NOTICES
DEPARTMENT OF COMMERCE
[C-357-404]
Certain Apparel From Argentina;
Final Results of Countervailing Duty Administrative Review
Friday, January 15, 1988
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AGENCY: International Trade Administration/Import Administration
Department of Commerce.
ACTION: Notice of final results of countervailing duty administrative review.
SUMMARY: On July 10, 1987, the Department published the preliminary results of its
administrative review of the countervailing duty order on certain apparel from
Argentina. We determine the bounty or grant to be 0.83 percent ad valorem for the
period December 21, 1984 through December 31, 1984, and 0.46 percent ad valorem for
1985. The Department considers any rate less than 0.50 percent ad valorem to be de
minimis.
EFFECTIVE DATE: January 15, 1988.
FOR FURTHER INFORMATION CONTACT:Christopher Beach or Bernard Carreau, Office of
Compliance, International Trade Administration, U.S. Department of Commerce,
Washington, DC 20230; telephone: (202) 377-2786.
SUPPLEMENTARY INFORMATION:
Background
On July 10, 1987, the Department of Commerce ("the Department") published in the
Federal Register (52 FR
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26053) the preliminary results of its administrative
review of the countervailing duty order on certain apparel from Argentina (48 FR
9846; March 12, 1985). The Department has now completed that administrative review in
accordance with section 751 of the Tariff Act of 1930 ("the Tariff Act").
Scope of Review
Imports covered by the review are shipments of Argentine apparel, currently classifiable
under the following items of the Tariff Schedules of the United States Annotated:
372.7540, 374.2500, 374.3530, 374.6500, 376.2830, 381.0540, 381.0542, 381.0546,
381.4130, 381.4160, 381.4770, 381.5650, 381.6240, 381.8930, 381.9035, 381.9540,
381.9545, 381.9585, 384.0207, 384.0208, 384.0212, 384.0236, 384.0320, 384.0330,
384.0340, 384.0350, 384.0360, 384.0370, 384.0406, 384.0432, 384.0433, 384.0436,
384.0437, 384.0438, 384.0439, 384.0441, 384.0442, 384.0444, 384.0451, 384.0497,
384.0608, 384.0805, 384.0810, 384.0815, 384.0820, 384.0825, 384.0905, 384.0944,
384.1000, 384.1319, 384.1321, 384.1611, 384.1612, 384.1613, 384.1680, 384.1920,
384.2105, 384.2115, 384.2120, 384.2125, 384.2205, 384.2216, 384.2816, 384.2881,
384.2821, 384.2850, 384.2910, 384.2920, 384.2930, 384.2940, 384.2950, 384.3758,
384.3767, 384.3777, 384.4609, 384.4647, 384.4765, 384.4925, 384.5234, 384.5275,
384.5276, 384.5277, 384.5278, 384.5279, 384.5299, 384.5526, 384.5930, 384.6310,
384.6330, 384.6340, 384.6350, 384.6360, 384.6371, 384.6372, 384.6385, 384.7010,
384.7020, 384.7215, 384.7220, 384.7510, 384.7522, 384.7528, 384.7532, 384.7534,
384.7536, 384.7538, 384.7542, 384.7544, 384.7546, 384.7548, 384.7552, 384.7554,
384.7556, 384.7558, 384.7562, 384.7595, 384.8024, 384.8026, 384.8073, 384.8225,
384.8300, 384.9115, 384.9445, and 704.6500.
The review covers the period December 21, 1984 through December 31, 1985 and ten
programs: (1) The reembolso; (2) post-export financing; (3) pre-export financing; (4)
incentives for exports from southern ports; (5) tax reductions for investors; (6) regional
tax incentives; (7) tax reductions for locating in industrial parks; (8) discounts of foreign
currency accounts receivable; (9) low-cost loans for projects outside Buenos Aires; and
(10) BANADE loan guarantees.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the preliminary results. At the
request of an exporter, Pulloverfin, S.A.I.C., and an importer, Che Amigo, U.S.A. ("the
respondents"), we held a public hearing on August 6, 1987.
Comment 1: The respondents contend that the Department incorrectly disallowed
indirect taxes claimed under the reembolso as prior-stage taxes. The reembolso study
submitted in this review is based upon the apparel industry's 1985 fiscal incidence and
cost structure. It is an update of the 1978 apparel reembolso study, which the Treasury
Department previously verified and accepted in its final determination on certain textiles
and textile products from Argentina (43 FR 53421, November 16, 1978). In that case,
the Commerce Department allowed a tax incidence of 19.33 percent in three successive
administrative reviews of that order, covering calendar years 1981, 1982, and 1983.
