responses to our questionnaires and issued 
supplemental questionnaires throughout the period October 2000 through 
February 2001. Responses to the supplemental questionnaires were 
received in January, February and March 2001.
    On October 23, 2000, we were notified by a bankruptcy trustee that 
Maltagliati declared bankruptcy on February 9, 2000, and that its 
factory was closed that same month.
    On April 3, 2001, the Department extended the time limit for 
issuing these preliminary results until no later than July 31, 2001 
(Certain Pasta From Italy and Turkey; Notice of Extension of Time Limit 
for Preliminary Results of Countervailing Duty Administrative Reviews, 
65 FR 17683).

Partial Rescission

    As noted above, the petitioner withdrew its request for review of 
those producers/exporters that were included in its July 31, 2000 
request for review but were not selected by the Department

[[Page 40988]]

as mandatory respondents. These producers/exporters are: Pastificio 
F.lli Pagani, Commercio-Rappresentanze-Export S.r.L., Tamma Industrie 
Alimentari di Capitanata. S.r.L., Molino e Pastificio, La Molisana 
Alimentari S.p.A., Arrighi S.p.A. Industrie Alimentari, Industria 
Alimentare Colavita, S.p.A., Isola del Grano S.r.L., Italpast S.p.A., 
Italpasta S.r.L., Labor S.r.L., Pastificio Guido Ferrara, Pastificio 
Campano, S.p.A., Indalco, Audisio Industrie Alimentari de Capitanata, 
S.p.A., and Pastificio Fabianelli, S.p.A. Also, Di Martino and Tamma 
withdrew their requests for review.
    Because these withdrawals were timely filed, we are finally 
rescinding this review with respect to these companies (see 19 CFR 
351.213(d)(1)). We will instruct the U.S. Customs Service to liquidate 
any entries from these companies during the POR and to assess 
countervailing duties at the rate that was applied at the time of 
entry.

Use of Facts Available

    As noted above, we were notified by a bankruptcy trustee that 
Maltagliati filed for bankruptcy in February 2000, shortly after the 
period covered by this administrative review. We did not receive a 
response to our countervailing duty questionnaire from this company.
    Section 776(a)(2) of the Act provides that: If an interested party 
or any other person--(A) withholds information that has been requested 
by the administering authority or the Commission under this title, (B) 
fails to provide such information by the deadlines for submission of 
the information or in the form and manner requested, subject to 
subsections (c)(1) and (e) of section 782, (C) significantly impedes a 
proceeding under this title, or (D) provides such information but the 
information cannot be verified as provided in section 782(i), the 
administering authority and the Commission shall, subject to section 
782(d), use the facts otherwise available in reaching the applicable 
determination under this title. Section 776(b) of the Act further 
provides that adverse inferences may be employed when a party has 
failed to cooperate by not acting to the best of its ability to comply 
with a request for information.
    In this instance, we preliminarily determine that an adverse 
inference is not warranted. According to the bankruptcy trustee, all of 
Maltagliati's employees were dismissed and the facility closed prior to 
receipt of the questionnaire. Moreover, we have confirmed with the 
Customs Service that there have been no imports of pasta from 
Maltagliati since February 2000. Therefore, as facts available, we 
preliminarily determine that the countervailable subsidy bestowed on 
Maltagliati during the POR is 3.85 percent ad valorem, the ``all 
others'' rate established in Notice of Countervailing Duty Order and 
Amended Final Affirmative Countervailing Duty Determination: Certain 
Pasta (``Pasta'') from Italy, 61 FR 38544, July 24, 1996. Maltagliati 
was not investigated or included in any prior reviews. Therefore, 
entries during the POR from Maltagliati were subject to estimated 
countervailing duties of 3.85 percent.

Scope of the Review

    Imports covered by this review are shipments of certain non-egg dry 
pasta in packages of five pounds (2.27 kilograms) or less, whether or 
not enriched or fortified or containing milk or other optional 
ingredients such as chopped vegetables, vegetable purees, milk, gluten, 
diastases, vitamins, coloring and flavorings, and up to two percent egg 
white. The pasta covered by this scope is typically sold in the retail 
market, in fiberboard or cardboard cartons, or polyethylene or 
polypropylene bags, of varying dimensions.
    Excluded from the scope of this review are refrigerated, frozen, or 
canned pastas, as well as all forms of egg pasta, with the exception of 
non-egg dry pasta containing up to two percent egg white. Also excluded 
are imports of organic pasta from Italy that are accompanied by the 
appropriate certificate issued by the Istituto Mediterraneo Di 
Certificazione (``IMC''), by Bioagricoop Scrl, by QC&I International 
Services, by Ecocert Italia, by the Conzorzio per il Controllo dei 
Prodotti Biologici, or by Associazione Italiana per l'Agricoltura 
Biologica.
    The merchandise subject to review is currently classifiable under 
item 1902.19.20 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). Although the HTSUS subheading is provided for convenience 
and customs purposes, the written description of the merchandise 
subject to the order is dispositive.

Scope Rulings

    The Department has issued the following scope rulings to date:
    (1) On August 25, 1997, the Department issued a scope ruling that 
multicolored pasta, imported in kitchen display bottles of decorative 
glass that are sealed with cork or paraffin and bound with raffia, is 
excluded from the scope of the countervailing duty order. (See August 
25, 1997 memorandum from Edward Easton to Richard Moreland, which is on 
file in CRU in Room B-099 of the main Commerce building.)
    (2) On July 30, 1998, the Department issued a scope ruling, finding 
that multipacks consisting of six one-pound packages of pasta that are 
shrink-wrapped into a single package are within the scope of the 
countervailing duty order. (See July 30, 1998 letter from Susan H. 
Kuhbach, Acting Deputy Assistant Secretary for Import Administration, 
to Barbara P. Sidari, Vice President, Joseph A. Sidari Company, Inc., 
which is on file in the CRU.)
    (3) On October 26, 1998, the Department self-initiated a scope 
inquiry to determine whether a package weighing over five pounds as a 
result of allowable industry tolerances may be within the scope of the 
countervailing duty order. On May 24, 1999, we issued a final scope 
ruling finding that, effective October 26, 1998, pasta in packages 
weighing or labeled up to (and including) five pounds four ounces is 
within the scope of the countervailing duty order. (See May 24, 1999 
memorandum from John Brinkmann to Richard Moreland, which is on file in 
the CRU.)

Period of Review

    The period of review (``POR'') for which we are measuring subsidies 
is from January 1, 1999 through December 31, 1999.

