(Cite as: 51 FR 9491)


                                            NOTICES

                                    DEPARTMENT OF COMMERCE

                                           [C-351-504]

                 Final Affirmative Countervailing Duty Determination; Certain Heavy Iron
                                 Construction Castings From Brazil

                                   Wednesday, March 19, 1986

*9491
                                     (Cite as: 51 FR 9491, *9491)

AGENCY: Import Administration, International Trade Administration, Commerce.

ACTION: Notice.

SUMMARY: We determine that certain benefits which constitute subsidies within the meaning of the countervailing
duty law are being provided to manufacturers, 
                                     (Cite as: 51 FR 9491, *9491)

producers, or exporters in Brazil of certain heavy iron construction castings. The estimated net subsidy is 5.77
percent ad valorem during the review period. However, consistent with our stated policy of taking into account
program-wide changes that occur before our preliminary determination, we are adjusting the cash deposit rate to reflect
changes in the Preferential Working Capital Financing for Exports program. We have notified the U.S. International Trade
Commission ((ITC) of our determination. Therefore, if the ITC determines that imports of certain heavy iron construction
castings materially injure, or threaten material injury to, a U.S. industry, we will direct the U.S. Customs Service to resume
the suspension of liquidation of certain heavy iron construction castings from Brazil and to require a cash deposit on
entries or withdrawals from warehouse for consumption in an amunt equal to 3.40 percent ad valorem.

EFFECTIVE DATE: March 19, 1986.

FOR FURTHER INFORMATION CONTACT: Thomas Bombelles or Barbara Tillman, Office of Investigations, Import
Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution
Avenue, NW., Washington, DC. 20230; telephone: (202) 377-3174, or (202) 377-2438.


                                     (Cite as: 51 FR 9491, *9491)

SUPPLEMENTARY INFORMATION:

Final Determination

Based upon our investigation, we determine that certain benefits which constitute subsidies within the meaning of section
701 of the Tariff Act of 1930, as amended (the Act), are being provided to manufacturers, producers, or exporters in
  Brazil of certain heavy iron construction castings. For purposes of this investigation, the following programs are found
to confer subsidies;
- Preferential Working Capital Financing for Exports--Resolutions 674 and 950;
- Income Tax Exemption for Export Earnings; and
- Export Financing Under Resolution 509 (FINEX).
We determine the estimated net subsidy to be 5.77 percent ad valorem for all manufacturers, producers, or exporters of
certain heavy iron construction castings from Brazil.

Case History

On May 13, 1985, we received a petition in proper form from the Municipal Castings Fair Trade Council, a trade association
representing domestic producers of certain iron construction castings and 15 individually-named 
                                     (Cite as: 51 FR 9491, *9491)

members of the association. Those members are: Alhambra Foundry, Inc.; Allegheny Foundry Co.; Bingham & Taylor;
Campbell Foundry Co.; Charlotte Pipe & Foundary Co.; Deeter Foundry Co.; East Jordan Iron Works, Inc.; E.L. Le Baron
Foundry Co.; Municipal Castings, Inc.; Neenah Foundary Co.; Opelika Foundary Co., Inc.; Pinkerton Foundary, Inc.; Tyler
Pipe Corp.; U.S. Foundary & Manufacturing Co.; and Vulcan Foundary, Inc., filing on behalf of the U.S. producers of certain
iron construction castings. In compliance with the filing requirements of § 355.26 of the Commerce Regulations (19 CFR
355.26), the petition alleged that manufacturers, producers, or exporters in Brazil of certain iron construction
castings received, directly or indirectly, benefits which constitute subsidies within the meaning of section 701 of the Act,
and that these imports materially injure, or threaten material injury to, a U.S. industry.
We found that the petition contained sufficient grounds upon which to initiate a countervailing duty investigation,
and on June 3, 1985, we initiated such an investigation (50 FR 24269). We stated that we expected to issue a preliminary
determination by August 6, 1985.
Since Brazil is a "country under the Agreement" within the meaning of section 701(b) of the Act, an injury
determination is required for this investigation. Therefore, we notified the ITC of our initiation. On June 27, 1985, the ITC
preliminarily determined that there is a reasonable indication that imports of 
                                     (Cite as: 51 FR 9491, *9491)

certain heavy iron construction castings materially injure, or threaten material injury to, a U.S. industry (50 FR 27498).
The ITC also determined that there is no reasonable indication that imports of certain light iron construction castings
cause or threaten material injury to a U.S. industry. For the purpose of this investigation, the term "certain light iron
construction castings" is limited to valve, service and meter boxes. Such castings are placed below ground to encase water,
gas or other valves, or water or gas meters. Therefore, our investigation is limited to certain heavy iron construction
castings as defined in the "Scope of Investigation" section of this notice, and we have changed the title of the investigation
accordingly.
On June 12, 1985, Phillip Brothers, Inc., a U.S. importer of the subject merchandise, filed a notice of appearance as an
interested party in this proceeding.
We presented a questionnaire concerning petitioners' allegations to the government of Brazil in Washington, D.C. on
June 11, 1985. On July 22, 1985, we received a response to the questionnaire. There are four known producers and
exporters in Brazil of certain heavy iron construction castings that exported to the United States during the review
period. We have received information on three of the companies, which, based on information obtained at verification,
account for *9492
                                     (Cite as: 51 FR 9491, *9492)

substantially all exports to the United States. These are Fundicao Aldebara, Ltda. (Aldebara), Usina Siderurgica 
                                     (Cite as: 51 FR 9491, *9492)

Paraense--Usipa Ltda. (Usipa) and Sociedade de Metalurgica e Processos Ltda. (Somep).
On the basis of information supplied in the July 22, 1985 responses, we made a preliminary determination on August 6,
1985 (50 FR 32462). We verified the responses of the government of Brazil and the producers of heavy iron
construction castings, from August 27 to September 17, 1985. Subsequent to the verification, we received an amended
response from the government of Brazil and the producers under investigation on September 23, 1985.
On Auguset 8, 1986, we received a request from petitioners that the deadline for the final determation in this investigation
be extended to correspond to the date of the final determination in the antidumping investigation of the same products
from Brazil. This request was made pursuant to section 705(a)(1) of the Act, as amended by section 606 of the Trade
and Tariff Act of 1984. On August 23, 1985, we extended the date of this final determination to January 6, 1986, the
originally scheduled date of the final antidumping duty determination (50 FR 35280). On October 25 and October 29,
1985, we received requests form respondents in the antidumping duty investigation of certain iron construction castings
from Brazil that the final determination be postponed as provided for in section 735(a)(2)(A) of the Act, amended.
Pursuant to this request, and in accordance with petitioners' request that the date of the final countervailing duty
determination correspond to date of the final antidumping 
                                     (Cite as: 51 FR 9491, *9492)

