DEPARTMENT OF COMMERCE

[C-351-004]

Certain Stainless Steel Products From Brazil; Final Results of Countervailing Duty Administrative Review and Renegotiation of Suspension Agreement

Thursday, December 18, 1986

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(Cite as: 51 FR 45371, *45371) AGENCY: International Trade Administration/Import Administration, Department of Commerce.

ACTION: Notice of final results of countervailing duty administrative review and renegotiation of suspension agreement.

SUMMARY: On October 30, 1986, the Department of Commerce published the

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preliminary results of its administrative review and tentative determination to renegotiate or terminate suspension agreement on certain stainless steel products from Brazil. We have renegotiated the suspension agreement and find that the revised agreement meets the requirements of sections 704 (b) and (d) of the Tariff Act. The review covers the period March 31, 1983 through December 31, 1985 and 17 programs.

We gave interested parties an opportunity to comment on the preliminary results. After reviewing all of the comments received, we have determined the net subsidy to be 27.88 percent ad valorem for the 1983 period, 16.74 percent and valorem for 1984, and 8.51 percent ad valorem for 1985.

EFFECTIVE DATE: December 18, 1986.

FOR FURTHER INFORMATION CONTACT:Richard C. Henderson or John D. Miller, Office of Compliance, International Trade Administration, U.S. Department of Commerce, Washington, DC 20230; telephone: (202) 377-2786.

SUPPLEMENTARY INFORMATION:

Background

On October 30, 1986, the Department of Commerce ("the Department") published in the Federal Register (51 FR 39693) the preliminary results of its countervailing duty administrative review and tentative determination to renegotiate or terminate the suspension agreement on certain stainless steel products from Brazil (48 FR 4703, February 2, 1983). We have now completed the administrative review in

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accordance with section 751 of the Tariff Act of 1930 ("the Tariff Act").

Scope of Review

Imports covered by the review are shipments of Brazilian certain stainless steel products, limited to hot-rolled stainless steel bars, cold-formed stainless steel bars and stainless steel wire rod. Such merchandise is currently classifiable under items 606.9005, 606.9010, and 607.2600 (if tempered, treated or partly manufactured, 607.4300) of the Tariff Schedules of the United States Annotated.

The review covers the period March 31, 1983 through December 31, 1985 and 17 programs: (1) CACEX export financing; (2) an income tax exemption for export earnings; (3) the export credit premium for the IPI; (4) CIC-CREGE 14-11 financing; (5) incentives for trading companies (Resolution 883); (6) accelerated depreciation for Brazilian-made capital goods; (7) duty-free treatment and tax exemption on equipment used in export production ("CDI"); (8) FINEX (Resolutions 68 and 509); (9) funding for expansion through IPI tax rebates; (10) BNDES long-term loans; (11) FINEP long-term loans; (12) BEFIEX; (13) CIEX; (14) FUNPAR; (15) PROEX; (16) PROSIM; and (17) financing for the storage of merchandise destined for export (Resolution 330).
The review covers three producers and one trading company.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the preliminary results. We received comments from the petitioner, the Speciality Steel Industry of the United States ("SSI"), and the Brazilian government.

Comment 1: The Brazilian government argues that the Department should use for its short-term loan benchmark the annualized interest rate in effect on the date that each loan was obtained instead of the average annual rate in effect during the reveiw period. In a high-inflation economy, such as exists in Brazil, an average rate calculated over the review period distorts the actual interest differentials. Further, since the number of loans in this case is small, this approach will not create an unworkable administrative burden.

Department's Position: We disagree. An average benchmark over the review period may understate or overstate the benefit on individual loans, but it will accurately reflect the aggregate benefit from preferential loans over the review period because each company borrows at a more or less constant rate throughout the year.

Comment 2: The Brazilian government contends that the Department should use as its short-term loan benchmark the average commercial bank lending rates published by Morgan Guaranty Trust Company in its World Financial Markets instead of the average of weekly trade bill discount figures published in Analise/Business Trends. Commercial bank lending practices are most similar to Resolution 674/882 financing, the source of Morgan Guaranty's figures.

Department's Position: We disagree. The commercial bank lending rates published by Morgan Guaranty Trust Company are lending rates to prime borrowers. As stated in the Subsidies Appendix to the notice of final affirmative countervailing duty determination and order on certain cold-rolled carbon steel flat-rolled products from Argentina (49 FR 18006, April 26, 1984) ("the Subsidies Appendix"), we use a national average benchmark based on short- term financing available to all firms, not just to prime borrowers. We have found that trade bill discounting more accurately reflects the actual borrowing practice of most Brazilian firms.