Attribution of Subsidies

    Agritalia: Agritalia is a trading company which buys and sells 
pasta produced by non-affiliated suppliers. In accordance with section 
351.525(c) of the regulations, we have cumulated the benefits received 
by Agritalia and by the two major companies supplying Agritalia to 
calculate the countervailing duty rate applicable to Agritalia.
    DeCecco: DeCecco has responded on behalf of three members of the 
DeCecco Group: F.lli DeCecco di Filippo Fara San Martino S.p.A. 
(``Pastificio''), Molino e Pastificio F.lli DeCecco S.p.A. 
(``Pescara'') and Molino F.lli DeCecco di Filippo S.p.A. (``Molino''). 
Pastificio and Pescara manufacture pasta for sale in Italy and the 
United States; Molino produces semolina for Pastifico and Pescara. 
Pastifico and Pescara are directly or indirectly 100 percent-owned by 
members of the DeCecco family. Effective January 1, 1999, Molino was 
merged with Pastifico and ceased to be a separate entity. In accordance 
with section 351.525(b)(6)(i) and (ii) of the regulations, we are 
attributing subsidies received by all three entities to the combined 
sales of all three.

[[Page 40989]]

    Delverde: Consistent with section 351.525(b)(6)(ii) of the 
regulations and the most recent administrative review of this order, we 
have continued to treat the two affiliated companies, Delverde and 
Tamma, as separate respondents (see, Certain Pasta from Italy: Final 
Results of Third Administrative Review, 66 FR 11269, February 23, 2001 
(``Third Review--Final Results''). Thus, subsidies received by Delverde 
have been assigned solely to that company. Tamma is not being reviewed, 
and no subsidies received by Tamma have been attributed to Delverde.
    DeMatteis: DeMatteis is 100 percent owned by DeMatteis Costruzioni 
S.r.L. (``Costruzioni''). Costruzioni also owns 100 percent of 
Demaservice S.r.L., (``Demaservice''). DeMatteis produces and sells 
pasta products. Costruzioni, a real estate management company, built a 
warehouse and office building for DeMatteis. Demaservice provides 
accounting services to Constuzioni and miscellaneous administrative and 
support services to DeMatteis. DeMatteis has responded on behalf of all 
three of these companies. In accordance with section 351.525(b)(6)(iii) 
of the regulations (see, in particular, discussion in the preamble to 
this regulation regarding ``non-producing'' subsidiaries), we are 
attributing subsidies received by all three entities to the combined 
sales of all three.
    Pallante: Pallante has responded on behalf of Pastificio Antonio 
Pallante, S.r.L. (``Pallante'') and Industrie Alimentari Molisane 
S.r.L. (``IAM''), two separately incorporated companies. Pallante 
produces pasta. IAM is an integrated company that purchases wheat, 
mills it into semolina, and uses its semolina to produce pasta. We are 
treating Pallante and IAM as a single respondent, in accordance with 
section 351.525(b)(6)(ii) of the regulations, because a single 
shareholder, Antonio Pallante, has a controlling interest in both 
companies. Therefore, subsidies received by both companies are being 
attributed to the sales of both companies.
    PAM: PAM has responded on behalf of five companies: PAM, Liguori, 
Pastificio D'Apuzzo S.p.A. (``D'Apuzzo''), Comimpex, S.r.L. 
(``Comimpex''), and En.Le.Ve. S.r.L. (``En.Le.Ve.''). PAM, D'Apuzzo, 
and Comimpex were involved in the production and sale of pasta during 
the POR, or in related milling operations. En.Le.Ve. provided 
administrative services to these three companies. Given the nature and 
extent of the common ownership between PAM, D'Apuzzo, Comimpex, and 
En.Le.Ve. (the details of which are proprietary), we are attributing 
subsidies received by these four companies to the combined sales of the 
four companies. Details of Liguori's relationship with PAM are 
proprietary. Therefore, Liguori is discussed separately (see, July 31, 
2001 Proprietary Memorandum from Meg Weems to Richard W. Moreland 
regarding PAM--Attribution Issues).
    PAM has objected to being asked to respond on behalf of Comimpex. 
Its reasons are proprietary. PAM's arguments and our position are also 
discussed in the July 31, 2001 Proprietary Memorandum from Meg Weems to 
Richard W. Moreland regarding PAM--Attribution Issues.
    Puglisi: Puglisi has responded on behalf of N. Puglisi & F. 
Industria Paste Alimentari S.p.A. (``Puglisi'') and its 100-percent 
owned subsidiary, CE.S.A.P. S.r.L. (``CE.S.A.P.''). CE.S.A.P. provides 
quality control and maintenance services to Puglisi. We have attributed 
the subsidies received by both companies to their combined sales.
    Riscossa: Riscossa is an integrated pasta producer, buying its 
wheat, milling the wheat into semolina, and producing pasta from its 
semolina. In accordance with section 351.525(b)(6)(i) of the 
regulations, the Department has attributed subsidies received by 
Riscossa for the production of semolina and pasta to Riscossa's sales 
of pasta.
    Rummo: Rummo is a family-owned business with no affiliated 
companies producing subject merchandise or inputs into subject 
merchandise. Therefore, all subsidies received by Rummo have been 
attributed to pasta it produces and sells, and to the ``pasta waste'' 
(a by-product) it sells as animal feed.

Subsidies Valuation Information

    Benchmarks for Long-term Loans and Discount Rates: In accordance 
with section 351.505(a)(1) and 351.524(d)(3) of the regulations, we 
have used the amount the company actually paid on a comparable 
commercial loan as the benchmark/discount rate, when the company had a 
commercial loan in the same year as the government loan or grant. 
However, there were several instances where a company did not take out 
any loans which could be used as benchmarks/discount rates in the years 
in which the government grants or loans under review were received. In 
these instances, consistent with section 351.505(a)(3)(ii) of the 
regulations, we used a national average interest rate for a comparable 
commercial loan. Specifically, for years prior to 1995, we used the 
Bank of Italy reference rate, adjusted upward to reflect the mark-up an 
Italian commercial bank would charge a corporate customer, as the 
benchmark interest rate for long-term loans and as the discount rate. 
For subsidies received in 1995 and later, we used the Italian Bankers' 
Association (``ABI'') interest rate, increased by the average spread 
charged by banks on loans to commercial customers plus an amount for 
bank charges.
    Allocation Period: In the Final Affirmative Countervailing Duty 
Determination: Certain Pasta (``Pasta'') from Italy, 61 FR 30288, June 
14, 1996, (``Pasta Investigation''), the Department used as the 
allocation period for non-recurring subsidies the average useful life 
(``AUL'') of renewable physical assets in the food-processing industry 
as recorded in the Internal Revenue Service's 1977 Class Life Asset 
Depreciation Range System (``the IRS tables''), i.e., 12 years. 
However, the U.S. Court of International Trade (``CIT'') ruled against 
this allocation methodology for non-recurring subsidies (see British 
Steel plc v. United States, 879 F.Supp. 1254, 1289 (CIT 1995) 
(``British Steel I'')). In accordance with the CIT's remand order, the 
Department determined that the most reasonable method of deriving the 
allocation period for non-recurring subsidies was a company-specific 
AUL of renewable physical assets. This remand determination was 
affirmed by the CIT on June 4, 1996 (see British Steel plc v. United 
States, 929 F.Supp. 426, 439 (CIT 1996) (``British Steel II'')).
    Consistent with the ruling in British Steel II, we developed 
company-specific AULs in the first and second administrative reviews of 
this order (see Certain Pasta from Italy: Final Results of 
Countervailing Duty Administrative Review, 63 FR 43905, 43906, August 
17, 1998 (``First Review--Final Results'') and Certain Pasta from 
Italy: Final Results of the Second Countervailing Duty Administrative 
Review, 64 FR 44489, 44490-91, August 16, 1999 (``Second Review--Final 
Results''). We used these company-specific AULs to allocate any non-
recurring subsidies that were not countervailed in the investigation. 
However, for non-recurring subsidies which had already been 
countervailed in the investigation, the Department used the original 
allocation period, i.e., 12 years, because it was deemed neither 
reasonable nor practicable to reallocate those subsidies over a 
different time period. This methodology was consistent with our 
approach in Certain Carbon Steel Products from Sweden; Final Results of 
Countervailing Duty Administrative Review, 62 FR 16549 (April 7, 1997).

