56 FR 50854
NOTICES
DEPARTMENT OF COMMERCE
[C-508-605]
Industrial Phosphoric Acid From Israel--Final Results of Countervailing Duty
Administrative Reviews
Wednesday, October 9, 1991
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AGENCY: International Trade Administration/Import Administration, Department of
Commerce.
ACTION: Notice of final results of countervailing duty administrative reviews.
SUMMARY: On June 7, 1991, the Department of Commerce published the preliminary results of its
administrative reviews of the countervailing duty order on
industrial phosphoric acid from Israel (56 FR 26389). We have now completed those
reviews and determine the net subsidy to be 19.46 percent ad valorem for Haifa Chemicals, Ltd.
and 9.18 percent ad valorem for all other firms during the period January 1, 1988 through
December 31, 1988. We determine the net subsidy to be 11.26 percent ad valorem for all firms
during the period January 1, 1989 through December 31, 1989.
EFFECTIVE DATE: October 9, 1991.
FOR FURTHER INFORMATION CONTACT: Cameron Cardozo 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 7, 1991, the Department of Commerce (the Department) published in the Federal Register
(56 FR 26389) the preliminary results of its administrative reviews of the countervailing duty
order on industrial phosphoric acid from Israel (52 FR 31057; August 19, 1987)
covering the periods January 1, 1988
through December 31, 1988 and January 1, 1989 through December 31, 1989. The Department has
now completed those administrative reviews in accordance with section 751 of the Tariff Act of
1930, as amended (the Tariff Act).
Scope of Review
Imports covered by these reviews are shipments of Israeli industrial phosphoric acid. During
the 1988 review period, this merchandise was classifiable under item number 416.30 of the Tariff
Schedules of the United States (TSUS). During the 1989 review period, this merchandise was
classifiable under item number 2809.20.00 of the Harmonized Tariff Schedule (HTS). The TSUS and
HTS item numbers are provided for convenience and Customs purposes. The written description
remains dispositive.
The reviews cover the periods January 1, 1988 through December 31, 1988, and January 1, 1989
through December 31, 1989, and ten programs. Negev Phosphates, Ltd. and Haifa Chemicals, Ltd.
are the only known producers exporting the subject merchandise from Israel to the United
States during the 1988 review period. Negev Phosphates, Ltd. is the only known producer
exporting the subject merchandise from Israel to the United States during the 1989 review
period.
Calculation Methodology for Assessment and Cash Deposit Purposes
Haifa Chemicals, Ltd. did not respond to the 1988 questionnaire. As best information available, we
used the rate from the original investigation which is the highest rate ever found for the
merchandise covered by the order (52 FR 31057; August 19, 1987). In calculating the benefits
received during the l988 review period, we followed the methodology described in the preamble to
19 CFR 355.20(d) (53 FR 52325; December 27, 1988). First, we calculated a country- wide rate,
weight-averaging the benefits received by the two companies subject to review to determine the
overall subsidy from all countervailable programs benefitting exports of the subject merchandise
to the United States. Because the country-wide rate was above de minimis as defined by 19 CFR
355.7, we proceeded to the next step in our analysis and examined the aggregate ad valorem rate
for each company including all countervailable programs combined, to determine whether
individual company rates differed significantly from the weighted-average country-wide rate. One
company, Haifa Chemicals, Ltd., received aggregate benefits which were significantly different
within the meaning of 19 CFR 355.22(d)(3)(ii). Therefore, this company must be treated separately
for assessment and cash deposit purposes.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the preliminary results. We received
written
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comments from the petitioners, the Monsanto Company and FMC Corporation, and from a
respondent, Negev Phosphates, Ltd.
Comment 1: The respondent asserts that the Department's methodology for calculating the net
subsidy to Negev Phosphates, Ltd. (NPL) from the Exchange Rate Risk Insurance Scheme (EIS)
overstates the benefit provided by the EIS. NPL maintains that the Department erroneously based
its calculations on cash receipts, rather than on an accrual basis. As was demonstrated at
verification, NPL's records regarding EIS payouts are on an accrual basis. Thus, according to
respondent, the company does not benefit from the EIS when it receives a payment, but instead
when the shipment is made and the payment accrues. At verification, the Department was informed
that because EIS payouts during 1989 related to sales in the previous period, the Department's
methodology distorted the actual benefit to NPL.
Petitioners point out that it would be inconsistent with announced Department policy and
traditional practice to calculate EIS benefits on an accrual rather than on a cash receipt basis.