Comment 3: The Brazilian government argues that the Department overstated the short-term loan benchmark by compounding monthly rates. If the Department continues to use the annual average for discounts of accounts receivable, it should calculate a daily rate, compound it for a 30-day period and then multiply this rate by 12 to annualize the benchmark. This calculation would take into account the montly rollover of the principal.

Department's Position: We disagree. We have found that commercial lending in Brazil generally does not exceed 30 days and that most loans are rolled over monthly. It is inappropriate to use compounded daily rates, even if such rates were available, because loans are rolled over monthly, not daily.

Comment 4: The Brazilian government believes that the Department should use the guideline interest rates established by the resolutions regarding the short-term preferential export financing programs instead of the actual interest rates on each loan contract. Although the actual lending experience of certain firms may result in interest rates that are lower than the guideline interest rates, the lower rates are the result of commercial practices, such as the large volume of business conducted between certain firms and banks, and not any government action. Furthermore, since a higher lending volume generates higher costs for the firm, the Department should include these costs in calculating the effective preferential interest rate.

Department's Position: We disagree. Regardless of whether the costs of these loans are higher or lower than the guideline rates, the benefit received by the companies borrowing under this program is the difference between what they are paying and what they otherwise pay. Further, the Brazilian government has provided no evidence that an increased volume of loans causes higher effective costs.

Comment 5: The Brazilian government claims that, in calculating the short-term interest rate benchmark, the Department should not include the tax on financing transactions ("the IOF"). The IOF is an indirect tax on the financing of physically incorporated inputs. Considering the IOF tax to be an integral part of the commercially-available rate (i.e., considering exemption from the tax to be a subsidy) is contrary to the General Agreement on Tariffs and Trade and U.S. law, both of which permit the non-excessive rebate of indirect taxes.

Department's Position: We have considered and rejected this argument in other Brazilian countervailing duty cases. See, e.g., Certain Castor Oil Products from Brazil (48 FR 40534, September 8, 1983).

Comment 6: The Brazilian government claims that the Department incorrectly allocated the benefits from the income tax exemption for export earnings program over export sales instead of total sales. Since the program rebates direct taxes, it is a domestic subsidy, which requires the Department to allocate the benefit over total sales.

Department's Position: We disagree. When the amount of benefit received under a program is tied directly or indirectly to a company's level of exports, that program is an export subsidy. Under this program, exports are necessary to receive a benefit, and the level of exports determines the level of benefit. Therefore, we will continue to allocate benefits from this program over export sales instead of total sales.

Comment 7: The Brazilian government argues that CIC-CREGE 14-11 loans are not countervailable because they are non-government loans granted in accordance with commercial considerations. Although the nominal interest rates on these loans during the review period were somewhat below the commercial interest rates, commission costs, collateral and foreign exchange requirements effectively increased nominal rates to the range of commercial rates. Further, the Department should not calculate a cash

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deposit rate for this program because the nominal rates on these loans now approximate commercial rates.

Department's Position: The Brazilian government has not provided adequate information to allow us to consider this loan program to be provided without government direction or to be provided on terms consistent with commerical loans.

Comment 8: The Brazilian government believes that the Industrial Development Council's ("CDI") Decree Law 1137, which provides for accelerated depreciation for Brazilian-made capital goods, and Decree Law 1428, which allows import duty exemptions on Brazilian-made capital equipment, are not limited to an industry or group of industries, and are therefore not countervailable.

If the Department maintains that Decree Law 1137 is countervailable, it should calculate a benefit only when the amount of accelerated depreciation claimed exceeds the amount of accelerated depreciation "recaptured" (i.e., added back to the net profit in an amount equal to that claimed in prior years), because the recapture eliminates any net tax effect.

Department's Position: We disagree. We have found that CDI benefits are provided by the government to specific industries. See, Certain Carbon Steel Products from Brazil (49 FR 17988, April 26, 1984.
We agree that we should calculate a benefit when the amount of recapture attributable to CDI is less than the amount of accelerated depreciation attributable to CDI. However, the companies did not provide the relevant verification documents that would allow us to make this calculation.