[[Page 40990]]

    The third review of this order was subject to section 351.524(d)(2) 
of the regulations. Under this regulation, the Department will use the 
AUL in the IRS tables as the allocation period unless a party can show 
that the IRS tables do not reasonably reflect the company-specific AUL 
or the country-wide AUL for the industry. If a party can show that 
either of these time periods differs from the AUL in the IRS tables by 
one year or more, the Department will use the company-specific AUL or 
the country-wide AUL for the industry as the allocation period. In 
Third Review--Final Results, all subsidies received in the POR were 
assigned a 12-year allocation period, consistent with the IRS tables.
    In the current review, no respondent has contested the 12-year AUL 
in the IRS tables. Therefore, we are assigning a 12-year allocation 
period to non-recurring subsidies received in the POR, as well as any 
non-recurring subsidies received in prior years by companies that were 
not included in previous reviews.

Change in Ownership

    In 1991, Delverde purchased a pasta factory from an unaffiliated 
party. The previous owner of the purchased factory had received non-
recurring countervailable subsidies prior to the transfer of ownership. 
In Third Review--Final Result, the Department applied the methodology 
it developed to comply with the Court of Appeals for the Federal 
Circuit's decision in Delverde v. United States, 202 F.3rd 1360, 1369 
(Fed. Cir. 2000), to Delverde's purchase of the pasta factory. We 
determined that the post-sale entity was, for all intents and purposes, 
the same ``person'' as the pre-sale entity. Consequently, all the 
elements of a subsidy are established with regard to the post-sale 
Delverde and it continues to benefit in full from all of the subsidies 
that were provided to the previous owner prior to the sale of the pasta 
factory.
    No new information has been submitted in this review to warrant 
reconsideration of our determination regarding the countervailability 
of these subsidies. Therefore, we have included these subsidies in the 
countervailing duty rate calculated for Delverde.

Analysis of Programs

I. Programs Preliminarily Determined to Confer Subsidies

1. Law 64/86 Industrial Development Grants
    Law 64/86 provided assistance to promote development in the 
Mezzogiorno (the south of Italy). Grants were awarded to companies 
constructing new plants or expanding or modernizing existing plants. 
Pasta companies were eligible for grants to expand existing plants but 
not to establish new plants because the market for pasta was deemed to 
be close to saturated. Grants were made only after a private credit 
institution chosen by the applicant made a positive assessment of the 
project. (Loans were also provided under Law 64/86; see below.)
    In 1992, the Italian Parliament abrogated Law 64/86 and replaced it 
with Law 488/92 (see below). This decision became effective in 1993. 
However, companies whose projects had been approved prior to 1993 were 
authorized to continue receiving grants under Law 64/86 after 1993.
    DeCecco, Delverde, DeMatteis, Pallante, Puglisi, and Riscossa 
received grants under Law 64/86 which conferred a benefit during the 
POR.
    In Pasta Investigation, the Department determined that these grants 
confer a countervailable subsidy within the meaning of section 771(5) 
of the Act. They are a direct transfer of funds from the GOI bestowing 
a benefit in the amount of the grant. Also, these grants were found to 
be regionally specific within the meaning of section 771(5A) of the 
Act. In this review, neither the GOI nor the responding companies have 
provided new information which would warrant reconsideration of our 
determination that these grants are countervailable subsidies.
    In Pasta Investigation, the Department treated the industrial 
development grants as non-recurring. No new information has been placed 
on the record of this review that would cause us to depart from this 
treatment. Also, consistent with our treatment of these grants in the 
Third Review--Final Results, for companies which previously have been 
investigated or reviewed, we have continued to expense or allocate 
grants disbursed prior to 1998 (the POR in the third review) according 
to the practice in place at the time of the investigation or review. 
(See Countervailing Duties (Proposed Rules), 54 FR 23366, 23384 (19 CFR 
355.49(a)(3)) (May 31, 1989).) For grants disbursed in 1998 and this 
POR, 1999, we have followed the methodology described in section 
351.524(b)(2) of our new countervailing duty regulations, which directs 
us to allocate over time those non-recurring grants whose total 
authorized amount exceeds 0.5 percent of the recipient's sales in the 
year of authorization. Where the total amount authorized is less than 
0.5 percent of the recipient's sales in the year of authorization, the 
benefit is countervailed in full (``expensed'') in the year of receipt. 
We have also applied the methodology described in section 351.524(b)(2) 
of the regulations to grants approved prior to 1998 for companies that 
were not previously investigated or reviewed.
    We used the grant methodology described in section 351.524(d) of 
the regulations to calculate the countervailable subsidy from those 
grants that were allocated over time. We divided the benefit received 
by each company in the POR by its total sales, or total pasta sales, as 
appropriate, in the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from the Law 64/86 industrial development grants to be 0.94 
percent ad valorem for DeCecco, 1.55 percent ad valorem for Delverde, 
0.16 percent ad valorem for DeMatteis, 1.20 percent ad valorem for 
Pallante, 2.83 percent ad valorem for Puglisi, and 0.81 percent ad 
valorem for Riscossa.
2. Law 488/92 Industrial Development Grants
    In 1986, the European Union (``EU'') initiated an investigation of 
the GOI's regional subsidy practices. As a result of this 
investigation, the GOI changed the regions eligible for regional 
subsidies to include depressed areas in central and northern Italy in 
addition to the Mezzogiorno. After this change, the areas eligible for 
regional subsidies are the same as those classified as Objective 1, 
Objective 2, and Objective 5(b) areas by the EU (see ``European Social 
Fund'' section below). The new policy was given legislative form in Law 
488/92 under which Italian companies in the eligible sectors 
(manufacturing, mining, and certain business services) may apply for 
industrial development grants. (Loans are not provided under Law 488/
92.)
    Law 488/92 grants are made only after a preliminary examination by 
a bank authorized by the Ministry of Industry. On the basis of the 
findings of this preliminary examination, the Ministry of Industry 
ranks the companies applying for grants. The ranking is based on 
indicators such as the amount of capital the company will contribute 
from its own funds, the number of jobs created, regional priorities, 
etc. Grants are then made based on this ranking.
    DeCecco, Delverde, DeMatteis, Pallante and Puglisi received grants 
under Law 488/92 which conferred a benefit during the POR.
    Industrial development grants under Law 488/92 were found 
countervailable in Second Review--Final Results. The

