NOTICES
DEPARTMENT OF COMMERCE
[C-301-003]
Roses and Other Cut Flowers From Colombia; Preliminary Results of
Countervailing Duty Administrative Review
Tuesday, December 12, 1989
AGENCY: International Trade Administration/Import Administration, Commerce.
ACTION: Notice of preliminary results of countervailing duty administrative review.
SUMMARY: The Department of Commerce has conducted an administrative review of the
agreement suspending the countervailing duty investigation on roses and other cut
flowers from Colombia. The review covers the periods January 1, 1986 through
December 31, 1986 and January 1, 1987 through December 31, 1987 and ten programs.
We preliminarily determine that Colombian cut flower exporters have complied with the
terms of the suspension agreement. We invite interested parties to comment on these
preliminary results.
EFFECTIVE DATE: December 12, 1989.
FOR FURTHER INFORMATION CONTACT:Stephanie Moore or Paul McGarr, Office of
Countervailing Compliance, International Trade Administration, U.S. Department
of Commerce, Washington, DC 20230; telephone (202) 377-2786.
SUPPLEMENTARY INFORMATION:
Background
On December 28, 1987, the Department of Commerce ("the Department") published in the
Federal Register (52 FR 48846) the final results of its last administrative review of the
agreement suspending the countervailing duty investigation on roses and other cut
flowers from Colombia (48 FR 2158; January 18, 1983). On January 30, 1987 and on
January 28, 1988, three domestic interested parties, Roses Inc., the California Floral
Trade Council, and the Floral Trade Council, requested administrative reviews of the
suspension agreement. We initiated the reviews on February 23, 1987 (52 FR 5479) and
on March 2, 1988 (53 FR 6681). The Department has now conducted these reviews in
accordance with section 751 of the Tariff Act of 1930 ("the Tariff Act").
Scope of Review
The United States, under the auspices of the Customs Cooperation Council, has developed
a system of tariff classification based on the international harmonized system of Customs
nomenclature. On January 1, 1989, the United States fully converted to the Harmonized
Tariff Schedule (HTS), as provided for in section 1201 et seq. of the Omnibus Trade and
Competitiveness Act of 1988. All merchandise entered, or withdrawn from warehouse, for
consumption on or after that date is now classified solely according to the appropriate
HTS item number(s).
Imports covered by these reviews are shipments of roses and other cut flowers from
Colombia. During the periods of review, such merchandise was classifiable under items
192.1810 through 192.2192 of the Tariff Schedules of the United States Annotated. This
merchandise is currently classifiable under HTS items 0603.10.60, 0603.10.70,
0603.10.80 and 0603.90.00. The HTS item numbers are provided for convenience and
Customs purposes. The written description remains dispositive.
The review covers the periods January 1, 1986 through December 31, 1986 and January
1, 1987 through December 31, 1987 and ten programs.
The producers and exporters listed in Appendix I, accounting for more than eighty-five
(85) percent of the total exports of roses and other cut flowers (excluding miniature
carnations) from Colombia to the United States, are signatories to the suspension
agreement.
Analysis of Programs
(1) Tax Rebate Certificate
On April 1, 1984, the Colombian government pursuant to Law 48/83, established the Tax
Rebate Certificate ("CERT"), which replaced the Tax Reimbursement Certificate Program
("CAT"). According to the Colombian government, the CERT rebated all or part of the
indirect taxes paid by exporters. CERT is freely negotiable on the stock market and can be
used for paying a variety of taxes.
The Government of Columbia provides payment to exporters of roses and other cut
flowers in the form of CERT. Rebates are calculated as a percentage of the value of the
exported product attributable to the domestic value-added content.
As a term of the suspension agreement, the Colombia government terminated CERT
payments on exports of cut flowers to the United States. We verified that there were no
CERT payments on shipments of cut flowers to the United States and Puerto Rico during
the period of review.
(2) Air Freight Rates
The Civil Aeronautics Board (DAAC), an agency of the Colombia government,
established in Resolution 5833 air freight rates for a variety of products, including cut
flowers. Resolution 6333 of September 25, 1981, which updates Resolution 5833, set a
minimum air freight rate of U.S.$0.45 per kilo and a maximum rate of U.S.$0.62 per kilo
for flowers exported to the United States. The rates established under Resolution 6333
were in effect during the periods of review.
