[Federal Register: August 6, 2001 (Volume 66, Number 151)]
[Notices]
[Page 40987-40996]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-475-819]
Certain Pasta From Italy: Preliminary Results and Partial
Rescission of Countervailing Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results and partial rescission of
countervailing duty administrative review.
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SUMMARY: The Department of Commerce is conducting an administrative
review of the countervailing duty order on certain pasta from Italy for
the period January 1, 1999, through December 31, 1999. We have
preliminarily determined that certain producers/exporters have received
countervailable subsidies during the period of review. If the final
results remain the same as these preliminary results, we will instruct
the U.S. Customs Service to assess countervailing duties as detailed in
the ``Preliminary Results of Review'' section of this notice.
Because the requests for review were withdrawn, we are rescinding
this review for the following companies: Pastificio F.lli Pagani,
Commercio-Rappresentanze-Export S.r.L., Tamma Industrie Alimentari di
Capitanata. S.r.L., Molino e Pastificio, La Molisana Alimentari S.p.A.,
Arrighi S.p.A. Industrie Alimentari, Industria Alimentare Colavita,
S.p.A., Isola del Grano S.r.L., Italpast S.p.A., Italpasta S.r.L.,
Labor S.r.L., Pastificio Guido Ferrara, Pastificio Campano, S.p.A.,
Indalco, Audisio Industrie Alimentari de Capitanata, S.p.A., Pastificio
Fabianelli, S.p.A. and Pastificio Di Martino Gaetano & F.lli S.r.l.
Interested parties are invited to comment on these preliminary
results (see the ``Public Comment'' section of this notice).
EFFECTIVE DATE: August 6, 2001.
FOR FURTHER INFORMATION CONTACT: Craig Matney, Sally Hastings, Andrew
Covington, or Meg Weems AD/CVD Enforcement, Group I, Office 1, Import
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC. 20230; telephone (202) 482-
1778, 482-3464, 482-3534, or 482-2613, respectively.
SUPPLEMENTARY INFORMATION:
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions of the Tariff Act of 1930, as amended by
the Uruguay Round Agreements Act (``URAA'') effective January 1, 1995
(``the Act''). Unless otherwise indicated, all citations to the
Department's regulations are to the regulations codified at 19 CFR part
351 (2000).
Case History
The Department published the countervailing duty order on certain
pasta from Italy on July 24, 1996 (Notice of Countervailing Duty Order
and Amended Final Affirmative Countervailing Duty Determination:
Certain Pasta From Italy, 61 FR 38544). On July 20, 2000, the
Department published a notice of ``Opportunity to Request
Administrative Review'' of this countervailing duty order for calendar
year 1999 (Notice of Opportunity to Request Administrative Review of
Antidumping or Countervailing Duty Order, Finding, or Suspended
Investigation, 65 FR 45035). We received review requests for 29
producers/exporters of Italian pasta. We initiated our review on
September 6, 2000 (Initiation of Antidumping and Countervailing Duty
Administrative Reviews and Requests for Revocation in Part, 65 FR
53980).
Due to administrative resource constraints, the Department decided
to limit the number of producers/exporters it would review. On
September 18, 2000, the Department issued its ``Respondent Selection
Memorandum'' stating that it had selected the largest 12 exporters as
mandatory respondents. (See September 18, 2000 Memorandum to Deputy
Assistant Secretary Richard W. Moreland regarding Respondent Selection.
A public version of this memorandum is available in the Central Records
Unit (``CRU'') in Room B-099 of the main Department building).
On September 21, 2000, Borden Foods Corporation (one of the
original petitioners in this proceeding) withdrew its request for
review of those producers/exporters that had been included in its July
31, 2000 request for review but were not selected as mandatory
respondents. On October 18, 2000, Pastificio Di Martino Gaetano & F.lli
s.r.l. (``Di Martino'') withdrew its request for review, and on
November 6, 2000, Tamma Industrie Alimentari, S.r.L (``Tamma'')
withdrew its request for review. We are rescinding this administrative
review for all of these companies (see, the ``Partial Rescission''
section, below).
Thus, this administrative review of the order covers the following
producers/exporters of the subject merchandise: Agritalia, S.r.L.
(``Agritalia''), F.lli De Cecco di Filippo Fara S. Martino S.p.A. (``De
Cecco''), Delverde S.p.A. (``Delverde''), De Matteis Agroalimentare
S.p.A. (``De Matteis''), Pastificio Antonio Pallante S.r.L.
(``Pallante''), Pastificio Maltagliati S.p.A. (``Maltagliati''), P.A.M.
S.r.L.--Prodotti Alimentari Meridionali (``PAM'') (PAM is also
responding for Pastificio Liguori dal 1820, S.p.A.), Pastificio
Riscossa F.lli Mastromauro S.r.L. (``Riscossa''), N. Puglisi & F.
Industria Paste Alimentari S.p.A. (``Puglisi''), Rummo S.p.A. Molino e
Pastificio (``Rummo''), and 28 programs.
On September 29, 2000, we issued countervailing duty questionnaires
to the Commission of the European Union (``EC'') and the Government of
Italy (``GOI''). We received responses to our questionnaires and issued
supplemental questionnaires throughout the period October 2000 through
February 2001. Responses to the supplemental questionnaires were
received in January, February and March 2001.
On October 23, 2000, we were notified by a bankruptcy trustee that
Maltagliati declared bankruptcy on February 9, 2000, and that its
factory was closed that same month.
On April 3, 2001, the Department extended the time limit for
issuing these preliminary results until no later than July 31, 2001
(Certain Pasta From Italy and Turkey; Notice of Extension of Time Limit
for Preliminary Results of Countervailing Duty Administrative Reviews,
65 FR 17683).
Partial Rescission
As noted above, the petitioner withdrew its request for review of
those producers/exporters that were included in its July 31, 2000
request for review but were not selected by the Department
[[Page 40988]]
as mandatory respondents. These producers/exporters are: Pastificio
F.lli Pagani, Commercio-Rappresentanze-Export S.r.L., Tamma Industrie
Alimentari di Capitanata. S.r.L., Molino e Pastificio, La Molisana
Alimentari S.p.A., Arrighi S.p.A. Industrie Alimentari, Industria
Alimentare Colavita, S.p.A., Isola del Grano S.r.L., Italpast S.p.A.,
Italpasta S.r.L., Labor S.r.L., Pastificio Guido Ferrara, Pastificio
Campano, S.p.A., Indalco, Audisio Industrie Alimentari de Capitanata,
S.p.A., and Pastificio Fabianelli, S.p.A. Also, Di Martino and Tamma
withdrew their requests for review.
Because these withdrawals were timely filed, we are finally
rescinding this review with respect to these companies (see 19 CFR
351.213(d)(1)). We will instruct the U.S. Customs Service to liquidate
any entries from these companies during the POR and to assess
countervailing duties at the rate that was applied at the time of
entry.
Use of Facts Available
As noted above, we were notified by a bankruptcy trustee that
Maltagliati filed for bankruptcy in February 2000, shortly after the
period covered by this administrative review. We did not receive a
response to our countervailing duty questionnaire from this company.
