[Federal Register: August 6, 2008 (Volume 73, Number 152)]
[Notices]
[Page 45721-45729]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06au08-39]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-475-819]
Certain Pasta from Italy: Preliminary Results of the 11th (2006)
Countervailing Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce (``Department'') is conducting an
administrative review of the countervailing duty order on certain pasta
from Italy for the period January 1, 2006, through December 31, 2006.
We preliminarily find that De Matteis Agroalimentare S.p.A. (``De
Matteis''), Pastificio Lucio Garofalo S.p.A. (``Garofalo''), and F.lli
De Cecco di Filippo Fara San Martino S.p.A. (``De Cecco'') received
countervailable subsidies, and that Pastificio Felicetti SrL
(``Felicetti'') did not receive any countervailable subsidies. See the
``Preliminary Results of Review'' section, below. Interested parties
are invited to comment on these preliminary results. See the ``Public
Comment'' section of this notice.
EFFECTIVE DATE: August 6, 2008.
FOR FURTHER INFORMATION CONTACT: Andrew McAllister or Brandon
Farlander, AD/CVD Operations, Office 1, Import Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW,
Washington, DC 20230; telephone: (202) 482-1174 and (202) 482-0182,
respectively.
SUPPLEMENTARY INFORMATION:
Background
On July 24, 1996, the Department published a countervailing duty
order on certain pasta (``pasta'' or ``subject merchandise'') from
Italy. See Notice of Countervailing Duty Order and Amended Final
Affirmative Countervailing Duty Determination: Certain Pasta From
Italy, 61 FR 38544 (July 24, 1996) (``Pasta Order''). On July 3, 2007,
the Department published a notice of ``Opportunity to Request
Administrative Review'' of this countervailing duty order for calendar
year 2006, the period of review (``POR''). See Antidumping or
Countervailing Duty Order, Finding, or Suspended Investigation;
Opportunity to Request Administrative Review, 72 FR 36420 (July 3,
2007). On July 31, 2007, we received requests for review from Garofalo,
Valdigrano Di Flavio Pagani SrL (``Valdigrano''), Felicetti, and
Prodotti Mediterranei, Inc. on behalf of De Cecco. On July 31, 2007, we
received a request for review from New World Pasta Company, American
Italian Pasta Company, and Dakota Growers Pasta Company
(``petitioners'') for De Matteis. In accordance with 19 CFR
351.221(c)(1)(i), we published a notice of initiation of the review on
August 24, 2007. See Initiation of Antidumping and Countervailing Duty
Administrative Reviews and Requests for Revocation in Part, 72 FR 48613
(August 24, 2007).
On September 11, 2007, we issued countervailing duty questionnaires
to the Commission of the European Union (``EU''), the Government of
Italy (``GOI''), Garofalo, Valdigrano, Felicetti, De Cecco, and De
Matteis. On October 16, 2007, Valdigrano withdrew its request for
review. On November 5, 2007, we rescinded the review with respect to
Valdigrano. See Certain Pasta from Italy: Notice of Partial Rescission
of Countervailing Duty Administrative Review, 72 FR 62437 (November 5,
2007).
We received responses to our questionnaires in November 2007. We
issued supplemental questionnaires to the respondents and GOI in
February, March, April, May, June, and July 2008, and we received
responses to our supplemental questionnaires in March, April, May,
June, and July 2008.
Period of Review
The POR for which we are measuring subsidies is January 1, 2006,
through December 31, 2006.
