66 FR 51640, October 10, 2001
C-475-819
Sunset Review
Public Document
MEMORANDUM TO: Faryar Shirzad
Assistant Secretary
for Import Administration
FROM: Jeffrey A. May
Director
Office of Policy
SUBJECT: Issues and Decision Memo for the Expedited Sunset Review of the
Countervailing Duty Order on Certain Pasta from Italy; Final Results
Summary:
We have analyzed the substantive responses of domestic interested parties
and respondent interested parties in the expedited sunset review of the
countervailing duty order on certain pasta ("pasta") from Italy. We
recommend that you approve the positions we have developed in the
Discussion of the Issues section of this memorandum for these final
results of review. Below is the complete list of the issues in this
expedited sunset review for which we received comments from interested
parties:
1. Likelihood of Continuation or Recurrence of Countervailable Subsidies
A. Programs from the investigation and subsequent reviews
B. Continuation of subsidy programs
2. Net countervailable subsidy likely to prevail
A. Net countervailable subsidy from the investigation
B. Adjustments to the subsidy
3. Nature of the Subsidies
History of the Order:
On July 14, 1996, the Department published in the Federal Register a
final affirmative countervailing duty determination on pasta from Italy
(61 FR 30288). On July 24, 1996, the Department published the
countervailing duty order and amended final countervailing duty
determination in the Federal Register ( 61 FR 38544). The following
programs were found to confer countervailable subsidies in the original
investigation:
(1) Local Income Tax ("ILOR") Exemptions
(2) Industrial Development Grants Under Law 64/86
(3) Industrial Development Loans Under Law 64/86
(4) Export Marketing Grants Under Law 304/90
(5) Social Security Reductions and Exemptions
a. Sgravi Benefits
b. Fiscalizzazione Benefits
c. Law 407/90 Benefits
d. Law 863 Benefits
(6) European Regional Development Fund
(7) European Social Fund
(8) Export Restitution Payments
(9) Lump-Sum Interest Payment Under the Sabatini Law for
Companies in Southern Italy
(10) Remission of Taxes on Export Credit Insurance Under
Article 33 of Law 227/77
In the original investigation the Department also determined that one
program did not confer countervailable subsidies, and that ten programs
were not used by the Italian pasta industry. The list below identifies
manufacturers, producers, and exporters, and net subsidies determined
by the Department in the investigation (61 FR 38544):
Manufacturers/Producers/Exporters Net subsidy (percent)
______________________________________________________________________
Agritalia, S.r.l. 2.55
Arrighi S.p.A. Industrie Alimentari 2.44
Barilla G. e R. F.lli S.p.A ("Barilla") Excluded *
De Matteis Agroalimentare S.p.A. 2.47
Delverde, S.r.l. 5.90
F.lli De Cecco di Filippo Fara S. Martino S.p.A. 3.37
Gruppo Agricoltura Sana S.r.L.("Gruppo") Excluded *
Industria Alimentare Colavita, S.p.A 2.04
Isola del Grano S.r.L. 11.23
Italpasta S.p.A. 11.23
Italpasta S.r.L. 2.44
La Molisana Alimentari S.p.A. 4.17
Labor S.r.L. 11.23
Molino e Pastificio De Cecco S.p.A. Pescara 3.37
Pastificio Guido Ferrara 1.21
Pastificio Campano, S.p.A. 2.59
Pastificio Riscossa F.lli Mastromauro S.r.L. 6.91
Tamma Industrie Alementari di Capitanata 5.90
All Others 3.85
* Barrilla and Gruppo were excluded from the order during the original
investigation.
______________________________________________________________________
The Department has completed three administrative reviews since the
issuance of this order. (1) On September 6, 2000, the Department initiated
(65 FR 53980) the fourth administrative review covering the period January
1, 1999 through December 1999. The Department published the preliminary
results of the fourth review on August 6, 2001 (66 FR 40987). The
Department is scheduled to reach its final results of review not later
than December 4, 2001.
In the final results of the first administrative review (63 FR 43905) the
Department found several programs to confer countervailable subsidies. The
net countervailable subsidies ranged between de minimis to 7.78 percent.