Section D(3) of the suspension agreement states that the Department may consider
rescinding the agreement if the air freight rates paid by cut flower exporters approach
government mandated maximum rates set by the DAAC. If we found such rates, we might
consider them indicative of government control rather than the result of competitive
forces. We found that rates ranged from U.S.$0.53 per kilo to U.S.$0.65 kilo, including a
U.S. $0.05 charge for handling and cooling services. Handling and cooling charges are
not regulated by DAAC. The rates negotiated between cut flower exporters and air freight
companies were competitively priced. Therefore, we preliminarily determine that this
program does not provide any benefits to the cut flower exporters.
(3) Resolutions 59 and 22
Resolution 59/72, provided working capital financing at preferential rates to firms that
manufacture, store or sell products destined for export. This program was updated by
Resolution 22/84. All industries were eligible, except producers of coffee, petroleum, and
petroleum by-products. Resolution 22/84 loans are administered by the Export
Promotion Fund ("PROEXPO"), an agency of the Colombian government. The loans are for
180 days and the interest is paid quarterly, in advance. In December 1986, the maximum
interest rate was 22.0 percent. Colombian cut flower exporters received working capital
loans under Resolution 22/84 during 1986.
Since we found this program to be countervailable in the agreement suspending the
countervailing duty investigation on certain textile mill products and apparel from
Colombia (50 FR 9863, March 12, 1985), we included it in the December 15, 1986
revised suspension agreement. At that time, we established a short-term benchmark
interest rate of 22.5 percent, which was the average rate of the Fondo Financiero
Agropecuario (FFA) and the Agrarian Fund as of March 31, 1986. The revised suspension
agreement required that the cut flower exporters not apply for, or receive, any
short-term export financing provided by PROEXPO other than that offered at or above the
short-term
*51053
benchmark interest rate of 22.5 percent. All loans with outstanding
balances were to be repaid or refinanced by March 15, 1987, ninety days after notice of
the revised suspension agreement was published in the Federal Register.
Resolution 3/87, which is an update to Resolution 22/84, was passed by PROEXPO on
February 26, 1987. Resolution 3/87 changed the short-term interest rate to 22.5 percent
and required the interest rate on all outstanding loans that were taken out under
Resolution 22/84 be refinanced at the interest rate benchmark. At the nine companies we
verified, all PROEXPO short-term loans outstanding were refinanced in March 1987 at the
interest rate benchmark, and the adjusted interest differential was paid.
On December 21, 1987, PROEXPO passed Resolution 11/87, which covers pre- shipment
working capital loans, and 14/87, which provides working capital financing to export
companies for various products, including cut flowers. Resolution 11/87 established
financing to flower exporters at the highest interest rate between 22.5 percent per year
prepaid quarterly and the interest rate paid on certificates of deposit (DTF), payable at
the end of each quarter. The certificates of deposit rate is a market-determined rate.
Resolution 14/87 established financing to flower exporters by setting as the base rate the
highest rate between 25 percent per year prepaid quarterly and the DTF rate. The actual
rate charged varies depeding on the size of the company. The Colombian government has
moved away from the fixed-rate PROEXPO financing to the DTF rate, which more
accurately reflects interest rate fluctuations in the market. No loans were taken out under
Resolution 11/87 or 14/87 during the review period. We preliminarily determine that the
DTF interest rate is an appropriate market rate indicator for pre-shipment and
post-shipment financing, and that cut flower exporters have complied with the terms of
the suspension agreement.
(4) Resolution 40
Resolution 40/78 was approved under Decree 2366 of 1974. Decree 2366/74 provides
exporters with fixed assets financing. During 1986, flower exporters received financing at
preferential interest rates of 14 and 18 percent. The revised suspension agreement set a
21 percent benchmark interest rate. On February 26, 1987, PROEXPO passed Resolution
4/87, which changed the interest rate to 21 percent and required the flower exporters to
refinance all outstanding loan balance at the new higher interest rate. We verified that all
outstanding long-term loan balances were refinanced in March 1987 at the interest rate
benchmark.
Resolution 13/87, passed by PROEXPO on December 21, 1987, sets the base rate at the
highest rate between 25 percent per year prepaid quarterly and the DTF rate. The actual
rate changed varies depending on the size of the company. There were no loans approved
for cut flower exporters under Resolution 13/87 during the periods of review.
We preliminarily determine that the DTF is an appropriate market rate indicator for
long-term loans and that cut flower exporters have complied with the term of the
suspension agreement.
