55 FR 46703
NOTICES
INTERNATIONAL TRADE ADMINISTRATION
[C-508-601]
Oil Country Tubular Goods From Israel; Final Results Of Countervailing Duty
Administrative Review
Tuesday, November 6, 1990
AGENCY: International Trade Administration/Import Administration Commerce.
ACTION: Notice of final results of countervailing duty administrative review.
SUMMARY: On June 13, 1989, the Department of Commerce published the preliminary results of
its administrative review of the countervailing duty order on oil country tubular goods from
Israel. We have now completed that review and
determine the net subsidy to be 4.30 percent ad valorem for the period June 11, 1986 through
December 31, 1986 and 4.30 percent ad valorem for the period January 1, 1987 through December
31, 1987.
EFFECTIVE DATE: November 6, 1990.
FOR FURTHER INFORMATION CONTACT: Lorenza Olivas or Maria MacKay, Office of
Countervailing Compliance, International Trade Administration, U.S. Department of
Commerce, Washington, DC. 20230; telephone: (202) 377-2786.
SUPPLEMENTARY INFORMATION:
Background
On June 13, 1989, the Department of Commerce (the Department) published in the Federal Register
(54 FR 25l45) the preliminary results of its administrative review of the countervailing duty
order on oil country tubular goods from Israel (52 FR 6999; March 6, l987). The Department
has now completed that administrative review in accordance with section 75l of the Tariff Act of
1930 (the Tariff Act).
Scope of Review
Imports covered by the review are shipments of Israeli oil country tubular goods (OCTG), in both
finished and unfinished condition. OCTG consists of hollow steel products of circular cross-section
intended for use in drilling for oil or gas. These products include oil well casing and tubing, of
carbon or alloy steel, whether welded or seamless, manufactured to either American Petroleum
Institute (API) or non-API (such as proprietary) specifications. During the review period such
merchandise was classifiable under the following "Tariff Schedules of the United States Annotated"
(TSUSA) item numbers:
610.3216
610.3219
610.3233
610.3234
610.3242
610.3243
610.3249
610.3252
610.3254
610.3256
610.3258
610.3262
610.3264
610.3721
610.3722
610.3751
610.3925
610.4025
610.4035
610.4210
610.4220
610.4225
610.4230
610.4235
610.4240
610.4310
610.4320
610.4325
610.4335
610.4942
610.4944
610.4954
610.4955
6104956
610.4957
610.4966
610.4967
610.4968
610.4969
610.4970
610.5221
610.5222
610.5234
610.5240
610.5242
610.5243
610.5244
This merchandise is currently classifiable under the following "Harmonized Tariff Schedule" (HTS)
item numbers:
7304.20.10.00
7304.20.20.00
7304.20.30.00
7304.20.40.00
7304.20.50.10
7304.20.50.50
7304.20.60.10
7304.20.60.50
7305.20.20.00
7305.20.40.00
7305.20.60.00
7305.20.80.00
7306.20.10.30
7306.20.10.90
7306.20.20.00
7306.20.30.00
7306.20.40.10
7306.20.60.10
7306.20.80.10
7306.20.80.50
The TSUSA and HTS item numbers are provided for convenience and Customs purposes. The
written description remains dispositive.
The review covers the period June 11, 1986 through December 31, 1987 and eighteen programs:
(1) Investment Grants under the Encouragement of Capital Investment Law (ECIL)
(2) Insurance from Israel Foreign Trade Risk Insurance Corporation (IFTRIC)
(3) Long-term Industrial Development Loans
(4) Bank of Israel Export Loans
(5) Export Production Fund (EPF)
(6) Export Shipment Fund (ESF)
(7) Import-for-Export Fund (IEF)
(8) Dividends and Interest Tax Benefits Under Section 46 of the ECIL
(9) Drawback Grants
(10) ECIL Interest Subsidy Payments
(11) ECIL Loans
(12) ECIL Preferential Accelerated Depreciation
(13) Encouragement of Industrial Research and Development Law
(14) Equity Maintenance Allowance
(15) Labor Training Grants
(16) Special Export Financing
(17) Reduced Corporate and Income Tax Rates Under Section 47 of the ECIL
(18) Tax Deductible Inventory Adjustment
The only known exporter of OCTG to the United States during the period of review was Middle East
Tube Co. (METCO).