The list below identifies subsidy programs in the first review:
Local Income Tax ("ILOR") Exemptions
Industrial Development Grants Under Law 64/86
Industrial Development Loans Under Law 64/86
Export Marketing Grants Under Law 304/90
Social Security Reductions and Exemptions
a. Sgravi Benefits
b. Fiscalizzazione Benefits
c. Law 863 Benefits
European Social Fund
Export Restitution Payments
Lump-Sum Interest Payment Under the Sabatini Law for Companies in
Southern Italy
Remission of Taxes on Export Credit Insurance Under Article 33 of Law
227/77
PRISMA
In the first administrative review, the Department found 10 subsidy
programs that were not used by Italian manufacturers, producers, and
exporters.
In the amended final results of the second administrative review (64 FR
51293) the following programs were found to confer countervailable
subsidies. The net countervailable subsidies ranged from zero to 3.98
percent:
Industrial Development Grants Under Law 64/86
Industrial Development Loans Under Law 64/86
Industrial Development Grants Under Law 488/92
Export Marketing Grants Under Law 304/90
Social Security Reductions and Exemptions
a. Sgravi Benefits
b. Fiscalizzazione Benefits
c. Law 863 Benefits
d. Law 307/90
European Social Fund
Export Restitution Payments
Remission of Taxes on Export Credit Insurance Under Article 33 of Law
227/77
In addition, in the second review the Department found 15 subsidy programs
that were not used by Italian manufacturers, producers, and exporters.
Finally, in the third administrative review (66 FR 11269), the following
programs conferred countervailable subsidies. In this review, net
subsidies ranged between de minimis and 3.10 percent:
Industrial Development Grants Under Law 64/86
Law 488/92 Industrial Development Grants
Industrial Development Loans Under Law 64/86
Law 183/76 Industrial Development Grants
Law 304/90 Export Marketing Grants
Social Security Reductions and Exemptions- Sgravi Benefits
Law 598/94 Interest Subsidies
Law 236/93 Training Grants
European Social Fund
Export Restitution Payments
In the third review, the Department found 18 programs not used by the
Italian pasta industry.
In addition, the Department determined that one program, Fiscalizzazione
Benefits (also a part of the Social Security Reductions and Exemptions
Program) did not confer countervailable subsidies during the third period
of review.
The Department has issued several scope rulings and a notice of
initiation of anti-circumvention inquiry with respect to this order. (2)
In the initial investigation, the Department excluded two companies from
this order; Barilla G. e R. F. lli S.p.A. ("Barilla") and Gruppo
Agricoltura Sana S.r.L. ("Gruppo"). (3)
The order remains in effect for all Italian pasta producers and exporters
except for Barilla and Gruppo.
Background:
On June 1, 2001, the Department initiated a sunset review of the
countervailing duty order on pasta from Italy (66 FR 29771), pursuant to
section 751(c) of the Tariff Act of 1930, as amended, ("the Act"). The
Department received a notice of intent to participate on behalf of the New
World Pasta Company, Dakota Growers Pasta Company, Borden Foods
Corporation, and American Italian Pasta Company (collectively "the
domestic interested parties"), within the applicable deadline (June 15,
2001) specified in section 351.218(d)(1)(i) of the Sunset Regulations.
The domestic parties claimed interested-party status under section
771(9)(C) of the Act, as domestic producers of certain pasta.
On June 29, 2001, we received a request for extension of time to file
substantive responses and rebuttal briefs from the domestic interested
parties. (4) Pursuant to 19 CFR 351.302(b), the Department extended the
deadlines for the domestic interested parties and all eligible
participants until July 16, 2001, for the submission of substantive
responses, and July 23, 2001, for the submission of rebuttal briefs. (5)
Accordingly, on July 16, 2001, we received a complete substantive
response to the notice of initiation from the domestic interested parties.
The domestic interested parties assert that most of the domestic
interested parties participated in the original investigation, including
participation in the scope clarification proceeding. (6)
On June 28, 2001 and June 29, 2001, we received complete substantive
responses from the Delegation of the European Commission ("EC") and the
government of Italy ("GOI"). The EC expressed its intent to participate in
this review as the authority responsible for defending the interest of the
Member States of the European Union. See EC's substantive response at I E,
June 28, 2001. The GOI expressed its intent to participate in this review
as the authority responsible for defending the interests of its domestic
industry. See GOI's substantive response at I E (June 29, 2001). On June
29, 2001, Delverde S.p.A. and Tamma Industrie Alimentari de Capitanata,
Italian producers and exports of the subject merchandise, waived
participation in this review, pursuant to section 351.218(d)(2). On July
16, 2001, we received a complete substantive response from N. Puglisi & F.