[[Page 40991]]

grants are a direct transfer of funds from the GOI bestowing a benefit 
in the amount of the grant. Also, these grants were found to be 
regionally specific within the meaning of section 771(5A) of the Act. 
In this review, neither the GOI nor the responding companies have 
provided new information which would warrant reconsideration of our 
determination that these grants are countervailable subsidies.
    In Second Review--Final Results, the Department treated industrial 
development grants under Law 488/92 as non-recurring. No new 
information has been placed on the record of this review that would 
cause us to depart from this treatment. We expensed or allocated these 
grants according to the methodology applied to the Law 64/86 industrial 
development grants discussed above.
    We used the grant methodology as described in section 351.524(d) of 
the regulations to calculate the subsidy for those grants that were 
allocated over time. We divided the benefits received by each company 
in the POR by its total sales, or total pasta sales, as appropriate, in 
the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from the Law 488/92 industrial development grants to be 0.31 
percent ad valorem for DeCecco, 0.28 percent ad valorem for Delverde, 
1.17 percent ad valorem for DeMatteis, 0.07 percent ad valorem for 
Pallante, and 2.55 percent ad valorem for Puglisi.
3. Law 183/76 Industrial Development Grants
    In 1983, Riscossa applied for an industrial development grant under 
Law 183/76. The GOI approved the application and disbursed the grant in 
tranches. Only the last of these disbursements, received by Riscossa in 
1988, falls within that company's 12-year AUL period. Therefore, only 
this last disbursement is being countervailed in the current review.
    In Pasta Investigation and subsequent reviews, the Department 
determined that the industrial development grant received by Riscossa 
confers a countervailable subsidy within the meaning of section 771(5) 
of the Act. This grant is a direct transfer of funds from the GOI 
bestowing a benefit in the amount of the grant. Also, this grant was 
found to be regionally specific within the meaning of section 771(5A) 
of the Act. In this review, neither the GOI nor Riscossa has provided 
new information which would warrant reconsideration of our 
determination that this grant is a countervailable subsidy.
    We have previously treated Riscossa's industrial development grant 
as non-recurring. No new information has been placed on the record of 
this review that would cause us to depart from this treatment. We 
allocated the last disbursement of this grant over time because it 
exceeded 0.5 percent of Riscossa's sales in the year of receipt.
    We used the grant methodology described in section 351.524(d) of 
the regulations to calculate the countervailable benefit. We divided 
the benefit received by Riscossa in the POR by the company's total 
pasta sales in the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from the Law 183/76 industrial development grant to be 0.08 
percent ad valorem for Riscossa.
4. Law 64/86 Industrial Development Loans
    In addition to the industrial development grants discussed above, 
Law 64/86 also provided reduced rate industrial development loans with 
interest contributions paid by the GOI on loans taken by companies 
constructing new plants or expanding or modernizing existing plants in 
the Mezzogiorno. For the reasons discussed above, pasta companies were 
eligible for interest contributions to expand existing plants, but not 
to establish new plants. The interest rates on these loans were set at 
the reference rate with the GOI's interest contributions serving to 
reduce this rate. Although Law 64/86 was abrogated in 1992 (effective 
1993), projects approved prior to 1993, were authorized to receive 
interest subsidies after 1993.
    DeCecco, Delverde, De Matteis, Pallante, and Puglisi had Law 64/86 
industrial development loans outstanding during the POR.
    In Pasta Investigation, the Department determined that the Law 64/
86 loans confer a countervailable subsidy within the meaning of section 
771(5) of the Act. They are a direct transfer of funds from the GOI 
providing a benefit in the amount of the difference between the 
benchmark interest rate and the interest rate paid by the companies 
after accounting for the GOI's interest contributions. Also, these 
loans were found to be regionally specific within the meaning of 
section 771(5A) of the Act. In this review, neither the GOI nor the 
responding companies have provided new information which would warrant 
reconsideration of our determination that these loans are a 
countervailable subsidy.
    In accordance with section 351.505(c)(2) of the regulations, we 
calculated the benefit for the POR by computing the difference between 
the payments the loan recipients made on their Law 64/86 loans during 
the POR and the payments the companies would have made on a comparable 
commercial loan. We divided the benefit received by each company by its 
total sales or total pasta sales, as appropriate, in the POR.
    Pallante reported having received loans under Law 64/86. Based on 
the underlying documents submitted, it appears that for some of these 
loans Pallante received interest contributions but it did not receive 
reduced interest rates. For these loans, the interest contributions 
were received prior to the POR. Moreover, the interest contributions 
were less than 0.5 percent of Pallante's sales in the years the 
bestowals were approved. Therefore, we have not included these loans in 
our calculations for Pallante. Instead, we are only calculating a 
benefit for those Law 64/86 loans to Pallante that were outstanding 
during the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from the Law 64/86 industrial development loans to be 0.63 
percent ad valorem for DeCecco, 0.35 percent ad valorem for Delverde, 
0.08 percent ad valorem for DeMatteis, 0.13 percent ad valorem for 
Pallante, and 0.18 percent ad valorem for Puglisi.
5. Law 341/95 Interest Contributions on Debt Consolidation Loans
    Law 85/95 created the Fondo di Garanzia aimed at improving the 
financial structure of small- and medium-sized companies located in EU 
Objective 1 areas (see, ``European Social Fund'' section below). Under 
Article 2 of Law 341/95, monies from the Fondo di Garanzia are used to 
make interest contributions on debt consolidation loans obtained by 
eligible companies. The company first enters into a loan contract with 
a commercial bank. Then, the contract is submitted to the approving 
authority. After approval, the loan is made.
    DeCecco had a Law 341/95 debt consolidation loan outstanding during 
the POR.
    We preliminarily determine that the interest contributions on this 
loan confer a countervailable subsidy within the meaning of section 
771(5) of the Act. They are a direct transfer of funds from the GOI 
providing a benefit in the amount of the interest contributions. Also, 
these interest contributions are regionally specific within the meaning 
of section 771(5A) of the Act.
    Because DeCecco anticipated receiving the interest contributions 
when it applied for the debt

