NOTICES

DEPARTMENT OF COMMERCE

(C-351-037)

Cotton Yarn From Brazil; Final Results of Countervailing Duty Administrative Review

Tuesday, January 14, 1992

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

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

SUMMARY: On September 19, 1991, the Department of Commerce published the preliminary results of its administrative review of the countervailing duty order on cotton yarn from Brazil (56 FR 47456; September 19, 1991). We have now completed that review and determine the net subsidy to be zero for one firm, 0.20 percent ad valorem for one firm, 7.75 percent ad valorem for one firm and 1.29 percent ad valorem for all other firms for the period January 1, 1990 through December 31, 1990. In accordance with 19 CFR 355.7, any rate less than 0.50 percent ad valorem is de minimis.

EFFECTIVE DATE: January 14, 1992.

FOR FURTHER INFORMATION CONTACT:Elizabeth Levy or Michael Rollin, Office of Countervailing Compliance, International Trade Administration, U.S. Department of Commerce, Washington, DC 20230; telephone: (202) 377-2786.

SUPPLEMENTARY INFORMATION:

Background

On September 19, 1991, the Department of Commerce (the Department) published in the Federal Register (56 FR 47456) the preliminary results of its administrative review of the countervailing duty order on cotton yarn from Brazil (42 FR 14089; March 15, 1977). 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 cotton yarn, carded but not combed, wholly of cotton. During the review period, such merchandise was classifiable under item numbers 5205.11.10, 5205.11.20, 5205.12.10, 5205.12.20, 5205.13.10, 5205.13.20, 5205.14.10, 5205.14.20, 5205.15.10, 5205.15.20, 5205.31.00, 5205.32.00, 5205.33.00, 5205.34.00, and 5205.35.00 of the Harmonized Tariff Schedule (HTS). The HTS item numbers are provided for convenience and Customs purposes. The written description remains dispositive.

This review covers the period January 1, 1990 through december 31, 1990, nine companies and six programs: (1) Income Tax Reduction for Export Earnings; (2) Reductions of Taxes and Import Duties through BEFIEX; (3) SUDENE Regional Tax Exemption; (4) CACEX Preferential Working Capital Financing for Exports; (5) Preferential Export Financing under CIC-OPCRE of the Banco do Brasil; and (6) Preferential Financing for Industrial Enterprises by the Banco do Brasil (FTS and EGF loans).

Calculation Methodology for Assessment and Cash Deposit Purposes

In calculating the benefits received during the review period, we followed the methodology described in the preamble to 19 CFR 355.20(d) (53 FR 52325; December 27, 1988). First, we calculated a country-wide rate, weight-

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averaging the benefits received by the nine companies subject to review to determine the overall subsidy from all countervailable programs benefitting exports of the subject merchandise to the United States. Because the country-wide rate was above de minimis, as defined by 19 CFR 355.7, we proceeded to the next step in our analysis and examined the ad valorem rate we had calculated for each company for all countervailable programs combined, to determine whether individual company rates differed significantly from the weighted-average country-wide rate. Two companies received aggregate benefits which were zero or de minimis (significantly different within the meaning of 19 CFR 355.22(d)(3)(ii)); one company, Fiacao Nordeste do Brasil S.A.--Finobrasa, received aggregate benefits which were otherwise significantly different in accordance with 19 CFR 355.22(d)(3)(i). These three companies must be treated separately for assessment and cash deposit purposes.

The remaining six companies received aggregate benefits from all countervailable programs combined which were not significantly different from the weighted-average country-wide rate; their rates were used in the calculation to establish the "all other" rate for the review period. See, e.g., Final Results of Countervailing Duty Administrative Review; Certain Apparel from Argentina (56 FR 41823; August 23, 1991) and Final Results of Countervailing Duty Administrative Review; Ceramic Tile from Mexico (56 FR 27496; June 14, 1991).

Analysis of Comments Received

We gave interested parties an opportunity to comment on the preliminary results. We received a written comment from the Government of Brazil. The comment was timely within the meaning of 19 CFR 355.38(c)(1)(ii).