duty determination, we extended the date fo this final determination to March 12, 1986 (November 21, 1985, 50 FR
48826).
Articles 5, pargraph 3 of the Agreement on Interpretation and Appalication of Articles VI, XVI, and XXIII of the General
Agreement on Tariffs and Treade (the Subsidies Code), prohibits parovisional measures (i.e., suspension of liquidation) for
more than 120 days in the absence of a final determination. Therefore, orderes in our preliminary determination.
During verifiction in Brazil, we discovered that Philipp Brothers, Inc., a U.S. importer of the subject merchandise,
financed the importation of these goods by loans made available to foreign importers through Resolution 509 (FINEX) of
the governement of Brazil. Because of the extra time in which to issue a final determination afforded by the extensions
in this case, we obtained specific loan utilization information from Philipp Brothers after our retun to Washington. On
December 26, 1985, we mailed a questionnaire requesting Resolution 509 loan data from Philipp Brothers. On Janaury 21
and February 12, 1986 we received to our questionnaire. Because the responses included, as confidential exhibits,
complete documentation of the type normally gathered at verification, we did not travel to Philipp Brothers headquarters
in New York City as part of our verification of the responses.
Petitioners, respondents and an interested party submitted briefs addressing the issues arising in this investigation on
February 3, 12, and 18, 1986.

                                     (Cite as: 51 FR 9491, *9492)


Scope of the Investigation

The products covered by this investigation are certain heavy iron construction castings, which are defined for purposes of
this proceeding as manhole covers, rings and frames; catch basin grates and frames; and cleanout covers and frames. Such
castings are used for drainage or access purposes for public utility, water and sanitary systems. Manhole covers, rings and
frames are currently provided for in item 657.0950 of the Tariff Schedules of the United States, Annotated (TSUSA). All
other certain heavy iron construction castings are subsumed in item 657.0999 of the TSUSA.

Analysis of Programs

Throughout this notice, we refer to certain general principles applied to the facts of the current investigation. These
principles are described in the "Subsidies Appendix" attached to the notice of "Cold-Rolled Carbon Steel Flat- Rolled
Products from Argentina: Final Affirmative Countervailing Duty Determination and Countervailing Duty
Order," which was published in the April 26, 1984 issue of the Federal Register (49 FR 18006).
For purposes of this final determination, the period for which we are 
                                     (Cite as: 51 FR 9491, *9492)

measuring subsidization ("the review period") is the calendar year 1984. In its response, the government of Brazil
provided data for the applicable period, including financial statements for Somep, Usipa and Aldebara.
Based upon our analysis of the petition, the responses submitted by the government of Brazil and by Somep, Usipa,
Aldebara, and Philipp Brothers to our questionnaires, our verification, and the comments filed by the petitioners,
respondents and the interested party , we determine the following:

Programs Determined To Confer Subsidies 

I. We determine that subsidies are being provided to manufacturers, producers, or exporters in Brazil of certain heavy
iron construction castings under the following programs:

A. Preferential Working-Capital Financing for Exports

The Carte>=2ria do Comercio Exterior (Foreign Trade Department, or CACEX) of the Banco do Brasil administers a
program of short-term working capital financing for the purchase of inputs. During the review period, these loans were
authorized under Resolution 674. On January 1, 1984, Resolution 674 was superceded by Resolution 882, which was
itself substantially amended by 
                                     (Cite as: 51 FR 9491, *9492)

Resolution 950 on August 21, 1984.
Eligibility for this type of financing is determined on the basis of past export performance or of an acceptable export plan .
The amount of available financing is calculated by making a series of adjustments to the dollar value of exports. During the
review period, the maximum level of eligibility for such financing was 30 percent of the value of exports; at present,
financing is capped at 20 percent of the value of exports.
Following approval by CACEX of their applications, participants in the program receive certificates representing portions
of the total dollar amount for which they are eligible. The certificates, which must be used within one year of their issue,
may be presented to banks in return for cruzeiros at the exchange rate in effect on the date of presentation.
Use of a certificate establishes a loan obligation with a term of up to one year (360 days). Certificates must be used within
12 months of the date of issue, and loans incurred as a result of their use must be repaid within 18 months of that date.
The interest rate ceiling was raised from 40 to 60 percent on loans obtained under Resolution 674 on June 11, 1983. This
interest rate is below our commercial benchmark rate for short-term loans in Brazil, which is the short- term discount
rate for accounts receivable in Brazil, published in Business Trends magazine. On January 1, 1984, Resolution 882
changed the payment date 
                                     (Cite as: 51 FR 9491, *9492)

for both interest and principal to the expiration date of the loan. On August 21, 1984, Resolution 950 made this
working-capital financing available from commercial banks at prevailing market rates, with interest calculated at time of
repayment.
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Under Resolution 950, the Banco do Brasil paid the lending institution an equalization fee of up to 10 percent of the interest
(after monetary correction). In May 1985, the equalization fee was increased up to 15 percent of the interest. Therefore, if
the interest rate charged to the borrower is less than full monetary correction plus 15 percent, the Banco do Brasil pays the
lending bank the difference, up to 15 percent. In our "Final Affirmative Countervailing Duty Determination: Certain
Agricultural Tillage Tools from Brazil" (50 FR 34525), we verified that the lending bank, in turn, passes the 15 percent
equalization fee on to the borrower in the form of a reduction of the interest due or a credit to the borrower's account.
Receipt of the equalization fee by the borrower reduces the interest rate of these working capital loans below the
commercial rate of interest. In addition, Resolution 950 working capital loans are exempted from the Imposto Sobre
Opercoes Fianancieros, (IOF), which is charged on all Brazilian financial transactions.
Since receipt of working-capital financing under both Resolution 674 and Resolution 950 is contingent on export
performance, and since the loans are 
                                     (Cite as: 51 FR 9491, *9493)

provided at interest rates lower than those available from commercial sources, we determine that this program confers an
export subsidy.
During the review period, exporters of castings received loans based on the criteria set forth in Resolution 674. Therefore,
to determine the ad valorem subsidy bestowed by this program during the review period, we compared the actual interest
rates charged on the loans received under Resolution 674 by the respondents and on which interest was paid during the
review period, to the benchmark and multiplied the difference by the loan principal. We then allocated the benefit over
total exports of the three castings producers, which resulted in an estimated net subsidy of 2.85 percent ad valorem.
Consistent with our stated policy of taking into account program-wide changes that go into effect after the review period
but before our preliminary determination, we calculated a subsidy rate for duty deposit purposes based on the interest
rate rebate provided for under Resolution 950. To do this, we first determined the three companies' historical utilization
rate of this program by dividing the total value of loans, on which interest payments were made during the review period,
by the total value of the three companies' 1984 exports. We then multiplied this figure by the equalization fee (15
percent), plus the Imposto Sobre Opercoes Financieros (IOF), which is charged on all financial transactions in Brazil.
We thus calculated a rate of 0.48 percent ad valorem for duty deposit purposes.

