[Federal Register Volume 66, Number 238 (Tuesday, December 11, 2001)]
[Notices]
[Pages 64019-64022]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-30604]


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

DEPARTMENT OF COMMERCE

International Trade Administration

[C-508-605]


Industrial Phosphoric Acid From Israel; Final Results of 
Countervailing Duty Administrative Review

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

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

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

SUMMARY: On August 31, 2001, the Department of Commerce (``the 
Department'') published in the Federal Register its preliminary results 
of administrative review of the countervailing duty order on industrial 
phosphoric acid from Israel for the period January 1, 1999 through 
December 31, 1999 (66 FR 45965). The Department has now completed this 
administrative review in accordance with section 751(a) of the Tariff 
Act of 1930, as amended (``the Act''). For information on the subsidy 
rate for each reviewed company, and for all non-reviewed companies, 
please see the Final Results of Review section of this notice. We will 
instruct the U.S. Customs Service (``Customs'') to assess 
countervailing duties as detailed in the Final Results of Review 
section of this notice.

EFFECTIVE DATE: December 11, 2001.

FOR FURTHER INFORMATION CONTACT: Dana Mermelstein or Sean Carey, Office 
of AD/CVD Enforcement VI, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
1391 or (202) 482-3964, respectively.

SUPPLEMENTARY INFORMATION:

Background

    Pursuant to 19 CFR 351.213(b), this review covers only those 
producers or exporters of the subject merchandise for

[[Page 64020]]

which a review was specifically requested. Accordingly, this review 
covers Rotem-Amfert Negev Ltd. (``Rotem''). We published the 
preliminary results on August 31, 2001 (66 FR 45965). We invited 
interested parties to comment on the preliminary results. We received 
no comments from any of the parties.

Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions of the Tariff Act of 1930, as amended 
(``the Act''). All citations to the Department's regulations reference 
19 CFR part 351 (2000), unless otherwise indicated.

Scope of the Review

    Imports covered by this review are shipments of industrial 
phosphoric acid (IPA) from Israel. Such merchandise is classifiable 
under item number 2809.20.00 of the Harmonized Tariff Schedule (HTS). 
The HTS item number is provided for convenience and U.S. Customs 
Service purposes. The written description of the scope remains 
dispositive.

Subsidies Valuation Information

Period of Review

    The period for which we are measuring subsidies is calendar year 
1999.

Allocation Period

    In British Steel plc. v. United States, 879 F.Supp. 1254 (CIT 1995) 
(British Steel I), the U.S. Court of International Trade (the Court) 
ruled against the allocation period methodology for non-recurring 
subsidies that the Department had employed for the past decade, as it 
was articulated in the General Issues Appendix appended to the Final 
Countervailing Duty Determination; Certain Steel Products from Austria, 
58 FR 37225 (July 9, 1993) (GIA). In accordance with the Court's 
decision, on remand, the Department determined that the most reasonable 
method of deriving the allocation period for non-recurring subsides is 
a company-specific average useful life (AUL). This remand determination 
was affirmed by the Court on June 4, 1996. See British Steel plc. v. 
United States, 929 F.Supp 426, 439 (CIT 1996) (British Steel II).
    However, in administrative reviews in which the Department examines 
non-recurring subsidies received prior to the POR which have been 
countervailed based on an allocation period established in an earlier 
segment of the proceeding, it is not practicable to reallocate those 
subsidies over a different period of time. When a countervailing duty 
rate in earlier segments of a proceeding was calculated based on a 
certain allocation period and resulted in a certain benefit stream, 
redefining the allocation period in later segments of the proceeding 
would entail taking the original grant amount and creating an entirely 
new benefit stream for that grant. (See, e.g., Certain Carbon Steel 
Products from Sweden; Final Results of Countervailing Duty 
Administrative Review, 62 FR 16549 (April 7, 1997)).
    In this administrative review, the Department has considered non-
recurring subsidies previously allocated in earlier administrative 
reviews under the old practice, non-recurring subsidies also previously 
allocated in recent administrative reviews under the new practice, and 
non-recurring subsidies received during the POR to which the current 
countervailing duty regulations apply. Under these circumstances, and 
as discussed below, the Department has used different allocation 
periods depending upon the date of receipt of the non-recurring 
subsidy. For non-recurring subsidies received prior to the 1995 
administrative review (the first review for which the Department 
implemented the British Steel I decision), the Department is using the 
original allocation period of 10 years. For non-recurring subsidies 
received since 1995, Rotem has submitted in each subsequent 
administrative review, including this one, AUL calculations based on 
depreciation and values of productive assets reported in its financial 
statements. In accordance with the Department's practice, we derived 
Rotem's company-specific AUL for each respective administrative review 
since 1995 by dividing the aggregate of the annual average gross book 
values of the firm's depreciable productive fixed assets by the firm's 
aggregated annual charge to depreciation for a 10-year period. In the 
current review, this methodology resulted in an AUL of 23 years. 
Pursuant to section 351.524(d)(2) of the Department's regulations, this 
company-specific AUL rebuts the presumptive use of the IRS tables. 
Therefore, for the purposes of this review, non-recurring subsidies 
received during the POR have been allocated over 23 years.