Analysis of Comments Received
We gave interested parties an opportunity to comment on the preliminary results. We received
comments from Lone Star Technologies, Inc., and CF&I Steel Corporation, petitioners, and from
METCO.
Comment 1: Petitioners contend that the Department's method of calculating the benefit from the
Exchange Rate Risk Insurance Scheme (EIS) operated by the Israel Foreign Trade Risk
Insurance Corporation (IFTRIC) is erroneous. Petitioners claim that item (j) of the Illustrative List
of Exports Subsidies, annexed to the "Agreement on Interpretation and Application of Articles VI,
XVI and XXIII of the General Agreement on Tariffs and
*46704
Trade" (the Subsidies Code), not only gives guidance for identifying a subsidy but describes the
most accurate measurement of the subsidy; item (j) requires the Department to compare the prices
charged for the good or service in question to a benchmark price. Specifically, the benefit should
be the difference between the premiums paid by the recipient and the premiums that the recipient
would have paid if total premiums collected equaled the program's operating costs and losses.
Since the provision of insurance by a government is no different from the provision of any other
service, the Department should calculate the benefit from EIS according to the methodology
prescribed under § 355.44(f)(2) of "Countervailing Duties; Notice of Proposed Rulemaking
and Request for Public
Comments" (54 FR 23366; May 3l, 1989). Petitioner further contends that under this section, which
requires the Department to consider alternative benchmarks, the most appropriate benchmark is
the government's cost of providing this service. This benchmark is appropriate for export
insurance programs when their premiums are below the cost of providing the insurance coverage.
The respondent, on the other hand, argues that the Department was correct in using the
methodology prescribed under 355.44(d) of the proposed rulemaking, which explicitly sets forth
the methodology for measuring the benefit from an export insurance program like EIS.
Furthermore, the methodology not only is consistent with the Department's current practice but
also measures the precise benefit received by the firm. Respondent further contends that the
methodology set forth under 355.44(f) of the proposed rulemaking applies only to domestic
programs and points out that, although the cost approach advocated by the petitioner in this
instance has been proposed by the Department under § 355.44(f)(2) as one means of measuring
preferentiality under domestic programs, it is to be used only if better methods are unavailable.
Because the benefit can be directly measured, the Department should not use such a surrogate
method.
Department's Position: The Department considers the benefits from a subsidy program to be the
benefit to the recipient. Based on this standard, which is consistent with past practice in calculating
the benefit from the EIS, the
Department measures the actual benefit to a company by looking at the difference between what
the company paid into the program and what it received in return. See, "Final Affirmative
Countervailing Duty Determination; Industrial Phosphoric Acid from Israel" (52
FR 25447; July 7, 1987); "Final Affirmative Countervailing Duty Determination; Certain
Fresh Cut Flowers from Israel" (52 FR 3317; February 3, 1987); and "Fresh Cut Roses From
Israel; Preliminary Results of Countervailing Duty Administrative Review" (54 FR
10395; March 13, l989). With our methodology, we can precisely measure the benefit on exports of
the subject merchandise to the United States as a result of the respondent's participation in this
program. This methodology has also been incorporated in § 355.44(d) of the proposed rulemaking,
which explicitly sets forth our standard for determining whether a government export insurance
program provides a countervailable benefit.
