Certain Castor Oil Products From Brazil; Final Results of Countervailing Duty
Administrative Review
AGENCY: International Trade Administration, Import Administration, Commerce. Scope of Review
Comment 1: The Government of Brazil argues that the Department incorrectly weighted the benefits from
CACEX export financing by the proportion of each firm's exports to all markets. The Department should weight
the benefits by the proportion of exports of this merchandise to the United States. Department's Position: We agree and have corrected the calculations. We determine the benefit from CACEX
export financing under Resolution 882 to be 0.09 percent ad valorem and from CACEX trading company
financing to be 0.05 percent ad valorem. Comment 2: The Government of Brazil argues that the Department should not include the exemption from the
IOF tax (tax on financial transactions) in its calculation of the interest rate benchmark. 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 3: The Government of Brazil, Braswey, and Braswey Trading Company argue that the Department
failed to weight-average the companies' benefits from the income tax exemption program by the proportion of
their exports of this merchandise to the United States. Department's Position: We agree and have corrected the calculations. We determine the benefit from this
program to be 0.21 percent ad valorem. Comment 4: The Government of Brazil argues that the Department should use total sales, not total exports, as
the denominator in calculating the benefit from the income tax exemption program. Department's Position: We disagree. See the final results of our last administrative review in this case (51 FR 45497, December 19, 1986). Comment 5: The Government of Brazil contends that CIC-CREGE 14-11 loans should not be countervailed
because the government does not fund such loans and does not regulate or in any way control the provision of
such loans. In additon, the terms of these loans are comparable to commercial terms. Department's Position: We disagree. See the final results of our last administrative review in this case. Because
the Government of Brazil has provided no new information on this program, we have not reconsidered it. Comment 6: The Government of Brazil argues that under CIC-CREGE 14-11, commercial banks recover all of
their costs and that, therefore, the loans cannot be countervailable. Department's Position: We do not consider the cost to commercial banks in determining whether a program is
countervailable. We are concerned with the benefit to the recipient of the financing, rather than to the
commercial bank. We measure the benefit from preferential loans against our commercial benchmark, which is
a national average interest rate. We found that the rate for this program was lower than our benchmark.
Therefore, regardless of whether the commercial banks recover their costs, the loans are countervailable. Comment 7: Assuming that CIC-CREGE loans do confer a subsidy, the Government of Brazil argues that the
Department incorrectly weighted the benefit from these loans by the proportion of each firm's exports to all
markets. The Department should weight the benefits by the proportion of each firm's exports of this
merchandise to the United States. Department's Position: We agree and have corrected the calculations. We now determine the benefit from this
program to be 0.04 percent ad valorem. Comment 8: Assuming that CIC-CREGE loans do confer a subsidy, the Government of Brazil contends that the
Department used the wrong benchmark is calculating the benefit. The Department used the average annual
interest rate in effect when the loan was received. The Government of Brazil argues that the Department should
use the relevant weekly or monthly rate in effect when the loan was received to calculate the benefit. Department's Position: We disagree. See the final results of our last administrative review in this case. Because
the Government of Brazil has provided no new information or new arguments on this issue, we have not
reconsidered it. Comment 9: The Government of Brazil contends that the rate published in Analise/Business Trends is not the
most appropriate benchmark interest rate available. The Department should use the average commercial bank
lending rates published by Morgan Guaranty Trust Company in its World Financial Markets. Department's Position: We disagree. See the final results of the last administrative review in this case. Because
the Government of Brazil has provided no new information or new arguments on this issue, we have not
reconsidered it. Comment 10: The Government of Brazil argues that the accelerated depreciation provisions of the Brazilian
Industrial Development Council ("CDI") are generally available and, therefore, not countervailable. If the
Department continues to consider the program countervailable, the Brazilian government contends that there is
still no benefit because the "recapture" (i.e., the amount added back to the current year's net profit from the
amount of accelerated depreciation claimed in prior years) eliminates any net tax benefit. In its last verification,
the Department collected all the documents relevant to this review period showing that there was no net benefit from this program. The Government of
Brazil argues that the Department miscalculated the benefit from the accelerated depreciation program by not
subtracting the amount of recapture from the amount of accelerated depreciation claimed in the review period. 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 17988, April 26, 1984). Regarding the
recapture, we addressed this issue in the final results of the last administrative review in this case. Although we
do have the tax forms filed in the review period, those forms do not show the amount of recapture attributable to
CDI. Neither at our last verification nor in its questionnaire response did the Government of Brazil provide
documents linking the recapture to the CDI program. Comment 11: The Government of Brazil argues that the Department failed to take into consideration the full
amount of the export taxes paid during the review period. Since the export taxes paid were higher than the IPI
export credit premiums received, the Department should consider the overpayment an offset against the total
subsidy received. Department's Position: We disagree. See the final results of the last administrative review in this case. Because
the Government of Brazil has provided no new information or new arguments on this issue, we have not
reconsidered it.