Privatization

    Israel Chemicals Limited (ICL), the parent company which owns 100 
percent of Rotem's shares, was partially privatized in 1992, 1993, 
1994, 1995, 1997 and 1998. In this administrative review, the 
Government of Israel (GOI) and Rotem reported that additional shares of 
ICL were sold in 1999. We have previously determined that the partial 
privatization of ICL represents a partial privatization of each of the 
companies in which ICL holds an ownership interest. See Final Results 
of Countervailing Duty Administrative Review; Industrial Phosphoric 
Acid from Israel, 61 FR 53351, 53352 (October 11, 1996) (1994 Final 
Results). In this review and prior reviews of this order, the 
Department found that Rotem and/or its predecessor, Negev Phosphates 
Ltd., received non-recurring countervailable subsidies prior to these 
partial privatizations.
    On December 4, 2000, the Department announced a new privatization 
approach in a remand determination following the decision 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 applied this new 
approach in the final results of the prior administrative review of 
this order. See Final Results of Countervailing Duty Administrative 
Review; Industrial Phosphoric Acid from Israel, 66 FR 15839 (March 21, 
2001) (1998 Final Results). Under this approach, the first requirement 
is to determine whether the person to which the subsidies were given 
is, in fact, distinct from the person that produced the subject 
merchandise exported to the United States. If the two persons are 
distinct, the original subsidies may not be attributed to the new 
producer/exporter. The Department would, however, consider whether any 
subsidy had been bestowed upon that producer/exporter as a result of 
the change-in-ownership transaction. On the other hand, if the original 
subsidy recipient and the current producer/exporter are considered to 
be the same person, 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'' 
that is the firm under investigation or review. Assuming that the 
original subsidy had not been fully amortized under the Department's 
normal allocation methodology as of the POR, the Department would then 
continue to countervail the remaining benefits of that subsidy.
    In making the ``person'' determination, where appropriate and 
applicable, we analyze factors such as (1) continuity of general 
business operations, including whether the successor represents itself 
as the continuation of the previous enterprise,