(5) Duty and Tax Exemptions Under Plan Vallejo
Plan Vallejo exempts exports from import duties on imported raw materials,
intermediate products, and capital goods used to produce exported products. The
exemption of customs duties and indirect taxes on imported imputs physically
incorporated into exports is not countervailable. Exemptions on non-physically
incorporated inputs, such as imported capital goods, are countervailable when the
exemption is conditional upon exportation.
On December 15, 1986, we revised the suspension agreement to include renunciation of
duty and tax exemptions for imported capital equipment under Plan Vallejo. Because of
an administrative oversight and lack of communication between two Colombian
government agencies, ten contracts were approved during the first quarter of 1987. Six
signatories to the suspension agreement imported capital goods under Plan Vallejo in
1987.
We verified that the firms that utilized the Plan Vallejo contracts subsequently paid the
applicable duties and taxes on the capital goods imported. Therefore, we preliminarily
determine that the signatories did not benefit from this program in 1987.
(6) Resolution 10
The flower exporters, on a voluntary basis, allowed the Banco de la Republica to withhold
a certain percentage of their CAT/CERT rebates earned on non-U.S. exports. The Banco de
la Republica also held all CAT/CERT rebates that would have been paid in exports of roses
and other cut flowers to the United States from January 1983, the effective date of the
suspension agreement, until November 1985, when the established rebate rate for flowers
subject to suspension agreement was reduced to zero. PROEXPO issued Resolution 10,
effective July 23, 1986, to use these funds for the diversification and development of
flowers and vegetables for external markets; transport and control procedures to prevent
drug and narcotic traffic in exports of flowers and vegetables; development of new
markets; and payment of logal and technical services required in Colombia and abroad.
The resolution requires that any funds expended under this program be disbursed in a
manner consistent with the suspension agreement.
During the periods of review, expenditures from this fund were used for legal fees,
narcotics control and security, generic promotion and development of new non-U.S.
markets. We found no evidence to indicate that these funds were provided to exporters of
flowers to the United States, therefore, we preliminarily determine that exports of flowers
to the United States did not receive a countervailable benefit from this program.
(7) Other Programs
We examined the following program and preliminarily determine that flower exporters
did not use them during the periods of review:
(A) Fund for Agricultural Financing ("FFA");
(B) Fund for Industrial Financing ("FFI");
(C) Capital Formation Fund ("FCE"); and
(D) Fund for National Economic Development ("FONADE")
Preliminary Results of Review
As a result of our review, we preliminarily determine that the signatories have complied
with the terms of the suspension agreement during the period January 1, 1986 through
December 31, 1987.
The agreement can remain in force only as long as shipments from the signatories account
for at least 85 percent of imports of the subject merchandise into the United States. Our
information indicates that the signatories accounted for over 90 percent of imports of
this merchandise into the United Stated during the period of review.
Interested parties may submit written comments on these preliminary results within 30
days of the date of publication of this notice and may request disclosure and/or a hearing
within 10 days of the date of publication. Any hearing, if requested, will be held 44 days
from the date of publication or the first workday thereafter. Rebuttal briefs and rebuttals
to written comments,
*51054
limited to issues in those comments, must be filed not later
than 37 days after the date of publication. Any request for an administrative protective
order must be made no later than five days after the date of publication. The Department
will publish the final results of its analysis of issues raised in any such written comments
or at a hearing.
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 § 355.22 of the Commerce Regulations published in
the Federal Register on December 27, 1988 (53 FR 53254) (to be codified at 19 CFR
355.22).
Dated: December 5, 1989.
Eric I. Garfinkel,
Assistant Secretary for Import Administration.
Appendix I
Company
Abaco Tulipanes De Colombia S.A.
Achalay Ltda.
Agricola Ltda.
Agricola Benilda Ltda.
Agricola Bojaca Ltda.
Agricola Bonanza Ltda.
Agricola De La Fontanta y Cia Ltda.
Agricola de los Alisos Ltda.
Agricola de Occidente.
Agricola del Monte Ltda.
Agricola el Cactus S.A.
Agricola el Jardin
Agricola el Mortino Ltda.
Agricola el Redil
Agricola Floral Ltda.
Agricola Guali Ltda.
Agricola la Corsaria Ltda.
Agricola la Floresta Ltda.
Agricola la Maria Ltda.
Agricola los Arboles
Agricola los Gaques Ltda.
Agricola Malqui Ltda.
Agricola Papagayo Ltda.
