[Federal Register Volume 66, Number 153 (Wednesday, August 8, 2001)]
[Notices]
[Pages 41553-41558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19777]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[C-489-806]


Certain Pasta From Turkey: Preliminary Results of Countervailing 
Duty Administrative Review

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

ACTION: Notice of preliminary results of countervailing duty 
administrative review.

-----------------------------------------------------------------------

SUMMARY: The Department of Commerce is conducting an administrative 
review of the countervailing duty order on certain pasta from Turkey 
for the period January 1, 1999 through December 31, 1999. We have 
preliminarily determined that certain producers/exporters have received 
net subsidies during the period of review. If the final results remain 
the same as these preliminary results, we will instruct the Customs 
Service to assess countervailing duties as detailed in the Preliminary 
Results of Review section of this notice. Interested parties are 
invited to comment on these preliminary results (see the Public Comment 
section of this notice).

EFFECTIVE DATE: August 8, 2001.

FURTHER INFORMATION CONTACT: Annika O'Hara or Melanie Brown, Office of 
AD/CVD Enforcement 1, Import Administration, U.S. Department of 
Commerce, Room 3099, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-3798 and (202) 482-4987, 
respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

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

Case History

    On July 24, 1996, the Department published in the Federal Register 
(61 FR 38546) the countervailing duty order on certain pasta from 
Turkey. On July 20, 2000, the Department published in the Federal 
Register, a notice of ``Opportunity to Request Administrative Review'' 
of this countervailing duty order (65 FR 45035). We received requests 
for review and initiated the review for calendar year 1999, on 
September 6, 2000 (65 FR 53980). In accordance with 19 CFR 351.213(b), 
this review of the order covers the following producers or exporters of 
the subject merchandise for which a review was specifically requested: 
Filiz Gida Sanayi ve Ticaret A.S. (``Filiz''), Beslen Makarna Gida 
Sanayi ve Ticaret A.S. and Beslen Pazarlama Gida Sanayi ve Ticaret A.S. 
(``Beslen''), Pastavilla Makarnacilik Sanayi ve Ticaret A.S. 
(``Pastavilla''), and Maktas Makarnacilik ve Ticaret A.S. (``Maktas'').
    On October 2, 2000, we issued countervailing duty questionnaires to 
the Government of Turkey (``GRT'') and the above-named companies under 
review. We received responses to our

[[Page 41554]]

questionnaires on November 22, 2000, and issued supplemental 
questionnaires on December 20, 2000. Responses to the supplemental 
questionnaires were received on January 9 and 10, 2001. Between April 3 
and 6, 2001, we issued a second set of supplemental questionnaires to 
all the respondents except Beslen. The responses to these supplemental 
questionnaires were received between April 25 and May 2, 2001.

Scope of Order

    Covered by the order 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 order is typically sold in the retail market, in 
fiberboard or cardboard cartons or polyethylene or polypropylene bags, 
of varying dimensions.
    Excluded from the order 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.
    The merchandise under review is currently classifiable under 
subheading 1902.19.20 of the Harmonized Tariff Schedule of the United 
States (``HTSUS''). Although the HTSUS subheading is provided for 
convenience and customs purposes, our written description of the scope 
of the order is dispositive.

Scope Ruling

    To date, the Department has issued the following scope ruling:
    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 Brinkman to Richard Moreland, which is on file in 
the Central Records Unit (``CRU'') in Room B-099 of the main Commerce 
building.)