[[Page 40992]]

consolidation loan, we are calculating the amount of the subsidy as if 
this were a reduced interest loan (see, section 351.508(c)(2) of the 
regulations). Thus, we have divided the interest contributions received 
by DeCecco in the POR by DeCecco's total sales in the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from interest contributions under Law 341/95 to be 0.02 percent 
ad valorem for DeCecco.
6. Law 598/94 Interest Subsidies
    Under Law 598/94, the GOI pays a portion of the interest on certain 
loans granted to small- and medium-sized industrial companies. These 
loans are to be used for investments related to technological 
innovation and/or environmental protection.
    During the POR, DeMatteis, Riscossa, and Rummo received interest 
subsidies under this program.
    In Third Review--Final Results, the Department determined that 
these interest contributions confer a countervailable subsidy within 
the meaning of section 771(5) of the Act. They are a direct transfer of 
funds bestowing a benefit in the amount of the interest contribution.
    Regarding specificity, we recognized that different levels of 
interest contributions were made depending on the region in which the 
recipient company was located. In particular, the level of the interest 
contribution was set at 45 percent for companies located in EU 
Objective 1, 2, and 5(b) areas (see, ``European Social Fund'' section 
below), while firms in all other regions could receive interest 
contributions of 30 percent. Although we sought information in that 
review about the actual use and distribution of interest contributions 
in the non-disadvantaged regions, the GOI did not provide it. Similarly 
in this review, the GOI has not provided information showing that the 
30 percent interest contributions are not specific in fact. Therefore, 
consistent with our determination in Third Review--Final Results, we 
preliminarily determine that the 45 percent interest contributions are 
regionally specific and that the 30 percent interest contributions are 
specific in fact, within the meaning of section 771(5A) of the Act.
    Because the recipient companies anticipated receiving interest 
contributions when they applied for the loans, we are calculating the 
amount of the subsidy as if this were a reduced interest loan (see, 
section 351.508(c)(2) of the regulations). Thus, we have divided the 
interest contributions received by DeMatteis, Riscossa, and Rummo in 
the POR by each company's total sales, or total pasta sales, as 
appropriate, in the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from the Law 598/94 interest subsidies to be 0.18 percent ad 
valorem for DeMatteis, 0.20 percent ad valorem for Riscossa, and 0.20 
percent ad valorem for Rummo.
7. Social Security Reductions and Exemptions--Sgravi
    Italian law allows companies, particularly those located in the 
Mezzogiorno, to use a variety of exemptions and reductions (``sgravi'') 
of the payroll contributions that employers make to the Italian social 
security system for health care benefits, pensions, etc. The sgravi 
benefits are regulated by a complex set of laws and regulations and are 
sometimes linked to conditions such as creating more jobs. The benefits 
under some of these laws (e.g., Laws 183/76 and 449/97) are available 
only to companies located in the Mezzogiorno and other disadvantaged 
regions. Other laws (e.g., Laws 407/90 and 863/84) provide benefits to 
companies all over Italy, but the level of benefits is higher for 
companies in the south than for companies in other parts of the 
country.
    The various laws identified as having provided sgravi benefits 
during the POR are: Law 1089/68 (``Sgravi Unico''); Law 183/76; Law 
863/84, Law 407/90; Law 223/91; Law 56/97; Law 196/97; Law 449/97; and 
Law 448/98. (Laws 449/97 and 448/98 are related and sometimes referred 
to jointly as ``Sgravi Capitario.'') All the respondent companies in 
this review received some form of sgravi benefits during the POR.
    In Pasta Investigation and subsequent reviews, the Department 
determined that the various forms of social security reductions and 
exemptions confer countervailable subsidies within the meaning of 
section 771(5) of the Act. They represent revenue foregone by the GOI 
bestowing a benefit in the amount of the savings received by the 
companies. Also, they were found to be regionally specific within the 
meaning of section 771(5A) of the Act because they were limited to 
companies in the Mezzogiorno or because the higher levels of benefits 
were limited to companies in the Mezzogiorno. In this review, neither 
the GOI nor the responding companies provided new information which 
would warrant reconsideration of our determination that these tax 
savings are a countervailable subsidy.
    In accordance with section 351.524(c) of the regulations and 
consistent with our methodology in the investigation and previous 
reviews, we have treated social security reductions and exemptions as 
recurring benefits. To calculate the countervailable subsidy, we 
divided each company's savings in social security contributions during 
the POR by that company's total sales in the POR. In those instances 
where the applicable law provided a higher level of benefits to 
companies based on their location, we divided the amount of the sgravi 
benefits that exceeded the amount available to companies in other parts 
of Italy by the recipient company's total sales in the POR (see, 
section 351.503(d)(1) of the regulations).
    On this basis, we preliminarily determine the countervailable 
subsidy from the sgravi program to be 0.21 percent ad valorem for 
Agritalia, 0.11 percent ad valorem for DeCecco, 0.22 percent ad valorem 
for Delverde, 0.61 percent ad valorem for De Matteis, 0.18 percent ad 
valorem for Pallante, 0.26 percent ad valorem for PAM, 0.56 percent ad 
valorem for Puglisi, 0.04 percent ad valorem for Riscossa, and 0.46 
percent ad valorem for Rummo.
    Delverde requested that it receive an offset or credit against 
current sgravi benefits to reflect repayment of certain sgravi benefits 
received in the past. Specifically, because Molise and Abruzzo have 
lost their status as regions entitled to higher benefit levels, 
Delverde has begun repayment of benefits it received between December 
1, 1994 and November 30, 1996.
    Because the repayments made by Delverde relate to prior recurring 
subsidies previously countervailed and because countervailing duties 
have already been assessed on the relevant imports of pasta, we have 
not credited the repayment of these past benefits against current 
sgravi benefits because they do not qualify as a permissible offset 
within the meaning of section 771(6) of the Act.
8. IRAP Exemptions
    On January 1, 1998, the local income tax (ILOR) was replaced with a 
new regional tax, the IRAP, as a result of Legislative Decree 446 
(December 15, 1997). Existing exemptions from the ILOR continued under 
IRAP. In particular, income from production facilities located in the 
Mezzogiorno was exempt from tax for ten years.
    DeCecco claimed the IRAP tax exemption on its tax return filed 
during the POR.
    In Pasta Investigation, the Department determined that the ILOR tax 
exemption confers a countervailable subsidy within