Industria Paste Alimentari S.p.A. ("Puglisi"), manufacturer and exporter
of the subject merchandise, and its U.S. affiliate, Rienzi & Sons, Inc.,
("Rienzi"), Puglisi and Rienzi claim interested-party status pursuant to
section 771(9) of the Tariff Act of 1930, as amended (19 U.S.C.§ 1677(9)),
and 19 C.F.R.§351.102(b). See Puglisi and Rienzi's substantive response at
2 (July 16, 2001). Puglisi is the only foreign manufacturer and exporter
for which we received a substantive response. (7) Because measurement of
any benefits attributable to the programs investigated in the original
investigation and subsequent reviews of this order is dependent upon
company-specific information, we determine that company participation is
appropriate. However, because Puglisi's five-year average percentage of
exports to the United States vis-a-vis the total exports of the subject
merchandise during the relevant period is significantly below the fifty
percent threshold provided for in section 351.218(e)(1)(ii)(A) of the
Sunset Regulations, we determined that respondents' response was
inadequate to warrant a full review. Consequently, on July 23, 2001,
pursuant to section 351.218(e)(1)(ii)(C)(2) of the Department's
regulations, we determined to conduct an expedited (120-day) sunset review
of this order. (8)
On July 23, 2001, we received rebuttal briefs on behalf of the domestic
interested parties. We did not receive rebuttal briefs from any respondent
interested parties in this proceeding. The Department did not conduct a
hearing because a hearing was not requested.
Discussion of the Issues:
In accordance with section 751(c)(1) of the Act, the Department conducted
this review to determine whether termination of the countervailing duty
order would be likely to lead to continuation or recurrence of a
countervailable subsidy. Section 752(b) of the Act provides that, in
making this determination, the Department shall consider the net
countervailable subsidy determined in the investigation and subsequent
reviews, and whether any change in the program which gave rise to the net
countervailable subsidy has occurred and is likely to affect that net
countervailable subsidy. Pursuant to section 752(b)(3) of the Act, the
Department shall provide to the International Trade Commission ("the
Commission") the net countervailable subsidy likely to prevail if the
order is revoked. In addition, consistent with section 752(a)(6), the
Department shall provide to the Commission information concerning the
nature of the subsidy and whether it is a subsidy described in Article 3
of the 1994 World Trade Organization ("WTO") Agreement on Subsidies and
Countervailing Measures ("Subsidies Agreement").
Below we address the response of interested parties.
1. Continuation or Recurrence of a Countervailable Subsidy:
Interested Party Comments
Comment 1
The domestic interested parties argue that revocation of this order is
likely to lead to continued and increased subsidization of the subject
merchandise. See domestic interested parties' response at 6 (July 16,
2001). In support of this statement, the domestic interested parties
assert the GOI and the EC have provided numerous programs to the Italian
pasta industry over a long period of time, e.g, the EU Pasta Export
Restitution Program, ILOR Tax Exemption, and Law 64, Grants and Loans. Id.
at 7. Further, they add that there is no evidence to indicate that these
programs will expire soon. Id.
Department's Position:
We agree with the domestic interested parties' assertion that numerous
programs have been used by the Italian pasta industry over a long period
of time. As noted in the section concerning the history of this order,
several programs have been found to provide benefits to Italian pasta
producers and exporters during the investigation and subsequent
administrative reviews. In addition, net subsidy rates for several Italian
companies continue at levels above de minimis.
Comment 2
The domestic interested parties note that, although the countervailing
duty order has caused a decline in the use of subsidy programs by Italian
pasta producers and exporters and termination of two programs (Law 113
Training Grants and social reductions under Fiscalizzazione) it has not
caused the GOI and/or the EC to terminate other programs. Id. at 8.
Instead, the domestic interested parties note that new countervailable
programs have been identified since the investigation: PRISMA, Law 236
Training Grants, and Law 598 Interest payments. Id. The domestic
interested parties, noting the Department's Policies Regarding the Conduct
of the Five-Year ("Sunset") Reviews of Antidumping and Countervailing Duty
Orders, Policy Bulletin, assert that the Department has clearly stated
that continuation of a program will be highly probative of the likelihood
of continuation or recurrence of countervailable subsidies. Id.
Furthermore, regardless of a long history of not using a program, the fact
that a program has been in place for a long period of time without its use
does not indicate that continued subsidization is unlikely. Id. at 8-9.
Moreover, the domestic interested parties assert that the fact that the
order has caused companies to discontinue the use of a program during
reviews does not mean that these subsidies are unlikely to be used if the
order is revoked. Instead, it shows that the order is having its intended
effect, and that, absent the order, there is likely to be a return to
higher levels of subsidization. Id.