Section 776(a)(2) of the Act provides that: If an interested party
or any other person--(A) withholds information that has been requested
by the administering authority or the Commission under this title, (B)
fails to provide such information by the deadlines for submission of
the information or in the form and manner requested, subject to
subsections (c)(1) and (e) of section 782, (C) significantly impedes a
proceeding under this title, or (D) provides such information but the
information cannot be verified as provided in section 782(i), the
administering authority and the Commission shall, subject to section
782(d), use the facts otherwise available in reaching the applicable
determination under this title. Section 776(b) of the Act further
provides that adverse inferences may be employed when a party has
failed to cooperate by not acting to the best of its ability to comply
with a request for information.
In this instance, we preliminarily determine that an adverse
inference is not warranted. According to the bankruptcy trustee, all of
Maltagliati's employees were dismissed and the facility closed prior to
receipt of the questionnaire. Moreover, we have confirmed with the
Customs Service that there have been no imports of pasta from
Maltagliati since February 2000. Therefore, as facts available, we
preliminarily determine that the countervailable subsidy bestowed on
Maltagliati during the POR is 3.85 percent ad valorem, the ``all
others'' rate established in Notice of Countervailing Duty Order and
Amended Final Affirmative Countervailing Duty Determination: Certain
Pasta (``Pasta'') from Italy, 61 FR 38544, July 24, 1996. Maltagliati
was not investigated or included in any prior reviews. Therefore,
entries during the POR from Maltagliati were subject to estimated
countervailing duties of 3.85 percent.
Scope of the Review
Imports covered by this review are shipments of certain non-egg dry
pasta in packages of five pounds (2.27 kilograms) or less, whether or
not enriched or fortified or containing milk or other optional
ingredients such as chopped vegetables, vegetable purees, milk, gluten,
diastases, vitamins, coloring and flavorings, and up to two percent egg
white. The pasta covered by this scope is typically sold in the retail
market, in fiberboard or cardboard cartons, or polyethylene or
polypropylene bags, of varying dimensions.
Excluded from the scope of this review are refrigerated, frozen, or
canned pastas, as well as all forms of egg pasta, with the exception of
non-egg dry pasta containing up to two percent egg white. Also excluded
are imports of organic pasta from Italy that are accompanied by the
appropriate certificate issued by the Istituto Mediterraneo Di
Certificazione (``IMC''), by Bioagricoop Scrl, by QC&I International
Services, by Ecocert Italia, by the Conzorzio per il Controllo dei
Prodotti Biologici, or by Associazione Italiana per l'Agricoltura
Biologica.
The merchandise subject to review is currently classifiable under
item 1902.19.20 of the Harmonized Tariff Schedule of the United States
(``HTSUS''). Although the HTSUS subheading is provided for convenience
and customs purposes, the written description of the merchandise
subject to the order is dispositive.
Scope Rulings
The Department has issued the following scope rulings to date:
(1) On August 25, 1997, the Department issued a scope ruling that
multicolored pasta, imported in kitchen display bottles of decorative
glass that are sealed with cork or paraffin and bound with raffia, is
excluded from the scope of the countervailing duty order. (See August
25, 1997 memorandum from Edward Easton to Richard Moreland, which is on
file in CRU in Room B-099 of the main Commerce building.)
(2) On July 30, 1998, the Department issued a scope ruling, finding
that multipacks consisting of six one-pound packages of pasta that are
shrink-wrapped into a single package are within the scope of the
countervailing duty order. (See July 30, 1998 letter from Susan H.
Kuhbach, Acting Deputy Assistant Secretary for Import Administration,
to Barbara P. Sidari, Vice President, Joseph A. Sidari Company, Inc.,
which is on file in the CRU.)
(3) On October 26, 1998, the Department self-initiated a scope
inquiry to determine whether a package weighing over five pounds as a
result of allowable industry tolerances may be within the scope of the
countervailing duty order. On May 24, 1999, we issued a final scope
ruling finding that, effective October 26, 1998, pasta in packages
weighing or labeled up to (and including) five pounds four ounces is
within the scope of the countervailing duty order. (See May 24, 1999
memorandum from John Brinkmann to Richard Moreland, which is on file in
the CRU.)
Period of Review
The period of review (``POR'') for which we are measuring subsidies
is from January 1, 1999 through December 31, 1999.
Attribution of Subsidies
Agritalia: Agritalia is a trading company which buys and sells
pasta produced by non-affiliated suppliers. In accordance with section
351.525(c) of the regulations, we have cumulated the benefits received
by Agritalia and by the two major companies supplying Agritalia to
calculate the countervailing duty rate applicable to Agritalia.
DeCecco: DeCecco has responded on behalf of three members of the
DeCecco Group: F.lli DeCecco di Filippo Fara San Martino S.p.A.
(``Pastificio''), Molino e Pastificio F.lli DeCecco S.p.A.
(``Pescara'') and Molino F.lli DeCecco di Filippo S.p.A. (``Molino'').
Pastificio and Pescara manufacture pasta for sale in Italy and the
United States; Molino produces semolina for Pastifico and Pescara.
Pastifico and Pescara are directly or indirectly 100 percent-owned by
members of the DeCecco family. Effective January 1, 1999, Molino was
merged with Pastifico and ceased to be a separate entity. In accordance
with section 351.525(b)(6)(i) and (ii) of the regulations, we are
attributing subsidies received by all three entities to the combined
sales of all three.
[[Page 40989]]
Delverde: Consistent with section 351.525(b)(6)(ii) of the
regulations and the most recent administrative review of this order, we
have continued to treat the two affiliated companies, Delverde and
Tamma, as separate respondents (see, Certain Pasta from Italy: Final
Results of Third Administrative Review, 66 FR 11269, February 23, 2001
(``Third Review--Final Results''). Thus, subsidies received by Delverde
have been assigned solely to that company. Tamma is not being reviewed,
and no subsidies received by Tamma have been attributed to Delverde.
DeMatteis: DeMatteis is 100 percent owned by DeMatteis Costruzioni
S.r.L. (``Costruzioni''). Costruzioni also owns 100 percent of
Demaservice S.r.L., (``Demaservice''). DeMatteis produces and sells
pasta products. Costruzioni, a real estate management company, built a
warehouse and office building for DeMatteis. Demaservice provides
accounting services to Constuzioni and miscellaneous administrative and
support services to DeMatteis. DeMatteis has responded on behalf of all
three of these companies. In accordance with section 351.525(b)(6)(iii)
of the regulations (see, in particular, discussion in the preamble to
this regulation regarding ``non-producing'' subsidiaries), we are
attributing subsidies received by all three entities to the combined
sales of all three.
Pallante: Pallante has responded on behalf of Pastificio Antonio
Pallante, S.r.L. (``Pallante'') and Industrie Alimentari Molisane
S.r.L. (``IAM''), two separately incorporated companies. Pallante
produces pasta. IAM is an integrated company that purchases wheat,
mills it into semolina, and uses its semolina to produce pasta. We are
treating Pallante and IAM as a single respondent, in accordance with
section 351.525(b)(6)(ii) of the regulations, because a single
shareholder, Antonio Pallante, has a controlling interest in both
companies. Therefore, subsidies received by both companies are being
attributed to the sales of both companies.
PAM: PAM has responded on behalf of five companies: PAM, Liguori,
Pastificio D'Apuzzo S.p.A. (``D'Apuzzo''), Comimpex, S.r.L.