                                     (Cite as: 51 FR 9491, *9493)


B. Income Tax Exemption for Export Earnings

Under Decree-Laws 1158 and 1721, exporters of certain heavy iron construction castings are eligible for an exemption
from income tax on a portion of profits attributable to export revenue. Because this exemption is tied to exports and is not
available for domestic sales, we determine that this exemption confers an export subsidy. One producer of certain heavy
iron construction castings took an exemption from income tax payable in 1984 on the portion of taxable income
earned from export sales in 1983.
According to information developed and verified in past investigations in Brazil [e.g., "Final Affirmative
  Countervailing Duty Determination: Certain Agricultural Tillage Tools from Brazil" (50 FR 34525), and "Final
Affirmative Copuntervailing Duty Determination: Fuel Ethanol from Brazil" (51 FR 3361)], companies in Brazil
may opt to invest up to 26 percent of their tax liability, as stated on their federal tax return, in specified companies and
funds, thereby lowering their effective corporate tax rate. In the two cases cited above, we accepted this investment in
calculating an effective corporate tax rate, because the respondents furnished all requested documentation demonstrating
that investments made under this program can yield returns and are not merely a means by which the government of
  Brazil targets a firm's 
                                     (Cite as: 51 FR 9491, *9493)

taxes.
In this investigation, we asked the one respondent company which claimed the income tax exemption on export earnings
on its 1983 tax form, filed in 1984, for documentation regarding the investments made through this program. We
requested this information as further evidence of the appropriateness of calculating an effective tax rate when measuring
the benefit from the income tax exemption on export earnings. The respondent did not furnish the requested documents
regarding these investments either during the September 1985 verification or following the verification. Because the
company did not respond to our request, we are not accepting, for purposes of this final determination, respondents'
arguments that the benefit from the income tax exemption on export earnings should be measured on the basis of the
company's effective tax rate. Therefore, to determine the benefit from this program, we indexed the exempted profit from
exports, as required by Brazilian tax laws, and multiplied it by the nominal corporate tax rate, and allocated the benefit
over the total value of respondents' 1984 exports to calculate an estimated net subsidy of 1.86 percent ad valorem.

C. FINEX Export Financing

Resolution 509 of the Conselho Nacional do Come>=2rcio Exterior (CONCEX) 
                                     (Cite as: 51 FR 9491, *9493)

provides that CACEX may draw upon the resources of the Fundo de Financiamento a>=3 Exportaxa>=3o (FINEX) to
subsidize short- and long-term loans to foreign importers of Brazilian goods. The loans are extended to the importer by a
bank in the importer's country at interest rates set by FINEX. These interest rates are based on LIBOR plus a spread. CACEX
will in turn provide the lending bank, via a correspondent bank in Brazil with an "equalization fee" which makes up the
difference to the bank between the subsidized interest rate and the prevailing commercial rate. CACEX also provides the
lending bank with a "handling fee" equal to two percent of the loan principal to encourage foreign bank participation in the
program.
During verification, we discovered that Usipa's U.S. importer had used short- term Resolution 509 loans to finance 100
percent of its imports of heavy iron construction castings from Brazil to the United States during the review period. We
verified that neither Somep's nor Aldebara' U.S. importers applied for or used Resolution 509 financing during the review
period.
Because use of Resolution 509 FINEX financing is contingent upon exports, we determine that it is contervailable to the
extent that it is offered on preferential terms. We learned from the government officials in Brazil who administer the
FINEX program, for examination of company documents, and from the information published in the Jornal do Brasil and
the Gazeta Mercantil that the interest rates on Resolution 509 loans for financing the products under 
                                     (Cite as: 51 FR 9491, *9493)

investigation during the review period ranged from eight to nine percent per annum. Since these are short-term loans
which are given in U.S. dollars to U.S. importers, we chose as a benchmark interest rate for comparble loans in the United
States, the mean average interest rate for commercial and industrial short-term loans as published by the U.S. Federal
Reserve Board. Comparison of the FINEX interest rate to this domestic U.S. rate published by the Federal Reserve indicates
that FINEX financing is made at preferential interest rates.
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                                     (Cite as: 51 FR 9491, *9494)

In order to measure the benefit conferred by Resolution 509 financing on exports of heavy iron construction castings from
  Brazil, we multiplied the value of financing on which interest was paid during the review period by the difference
between the U.S. benchmark rate and the actual interest rate paid by Usipa's U.S. importer. We then divided the resulting
benefit over total exports of certain heavy iron construction castings to the United States, and calculated an estimated net
subsidy of 1.06 percent ad valorem.

II. Programs determined Not To Confer a Subsidy

We determine that subsidies are not being provided to manufacturers, producers, or exporters of certain heavy iron
construction castings in Brazil under the following programs:

                                     (Cite as: 51 FR 9491, *9494)


A. Resolution 695--Financing to Small-and Medium-Size Firms

At verification, we discovered the use by one company of a line of credit, classified under Resolution 695, that is available
to small- and medium-size firms through commercial banks in Brazil. The text of Resolution 695 indicates that there
are no conditions which would limit or target the distribution of these loans to any particular type or group of companies.
We held extensive discussions with company and government officials, and, independently, with commercial bankers
regarding the statutory definition and operation of Resolution 695. According to this information, there is no regional
preference, either in the distribution of, or in the purpose for these loans. Furthermore, Resolution 695 loans are made
with commercial banks' own funds, to all types of companies. We have consistently held that a line of credit extended only
to small-and medium-size firms, without any further limitation, is not contervailable. Accordingly, we determine that
Resolution 695 loans are not limited to a specific enterprise or industry or group of enterprises or industries.

