Cite as: 59 FR 68

NOTICES

DEPARTMENT OF COMMERCE

(C-351-037)

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

Monday, January 3, 1994

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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 is conducting an administrative review of the countervailing duty order on cotton yarn from Brazil. We are terminating the review with respect to Companhia Brasileira de Fiacao, (CBF) and benefits received by this company are not included in the net subsidy rate of the Department's preliminary results.

We preliminarily determine the net subsidy to be 0.30 percent ad valorem for all producers and exporters of cotton yarn from Brazil for the period January 1, 1992 through December 31, 1992. 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: January 3, 1994.

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 12, 1993, the Department of Commerce (the Department) published in the Federal Register a notice of "Opportunity to Request Administrative Review" (58 FR 13583) of the countervailing duty order on cotton yarn from Brazil (42 FR 14089; March 15, 1977) for the period January 1, 1992 through December 31, 1992. On March 31, 1993, the Government of Brazil requested an administrative review for that period. We initiated the review on May 6, 1993 (58 FR 26960). The Department is conducting this review in accordance with section 751 of the Tariff Act of 1930, as amended (the Act). When examining Brazilian customs information at verification, we found that export information for non-subject merchandise, combed cotton yarn, had been inadvertently included in the questionnaire response. Brazilian officials were not aware that the Harmonized Tariff Schedule (HTS) numbers that covered combed cotton yarn were not included in the scope of this order. At verification, we found that one respondent, CBF, had no shipments of the subject merchandise to the United States during the review period. Therefore, we are terminating the review with respect to this company. The final results of the last administrative review of this order were published in the Federal Register on February 2, 1993 (58 FR 6779).

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 HTS. The HTS item numbers are provided for convenience and Customs purposes. The written description remains dispositive.

The review covers the period January 1, 1992 through December 31, 1992, seven programs and the following eight producers/exporters of cotton yarn from Brazil: Companhia Industrial e Agricola Boyes, Companhia Textil do Vale, Cotonificio Guilherme Giorgi S.A., Fiacao Nordeste do Brasil S.A.--Finobrasa, Fiacao e Tecelagem Kanedo do Brasil 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 eight 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) Program That Provided Benefits During the Period of Review

a. 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 this program 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.

Four cotton yarn exporters received import duty tax reductions and two of these cotton yarn exporters also received merchant marine freight 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 and merchant marine tax exemptions received in 1992 by that firm's total exports in 1992. We then weight-averaged the benefits by each

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respondent's share of exports of the subject merchandise to the United States. On this basis, we preliminarily determine the benefit to be 0.30 percent ad valorem for all firms.

(2) Terminated Programs With No Residual Benefits During the Period of Review

a. Income Tax Reduction for Export Earnings

This program was terminated effective April 12, 1990, by Decree Law 8034 which established a uniform tax rate of 30 percent for domestic and export earnings beginning with tax year 1990. Since the last tax returns on which these benefits could be claimed were filed in 1991, there are no residual benefits from this program. (See Cotton Yarn From Brazil; Preliminary Results of Countervailing Duty Administrative Review, (56 FR 47456) and Cotton Yarn From Brazil; Final Results of Countervailing Duty Administrative Review, (57 FR 1454).)

b. CACEX (Carteira de Comercio Exterior) Preferential Working Capital Financing for Exports

This program was terminated effective August 30, 1990, by Central Bank Resolution 1744. In accordance with Resolution 1744, there are no residual benefits from this program since all non-used portions of financing were cancelled when the program was eliminated. At verification, we saw no evidence of this financing at the companies.

c. IPI (Tax on Industrialized Products) for Imports of Machinery or Equipment Under Decree Law 2324

This program was terminated effective December 28, 1989, by Decree-Law 7988. Companies could benefit from the tax exemption until December 31, 1990, and no residual benefits were provided after this date. At verification, we saw no evidence of IPI tax exemptions under Law 2324 at the companies.

(3) Programs Not Used

We also examined the following programs and preliminarily determine that the respondents did not use them during the review period:
A. SUDENE Corporate Income Tax Reduction for Companies Located in the Northeast of Brazil.
B. Preferential Export Financing under CIC-OPCRE of the Banco do Brasil.
C. Preferential Financing for Industrial Enterprises by the Banco do Brasil (FST and EGF loans).

Verification

As required under 19 CFR 355.36(a)(1)(iv)(B) of the Department's regulations, we verified Brazilian cotton yarn exporters because no verification had been conducted in either of the two immediately preceeding administrative reviews. We selected several companies for verification of both programs that were used and programs that were not used. When conducting verification of Brazilian customs information, we found that Brazilian officials had inadvertently reported export information for shipments of non-subject merchandise, combed cotton yarn, to the United States. According to Brazilian government records, CBF, a company originally included in this review, had no shipments of the subject merchandise to the United States during the review period. At the company, we examined company records and found no evidence of shipments of the subject merchandise to the United States during the review period.

Preliminary Results of Review

As a result of our review, we preliminarily determine the net subsidy to be 0.30 percent ad valorem for all firms for the period January 1, 1992 through December 31, 1992. In accordance with 19 CFR 355.7, any rate less than 0.5 percent ad valorem is de minimis.

Therefore, in accordance with section 706(a)(1) of the Act (19 U.S.C. 1671e(a)(1)), the Department intends to instruct the Customs Service to liquidate, upon publication of the final results of this review in the Federal Register, without regard to countervailing duties, all shipments of the subject merchandise from Brazil exported on or after January 1, 1992, and on or before December 31, 1992.

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 Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.

Dated: December 23, 1993.

Barbara R. Stafford,

Acting Assistant Secretary for Import Administration.

(FR Doc. 93-32072 Filed 12-30-93; 8:45 am)