(``Comimpex''), and En.Le.Ve. S.r.L. (``En.Le.Ve.''). PAM, D'Apuzzo,
and Comimpex were involved in the production and sale of pasta during
the POR, or in related milling operations. En.Le.Ve. provided
administrative services to these three companies. Given the nature and
extent of the common ownership between PAM, D'Apuzzo, Comimpex, and
En.Le.Ve. (the details of which are proprietary), we are attributing
subsidies received by these four companies to the combined sales of the
four companies. Details of Liguori's relationship with PAM are
proprietary. Therefore, Liguori is discussed separately (see, July 31,
2001 Proprietary Memorandum from Meg Weems to Richard W. Moreland
regarding PAM--Attribution Issues).
PAM has objected to being asked to respond on behalf of Comimpex.
Its reasons are proprietary. PAM's arguments and our position are also
discussed in the July 31, 2001 Proprietary Memorandum from Meg Weems to
Richard W. Moreland regarding PAM--Attribution Issues.
Puglisi: Puglisi has responded on behalf of N. Puglisi & F.
Industria Paste Alimentari S.p.A. (``Puglisi'') and its 100-percent
owned subsidiary, CE.S.A.P. S.r.L. (``CE.S.A.P.''). CE.S.A.P. provides
quality control and maintenance services to Puglisi. We have attributed
the subsidies received by both companies to their combined sales.
Riscossa: Riscossa is an integrated pasta producer, buying its
wheat, milling the wheat into semolina, and producing pasta from its
semolina. In accordance with section 351.525(b)(6)(i) of the
regulations, the Department has attributed subsidies received by
Riscossa for the production of semolina and pasta to Riscossa's sales
of pasta.
Rummo: Rummo is a family-owned business with no affiliated
companies producing subject merchandise or inputs into subject
merchandise. Therefore, all subsidies received by Rummo have been
attributed to pasta it produces and sells, and to the ``pasta waste''
(a by-product) it sells as animal feed.
Subsidies Valuation Information
Benchmarks for Long-term Loans and Discount Rates: In accordance
with section 351.505(a)(1) and 351.524(d)(3) of the regulations, we
have used the amount the company actually paid on a comparable
commercial loan as the benchmark/discount rate, when the company had a
commercial loan in the same year as the government loan or grant.
However, there were several instances where a company did not take out
any loans which could be used as benchmarks/discount rates in the years
in which the government grants or loans under review were received. In
these instances, consistent with section 351.505(a)(3)(ii) of the
regulations, we used a national average interest rate for a comparable
commercial loan. Specifically, for years prior to 1995, we used the
Bank of Italy reference rate, adjusted upward to reflect the mark-up an
Italian commercial bank would charge a corporate customer, as the
benchmark interest rate for long-term loans and as the discount rate.
For subsidies received in 1995 and later, we used the Italian Bankers'
Association (``ABI'') interest rate, increased by the average spread
charged by banks on loans to commercial customers plus an amount for
bank charges.
Allocation Period: In the Final Affirmative Countervailing Duty
Determination: Certain Pasta (``Pasta'') from Italy, 61 FR 30288, June
14, 1996, (``Pasta Investigation''), the Department used as the
allocation period for non-recurring subsidies the average useful life
(``AUL'') of renewable physical assets in the food-processing industry
as recorded in the Internal Revenue Service's 1977 Class Life Asset
Depreciation Range System (``the IRS tables''), i.e., 12 years.
However, the U.S. Court of International Trade (``CIT'') ruled against
this allocation methodology for non-recurring subsidies (see British
Steel plc v. United States, 879 F.Supp. 1254, 1289 (CIT 1995)
(``British Steel I'')). In accordance with the CIT's remand order, the
Department determined that the most reasonable method of deriving the
allocation period for non-recurring subsidies was a company-specific
AUL of renewable physical assets. This remand determination was
affirmed by the CIT on June 4, 1996 (see British Steel plc v. United
States, 929 F.Supp. 426, 439 (CIT 1996) (``British Steel II'')).
Consistent with the ruling in British Steel II, we developed
company-specific AULs in the first and second administrative reviews of
this order (see Certain Pasta from Italy: Final Results of
Countervailing Duty Administrative Review, 63 FR 43905, 43906, August
17, 1998 (``First Review--Final Results'') and Certain Pasta from
Italy: Final Results of the Second Countervailing Duty Administrative
Review, 64 FR 44489, 44490-91, August 16, 1999 (``Second Review--Final
Results''). We used these company-specific AULs to allocate any non-
recurring subsidies that were not countervailed in the investigation.
However, for non-recurring subsidies which had already been
countervailed in the investigation, the Department used the original
allocation period, i.e., 12 years, because it was deemed neither
reasonable nor practicable to reallocate those subsidies over a
different time period. This methodology was consistent with our
approach in Certain Carbon Steel Products from Sweden; Final Results of
Countervailing Duty Administrative Review, 62 FR 16549 (April 7, 1997).
[[Page 40990]]
The third review of this order was subject to section 351.524(d)(2)
of the regulations. Under this regulation, the Department will use the
AUL in the IRS tables as the allocation period unless a party can show
that the IRS tables do not reasonably reflect the company-specific AUL
or the country-wide AUL for the industry. If a party can show that
either of these time periods differs from the AUL in the IRS tables by
one year or more, the Department will use the company-specific AUL or
the country-wide AUL for the industry as the allocation period. In
Third Review--Final Results, all subsidies received in the POR were
assigned a 12-year allocation period, consistent with the IRS tables.
In the current review, no respondent has contested the 12-year AUL
in the IRS tables. Therefore, we are assigning a 12-year allocation
period to non-recurring subsidies received in the POR, as well as any
non-recurring subsidies received in prior years by companies that were
not included in previous reviews.
Change in Ownership
In 1991, Delverde purchased a pasta factory from an unaffiliated
party. The previous owner of the purchased factory had received non-
recurring countervailable subsidies prior to the transfer of ownership.
In Third Review--Final Result, the Department applied the methodology
it developed to comply with the Court of Appeals for the Federal
Circuit's decision in Delverde v. United States, 202 F.3rd 1360, 1369
(Fed. Cir. 2000), to Delverde's purchase of the pasta factory. We
determined that the post-sale entity was, for all intents and purposes,
the same ``person'' as the pre-sale entity. Consequently, all the
elements of a subsidy are established with regard to the post-sale
Delverde and it continues to benefit in full from all of the subsidies
that were provided to the previous owner prior to the sale of the pasta
factory.
No new information has been submitted in this review to warrant
reconsideration of our determination regarding the countervailability
of these subsidies. Therefore, we have included these subsidies in the
countervailing duty rate calculated for Delverde.
Analysis of Programs
I. Programs Preliminarily Determined to Confer Subsidies
1. Law 64/86 Industrial Development Grants
Law 64/86 provided assistance to promote development in the
Mezzogiorno (the south of Italy). Grants were awarded to companies
constructing new plants or expanding or modernizing existing plants.
Pasta companies were eligible for grants to expand existing plants but
not to establish new plants because the market for pasta was deemed to
be close to saturated. Grants were made only after a private credit
institution chosen by the applicant made a positive assessment of the
project. (Loans were also provided under Law 64/86; see below.)
In 1992, the Italian Parliament abrogated Law 64/86 and replaced it
with Law 488/92 (see below). This decision became effective in 1993.
However, companies whose projects had been approved prior to 1993 were
authorized to continue receiving grants under Law 64/86 after 1993.