Department's Position
With respect to the domestic interested parties' assertion that two
programs have been terminated (Law 113.86 Training Program, and the social
security reduction under Fiscalizzazione), in the Department's third
administrative review, we determined that benefits provided under
Fiscalizzazione were no longer countervailable. We do not have information
demonstrating that Law 113.86 has been terminated by legislative action.
In addition, new programs (PRISMA , Law 236 Training Grants, Law 183/76
Industrial Development Grants, and Law 598 Interest Payments) were found
to confer countervailable subsidies in the administrative reviews
subsequent to the investigation. As stated in the Statement of
Administrative Action ("SAA") accompanying the Uruguay Round Agreement Act
("URAA"), at 888, given that programs continue to provide countervailable
subsidies, continuation of a program will be considered highly probative
of the likelihood of continuation or recurrence of countervailable
subsidies.
Respondent Interested Parties' Comments
Comment 3
Rienzi and Puglisi contend that there would be no likelihood of continued
subsidization at statistically significant levels if the countervailing
duty order on pasta were revoked given that (1) subsidy utilization by
Italian pasta manufacturers has consistently been reduced, (2) certain
major subsidies are set to expire in the near future, and (3) existence of
the CVD order has had no effect on import volumes. See Rienzi and
Puglisi's substantive response at 3 (July 2, 2001). In support of their
statement that revocation of this order will not likely lead to
continuation or recurrence of countervailable subsidies, Rienzi and
Puglisi claim that, of the twenty-seven programs found to be
countervailable in the investigation, ten programs were not used by
Italian pasta producers and exporters. Rienzi and Puglisi also note that,
in the third administrative review, nineteen subsidy programs were found
to be not used, and that a number of programs that are being used will
expire in the near future. Id. at 4. Although Italian producers have
benefitted from social security, local and corporate tax exemptions,
Puglisli and Rienzi claim that these exemptions will not provide benefits
beyond 2003. Id. Finally, Rienzi and Puglisli maintain that the order has
not had an effect on import volume, given that the volume of the subject
merchandise imported into the United States have increased since the
issuance of this order. They contend that, prior to the order, annual
import volumes totaled 379,661,956 kilograms, and that over the past three
years annual import volumes increased to 486,115,365 kilograms. Id. at 6.
Department's Position
We agree with Rienzi and Puglisi's assertion that there has been a steady
decline of subsidy utilization by Italian pasta producers and exporters.
However, we also note that various subsidy programs remain available to
the Italian pasta industry. In their response, Rienzi and Puglisi stated
that the social security, local and corporate tax exemptions will not
provide benefits beyond 2003. This date extends beyond our sunset review
period. In examining a subsidy for which the benefits are allocated over
time, the Department normally will determine that a countervailable
subsidy will continue to exist when the benefit stream, as defined by the
Department, will continue beyond the end of the sunset review period,
without regard to whether the program that gave rise to the long-term
benefit continues to exist. See SAA at 889 "Subsidies for which benefits
are allocated over time." In our review we also find that three
countervailable subsidy programs (Export Marketing Grants Under Law
304/90, Remission of Taxes on Export Credit Respondent's Insurance Under
Article 33 of Law 227/77, and Export Restitution Program) meet the
definition of export subsidies under Article 3.1. of the Subsidies
Agreement. In addition, as noted in the history of this order, most of the
programs found in the investigation continue to exist. As stated in the
SAA, at 888, continuation or recurrence of a program will be highly
probative of the likelihood of continuation or recurrence of
countervailable subsidies. In this instance, there are several subsidy
programs that are available to the Italian pasta industry, and some of
these programs are export subsidies.
Rienzi and Puglisi's statement that the countervailing duty order has had
no effect on import volumes because the import volume of pasta from Italy
has increased since the issuance of the order is insufficient to
demonstrate absence of likelihood, particularly in a countervailing duty
(rather than an antidumping) case, where decisions regarding likelihood
are primarily based on the continued existence of countervailing duty
programs and/or benefits therefrom. See Sunset Reviews in Countervailing
Duty Proceedings section in the Sunset Policy Bulletin.