Scope of the Order
Imports covered by the order are shipments of certain non-egg dry
pasta in packages of five pounds four ounces or less, whether or not
enriched or fortified or containing milk or other optional ingredients
such as chopped vegetables, vegetable purees, milk, gluten, diastasis,
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 the order 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 Instituto Mediterraneo Di
Certificazione, Bioagricoop S.r.l., QC&I International Services,
Ecocert Italia, Consorzio per il Controllo dei Prodotti Biologici,
Associazione Italiana per l'Agricoltura Biologica, or Codex S.r.l. In
addition, based on publicly available information, the Department has
determined that, as of August 4, 2004, imports of organic pasta from
Italy that are accompanied by the appropriate certificate issued by
Bioagricert S.r.l. are also excluded from this order. See Memorandum
from Eric B. Greynolds to Melissa G. Skinner, dated August 4, 2004,
which is on file in the Department's Central Records Unit (``CRU'') in
Room B-099 of the main Department building. In addition, based on
publicly available information, the Department has determined that, as
of March 13, 2003, imports of organic
[[Page 45722]]
pasta from Italy that are accompanied by the appropriate certificate
issued by Instituto per la Certificazione Etica e Ambientale (ICEA) are
also excluded from this order. See Memorandum from Audrey Twyman to
Susan Kuhbach, dated February 28, 2006, entitled ``Recognition of
Instituto per la Certificazione Etica e Ambientale (ICEA) as a Public
Authority for Certifying Organic Pasta from Italy'' which is on file in
the Department's Central Records Unit (``CRU'') in Room B-099 of the
main Department building.
The merchandise subject to review is currently classifiable under
items 1901.90.9095 and 1902.19.20 of the Harmonized Tariff Schedule of
the United States (``HTSUS''). Although the HTSUS subheadings are
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 antidumping and countervailing duty
orders. See Memorandum from Edward Easton to Richard Moreland, dated
August 25, 1997, which is on file in the CRU.
(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
antidumping and countervailing duty orders. See Letter from Susan H.
Kuhbach to Barbara P. Sidari, dated July 30, 1998, which is available
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 is within the scope of the
antidumping and countervailing duty orders. 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 antidumping and countervailing duty
orders. See Memorandum from John Brinkmann to Richard Moreland, dated
May 24, 1999, which is available in the CRU.
(4) On April 27, 2000, the Department self-initiated an anti-
circumvention inquiry to determine whether Pastificio Fratelli Pagani
S.p.A.'s importation of pasta in bulk and subsequent repackaging in the
United States into packages of five pounds or less constitutes
circumvention with respect to the antidumping and countervailing duty
orders on pasta from Italy pursuant to section 781(a) of the Act and 19
CFR 351.225(b). See Certain Pasta from Italy: Notice of Initiation of
Anti-Circumvention Inquiry of the Antidumping and Countervailing Duty
Orders, 65 FR 26179 (May 5, 2000). On September 19, 2003, we published
an affirmative finding of the anti-circumvention inquiry. See Anti-
Circumvention Inquiry of the Antidumping and Countervailing Duty Orders
on Certain Pasta from Italy: Affirmative Final Determinations of
Circumvention of Antidumping and Countervailing Duty Orders, 68 FR
54888 (September 19, 2003).
Subsidies Valuation Information
Allocation Period
Pursuant to 19 CFR 351.524(b), non-recurring subsidies are
allocated over a period corresponding to the average useful life
(``AUL'') of the renewable physical assets used to produce the subject
merchandise. The Department's regulations create a rebuttable
presumption that the AUL will be taken from the U.S. Internal Revenue
Service's 1977 Class Life Asset Depreciation Range System (``IRS
Tables''). See 19 CFR 351.524(d)(2). For pasta, the IRS Tables
prescribe an AUL of 12 years. None of the responding companies or
interested parties objected to this allocation period. Therefore, we
have used the 12-year allocation period for all respondents.
Attribution of Subsidies
Pursuant to 19 CFR 351.525(b)(6), the Department will attribute
subsidies received by certain companies to the combined sales of those
companies. Based on our review of the responses, we preliminarily find
that ``cross-ownership'' exists with respect to certain companies, as
described below, and we have attributed subsidies accordingly:
De Matteis: De Matteis has reported that it is affiliated with De
Matteis Construzioni S.r.L. (``Construzioni'') by virtue of being 100
percent owned by Construzioni. See De Matteis's November 21, 2007,
questionnaire response (``QR'') at 2-3. De Matteis has reported that
Construzioni did not receive any subsidies during the POR or AUL
period. See De Matteis's April 1, 2008, supplemental questionnaire
response (``SQR'') at 1. Therefore, we are attributing De Matteis's
subsidies to its sales only.
