NOTICES
DEPARTMENT OF COMMERCE
[C-301-003, C-301-601]
Roses and Other Cut Flowers from Colombia; Miniature Carnations from Colombia:
Preliminary Results of Countervailing Duty Administrative Reviews of Suspended
Investigations
Friday, March 8, 1996
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AGENCY: Import Administration, International Trade Administration,
Commerce.
ACTION: Notice of Preliminary Results of Countervailing Duty Administrative
Reviews and Intent To Terminate Suspended Investigations.
SUMMARY: The Department of Commerce (the Department) is conducting administrative
reviews of the agreements suspending the countervailing duty investigation on roses
and other cut flowers (roses) from Colombia and the countervailing duty
investigation on miniature carnations (minis) from Colombia. Termination of these two
cases has been requested by the Government of Colombia ("GOC") pursuant to 19 CFR
355.25(a)(2) and the procedures specified in 19 CFR 355.25(b)(2), and by certain
producers and exporters of subject merchandise pursuant to 19 CFR 355.25(a)(3) and the
procedures specified in 19 CFR 355.25(b)(3) in the event the Department denies the GOC's
request to terminate. These reviews cover the period of review ("POR") January 1, 1994,
through December 31, 1994, and eleven programs. We preliminarily determine that the
GOC and the producers/exporters of roses and minis have complied with the terms of the
suspension agreements. We also preliminarily determine that the producers/exporters of
subject merchandise have not used any program under review for a period of at least five
consecutive years. Additionally, we preliminarily determine that the GOC and
producers/exporters of the subject merchandise (respondents) have provided sufficient
evidence for the Department to determine that it is likely that producers/exporters of
subject merchandise will not in the future apply for or receive any net subsidy on the
subject merchandise from those programs the Department has found countervailable in
any proceeding involving Colombia or from other countervailable programs. Therefore,
we preliminarily determine that respondents have met the requirements for termination
of the countervailing duty suspended investigation on roses and other cut flowers and
on miniature carnations as outlined in the Commerce Regulations.
We invite interested parties to comment on these results. Parties who submit arguments
in this proceeding are requested to submit with any argument (1) a statement of the issue
and (2) a brief summary of the argument.
EFFECTIVE DATE: March 8, 1996.
FOR FURTHER INFORMATION CONTACT: Rick Johnson or Jean Kemp, Office of
Agreements Compliance, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue,
NW., Washington, DC 20230, telephone: (202) 482-3793.
SUPPLEMENTARY INFORMATION:
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute and to the Department's regulations
are in reference to the provisions as they existed on or after January 1, 1995, the effective
date of amendments made to the Tariff Act in accordance with the Uruguay Round
Agreements Act.
Background
On January 12, 1995, the Department published in the Federal Register (60 FR 2941) a
notice of "Opportunity to Request an Administrative Review" for the 1994 review period.
On January 31, 1995 the GOC and the Colombian Association of Flower Exporters
(Asocolflores) requested administrative reviews of the suspended countervailing duty
investigations covering roses and
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minis for the 1994 period. On April 14, 1995, the
Department initiated these reviews (60 FR 19017, 19018). The Department is now
conducting these reviews in accordance with section 751 of the Tariff Act of 1930, as
amended (the Tariff Act), and 19 CFR 355.22.
Scope of Review
The products covered by these administrative reviews constitute two separate "classes or
kinds" of merchandise: roses and minis from Colombia. During the POR, such
merchandise covered by these suspension agreements was classifiable under Harmonized
Tariff Schedule (HTS) item numbers 0603.10.60, 0603.10.70, 0603.10.80, and
0603.90.00 for roses, and 0603.10.30 for minis. The HTS item numbers are provided for
convenience and Customs purposes only. The written descriptions remain dispositive.
These reviews of the suspended investigations involve approximately 600 Colombian
flower producers/exporters of roses, over 100 Colombian flower producers/exporters of
minis, and the GOC. The suspension agreement for minis covers ten programs: (1)
BANCOLDEX (funds for the promotion of exports); (2) Plan Vallejo; (3) Instituto de
Fomento Industrial (IFI); (4) Fondo Financiero de Proyectos de Desarrollo (FONADE); (5)
Financiero de Desarrollo Territorial (FINDETER); (6) Tax Reimbursement Certificate
Program ("CERT"); (7) Free Industrial Zones; (8) Export Credit Insurance; (9)
Countertrade; and (10) Research and Development. The suspension agreement for roses
covers the ten programs listed above, as well as (11) Air Freight Rates.