Comment 4
The EC and the GOI assert that they do not foresee any negative impact
from termination of the order, given that the countervailing duty rate of
several companies countervailed in the original investigation is now close
to or below the de minimis threshold. See EC's response at 3 and GOI's
response at 4. Furthermore, the EC and the GOI contend that the history of
this order demonstrates that an increase in subsidization during the next
five years is not likely. Id. In addition, the EC points to the WTO
consultations with respect to the United States imports covered by Certain
Corrosion-Resistant Carbon Steel Flat Products from Germany and argues
that Commerce is incorrect in using a 0.5 percent de minimis threshold in
sunset reviews. (9) In the WTO consultations, the EC asserted that the one
percent standard found in Article 19 of the Subsidies Agreement should
also be used as the appropriate threshold in sunset reviews, and that it
reserves the right to request further WTO consultations if the Department
applies a 0.5 percent threshold in this sunset review of pasta. The GOI
states that, with respect the current investigation, it shares the
position of the EC and its complaint against the Department's use, in
sunset reviews, of a 0.5 percent de minimis standard. See GOI's response
at 4.
Department's Position:
In accordance with section 752(b)(4)(B) of the Act and 19 CFR
351.106(c)(1), the Department will treat as de minimis any countervailable
subsidy rate that is less than 0.5 percent ad valorem. The statute states
that "the administering authority shall apply the de minimis standards
applicable to reviews conducted under subsections (a) and (b) of section
751 for which the Department has established a de minimis standard of 0.5
percent. Further, the legislative history supports the application of the
0.5 percent standard for de minimis in sunset reviews. In Malleable Cast
Iron Pipe Fittings from Thailand: Final Results of Full Sunset Review (64
FR 66884 (November 30, 1999)), the Department determined that both the
statute and regulations clearly provide that, in reviews of orders, that
the Department will treat as de minimis any weighted-average margin that
is less than 0.5 percent ad valorem. With respect to the EC and GOI's
arguments concerning the Subsidies Agreement, U.S. law and regulations are
fully consistent with our WTO obligations.
Comment 5
In their response, the GOI and the EC also address three programs found
to confer countervailable subsidies in the investigation and subsequent
administrative reviews (Remission of Taxes on Export Credit Insurance
Under Article 33 of Law 227/77, Community Initiative Concerning
Preparation of Enterprises for the Single Market ("PRISMA"), and the
European Structural Fund ("ESF")). The EC and the GOI maintain that these
programs have been replaced, are no longer enforceable, or have been
terminated. Id.
Department's Position
The Department finds that the decline in use of subsidy programs by
Italian pasta producer and exporters, alone, does not demonstrate that
these programs will not be reinstated in the future. The SAA states that
"[w]here the foreign government has eliminated a subsidy program or
changes a program to exclude subject merchandise, the Department will
consider the legal method by which the government eliminated the program,
and whether the government is likely to reinstate the program." See SAA
888. Currently we do not have sufficient documentation indicating the
legal method by which the programs have been terminated.
Domestic Interested Parties' Rebuttal
Comment 6
In their July 23, 2001, rebuttal, the domestic interested parties
reiterate the numerous programs that continue to exist for Italian
producers and exporters. The domestic interested parties claim that (1)
respondent interested parties have failed to show that Italian pasta
producers will no longer be subsidized if the order is revoked, (2)
respondent interested parties have not established that a de minimis rate
is likely to prevail in the event of revocation, and (3) the responses
submitted by respondent interested parties are inadequate and an expedited
review is justified given the unique circumstances of this case. First,
according to the domestic interested parties, respondent interested
parties solely focus on the decline of utilization of subsidies by the
Italian pasta industry, coupled with the decline in subsidy rates. The
domestic interested parties allege that respondent interested parties
focus on termination of small programs that are of minimal significance in
a sunset review to support their claim that revocation of this
countervailing duty order is not likely. See Domestic Interested Parties'
Rebuttal at 2. For example, they note that the GOI and the EC, in their
response, claim that three programs have been terminated. See Domestic
Interested Parties' Rebuttal at 3 (July 23, 2001). Second, the respondent
interested parties have ignored the existence of, and use of, the majority
of these programs. Domestic interested parties note that, since the order
has been in place, the Department has continued to calculate above de
miminis rates for virtually all exporters reviewed. Third, the domestic
interested parties contend that Rienzi and Puglisi's response is
inadequate in this sunset review because the combined exports of these
companies have never exceeded the three percent of total import volume.
This is well below the 50 percent threshold required to warrant a full
review of the order. Therefore, they maintain that the Department should
conduct an expedited review. Id. at 8.