Comment 9: The Brazilian government believes that FINEX financing under Resolutions 68 and 509 is not countervailable because the proogram is consistent with the Arrangement on Guidelines for Officially Supported Export Credits ("the Arrangement"), which is not considered an illegal export subsidy under item (k) of the Illustrative List of Export Subsidies annexed to the Agreement on Interpretation and Application of Articles VI, XVI, and XXIII of the General Agreement on Tariffs and Trade ("the Subsidies Code").

Department's Position: We disagree. Since the FINEX loans in this case are short-term loans, they are not covered by the Arrangement and, hence, do not fall within the second paragraph of item (k).

Comment 10: The Brazilian government contends that U.S. importers would normally obtain import financing at LIBOR or the U.S. prime rate, not at the rates reported in the U.S. Federal Reserve Bulletin. Therefore, the Department should change the benchmark for FINEX importer financing. If the Department continues to use the Federal Reserve rate as a benchmark, the Brazilian government believes that the benchmark should not be based on the upper limit of the interquartile range, but rather on the average of the upper and lower limits.

Department's Position: We disagree. The Federal Reserve rates are an appropriate measure of the national average commercial rates available to U.S. importers. The Brazilian government has not provided any proof that an average importer in the United States would have access to either trade or working capital financing at LIBOR or U.S. prime rates. In calculating the benchmark, we used the weighted-average interest rates on loans of less than one million dollars, not the upper limit of the interquartile range.

Comment 11: The Brazilian government contends that the Department should have used discounting operations under Communication 331, rather than Resolution 63 loans, as the basis for the FINEX export financing benchmark. The terms and commitments associated with Communication 331 discount operations more closely approximate the FINEX export financing discounting operations.

Department's Position: We disagree. Communication 331 discount operations generally have a duration of much less than 180 days. In contrast, Resolution 63 loans, with 180-day terms, more closely approximate the terms, commitments, and duration of FINEX export financing.

Comment 12: The Brazilian government argues that the Department, in its calculation of benefits from importer and exporter FINEX financing, should not have included the commission, which is paid to the lending bank by CACEX. The Brazilian government believes that, since the commission is negotiated between the lender and borrower at arm's length, it is governed by commercial considerations, and is therefore not countervailable.

Department's Position: We disagree. The benefit received by the companies borrowing under this program is the difference between what they are paying and what they would otherwise pay. Therefore, we have included the portion of the commission that is passed on to borrowers.

Comment 13: The Brazilian government argues that the IPI rebate program under Decree Law 1547 is not countervailable. As originally enacted, the value-added tax was applied to all domestic sales transactions, but it now applies to only fourteen industries, including steel. Because these industries are subject to the IPI while others are not, the reduction of the IPI for any of those industries cannot be considered a subsidy.

Department's Position: We disagree. The IPI rebates do not directly reduce taxes paid by steel producers. Instead, the same amount of IPI tax is applied to all steel products, but only companies that produce certain priority products and companies whose expansion projects are government-approved may receive the rebates. For example, manufacturers of steel products such as welded pipe and tube are not eligible for the rebates. Therefore, there is no one-to-one correspondence between taxes paid and the IPI rebate. Moreover, we do not have sufficient information on the amount of rebates in other industries or on the exceptions within those industries.

Comment 14: The Brazilian government contends that the Department has sufficient evidence to find the FINEP long-term loan program generally available and, therefore, not countervailable. If the Department continues to find these loans countervailable, the benchmark should be the company-specific long-term interest rate in effect when the loans were taken out.

Department's Position: We disagree. During verification, we requested industry-specific FINEP loan information, including data on the relative size of, and amounts received by, each industry for the past six years. Although we obtained information on various industries that received FINEP loans, the Brazilian government did not break down the amounts provided for those industries. Therefore, we do not have sufficient information to find that FINEP long-term loans are not specifically provided to more than a specific enterprise or industry or group of enterprises or industries.
We agree that a company-specific loan benchmark is appropriate. We have calculated the benefit and find no change in the subsidy rate.

Comment 15: The Brazilian government believes that, since sales from producers to trading companies are made at arm's length, the Department inappropriately assumed that the subsidies given to producers also confer subsidies on trading companies and service centers. If the Department believes that subsidies on this merchandise were passed through from the producers to the trading companies

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and service centers, it should have used an upstream subsidy test to determine the benefit. If the Department continues to assume that subsidies given to producers also confer subsidies on trading companies and service centers, it should weight the benefits received by each trading company and service center by the amount purchased from each producer.

