ACTION: Notice of final results of countervailing duty administrative review.
SUMMARY: On February 11, 1991, the 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, 1989 through December 31, 1989. We have now completed that review and determine the net subsidy to be 0.24 percent ad valorem. In accordance with 19 CFR 355.7, any rate less than 0.50 percent ad valorem is de minimis.
EFFECTIVE DATE: May 29, 1991.
FOR FURTHER INFORMATION CONTACT:Mark Spellun 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 5401) the preliminary results of its administrative review of the countervailing duty order on
pig iron
from Brazil (45 FR 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 numbers 7201.10.00, 7201.20.00, 7201.30.00 and 7206.10.00 of the Harmonized Tariff Schedule. The HTS numbers are provided for convenience and Customs purposes. The written description remains dispositive.
The review covers the period January 1, 1989 through December 31, 1989 and ten programs: (1) CACEX Preferential Working Capital Financing for Exports, (2) Income Tax Exemption for Export Earnings, (3) BEFIEX and CIEX, (4) PROEX and PROSIM, (5) Preferential Financing for the Storage of Merchandise, (6) FST and EGF Financing, (7) Accelerated Depreciation for Brazilian-Made Capital Goods, (8) FINEX, (9) FUNPAR, and (10) FINEP.
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's 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
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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.
Comment 3: Consider argues that since CACEX Preferential Working Capital Financing for Exports and the
Income Tax Exemption for Export Earnings (the two programs found to be used during the current review
period) have been terminated, there is sufficient grounds to warrant a changed circumstances review under 19
CFR 355.22(h).
Department's Position: A changed circumstances review under 19 CFR 355.22(h) would have no purpose. As a
result of the findings in this review and the termination of these programs, the rate of cash deposit will be zero.
The termination of the two programs found to be countervailable in this review does not constitute changed
circumstances sufficient to warrant revocation under 19 CFR 355.25(d). Revocation based on the government's
elimination of all subsidies on the merchandise is provided for under 19 CFR 355.25(a)(1). Under that section,
an order can be revoked only after the government has eliminated all subsidies for a period of at least three
consecutive years; the Government of Brazil has not yet met this requirement.
Final Results of Review
As a result of our review, we determine the net subsidy to be 0.24 percent ad valorem for the period January 1,
1989 through December 31, 1989. In accordance with 19 CFR 355.7, any rate less than 0.50 percent ad
valorem is de minimis. Therefore, the Department will instruct the Customs Service to liquidate, without regard
to countervailing duties, all entries of this merchandise exported on or after January 1, 1989 and on or before
December 31, 1989.
Further, the Department will instruct the Customs Service to waive cash deposits of estimated countervailing
duties on all 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 22, 1991.
Eric I. Garfinkel,
Assistant Secretary for Import Administration.