Garofalo: Garofalo has reported that it has no affiliates. Thus, we are
attributing any subsidies received to Garofalo's sales only.
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, to third- countries, and to the United States. Pastificio 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 review periods and allocated
over a period that extends into or beyond the current POR. In
accordance with 19 CFR 351.525(b)(6)(i) and (ii), we are attributing
subsidies received by Pastificio and Pescara to the combined sales of
both.
Discount Rates
Pursuant to 19 CFR 351.524(d)(3)(i)(B), we used the national
average cost of long-term, fixed-rate loans as a discount rate for
allocating non-recurring benefits over time because no company for
which we need such discount rates took out any loans in the years in
which the government agreed to provide the subsidies in question.
Consistent with past practice in this proceeding, 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. See, e.g., Certain Pasta from Italy: Preliminary Results and
Partial Rescission of the Eighth Countervailing Duty Administrative
Review, 70 FR 17971 (April 8, 2005); Certain Pasta from Italy: Final
Results of the Eighth Countervailing Duty Administrative Review, 70 FR
37084 (June 28, 2005) (unchanged in Final Results). For benefits
received in 1995-2004, we used the Italian Bankers' Association
(``ABI'') prime interest rate (as reported by the Bank of Italy),
increased by the average spread charged by banks on loans to commercial
customers plus an amount for bank charges. The Bank of Italy ceased
reporting this rate in 2004. Because the ABI prime rate was no
[[Page 45723]]
longer reported after 2004, for 2005 and 2006, we have used the ``Bank
Interest Rates on Euro Loans: Outstanding Amounts, Non-Financial
Corporations, Loans With Original Maturity More Than Five Years''
published by the Bank of Italy and provided by the GOI in its November
8, 2007, QR at Exhibit 5. We made the adjustments described above to
this rate.
Analysis of Programs
I. Programs Preliminarily Determined to be Countervailable
A. Industrial Development Grants Under Law 64/86
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.
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
Matteis, Garofalo, and De Cecco received grants under Law 64/86 which
conferred a benefit during the POR.
In the Pasta Investigation,\1\ the Department determined that these
grants confer a countervailable subsidy within the meaning of section
771(5) of the Tariff Act of 1930, as amended (``the Act''). They are a
direct transfer of funds from the GOI bestowing a benefit in the amount
of the grant. See section 771(5)(D)(i); see also 19 CFR 351.504(a).
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.
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\1\ Final Affirmative Countervailing Duty Determination: Certain
Pasta (``Pasta'') from Italy, 61 FR 30288 (June 14, 1996) (``Pasta
Investigation'').
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In the 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. We have followed the methodology described in 19 CFR
351.524(b)(2) 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 determined that grants
received by De Matteis, Garofalo, and De Cecco under Law 64/86 exceeded
0.5 percent of their sales in the year in which the grants were
approved.
We used the grant methodology described in 19 CFR 351.524(d) to
allocate the benefits from those grants that were allocated over time.
We divided the benefit received by each company in the POR by its total
sales in the POR.
On this basis, we preliminarily determine the countervailable
subsidy from the Law 64/86 industrial development grants to be 0.05
percent ad valorem for De Matteis, 0.59 percent ad valorem for
Garofalo, and 0.56 percent ad valorem for De Cecco. See Memorandum to
the File, ``2006 Preliminary Results Calculation Memorandum for De
Matteis Agroalimentare S.p.A.,'' dated July 30, 2008 (``De Matteis Calc
Memo''); Memorandum to the File, ``2006 Preliminary Results Calculation
Memorandum for Pastificio Lucio Garofalo S.p.A.,'' dated July 30, 2008
(``Garofalo Calc Memo''); and Memorandum to the File, ``2006
Preliminary Results Calculation Memorandum for F.lli De Cecco di
Filippo Fara San Martino S.p.A.,'' dated July 30, 2008 (``De Cecco Calc
Memo'').