Period of Review

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

Change in Ownership

    Pursuant to the finding of the U.S. Court of Appeals for the 
Federal Circuit (``CAFC'') in Delverde Srl v. United States, 202 F.3d 
1360, 1365 (Fed. Cir. 2000), reh'g en banc denied (June 20, 2000) 
(``Delverde III''), the Department has developed a new change-in-
ownership methodology, first announced in a remand determination on 
December 4, 2000, following the CAFC's decision in Delverde III, and 
also applied in Grain-Oriented Electrical Steel from Italy; Final 
Results of Countervailing Duty Administrative Review, 66 FR 2885 
(January 12, 2001).
    The first step under this new methodology is to determine whether 
the legal person (entity) to which the subsidies were given is, in 
fact, distinct from the legal person that produced the subject 
merchandise exported to the United States. If we determine the two 
persons are distinct, we then analyze whether a subsidy has been 
provided to the purchasing entity as a result of the change-in-
ownership transaction. If we find, however, that the original subsidy 
recipient and the current producer/exporter are the same person, then 
that person benefits from the original subsidies, and its exports are 
subject to countervailing duties to offset those subsidies. In other 
words, we will determine that a ``financial contribution'' and a 
``benefit'' have been received by the ``person'' under investigation. 
Assuming that the original subsidy has not been fully amortized under 
the Department's normal allocation methodology as of the period of 
investigation or review, the Department would then continue to 
countervail the remaining benefits of that subsidy.
    Pastavilla underwent a change in ownership through a private-to-
private transaction in 1995 when a Turkish business conglomerate, the 
Koc Group, bought the company from its founders. The ownership of Filiz 
changed in a 1996 private-to-private transaction in which Italian pasta 
manufacturer Barilla became the majority shareholder of Filiz. 
Regarding Beslen, the Turkish Grain Board (``TMO''), a government-owned 
enterprise, acquired 45 percent of the shares in Beslen in 1990. The 
remaining shares were--and still are--owned by Okan Holding, a 
privately owned holding company. In 1998, the TMO transferred its 
shares in Beslen to the Turkish Privatization Board, apparently in 
preparation for privatization of the shares.
    We have not made a finding for the purpose of these preliminary 
results as to whether the pre-sale entities are distinct persons from 
the post-sale entities because the respondents have not reported 
receiving any subsidies prior to the changes in ownership (e.g., non-
recurring grants or long-term loans provided to the previous owner of 
the company) from which they continued to benefit during the POR.
    On this basis, we find that application of the change-in-ownership 
methodology is not relevant in this review.

Subsidies Valuation Information

    Benchmark Interest Rates for Short-term Loans: In the POR, 
Pastavilla had outstanding pre-shipment loans denominated in Turkish 
lira (``TL'') while Maktas had pre-shipment loans denominated in both 
TL and foreign currencies. See section I.1 below.
    The Department uses company-specific interest rates as the 
benchmark rate, where possible, in accordance with 19 CFR 351.505. 
Because short-term interest rates in Turkey fluctuated significantly 
during the POR, we have used monthly benchmark rates, e.g., the 
interest rate paid on a pre-shipment loan obtained in January 1999 has 
been compared to the interest rate paid on a benchmark loan obtained 
the same month. Maktas has argued that the Department should use the 
costs it paid on discounted checks as the benchmark interest rate for 
its TL-denominated pre-shipment loans. In the calculation of these 
preliminary results, we have used the discounts paid on such checks as 
the benchmark rate. We have increased these rates to reflect taxes that 
are normally paid on short-term loans in Turkey (i.e., the Resource 
Utilization Support Fund (``KKDF'') tax, the Banking and Insurance 
Transactions (``BIST'') tax, and the stamp tax) but are not charged on 
pre-shipment and other export-related short-term loans (see section I.2 
below).
    Pastavilla did not obtain any comparable commercial short-term 
loans in the same months as it obtained its pre-shipment loans and we, 
therefore, lack company-specific benchmark interest rates for 
Pastavilla. 19 CFR 351.505(3)(ii) directs us to use a national average 
interest rate as the benchmark where there are no company-specific 
rates. The GRT does not maintain or publish data concerning the 
predominant national average short-term interest rates in Turkey. We 
have, therefore, calculated a monthly benchmark interest rate based on 
the short-term interest rates in Turkey for 1999 as reported weekly by 
The

[[Page 41555]]