[[Page 40993]]

the meaning of section 771(5) of the Act. The exemption represents 
revenue foregone by the taxing authority and confers a benefit in the 
amount of the tax savings to the recipient companies. Also, this tax 
exemption was found to be regionally specific within the meaning of 
section 771(5A) of the Act. In this review, neither the GOI nor the 
responding companies have provided any information to indicate that the 
substitution of the IRAP for the ILOR would warrant reconsideration of 
our determination that this tax exemption is a countervailable subsidy.
    In accordance with sections 351.509(b) of the regulations and our 
treatment of the ILOR tax exemption in Pasta Investigation, we are 
calculating the countervailable subsidy by dividing each company's tax 
savings in the POR by its total sales, or total pasta sales, as 
appropriate, during the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from the IRAP tax exemption to be 0.08 percent ad valorem for 
DeCecco.
9. Law 236/93 Training Grants
    Under Law 236/93, which is administered by the regional governments 
but funded by the GOI, grants are provided to Italian companies for 
worker training.
    Delverde received a grant under this program during the POR. Its 
grant application was approved in 1997, and tranches of the grant were 
disbursed in 1998 and 1999.
    In Third Review--Final Results, the Department determined that Law 
236/93 training grants confer a countervailable subsidy within the 
meaning of section 771(5) of the Act. They are a direct transfer of 
funds from the GOI bestowing a benefit in the amount of the grant. 
Also, because the GOI and the regional government of Abruzzo did not 
provide adequate information about the distribution of grants under 
this program, we determined that Law 236/93 training grants were 
specific within the meaning of section 771(5A) of the Act. In this 
review, neither the GOI nor the Government of Abruzzo has provided 
information that would warrant reconsideration of our determination 
that these grants are countervailable subsidies.
    Consistent with section 351.524(c)(1) of the regulations and our 
treatment of this grant in the prior review, the Department is treating 
this worker training subsidy as a recurring benefit. Therefore, to 
calculate the countervailable subsidy, we divided the amount received 
by Delverde in the POR by the company's total sales in the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy for this program to be 0.02 percent ad valorem for Delverde.
 10. Law 304/90 Export Marketing Grants
    Under Law 304/90, the GOI provided grants to promote the sale of 
Italian food and agricultural products in foreign markets. The grants 
were given for pilot projects aimed at developing links and integrating 
marketing efforts between Italian food producers and foreign 
distributors. The emphasis was on assisting small-and medium-sized 
producers.
    Delverde received a grant under this program for an export sales 
pilot project in the United States. The purpose of the project was to 
increase the presence of all Delverde's products in the U.S. market, 
not only pasta.
    In Pasta Investigation, the Department determined that these export 
marketing grants confer a countervailable subsidy within the meaning of 
section 771(5) of the Act. They are a direct transfer of funds from the 
GOI bestowing a benefit in the amount of the grant. Also, these grants 
were found to be specific within the meaning of section 771(5A) of the 
Act because their receipt was contingent upon exportation. In this 
review, neither the GOI nor the responding companies have provided new 
information which would warrant reconsideration of our determination 
that these grants confer a countervailable subsidy.
    Also in Pasta Investigation, the Department treated export 
marketing grants as non-recurring. No new information has been placed 
on the record of this review that would cause us to depart from this 
treatment.
    Because this grant exceeded 0.5 percent of Delverde's exports to 
the United States in the year of receipt, we used the grant methodology 
described in section 351.524(d) of the regulations to allocate the 
benefit over time. We divided the benefit attributable to the POR by 
the value of Delverde's total exports to the United States in the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from the Law 304/90 export marketing grants to be 0.34 percent 
ad valorem for Delverde.
11. European Regional Development Fund (ERDF)
    The ERDF is another of the European Union's Structural Funds. It 
was created pursuant to the authority in Article 130 of the Treaty of 
Rome in order to reduce regional disparities in socio-economic 
performance within the EU. The ERDF program provides grants to 
companies located within regions which meet the criteria of Objective 1 
(underdeveloped regions), Objective 2 (declining industrial regions), 
or Objective 5(b) (declining agricultural regions ) under the 
Structural Funds.
    DeMatteis and PAM received ERDF grants which conferred a benefit 
during the POR.
    In Pasta Investigation, the Department determined that ERDF grants 
confer a countervailable subsidy within the meaning of section 771(5) 
of the Act. They are a direct transfer of funds bestowing a benefit in 
the amount of the grant. Also, these grants were found to be regionally 
specific within the meaning of section 771(5A) of the Act. In this 
review, neither the EU, the GOI nor the responding companies have 
provided new information which would warrant reconsideration of our 
determination that ERDF grants are countervailable subsidies.
    In Pasta Investigation, the Department treated ERDF grants as non-
recurring. No new information has been placed on the record of this 
review that would cause us to depart from this treatment. In accordance 
with section 351.524(b)(2) of the regulations, we determined that the 
ERDF grants received by these companies exceeded 0.5 percent of their 
respective sales in the years in which the grants were approved.
    We used the grant methodology described in section 351.524(d) of 
the regulations to calculate the countervailable benefit. We divided 
the benefit received by each company in the POR by its total sales, or 
total pasta sales, as appropriate, in the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from the ERDF grant to be 0.13 percent ad valorem for DeMatteis 
and 0.12 percent ad valorem for PAM.
12. Export Restitution Payments
    The EU provides restitution payments to EU pasta exporters based on 
the durum wheat content of their exported pasta products. The program 
is designed to compensate pasta producers for the difference between EU 
prices and world market prices for durum wheat. Generally, under this 
program, a restitution payment is available to any EU exporter of pasta 
products, regardless of whether the pasta was made with imported wheat 
or wheat grown within the EU.
    Agritalia, DeCecco, Delverde, Pallante, PAM, Puglisi, and Rummo 
received export restitution payments during the POR for shipments of 
pasta to the United States.
    In Pasta Investigation, the Department determined that export 
restitution payments confer a countervailable

[[Page 40994]]