Department's Position: The upstream subsidy provision of the Act, 19 U.S.C. section 1677-1, only applies to situations involving an input product. (See, final affirmative countervailing duty determination on live swine and fresh chilled and frozen pork products from Canada (50 FR 25097, June 17, 1985)). The products which are sold to the trading companies or the service center in this case are not inputs, rather they are products which are at or near the final stage of processing. All the trading companies or the service centers do is prepare these products for the next customer. The amount of value added by the trading company or the service center is minimal. Thus, since we determine that this situation is not one involving inputs, we determine that the upstream subsidy provision of the Act is not applicable. Nor does the fact that the sale from the producer to the trading company is an arm's length transaction alter this conclusion.

Comment 16: The Brazilian government believes that the Department incorrectly determined that the suspension agreement no longer meets the requirements of the Tariff Act. The Brazilian government has fulfilled the conditions of the suspension agreement by appropriately collecting export taxes equal to the amount required by the Department, and therefore, it has not violated the agreement. Neither the agreement nor the statute requires retroactive comparison of the export tax with the net subsidy. Instead, a suspension agreement should function prospectively since the statute only requires the review of the net subsidy. Therefore, there is no need to renegotiate the suspension agreement. Further, it would be inappropriate to use the rate set in the final determination of this case instead of the rate found in this review for a deposit rate for estimated countervailing duties if an order were issued.

Department's Position: We disagree. Although the Brazilian government did not violate the suspension agreement, the original agreement lacked a mechanism that would allow the complete elimination of the net subsidy as required by the statute. Therefore, the agreement no longer met the requirements of section 704 (b) and (d) of the Tariff Act. The revised agreement now has an adjustment mechanism that allows for the complete elimination of the net subsidy based on a comparison between actual export taxes paid during the period of review and the net subsidy found during the same period. Therefore, the revised agreement conforms to both the statute and the Department's practice to conduct reviews retrospectively.
Further, since we have not issued an order in this case, the issue of the appropriate cash deposit rate is moot.

Comment 17: The petitioner, the Specialty Steel Industry ("SSI"), argues that the Department lacks the authority to renegotiate the suspension agreement. The SSI believes that, because the original agreement has been violated and no longer meets the requirements of section 704 (b) and (d) of the Tariff Act, the Department is required under section 704(i) to terminate the agreement and issue a countervailing duty order.

Department's Position: We disagree. We made a preliminary determination that the original agreement no longer meets the requirements of section 704 (b) and (d) because the amount of export taxes collected did not fully offset the net subsidy. Section 355.32(b) of the Commerce Regulations allows the Department to renegotiate suspension agreements, except in the event of intentional violations, which we do not find in this case. Further, the statute does not prohibit renegotiations to bring agreement into compliance with section 704 (b) and (d). Therefore, we believe that we have the authority to renegotiate the suspension agreement. Further, we determine that the revised agreement meets the requirements of section 704 (b) and (d).

Comment 18: The SSI argues that the Department should terminate the agreement because of the Brazilian government's past failures to collect the appropriate amount of export tax required by Brazil's tax resolutions. The SSI believes that such incidents indicate a continuing failure to comply with the terms of the agreement.

Department's Position: We disagree. Although there were some initial problems with implementation of the tax resolutions governing the suspension agreement, we have found no further problems. The companies have paid to the Brazilian Government all underpayments resulting from any difference between the export tax rate set by the Brazilian government and the amount paid by the companies on specific shipments of this merchandise. Therefore, we believe that the Brazilian government and the companies have made efforts in good faith to comply with the terms of the agreement.

Comment 19: The petitioner argues that the revised suspension agreement should not forgive the difference between the net subsidy and the amount of export taxes paid during the review period and 1986. The SSI believes that the Department should rectify this difference by assessing additional countervailing duties or requiring the Brazilian government to collect additional export taxes.

Department Position: We disagree. The originial suspension agreement did not allow for the retroactive correction of export taxes. Further, we have no authority to collect countervailing duties on imports covered by the agreement. The revised agreement corrects this deficiency by including a mechanism which adjusts for any under-or over-collection of export taxes on specific shipments. This mechanism will account for any differences between the net subsidy and the amount of past export taxes paid.

Comment 20: The SSI argues that the revised agreement should include a provision for the treatment of any differences between the export tax rate set by the Brazilian government and the amount paid by the companies. The SSI believes that the absence of such a provision gives exporters an incentive to underpay. Such undercollections should be treated as interest-free long-term loans.