Economist. This is consistent with the methodology used in Certain 
Welded Carbon Steel Pipes and Tubes and Welded Carbon Steel Line Pipe 
from Turkey; Preliminary Results of Countervailing Duty Administrative 
Review, 65 FR 18070 (April 6, 2000) (``1998 Pipe & Tube''). As in the 
case of Maktas, we have increased these interest rates to reflect the 
tax exemptions on pre-shipment loans.
    With respect to pre-shipment loans denominated in foreign 
currencies, Maktas has provided the interest rates paid on comparable 
commercial short-term loans denominated in the same currencies. In 
accordance with 19 CFR 351.505, we have used these interest rates as 
the benchmark rates for the foreign currency pre-shipment loans.
    Benefits to Mills: All the respondents owned mills for processing 
wheat into semolina, which is the principal input product in pasta. 
None of the mills was separately incorporated, i.e., both the semolina 
and the downstream product (pasta) were produced within a single 
corporate entity.
    On this basis and in accordance with 19 CFR 351.525(b)(6)(ii), the 
Department has attributed subsidies provided for the production of 
semolina and pasta to the sales by the corporate entities that received 
them.
    Adjusting for Inflation: During the POR, the inflation rate in 
Turkey exceeded 50 percent, as shown in the IMF's International 
Financial Statistics (``IFS''). Adjusting the subsidy benefits and the 
sales figures for inflation neutralizes any potential distortion in our 
subsidy calculations caused by high inflation and the timing of the 
receipt of the subsidy. Consistent with the methodology used in 1998 
Pipe & Tube, we calculated the ad valorem subsidy rates for each 
program by multiplying the benefit in the month of receipt by the rate 
of inflation from the month of receipt until the end of the POR. Next, 
we adjusted the monthly sales values in the same way and added these 
adjusted values, thus obtaining total sales for the POR valued at 
December 1999 prices. In these calculations, we used the Wholesale 
Price Index (``WPI'') as reported in the IFS.

Analysis of Programs

I. Programs Preliminarily Determined To Confer Subsidies

1. Pre-Shipment Export Loans
    In order to meet the financing needs of Turkish exporters, the 
Export Credit Bank of Turkey provides short-term pre-shipment loans to 
exporters through intermediary commercial banks. The term for TL-
denominated loans is 120 days, whereas the term for loans denominated 
in foreign currencies is 180 days. Both types of loans may cover up to 
100 percent of the FOB export value. The interest rate charged on the 
loans is established by the Export Credit Bank and is changed 
periodically. The intermediary commercial banks, which take the risk 
that the borrower may default, can require additional fees to offset 
this risk and may also charge a commission. Like all other export-
related short-term loans, the pre-shipment export loans are exempted 
from the KKDF, BIST, and stamp taxes (see Subsidies Valuation 
Information section above).
    Maktas and Pastavilla had outstanding pre-shipment export loans in 
the POR.
    The Department has previously found that these loans confer a 
countervailable subsidy within the meaning of section 771(5) of the Act 
because the interest rate paid on these loans is less than the amount 
the recipient would pay on a comparable commercial loan. See Final 
Affirmative Countervailing Duty Determination: Certain Pasta 
(``Pasta'') from Turkey, 61 FR 30366 (June 14, 1996) (``Pasta 
Investigation Final''). The loans are a direct transfer of funds from 
the GRT bestowing a benefit in the amount of the difference between the 
benchmark interest rate (including the taxes listed above) and the 
interest rate and fees paid by the recipient companies. In Pasta 
Investigation Final, we found the pre-shipment export loans to be 
specific in accordance with section 771(5A)(B) of the Act because 
receipt of these loans is contingent upon export performance. We have 
also previously found that these loans are not tied to a particular 
export destination and have, therefore, treated this program as an 
untied export loan program which renders it countervailable regardless 
of whether or not the loans were used for exports to the United States. 
See 1998 Pipe & Tube, 67 FR at 18072. In this review, no new 
information has been provided that would warrant reconsideration of 
these determinations.
    Pursuant to 19 CFR 351.505, we have calculated the benefit as the 
difference between the payments of interest and taxes that Maktas and 
Pastavilla made on their pre-shipment export loans during the POR and 
the payments the companies would have made on comparable commercial 
loans. We divided the resulting benefit by the value of each company's 
exports during the POR, adjusting for inflation as described in the 
Subsidies Valuation Information section above. On this basis, we 
preliminarily determine the countervailable subsidy from this program 
to be 5.45 percent ad valorem for Maktas and 1.73 percent ad valorem 
for Pastavilla.
2. Exemption from KKDF, BIST, and Stamp Taxes on Export-related Loans
    Pursuant to Article 4 of Resolution no. 94/5782 of June 13, 1994, 
Turkish companies are exempted from paying the KKDF, BIST, and stamp 
taxes on export-related short-term loans regardless of whether the 
loans are denominated in TL or foreign currencies. These exemptions are 
allowed both on loans at preferential interest rates (such as the pre-
shipment export loans discussed above) and on loans at non-preferential 
interest rates.
    Maktas reported receiving tax exemptions on short-term export-
related loans provided at non-preferential interest rates. (Tax 
exemptions on preferential-rate pre-shipment export loans have been 
included in the calculation of the countervailable benefit for these 
loans, as described above.)
    We have preliminarily determined that these tax exemptions confer a 
countervailable subsidy within the meaning of section 771(5) of the 
Act. They constitute revenue forgone by the GRT and provide a benefit 
in the amount of the tax exemptions.
    We have preliminarily determined that the tax exemptions are 
specific in accordance with section 771(5A)(B) of the Act because their 
receipt is contingent upon exportation.
    The Department typically treats tax exemptions as recurring grants 
in accordance with 19 CFR 351.524(c)(1). To calculate the 
countervailable subsidy, we divided the total amount of the tax 
exemptions received by Maktas on short-term export-related loans 
outstanding during the POR by the value of Maktas' exports during the 
POR, adjusting for inflation as described in the Subsidies Valuation 
Information section above. On this basis, we preliminarily determine 
the countervailable subsidy from this program to be 5.31 percent ad 
valorem for Maktas.
3. VAT Support for Domestic Machinery and Equipment Purchases
    Under the General Investment Encouragement Program (``GIEP''),\1\ 
companies engaging in a wide variety of investment projects such as 
expanding or modernizing their production facilities, improving 
infrastructure, undertaking research and development,