Agro Koralia Ltda.
Agrodex Ltda.
Agroindustrias De Narino Ltda.
Agromec Ltda.
Agromonte Ltda.
Agroindustria Del Rio Frio Ltda.
Agropecuaria Cuernavaca
Agrorosas S.A.
Agrosuba
Ancas Ltda.
Arboles Azules Ltda.
Astro Ltda.
Astroflores Ltda.
Becerra Castellanos y Cia
Bogota Flowers Ltda.
Cienfuegos Ltda.
Claveles Colombianos Ltda.
Claveles de los Alpes Ltda.
Colinga Ltda.
Conbiflor
Confloresa Ltda.
Crop S.A.
Cult. del Caribe Ltda. "Florcaribe"
Cultivos Buenavista Ltda.
Cultivos el Lago
Cultivos Medellin Ltda.
Daflor Ltda.
De la Pava Guevara e Hijos Ltda.
Del Tropico Ltda.
Dianticola Colombiana Ltda.
Edir Ltda.
El Antelio S.A.
El Rancho Ltda.
El Timbul Ltda.
Exportaciones Bochica S.A.
Flomingo Flowers Ltda.
Flora Bellisma Ltda.
Flora Intercontinental Ltda.
Floral Ltda.
Floralex Ltda.
Floramerica
Florandia Herrera Camacho y Cia
Floreales Ltda.
Florenal Ltda.
Flores Acuarela S.A.
Flores Aguaclara Ltda.
Flores Aguila Ltda.
Flores Alborada S.A.
Flores Alcala Ltda.
Flores Alfaya Ltda.
Flores Andinas Ltda.
Flores Aurora Ltda.
Flores Bachue Ltda.
Flores Catalina Ltda.
Flores Cigarral Ltda.
Flores Colombianas Ltda.
Flores Colon Ltda.
Flores Condor de Colombia Ltda.
Flores Corinto
Flores de Cota Ltda.
Flores de Funza S.A.
Flores de Hunza Ltda.
Flores de la Pradera Ltda.
Flores de la Sabana
Flores Cajibio
Flores Catalina Ltda.
Flores de Hacaritama
Flores de la Vega Ltda. "Vegaflor"
Flores de las Mercedes Ltda.
Flores de los Amigos Ltda.
Flores de los Andes
Flores de los Arrayanes Ltda.
Flores de Nemocon Ltda.
Flores de Oriente Ltda.
Flores de Serrezuela S.A.
Flores de Suba Ltda.
Flores de Suesca
Flores de Tenjo
Flores De Ubate Ltda.
Flores del Bosque
Flores del Campo Ltda.
Flores del Cauca
Flores del Cielo Ltda.
Flores del Cortijo
Flores del Gallinero Ltda.
Flores del Lago Ltda.
Flores del Monte Ltda.
Flores del Pinar Ltda.
Flores del Prado Ltda.
Flores del Pretrero Ltda.
Flores del Rio
Flores del Tambo Leda.
Flores del Vino Ltda.
Flores Depina Ltda.
Flores Dos Hectareas Ltda.
Flores el Chircal Ltda.
Flores el Danubio Ltda.
Flores el Lobo Ltda.
Flores el Puente Ltda.
Flores el Rosal Ltda.
Flores el Trentino Ltda.
Flores Esmeralda S.A.
Flores Estrella Ltda.
Flores Galia Ltda.
Flores Generales Ltda.
Flores Guaicata Ltda.
Flores Hana Ichi de Col.
Flores Horizonte (Flores Monte Verde)
Flores Internacionales Ltda.
Flores Juananbu Ltda.
Flores Juncalito Ltda.
Flores la Conchita.
Flores la Conejera Ltda.
Flores la Estancia Ltda.
Flores la Fragancia S.A.
Flores la Macarena
Flores la Maria Ltda.
Flores la Pampa Ltda.
Flores la Union S.A.
Flores la Valvanera Ltda.
Flores Lano Grande Ltda.
Flores las Plamas Ltda.
Flores las Caicas-Davila Arbelaez Cia S.S.
Flores los Rosales Ltda.
Flores Marandua Ltda.
Flores Maria Elisa Ltda.
Flores Monserrate Ltda.
Flores Moungar Ltda.
Flores Palimana
Flores Petaluma Ltda.
Flores Ramo Ltda.
Flores Ruizort
Flores San Carlos
Flores Santa Fe Ltda.