Department's Position: We disagree. We do not belive it is necessary to include the export tax provisions suggested by the SSI in the agreement because the Department has the authority to calculate a benefit which corrects for any such discrepancies. If we find continuing problems with collection or payment of the export taxes, we will terminate the suspension agreement and issue a countervailing duty order. Further, since all payments for the review period have been appropriately made, the issue of the benchmark is moot.

Comments 21: The SSI argues that the revised agreement should correct for Brazil's inflation rate by specifying how the dollar value of the cruzado- denominatd subsidy is calculated. The SSI believes that if Brazil's inflation rate exceeds the depreciation of the cruzado in relation to the dollar, the dollar value of the subsidies will be understated. Department's Position: The SSI mistakenly belives that we can tie the benefits received by each firm from the

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different subsidy programs to each shipment. The dollar value of benefits received by Brazilian companies from one particular program on individual shipments may be, to a certain extent, "understated" or "overstated" by the divergence between inflation and devaluation. However, the calculation of a countervailing duty would also "understate" or "overstate" the benefit by the same amount. Since the effect of a suspension agreement and a countervailing duty order is the same, there is no reason to calculate the benefits differently.

Final Results of Review

After reviewing all of the comments received, we determine that the revised agreement now meets the requirements of sections 704(b) and (d) of the Tariff Act and that the net benefit be 27.88 percent ad valorem for the 1983 period, 16.74 percent ad valorem for 1984, and 8.51 percent ad valorem for 1985, the same as in the preliminary results. The Government of Brazil collected an average export tax of 15.99 percent ad valorem for the 1983 period, 16.26 percent ad valorem for 1984, and 8.50 percent ad valorem for 1985. In accordance with the adjustment mechanism in the revised agreement, we will instruct the Government of Brazil to set an export tax rate of 8.51 percent on all shipments of this merchandise to the United States.

This administrative review and notice are in accordance with section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and § 355.10 of the Commerce Regulations (19 CFR 355.10).
Dated: December 12, 1986.

Gilbert B. Kaplan,
Deputy Assistant Secretary, Import Administration.

Revised Suspension Agreement

Certain Stainless Steel Products From Brazil

Pursuant to section 704 of the Tariff Act of 1930, ("the Tariff Act"), and §355.31 of the Commerce Regulations, the Department of Commerce ("the Department") and the Government of Brazil enter into the following Revised Suspension Agreement ("the Agreement"). On the basis of the foregoing, the Department shall continue to suspend its countervailing duty investigation initiated on July 6, 1982 (47 FR 30274) with respect to certain stainless steel products from Brazil subject to the terms and provisions set forth below.

I. Scope of the Agreement

The Agreement applies to certain stainless steel products manufactured in Brazil and exported, directly or indirectly, from Brazil to the United States, ("certain stainless steel products"). Certain stainless steel products include stainless steel wire rod, hot-rolled stainless steel bars, and cold-formed stainless steel bars.
The term stainless steel wire rod covers a coiled, semi-finished, hot-rolled stainless steel product of solid cross section, approximately round in cross section, not under 0.20 inch nor over 0.74 inch in diameter, not tempered, not treated, and not partly manufactured, currently classifiable under item 607.2600 of the Tariff Schedules of the United States Annotated ("TSUSA"), or if tempered, treated, or partly manufactured, currently classifiable under item 607.4300 of the TSUSA.

The term "hot-rolled stainless bars" covers hot-rolled stainless steel products of solid cross section having cross sections in the shape of circles, segments of circles, ovals, triangles, rectangles, hexagons or octagons, not coated or plated with metal, currently classifiable under item 606.9005 of the TSUSA.
The term "cold-formed stainless steel bars" covers cold-formed stainless steel products of solid cross section having cross sections in the shapes of circles, segments of circles, ovals, triangles, rectangles, hexagons or octagons, not coated or plated with metal, currently classifiable under item 606.9010 of the TSUSA.
Stainless steel is an alloy steel which contains by weight less than 1 percent of carbon and over 11.5 percent of chromium.