[[Page 41556]]

etc., can obtain an Investment Incentive Certificate for the project 
from the GRT. This certificate makes the company eligible for certain 
benefit programs as specified on each certificate. (A company may have 
more than one certificate depending on the number of investment 
projects.) The application for a certificate should include a 
description of the investment project, a feasability study, a list of 
the machinery and equipment that the company plans to buy in connection 
with the project, etc. In order to receive a certificate, the company 
must commit to a certain level of investment and deposit a certain 
amount of money with the GRT (smaller investments and deposits are 
required for companies in areas designated as ``priority development 
regions'').
---------------------------------------------------------------------------

    \1\ GIEP is the successor to GIP (General Incentives Program) 
which the Department examined in Pasta Investigation Final and 1998 
Pipe & Tube.
---------------------------------------------------------------------------

    The Department has previously determined that some parts of the 
GIP/GIEP program are not countervailable (see section II.4 below) while 
other parts of the program are countervailable. ``VAT Support for 
Domestic Machinery and Equipment Purchases,'' a program rebating the 
full VAT on domestically produced machinery and equipment, is 
countervailable. In some instances, a 10 percent premium is added to 
the VAT rebate.
    In 1998 Pipe & Tube, we determined that the VAT Support Program was 
countervailable under section 771(5)(D)(ii) of the Act because the VAT 
rebates constituted revenue forgone by the GRT. We also found the 
program to be specific under section 771(5A)(C) of the Act because the 
receipt of the rebates was contingent upon the use of domestically 
produced goods. A precursor to this program, ``Incentive Premium on 
Domestically Obtained Goods,'' which functioned in a similar manner, 
was found countervailable for the same reasons in Pasta Investigation 
Final.
    In 1998 Pipe & Tube, we found that the VAT Support Program changed 
on August 1, 1998. As of that date, any company holding an Investment 
Incentive Certificate issued on or after August 1, 1998, could claim a 
full VAT exemption on all machinery and equipment acquired for the 
investment project, regardless of whether it is imported or 
domestically produced. This new program, which is called ``VAT 
Exemption for Imported and Locally Purchased Machinery and Equipment,'' 
is further discussed under section II.5 below.
    However, in 1998 Pipe & Tube, we also found that companies could 
still receive benefits under the old system, i.e., VAT rebates 
exclusively on domestically produced machinery and equipment, if the 
Investment Incentive Certificate was issued before August 1, 1998.
    Pastavilla received benefits under the old VAT Support Program 
during the POR. As noted above, the Department has previously 
determined that these rebates confer a countervailable subsidy within 
the meaning of section 771(5) of the Act. They are a direct transfer of 
funds from the GRT bestowing a benefit in the amount of the rebate. As 
noted above, this program has previously been found to be specific. In 
this review, no new information has been provided that would warrant 
reconsideration of this determination.
    We have previously treated the VAT rebates on domestic machinery 
and equipment as recurring grants because once a company has received 
an Investment Incentive Certificate, it becomes eligible for the VAT 
Support Program. See 1998 Pipe & Tube. The receipt of benefits is 
automatic; companies do not have to apply for new certificates each 
year. In the current review, no new information has been placed on the 
record that would cause us to depart from this treatment. Therefore, to 
calculate the countervailable subsidy, we divided the amount received 
by Pastavilla in the POR by the value of the company's total sales in 
the POR, adjusting for inflation as described in the Subsidies 
Valuation Information section above. On this basis, we preliminarily 
determine the countervailable subsidy from this program to be 0.04 
percent ad valorem for Pastavilla.