The respondents argue that to apply a stricter linkage test in this case and deny
prior-stage taxes because of slight variances from previous studies is to demand
unrealistic precision in the administration of the countervailing duty law. The
Department cannot demand such precision when its only reason for disallowing
prior-stage taxes is that it was not able to establish from the records of the verified
companies the level of prior-stage tax incidence. Apparel producers cannot be expected
to maintain the records of taxes billed or paid by prior-stage producers.
In the alternative, the respondents claim that the Department must allow the prior-stage
taxes, verified and accepted in the textile portion of the original investigation in this case,
for yarn and woven fabric because yarn and woven fabric are earlier stages in the
production of apparel.
Department's position: In deciding whether a tax rebate program provides a
countervailable benefit, the Department asks two questions: (1) Does the requisite linkage
between the payment and the indirect tax incidence exist and (2) Is the payment less
than, equal to, or greater than, the indirect tax on the exported product (See Senate
Finance Committee Report on the 1979 Trade Agreements Act, S. Rep. No. 249, 96th
Cong., 1st Sess. 85 (1979); Industrial Fasteners Group, American Importers Association
v. United States, 710 F.2d 1576 (Fed. Cir. 1983); and Certain Fasteners from India, Final
Countervailing Duty Determination and Countervailing Duty Order (45 FR 48607;
July 21, 1980).)
If we find the linkage requirements are not met, the full value of the export payment is
countervailable. If linkage is found, the payments are countervailable only to the extent
that they exceed the indirect tax incidence during the period of review.
Contrary to the respondents' belief, we have found linkage in this review. (See preliminary
results of review, at page 26053.) However, the determination as to whether the
reembolso payments are less than the indirect tax burden on apparel during a particular
review period requires a separate inquiry. For this purpose, we cannot accept the
respondents' suggestion that we use outdated information from a separate proceeding
(materials relied on in the 1978 textile final determination), or even the 1981 information
relied on in the 1984/85 textile proceeding. Rather, we must rely on evidence which
reasonably demonstrates the level of indirect taxes on apparel during the period of
review.
We attempted to obtain and verify prior-sage tax information both at the Argentine
government and at the Argentine apparel trade association, and were unable to do so. As
a last resort, we attempted to obtain and verify that information at the company level,
again without success. Consequently, while we were able to find linkage, we were unable
to determine whether the reembolso payments during this review period were less than,
equal to, or greater than the indirect tax incidence on apparel during the same period.
Comment 2: The respondents contend that the Department erroneously calculated the
benefit from the reembolso program by using the absolute difference between the
reembolso rate and the allowable amount of tax incidence. The Department should
allocate the countervailable amount of reembolso payments on exports to the United
States actually received during the review period over total exports to the United States.
If the Department uses this method, it should also calculate company-specific rates for
firms such as Pulloverfin, whose total reembolso receipts lead to de minimis benefits.
Department's position: Even if we accepted the respondents' method of calculation, we do
not have enough information to calculate the benefit on the basis of actual rebates
received. The Argentine government did not provide the total amount of reembolso
payments made to all apparel exporters during the during the period of review. We have
that informaiton for only four out of 45 companies.
Since we calculated the benefits for all companies based on the full reembolso rate, no
company's rate was "significantly different" from the weighted-average country-wide rate,
and there was therefore no basis for setting company- specific rates in 1984.
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In
1985, this is not an issue because the subsidy rates for all firms were de minimis.
Final Results of Review
After considering all of the comments received, we determine the total bounty or grant to
be 0.83 percent ad valorem for the period December 21, 1984 through December 31,
1984, and 0.46 percent ad valorem for the period January 1, 1985 through December 31,
1985. We consider any rate less than 0.50 percent to be de minimis.
The Department will instruct the Customs Service to assess countervailing duties of
0.83 percent of the f.o.b. invoice price on any shipments of this merchandise entered, or
withdrawn from warehouse, for consumption on or after December 21, 1984 and
exported on or before December 31, 1984, and to liquidate, without regard to
countervailing duties, any shipments of this merchandise exported on or after
January 1, 1985 and on or before December 31, 1985.
The Department also intends to instruct the Customs Service to waive cash deposits of
estimated countervailing duties, as provided by section 751(a)(1) of the Tariff Act, 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 355.10.)
Gilbert B. Kaplan,
Acting Assistant Secretary Import Administration.
Dated: January 11, 1988.
[FR Doc. 88-806 Filed 1-14-88; 8:45 am]
BILLING CODE 3510-DS-M