B. Regional Bank Financing


                                     (Cite as: 51 FR 9491, *9494)

Petitioners alleged that regional development banks in Brazil make loans to foundries on terms inconsistent with
commercial considerations. During verification, we discovered that one of the companies under investigation had loans
outstanding during the review period from the government-owned Development Bank of Minas Gerais (BDMG), through the
Fund for Development of Mining and Metallurgy (FDM). According to information gathered during the verification, the
FDM is a program administered by the BDMG and funded entirely by its own resources. The purpose of the FDM is to
provide working capital to mining and metallurgy companies in the state of Minas Gerais, the center of Brazil's mining
and metallurgical activities. In Minas Gerais, mining and metallurgy activities encompass extracting, processing and
refining gold, bauxite, tin, columbium, nickel, coal, phosphate, sulfur, zinc, zirconium, graphite, tungsten, iron ore, gems,
and many other minerals and metals. According to government of Brazil documents submitted after the verification,
mining and metallurgy together contributed over 51 percent to the Gross Domestic Product of the state, while receiving 33
percent of the credit extended by the BDMG in 1984. There is no evidence of targeting of these or other BDMG funds to
the industry under investigation. Accordingly, we determine that loans under the FDM program are not limited to a
specific enterprise or industry or group of enterprises or industries. [See also, "Certain Carbon Steel Products from France:
Final Affirmative Countervailing  
                                     (Cite as: 51 FR 9491, *9494)

  Duty Determination" (49 FR 39332), where we held that benefits extended to the extractive sector of the economy are
not limited to a specific enterprise or industry or group of enterprises or industries.]

III. Programs Determined Not To Be Used

We determine that manufacturers, producers, or exporters in Brazil of certain heavy iron construction castings did not
use the following programs.

A. Resolution 330 of the Banco Central do Brasil

Resolution 330 provides financing for up to 80 percent of the value of the merchandise placed in specified bonded
warehouses and destined for export. Exporters of iron construction castings would be eligible for financing under this
program. We verified that none of the producers of construction castings under investigation participated in this program
during the review period.

B. Export Financing Under the CIC-CREGE 14-11 Circular

Under its CIC-CREGE 14-11 circular, the Banco do Brasil provides 180- and 360- day cruzerio loans for export financing, on
the condition that companies 
                                     (Cite as: 51 FR 9491, *9494)

applying for these loans negotiate fixed-level exchange contracts with the bank. Companies obtaining a 360-day loan must
negotiate exchange contracts with the bank in an amount equal to twice the value of the loan. Companies obtaining a
180-day loan must negotiate an exchange contract equal to the amount of the loan.
We verified that none of the companies under investigation received loans under this program which were outstanding
during the review period.

C. Exemption of IPI and Customs Duties on Imported Equipment (CDI)

Under Decree-Law 1428, the Conselho do Desenvolvimento Industrial (Industrial Development Council, or CDI) provides
for the exemption of 80 to 100 percent of the customs duties and 80 to 100 percent of the IPI tax on certain imported
machinery for projects approved by the CDI. The recipient must demonstrate that the machinery or equipment for which
an exemption is sought was not available from a Brazilian producer. The investment project must be deemed to be feasible
and the recipient must demonstrate that there is a need for added capacity in Brazil.
We verified that none of the construction castings producers subject to the investigation received incentives under this
program during the review period.


                                     (Cite as: 51 FR 9491, *9494)

D. The BEFIEX Program

The Comissao para a Concessao de Beneficios Fiscais a Programas Especiais de Exportacao (Commission for the Granting of
Fiscal Benefits to Special Export Programs, or BEFIEX) grants at least three categories of benefits to Brazilian exporters:
- Under Decree-Law 77.065, BEFIEX may reduce by 70 to 90 percent import duties and the IPI tax on the importation of
machinery, equipment, apparatus, instruments, accessories and tools necessary for special export programs approved by
the Ministry of Industry and Trade, and may reduce by 50 percent import duties and the IPI tax on imports of
components, raw materials and intermediary products;
- Under article 13 of Decree No. 72.1219, BEFIEX may extend the carry-forward period for tax losses from 4 to 6 years; and
- Under article 14 of the same decree, BEFIEX may allow special amortization of pre-operational expenses related to
approved projects.
We verified that the construction castings producers under investigation did not participate in this program.

E. The CIEX Program


                                     (Cite as: 51 FR 9491, *9494)

Decree-Law 1428 authorized the Comissao para Incentivos a Exportacao (Commission for Export Incentives, or CIEX) to
reduce import taxes and the IPI tax up to 10 percent on certain *9495
                                     (Cite as: 51 FR 9491, *9495)

equipment for use in export production. We verified that none of the construction castings producers under investigation
participated in this program.

F. Accelerated Depreciation for Brazilian-Made Capital Equipment

Pursuant to Decree-Law 1137, any company which purchases Brazilian-made capital equipment and has an expansion
project approved by the CDI may depreciate this equipment at twice the rate normally permitted under Brazilian tax laws.
We verified that none of the respondents used this program during the review period.

G. Incentives for Trading Companies

Under Resolution 883 of the Banco Central do Brasil, trading companies can obtain export financing simailar to that
obtained by manufacturers under Resolution 882. We verified that the construction casting producers under investigation
did not use trading companies for exports of the subject merchandise during the review period.

                                     (Cite as: 51 FR 9491, *9495)


H. The PROEX Prigram

Short-term credits for exports are available under the Programa de Finaciamento a Producao para a Exportacao (PROEX),
a loan program operated by Banco Nacional do Desenvolvimento Economico e Social (National Bank of Economic and
Social Development, or BNDES). We vertified that none of the companies under investigation participated in this program
during the review preriod.

I. Resolution 68 (FINEX) Financing

Resolution 68 of the Conselho Nacional de Comercio Exterior (CONCEX) provides that CONCEX may draw upon the
resources of the Fundo de Financiamento a Exportcao (FINEX) to extend short-term loans to exporters of Brazilian goods.
Financing is granted on a transaction-by-transaction basis. We verified that none of the respondents received Resolution
68 financing during the review period.

J. Government Loan Guarantees on Foreign-Denominated Debt

Petitioners allege that the government of Brazil provides guarantees on long- 
                                     (Cite as: 51 FR 9491, *9495)

term, foreign-denominated loans in order to help enterprises service such loans. We verified that none of the companies
under investigation received government loan quarantees on foreign-denominated debt during the review period. In the
time since the initiation of this investigation, we determined that this program does not constitute a subsidy because it is
not limited to a specific enterprise or industry or group or enterprise or industries. [See, "Final Affirmative
  Countervailing Duty Determination: Certain Agricultural Tillage Tools from Brazil," (50 FR 34525).]

K. FINEP/ADTEN Long Term Loans

Petitioners allege that the government of Brazil maintains, through the Financiadora de Estudos Projectos (FINEP), a
loan program, ADTEN, that provides long-term loans on preferential terms to encourage the growth of industries and
development of technology. We verified that none through this program outstanding during the review period.

L. IPI Rebates for Capital Investment

Decree law 1547, enacted in April 1977, provides funding for approved expansion projects in the Brazilian steel industry
through a rebate of IPI, a 
                                     (Cite as: 51 FR 9491, *9495)

value-added tax imposed on domestic sales. We verified that iron construction castings producers are not eligible to
participate in this program.