subsidy within the meaning of section 771(5) of the Act. These payments 
are a direct transfer of funds from the EU bestowing a benefit in the 
amount of the payment. The restitution payments were found to be 
specific because their receipt is contingent upon export performance. 
In this review, the GOI, the EU, and the responding companies have not 
provided new information which would warrant reconsideration of our 
determination that export restitution payments are countervailable 
subsidies.
    In Pasta Investigation, we treated the export restitution payments 
as recurring benefits. We have found no reason to depart from this 
treatment in the current review. Therefore, to calculate the 
countervailable subsidy, we generally divided the export restitution 
payments received by the recipient companies in the POR for pasta 
shipments to the United States by the value of each company's pasta 
exports to the United States in the POR. For Pallante, we divided total 
export restitution payments by exports to all markets, because the 
reported benefits were not segregated by market.
    On this basis, we preliminarily determine the countervailable 
subsidy from the export restitution program to be 0.07 percent ad 
valorem for Agritalia, 0.11 percent ad valorem for DeCecco, 0.51 
percent ad valorem for Delverde, 2.52 percent ad valorem for Pallante, 
0.70 percent ad valorem for PAM, 1.36 percent ad valorem for Puglisi, 
and 0.60 percent ad valorem for Rummo.
13. Duty-Free Import Rights
    Under Italian and EU customs procedures, companies may seek 
authorization for duty-free importation of certain agricultural input 
products, on the condition that processed agricultural products are 
exported. Under the Temporanea Importazione scheme, a processor of 
agricultural products can apply to import its input duty free and, 
after processing, to export the processed product. Under the 
Riesportazione Preventiva scheme, the order is reversed: after 
exporting the processed product, the agricultural input product can be 
imported duty free. The authorizations for duty-free importation, 
granted by the customs authorities, are transferable.
    During the POR, Agritalia received authorizations for duty-free 
importation of durum wheat which it sold.
    In situations where a producer imports its inputs and then exports 
the product processed from those imported inputs, this scheme appears 
to operate as a non-excessive duty drawback system and, hence, would 
not confer a countervailable subsidy. However, where the exporter of 
the processed product is not the importer and processor of the imported 
input, we cannot equate the scheme to a non-excessive duty drawback 
scheme. Instead, when the exporter and importer are different, the 
exporter receiving duty-free import rights is receiving a ``privilege'' 
which can be sold, and the importer purchasing that ``privilege'' is 
exempt from duties and is under no obligation to export.
    Based on this analysis, we preliminarily determine that the 
granting of duty-free import rights confers a countervailable subsidy 
within the meaning of section 771(5) of the Act. In authorizing duty-
free importation of inputs, the GOI is forgoing revenue that it is 
otherwise due. These authorizations are specific within the meaning of 
section 771(5A) because they are contingent upon exportation.
    In analyzing the benefit arising from the authorization of 
transferable duty-free import rights, we have considered the nature of 
the financial contribution, i.e., the forgoing of revenue by the GOI, 
and we preliminarily determine that the total benefit is equal to the 
duty savings. However, those savings are essentially shared between the 
producer that is able to import duty free and the exporter (Agritalia) 
that sells the privilege of importing duty free. Specifically, the 
benefit to the importer is the amount of the duty that would have been 
paid absent the duty-free import rights, less the amount that the 
importer paid for those rights, while the benefit to the exporter is 
the amount it receives from importer.
    On this basis, we preliminarily determine the countervailable 
subsidy from the duty-free import rights to be 0.38 percent ad valorem 
for Agritalia. We do not have information identifying the companies 
that purchased the duty-free import rights for these preliminary 
results. We are seeking this information for the final results.

II. Programs Preliminarily Determined Not To Confer Countervailable 
Subsidies in the POR

1. IRPEG Exemptions
    In addition to providing sgravi benefits, Law 449/97 also provides 
partial exemptions from a corporate income tax, the IRPEG. These 
partial exemptions are given for new employees hired between October 1, 
1997 and December 31, 2000. Only firms located in EU Objective 1 areas 
are eligible for these exemptions.
    It appears from DeCecco's response that the company applied a 
partial exemption it received under Law 449/97 to estimated IRPEG 
payments it made in 1999. The estimated payments would apply to tax 
year 1999, and the tax return for tax year 1999 would not be filed 
until 2000.
    Under section 351.509(c) of the Department's regulations, direct 
tax benefits are assigned to the date on which the recipient firm would 
otherwise have had to pay the taxes. Since it appears that the partial 
exemption was applied towards estimated taxes in 1999 and that 
DeCecco's ultimate liability for tax year 1999 would not be known until 
2000, we preliminarily determine that any benefit from the IRPEG 
exemption would not occur in this POR.
    We are seeking further information from DeCecco to confirm our 
understanding that the partial exemption was applied to estimated IRPEG 
payments made during the POR for taxes that will ultimately be paid 
after the POR.
2. Remission of Taxes on Export Credit Insurance Under Article 33 of 
Law 227/77
    The ``Special Section for Export Credit Insurance'' (``SACE'') 
insures and reinsures Italian companies with foreign operations for 
political, catastrophic, economic, commercial and exchange rate risks. 
Article 33 of Law 227/77 provides for the remission of insurance taxes 
on policies that are directly insured or reinsured with SACE.
    In Pasta Investigation, the Department determined that the 
remission of this tax was a countervailable subsidy. To calculate the 
tax savings during the POI, the Department multiplied the premiums paid 
during the POI by the insurance tax rate (12.5 percent). This amount 
was then divided by exports to the United States to determine the ad 
valorem benefit.
    Pallante reported that it insured shipments in years prior to the 
POR and received tax remissions in those years. However, it did not 
receive tax remissions in the POR. Therefore, we preliminarily 
determine that there was no benefit to Pallante during the POR.
3. ADAPT
    DeCecco reported that it received a training grant during the POR 
aimed at enhancing its sales forces in Italy. According to DeCecco, the 
grant was made available under the European program ``ADAPT.'' The 
funding for this program comes in part from the EU's Social Fund and 
from the GOI. The GOI's Ministry of Labor administers these 
contributions on behalf of the EU.
    DeCecco claims, and has provided supporting information, that 
assistance

[[Page 40995]]

under the ADAPT program is neither de jure nor de facto specific. 
According to DeCecco, the ADAPT Program is focused on small- and 
medium-sized companies, is widely available throughout the EU and has 
been widely used.
    Based upon our review of the data provided by DeCecco regarding the 
ADAPT Program, it appears that this assistance differs from the 
European Social Fund worker training grants that we have countervailed 
in Pasta Investigation and subsequent reviews. In particular, the 
grants we have countervailed in the past have been given to support one 
or more of the specific objectives described in the ``European Social 
Fund'' section, above. In the case of the ADAPT program, it appears 
that the funding is not given under these specific objectives. Also, as 
DeCecco claims, the ADAPT program appears to be focused on the non-
specific group of small and medium-sized enterprises (see, section 
351.502(e)), and to be available to and used by companies across the 
EU.
    Therefore, we preliminarily determine that the ADAPT Program does 
not confer a countervailable subsidy. For the final results, we intend 
to seek further information on the ADAPT Program from the EU and the 
GOI.
4. Law 1329/65 Interest Contributions (Sabatini Law)
    The Sabatini Law was enacted to encourage the purchase of 
production equipment. It provides, inter alia, for one-time, lump-sum 
interest contributions from the Mediocredito Centrale on loans taken 
out to purchase production equipment. Pallante reported that it 
received interest contributions under the Sabatini Law prior to the 
POR.
    In Pasta Investigation, the Department determined that the interest 
contributions to firms in Southern Italy confer countervailable 
subsidies. The Department also determined that companies were able to 
anticipate the interest contributions at the time the loans were taken 
out. Consequently, in accordance with sections 351.508(c)(2) and 
351.505(c)(2) of the Department's regulations any benefit would be 
countervailed in the year of receipt.
    Since Pallante received the interest contributions prior to the 
POR, we preliminarily determine that the Sabatini Law did not confer a 
benefit during the POR.
5. European Social Fund
    The European Social Fund (``ESF''), one of the EU's structural 
funds, was created under Article 123 of the Treaty of Rome to improve 
employment opportunities for workers and to help raise their living 
standards. There are six different objectives identified for the 
structural funds: Objective 1 covers projects located in underdeveloped 
regions; Objective 2 addresses areas in industrial decline; Objective 3 
relates to the employment of persons under the age of 25; Objective 4 
funds training for employees in companies undergoing restructuring; 
Objective 5 pertains to agricultural areas; and Objective 6 applies to 
regions with very low population (i.e., the far north).
    In Pasta Investigation, the Department determined that ESF grants 
confer a countervailable subsidy within the meaning of section 771(5) 
of the Act.
    DeMatteis reported that it received an ESF grant in 1995. DeMatteis 
states that its grant was a one-time measure that required a separate 
application and government approval, and, therefore, that its ESF grant 
should be treated as a non-recurring subsidy.
    In accordance with section 351.524(b)(2) of the regulations, we 
divided the amount of the ESF grant by the value of DeMatteis' total 
sales in the year the grant was approved. On this basis, we 
preliminarily determine that the benefit from this grant is properly 
allocated to the year of receipt, 1995. Hence, there is no benefit to 
DeMatteis during the POR.