[[Page 64021]]

as may be indicated, for example, by use of the same name, (2) 
continuity of production facilities, (3) continuity of assets and 
liabilities, and (4) retention of personnel. No single factor will 
necessarily provide a dispositive indication of any change in the 
entity under analysis. Instead, the Department will generally consider 
the post-sale entity to be the same person as the pre-sale entity if, 
based on the totality of the factors considered, we determine that the 
entity in question can be considered a continuous business entity 
because it was operated in substantially the same manner before and 
after the change in ownership.
    Using the approach described above, we have analyzed the 
information provided by the GOI and Rotem to determine whether the 
subsidies received by Rotem continued to benefit Rotem during the POR. 
By applying this approach to the facts and circumstances of the instant 
countervailing duty administrative review of industrial phosphoric acid 
from Israel and the relevant privatization of ICL and its subsidiary, 
Rotem, we find that the pre-sale and post-sale entities are not 
distinct persons. Specifically, Rotem maintains the same plants and 
uses the same production facilities to manufacture and sell the same 
products; continues to rely on the same suppliers and customer base; 
and employs largely the same personnel and management. See the 
Department's June 13, 2001, letter to Rotem (with attached Change in 
Ownership Analysis Memorandum from the 1998 administrative review) and 
the 1998 Final Results and accompanying Decision Memorandum (section 
entitled Change in Ownership), for a complete discussion of our 
analysis of ICL's and Rotem's privatization. Therefore, we determine 
that the subsidies provided to Rotem, prior to the privatization of 
ICL, continue to benefit Rotem after ICL's privatization.

Grant Benefit Calculations

    To calculate the benefit for the POR, we followed the same 
methodology used in the final results of prior administrative reviews. 
We converted Rotem's shekel-denominated grants into U.S. dollars, using 
the exchange rate in effect on the dates the grants were received. We 
then applied the grant methodology to determine the benefit for the 
POR. See e.g., Industrial Phosphoric Acid from Israel; Final Results of 
Countervailing Duty Administrative Review, 63 FR 13626, 13633 (March 
20, 1998) (1995 Final Results).
    As a result of our privatization approach and our determination 
that Rotem continues to benefit from subsidies received prior to the 
privatization of ICL, the full value of the benefit allocable to the 
1999 POR from non-recurring subsidies is being used in the calculation 
of Rotem's subsidy rate.

Discount Rates

    We considered Rotem's cost of long-term borrowing in U.S. dollars 
as reported in the company's financial statements for use as the 
discount rate used to allocate the countervailable benefit over time. 
However, this information includes Rotem's borrowing from its parent 
company, ICL, and thus does not provide an appropriate discount rate. 
Therefore, we followed the same methodology used in the final results 
of prior administrative reviews in using ICL's cost of long-term 
borrowing in U.S. dollars in each year from 1984 through 1999 as the 
most appropriate discount rate. ICL's interest rates are shown in the 
notes to the company's financial statements, public documents which are 
in the record of this review. See Comment 9 in the 1995 Final Results.

Analysis of Programs

    There were no comments submitted to the Department with respect to 
our preliminary results of review; therefore, our preliminary results 
provide the basis for these final results of review. Accordingly, we 
determine the following:

I. Programs Conferring Subsidies

A. Encouragement of Capital Investments Law (ECIL)
    In the preliminary results, we found that the ECIL grant program 
conferred countervailable subsidies on the subject merchandise. It is 
de jure specific because the program limits the availability of grants 
to enterprises located only in Development Zones A and B. Rotem is 
located in Development Zone A, and received ECIL investment and capital 
grants in disbursements over a period of years for several projects. 
Our review of the record has not led us to change any findings or 
calculations. Accordingly, the subsidy from ECIL grants is 4.57 percent 
ad valorem for the POR, which remains unchanged from the preliminary 
results.
B. Infrastructure Grant Program
    In this review, we preliminarily determined that Rotem received an 
infrastructure grant to initiate and establish industrial areas, and 
that this grant conferred countervailable subsidies on the subject 
merchandise. Our review of the record has not led us to change any 
findings or calculations. Accordingly, the subsidy for this program is 
0.21 percent ad valorem, which remains unchanged from the preliminary 
results.
C. Encouragement of Industrial Research and Development Grants (EIRD)
    In the preliminary results, we found that three EIRD grant 
disbursements received by Rotem were tied to research related to the 
production of IPA. Our review of the record has not led us to change 
any findings or calculations. Accordingly, the subsidy for this program 
is 0.02 percent ad valorem, which remains unchanged from the 
preliminary results.