II. Programs Preliminarily Determined To Be Not Countervailable

1. Export Credit Insurance
    Exporters can obtain short-term export credit insurance from the 
Export Credit Bank of Turkey. These are one-year blanket insurance 
policies which cover up to 90 percent of losses incurred due to 
political risks (e.g., cancellation of the buyer's import permit or 
license and losses resulting from war, revolution, etc.) and commercial 
risks (e.g., the insolvency of the buyer or the refusal or failure of 
the buyer to take delivery of the goods). The insurance provided under 
this program is a post-shipment insurance because the Export Credit 
Bank becomes liable only if the loss occurs on or after the date of 
shipment.
    The premium rates differ depending on the following factors: (1) 
whether the buyer is a public or a private entity, (2) the risk 
classification of the buyer's country, (3) the payment terms, and (4) 
the length of the credit period. Previously, it was obligatory for 
companies taking pre-shipment export loans (see section I.1 above) to 
use the export credit program. However, since February 1997, use of the 
export credit insurance program is voluntary for borrowers under the 
pre-shipment export loan program.
    The export credit insurance program was not used in the 
investigation of this case (see Pasta Investigation Final) or in 1998 
Pipe & Tube. In this review, Maktas and Filiz have reported buying 
export credit insurance from the Export Credit Bank, although neither 
company received any reimbursements under the program during the POR.
    The GRT has provided information for the time period 1995-1999 
showing that, in each of these years, the premiums paid for the export 
credit insurance and other income generated by the program exceeded the 
insurance claims paid to participating companies. The 1999 annual 
report of the Export Credit Bank also shows that the bank's operating 
income (which includes the operating income for the export credit 
insurance program) exceeds its long-term operating costs. On this 
basis, in accordance with 19 CFR 351.520(a)(1), we preliminarily find 
the export credit insurance program to be not countervailable.
2. Purchases of Domestic Wheat from the TMO under Decree 98/11033
    There are three main ways for Turkish pasta producers to obtain 
wheat for semolina: (1) from the TMO, (2) from local growers and 
traders, or (3) through imports. Prices on Turkish wheat are set above 
world market price as part of a price support scheme benefitting 
domestic wheat growers. However, companies holding an Inward Processing 
License may obtain cheaper wheat by either importing it under a duty-
drawback program (see section II.3 below) or by purchasing Turkish 
wheat from the TMO under Decree 98/11033 at prices below normal 
domestic prices. The GRT and Maktas, the only company using this 
program in the POR, have stated that the price of wheat purchased under 
this decree is at or above the price generated in international tender 
auctions held by the TMO to sell Turkish wheat to foreign buyers, i.e., 
a world market price. Companies using Inward Processing Licenses must 
export the finished product regardless of whether they import wheat 
under the duty drawback program or buy it from the TMO under Decree 98/
11033.
    Under 19 CFR 351.516(a)(1), price preferences for inputs used in 
the production of goods for export confer a countervailable benefit if 
the inputs are provided at more favorable terms or

