Pig Iron From Brazil; Final Results of Countervailing Duty Administrative

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

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

SUMMARY: On February 11, 1991, Department of Commerce published the preliminary results of its administrative review of the countervailing duty order on pig iron from Brazil for the period January 1, 1987 through December 31, 1987. We have now completed that review and determine the net subsidy to be zero or de minimis for seven firms and 1.85 percent ad valorem for all other firms.

EFFECTIVE DATE: May 23, 1991.

FOR FURTHER INFORMATION CONTACT:Christopher Beach or Maria MacKay, Office of Countervailing Compliance, International Trade Administration, U.S. Department of Commerce, Washington, DC. 20230; telephone: (202) 377-2786.

SUPPLEMENTARY INFORMATION:

Background

On February 11, 1991, the Department of Commerce (the Department) published in the Federal Register (56 FR 5403) the preliminary results of its administrative review or the countervailing duty order on pig iron from Brazil (45 23045). The Department has now completed that administrative review in accordance with section 751 of the Tariff Act of 1930, as amended (the Tariff Act).

Scope of Review
Imports covered by this review are shipments of Brazilian pig iron of basic foundry, malleable, and low phosphorous grades. During the review period, such merchandise was classifiable under item number 606.1300 of the Tariff Schedules of the United States Annotated (TSUSA). This merchandise is currently clasifiable under item numbers 7201.10.00, 7201.20.00, 7201.30.00 and 7206.10.00 of the Harmonized Tariff Schedule (HTS). The TSUSA and HTS numbers are provided for convenience and Customs purpose. The written description remains dispositive.

The review covers the period January 1, 1987 through December 31, 1987 and twelve programs: (1) CACEX Preferential Working Capital Financing for Exports, (2) Income Tax Exemption for Export Earnings, (3) IPI Export Credit Premium, (4) BEFIEX and CIEX, (5) PROEX and PORSIM, (6) Preferential Financing for the Storage of Merchandise, (7) FST and EGF Financing, (8) Accelerated Depreciation for Brazilian-Made Capital Goods, (9) FINEX, (10) FUNPAR, (11) FINEP and (12) CIC-OPCRE 6-2-6 financing.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the preliminary results. We received comments from Consider U.S.A., Inc., an importer.

Comment 1: Consider states that the exemption of export financing from the tax on financial transactions (the IOF tax) is not a subsidy. Consider claims that, in calculating the interest differential under the program for preferential working capital financing for exports, the exemption from the IOF tax for loans received under CACEX should not be considered. The IOF is an indirect tax on the financing used for the purchase of physically incorporated inputs. The non-excessive rebate of an indirect tax borne by exported merchandise is not a subsidy.

Department' Position: We addressed this issue in the last administrative review of this countervailing duty order, as well as in numerous administrative reviews of other countervailing duty orders on Brazilian products. See, e.g., Certain Castor Oil Products from Brazil; Final Results of Administrative Review of Countervailing Duty Order (September 8, 1983; 48 FR 40534). The Brazilian government has provided neither new evidence nor new arguments that convince us to reconsider our position on this issue.

Comment 2: Consider claims that the benefits derived from the income tax exemption for export earnings should be allocated over total revenue rather than export revenue. Under this program, a Brazilian exporter receives an exemption from income tax liabilities at the end of the fiscal year based upon the ratio of export to total revenue, provided that the firm has made an overall profit. Consider argues that, because the determining factor in a firm's eligibility for this benefit is its overall profitability for a given year, the benefit accrues to the operations of the whole firm and not just the exports.

Department's Position: We have considered and rejected this argument in numerous administrative reviews of other countervailing duty orders on Brazilian products. See, e.g., Certain Scissors and Shears from Brazil; Final Results of Administrative Review of Countervailing Duty Order (March 10, 1982; 47 FR 10266). We have stated 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 is an export subsidy. The fact that the firm as a whole must be profitable to benefit from this 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 revenue instead of total revenue.

Final Results of Review

As a result of our review, we determine the new subsidy to be zero or de minimis for the seven firms listed below and 1.85 percent ad valorem for all other firms during the period January 1, 1987 through December 31, 1987:
(1) S.G. Comercio;
(2) Inbrasil;
(3) Amaral;
(4) Bondespachense;
(5) CBF;
(6) Cotra; and
(7) Foscalma
Therefore, the Department will instruct the Customs Service to liquidate, without regard to countervailing duties, all entries of this merchandise from the seven firms listed above, and to assess countervailing duties of 1.85 percent of the f.o.b. invoice price on shipments from all other firms exported on or after January 1, 1987 and on or before December 31, 1987.
Because the only programs used by the respondents during the review period, the CACEX export financing and Income Tax Exemption programs, have been terminated by the Government of Brazil, the Department will instruct the Customs Service to waive cash deposits of estimated countervailing duties on all

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shipments of this merchandise 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 355.22.
Dated: May 16, 1991.
Marjorie A. Chorlins,
Acting Assistant Secretary for Import Administration.