M. Loans Through the National Bank of Economic and Social Development

The National Bank of Economic and Social Development (Banco Nacional do Desenvolvimento Economico e Social, or
BNDES) is the sole source of long-term cruzeiro loans in Brazil. Petitioners allege that BNDES loans are allocated in
accordance with government development plans to finance the needs of designated priority sectors, and that they are
granted on terms inconsistent with commercial considerations.
In support of their allegation, petitioners argue that the iron and steel industry, in which foundries are included, received a
disproportionate amount of BNDES lending in 1982.
We verified that none of the companies under investigation had BNDES loans outstanding during the review period.

N. Loan From the Secretariat for Technology and Industry

At verification, we discovered that one of the companies under investigation, Somep, had a long-term loan from the
Secretariat of Technology and Industry 
                                     (Cite as: 51 FR 9491, *9495)

(STI). This loan was given to Somep for the purpose of developing a new process for the manufacture of "clinkers." Clinkers
are used in the processing of iron ore which is used to manufacture pig iron which in turn is used in the manufacture of
castings. A review of all the loan contracts and associated documents regarding this loan substantiated that the loan was
given solely for this specific purpose. Information in the public record of the antidumping duty investigation of the same
products from Brazil indicates that Somep does not fabricate pig iron, but rather purchases the pig iron used
in the production of castings from unrelated suppliers. Because the STI loan is tied specifically to the development of a
"clinker" machine, and because "clinkers" are used in the fabrication of pig iron, which Somep does not produce, we
determine that this loan was not used by SOMEP in the production of the product under investigation.

O. Loan Through the Caixa Economica Federal

At verification, we learned that Aldebara had a loan borrowed during the review period, from the BDMG. The funds for this
loan, however, originated with the Caixa Economica Federal (CEF), a government-controlled bank in Brazil. According
to information gathered at verification, this loan represents a pass- through of CEF's funds through the BDMG. Examination
of the loan contract and 
                                     (Cite as: 51 FR 9491, *9495)

bank repayment receipts indicates that no interest or principal payments on this loan were due during the review period.
Thus, we determine that no benefits were provided during the review period. This loan will be examined again in any
section 751 administrative review that is requested.

IV. Program Determined To Have Been Terminated

IPI Export Credit Premium

Until very recently, Brazilian exporters of manufactured products were eligible for a tax credit on the Imposto sobre
Produtos Industrializados (Tas on Industrialized Products, or IPI). The IPI export credit premium, a cash reimbursement
paid to the exporter upon the export of otherwise taxable industrial products, has been found to confer a subsidy in
previous countervailing duty investigations involving Brazilian products. After having suspended this program in
December 1979, the government of Brazil reinstated it on April 1, 1981.
Subsequent to April 1, 1981, the IPI credit premium was gradually phased out in accordance with Brazil's commitment
pursuant to Article 14 of the Agreement on Interpretation and Application of Articles VI, XVI, and XXIII of the General
Agreement of Tariffs and Trade ("the Subsidies Code"). Under the terms of 
                                     (Cite as: 51 FR 9491, *9495)

"Portaria" (Notice) of the Ministry of Finance No. 176 of September 12, 1984, the credit premium was eliminated
effective May *9496
                                     (Cite as: 51 FR 9491, *9496)

1, 1985. We verified that the companies under investigation received no IPI export credit premiums after that date.
Accordingly, consistent with our stated policy of taking into account program- wide changes that occur subsequent to the
review period but prior to our preliminary determination, we determine that this program has been terminated, and no
benefits under the program are accruing to current exports of heavy iron construction castings to the United States.

Petitioners' Comments

Comment 1: Petitioners argue that, given the substantial use of Resolution 674 financing by Brazilian respondents, the
Department is correct to assume maximum utilization of preferential export financing. They assert that in the "Final
Affirmative Countervailing Duty Determination: Certain Agricultural Tillage Tools from Brazil," (50 FR 34525),
the burden to demonstrate under-utilization of Resolution 674 loans is on the respondent. Verification has shown two of
the respondents have used their maximum eligibility while a third had several unreported loans.
DOC Position: Prior to the enactment of Resolution 950 on Augst 1, 1984, the 
                                     (Cite as: 51 FR 9491, *9496)

Department, in prior cases, calculated the deposit rate for the working captial financing program by multiplying the
historical utilization of the program by the current interest differential. [See, e.g., "Final Results of Administrative Review
of Certain Castor Oil Products," (49 FR 9921); "Final Results of Administrative Review of Cotton Yarn from Brazil," (48
FR 34999); and, "Final Results of Administrative Review of Pig Iron from Brazil" (48 FR 9923).] Rsolution 950
completely changed the program, unlike earlier resoltuions which had usually just changed the interest rate. Therefore, we
were reluctant to use historical utilization until we understood the changes. We have no seen several Resolution 950 loans
and conclude that historical utilization is the most accurate calculation method for deposit puroses.
Comment 2: Petitioners assert that the Department should continue to include the IOF tax exemption in any calcuation of
the benefit from preferential working capital export loans. The Department, in "Final Affirmative Countervailing Duty
   Determination: Oil Country Tubular Goods from Brazil," (49 FR 46570), denied respondent's contention that the IOF
tax exemption was not countervailable. Commerce should also use a compounded interest rate, which includes
compensating balances when determining a benchmark rate against which to measure the benefit from these loans.
DOC Position: Consistent with our past practice, we have included the value of the IOF tax exemption on preferential
working capital export loans as part of 
                                     (Cite as: 51 FR 9491, *9496)

the subsidy in order to measure the benefit provided under this program. We disagree that we should use a compounded
rate that includes compensating balances. We have found that in Brazil, there is no uniform requirement for such
balances. In prior Brazilian determinations, compensating balances have only been included in a benchmark rate for
uncreditworthy companies in order to calculate the highest commercial rate plus a risk premium.
Comment 3: Petitioners argue that while Resolution 695 loans may appear to be de jure generally available, the terms are
so preferential that it is unlikely that they are de facto generally available, and therefore, these loans should be
countervailed. The benchmark rate against which to measure the benefit should include compensating balances.
DOC Position: We disagree. We have consistently held that a line of credit extended to small- and medium-sized firms is not
limited to a specific enterprise or industry or group of enterprises or industries. The regulations provide no indication of
any limitation other than the small- and medium-sized criteria.
Comment 4: Petitioners argue that the government of Brazil's request that the nominal tax rate be adjusted for
investments into specified companies or funds before the income tax exemption benefit is calculated creates an
unauthorized offset to a subsidy. Even if permissible, respondents have not provided sufficient information on the
"investments" to demonstrate their eligibility. 
                                     (Cite as: 51 FR 9491, *9496)

