NOTICES
DEPARTMENT OF COMMERCE
International Trade Administration
(C-351-037)
Cotton Yarn From Brazil; Preliminary Results of Countervailing Duty Administrative Review
Thursday, December 10, 1992
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AGENCY: International Trade Administration/Import Administration, Department of Commerce.
ACTION: Notice of preliminary results of countervailing duty administrative review.
SUMMARY: The Department of Commerce has conducted an administrative review of the countervailing duty order on cotton yarn from Brazil. We preliminarily determine the net subsidy to be 0.19 percent ad valorem for all firms for the period January 1, 1991 through December 31, 1991. In accordance with 19 CFR 355.7, any rate less than 0.50 percent ad valorem is de minimis. We invite interested parties to comment on these preliminary results.
EFFECTIVE DATE: December 10, 1992.
FOR FURTHER INFORMATION CONTACT: Gayle Longest or Kelly Parkhill, Office of Countervailing Compliance, International Trade Administration, U.S. Department of Commerce, Washington, DC 20230; telephone: (202) 482-2786.
SUPPLEMENTARY INFORMATION:
Background
On March 5, 1992, the Department of Commerce (the Department) published in the Federal Register a notice of "Opportunity to Request Administrative Review" (57 FR 7910) of the countervailing duty order on cotton yarn from Brazil ( 42 FR 14089; March 15, 1977) for the period January 1, 1991 through December 31, 1991. On March 31, 1992, the Government of Brazil requested an administrative review for that period. We initiated the review on April 13, 1992 (57 FR 12797). The Department has now conducted this review in accordance with section 751 of the Tariff Act of 1930, as amended (the Act). The final results of the last administrative review of this order were published in the Federal Register on January 14, 1992 (57 FR 1454).
Scope of Review
Imports covered by this review are shipments of Brazilian 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.
The review covers the period January 1, 1991 through December 31, 1991, six programs and the following ten producers/exporters of cotton yarn from Brazil: Cia Industrial e Agricola Boyes, Companhia Brasileira de Fiacao, Companhia Jauense Industrial, Filobel S.A.--Industrias Texteis do Brasil, Fiacao Nordeste do Brasil S.A.--Finobrasa, Fiacao e Tecelagem Kanedo do Brasil S.A., Minasa Trading Internacional S.A., Nisshinbo do Brasil Industria Textil Ltda., Toyobo do Brasil Industria Textil, and Unitika do Brasil Industria Textil Ltda.
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-averaging the subsidy rates of the ten companies subject to review to determine the overall subsidy from all countervailing programs benefitting exports of the subject merchandise to the United States. Because the overall weighted-average country-wide rate was de minimis, as defined by 19 CFR 355.7, we did not proceed any further in our analysis.
Analysis of Programs
(1) Reductions of Taxes and Import Duties Through BEFIEX
The Commission for the Granting of Fiscal Benefits to Special Export Programs (BEFIEX) allows Brazilian exporters, in exchange for export commitments, to take advantage of several types of benefits, such as import duty reductions and accelerated depreciation for machinery used in the production of exports. Because this program provides tax reductions that are limited to exporters, we preliminarily determine that it is countervailable. Brazilian Law 8.032 of April 12, 1990 eliminated this program for new projects. However, the Department has determined that residual benefits may continue due to outstanding BEFIEX contracts. Five cotton yarn exporters received import duty tax reductions by virtue of their BEFIEX contracts during the review period.
To calculate the benefit, we divided the amount of each firm's import duty reductions received in 1991 by that firm's total exports in 1991. We then weight-averaged the benefits by each respondent's share of exports of the subject merchandise to the United States. On this basis, we preliminarily determine the benefit to be 0.18 percent ad valorem for all firms.
According to Brazilian Law Number 4239 of June 27, 1963, as amended, and under Decree Number 64214 of March 18, 1969, as amended, companies located in the Northeast of Brazil are eligible for exemption from income tax for production attributable to SUDENE-approved projects. The intent of this program is to encourage development of this region of Brazil.
Because this exemption is only available to companies located in a specific region of Brazil, we find this to be a countervailable domestic subsidy.
One cotton yarn exporter is located in the Northeast of Brazil and received a tax exemption for production attributable to its SUDENE-approved projects. The amount of the tax exemption due to this program can be found on a company's tax return denominated in BTN. The benefit is equal to the amount of the exemption.
We divided the benefit received by the company by its total sales in order to calculate the company's ad valorem subsidy. The individual benefits for each company were weight-averaged by the company's share of total exports of the subject merchandise to the United States. On this basis, we determine the benefit from this program to be 0.01 percent ad valorem for all firms.
We also examined the following programs and preliminarily determine that the respondents did not use them during the
review period:
A. Income Tax Exemption for Export Earnings,
B. CACEX Preferential Working Capital Financing for Exports,
C. Preferential Export Financing under CIC-OPCRE of the Banco do Brasil,
D. Preferential Financing for Industrial Enterprises by the Banco do Brazil (FST and EGF loans).
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Preliminary Results of Review
As a result of our review, we preliminarily determine the net subsidy to be 0.19 percent ad valorem for all firms for the period January 1, 1991 through December 31, 1991. In accordance with 19 CFR 355.7, any rate less than 0.5 percent ad valorem is de minimis.
Therefore, as provided for by section 751(a)(1) of the Act, the Department intends to instruct the Customs Service to liquidate, without regard to countervailing duties, all shipments of the subject merchandise from Brazil exported on or after January 1, 1991, and on or before December 31, 1991.
The Department also intends to instruct the Customs Service not to collect cash deposits of estimated countervailing duties on any shipments of this merchandise from Brazil entered or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this administrative review.
Parties to the proceeding may request disclosure of the calculation methodology and interested parties may request a hearing not later than 10 days after the date of publication of this notice. Interested parties may submit written arguments in case briefs on these preliminary results within 30 days of the date of publication. Rebuttal briefs, limited to arguments raised in case briefs, may be submitted seven days after the time limit for filing the case brief. Any hearing, if requested, will be held within seven days after the scheduled date for submission of rebuttal briefs. Copies of case briefs and rebuttal briefs must be served on interested parties in accordance with 19 CFR 355.38(e). Representatives of parties to the proceeding may request disclosure of proprietary information under administrative protective order no later than 10 days after the representative's client or employer becomes a party to the proceeding, but in no event later than the date the case briefs, under § 355.38(c), are due. The Department will publish the final results of this administrative review including the results of its analysis of issues raised in any case or rebuttal brief.
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 4, 1992.
Rolf Th. Lundburg, Jr.,
Acting Assistant Secretary for Import Administration.
(FR Doc. 92-30051 Filed 12-9-92; 8:45 am)