[Federal Register Volume 67, Number 67 (Monday, April 8, 2002)]
[Notices]
[Pages 16722-16727]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-8445]


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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, 2000, through December 31, 2000. We preliminarily 
find 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    Because its request for review was withdrawn, we are rescinding 
this review for company N. Puglisi & F. Industria Paste Alimentari 
S.p.A.
    Interested parties are invited to comment on these preliminary 
results (see the ``Public Comment'' section of this notice).

EFFECTIVE DATE: April 8, 2002.

FOR FURTHER INFORMATION CONTACT: Craig Matney, 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.

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 (April 2001).

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 2, 2001, the Department 
published a notice of ``Opportunity to Request Administrative Review'' 
of this countervailing duty order for calendar year 2000 (Notice of 
Opportunity to Request Administrative Review of Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation, 66 FR 
34910). We received review requests for five producers/exporters of 
Italian pasta. We initiated our review on August 20, 2001 (Initiation 
of Antidumping and Countervailing Duty Administrative Reviews and 
Requests for Revocation in Part, 66 FR 43570).
    This administrative review of the order covers the following 
producers/exporters of the subject merchandise: F.lli De Cecco di 
Filippo Fara S. Martino S.p.A. (``De Cecco''), Delverde S.p.A. 
(``Delverde''), Italian American Pasta Company, S.r.L. (``IAPC''), and 
Labor S.r.L. (``Labor'') and 26 programs.
    On October 19, 2001, we issued countervailing duty questionnaires 
to the Commission of the European Union (``EC''), the Government of 
Italy (``GOI''), and the producers/exporters of the subject 
merchandise. We received responses to our questionnaires in November 
and December 2001, and issued supplemental questionnaires in February 
2002. Responses to the supplemental questionnaires were received in 
February and March 2002.

Partial Rescission

    As noted above, N. Puglisi & F. Industria Paste Alimentari S.p.A. 
(``Puglisi''), one of the respondents, withdrew its request for review 
on November 2, 2001. Because this request for withdrawal was timely 
filed, we are rescinding this review with respect to this company (see 
19 CFR 351.213(d)(1)). We will instruct the U.S. Customs Service to 
liquidate any entries from Puglisi during the POR and to assess 
countervailing duties at the rate that was applied at the time of 
entry.

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, Bioagricoop S.c.r.l., QC&I International Services, 
Ecocert Italia, the Conzorzio per il Controllo dei Prodotti Biologici, 
Associazione Italiana per l'Agricoltura Biologica, or Codex S.r.L.
    The merchandise subject to review is currently classifiable under 
item 1902.19.20 of the Harmonized Tariff Schedule of the United States

[[Page 16723]]

(``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, 2000, through December 31, 2000.

Attribution of Subsidies

    De Cecco: De Cecco has responded on behalf of two members of the De 
Cecco Group: F.lli De Cecco di Filippo Fara San Martino S.p.A. 
(``Pastificio'') and Molino e Pastificio F.lli De Cecco S.p.A. 
(``Pescara''). Pastificio and Pescara manufacture pasta for sale in 
Italy and the United States. Pastifico and Pescara are directly or 
indirectly 100 percent-owned by members of the De Cecco family. 
Effective January 1, 1999, Molino F.lli De Cecco di Filippo S.p.A. 
(``Molino'') a third member of the De Cecco Group on whose behalf De 
Cecco responded in the fourth administrative review, was merged with 
Pastifico and ceased to be a separate entity. The Department will 
continue to consider countervailable any benefits received by Molino in 
past administrative reviews and allocated over a period that extends 
into or beyond the current POR. In accordance with section 
351.525(b)(6)(i) and (ii) of the regulations, we are attributing 
subsidies received by Pastificio and Pescara to the combined sales of 
both.
    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 Fourth Administrative Review, 66 FR 64214, December 12, 2001 
(``Fourth 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.
    Labor: Labor has responded on behalf of itself and Pastificio 
Balzano s.r.l. (``Balzano''), which was established by Labor on March 
31, 2000. During the POR, Balzano had no sales, assets, employees, or 
operational activities, and received no benefits from the GOI. Labor 
had no other affiliates during the POR.
    IAPC: IAPC has no affiliated companies located in Italy, and has 
therefore responded only on its own behalf.