B. Industrial Development Loans Under Law 64/86
In addition to the Law 64/86 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. As with the grants discussed above,
pasta companies were eligible for interest contributions to expand
existing plants, but not to establish new plants. The fixed-interest
rates on these long-term 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.
Garofalo and De Cecco had Law 64/86 industrial development loans
outstanding during the POR.
In the Pasta Investigation, the Department determined that 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. See Section
751(5)(E)(ii). 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 grants are countervailable subsidies.
In accordance with 19 CFR 351.505(c)(2), we calculated the benefit
for the POR by computing the difference between the payments Garofalo
and De Cecco made on their Law 64/86 loans net of GOI interest
contributions and the payments Garofalo and De Cecco would have made on
the benchmark loan. We divided the benefit received by Garofalo and De
Cecco by their respective total sales in the POR.
On this basis, we determine the countervailable subsidy from the
Law 64/86 industrial development loans to be 0.16 percent ad valorem
for Garofalo and 0.02 percent ad valorem for De Cecco. See Garfalo Calc
Memo and De Cecco Calc Memo.
C. Industrial Development Grants Under Law 488/92
In 1986, the 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 (underdeveloped regions), Objective 2
(declining industrial regions), or Objective 5(b) (declining
agricultural regions) areas by the EU. 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.
Law 488/92 grants are made only after a preliminary examination by
a bank authorized by the Ministry of Industry.
[[Page 45724]]
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 Matteis, Garofalo, and De Cecco received grants under Law 488/92
which conferred a benefit during the POR. Based upon findings at
verification, we adjusted De Matteis's reported disbursement amounts to
include an interest amount received by De Matteis reflecting a lag in
payment. See Memorandum to the File, ``Verification of the
Questionnaire Responses of De Matteis Agroalimentare S.p.A. in the
11\th\ Administrative Review,'' dated July 30, 2008 (``De Matteis
Verification Report''), at 8; see also De Matteis Calc Memo.
In the Second Administrative Review,\2\ 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. See section
771(5)(D)(i); see also 19 CFR 351.504(a). 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.
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\2\ See Certain Pasta From Italy: Preliminary Results of
Countervailing Duty Administrative Review, 64 FR 17618 (April 12,
1999) (``Second Administrative Review''); Certain Pasta From Italy:
Final Results of Second Countervailing Duty Administrative Review,
64 FR 44489 (August 16, 1999) (unchanged in Final Results).
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In the Second Administrative Review, 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. We have followed the methodology described in 19
CFR 351.524(b)(2) 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 expensed in the year of
receipt. We determined that grants received by De Matteis, Garofalo,
and De Cecco under Law 488/92 exceeded 0.5 percent of their sales in
the year in which the grants were approved.
We used the grant methodology described in 19 CFR 351.524(d) to
allocate the benefits over time. We divided the benefit received by
each company in the POR by its total sales in the POR.
On this basis, we preliminarily determine the countervailable
subsidy from the Law 488/92 industrial development grants to be 1.11
percent ad valorem for De Matteis, 0.81 percent ad valorem for
Garofalo, and 0.25 percent ad valorem for De Cecco. See De Matteis Calc
Memo, Garofalo Calc Memo, and De Cecco Calc Memo.
D. European Regional Development Fund (``ERDF'') Programma Operativo
Plurifondo (P.O.P.) Grant
The ERDF is one of the EU'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, as described above, of Objective 1,
Objective 2, or Objective 5(b) under the Structural Funds.
De Matteis received a P.O.P. Grant from the Regione Campania in
1998.\3\ The P.O.P. Grants were funded by the EU, the GOI, and the
Regione Campania.