Department's Position
Drawing on the guidance provided in the legislative history accompanying
the Uruguay Round Agreements Act ("URAA"), specifically, the SAA, H.R.
Doc. No. 103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826,
pt.1 (1994), and the Senate Report, S. Rep. No. 103-412 (1994), the
Department issued its Sunset Policy Bulletin providing guidance on
methodological and analytical issues, including the basis for likelihood
determinations. The Department clarified that determinations of likelihood
will be made on an order-wide basis (see section III.A.2 of the Sunset
Policy Bulletin). Additionally, the Department normally will determine
that revocation of a countervailing duty order is likely to lead to
continuation or recurrence of a countervailable subsidy where (a) a
subsidy program continues, (b) a subsidy program has been only temporarily
suspended, or (c) a subsidy program has been only partially terminated
(see section III.A.3.a of the Sunset Policy Bulletin). Exceptions to this
policy are provided where a company has a long record of not using a
program (see section III.A.3.b of the Sunset Policy Bulletin
The Department, through the process of administrative reviews, has
identified new countervailable programs affecting the subject merchandise
(PRISMA, Industrial Development Grants Law 183/76; Industrial Development
Grants Law 488/92; Law 598/94 Interest Subsidies; and Law 236/93 Training
Grants). See History of the Order, above. Although we recognize that some
of the old programs have been replaced with new programs, these programs
have been found to confer countervailable subsidies over the history of
this order and most of these programs are scheduled to continue past the
time of this sunset review. As noted in the SAA at 889, where the
Department is examining a subsidy for which the benefits are allocated
over time, the Department normally will determine that a countervailable
subsidy will continue to exist when the benefit stream, as defined by the
Department, will continue beyond the end of the sunset review, without
regard to whether the program that gave rise to the long-term benefit
continues to exist. On this basis alone, the Department can determine that
revocation of the order is likely to lead to the continuation or
recurrence of countervailable subsidies. Specifically, we find in this
review that programs meeting the definition of export subsidies continue
to provide benefits to the Italian pasta industry. These programs include:
Export Marketing Grants Under Law 304/90, Remission of Taxes on Export
Credit Insurance Under Article 33 of Law 227/77, and the Export
Restitution Program. The Sunset Policy Bulletin states that revocation of
a countervailing duty order is likely to lead to a countervailing subsidy
where a subsidy program continues. In this instance, many subsidy programs
continue. Therefore, we find that revocation of the order would be likely
to lead to continuation or recurrence of a countervailable subsidy.
2. Net Countervailable Subsidy Likely to Prevail
Interested Party Comments:
Comment 7
The domestic interested parties suggest that the Department use the rates
from the original investigation as rates likely to prevail if the
countervailing duty order is revoked, because an overwhelming majority of
programs that comprise the original subsidy rate continue to exist. See
Domestic Interested Parties' Response at 10. However, they note that the
rates from the investigation may be understated given the new programs
identified in subsequent reviews. Id. For companies not reviewed in the
investigation, but which have since been included in subsequent
administrative reviews, e.g., Audisio Industrie Alimentari S.r.L.,
Pastificio Fabianelli S.p.A., Petrini S.p.A., and Rummo S.p.A. Molino
Pastificio, the domestic interested parties suggest the Department use the
first calculated rate for each company as the rate likely to prevail. Id.
The domestic interested parties also suggest that the Department adjust
the original countervailing duty rate for Delverde, given that the
Department made changes to Delverde's net subsidy rate after examining its
change in ownership analysis and methodology in response to the opinion of
the Court of Appeals for the Federal Circuit in Delverde S.r.L. v. United
States, 202 F. 3d 1360 (Fed. Cir. 2000). Id. at 11. Citing to the
Department's Sunset Policy Bulletin, the domestic interested parties
assert that the change in ownership methodology may affect the rate
calculated in the original determination, which is likely to affect the
net countervailable subsidy. Therefore, they urge the Department to
consider recalculating the original subsidy rate for Delverde using its
revised change in ownership methodology to obtain a more accurate measure
of the subsidy rate likely to prevail if the order were revoked. Id.
Respondent interested parties, Rienzi and Puglisli, assert that the
Department should calculate a simple average of the countervailing duty
rates for those companies included in this sunset review, excluding those
based on facts available, to determine the rate likely to prevail if the
order were to be revoked. Using this methodology, the rate assigned would
be 1.89 percent, rather than 3.85 percent. See Rienzi and Puglisli's
response at 7, and Exhibit C.