Petitioners also maintain that since the income tax exemption program is tied to exports, the benefit must be allocated
over total export sales.
DOC Position: For purposes of this final determination, because the respondent did not respond to our request for further
documentation on these investments, we have not valued the income tax exemption on export earnings on the basis of the
effective tax rate. We also agree that the benefit should be calculated over total export sales. See our determination in
section I.B. of this notice.
Comment 5: Petitioners content that BNDES loans passed-through to the Development Bank of Minas Gerais (BDMG), a
regional bank, provide a subsidy. Development banks, like BDMG, make credit available to industrial sectors on the basis of
the State Planning Secretariat's annual development plan. The benefits from the FDM and CEF loans provided by BDMG are
de facto not generally available because they are limited to a specific enterprise or industry or group of enterprises or
industries. Because one of the respondents had two loans that were paid off by the issuance of new loans, the benefit from
these loans should be calculated using the Department's long-term loan methodology using a compounded rate which
includes compensating balances as a benchmark.
DOC Position: We disagree that loans given by regional banks are de facto limited to a specific enterprise or industry or
group of enterprises or industries simply because such activities are confined to the geographical area defined by a
regional bank's charter. The BDMG is a regional bank which 
                                     (Cite as: 51 FR 9491, *9496)

provides funds throughout the state of Minas Gerais. Where a loan program, such as FDM, is completely funded by a
regional or state organization, and is not a pass-through of funds from the federal government, then we must only examine
whether it is limited to a specific enterprise or industry or group of enterprises or industries within the political
jurisdiction specified by its charter (i.e., the state of Minas Gerais). We have found that FDM is not limited (see section II.B
above).
With respect to CEF, no interest or principal payments were due during the review period. Thus, it is not necessary to
determine at this time, whether CEF loans are countervailable. Since there are no countervailable benefits under these two
programs, and since respondents had no BNDES loans outstanding during the review period, petitioners' remaining
comments are moot.
Comment 6: Petitioners argue that the STI loan to Somep should be regarded as a long-term preferential loan which
provides a countervailable benefit because such research and development financing is targeted to specific sectors of the
economy and is provided on terms inconsistent with commercial considerations. Furthermore, since the Department did
not verify that there is a direct link between Somep's expenditures on the "clinker" project and the amount of the loan
disbursements, Somep's ability to produce castings was enhanced because of a lower weighted cost of capital from the STI
loan.
DOC Position: We verified that the loan in question was tied to the 
                                     (Cite as: 51 FR 9491, *9496)

*9497
                                     (Cite as: 51 FR 9491, *9497)

development of the ''clinker" project and, therefore, provided no benefit to the products under investigations during the
review period. See Section III. N. of this notice for our determination.
Comment 7: Petitioners argue that because FINEX Resolutions 68 and 509 financing is contigent upon exports, and is at
preferencial rates, the programs provide countervailable benefits.
DOC Position: We verified that exporters did not use Resolution 68 or Resolution 509 export financing. However, one U.S.
importer did take advantage of Resolution 509 financing for imports. We have determined that this financing is
countervailable. See our determination in Section I.C. of this notice.
Comment 8: Petitioners contend that the Department should use as its benchmark rate for Resolution 509 loans either the
Brazilian exporter's cost for borrowing non-guaranteed dollars or the national average rate for non- government
controlled short-term dollar financing. This benchmark should then be compared to the FINEX rate. The interest
differential should be multiplied by the principal for each transaction. These values should be summed and divided by the
net FOB value of the exporters' total net proceeds from their export castings sales. In addition, the two percent inducement
commission paid to the foreign bank should be countervailed separately by dividing the value of the commission by the
portion of the year that the imports are financed. This 
                                     (Cite as: 51 FR 9491, *9497)

amount should be added to the weighted-average rate of subsidy. If the Department cannot determine the above suggested
benchmark rate, it should use the Brazilian government's cost of borrowing dollars plus a risk premium or, lastly, use a
benchmark based on U.S. interest rates. Finally, the conflicting nature of the information provided by the three parties in
the transaction may necessitate the use of best information available.
DOC Position: The Department does have information on the actual terms of the FINEX financing used. We used this
information to calculate the benefit rather than the best information otherwise available.
This program benefits the exportation of a product by reducing the potential importer's financing costs if he purchases the
Brazilian made product. Thus, it is appropriate to use, as a benchmark, what the importer would otherwise have to pay to
finance the import. Since these loans were dollar-denominated loans obtained through a banking facility in the United
States even if ultimately financed by the Brazilian government, a rate for short-term dollar denominated loans in the
United States is appropriate, and captures completely the benefit from these loans.
Comment 9: Petitioners contend that exports of Somep and Aldebara have benefitted from Resolution 509 FINEX financing
in 1985. Thus, petitioners request that the Department include this Resolution 509 financing for cash deposit purposes and
apply a country-wide rate that reflects the subsidy 
                                     (Cite as: 51 FR 9491, *9497)

bestowed by Resolution 509.
DOC Position: We verified that neither Somep's or Aldebara's importers used this program during the review period. Public
information in the record of the companion antidumping duty investigation indicates that Somep's and Aldebara's
importers may have used this program subsequent to the review period. Therefore, we will reexamine FINEX financing in
any section 751 administrative review that is requested.
Comment 10: Petitioners contend that a two-week interest-free loan given to USIPA by Banco Sudameris, discovered at
verification, is a subsidy to the extent it is provided on terms inconsistent with commerical considerations.
DOC Position: Documents provided after the verification by the government of Brazil indicate that Banco Sudameris is
a private bank. Since Banco Sudameris is a private bank and we have no evidence that this loan was given under
government direction , we find that this loan is not inconsistent with commerical considerations.
Comment 11: Petitioners request that the Department investigate all entries in USIPA's interest ledger which record
interest payments to Banco do Brasil because they may relate to countervailable loan programs.
DOC Position: During verification, we throughly examined USIPA's financial records and found no countervailable or
non-countervailable loans other than those discussed in this notice.

                                     (Cite as: 51 FR 9491, *9497)


Respondents' Comments

Comment 1: Respondents claim that the Department erred in assuming maximum utilization and maximum interest
differential in its calculation of the benefit of Resolution 950 financing. Commerce should have calculated the benefit by
reviewing loans with payments during the review period to estimate future loan utilization. The "Final Results of
Administration Review of Cotton Yarn from Brazil" (47 FR 15392), provides that using verified historical utilization
rates is preferable to assuming full utilization in calculating the deposit rates.
DOC Position: We agree that historic utilization is appropriate in calculating the deposit rate. See our response to
petitioners' Comment 1.
Comment 2: The government of Brazil contends that the Imposto sobre Operacoes Fianceiras (IOF) is an indirect tax
on the production of goods for export, that the exemption of loans under Resolutions 674/950 from this tax is not a
subsidy, and that if we determine that Resolution 674 financing provides a subsidy, we should not consider this exemption
as part of the benefit. Respondents further argue we should reject petitioners' argument that compensating balances be
included in the calculation of the benchmark against which any benefit is measured.