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\3\ See Certain Pasta from Italy: Preliminary Results and
Partial Rescission of Countervailing Duty Administrative Review, 66
FR 40987 (August 6, 2001) (``Fourth Administrative Review'');
Certain Pasta From Italy: Final Results of Fourth Countervailing
Duty Administrative Review, 66 FR 64214 (December 12, 2001)
(unchanged in Final Results).
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In the Pasta Investigation, the Department determined that ERDF
P.O.P. 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. See section
771(5)(D)(i); see also 19 CFR 351.504(a). 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 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 the 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 19 CFR 351.524(b)(2), we determined that the ERDF grant received
by De Matteis exceeded 0.5 percent of its sales in the year in which
the grant was approved, as was the case in the Fourth Administrative
Review.
We used the grant methodology described in 19 CFR 351.524(d) to
allocate the benefits over time. We divided the benefit received by De
Matteis in the POR by its total sales in the POR.
On this basis, we preliminarily determine the countervailable
subsidy from the ERDF P.O.P. Grant to be 0.05 percent ad valorem for De
Matteis. See De Matteis Calc Memo.
E. Social Security Reductions and Exemptions - Sgravi
Italian law allows companies, particularly those located in the
Mezzogiorno region, to use a variety of exemptions from and reductions
(sgravi) of 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. We
have found in past segments of this proceeding that benefits under some
of these laws (e.g., Laws 183/76, 449/97, and 223/91) are available
only to companies located in the Mezzogiorno and other disadvantaged
regions. Certain 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 Mezzogiorno and other disadvantaged regions
than for companies in other parts of the country. Still, other laws
provide benefits that are not linked to any region.
In the Pasta Investigation and subsequent reviews, the Department
determined that certain types 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. See section 771(5)(D)(ii) of the Act. 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 the instant review, no party in this proceeding challenged our
past determinations in the Pasta Investigation and subsequent reviews
that sgravi benefits, generally, were countervailable for companies
located within the Mezzogiorno region.
[[Page 45725]]
However, the GOI has submitted information claiming that benefits
provided under Article 8 of Law 223/91 should be found not
countervailable. See Memorandum to the File, ``GOI's June 11, 2008,
Letter,'' dated July 30, 2008.
The laws identified as having provided sgravi benefits during the
POR are the following: Law 863/84 (De Matteis and Garofalo), Law 196/97
(De Matteis), Law 407/90 (De Matteis and Garofalo), Law 223/91 Article
8 Paragraph 2 (De Matteis), and Law 223/91 Article 25 Paragraph 9 (De
Matteis). These companies are located in the Mezzogiorno region of
Italy.
1) Law 863/84
Law 863/84 provides social security reductions or exemptions when a
company hires a worker under a non-renewable contract with a term of 24
months or less and the contract includes an educational or training
component. The GOI refers to these as ``skilling'' contracts. See GOI
Verification Report,\4\ at 10-11. The employer may receive reductions
or exemptions from social security contributions for a period of up to
24 months. Id. Typically, employees hired under these contracts must be
no more than 29 years old, but in the Mezzogiorno, the maximum age is
32 years old. Id. Also, a company in the Mezzogiorno is exempted from
making social security contributions for employees hired under these
skilling contracts, while companies in other areas of Italy received a
25 percent reduction in social security contributions. Id.
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\4\ See Memorandum to the File, ``Verification of the
Questionnaire Responses of the Government of Italy in the 11th
Administrative Review,'' dated July 30, 2008 (``GOI Verification
Report'').
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Legislative Decree (``L.D.'') 276/03 repealed the provision related
to skilling contracts by private companies and, as of November 2004, no
new skilling contracts could be made. Id. However, for skilling
contracts entered into as of October 2004, benefits could be realized
for the duration of the two-year period. Id.