III. Programs Preliminarily Determined To Be Not Used

    We examined the following programs and preliminarily determine that 
the producers and/or exporters of the subject merchandise did not apply 
for or receive benefits under these programs during the POR:
    1. Law 64/86 VAT Reductions.
    2. Export Credits under Law 227/77.
    3. Capital Grants under Law 675/77.
    4. Retraining Grants under Law 675/77.
    5. Interest Contributions on Bank Loans under Law 675/77.
    6. Interest Grants Financed by IRI Bonds.
    7. Preferential Financing for Export Promotion under Law 394/81.
    8. Urban Redevelopment under Law 181.
    9. Grant Received Pursuant to the Community Initiative Concerning 
the Preparation of Enterprises for the Single Market (``PRISMA'').
    10. European Agricultural Guidance and Guarantee Fund (``EAGGF'').

Preliminary Results of Review

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated an 
individual subsidy rate for each producer/exporter covered by this 
administrative review. For the period January 1, 1999 through December 
31, 1999, we preliminarily determine the net subsidy rates for 
producers/exporters under review to be those specified in the chart 
shown below. If the final results of this review remain the same as 
these preliminary results, the Department intends to instruct the U.S. 
Customs Service (``Customs'') to assess countervailing duties at these 
net subsidy rates. The Department also intends to instruct Customs to 
collect cash deposits of estimated countervailing duties at these rates 
on the f.o.b. value of all shipments of the subject merchandise from 
the producers/exporters under review that are entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
the final results of this administrative review.

------------------------------------------------------------------------
                                                              Ad valorem
                          Company                                rate
                                                              (percent)
------------------------------------------------------------------------
Agritalia, S.r.L...........................................         2.94
F.lli De Cecco di Filippo Fara San Martino S.p.A...........         2.21
Delverde S.p.A.............................................         3.27
De Matteis Agroalimentare S.p.A............................         2.33
Pastificio Antonio Pallante S.r.L..........................         4.10
Pastificio Maltagliati S.p.A...............................         3.85
P.A.M. S.r.L.--Prodotti Alimentari Meridionali.............         1.08
Pastificio Riscossa F.lli Mastromauro S.r.L................         1.13
N. Puglisi & F. Industria Paste Alimentari S.p.A...........         7.48
Rummo S.p.A. Molino e Pastaficio...........................         1.26
------------------------------------------------------------------------

    We calculated the ad valorem rate for Agritalia, an export trading 
company, by weight averaging the subsidy rates for its two main 
suppliers of pasta for export to the United States and adding this 
amount to the subsidy rate calculated for Agritalia based on the 
subsidies it received directly. This is consistent with the calculation 
methodology used for Agritalia in Pasta Investigation, 61 FR 30288, 
30309.
    The calculations will be disclosed to the interested parties in 
accordance with section 351.224(b) of the regulations.
    For companies that were not named in our notice initiating this 
administrative review (except Barilla G. e R. F.lli S.p.A. 
(``Barilla'') and Gruppo Agricoltura Sana S.r.L. (``Gruppo'') which 
were excluded from the order during the investigation), the Department 
has directed Customs to assess countervailing duties on all entries 
between January 1, 1999 and

[[Page 40996]]

December 31, 1999 at the rates in effect at the time of entry. For 
those companies for which this review has been rescinded (Pastificio 
F.lli Pagani, Commercio-Rappresentanze-Export S.r.L., Tamma Industrie 
Alimentari di Capitanata. S.r.L., Molino e Pastificio, La Molisana 
Alimentari S.p.A., Arrighi S.p.A. Industrie Alimentari, Industria 
Alimentare Colavita, S.p.A., Isola del Grano S.r.L., Italpast S.p.A., 
Italpasta S.r.L., Labor S.r.L., Pastificio Guido Ferrara, Pastificio 
Campano, S.p.A., Indalco, Audisio Industrie Alimentari de Capitanata, 
S.p.A., and Pastificio Fabianelli, S.p.A., and Pastificio Di Martino 
Gaetano & F.lli s.r.l.), we will direct Customs to liquidate all 
entries between January 1, 1999 and December 31, 1999 at the rates in 
effect at the time of entry.
    For all non-reviewed firms, we will instruct Customs to collect 
cash deposits of estimated countervailing duties 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 are those established in the 
Notice of Countervailing Duty Order and Amended Final Affirmative 
Countervailing Duty Determination: Certain Pasta from Italy, 61 FR 
38544 (July 24, 1996) or the company-specific rate published in the 
most recent final results of an administrative review in which a 
company participated. These rates shall apply to all non-reviewed 
companies until a review of a company assigned these rates is 
requested.

Public Comment

    Interested parties may submit written arguments in case briefs 
within 30 days of the date of publication of this notice. Rebuttal 
briefs, limited to issues raised in case briefs, may be filed not later 
than five days after the date of filing the case briefs. Parties who 
submit briefs in this proceeding should provide a summary of the 
arguments not to exceed five pages and a table of statutes, 
regulations, and cases cited. Copies of case briefs and rebuttal briefs 
must be served on interested parties in accordance with 19 CFR 
351.303(f).
    Interested parties may request a hearing within 30 days after the 
date of publication of this notice. Any hearing, if requested, will be 
held two days after the scheduled date for submission of rebuttal 
briefs.
    Representatives of parties to the proceeding may request disclosure 
of proprietary information under administrative protective order no 
later than 10 days after the representative's client or employer 
becomes a party to the proceeding, but in no event later than the date 
the case briefs, under 19 CFR 351.309(c)(ii), are due.
    The Department will publish a notice of the final results of this 
administrative review within 120 days from the publication of these 
preliminary results.
    This administrative review and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: July 4, 2001.
Faryar Shiryard,
Assistant Secretary for Import Administration.
[FR Doc. 01-19624 Filed 8-3-01; 8:45 am]
BILLING CODE 3510-DS-P