Department's Position:
In the Sunset Policy Bulletin, the Department stated that, consistent with
the SAA and the House Report, the Department normally will select a rate
from the investigation as the net countervailable subsidy likely to prevail
if the order is revoked, because that is the only calculated rate that
reflects the behavior of exporters and foreign governments without the
discipline of an order or suspension agreement in place. However, this
rate may not be the most appropriate rate if, for example, the rate was
derived from subsidy programs which were found in subsequent reviews to
be terminated, there has been a program-wide change, or the rate ignores
a program found to be countervailable in a subsequent administrative
review. (10)
Additionally, where the Department determined company-specific
countervailing duty rates in the original investigation the Department
normally will report to the Commission company-specific rates from the
original investigation; where no company-specific rate was determined for
a company, the Department normally will provide to the Commission the
country-wide or "all-others" rate (see Sunset Policy Bulletin at section
III.B.2.).
We disagree with Rienzi and Puglisi's argument that the Department should
apply a current average rate of 1.89 percent. Rienzi and Puglisi state
that 1.89 percent is an average for all companies subject to this order.
As stated above, the Department normally will report to the Commission
company-specific rates from the original investigation, or, where no
company-specific rate was determined for a company, the Department
normally will provide to the Commission the country-wide or "all-others"
rate (see Sunset Policy Bulletin at section III.B.2.). In the
investigation, several companies that were found to benefit from
countervailable subsidies were assigned individual rates. Therefore, in
this sunset review we have reported individual rates for each company that
was individually investigated. For those companies that were not
individually investigated, we have determined that the most appropriate
rate to report to the ITC is the "all others" rate from the investigation,
adjusted as described below. We believe that this rate most accurately
reflects the behavior of exporters without the discipline of an order in
place.
As noted above, the Sunset Policy Bulletin also provides that adjustments
may be made to the net countervailable subsidy likely to prevail where
programs have been terminated, where there have been program-wide changes,
or where new programs have been found to be countervailable. Since the
imposition of the countervailing duty order on pasta from Italy, in
subsequent administrative reviews, four new countervailable subsidy
programs have been identified and one subsidy program that was found to be
countervailable in the investigation has since been found to be not
countervailable. Therefore, the Department has determined that using the
net countervailable subsidy rates as determined in the original
investigation, without any adjustments, would not be appropriate for many
of the Italian pasta producers and exporters. Thus, we made adjustments to
several of the original company-specific countervailing duty rates.
Further, for any Italian pasta producer and exporter that did not
participate in the original investigation, we have used the "all others"
rate of 3.85 percent from the original investigation and adjusted this
rate to 3.89 percent to account for the program-wide change with respect
to the Fiscalizzazione Program found not to confer countervailable
subsidies, and the new countervailable subsidy programs, described above.
Finally, with respect to the comment of the domestic interested parties
concerning a possible adjustment to Delverde's countervailing duty rate
based on a methodological change made by the Department in response to the
opinion of the Court of Appeals for the Federal Circuit in Delverde S.r.L.
v. United States, we have determined that this change does not meet the
standard set out in the Department's Sunset Policy Bulletin for one of the
three types of adjustments that should be made to the countervailing duty
rate calculated in an investigation, i.e., where subsidy programs have
been terminated, where such programs which have undergone a program-wide
change, or where the investigation rate ignores a program found to be
countervailable in a subsequent administrative review. (11) Therefore, we
have not adjusted the rate calculated for Delverde in the original
investigation to account for a methodological change that occurred
subsequent to it.
On this basis, we find that the net subsidy levels for all producers and
exporters of pasta included in this review are above de minimis and that
there is a likelihood of continuation or recurrence of countervailable
subsidies were the order to be revoked. Thus, we will report to the
Commission the net subsidy rates as contained in the Final Results of
Review section of this notice.