Verification
As provided in Section 776(b) of the Tariff Act, we verified information provided by the
respondents by using standard verification procedures, including inspection of programs
at the appropriate administering agencies, onsite inspection of the manufacturers'
facilities, the examination of relevant sales and financial records, and selection of original
documentation containing relevant information. We verified the responses from four
producers/exporters of both classes or kinds of merchandise under review for the period
January 1, 1994 to December 31, 1994: Flores Condor de Colombia, Ltda, Flores Las
Palmas, S.A., Splendid Flowers, Ltda, and Flores del Rio, S.A. Our verification results are
outlined in the public versions of the verification reports.
Analysis of Programs
We examined the following programs subject to the terms of the suspension agreements:
(1) BANCOLDEX
There are six major BANCOLDEX credit lines: Short-term working capital Colombian peso
(peso) loans; medium-term working capital peso loans; short- and long-term working
capital U.S. dollar (dollar) loans; long-term capitalization peso loans; long-term
capitalization dollar loans; and long-term fixed investment loans. In accordance with
Departmental practice, we will treat medium-term working capital peso loans as
long-term working capital peso loans.
Under the terms of the suspension agreements, Colombian flower exporters will not apply
for, or receive any export financing from BANCOLDEX other than that offered on
non-preferential terms, and at or above the established Department benchmark interest
rates. For the period of review, the benchmark interest rates in effect for minis were
nominal Depositos a Termino Fijo (DTF)+ 1 for short-term peso loans, and nominal
DTF+1+.25/year for long-term loans. See Miniature Carnations from Colombia; Final
Results of Countervailing Duty Administrative Review (1989), 56 FR 14240 (April 8,
1991). For roses for the period of review, the benchmark interest rates in effect were
22.5% for short- term peso loans and 21% for long-term peso loans. See Roses and Other
Cut Flowers from Colombia; Final Results of Countervailing Duty Administrative
Review and Revised Suspension Agreement (1983), 51 FR 44930, 44932 (December 15,
1986). There was no applicable benchmark for U.S. dollar loans for the POR.
Colombian Peso Loans
At verification, we examined GOC documents and confirmed that BANCOLDEX charged
interest rates on its short- and long-term peso loans above the established Department
benchmark interest rates in effect during the POR. In addition, we found that BANCOLDEX
issued the loans on non-preferential terms. We also examined the four companies'
accounting records which confirmed that the companies received BANCOLDEX peso
loans for the subject merchandise on non- preferential terms and at interest rates at or
above the established Department benchmark rates for exports of the subject
merchandise to the United States and Puerto Rico in effect during the POR. Therefore, we
preliminarily determine that BANCOLDEX did not confer any countervailable benefits
upon exports of the subject merchandise to the United States and Puerto Rico during the
POR. We also preliminarily determine that no countervailable loans under the
BANCOLDEX loan program have been used by exporters of the subject merchandise for a
period of five consecutive years.
U.S. Dollar Loans
For the period of review, there were no applicable benchmark interest rates for U.S.
dollar loans. However, for the purposes of determining whether termination of the
suspension agreement is appropriate, we examined whether BANCOLDEX conferred any
countervailable benefits upon exports of the subject merchandise to the United States
and Puerto Rico during the POR with regard to BANCOLDEX U.S. dollar-denominated
loans. We preliminarily determine that BANCOLDEX did not confer any countervailable
U.S. dollar loans on subject merchandise during the POR (See Memorandum to the File,
February 28, 1996). We also preliminarily determine that no countervailable loans under
the BANCOLDEX loan program have been used by exporters of the subject merchandise
for a period of five consecutive years.
(2) Plan Vallejo
Plan Vallejo was established in 1967 under decree 444. Its purpose is to exempt
exporters from certain indirect taxes and customs duties assessed on imported capital
equipment used to produce finished products for export. The Instituto Colombiano de
Comercio Exterior (INCOMEX) administers the Plan Vallejo program.
Under the terms of the suspension agreements, Colombian flower exporters will not apply
for or receive any benefits from duty and tax exemptions for capital equipment under
Plan Vallejo for exports of the subject merchandise to the United States and Puerto Rico.
At verification, we examined the GOC's documentation and confirmed that this program
was not used by the exporters of the subject merchandise for exports to the United States
and Puerto Rico during the POR. Also, GOC officials stated that, during the POR, no flower
exporter applied for Plan Vallejo benefits. Therefore, we preliminarily determine that this
program has not been used for subject merchandise for a period of five consecutive years.