DeCecco, Delverde, DeMatteis, Pallante, Puglisi, and Riscossa
received grants under Law 64/86 which conferred a benefit during the
POR.
In Pasta Investigation, the Department determined that these grants
confer a countervailable subsidy within the meaning of section 771(5)
of the Act. They are a direct transfer of funds from the GOI bestowing
a benefit in the amount of the grant. Also, these grants were found to
be regionally specific within the meaning of section 771(5A) of the
Act. In this review, neither the GOI nor the responding companies have
provided new information which would warrant reconsideration of our
determination that these grants are countervailable subsidies.
In Pasta Investigation, the Department treated the industrial
development grants as non-recurring. No new information has been placed
on the record of this review that would cause us to depart from this
treatment. Also, consistent with our treatment of these grants in the
Third Review--Final Results, for companies which previously have been
investigated or reviewed, we have continued to expense or allocate
grants disbursed prior to 1998 (the POR in the third review) according
to the practice in place at the time of the investigation or review.
(See Countervailing Duties (Proposed Rules), 54 FR 23366, 23384 (19 CFR
355.49(a)(3)) (May 31, 1989).) For grants disbursed in 1998 and this
POR, 1999, we have followed the methodology described in section
351.524(b)(2) of our new countervailing duty regulations, which directs
us to allocate over time those non-recurring grants whose total
authorized amount exceeds 0.5 percent of the recipient's sales in the
year of authorization. Where the total amount authorized is less than
0.5 percent of the recipient's sales in the year of authorization, the
benefit is countervailed in full (``expensed'') in the year of receipt.
We have also applied the methodology described in section 351.524(b)(2)
of the regulations to grants approved prior to 1998 for companies that
were not previously investigated or reviewed.
We used the grant methodology described in section 351.524(d) of
the regulations to calculate the countervailable subsidy from those
grants that were allocated over time. We divided the benefit received
by each company in the POR by its total sales, or total pasta sales, as
appropriate, in the POR.
On this basis, we preliminarily determine the countervailable
subsidy from the Law 64/86 industrial development grants to be 0.94
percent ad valorem for DeCecco, 1.55 percent ad valorem for Delverde,
0.16 percent ad valorem for DeMatteis, 1.20 percent ad valorem for
Pallante, 2.83 percent ad valorem for Puglisi, and 0.81 percent ad
valorem for Riscossa.
2. Law 488/92 Industrial Development Grants
In 1986, the European Union (``EU'') initiated an investigation of
the GOI's regional subsidy practices. As a result of this
investigation, the GOI changed the regions eligible for regional
subsidies to include depressed areas in central and northern Italy in
addition to the Mezzogiorno. After this change, the areas eligible for
regional subsidies are the same as those classified as Objective 1,
Objective 2, and Objective 5(b) areas by the EU (see ``European Social
Fund'' section below). The new policy was given legislative form in Law
488/92 under which Italian companies in the eligible sectors
(manufacturing, mining, and certain business services) may apply for
industrial development grants. (Loans are not provided under Law 488/
92.)
Law 488/92 grants are made only after a preliminary examination by
a bank authorized by the Ministry of Industry. On the basis of the
findings of this preliminary examination, the Ministry of Industry
ranks the companies applying for grants. The ranking is based on
indicators such as the amount of capital the company will contribute
from its own funds, the number of jobs created, regional priorities,
etc. Grants are then made based on this ranking.
DeCecco, Delverde, DeMatteis, Pallante and Puglisi received grants
under Law 488/92 which conferred a benefit during the POR.
Industrial development grants under Law 488/92 were found
countervailable in Second Review--Final Results. The
[[Page 40991]]
grants are a direct transfer of funds from the GOI bestowing a benefit
in the amount of the grant. Also, these grants were found to be
regionally specific within the meaning of section 771(5A) of the Act.
In this review, neither the GOI nor the responding companies have
provided new information which would warrant reconsideration of our
determination that these grants are countervailable subsidies.
In Second Review--Final Results, the Department treated industrial
development grants under Law 488/92 as non-recurring. No new
information has been placed on the record of this review that would
cause us to depart from this treatment. We expensed or allocated these
grants according to the methodology applied to the Law 64/86 industrial
development grants discussed above.
We used the grant methodology as described in section 351.524(d) of
the regulations to calculate the subsidy for those grants that were
allocated over time. We divided the benefits received by each company
in the POR by its total sales, or total pasta sales, as appropriate, in
the POR.
On this basis, we preliminarily determine the countervailable
subsidy from the Law 488/92 industrial development grants to be 0.31
percent ad valorem for DeCecco, 0.28 percent ad valorem for Delverde,
1.17 percent ad valorem for DeMatteis, 0.07 percent ad valorem for
Pallante, and 2.55 percent ad valorem for Puglisi.
3. Law 183/76 Industrial Development Grants
In 1983, Riscossa applied for an industrial development grant under
Law 183/76. The GOI approved the application and disbursed the grant in
tranches. Only the last of these disbursements, received by Riscossa in
1988, falls within that company's 12-year AUL period. Therefore, only
this last disbursement is being countervailed in the current review.
In Pasta Investigation and subsequent reviews, the Department
determined that the industrial development grant received by Riscossa
confers a countervailable subsidy within the meaning of section 771(5)
of the Act. This grant is a direct transfer of funds from the GOI
bestowing a benefit in the amount of the grant. Also, this grant was
found to be regionally specific within the meaning of section 771(5A)
of the Act. In this review, neither the GOI nor Riscossa has provided
new information which would warrant reconsideration of our
determination that this grant is a countervailable subsidy.
We have previously treated Riscossa's industrial development grant
as non-recurring. No new information has been placed on the record of
this review that would cause us to depart from this treatment. We
allocated the last disbursement of this grant over time because it
exceeded 0.5 percent of Riscossa's sales in the year of receipt.
We used the grant methodology described in section 351.524(d) of
the regulations to calculate the countervailable benefit. We divided
the benefit received by Riscossa in the POR by the company's total
pasta sales in the POR.
On this basis, we preliminarily determine the countervailable
subsidy from the Law 183/76 industrial development grant to be 0.08
percent ad valorem for Riscossa.
4. Law 64/86 Industrial Development Loans
In addition to the industrial development grants discussed above,
Law 64/86 also provided reduced rate industrial development loans with
interest contributions paid by the GOI on loans taken by companies
constructing new plants or expanding or modernizing existing plants in
the Mezzogiorno. For the reasons discussed above, pasta companies were
eligible for interest contributions to expand existing plants, but not
to establish new plants. The interest rates on these loans were set at
the reference rate with the GOI's interest contributions serving to
reduce this rate. Although Law 64/86 was abrogated in 1992 (effective
1993), projects approved prior to 1993, were authorized to receive
interest subsidies after 1993.
DeCecco, Delverde, De Matteis, Pallante, and Puglisi had Law 64/86
industrial development loans outstanding during the POR.
In Pasta Investigation, the Department determined that the Law 64/
86 loans confer a countervailable subsidy within the meaning of section
771(5) of the Act. They are a direct transfer of funds from the GOI
providing a benefit in the amount of the difference between the
benchmark interest rate and the interest rate paid by the companies
after accounting for the GOI's interest contributions. Also, these
loans were found to be regionally specific within the meaning of
section 771(5A) of the Act. In this review, neither the GOI nor the
responding companies have provided new information which would warrant
reconsideration of our determination that these loans are a
countervailable subsidy.