Comment: The Government of Brazil claims that the "Imposto sobre Produtos Industrializados" (IPI), a tax exemption, on four of the nineteen pieces of equipment imported under BEFIEX contracts should not be included in the calculation of the BEFIEX benefit for Fiacao Nordeste do Brasil S.A.-- Finobrasa. In support of its claim, the Government of Brazil cites Article 17 of Brazilian Decree-Law 2.433, of May 19, 1988, as amended by Decree-Law 2451 of July 29, 1988, which states that the IPI tax exemption is available to all imports of machinery.

Department's Position: We disagree. We requested detailed information on BEFIEX from the Government of Brazil and Finobrasa in the original questionnaire of April 17, 1991. In Finobrasa's response of July 11, 1991, it reported one aggregate amount for the total import duty and tax exemptions received under BEFIEX. In a supplemental questionnaire issued July 19, 1991, we requested more detailed information on the imports and benefits received under BEFIEX. Finobrasa responded on August 7, 1991, with a table entitled "BEFIEX Exemptions." This table listed the import duty and tax exemptions received during the review period on each piece of equipment imported under BEFIEX. The table contained four asterisks in the "IPI tax payable" labelled column indicating that these four pieces of equipment received and IPI exemption. The asterisks referred to a footnote which stated "IPI exemption on imports of machinery (that) was given pursuant to Decree-Law 2.433 of May 19, 1988, article 17, as amended by Decree-Law 2.451 of July 19, 1988 . . . this is a generally available benefits."

The IPI tax portion of BEFIEX copntracts has been found countervailable in all Brazilian countervailing duty cases where BEFIEX was used. The Department has never made a determination in any Brazilian countervailing duty investigation or review that Decree-Law 2.433, as amended, rendered the IPI tax exemption non-countervailable. While the decree indicates that the IPI tax exemption is now available to companies other than those with BEFIEX contracts, the Government of Brazil has not submitted any information demonstrating that the IPI tax exemption is, in fact, used by more than a specific group of enterprises, industries or groups thereof. Therefore, we do not have sufficient information in this administrative review upon which to base a redetermination of the IPI tax exemption. Accordingly, we have included both the import duty exemption and the IPI tax exemption in our calculations of Finobrasa's BEFIEX benefit.

Firms Not Receiving Benefits

We determine that the following firms received zero or de minimis benefits during the period January 1, 1990 through December 31, 1990:
(1) Unitika do Brasil Industria Textil Ltda.
(2) Fiacao e Tecelagam Kanebo do Brasil S.A.

Final Results of Review

After considering the comments received, we recommend that the net subsidy remain unchanged from the preliminary determination at zero for one firm de minimis for one firm, 7.75 percent ad valorem for one firm, and 1.29 percent ad valorem for all other firms.

The Department will instruct the Customs Service to liquidate, without regard to countervailing duties, shipments of Brazilian cotton yarn from the two firms with zero benefits listed above, and to assess countervailing duties of 7.75

percent of the f.o.b. invoice price on shipments of this merchandise from Fiacao Nordeste do Brasil S.A.--Finobrasa, and 1.29 percent of the f.o.b. invoice price on shipments from all other firms entered, or withdrawn from warehouse, for consumption on or after January 1, 1990 and exported on or before December 31, 1991.

The Department also will instruct the Customs Service to waive the collection of cash deposit of estimated countervailing duties, as provided by section 751(a)(1) of the Tariff Act, on any shipments of merchandise from the two firms with zero or de minimis benefits listed above, and to collect a cash deposit of estimated countervailing duties of 7.75 percent of the f.o.b. invoice price on all shipments of the subject merchandise from Fiacao Nordeste do Brasil S.A.-- Finobrasa. The elimination of the Income Tax Reduction for Export Earnings program on April 12, 1990 decreases the total estimated duty deposit rate for all other firms from 1.29 percent to 0.93 percent of the f.o.b. invoice price on shipments entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice. The deposit requirement and 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: December 31, 1991.

Alan M. Dunn,

Assistant Secretary for Import Administration.

(FR Doc. 92-955 Filed 1-13-92; 8:45 am)