                                     (Cite as: 51 FR 9491, *9497)

DOC Position: We disagree that the value of the IOF tax exemption should not be included in our benefit calculation. Since
all domestic financing transactions are subject to the IOF tax, it is appropriate that we reflect the exemption of Resolution
950 loans from the IOF as part of the subsidy in order to measure the full benefit provided under this program. Moreover,
we do not view the IOF as a tax on the production or distribution of the product. We agree that compensating balances
should not be included in the calculation of the benchmark. See our response to petitioners' Comment 2.
Comment 3: Respondents argue that Resolution 674/950 export financing is tied to particular products because such
financing requires an export commitment based on projected or past exports of eligible products. At the end of each year,
the company must show that it has satisifed its obligation through the export of specific products. In this investigation, one
company satisfied its commitment through export of a product other than heavy iron construction castings, therefore, the
benefit from this financing must be considered to have been conferred only on that product. If the Department rejects this
argument, then the benefit must be apportioned over total sales, not export sales.
DOC Position: We disagree. At verification we learned that a company may qualify for the loans in question based on past
export performance or projected export performance. We also verified that the export of heavy iron construction castings
qualifies a company to receive such loans and that two of 
                                     (Cite as: 51 FR 9491, *9497)

the firms under investigation did use heavy construction castings to qualify for these loans. Therefore, because castings are
eligible to benefit from such financing, it is irrelevant if a company qualifies for these export loans on the basis of past
exports of another product. With respect to the argument *9498
                                     (Cite as: 51 FR 9491, *9498)

that we should value the subsidy by allocating the benefit over total sales, we have consistently held in prior Brazilian
determinations that, when a firm must export to be eligible for benefits under a subsidy program, and when the amount of
the benefit received is tied directly or indirectly to the firm's level of exports, that program confers an export subsidy.
Therefore, the Department will continue to allocate the benefits under this program over export revenues instead of total
revenues.
Comment 4: Respondents argue that the Department should have considered effective rather than nominal tax rates in
calculating the value of the income tax exemption for export earnings. Brazilian tax law allows corporations to invest 26
percent of tax liability into specified companies or funds, effectively lowering a company's tax rate and lessening the
benefit from the income tax exemption from export earnings.
DOC Position: We disagree with respondents' argument that the nominal tax rate should not be used in this determination.
See our response to petitioners' Comment 4, and our determination under Section I.B. of this notice.
Comment 5: The government of Brazil argues that the Department erred in 
                                     (Cite as: 51 FR 9491, *9498)

valuing the subsidy arising from the income tax exemption for export earnings by allocating the benefit over export sales
rather than total sales. Because the determining factor in a firm's eligibility for this benefit is its overall profitability for a
given year, the benefits accrue to the entire operations of the firm and not just to exports. Further an income tax
exemption calculated on this basis does not affect the price of the exported product only; rather, it has a general effect on
all prices, both domestic and export.
DOC Position: We disagree. As we have stated in prior Brazilian determinations, when a firm must export to be eligible for
benefits under a subsidy program, and when the amount of the benefit received is tied directly or indirectly to the firm's
level of exports, that program confers an export subsidy. The fact that the firm as a whole must be profitable to benefit
from the program does not detract from the program's basic function as an export subsidy. Therefore, the Department will
continue to allocate the benefits under this program over export revenues instead of total revenues.
Comment 6: Respondents claim that the IPI export credit premium is not countervailable because it no longer exists. The
response to the questionnaire contained the legislation phasing out this program. Verification reports and previous
Commerce rulings have consistently held that this program has been eliminated and is not countervailable.
DOC Position: We agree and have determined this program to be terminated. See 
                                     (Cite as: 51 FR 9491, *9498)

Section IV. of this notice.
Comment 7: Respondents argue that none of the companies had outstanding BNDES or FINAME loans during the review
period. Furthermore, BNDES financing is generally available and has been recognized by Commerce previously as non-
countervailable. [See, "Final Affirmative Countervailing Duty Determination: Tool Steel from Brazil" (48 FR
25252).]
DOC Position: We verified that none of the companies under investigation had BNDES or FINAME loans outstanding during
the review period.
Comment 8: Respondents request that the Department review the standing of petitioners to file a petition. The original
petition, in which petitioners claimed to account for over 85 percent of total domestic production of construction castings,
included both heavy and light castings. The ITC eliminated hight iron construction castings from its investigations based
on a preliminary negative injury determination after concluding that these are two separate industries, and that producers
of light castings do not produce heavy castings. Because of this change, respondents argue that the Department must
consider petitioners' standing by obtaining information verifying that the petitioners constitute the majority of domestic
production of heavy iron construction castings
DOC Position: In the petition filed in this investigation, petitioners filed "on behalf of" the domestic heavy and light iron
construction castings 
                                     (Cite as: 51 FR 9491, *9498)

industry in accordance with 19 U.S.C. 1671a(b)(1). Thereafter, in response to respondents' assertion that petitioners might
lack standing in light of the fact that the investigation currently only covers heavy iron construction castings, petitioners
filed a letter asserting and supporting their continued representation of a majority of the industry under investigation.
The petition was filed on behalf of the castings industry by the Municipal Castings Fair Trade Council and its 15
individually-named members, and no opposition to the petition has been expressed from the domestic heavy iron
construction castings industry. Therefore, the Department finds that there is insufficient evidence to warrant a conclusion
that petitioners have not filed "on behalf of an industry" pursuant to 19 U.S.C. 1671a(b)(1). [See also, "Final Negative
  Countervailing Duty Determinations: Certain Textile Mill Products and Apparel from Malaysia" (50 FR 9852,
  March 12, 1985).]
Comment 9: Respondents contend that Resolution 695 loans are not industry, region, product, or export related.
Resolution 695 authorizes commercial banks to make loans available to small- and medium-sized businesses. The
Department has previously determined that similar loan programs to small- and medium-sized firms are not
countervailable.
DOC Position: We agree and have determined this program not to confer a subsidy. See Section II.A. of this notice for our
determination.
Comment 10: Respondents argue that FDM financing from BDMG is not 
                                     (Cite as: 51 FR 9491, *9498)