In accordance with section 351.505(c)(2) of the regulations, we
calculated the benefit for the POR by computing the difference between
the payments the loan recipients made on their Law 64/86 loans during
the POR and the payments the companies would have made on a comparable
commercial loan. We divided the benefit received by each company by its
total sales or total pasta sales, as appropriate, in the POR.
Pallante reported having received loans under Law 64/86. Based on
the underlying documents submitted, it appears that for some of these
loans Pallante received interest contributions but it did not receive
reduced interest rates. For these loans, the interest contributions
were received prior to the POR. Moreover, the interest contributions
were less than 0.5 percent of Pallante's sales in the years the
bestowals were approved. Therefore, we have not included these loans in
our calculations for Pallante. Instead, we are only calculating a
benefit for those Law 64/86 loans to Pallante that were outstanding
during the POR.
On this basis, we preliminarily determine the countervailable
subsidy from the Law 64/86 industrial development loans to be 0.63
percent ad valorem for DeCecco, 0.35 percent ad valorem for Delverde,
0.08 percent ad valorem for DeMatteis, 0.13 percent ad valorem for
Pallante, and 0.18 percent ad valorem for Puglisi.
5. Law 341/95 Interest Contributions on Debt Consolidation Loans
Law 85/95 created the Fondo di Garanzia aimed at improving the
financial structure of small- and medium-sized companies located in EU
Objective 1 areas (see, ``European Social Fund'' section below). Under
Article 2 of Law 341/95, monies from the Fondo di Garanzia are used to
make interest contributions on debt consolidation loans obtained by
eligible companies. The company first enters into a loan contract with
a commercial bank. Then, the contract is submitted to the approving
authority. After approval, the loan is made.
DeCecco had a Law 341/95 debt consolidation loan outstanding during
the POR.
We preliminarily determine that the interest contributions on this
loan confer a countervailable subsidy within the meaning of section
771(5) of the Act. They are a direct transfer of funds from the GOI
providing a benefit in the amount of the interest contributions. Also,
these interest contributions are regionally specific within the meaning
of section 771(5A) of the Act.
Because DeCecco anticipated receiving the interest contributions
when it applied for the debt
[[Page 40992]]
consolidation loan, we are calculating the amount of the subsidy as if
this were a reduced interest loan (see, section 351.508(c)(2) of the
regulations). Thus, we have divided the interest contributions received
by DeCecco in the POR by DeCecco's total sales in the POR.
On this basis, we preliminarily determine the countervailable
subsidy from interest contributions under Law 341/95 to be 0.02 percent
ad valorem for DeCecco.
6. Law 598/94 Interest Subsidies
Under Law 598/94, the GOI pays a portion of the interest on certain
loans granted to small- and medium-sized industrial companies. These
loans are to be used for investments related to technological
innovation and/or environmental protection.
During the POR, DeMatteis, Riscossa, and Rummo received interest
subsidies under this program.
In Third Review--Final Results, the Department determined that
these interest contributions confer a countervailable subsidy within
the meaning of section 771(5) of the Act. They are a direct transfer of
funds bestowing a benefit in the amount of the interest contribution.
Regarding specificity, we recognized that different levels of
interest contributions were made depending on the region in which the
recipient company was located. In particular, the level of the interest
contribution was set at 45 percent for companies located in EU
Objective 1, 2, and 5(b) areas (see, ``European Social Fund'' section
below), while firms in all other regions could receive interest
contributions of 30 percent. Although we sought information in that
review about the actual use and distribution of interest contributions
in the non-disadvantaged regions, the GOI did not provide it. Similarly
in this review, the GOI has not provided information showing that the
30 percent interest contributions are not specific in fact. Therefore,
consistent with our determination in Third Review--Final Results, we
preliminarily determine that the 45 percent interest contributions are
regionally specific and that the 30 percent interest contributions are
specific in fact, within the meaning of section 771(5A) of the Act.
Because the recipient companies anticipated receiving interest
contributions when they applied for the loans, we are calculating the
amount of the subsidy as if this were a reduced interest loan (see,
section 351.508(c)(2) of the regulations). Thus, we have divided the
interest contributions received by DeMatteis, Riscossa, and Rummo in
the POR by each company's total sales, or total pasta sales, as
appropriate, in the POR.
On this basis, we preliminarily determine the countervailable
subsidy from the Law 598/94 interest subsidies to be 0.18 percent ad
valorem for DeMatteis, 0.20 percent ad valorem for Riscossa, and 0.20
percent ad valorem for Rummo.
7. Social Security Reductions and Exemptions--Sgravi
Italian law allows companies, particularly those located in the
Mezzogiorno, to use a variety of exemptions and reductions (``sgravi'')
of the payroll contributions that employers make to the Italian social
security system for health care benefits, pensions, etc. The sgravi
benefits are regulated by a complex set of laws and regulations and are
sometimes linked to conditions such as creating more jobs. The benefits
under some of these laws (e.g., Laws 183/76 and 449/97) are available
only to companies located in the Mezzogiorno and other disadvantaged
regions. Other laws (e.g., Laws 407/90 and 863/84) provide benefits to
companies all over Italy, but the level of benefits is higher for
companies in the south than for companies in other parts of the
country.
The various laws identified as having provided sgravi benefits
during the POR are: Law 1089/68 (``Sgravi Unico''); Law 183/76; Law
863/84, Law 407/90; Law 223/91; Law 56/97; Law 196/97; Law 449/97; and
Law 448/98. (Laws 449/97 and 448/98 are related and sometimes referred
to jointly as ``Sgravi Capitario.'') All the respondent companies in
this review received some form of sgravi benefits during the POR.
In Pasta Investigation and subsequent reviews, the Department
determined that the various forms of social security reductions and
exemptions confer countervailable subsidies within the meaning of
section 771(5) of the Act. They represent revenue foregone by the GOI
bestowing a benefit in the amount of the savings received by the
companies. Also, they were found to be regionally specific within the
meaning of section 771(5A) of the Act because they were limited to
companies in the Mezzogiorno or because the higher levels of benefits
were limited to companies in the Mezzogiorno. In this review, neither
the GOI nor the responding companies provided new information which
would warrant reconsideration of our determination that these tax
savings are a countervailable subsidy.
In accordance with section 351.524(c) of the regulations and
consistent with our methodology in the investigation and previous
reviews, we have treated social security reductions and exemptions as
recurring benefits. To calculate the countervailable subsidy, we
divided each company's savings in social security contributions during
the POR by that company's total sales in the POR. In those instances
where the applicable law provided a higher level of benefits to
companies based on their location, we divided the amount of the sgravi
benefits that exceeded the amount available to companies in other parts
of Italy by the recipient company's total sales in the POR (see,
section 351.503(d)(1) of the regulations).
On this basis, we preliminarily determine the countervailable
subsidy from the sgravi program to be 0.21 percent ad valorem for
Agritalia, 0.11 percent ad valorem for DeCecco, 0.22 percent ad valorem
for Delverde, 0.61 percent ad valorem for De Matteis, 0.18 percent ad
valorem for Pallante, 0.26 percent ad valorem for PAM, 0.56 percent ad
valorem for Puglisi, 0.04 percent ad valorem for Riscossa, and 0.46
percent ad valorem for Rummo.