ACTION: Notice of final results of countervailing duty administrative review.
SUMMARY: On May 19, 1987, the Department published the preliminary results of its administrative review of
the countervailing duty order on certain castor oil products from Brazil. The review covers the period January 1,
1985 through December 31, 1985 and 15 programs
We gave interested parties an opportunity to comment on the preliminary results. After reviewing all the
comments received, the Department has determined the net subsidy to be 0.39 percent ad valorem for the
period of review. The Department considers any rate below 0.50 percent ad valorem to be de minimis.
EFFECTIVE DATE: November 2, 1987.
FOR FURTHER INFORMATION CONTACT:Jean M. Carroll or Bernard Carreau, Office of Compliance,
International Trade Administration, U.S. Department of Commerce, Washington, DC 20230; telephone: (202) 377-2786.
SUPPLEMENTARY INFORMATION:
Background
On May 19, 1987, the Department of Commerce ("the Department") published in the Federal Register (52 FR 18726) the preliminary results of its administrative review of the countervailing duty order on certain castor oil products from Brazil (41 FR 8634, March 16, 1976). We have now completed that administrative review in accordance with section 751 of the Tariff Act of 1930 ("the Tariff Act").
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The United States has developed a system of tariff classification based on the international harmonized system
of customs nomenclature. Congress is considering legislation to convert the United States to this harmonized
system ("HS") by January 1, 1988. In view of this, we will be providing both the appropriate Tariff Schedules of
the United States Annotated ("TSUSA") item numbers and the appropriate HS item numbers with our product
descriptions on a test basis, pending Congressional approval. As with the TSUSA, the HS item numbers are
provided for convenience and Customs purposes. The written description remains dispositive.
Imports covered by the review are shipments of Brazilian hydrogenated castor oil and 12-hydroxystearic acid.
Such merchandise is currently classifiable under TSUSA items 178.2000, 490.2650, and 490.2670. These
products are currently classifiable under HS item numbers 1516.20.9000, 1519.11.0000 and 2915.90.1050.
The review covers the period January 1, 1985 through December 31, 1985 and 15 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 643); (6) accelerated
depreciation for Brazilian-made capital goods; (7) BEFIEX; (8) CIEX; (9) FINEX; (10) duty-free treatment and tax
exemption on equipment used in export production ("CDI"); (11) FUNPAR; (12) exemption from state-
adminstered value added taxes on domestic sales ("ICM"); (13) PROEX; (14) PROSIM; and (15) financing for
the storage of merchandise destined for export (Resolution 330).
Analysis of Comments Received
We gave interested parties an opportunity to comment on the preliminary results. We received comments from
the Government of Brazil and three exporters, Sociedade Algodoeira do Nordeste Brasileiro, S.A. ("SANBRA"),
Braswey, S.A., Industria e Comercio, (Braswey) and Braswey Exportadora, S.A. (Braswey Trading).
Finsal Results of Review
After reviewing all of the comments received, we determine the net subsidy to be 0.39 percent ad valorem for
the period of review. The Department considers any rate below 0.50 percent ad valorem to be de minimis.
The Department will therefore instruct the Customs Service not to assess countervailing duties on any
shipments of this merchandise exported on or after January 1, 1985 and on or before December 31, 1985.
The Department will instruct the Customs Service not to collect a cash deposit of estimated countervailing
duties, as provided by section 751(a)(1) of the Tariff Act, on any shipments of certain castor oil products from
Brazil entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice.
This deposit waiver shall remain in effect until publication of the final results of the next administrative review.
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 19 CFR 355.10.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
Date: October 27, 1987.