Final Results of Review:
As a result of this review, the Department finds that revocation of the
countervailing duty order on pasta from Italy would likely lead to
continuation or recurrence of a countervailable subsidy at the rates
listed below:
Manufacturers/Producer/Exporter Net Countervailable
Subsidy (percent)
----------------------------------------------------------------------
Agritalia, S.r.l................................... 3.03
Agrrighi S.p.A. Industrie Alimentari ............ 2.92
De Matteis Agroalimentare S.p.A.................... 2.55
Barrilla G. e R. F.lli, S.p.A ("Barilla") Excluded *
Delverde, S.r.l.................................... 4.04
F.lli De Cecco di Filippo Fara S. Martino S.p.A.... 3.47
Gruppo Agricoltura Sana, S.r. L ("Gruppo") Excluded *
Industria Alimentare Colavita, S.p.A............... 2.08
Isola del Grano S.r.L............................. 11.71
Italpasta S.p.A.................................... 11.71
Italpasta S.r.L................................... 2.92
La Molisana Alimentari S.p.A., .................... 3.94
Labor S.r.L....................................... 11.71
Molino e Pastificio De Cecco S.p.A. Pescara ....... 3.47
Pastificio Guido Ferrara .......................... 1.41
Pastificio Campano, S.p.A.......................... 2.54
Pastificio Riscossa F.lli Mastromauro S.r.L........ 6.48
"All Others" 3.89
* Barilla G. e.R. F. lli S.p.A. ("Barilla") and Gruppo Agricoltura
Sana S.r.L. ("Gruppo") are excluded from this order. See 61 FR 38544.
______________________________________________________________________
This notice serves as the only reminder to parties subject to
administrative protective order ("APO") of their responsibility concerning
the disposition of proprietary information disclosed under APO in
accordance with 19 CFR 351.305 of the Department's regulations. Timely
notification of return/destruction of APO materials or conversion to
judicial protective order is hereby requested. Failure to comply with the
regulations and the terms of an APO is a sanctionable violation. This
sunset review and notice are in accordance with sections 751(c), 752,
and 777(i)(1) of the Act.
3. Nature of Subsidies:
Consistent with section 752(a)(6), the Department shall provide to the
Commission information concerning the nature of the subsidy and whether it
is a subsidy described in Article 3 of the 1994 World Trade Organization
("WTO") Agreement on Subsidies and Countervailing Measures ("Subsidies
Agreement"). In this review we find that three of the programs included in
the calculations of the net countervailable subsidy likely to prevail if
the order were revoked fall within the definition of an export subsidy
under Article 3.1(a) of the Subsidies Agreement. They are: Export
Marketing Grants Under Law 304/90, Remission of Taxes on Export Credit
Insurance Under Article 33 of Law 227/77, and Export Restitution Program.
AGREE ________ DISAGREE_________
_____________________
Joseph A. Spetrini
Acting Assistant Secretary
for Import Administration
_____________________
(Date)
__________________________________________________________________________
footnotes:
1. Certain Pasta From Italy: Final Results of Countervailing Duty
Administrative Review, 63 FR 43905(August 17, 1998). Certain Pasta From
Italy: Final Results of the Second Countervailing Duty Administrative
Review, 64 FR 44489 (August 16, 1999), as amended 64 FR 51293 (September
22, 1999), and Certain Pasta From Italy: Final Results of the Third
Countervailing Duty Administrative Review, 66 FR 11269 (February 23,
2001).
2. See Notice of Scope Rulings: 63 FR 6722 (February 10, 1998); 63 FR
29700 (June 1, 1998); 63 FR 41545 (August 4, 1998); 63 FR 59544 (November
4, 1998); 65 FR 41957 (July 7, 2000), and Notice of Anti-Circumvention, 65
FR 26179 (May 5, 2000). See Anti-Circumvention Inquiry of the Antidumping
Duty Order on Certain Pasta From Italy: Affirmative Final Determination of
Circumvention of the Antidumping Duty Order, 63 FR 54672 (October 13,
1998).
3. See Notice of Countervailing Duty Order and Amended Final Affirmative
Countervailing Duty Determination: Certain Pasta ("Pasta") From Italy
(July 24, 1996).
4. See June 29, 2001, Letter from Collier, Shannon, Scott, PLLC to the
Department
5. See June 29, 2001, Letter from James P. Maeder, Jr., Office of Policy
to Collier, Shannon, Scott, PLLC.
6. See July 16, 2001, Substantive Response of domestic interested parties
at 4.
7. Puglisi claims that they are first-time respondents in the ongoing
administrative review of the CVD order, and they do not have their own
countervailing duty rate.
8. See July 23, 2001, Letter from Jeffrey A. May, Director of Policy, to
Lynn Featherstone, Director of Investigations, International Trade
Commission, regarding inadequate response to the notice of initiation from
respondent interested parties.
9. See WTO Dispute Settlement Proceedings Regarding Countervailing Duty
Measures Concerning Certain Products From the European Communities, 66 FR
47515 (September 12, 2001).
10. See section III.B.3 of the Sunset Policy Bulletin .
11. See section III.B.3 of the Sunset Policy Bulletin .