Delverde requested that it receive an offset or credit against
current sgravi benefits to reflect repayment of certain sgravi benefits
received in the past. Specifically, because Molise and Abruzzo have
lost their status as regions entitled to higher benefit levels,
Delverde has begun repayment of benefits it received between December
1, 1994 and November 30, 1996.
Because the repayments made by Delverde relate to prior recurring
subsidies previously countervailed and because countervailing duties
have already been assessed on the relevant imports of pasta, we have
not credited the repayment of these past benefits against current
sgravi benefits because they do not qualify as a permissible offset
within the meaning of section 771(6) of the Act.
8. IRAP Exemptions
On January 1, 1998, the local income tax (ILOR) was replaced with a
new regional tax, the IRAP, as a result of Legislative Decree 446
(December 15, 1997). Existing exemptions from the ILOR continued under
IRAP. In particular, income from production facilities located in the
Mezzogiorno was exempt from tax for ten years.
DeCecco claimed the IRAP tax exemption on its tax return filed
during the POR.
In Pasta Investigation, the Department determined that the ILOR tax
exemption confers a countervailable subsidy within
[[Page 40993]]
the meaning of section 771(5) of the Act. The exemption represents
revenue foregone by the taxing authority and confers a benefit in the
amount of the tax savings to the recipient companies. Also, this tax
exemption was found to be regionally specific within the meaning of
section 771(5A) of the Act. In this review, neither the GOI nor the
responding companies have provided any information to indicate that the
substitution of the IRAP for the ILOR would warrant reconsideration of
our determination that this tax exemption is a countervailable subsidy.
In accordance with sections 351.509(b) of the regulations and our
treatment of the ILOR tax exemption in Pasta Investigation, we are
calculating the countervailable subsidy by dividing each company's tax
savings in the POR by its total sales, or total pasta sales, as
appropriate, during the POR.
On this basis, we preliminarily determine the countervailable
subsidy from the IRAP tax exemption to be 0.08 percent ad valorem for
DeCecco.
9. Law 236/93 Training Grants
Under Law 236/93, which is administered by the regional governments
but funded by the GOI, grants are provided to Italian companies for
worker training.
Delverde received a grant under this program during the POR. Its
grant application was approved in 1997, and tranches of the grant were
disbursed in 1998 and 1999.
In Third Review--Final Results, the Department determined that Law
236/93 training grants confer a countervailable subsidy within the
meaning of section 771(5) of the Act. They are a direct transfer of
funds from the GOI bestowing a benefit in the amount of the grant.
Also, because the GOI and the regional government of Abruzzo did not
provide adequate information about the distribution of grants under
this program, we determined that Law 236/93 training grants were
specific within the meaning of section 771(5A) of the Act. In this
review, neither the GOI nor the Government of Abruzzo has provided
information that would warrant reconsideration of our determination
that these grants are countervailable subsidies.
Consistent with section 351.524(c)(1) of the regulations and our
treatment of this grant in the prior review, the Department is treating
this worker training subsidy as a recurring benefit. Therefore, to
calculate the countervailable subsidy, we divided the amount received
by Delverde in the POR by the company's total sales in the POR.
On this basis, we preliminarily determine the countervailable
subsidy for this program to be 0.02 percent ad valorem for Delverde.
10. Law 304/90 Export Marketing Grants
Under Law 304/90, the GOI provided grants to promote the sale of
Italian food and agricultural products in foreign markets. The grants
were given for pilot projects aimed at developing links and integrating
marketing efforts between Italian food producers and foreign
distributors. The emphasis was on assisting small-and medium-sized
producers.
Delverde received a grant under this program for an export sales
pilot project in the United States. The purpose of the project was to
increase the presence of all Delverde's products in the U.S. market,
not only pasta.
In Pasta Investigation, the Department determined that these export
marketing grants confer a countervailable subsidy within the meaning of
section 771(5) of the Act. They are a direct transfer of funds from the
GOI bestowing a benefit in the amount of the grant. Also, these grants
were found to be specific within the meaning of section 771(5A) of the
Act because their receipt was contingent upon exportation. In this
review, neither the GOI nor the responding companies have provided new
information which would warrant reconsideration of our determination
that these grants confer a countervailable subsidy.
Also in Pasta Investigation, the Department treated export
marketing grants as non-recurring. No new information has been placed
on the record of this review that would cause us to depart from this
treatment.
Because this grant exceeded 0.5 percent of Delverde's exports to
the United States in the year of receipt, we used the grant methodology
described in section 351.524(d) of the regulations to allocate the
benefit over time. We divided the benefit attributable to the POR by
the value of Delverde's total exports to the United States in the POR.
On this basis, we preliminarily determine the countervailable
subsidy from the Law 304/90 export marketing grants to be 0.34 percent
ad valorem for Delverde.
11. European Regional Development Fund (ERDF)
The ERDF is another of the European Union's Structural Funds. It
was created pursuant to the authority in Article 130 of the Treaty of
Rome in order to reduce regional disparities in socio-economic
performance within the EU. The ERDF program provides grants to
companies located within regions which meet the criteria of Objective 1
(underdeveloped regions), Objective 2 (declining industrial regions),
or Objective 5(b) (declining agricultural regions ) under the
Structural Funds.
DeMatteis and PAM received ERDF grants which conferred a benefit
during the POR.
In Pasta Investigation, the Department determined that ERDF grants
confer a countervailable subsidy within the meaning of section 771(5)
of the Act. They are a direct transfer of funds bestowing a benefit in
the amount of the grant. Also, these grants were found to be regionally
specific within the meaning of section 771(5A) of the Act. In this
review, neither the EU, the GOI nor the responding companies have
provided new information which would warrant reconsideration of our
determination that ERDF grants are countervailable subsidies.
In Pasta Investigation, the Department treated ERDF grants as non-
recurring. No new information has been placed on the record of this
review that would cause us to depart from this treatment. In accordance
with section 351.524(b)(2) of the regulations, we determined that the
ERDF grants received by these companies exceeded 0.5 percent of their
respective sales in the years in which the grants were approved.
We used the grant methodology described in section 351.524(d) of
the regulations to calculate the countervailable benefit. We divided
the benefit received by each company in the POR by its total sales, or
total pasta sales, as appropriate, in the POR.
On this basis, we preliminarily determine the countervailable
subsidy from the ERDF grant to be 0.13 percent ad valorem for DeMatteis
and 0.12 percent ad valorem for PAM.
12. Export Restitution Payments
The EU provides restitution payments to EU pasta exporters based on
the durum wheat content of their exported pasta products. The program
is designed to compensate pasta producers for the difference between EU
prices and world market prices for durum wheat. Generally, under this
program, a restitution payment is available to any EU exporter of pasta
products, regardless of whether the pasta was made with imported wheat
or wheat grown within the EU.
Agritalia, DeCecco, Delverde, Pallante, PAM, Puglisi, and Rummo
received export restitution payments during the POR for shipments of
pasta to the United States.
In Pasta Investigation, the Department determined that export
restitution payments confer a countervailable
[[Page 40994]]
subsidy within the meaning of section 771(5) of the Act. These payments
are a direct transfer of funds from the EU bestowing a benefit in the
amount of the payment. The restitution payments were found to be
specific because their receipt is contingent upon export performance.
