[Federal Register: April 8, 2002 (Volume 67, Number 67)]
[Page 16722-16727]
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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, 2000, through December 31, 2000. We preliminarily
find 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Because its request for review was withdrawn, we are rescinding
this review for company N. Puglisi & F. Industria Paste Alimentari
S.p.A.
Interested parties are invited to comment on these preliminary
results (see the ``Public Comment'' section of this notice).
EFFECTIVE DATE: April 8, 2002.
FOR FURTHER INFORMATION CONTACT: Craig Matney, 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.
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 (April 2001).
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 2, 2001, the Department
published a notice of ``Opportunity to Request Administrative Review''
of this countervailing duty order for calendar year 2000 (Notice of
Opportunity to Request Administrative Review of Antidumping or
Countervailing Duty Order, Finding, or Suspended Investigation, 66 FR
34910). We received review requests for five producers/exporters of
Italian pasta. We initiated our review on August 20, 2001 (Initiation
of Antidumping and Countervailing Duty Administrative Reviews and
Requests for Revocation in Part, 66 FR 43570).
This administrative review of the order covers the following
producers/exporters of the subject merchandise: F.lli De Cecco di
Filippo Fara S. Martino S.p.A. (``De Cecco''), Delverde S.p.A.
(``Delverde''), Italian American Pasta Company, S.r.L. (``IAPC''), and
Labor S.r.L. (``Labor'') and 26 programs.
On October 19, 2001, we issued countervailing duty questionnaires
to the Commission of the European Union (``EC''), the Government of
Italy (``GOI''), and the producers/exporters of the subject
merchandise. We received responses to our questionnaires in November
and December 2001, and issued supplemental questionnaires in February
2002. Responses to the supplemental questionnaires were received in
February and March 2002.
Partial Rescission
As noted above, N. Puglisi & F. Industria Paste Alimentari S.p.A.
(``Puglisi''), one of the respondents, withdrew its request for review
on November 2, 2001. Because this request for withdrawal was timely
filed, we are rescinding this review with respect to this company (see
19 CFR 351.213(d)(1)). We will instruct the U.S. Customs Service to
liquidate any entries from Puglisi during the POR and to assess
countervailing duties at the rate that was applied at the time of
entry.
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, Bioagricoop S.c.r.l., QC&I International Services,
Ecocert Italia, the Conzorzio per il Controllo dei Prodotti Biologici,
Associazione Italiana per l'Agricoltura Biologica, or Codex S.r.L.
The merchandise subject to review is currently classifiable under
item 1902.19.20 of the Harmonized Tariff Schedule of the United States
[[Page 16723]]
(``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, 2000, through December 31, 2000.
Attribution of Subsidies
De Cecco: De Cecco has responded on behalf of two members of the De
Cecco Group: F.lli De Cecco di Filippo Fara San Martino S.p.A.
(``Pastificio'') and Molino e Pastificio F.lli De Cecco S.p.A.
(``Pescara''). Pastificio and Pescara manufacture pasta for sale in
Italy and the United States. Pastifico and Pescara are directly or
indirectly 100 percent-owned by members of the De Cecco family.
Effective January 1, 1999, Molino F.lli De Cecco di Filippo S.p.A.
(``Molino'') a third member of the De Cecco Group on whose behalf De
Cecco responded in the fourth administrative review, was merged with
Pastifico and ceased to be a separate entity. The Department will
continue to consider countervailable any benefits received by Molino in
past administrative reviews and allocated over a period that extends
into or beyond the current POR. In accordance with section
351.525(b)(6)(i) and (ii) of the regulations, we are attributing
subsidies received by Pastificio and Pescara to the combined sales of
both.
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 Fourth Administrative Review, 66 FR 64214, December 12, 2001
(``Fourth 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.
Labor: Labor has responded on behalf of itself and Pastificio
Balzano s.r.l. (``Balzano''), which was established by Labor on March
31, 2000. During the POR, Balzano had no sales, assets, employees, or
operational activities, and received no benefits from the GOI. Labor
had no other affiliates during the POR.
IAPC: IAPC has no affiliated companies located in Italy, and has
therefore responded only on its own behalf.
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).