In the Pasta Investigation, we determined Law 863/84 conferred a
countervailable subsidy within the meaning of section 771(5) of the
Act. The reduction or exemption of taxes is revenue forgone and is,
therefore, a financial contribution within the meaning of section
771(5)(D)(ii) of the Act. The benefit is the difference in the amount
of the tax savings between companies located in the Mezzigiorno and
companies located in the rest of Italy in accordance with 19 CFR
351.509(a). Additionally, the program is regionally specific within the
meaning of section 771(5A)(D)(iv) of the Act because higher levels of
benefits are limited to companies in the Mezzogiorno region.
In accordance with 19 CFR 351.524(c) and consistent with our
methodology in the Pasta Investigation and in reviews subsequent to the
Pasta Investigation, we have treated social security reductions and
exemptions as recurring benefits. To calculate the countervailable
subsidy for De Matteis and Garofalo, we calculated the difference
during the POR between the savings for each of these respondent
companies located in the Mezzogiorno and the savings a company located
in the rest of Italy would have received. This amount was divided by
the respondent's total sales in the POR.
On this basis, we preliminarily determine the countervailable
subsidy from Law 863/84 to be 0.01 percent ad valorem for De Matteis
and 0.03 percent ad valorem for Garofalo. See De Matteis Calc Memo and
Garofalo Calc Memo.
2) Law 196/97
Law 196/97 is closely related to Law 863/84. See GOI Verification
Report, at 11-12. It provides additional exemptions for employers in
the Mezzogiorno that hire on a long-term (or permanent) basis,
employees hired under skilling contracts. Id. Law 196/97 permits such
employers a total exemption from social security contributions for an
additional 12-month period.
Benefits from Law 196/97 could only be requested after an employee
had participated in a 24-month skilling contract under Law 863/84. As
noted above, no new skilling contracts under Law 863/84 could be made
after October 31, 2004. Thus, the last possible date to request
exemptions under Law 196/97 was October 31, 2006. Moreover, because the
exemption granted under Law 196/97 only lasts for twelve months,
benefits were set to expire by October 31, 2007.
In the Fourth Administrative Review, we determined Law 196/97
confers a countervailable subsidy within the meaning of section 771(5)
of the Act. The reduction or exemption of taxes is revenue forgone and
is, therefore, a financial contribution within the meaning of section
771(5)(D)(ii) of the Act . The benefit is the amount of the tax savings
in accordance with 19 CFR 351.509(a). Additionally, the program is
regionally specific within the meaning of section 771(5A)(D)(iv) of the
Act because benefits are limited to companies in the Mezzogiorno
region.
In accordance with 19 CFR 351.524(c) and consistent with our
methodology in the Pasta Investigation and in reviews subsequent to the
Pasta Investigation, we have treated social security reductions and
exemptions as recurring benefits. To calculate the countervailable
subsidy, we divided De Matteis's savings in social security
contributions during the POR by its total sales in the POR.
On this basis, we preliminarily determine the countervailable
subsidy from Law 196/97 to be 0.09 percent ad valorem for De Matteis.
See De Matteis Calc Memo.
3) Law 407/90
Law 407/90 grants an exemption from social security taxes for three
years when a company hires a worker who (1) has received wage
supplementation for a period of at least two years, or (2) has been
previously unemployed for a period of two years. See GOI Verification
Report, at 12-13. A 100-percent exemption is allowed for companies in
the Mezzogiorno, while companies located in the rest of Italy receive a
50-percent reduction.
In the Pasta Investigation, we determined Law 407/90 confers a
countervailable subsidy within the meaning of section 771(5) of the
Act. The reduction or exemption of taxes is revenue forgone and is,
therefore, a financial contribution within the meaning of section
771(5)(D)(ii) of the Act. The benefit is the difference in the amount
of the tax savings between companies located in the Mezzigiorno and
companies located in the rest of Italy in accordance with 19 CFR
351.509(a). Additionally, the program is regionally specific within the
meaning of section 771(5A)(D)(iv) of the Act because higher levels of
benefits are limited to companies in the Mezzogiorno region.