According to petitioners, there is nothing in the circumstances of the present administrative
reviews that would warrant a departure from the long-standing Department practice of following a
cash-flow-
effect approach to the calculation of countervailable benefits, such as those received by NPL under
the EIS. Petitioners also point out that NPL did not propose the accrual approach during the 1987
administrative review, when it was presumably advantaged by the Department's cash flow
approach because of higher sales during that period.
Department's Position: We disagree with the respondent. It is the Department's long-standing
practice to use the cash-flow method in determining when benefits are received (see, Final
Affirmative Countervailing Duty Determination: Fresh, Chilled, and Frozen Pork From
Canada (54 FR 30786; July 24, 1989)). Under this practice, the cash flow and economic effect of a
benefit normally occurs when a firm experiences a difference in cash flows, either in the payments
it receives or the outlays it makes, as a result of its receipt of the benefit (see, Countervailing
Duties: Notice of Proposed Rulemaking and Request for Public Comments (54 FR 23384; May 31,
1989)). Applicable exceptions are "big ticket items" whose production and delivery may extend
over several years, and export benefits provided as a percentage of the value of the exported
merchandise on the date of export. Respondent has failed to justify an exception to this general
rule. IPA is not a big ticket item, the production and delivery of which may extend over several
years; and, although NPL's records are kept on an accrual basis, the actual premium and payout
amounts are determined not at the time of the sale, but only after the
Israel Foreign Trade Risks Insurance Corp., Ltd. receives documentation of the actual
shipment of the merchandise and receipt of payment (see, Verification Report, page 2). We
therefore do not see any reason to calculate the EIS benefit on an accrual basis and continue to
apply our cash flow methodology.
Comment 2: NPL argues that the Department's methodology for calculating the subsidy from grants
to the Arad rock processing plant overstates the benefit actually conferred on industrial
phosphoric acid (IPA). The problem arises primarily because, in multiplying the amount of
benefit on one IPA ton by the total quantity of all IPA sales to all markets, the Department's
methodology fails to take into account that some of the IPA sold is produced from leftover rock
phosphate from the closed mine at Machtesh. NPL proposes to correct this distortion by
determining the ratio of rock phosphate from the Arad mine actually used in IPA production
during a particular year over rock phosphate extracted from the Arad mine in that same year.
Department's Position: We disagree with the respondent. Before the publication of the preliminary
results, we requested that NPL supply us with figures for both review periods for the total tonnage
of rock phosphate sold by the Arad processing plant, both for IPA and other uses. In a letter dated
May 23, 1991, NPL submitted information in response to the Department's request. NPL's
submission did not indicate that the figures for total tons of rock sold included rock from anywhere
else but the Arad mine. Furthermore, respondent
fails to show why rock from a different mine and processed at the Arad plant would not be
countervailable, since the Arad processing plant, not the mines, benefitted from the subsidies.
Therefore, based on the information available to the Department, we do not consider that we
should change our methodology for determining the subsidy to the Arad plant. In fact, the
methodology proposed by the respondent relies on the amount of phosphate rock processed and
not on actual sales of IPA to determine the amount of the subsidy during the review period. We
consider our methodology, based on actual sales, to be a more accurate measure of the benefits
received on the subject merchandise during the review periods.
Final Results of Review
After reviewing all of the comments received, we determine the net subsidy to be 19.46 percent ad
valorem for Haifa Chemicals, Ltd., and 9.18 percent ad valorem for all other companies during the
period January 1, 1988 through December 31, 1988. We determine the net subsidy to be 11.26
percent ad valorem for all companies during the period January 1, 1989 through December 31,
1989.
Therefore, the Department will instruct the Customs Service to assess countervailing duties
of 19.46 percent of the f.o.b. invoice price on shipments from Haifa Chemicals, Ltd., and 9.18
percent of the f.o.b. invoice price on
shipments from all other firms exported on or after January 1, 1988 and on or before December 31,
1988, and 11.26 percent of the f.o.b. invoice price on all shipments of this merchandise exported
on or after January 1, 1989 and on or before December 31, 1989.
Further, the Department will instruct the Customs Service to collect a cash deposit of 11.26 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 this notice. This cash deposit
shall remain in effect until publication of the final results of the next administrative review.
These administrative reviews 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: September 26, 1991.
Marjorie A. Chorlins,
Acting Assistant Secretary for Import Administration.
[FR Doc. 91-24333 Filed 10-8-91; 8:45 am]
BILLING CODE 3510-DS-M