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).
    The third review of this order was subject to section 351.524(d)(2) 
of the regulations. Under this regulation, the

[[Page 16724]]

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 Certain Pasta from Italy: Final Results of Third 
Administrative Review, 66 FR 11269, February 23, 2001 (``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 Results, 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.
    De Cecco and Delverde 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)(D)(iv) 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, 1999 and 
this POR, 2000, 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 (i.e., ``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 0.82 
percent ad valorem for De Cecco and 1.23 percent ad valorem for 
Delverde.
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.
    De Cecco and Delverde 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 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

[[Page 16725]]

771(5A)(D)(iv) 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 0.34 
percent ad valorem for De Cecco and 0.60 percent ad valorem for 
Delverde.
3. 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.
    De Cecco and Delverde 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)(D)(iv) 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.
    On this basis, we preliminarily determine the countervailable 
subsidy from the Law 64/86 industrial development loans to be 0.52 
percent ad valorem for De Cecco and 0.25 percent ad valorem for 
Delverde.
4. 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.
    De Cecco 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)(D)(iv) of the Act.
    Because De Cecco anticipated receiving the interest contributions 
when it applied for the debt 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 De Cecco in the POR by De Cecco'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 De Cecco.
    5. 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 183/76, Law 407/90, Law 863/84, 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, other than IAPC which is not located in the Mezzogiorno, 
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)(D)(iv) 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

[[Page 16726]]

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).
    In its November 26, 2001 questionnaire response, 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.
    Consistent with our finding in Fourth Review--Final Results, 
Comment 7, 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.
    On this basis, we preliminarily determine the countervailable 
subsidy from the sgravi program to be 0.08 percent ad valorem for De 
Cecco, 0.17 percent ad valorem for Delverde, and 1.57 percent ad 
valorem for Labor.
6. 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.
    De Cecco and Delverde claimed the IRAP tax exemption on their tax 
returns filed during the POR.
    In Pasta Investigation, the Department determined that the ILOR tax 
exemption confers a countervailable subsidy within 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, and the exemption was regionally 
specific within the meaning of section 771(5A)(D)(iv) 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 0.10 percent ad valorem for 
De Cecco, and 0.02 percent ad valorem for Delverde.
7. 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)(B) 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 0.37 percent 
ad valorem for Delverde.
8. 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.
    De Cecco and Delverde 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 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.
    On this basis, we preliminarily determine the countervailable 
subsidy from the export restitution program to be 0.02 percent ad 
valorem for De Cecco and 0.19 percent ad valorem for Delverde.
9. 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.
    Under section 351.509(c) of the Department's regulations, direct 
tax benefits are assigned to the date on

[[Page 16727]]

which the recipient firm would otherwise have had to pay the taxes. 
Because the partial exemption was applied towards estimated taxes in 
1999 and De Cecco's ultimate liability for tax year 1999 became known 
in 2000, we preliminarily determine that De Cecco received IRPEG 
exemptions in this POR.
    To calculate the countervailable subsidy, we divided the IRPEG 
exemptions received by the recipient company in the POR by the value of 
the company's total sales in the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from the IRPEG partial exemption program to be 0.00 percent ad 
valorem for De Cecco.

II. 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 under review 
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. Law 183/76 Industrial Development Grants
11. Law 598/94 Interest Subsidies
12. Law 236/93 Training Grants
13. European Regional Development Fund (ERDF)
14. Duty-Free Import Rights
15. Remission of Taxes on Export Credit Insurance Under Article 33 of 
Law 227/77
16. Law 1329/65 Interest Contributions (Sabatini Law)
17. European Social Fund (ESF)

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, 2000 through December 
31, 2000, 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  (in
                                                               percent)
------------------------------------------------------------------------
F.lli De Cecco di Filippo Fara San Martino S.p.A...........         1.90
Delverde S.p.A.............................................         2.83
Italian American Pasta Company, S.r.L......................         0.00
Labor, s.r.l...............................................         1.57
------------------------------------------------------------------------

    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, 2000 and December 31, 2000 at the rates in effect at 
the time of entry. For the company for which this review has been 
rescinded (Puglisi), we will direct Customs to liquidate all entries 
between January 1, 2000 and December 31, 2000 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.
    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) of the Act.

    Dated: April 1, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-8445 Filed 4-5-02; 8:45 am]
BILLING CODE 3510-DS-P