[[Page 41557]]

conditions than inputs used in the production of goods for domestic 
consumption, unless ``such terms or conditions are not more favorable 
than those commercially available on world markets to exporters.'' As 
explained above, the prices that Maktas paid for wheat purchased under 
Decree 98/11033 were equivalent to, or higher than, the prices that 
foreign buyers paid for Turkish wheat at auctions. We preliminarily 
regard these prices to be world market, but before issuing the final 
results of this review, we will seek more information from the GRT 
about the auctions and we will also request support documentation for 
the prices paid at the auctions.
    On this basis, we preliminarily determine that the provision of 
wheat under Decree 98/11033 is not countervailable.
3. Wheat Imports Under Inward Processing Licenses
    As described above, Turkish companies holding an Inward Processing 
License may import wheat duty-free under a duty drawback program 
provided that they export the finished product. Maktas and Pastavilla 
imported wheat under an Inward Processing License in the POR.
    According to 19 CFR 351.519, a benefit exists to the extent that 
the amount of the remission or drawback exceeds the amount of import 
charges on the imported input or to the extent that the exemption 
extends to inputs that are not consumed in the production of the 
exported products. Maktas and Pastavilla imported wheat (which is 
processed into semolina, the main input product in pasta) under the 
Inward Processing Licenses. There is no indication that either company 
received excessive remissions of the import duty, which normally is 50 
percent on imported wheat. On this basis, we preliminarily determine 
that wheat imports under the Inward Processing Licenses are not 
countervailable. However, before issuing the final results of this 
review, the Department will request Maktas and Pastavilla to document 
that they did not receive excessive remissions of the import duty under 
this program.
4. Certain GIEP Benefits: Investment Allowances, Customs Duty 
Exemptions, and Stamp Tax Exemptions
    In Pasta Investigation Final, we determined that certain GIEP 
(formerly GIP) benefits, were not countervailable because there were no 
de jure limitations on the types of industries eligible for these 
benefits (see 61 FR at 30371). Further, we determined that the pasta 
industry was not a dominant user of the program, nor did it receive a 
disproportionate number of the Investment Incentive Certificates issued 
by the GRT during the time period 1991-1994. In other words, we found 
that the certificates were not de facto specific to the pasta industry.
    In the POR, Filiz used certain GIEP benefits (Investment Allowance, 
which is a form of corporate income tax deduction, and Customs Duty 
Exemptions) under an Investment Incentive Certificate issued in 1994. 
In Pasta Investigation Final, we found the Customs Duty Exemptions to 
be not countervailable because, as explained above, there was neither 
de jure, nor de facto, specificity for certificates issued in 1994. In 
the current review, no new information has been placed on the record 
that would cause us to change this determination.
    Regarding the Investment Allowances portion of the GIP/GIEP 
program, none of the respondents in the investigation used this 
program. However, these allowances were used in 1998 Pipe & Tube where 
we analyzed them by examining the specificity of the Investment 
Incentive Certificates. We have applied the same type of analysis to 
the Investment Allowances used by Filiz in this review. Because we 
found in Pasta Investigation Final that certificates issued in 1994 
were not specific, we preliminarily determine that the Investment 
Allowances used by Filiz under its 1994 Investment Incentive 
Certificate are not countervailable.
    During the POR, Filiz also used an Investment Incentive Certificate 
issued in 1998. Pastavilla used certificates issued between 1996 and 
1999, and Maktas used a certificate issued in 1996. The GIP/GIEP 
programs used by these companies included Investment Allowances and 
Customs Duty Exemptions. Beslen also held Investment Incentive 
Certificates issued during the same general time period (Beslen's data 
regarding its certificates is proprietary and, therefore, cannot be 
discussed in further detail in this notice). Beslen received Customs 
Duty Exemptions and Stamp Tax Exemptions under its certificates. (The 
VAT support reported by the respondents in the context of the GIEP 
program has been dealt with elsewhere in this notice.)
    Consistent with Pasta Investigation Final and 1998 Pipe & Tube, we 
have analyzed the countervailability of the Investment Allowances, 
Customs Duty Exemptions, and Stamp Tax Exemptions in terms of the 
specificity of the Investment Incentive Certificates issued between 
1996 and 1999. Based on information gathered from the Turkish Treasury 
Department's website (http://www.hazine.gov.tr), we preliminarily 
determine that the food and beverages industry did not receive a 
disproportionate number of Investment Incentive Certificates during the 
time period 1996-1999. On this basis, we preliminarily determine that 
the Investment Allowances, Customs Duty Exemptions, and Stamp Tax 
Exemptions received under Investment Incentive Certificates issued 
between 1996 and 1999 are not countervailable.
5. VAT Exemption on Imported and Locally Purchased Machinery and 
Equipment
    As discussed in section I.3 above, the VAT Support Program changed 
on August 1, 1998. From that date, the program, renamed ``VAT Exemption 
on Imported and Locally Purchased Machinery and Equipment,'' entitles 
holders of Investment Incentive Certificates issued on or after August 
1, 1998, to claim full VAT exemption on all machinery and equipment 
acquired for the investment project, regardless of whether it is 
imported or domestically produced.
    During the POR, Pastavilla used this new program under an 
Investment Incentive Certificate issued in 1999. Because benefits under 
the program are no longer tied to the purchase of domestically produced 
machinery and equipment and because the food and beverages industry did 
not receive a disproportionate number of Investment Incentive 
Certificates during the relevant time period (see section II.4 above), 
we preliminarily find the ``VAT Exemption for Imported and Locally 
Purchased Machinery and Equipment'' program to be not countervailable.

