NOTICES

                        DEPARTMENT OF COMMERCE

                    International Trade Administration

                               [C-427-016]

     Industrial Nitrocellulose From France; Preliminary Results of Countervailing
     Duty Administrative Review and Intent to Revoke Countervailing Duty Order

                          Friday, December 2, 1988

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 AGENCY: International Trade Administration/Import Administration,
 Commerce.

 ACTION: Notice of preliminary results of countervailing duty administrative review
 and intent to revoke countervailing duty order.

 SUMMARY: The Department of Commerce has conducted an administrative review of the
 countervailing duty order on industrial nitrocellulose from France. We preliminarily
 determine the net subsidy to be 0.12 percent ad valorem for the period January 1, 1986
 through December 31, 1986, 0.09 percent ad valorem for the period January 1, 1987
 through December 31, 1987 and 0.06 percent ad valorem for the period January 1, 1988
 through March 10, 1988, rates we consider de minimis. As a result of the review, we
 intend to revoke the countervailing duty order. We invite interested parties to
 comment on these preliminary results.

 EFFECTIVE DATE: December 2, 1988.

 FOR FURTHER INFORMATION CONTACT:Lorenza Olivas or Bernard Carreau, Office of
 Countervailing Compliance, International Trade Administration, U.S. Department
 of Commerce, Washington, DC 20230; telephone: (202) 377-2786.

 SUPPLEMENTARY INFORMATION: .

 Background

 On March 10, 1988, the Department of Commerce ("the Department") published in the
 Federal Register (53 FR 7776) the preliminary results of administrative review and
 tentative determination to revoke the countervailing duty order on industrial
 nitrocellulose from France (48 FR 28521, June 22, 1983). On April 28, 1988, the
 Department published in the Federal Register (53 FR 15267) the final results of its
 administrative review of the countervailing duty order. In accordance with 19 CFR
 355.42, the revocation will be effective as of the date of publication of the notice of
 tentative determination to revoke. Therefore, in accordance with 19 CFR 355.42(f), we
 have conducted a review of the period January 1, 1986 through March 10, 1988--the
 period between the end of the minimum two-year period of no net subsidy and the
 tentative determination to revoke, since the dispositive date for establishing a two-year
 period of no net subsidy is the date of publication of the order.

 Scope of Review

 The United States has developed a system of tariff classification based on the international
 harmonized system of Customs nomenclature. On January 1, 1989, the U.S. tariff
 schedules will be fully converted to the Harmonized Tariff Schedule (HTS). All
 merchandise entered, or withdrawn from warehouse, for consumption on or after this
 date will be classified solely according to the appropriate HTS item number(s). Until that
 time, however, the Department will be providing both the appropriate Tariff Schedules of
 the United States Annotated (TSUSA) item number(s) and the appropriate HTS item
 number(s) with our product descriptions. As with the TSUSA, the HTS item number(s) are
 provided for convenience and Customs purposes. The written description remains
 dispositive.
 We are requesting petitioners to include the appropriate HTS item number(s) as well as
 the TSUSA item number(s) in all new petitions filed with the Department. A reference
 copy of the HTS schedule is available for consultation at the Central Records Unit, Room
 B-099, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW.,
 Washington, DC 20230. Additionally, all Customs offices have reference copies, and
 petitioners may contact the Import Specialist at their local Customs office to consult the
 schedule.
 Imports covered by this review are shipments of French industrial nitrocellulose
 containing between 10.8 percent and 12.2 percent nitrogen, not explosive grade
 nitrocellulose which contains over 12.2 per cent nitrogen. 

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 Industrial
 nitrocellulose is a dry, white, amorphous, synthetic chemical produced by the action of
 nitric acid on cellulose. Industrial nitrocellulose comes in several viscosities and is used
 to form films in lacquers, coatings, furniture finishes and printing ink. Such merchandise
 is currently classifiable as cellulosic plastic materials, other than cellulose acetate, under
 item 445.2500 of the TSUSA and item 3912.20.00 of the HTS.
 The review covers the period January 1, 1986 through March 10, 1988, and nine
 programs: (1) A grant from DATAR; (2) the assumption of labor costs for civil servants;
 (3) research and development assistance; (4) financing from the Fonds de Developpement
 Economique et Social; (5) loans from Credit National; (6) financing from the Caisse des
 Depots et Consignations; (7) loans from the Ministry of Research and Industry; (8) a grant
 from the Ministry of Defense; and (9) government equity infusions. Societe Nationale des
 Poudres et Explosifs ("SNPE") is the only known French producer and exporter of this
 merchandise to the United States.