In addition, we verified that the four companies we examined at verification did not use
the program for capital equipment during the POR. Therefore,
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we preliminarily
determine that this program did not confer any countervailable benefits upon exports of
the subject merchandise to the United States and Puerto Rico during the POR. In addition,
we preliminarily determine that Plan Vallejo has been abolished for the subject
merchandise in Resolution 2386 because flower exporters are ineligible to receive
benefits for exports to the United States and Puerto Rico.
(3) Instituto de Fomento Industrial (IFI) Loans
The Instituto de Fomento Industrial, or Institute for the Promotion of the Industrial
Sector, is a branch of the Colombian Ministry of Economic Development. It provides
financing to all sectors of the Colombian economy and to large and small companies.
Companies with assets above 1.25 billion pesos may borrow directly from IFI, while
smaller companies may borrow funds from IFI which are rediscounted through financial
intermediaries.
Two IFI credit lines are available only to exporters. These include a credit line for new
exporters and relocation of export enterprises, and the ANDEAN Trade Preference Act
("ATPA") line of credit. The other IFI credit lines are available to all enterprises. These
include a commercial sector line of credit, a line of credit for free zones, a line of credit for
working capital, a line of credit for capital equipment, a capitalization line of credit,
ordinary resource loans, a line of credit for motel and tourist projects, and a line of credit
for market studies. Loans are available in both pesos and dollars.
Loan terms and rates vary by credit line and length of the loan. Fixed asset dollar loans
are available for five-year terms at LIBOR plus five percentage points. Peso working
capital loans are available for terms of up to three years at the tasa de captacio1n para
corporacio1nes ("TCC") plus five percentage points. Long-term peso loans are available
for terms up to seven years at TCC plus six percentage points plus a 0.25 percent point for
each additional year after the fifth. ATPA loans are available in pesos for up to four years
at TCC plus five percentage points for working capital loans and for terms of up to twelve
years for fixed asset peso loans at TCC plus five percentage points plus a 0.25 percent
point for each year after the fifth. In addition, ATPA fixed asset loans are available in
dollars at LIBOR plus five percentage points plus 0.25 for each year after the fifth.
We verified that the non-export lines of credit provided by IFI were granted to a broad
range of Colombian industry sectors including: agriculture, mining, textiles, metallic
products, financial establishments, and chemicals, rubber and plastics. Therefore, we
preliminarily determine that IFI's non- export lines of credit are not provided to a
specific enterprise or industry or group thereof and, therefore, are not countervailable.
Furthermore, we verified that no Colombian flower exporters received loans under the
two export credit lines during the POR. We preliminarily determine that the GOC and the
Colombian flower exporters of the subject merchandise were in compliance with the
suspension agreements because IFI's export credit lines were not used by Colombian
flower exporters of the subject merchandise during the POR. As we noted in Roses and
Other Cut Flowers From Colombia; Miniature Carnations From Colombia; Preliminary
Results of Countervailing Duty Administrative Reviews of Suspended Investigations
(60 FR 42535, 42538, August 16, 1995) (1993 review), because flower exporters of the
subject merchandise were eligible to apply for and receive IFI's export credit lines, the
same short- and long-term benchmarks as for BANCOLDEX peso financing applied for the
POR (See Section 1 above).
At verification, we determined that Colombian flower exporters did not apply for or
receive any IFI short- and long-term export credits for the subject merchandise to the
United States and Puerto Rico. Therefore, we preliminarily determine that IFI loans did
not confer any countervailable benefits upon exports of the subject merchandise to the
United States and Puerto Rico during the POR. Although no loans at preferential rates
were received by exporters of the subject merchandise, the program itself has not been
abolished. Rather, the above scenario constitutes non-use of the program. Therefore, we
preliminarily determine that IFI's export credit line program has not been used by
exporters of the subject merchandise for the period of review. We also preliminarily
determine that exporters of the subject merchandise have not received countervailable
loans under this IFI program since the Department began examining this program, in the
1993 review.