III. Programs Preliminarily Determined To Be Not Used

    1. Pasta Export Grants.
    2. Export Credit Through the Foreign Trade Corporate Companies' 
Rediscount Credit Facility.
    3. Performance Foreign Currency Export Loans.
    4. Corporate Tax Deferrals.
    5. Subsidized Credits for a Proportion of Fixed Expenditures.
    6. Subsidized Credits in Foreign Currencies.
    7. Direct Payments to Exporters for Wheat Products to Compensate 
for High Domestic Input Prices.
    8. GIP/GIEP Program:
    a. Exemption from Certain Customs Duties and Fund Levies.
    b. Exemption from Certain Taxes, Duties and Fees (Other Tax 
Exemptions).

[[Page 41558]]

    c. Subsidized Turkish Lire Credit Facilities.
    d. Land Allocation.
    e. Energy Support.
    f. Payment of Certain Obligations of Firms Undertaking Large 
Investments.

IV. Programs Preliminarily Determined To Have Been Terminated

    The GRT has stated that the following programs have been 
terminated. Before issuing the final results in this administrative 
review, we will seek confirmation through official government documents 
and other sources that these programs no longer exist.
    1. Free Wheat Program.
    2. Payments for Exports on Turkish Ships/State Aid for Exports 
Program.
    3. Tax Exemption Based on Exports Earnings (Corporate Tax Law 
3946).
    4. Advance Refunds of Tax Savings.
    5. Exemption from Mass Housing Fund Levy (Duty Exemptions).
    6. GIP/GIEP Program:
    a. Interest Spread Return Program.
    b. Resource Utilization Support Fund.

Preliminary Results of Review

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated an 
individual subsidy rate for each producer/exporter subject to 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 
Customs Service (``Customs'') to assess countervailing duties at these 
net subsidy rates. Because the rates for Beslen and Filiz are zero, we 
plan to instruct Customs to liquidate entries from these companies 
during the POR without regard to countervailing duties.
    The Department also intends to instruct Customs to collect cash 
deposits of estimated countervailing duties at these rates on the FOB 
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)
------------------------------------------------------------------------
Beslen Makarna Gida Sanayi ve Ticaret A.S. and Beslen               0.00
 Pazarlama Gida Sanayi ve Ticaret A.S......................
Filiz Gida Sanayi ve Ticaret A.S...........................         0.00
Maktas Makarnacilik ve Ticaret A.S.........................        10.76
Pastavilla Makarnacilik Sanayi ve Ticaret A.S..............         1.77
------------------------------------------------------------------------

    The calculations will be disclosed to the interested parties in 
accordance with 19 CFR 351.224(b).
    For companies that were not named in our notice initiating this 
administrative review, the Department has directed Customs to assess 
countervailing duties on 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: Certain Pasta (``Pasta'') From 
Turkey, 61 FR 38546 (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 31, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-19777 Filed 8-7-01; 8:45 am]
BILLING CODE 3510-DS-P