II. Programs Determined To Be Not Used

    We examined the following programs and preliminarily determined 
that the producer and/or exporter of the subject merchandise did not 
apply for or receive benefits under these programs during the POR. Our 
review of the record has not led us to change our finding for these 
final results.

A. Environmental Grant Program
B. Reduced Tax Rates under ECIL
C. ECIL Section 24 loans
D. Dividends and Interest Tax Benefits under Section 46 of the ECIL
E. ECIL Preferential Accelerated Depreciation

III.Other Program Examined

Labor Training Grant
    For purposes of this administrative review, we expensed this labor 
training grant and have found that any subsidy which could be 
calculated for this program would be so small (significantly less than 
0.005 percent ad valorem) that there would be no impact on the overall 
subsidy rate. Our review of the record has not led us to change our 
finding. Therefore, we do not consider it necessary to address the 
issue of specificity for purposes of this administrative review and 
have not further considered this program. See e.g., Final Results of 
Countervailing Duty Administrative Review: Live Swine from Canada, 63 
FR 2210, 2211 (January 14, 1998).

Final Results of Review

    In accordance with section 705(c)(1)(B)(i) of the Act, we 
calculated an individual ad valorem subsidy rate for each producer/
exporter subject to this administrative review. For the period January 
1, 1999 through December 31, 1999, we determine the subsidy rate for 
Rotem to be 4.80 percent ad valorem. We will instruct the U.S. Customs 
Service (Customs) to assess countervailing duties as indicated

[[Page 64022]]

above on all appropriate entries. Because the URAA replaced the general 
rule in favor of a country-wide rate with a general rule in favor of 
individual rates for investigated and reviewed companies, the 
procedures for establishing countervailing duty rates, including those 
for non-reviewed companies, are now essentially the same as those in 
antidumping cases, except as provided for in section 777A(e)(2)(B) of 
the Act. The requested review will normally cover only those companies 
specifically named. See 19 CFR 351.213(b). Pursuant to 19 CFR 
351.212(c), for all companies for which a review was not requested, 
duties must be assessed at the cash deposit rate. Thus, for the period 
covered by this review, January 1, 1999, through December 31, 1999, the 
assessment rates applicable to all non-reviewed companies covered by 
this order are the cash deposit rates in effect at the time of entry.
    As a result of the International Trade Commission's determination 
that revocation of this countervailing duty order would not likely lead 
to continuation or recurrence of material injury to an industry in the 
United States in the reasonably foreseeable future, the Department, 
pursuant to section 751(d)(2) of the Act, revoked the countervailing 
duty order on IPA from Israel. See Revocation Countervailing Duty 
Order: Industrial Phosphoric Acid from Israel, 65 FR 114 (June 13, 
2000). Pursuant to section 751(c)(6)(A)(iv) of the Act and 19 CFR 
351.222(i)(2)(ii), the effective date of revocation was January 1, 
2000. Accordingly, the Department has instructed Customs to discontinue 
suspension of liquidation and collection of cash deposits on entries of 
the subject merchandise entered or withdrawn from warehouse on or after 
January 1, 2000.
    This notice serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 351.305(a)(3). Timely written 
notification of return/destruction of APO materials or conversion to 
judicial protective order is hereby requested. Failure to comply with 
the regulations and the terms of an APO is a sanctionable violation.
    This administrative review and notice are issued and published in 
accordance with sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 
1675(a)(1) and 19 U.S.C. 1677f(i)(1)).

    Dated: December 4, 2001.
Bernard T. Carreau,
Acting Assistant Secretary for Import Administration.
[FR Doc. 01-30604 Filed 12-10-01; 8:45 am]
BILLING CODE 3510-DS-P