II. Basis of the Agreement

The Government of Brazil hereby agrees to offset completely the net subsidy determined by the Department to exist with respect to certain stainless steel products exported directly or indirectly to the United States. The offset shall be accomplished by the imposition and collection of an export tax.
A. Export Tax. 1. The Government of Brazil shall impose and collect an export tax equal to the value of the "subsidy" found to exist, modified by an adjustment described in paragraph II.A.5. The export tax shall offset completely any benefit received through the following programs:
(a) Export credit premium for the IPI;
(b) CACEX export financing;
(c) Accelerated depreciation for Brazilian-made capital goods;
(d) CIC-CREGE 14-11 financing;
(e) Funding for expansion through IPI tax rebates;
(f) Duty-free treatment and tax exemptions on imported equipment;
(g) Incentives for trading companies;
(h) FINEX financing under Resolutions 68 and 509;
(i) Long-term loans under the FINEP program;
(j) BEFIEX;
(k) Income tax exemption for export earnings; and
(l) Any other benefits found countervailable in an administrative review in this proceeding.
2. The export tax will apply to certain stainless steel products exported directly or indirectly from Brazil to the United States on or after January 1, 1987.
3. The export tax shall be imposed and collected on or before the thirtieth day after the last day of the month of export.
4. The value of the "subsidy" referred to in paragraph II.A.1. shall be equal to the most recent rate of subsidy found by the Department in this proceeding to exist with respect to exports of certain stainless steel products.
5. The adjustment referred to in paragraph II.A.1. shall be calculated as follows:
(a) The United States dollar amount of the subsidy found by the Department to exist during the course of the most recent administrative review of this Agreement, minus
(b) The United States dollar amount of the export tax paid during the period reviewed in the most recent administrative review of this Agreement.
6. The Department shall make best efforts to complete any administrative review initiated under section 751 of the Tariff Act by November 30 of the year initiated. The effective date of any change in the export tax rate, as determined in the final results of administrative review, shall be the earlier of January 1 of the year following the issuance of the final results of administrative review or 30 days after issuance of the final results of administrative review.
7. Any change in the export tax shall apply only to exports made on or after the effective date of that adjusted export tax.

III. Additional Undertakings by the Government of Brazil

A. The Government of Brazil agrees to take such steps as are necessary to ensure that this Agreement is implemented and monitored effectively, including:
1. Notifying the relevant authorities of the Government of Brazil of the terms of this agreement in order to ensure action by those agencies consistent with the terms of this Agreement;
2. Supplying any information and documentation that the Department deems necessary to demonstrate full compliance with the terms of this Agreement;
3. Permitting such verification and data collection as deemed necessary by the Department in order to monitor this Agreement;
4. Notifying the Department if it becomes aware that any producer or exporter is transshipping certain stainless steel products through third countries to the United States;
5. Notifying the Department if it alters or terminates its position with respect to any of the terms of this Agreement; and
B. The Government of Brazil agrees to provide to the Department within 45 days of the end of each calendar quarter, beginning with the quarter ending March 31, 1987, all information deemed by the Department to be necessary to maintain this Agreement. The information shall include, but not be limited to:
1. A certification that the Government of Brazil continues to be in full compliance with this Agreement;
2. A certification (provided after consultation with each agency responsible for administering the programs in section II) that the exporters have paid the appropriate export tax in a timely manner; and
3. A certification of the total amount of export taxes paid during the quarter and a

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listing of each shipment of certain stainless steel products to the United States identifying for each shipment:
(a) The name of the exporter;
(b) The volume and value of the shipment;
(c) The date of shipment;
(d) The amount of export tax paid; and
(e) The date the export tax was paid.

IV. General Provisions

A. The provision of section 704(i) shall apply if:
1. The Government of Brazil withdraws from this Agreement; or
2. The Department determines that this Agreement is being or has been violated or no longer meets the requirements of section 704 of the Tariff Act.
B. By participating in this Agreement, the Government of Brazil does not admit that any of the programs investigated or included in this Agreement constitute subsidies within the meaning of the Tariff Act or the GATT Subsidies Code.

VI. Effective Date

The effective date of this Agreement is the date of publication in the Federal Register.
Signed on this 1st day of December 1986, for the Government of Brazil.

Jose Artur Medeiros,
Minister Counselor, Embassy of Brazil.

I have determined, pursuant to section 704(b) of the Tariff Act, that the provisions of Section II completely eliminate the subsidies that the Government of Brazil is providing with respect to certain stainless steel products exported, directly or indirectly, from Brazil to the United States. Furthermore, I have determined that the suspension of the investigation is in the public interest, that the provisions of Sections II and III ensure that this Agreement can be monitored effectively, and that this Agreement meets the requirements of the Tariff Act. United States Department of Commerce.

Gilbert B. Kaplan,
Deputy Assistant Secretary, Import Administration.