(4) Fondo Financiero de Proyectos de Desarrollo (FONADE)
FONADE is an industrial and commercial state entity owned by the National Department
of Planning. FONADE finances feasibility studies on pre-investment projects that are not
conditioned on exporting. The main client is the National Institute for Road
Development. At verification, we found no evidence that Colombian flower
producers/exporters of the subject merchandise applied for or received financing from
FONADE during the POR. Therefore, we preliminarily determine that FONADE's financing
was not used by Colombian flower producers/exporters of the subject merchandise
during the POR. Furthermore, we preliminarily determine that FONADE financing has not
been used by producers/exporters of the subject merchandise since the Department
began examining this program, in the 1993 review.
(5) Financiera de Desarrollo Territorial (FINDETER)
The Department has previously found Financiera de Desarrollo Territorial ("FINDETER")
financing to be not countervailable for exports of the subject merchandise (Roses and
Other Cut Flowers from Colombia; Miniature Carnations From Colombia; Preliminary
Results of Countervailing Duty Administrative Reviews of Suspended Investigations,
60 FR 42535-38, August 16, 1995). For the current review, the Department has examined
this program and preliminarily finds it to be unchanged and therefore not countervailable
for the subject merchandise.
Other Programs
In past reviews, the Department has found the following programs to have been abolished
for the subject merchandise for a period of at least three consecutive years (see, infra,
Roses and Other Cut Flowers from Colombia; Preliminary Results of Countervailing
Duty Administrative Review and Intent Not To Terminate Suspended Investigation, 58
FR 52272-5, October 7, 1993; Miniature Carnations From Colombia; Preliminary
Results of Countervailing Duty Administrative Review and Intent Not To Terminate
Suspended Investigation, 58 FR 52269-72, October 7, 1993):
(6) Tax Reimbursement Certificate Program ("CERT");
(7) Free Industrial Zones;
(8) Export Credit Insurance;
(9) Countertrade; and
(10) Research and Development.
For the current review, the Department has examined these programs and verified that
they are unchanged from earlier reviews. Therefore, they remain abolished for the
subject merchandise.
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Program Specific to the Suspension Agreement on Roses and Other Cut Flowers
(11) Air Freight Rates
The Civil Aeronautics Board (Departmento Administrativo de la Aeronautica Civil,
hereafter referred to as "DAAC") is the government agency that develops, maintains and
regulates air transport and air space activities.
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 the
government-mandated maximum rates set by the DAAC because such rates might be
indicative of government control rather than the result of competitive forces.
We preliminarily determine that this program did not confer any countervailable benefits
upon exports of the subject merchandise to the United States and Puerto Rico during the
POR. Although no subsidies were received by exporters of the subject merchandise
through this program, the program establishing minimum and maximum rates itself has
not been abolished. Rather, the above scenario characterizes non-use of the program.
Therefore, we preliminarily determine that this program has not been used by exporters
of the subject merchandise for a period of five consecutive years.
Preliminary Results of Review
We preliminarily determine that the GOC and the producers/exporters of the subject
merchandise have complied with all the terms of the suspension agreements during the
period January 1, 1994 through December 31, 1994. We preliminarily determine that no
countervailable benefits have been bestowed on subject merchandise, and furthermore,
that producers/exporters of subject merchandise have not used the above programs for
at least five years (or, in the case of programs only recently created, for the life of the
program). Additionally, we note that the GOC has stated for the record that it will institute
or maintain appropriate measures to ensure that export loan programs will be
administered to guarantee that loans granted to recipients are comparable to commercial
loans that a flower producer/exporter could obtain in the market, such as those
alternative sources of financing available to agriculture in Colombia, and will not confer
any loan program countervailable subsidies on flower producers/exporters.
Furthermore, the GOC has certified that, for the subject merchandise, it shall not reinstate
those programs which the Department has found countervailable, and it shall not
substitute other countervailable programs. Finally, producers/exporters have certified
that they will not apply for or receive any net subsidy on exports to the United States of
subject merchandise from those programs that the Department has found countervailable
in any proceeding involving Colombia or from other countervailable programs.
Therefore, we preliminarily determine that the GOC and the producers/exporters
covered by this agreement have met the requirements for termination of the suspended
countervailing duty investigations on roses and other cut flowers and miniature
carnations, as required by 19 CFR 355.25.
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. Rebuttal briefs and rebuttals to written
comments, limited to issues in those comments, must be filed not later than 37 days after
the date of publication. Any hearing, if requested, will be held 44 days after the date of
publication or the first workday thereafter. 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 19 CFR 355.22.
Dated: February 28, 1996.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-5439 Filed 3-6-96; 8:45 am]
BILLING CODE 3510-DS-P