The third review of this order was subject to section 351.524(d)(2)
of the regulations. Under this regulation, the
[[Page 16724]]
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 Certain Pasta from Italy: Final Results of Third
Administrative Review, 66 FR 11269, February 23, 2001 (``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 Results, 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.
De Cecco and Delverde 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)(D)(iv) 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, 1999 and
this POR, 2000, 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 (i.e., ``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 0.82
percent ad valorem for De Cecco and 1.23 percent ad valorem for
Delverde.
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.
De Cecco and Delverde 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 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
[[Page 16725]]
771(5A)(D)(iv) 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 0.34
percent ad valorem for De Cecco and 0.60 percent ad valorem for
Delverde.
3. 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.
De Cecco and Delverde 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)(D)(iv) 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.
On this basis, we preliminarily determine the countervailable
subsidy from the Law 64/86 industrial development loans to be 0.52
percent ad valorem for De Cecco and 0.25 percent ad valorem for
Delverde.
4. 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.
De Cecco 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)(D)(iv) of the Act.
Because De Cecco anticipated receiving the interest contributions
when it applied for the debt 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 De Cecco in the POR by De Cecco'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 De Cecco.
5. 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 183/76, Law 407/90, Law 863/84, 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, other than IAPC which is not located in the Mezzogiorno,
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)(D)(iv) 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
[[Page 16726]]
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).
In its November 26, 2001 questionnaire response, 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.
Consistent with our finding in Fourth Review--Final Results,
Comment 7, 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.
On this basis, we preliminarily determine the countervailable
subsidy from the sgravi program to be 0.08 percent ad valorem for De
Cecco, 0.17 percent ad valorem for Delverde, and 1.57 percent ad
valorem for Labor.
6. 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.
De Cecco and Delverde claimed the IRAP tax exemption on their tax
returns filed during the POR.
In Pasta Investigation, the Department determined that the ILOR tax
exemption confers a countervailable subsidy within 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, and the exemption was regionally
specific within the meaning of section 771(5A)(D)(iv) 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 0.10 percent ad valorem for
De Cecco, and 0.02 percent ad valorem for Delverde.
7. 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)(B) 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 0.37 percent
ad valorem for Delverde.
8. 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.
De Cecco and Delverde 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 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.
On this basis, we preliminarily determine the countervailable
subsidy from the export restitution program to be 0.02 percent ad
valorem for De Cecco and 0.19 percent ad valorem for Delverde.
9. 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.
Under section 351.509(c) of the Department's regulations, direct
tax benefits are assigned to the date on
[[Page 16727]]
which the recipient firm would otherwise have had to pay the taxes.
Because the partial exemption was applied towards estimated taxes in
1999 and De Cecco's ultimate liability for tax year 1999 became known
in 2000, we preliminarily determine that De Cecco received IRPEG
exemptions in this POR.
To calculate the countervailable subsidy, we divided the IRPEG
exemptions received by the recipient company in the POR by the value of
the company's total sales in the POR.
On this basis, we preliminarily determine the countervailable
subsidy from the IRPEG partial exemption program to be 0.00 percent ad
valorem for De Cecco.
II. 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 under review
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. Law 183/76 Industrial Development Grants
11. Law 598/94 Interest Subsidies
12. Law 236/93 Training Grants
13. European Regional Development Fund (ERDF)
14. Duty-Free Import Rights
15. Remission of Taxes on Export Credit Insurance Under Article 33 of
Law 227/77
16. Law 1329/65 Interest Contributions (Sabatini Law)
17. European Social Fund (ESF)
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, 2000 through December
31, 2000, 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 (in
percent)
------------------------------------------------------------------------
F.lli De Cecco di Filippo Fara San Martino S.p.A........... 1.90
Delverde S.p.A............................................. 2.83
Italian American Pasta Company, S.r.L...................... 0.00
Labor, s.r.l............................................... 1.57
------------------------------------------------------------------------
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, 2000 and December 31, 2000 at the rates in effect at
the time of entry. For the company for which this review has been
rescinded (Puglisi), we will direct Customs to liquidate all entries
between January 1, 2000 and December 31, 2000 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.
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) of the Act.
Dated: April 1, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-8445 Filed 4-5-02; 8:45 am]
BILLING CODE 3510-DS-P