Comment 2: Petitioners disagree with the Department's reliance on "Final Affirmative
Countervailing Duty Determination; Industrial Phosphoric Acid from Israel" (52
FR 24447; July 7, 1987) in determining that short-term financing from the Export Production
Fund, Export Shipment Fund and the Import-for-Export Fund was not countervailable. In that
determination, the Department found that Israel's foreign currency export loans were not
provided at preferential rates after July 1, 1985. Petitioner claims that the Department should have
determined whether METCO continued to have access to short-term foreign
currency financing from foreign sources and whether financing received was at preferential rates
during the period of review. To the extent that METCO paid a premium on non-subsidized loans, the
appropriate benchmark should reflect the same premium. If METCO had no unsubsidized
short-term loans during the period of review, the benchmark should then reflect lending to firms in
the same risk category.
The respondent, on the other hand, states that the Department had already found that Bank of
Israel export loans made under the same programs as those under review were not
countervailable. Therefore, the burden is on the petitioners to present new evidence establishing
that these programs had changed and the prior determinations were no longer applicable. In the
absence of such evidence or new allegations, the Department correctly relied on earlier cases to
find these programs not to be countervailable. Furthermore, the respondent states that the use of a
company-specific benchmark for short-term loans is contrary to the Department's practice of using
a national average benchmark to measure the benefit from short-term loans.
Department's Position: Generally, we do not reinvestigate programs previously found not
countervailable unless there is evidence of a change in that program or its application. In
"Industrial Phosphoric Acid from Israel," we determined that short-term export loans
provided by the Bank of Israel under the Export Production Fund, Export Shipment Fund and
the Import-for-Export Fund programs
were not countervailable after July 1985. Petitioners did not provide any new evidence to indicate
that the terms of these programs had changed and that new benefits were provided during the
period of review. Because we did not reinvestigate this program, the issue of the appropriate
benchmark is moot.
Final Results of Review
After considering the comments received, we determine the net subsidy to be 4.30 percent ad
valorem for the period June 11, 1986 through December 31, 1986 and 4.30 percent ad valorem for
the period January 1, 1987 through December 31, 1987.
Section 707 of the Tariff Act provides that the difference between the amount of a cash deposit, or
the amount of any bond or security, for an estimated countervailing duty and the duty
determined under a countervailing duty order shall be disregarded to the extent that the
estimated duty is lower than the duty determined under the order, which was published on March
6, 1987. The rate in our preliminary determination (51 FR 21201; June 11, 2986) was 2.12 percent
ad valorem.
In accordance with section 705(a)(1) of the Tariff Act, the final determination in this case was
extended to coincide with the final antidumping determination on the same products from
Israel. Because, pursuant to Article
5.3 of the Subsidies Code, we cannot require suspension of liquidation for more than 120 days
without the issuance of a countervailing duty order, we terminated the suspension of
liquidation on the subject merchandise entered, or withdrawn from warehouse, for consumption
on or after October 9, 1986. We reinstated the suspension of liquidation and required the collection
of cash deposits of estimated countervailing duties for the subject merchandise entered, or
withdrawn from warehouse, for consumption on or after March 6, 1987, the date of publication of
the countervailing duty order.
Therefore, the Department will instruct the Customs Service to assess
*46705
countervailing duties of 2.12 percent of the f.o.b. invoice price on all shipments of this
merchandise entered, or withdrawn from warehouse, for consumption on or after June 11, 1986
and on or before October 8, 1986. Entries or withdrawals made on or after October 9, 1986 and or
before March 5, 1987 are not subject to countervailing duties. Further, the Department will
instruct the Customs Service to assess countervailing duties of 4.30 percent of the f.o.b.
invoice price on all shipments of this merchandise entered, or withdrawn from warehouse, for
consumption on or after March 6, 1987 and exported on or before December 31, 1987.
The Department will also instruct the Customs Service to collect a cash deposit of estimated
countervailing duties of 4.30 percent of the f.o.b. invoice price on all shipments of this
merchandise entered, or withdrawn from
warehouse, for consumption on or after the date of publication of the final results of this
administrative review. This deposit requirement will 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 355.22.
Dated: October 1, 1990.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 90-26185 Filed 11-5-90; 8:45 am]
BILLING CODE 3510-DS-M