 (1) DATAR Grant

 The Delegation a 1'Amenagement du Territoire et a 1'Action Regionale ("DATAR")
 coordinates the programs of various government agencies that provide incentives to
 establish or expand businesses in certain regions of France. SNPE received a grant from
 DATAR in 1979 to improve the production facilities and general infrastructure of the
 Bergerac plant, where industrial nitrocellulose is produced. Because grants received from
 DATAR provide benefits to specific regions, we preliminarily determine that this program
 constitutes a subsidy.
 To calculate the benefit, we applied a declining balance methodology and allocated the
 grant over 10 years, the average useful life of assets in the nitrocellulose industry,
 according to the Asset Guideline Classes of the Internal Revenue Service. We used as the
 discount rate the 1979 national average corporate bond rate in France (as reported in
 Morgan Guaranty Trust Company's World Financial Markets) because we have no
 information on SNPE's weighted cost of capital for that year. On this basis, we
 preliminarily determine the benefit from this program to be 0.03 percent ad valorem for
 the period January 1, 1986 through December 31, 1986, 0.03 percent ad valorem for the
 period January 1, 1987 through December 31, 1987, and 0.03 percent ad valorem for the
 period January 1, 1988 through March 10, 1988.

 (2) Assmption of Labor Costs for Civil Servants

 Some employees of SNPE retain government civil service status ("status employees") as a
 result of the company's change from a government agency to a government-owned
 private corporation in 1971. SNPE is responsible for paying the wages and benefits of all
 its employees. In general, SNPE's contribution for certain nonwage benefits, such as
 health insurance, pensions, and unemployment insurance, is lower for its status
 employees than for other employees. Because the French government assumes part of
 SNPE's contributions for status employees, we preliminarily determine that this program
 constitutes a subsidy.
 To calculate the benefit, we took the average annual difference between SNPE's nonwage
 benefits for status employees and those for other employees and multiplied that amount
 by the number of status employees involved in industrial nitrocellulose production. We
 allocated the result over total sales of industrial nitrocellulose during the period of
 review. On this basis, we preliminarily determine the benefit from this program to be 0.09
 percent ad valorem for the period January 1, 1986 through December 31, 1986, 0.06
 percent ad valorem for the period January 1, 1987 through December 31, 1987, and 0.03
 percent ad valorem for the period January through March 10, 1988.

 (3) Other Programs

 We also examined the following programs and preliminarily determine that SNPE did not
 use them during the period of review:
 (a) Research and development assistance;
 (b) Financing from the Fonds de Developpement Economique et Social;
 (c) Preferential loans from Credit National;
 (d) Financing from the Caisse des Depots et Consignations;
 (e) Loans from the Ministry of Research and Industry;
 (f) Grants from the Ministry of Defense; and,
 (g) Government equity infusions.

 Preliminary Results of Review and Intent to Revoke

 As a result of our review, we preliminarily determine the net subsidy to be 0.12 percent
 ad valorem for the period January 1, 1986 through December 31, 1986, 0.09 percent ad
 valorem for the period January 1, 1987 through December 31, 1987, and 0.06 percent ad
 valorem for the period January 1, 1988 through March 10, 1988. The Department
 considers any rate less than 0.50 percent ad valorem to be de minimis.
 The Department therefore intends to instruct the Customs Service to liquidate, without
 regard to countervailing duties, all entries of this merchandise exported on or after
 January 1, 1986 and entered, or withdrawn from warehouse, for consumption on or
 before March 9, 1988. If the revocation is made final, the Department intends to instruct
 the Customs Service to terminate the suspension of liquidation requirement and to refund
 any cash deposits made on merchandise entered, or withdrawn from warehouse, for
 consumption on or after March 10, 1988.
 SNPE has requested that the Department revoke the countervailing duty order based
 on the absence of a net subsidy for at least two years, as provided in 19 CFR 355.42(b). In
 our last review (53 FR 15267, April 28,1988), we determined that SNPE received de
 minimis benefits for at least a two-year period. According to 19 CFR 355.42(f), a
 revocation will be effective with respect to all merchandise entered, or withdrawn from
 warehouse, for consumption on or after the date of publication of the notice of tentative
 determination to revoke, provided that the firm involved provides information showing
 no receipt of a net subsidy up to the date of the notice of tentative determination to
 revoke.
 Because we have found de minimis benefits for the current review period, which extends
 through March 10, 1988, the date of publication of the tentative determination to revoke,
 we intend to revoke the countervailing duty order. If the revocation is made final, it
 will apply to all unliquidated entries of this merchandise entered, or withdrawn from
 warehouse, for consumption on or after March 10, 1988.
 Interested parties may submit written comments on these preliminary results and intent
 to revoke 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 30 days from the date of publication, or the first workday
 afterwards. 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
 this administrative review and its decision on revocation, including the results of its
 analysis of issues raised in any such written comments or at a hearing.

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 This administrative review, intent to revoke, and notice are in accordance with
 section 751 (a)(1) and (c) of the Tariff Act (19 U.S.C.1675 (a)(1) and (c)) and §§ 355.41 and
 355.42 of the Commerce Regulations (19 CFR 355.41 and 355.42).
 Date: November 25, 1988.

 Jan W. Mares,

 Assistant Secretary for Import Administration.

 [FR Doc. 88-27818 Filed 12-1-88; 8:45 am]

 BILLING CODE 3510-05-M