countervailable. If all credit lines available through the bank are generally available, no countervailable benefit exists.
[See, "Fuel Ethanol from Brazil," (51 FR 3361).]
DOC Position: For the reasons set out in Section II.A of this notice, we found FDM loans do not constitute a subsidy because
they are not limited to a specific enterprise or industry or group of enterprises or industries.
Comment 11: Respondents argue that if FDM provide preferential financing, the proper benchmark is the generally
available rate in the region.
DOC Position: Since we have determined that FDM loans are not countervailable, this issue is moot.
Comment 12: Respondents argue that regional development loans through the BDMG are not countervailable. Regional
development banks in Brazil obtain their funds through foreign sources, BNDES, or their own operations. Generally
available loans from a regional or state authority are not countervailable.
DOC Position: We agree the loans from the BDMG found in this investigation do not confer a countervailable benefit. See our
response to petitioner' Comment 5.
Comment 13: Respondents contend the STI loan to one respondent was not used in the production of castings. Loans which
are not linked specifically to the product under investigation are not countervailable. [See, "Lime from Mexico" (49 FR
35672).] Futhermore, these loans are made to diverse sectors of the 
                                     (Cite as: 51 FR 9491, *9498)

Brazilian economy and all information developed from STI-financed projects must be publicly disseminated.
DOC Position: We agree that this loan did not benefit the production of castings. Therefore, we are not determining whether
the STI program itself is countervailable. See our *9499
                                     (Cite as: 51 FR 9491, *9499)

determination under Section III.N. of this notice.
Comment 14: Respondents argue that a short-term loan to USIPA from Banco Sudameris is not countervailable. It was
verified that there was no government involvement and no countervailable benefit.
DOC Position: We agree that the short-term loan to Usipa is not countervailable. See our response to petitioners' Comment
10.
Comment 15: Respondents argue that the Department should disregard amendments to the original petition which have
not been filed concurrently with the ITC as they are in violation of 19 CFR 355.26(e). Also, the Department should adhere
to the spirit of its proposed countervailing duty regulations and not consider any new allegations submitted beyond
the 20 day period after the notice of initiation was published in the Federal Register.
DOC Position: Petitioners' submissions were related to programs discovered during the course of verification. Section 775
of the Tariff Act of 1930, as amended, states that if, in the course of an investigation, the Department discovers a practice
which appears to be a subsidy, but was not included in the 
                                     (Cite as: 51 FR 9491, *9499)

matters alleged in the countervailing duty petition, it shall include the practice in the investigation if it appears to be
a subsidy with respect to the merchandise under investigation. Therefore, we do not consider petitioners' submissions to
be amendments to the original petition.

Interested Party Comments

Comment 1: Interested party submits that the historical utilization rate of Preferential Working Capital for Export
Financing should be used to quantify any benefits from this program.
DOC Position: We agree. See our response to petitioners' Comment 1.
Comment 2: Interested party asserts that the one company which benefitted from the income tax exemption for export
earnings on its 1983 tax form, filed in 1984, did not export the subject merchandise in 1983. Therefore, no
countervailable benefit has been conferred on exports of heavy iron construction castings.
DOC Position: We disagree. When a firm must export to be eligible for benefits under a subsidy program, and when the
amount of the benefit received depends directly or indirectly on the firm's level of exports, that program confers an export
subsidy. The fact that a firm earned an export subsidy from one product in one year, and shifted or diversified its export
output to other 
                                     (Cite as: 51 FR 9491, *9499)

products the next year, is irrelevant to the calculation of the export subsidy.
Comment 3: Interested party contends the appropriate benchmark against which to compare the FINEX interest rate is the
short-term interest rates actually paid by Philipp Brothers on its other domestic borrowing.
DOC Position: We disagree. The "Subsidies Appendix" states that the appropriate benchmark for short-term borrowing is a
national average commercial method of short-term financing, rather than a rate derived from company- specific financing.
Comment 4: Interested party argues that should there be a final affirmative determination in this case, the CVD deposit rate
should not include an amount related to FINEX financing. The sale of Usipa by Philipp Brothers, the uncertainty of
continued sales to the U.S., and the question of whether future sales of iron construction castings will be eligible for this
program represent significant changes from those circumstances or programs during the investigatory period. ITA should
recognize those changes and exclude FINEX from the CVD deposit rate.
DOC Position: The above situation does not constitute a "program-wide change" because the Department has no evidence of
a "program-wide change" in the benefits conferred by FINEX financing prior to the preliminary determination. Therefore,
we will not change the CVD deposit rate in an attempt to approximate future events.

                                     (Cite as: 51 FR 9491, *9499)


Suspension of Liquidation

In accordance with our preliminary affirmative countervailing duty determination published August 12, 1985, we
directed the U.S. Customs Service to suspend liquidaiton on the products under investigation and to require a cash deposit
or bond equal to the estimated net subsidy. This final countervailing duty determination was extended to coincide
with the final antidumping determination on the same product from Brazil, pursuant to section 606 of the Trade and
Tariff Act of 1984 (section 705(a)(1) of the Act). However, we cannot impose a suspension of liquidation on the subject
merchandise for more than 120 days without the issuance of final affirmative determinations of subsidization and injury.
Therefore, on December 10, 1985, we instructed the U.S. Customs Service to terminate the suspension of liquidation on the
subject merchandise entered on or after December 11, 1985. If the ITC determines that imports of certain heavy iron
construction castings materially injure, or threaten material injury to, a U.S. industry, we will order the U.S. Customs
Service to resume the suspension of liquidation of the products which are entered, or withdrawn from warehouse, for
consumption, and to require a cash deposit in an amount equal to 3.40 percent ad valorem.


                                     (Cite as: 51 FR 9491, *9499)

ITC Notification

In accordance with section 705(c) of the Act, we will notify the ITC of our determination. In addition, we are making
available to the ITC all non- privileged and non-confidential information relating to this investigation. We will allow the ITC
access to all privileged and confidential information in our files, provided the ITC confirms that it will not disclose such
information, either publicly or under an administrative protective order, without the written consent of the Deputy
Assistant Secretary for Import Administration.
The ITC will determine whether these imports materially injure, or threaten material injury to, a U.S. industry within 45
days after the date of this determination. If the ITC determines that material injury, or the threat of material injury, does
not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the
suspension of liquidation will be refunded or cancelled. If, however, the ITC determines that such injury exists, we will
issue a countervailing duty order, directing Customs officers to assess a countervailing duty on all entries of
certain heavy iron construction castings from Brazil entered, or withdrawn from warehouse, for consumption as
described in the "Suspension of Liquidation" section of this notice.
This notice is published pursuant to section 705(d) of the Act (19 
                                     (Cite as: 51 FR 9491, *9499)

U.S.C. 1671d(d)).

Paul Freedenberg,

Assistant Secretary for Trade Administration.

  March 12, 1986.