In this review, the GOI, the EU, and the responding companies have not
provided new information which would warrant reconsideration of our
determination that export restitution payments are countervailable
subsidies.
In Pasta Investigation, we treated the export restitution payments
as recurring benefits. We have found no reason to depart from this
treatment in the current review. Therefore, to calculate the
countervailable subsidy, we generally divided the export restitution
payments received by the recipient companies in the POR for pasta
shipments to the United States by the value of each company's pasta
exports to the United States in the POR. For Pallante, we divided total
export restitution payments by exports to all markets, because the
reported benefits were not segregated by market.
On this basis, we preliminarily determine the countervailable
subsidy from the export restitution program to be 0.07 percent ad
valorem for Agritalia, 0.11 percent ad valorem for DeCecco, 0.51
percent ad valorem for Delverde, 2.52 percent ad valorem for Pallante,
0.70 percent ad valorem for PAM, 1.36 percent ad valorem for Puglisi,
and 0.60 percent ad valorem for Rummo.
13. Duty-Free Import Rights
Under Italian and EU customs procedures, companies may seek
authorization for duty-free importation of certain agricultural input
products, on the condition that processed agricultural products are
exported. Under the Temporanea Importazione scheme, a processor of
agricultural products can apply to import its input duty free and,
after processing, to export the processed product. Under the
Riesportazione Preventiva scheme, the order is reversed: after
exporting the processed product, the agricultural input product can be
imported duty free. The authorizations for duty-free importation,
granted by the customs authorities, are transferable.
During the POR, Agritalia received authorizations for duty-free
importation of durum wheat which it sold.
In situations where a producer imports its inputs and then exports
the product processed from those imported inputs, this scheme appears
to operate as a non-excessive duty drawback system and, hence, would
not confer a countervailable subsidy. However, where the exporter of
the processed product is not the importer and processor of the imported
input, we cannot equate the scheme to a non-excessive duty drawback
scheme. Instead, when the exporter and importer are different, the
exporter receiving duty-free import rights is receiving a ``privilege''
which can be sold, and the importer purchasing that ``privilege'' is
exempt from duties and is under no obligation to export.
Based on this analysis, we preliminarily determine that the
granting of duty-free import rights confers a countervailable subsidy
within the meaning of section 771(5) of the Act. In authorizing duty-
free importation of inputs, the GOI is forgoing revenue that it is
otherwise due. These authorizations are specific within the meaning of
section 771(5A) because they are contingent upon exportation.
In analyzing the benefit arising from the authorization of
transferable duty-free import rights, we have considered the nature of
the financial contribution, i.e., the forgoing of revenue by the GOI,
and we preliminarily determine that the total benefit is equal to the
duty savings. However, those savings are essentially shared between the
producer that is able to import duty free and the exporter (Agritalia)
that sells the privilege of importing duty free. Specifically, the
benefit to the importer is the amount of the duty that would have been
paid absent the duty-free import rights, less the amount that the
importer paid for those rights, while the benefit to the exporter is
the amount it receives from importer.
On this basis, we preliminarily determine the countervailable
subsidy from the duty-free import rights to be 0.38 percent ad valorem
for Agritalia. We do not have information identifying the companies
that purchased the duty-free import rights for these preliminary
results. We are seeking this information for the final results.
II. Programs Preliminarily Determined Not To Confer Countervailable
Subsidies in the POR
1. IRPEG Exemptions
In addition to providing sgravi benefits, Law 449/97 also provides
partial exemptions from a corporate income tax, the IRPEG. These
partial exemptions are given for new employees hired between October 1,
1997 and December 31, 2000. Only firms located in EU Objective 1 areas
are eligible for these exemptions.
It appears from DeCecco's response that the company applied a
partial exemption it received under Law 449/97 to estimated IRPEG
payments it made in 1999. The estimated payments would apply to tax
year 1999, and the tax return for tax year 1999 would not be filed
until 2000.
Under section 351.509(c) of the Department's regulations, direct
tax benefits are assigned to the date on which the recipient firm would
otherwise have had to pay the taxes. Since it appears that the partial
exemption was applied towards estimated taxes in 1999 and that
DeCecco's ultimate liability for tax year 1999 would not be known until
2000, we preliminarily determine that any benefit from the IRPEG
exemption would not occur in this POR.
We are seeking further information from DeCecco to confirm our
understanding that the partial exemption was applied to estimated IRPEG
payments made during the POR for taxes that will ultimately be paid
after the POR.
2. Remission of Taxes on Export Credit Insurance Under Article 33 of
Law 227/77
The ``Special Section for Export Credit Insurance'' (``SACE'')
insures and reinsures Italian companies with foreign operations for
political, catastrophic, economic, commercial and exchange rate risks.
Article 33 of Law 227/77 provides for the remission of insurance taxes
on policies that are directly insured or reinsured with SACE.
In Pasta Investigation, the Department determined that the
remission of this tax was a countervailable subsidy. To calculate the
tax savings during the POI, the Department multiplied the premiums paid
during the POI by the insurance tax rate (12.5 percent). This amount
was then divided by exports to the United States to determine the ad
valorem benefit.
Pallante reported that it insured shipments in years prior to the
POR and received tax remissions in those years. However, it did not
receive tax remissions in the POR. Therefore, we preliminarily
determine that there was no benefit to Pallante during the POR.
3. ADAPT
DeCecco reported that it received a training grant during the POR
aimed at enhancing its sales forces in Italy. According to DeCecco, the
grant was made available under the European program ``ADAPT.'' The
funding for this program comes in part from the EU's Social Fund and
from the GOI. The GOI's Ministry of Labor administers these
contributions on behalf of the EU.
DeCecco claims, and has provided supporting information, that
assistance
[[Page 40995]]
under the ADAPT program is neither de jure nor de facto specific.
According to DeCecco, the ADAPT Program is focused on small- and
medium-sized companies, is widely available throughout the EU and has
been widely used.
Based upon our review of the data provided by DeCecco regarding the
ADAPT Program, it appears that this assistance differs from the
European Social Fund worker training grants that we have countervailed
in Pasta Investigation and subsequent reviews. In particular, the
grants we have countervailed in the past have been given to support one
or more of the specific objectives described in the ``European Social
Fund'' section, above. In the case of the ADAPT program, it appears
that the funding is not given under these specific objectives. Also, as
DeCecco claims, the ADAPT program appears to be focused on the non-
specific group of small and medium-sized enterprises (see, section
351.502(e)), and to be available to and used by companies across the
EU.
Therefore, we preliminarily determine that the ADAPT Program does
not confer a countervailable subsidy. For the final results, we intend
to seek further information on the ADAPT Program from the EU and the
GOI.
. Law 1329/65 Interest Contributions (Sabatini Law)
The Sabatini Law was enacted to encourage the purchase of
production equipment. It provides, inter alia, for one-time, lump-sum
interest contributions from the Mediocredito Centrale on loans taken
out to purchase production equipment. Pallante reported that it
received interest contributions under the Sabatini Law prior to the
POR.
In Pasta Investigation, the Department determined that the interest
contributions to firms in Southern Italy confer countervailable
subsidies. The Department also determined that companies were able to
anticipate the interest contributions at the time the loans were taken
out. Consequently, in accordance with sections 351.508(c)(2) and
351.505(c)(2) of the Department's regulations any benefit would be
countervailed in the year of receipt.