Flores Santa Rosa Ltda.
Flores Sausalito
Flores Sindamonoi Vod Ltda.
Flores Tairona Ltda.
Flores Tecnicas
Flores Tejas Verdes Ltda.
Flores Tenerife Ltda.
Flores Tiba Ltda.
Flores Tibati Ltda.
Flores Timana Ltda.
Flores Tocarinda Ltda.
Flores Tokay H.I.S.A.
Flores Tomine Ltda.
Flores Tropicales Ltda.
Floresa
Florex S.A.
Florexpo Ltda.
Floricola la Gaitana
Floricultores Asociados Lorena "Lorena Ltda."
Florinda Ltda.
Hacienda Curubital
Hacienda la Embarrada Ltda.
Happy Candy Ltda.
*51055
Happy Flowers
Horticuldura de La Sabana
Industrial Agricola Ltda.
Internacional de Flores Ltda. "Interflores"
Inverpalmas Ltda.
Inversiones Calipso S.A.
Ingro Ltda.
Inv. Cubivan Ltda.
Inv. Mejia Landucci y Cia S.C.
Inv. Rodaz Ltda.
Inverflores Ltda.
Inversiones Agricolas M.T. Ltda.
Inversiones Almer Ltda.
Inversiones Cota Ltda.
Inversiones el Bambu Ltda.
Inversiones Istra
Inversiones Kluar Ltda.
Inversiones Marcote Ltda.
Inversiones Maria Alejandra
Inversiones Miraflores Ltda
Inversiones Nativa Ltda.
Inversiones Patxi Ltda.
Inversiones Penas Blancas Ltda.
Inversiones Santa Rosa S.R.W. Ltda.
Inversiones Targa S.A.
Inversiones la Serena
Inversiones Santa Rita Ltda.
Iturrama S.A.
Jaramillo and Daza Ltda.
Jardines Bacata
Jardines Chuntame
Jardines de Chia Ltda.
Jardines de Colombia Ltda.
Jardines de los Andes
Jardines del Muna.
Jardines Fredonia Ltda.
Jardines la Aurora S.S.
Jardines la Florida Ltda.
Jardines Natalia Ltda.
Kingdom S.A.
La Fleurette de Colombia S.A.
La Nueva Rosa Ltda.
La Plazoleta Ltda.
Las Amalias S.A.
Las Flores Ltda.
Linda Colombia Ltda.
Los Geranios Ltda.
Mac Flowers Ltda.
Nahecha Bustos Humberto
Manrique Fajardo Luciano
Marketing and Trade Company Ltda.
Martinez Zurbachen & Cia
Medellin Ltda.
Mejia Sendoya y Cia Sen C.
M.G. Consultores Ltda.
Microplantas Ltda.
Monserrate Ltda.--Represent. E. Invers.
Monteverde Ltda.
Multiflores Ltda.
Orquideas Acatayma Ltda.
Petalos de Colombia Ltda.
Pineros Putman Enrique
Pisochago Ltda.
Plantaciones Delta Ltda.
Plantas Ornamentales del Col.
Plantas S.A.
Pompones Ltda.
Productos el Rosal Ltda.
Rincon Diaz Olga Paulina
Rocicler Ltda.
Roselandia Ltda.
Rosaflor Ltda.
Rosales de Colombia "Rosalco"
Rosas Colombianas Ltda.
Rosas de Colombia Ltda.
Rosas de Exportacion "Rosex"
Rosas el Juncal Ltda.
Rosas Sabanilla
Rosas Sausalito Ltda.
Rosas y Flores Ltda.
Rosas y Jardines del Tropico Ltda.
Roses Tesalia
Royal Carnation
Sandra Patricia Rey
Sansa Flowers Ltda.
Santa Helena S.A.
Santana Flowers Ltda.
Sociedad Arawac S.A.
Sun Flowers Ltda.
Sunset Farms Ltda.
Super Rosas Ltda.
Taganga Ltda.
Tec. Agricola Ganadera Tag Ltda.
Tecniflores Ltda.
Tegeiro Repres. Internales. "Terinter"
The Beall Company
Tropiflora Ltda.
Tuchany S.A.
Universal de Flores Ltda.
Universal Flowers
Velez de Monchaux e Hijos y Cia S. en C.
Villa Diana Ltda.
[FR Doc. 89-28953 Filed 12-11-89; 8:45 am]
BILLING CODE 3510-DS-M