Since Pallante received the interest contributions prior to the
POR, we preliminarily determine that the Sabatini Law did not confer a
benefit during the POR.
5. European Social Fund
The European Social Fund (``ESF''), one of the EU's structural
funds, was created under Article 123 of the Treaty of Rome to improve
employment opportunities for workers and to help raise their living
standards. There are six different objectives identified for the
structural funds: Objective 1 covers projects located in underdeveloped
regions; Objective 2 addresses areas in industrial decline; Objective 3
relates to the employment of persons under the age of 25; Objective 4
funds training for employees in companies undergoing restructuring;
Objective 5 pertains to agricultural areas; and Objective 6 applies to
regions with very low population (i.e., the far north).
In Pasta Investigation, the Department determined that ESF grants
confer a countervailable subsidy within the meaning of section 771(5)
of the Act.
DeMatteis reported that it received an ESF grant in 1995. DeMatteis
states that its grant was a one-time measure that required a separate
application and government approval, and, therefore, that its ESF grant
should be treated as a non-recurring subsidy.
In accordance with section 351.524(b)(2) of the regulations, we
divided the amount of the ESF grant by the value of DeMatteis' total
sales in the year the grant was approved. On this basis, we
preliminarily determine that the benefit from this grant is properly
allocated to the year of receipt, 1995. Hence, there is no benefit to
DeMatteis during the POR.
III. Programs Preliminarily Determined To Be Not Used
We examined the following programs and preliminarily determine that
the producers and/or exporters of the subject merchandise did not apply
for or receive benefits under these programs during the POR:
1. Law 64/86 VAT Reductions.
2. Export Credits under Law 227/77.
3. Capital Grants under Law 675/77.
4. Retraining Grants under Law 675/77.
5. Interest Contributions on Bank Loans under Law 675/77.
6. Interest Grants Financed by IRI Bonds.
7. Preferential Financing for Export Promotion under Law 394/81.
8. Urban Redevelopment under Law 181.
9. Grant Received Pursuant to the Community Initiative Concerning
the Preparation of Enterprises for the Single Market (``PRISMA'').
10. European Agricultural Guidance and Guarantee Fund (``EAGGF'').
Preliminary Results of Review
In accordance with 19 CFR 351.221(b)(4)(i), we calculated an
individual subsidy rate for each producer/exporter covered by this
administrative review. For the period January 1, 1999 through December
31, 1999, we preliminarily determine the net subsidy rates for
producers/exporters under review to be those specified in the chart
shown below. If the final results of this review remain the same as
these preliminary results, the Department intends to instruct the U.S.
Customs Service (``Customs'') to assess countervailing duties at these
net subsidy rates. The Department also intends to instruct Customs to
collect cash deposits of estimated countervailing duties at these rates
on the f.o.b. value of all shipments of the subject merchandise from
the producers/exporters under review that are entered, or withdrawn
from warehouse, for consumption on or after the date of publication of
the final results of this administrative review.
------------------------------------------------------------------------
Ad valorem
Company rate
(percent)
------------------------------------------------------------------------
Agritalia, S.r.L........................................... 2.94
F.lli De Cecco di Filippo Fara San Martino S.p.A........... 2.21
Delverde S.p.A............................................. 3.27
De Matteis Agroalimentare S.p.A............................ 2.33
Pastificio Antonio Pallante S.r.L.......................... 4.10
Pastificio Maltagliati S.p.A............................... 3.85
P.A.M. S.r.L.--Prodotti Alimentari Meridionali............. 1.08
Pastificio Riscossa F.lli Mastromauro S.r.L................ 1.13
N. Puglisi & F. Industria Paste Alimentari S.p.A........... 7.48
Rummo S.p.A. Molino e Pastaficio........................... 1.26
------------------------------------------------------------------------
We calculated the ad valorem rate for Agritalia, an export trading
company, by weight averaging the subsidy rates for its two main
suppliers of pasta for export to the United States and adding this
amount to the subsidy rate calculated for Agritalia based on the
subsidies it received directly. This is consistent with the calculation
methodology used for Agritalia in Pasta Investigation, 61 FR 30288,
30309.
The calculations will be disclosed to the interested parties in
accordance with section 351.224(b) of the regulations.
For companies that were not named in our notice initiating this
administrative review (except Barilla G. e R. F.lli S.p.A.
(``Barilla'') and Gruppo Agricoltura Sana S.r.L. (``Gruppo'') which
were excluded from the order during the investigation), the Department
has directed Customs to assess countervailing duties on all entries
between January 1, 1999 and
[[Page 40996]]
December 31, 1999 at the rates in effect at the time of entry. For
those companies for which this review has been rescinded (Pastificio
F.lli Pagani, Commercio-Rappresentanze-Export S.r.L., Tamma Industrie
Alimentari di Capitanata. S.r.L., Molino e Pastificio, La Molisana
Alimentari S.p.A., Arrighi S.p.A. Industrie Alimentari, Industria
Alimentare Colavita, S.p.A., Isola del Grano S.r.L., Italpast S.p.A.,
Italpasta S.r.L., Labor S.r.L., Pastificio Guido Ferrara, Pastificio
Campano, S.p.A., Indalco, Audisio Industrie Alimentari de Capitanata,
S.p.A., and Pastificio Fabianelli, S.p.A., and Pastificio Di Martino
Gaetano & F.lli s.r.l.), we will direct Customs to liquidate all
entries between January 1, 1999 and December 31, 1999 at the rates in
effect at the time of entry.
For all non-reviewed firms, we will instruct Customs to collect
cash deposits of estimated countervailing duties at the most recent
company-specific or country-wide rate applicable to the company.
Accordingly, the cash deposit rates that will be applied to non-
reviewed companies covered by this order are those established in the
Notice of Countervailing Duty Order and Amended Final Affirmative
Countervailing Duty Determination: Certain Pasta from Italy, 61 FR
38544 (July 24, 1996) or the company-specific rate published in the
most recent final results of an administrative review in which a
company participated. These rates shall apply to all non-reviewed
companies until a review of a company assigned these rates is
requested.
Public Comment
Interested parties may submit written arguments in case briefs
within 30 days of the date of publication of this notice. Rebuttal
briefs, limited to issues raised in case briefs, may be filed not later
than five days after the date of filing the case briefs. Parties who
submit briefs in this proceeding should provide a summary of the
arguments not to exceed five pages and a table of statutes,
regulations, and cases cited. Copies of case briefs and rebuttal briefs
must be served on interested parties in accordance with 19 CFR
351.303(f).
Interested parties may request a hearing within 30 days after the
date of publication of this notice. Any hearing, if requested, will be
held two days after the scheduled date for submission of rebuttal
briefs.
Representatives of parties to the proceeding may request disclosure
of proprietary information under administrative protective order no
later than 10 days after the representative's client or employer
becomes a party to the proceeding, but in no event later than the date
the case briefs, under 19 CFR 351.309(c)(ii), are due.
The Department will publish a notice of the final results of this
administrative review within 120 days from the publication of these
preliminary results.
This administrative review and notice are in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: July 4, 2001.
Faryar Shiryard,
Assistant Secretary for Import Administration.
[FR Doc. 01-19624 Filed 8-3-01; 8:45 am]
BILLING CODE 3510-DS-P