In accordance with 19 CFR 351.524(c) and consistent with our
methodology in the Pasta Investigation and in reviews subsequent to the
Pasta Investigation, we have treated social security reductions and
exemptions as recurring benefits. To calculate the countervailable
subsidy for De Matteis and Garofalo, we divided the difference during
the POR between the savings for each respondent company located in the
Mezzogiorno and the savings a company located in the rest of Italy
would have received. This amount was divided by the respondent's total
sales in the POR.
On this basis, we preliminarily determine the countervailable
subsidy from Law 407/90 to be 0.03 percent ad valorem for De Matteis
and 0.01 percent ad valorem for Garofalo. See De Matteis Calc Memo and
Garofalo Calc Memo.
4) Law 223/91
[[Page 45726]]
Law 223/91 is designed to increase employment by providing benefits
to companies that hire unemployed workers on a special mobility list.
The mobility list comprises recently fired workers in certain sectors
of the economy, but companies in any sector may hire workers off the
mobility list.
(a) Article 8, Paragraph 2
Under Law 223/91, Article 8, Paragraph 2, the employer is exempted
from social security contributions when a mobility-listed worker is
hired under a short-term contract of up to 12 months. See GOI
Verification Report, at 13-14. The employer receives such benefits for
the length of the contract to a maximum of 12 months. Id. But, if the
short-term contract is converted to a permanent contract, the employer
receives benefits for an additional 12 months. Id.
In the Seventh Administrative Review,\5\ we determined that Law
223/91 conferred a countervailable subsidy within the meaning of
section 771(5) of the Act. The reduction or exemption of taxes was
treated as revenue forgone and was, therefore, a financial contribution
within the meaning of section 771(5)(D)(ii) of the Act. The benefit is
the amount of tax savings in accordance with 19 CFR 351.509(a).
Additionally, we found that the program was regionally specific within
the meaning of section 771(5A)(D)(iv) of the Act because it was limited
to companies in the Mezzogiorno or because the higher levels of
benefits were limited to companies in the Mezzogiorno.
---------------------------------------------------------------------------
\5\ See Certain Pasta from Italy: Preliminary Results and
Partial Rescission of the Seventh Countervailing Duty Administrative
Review, 69 FR 45676, 45683 (July 30, 2004) (``Seventh Administrative
Review''); Certain Pasta from Italy: Final Results of the Seventh
Countervailing Duty Administrative Review, 69 FR 70657 (December 7,
2004) (unchanged in Final Results).
---------------------------------------------------------------------------
Based on our review of the record of the seventh administrative
review and our verification in this administrative review, we continue
to find the exemption or reduction of taxes as revenue forgone, with
the benefit equal to the amount not collected; however, we now find no
basis for de jure specificity under Law 223/91, Article 8, Paragraph 2.
See GOI Verification Report, at 13-14. However, on June 16, 2008, we
sent a supplemental questionnaire to the GOI which in part asked for a
list of the industries that received benefits under this law. The GOI
did not respond to this portion of the supplemental questionnaire. See
GOI's June 27, 2008, SQR. Therefore, the GOI has not provided
information to support a finding that Law 223/91, Article 8, Paragraph
2, is not de facto specific, within the meaning of section 771(5A)(iii)
of the Act. Accordingly, we continue to find the exemptions provided
under Law 223/91, Article 8, Paragraph 2, countervailable. After these
preliminary results, we intend to issue another supplemental
questionnaire to the GOI asking about industry usage of Law 223/91,
Article 8, Paragraph 2.
To calculate the countervailable subsidy, we divided De Matteis's
savings in social security contributions during the POR by its total
sales in the POR. On this basis, we preliminarily determine the
countervailable subsidy from Law 223/91, Article 8, Paragraph 2 to be
0.02 percent ad valorem for De Matteis. See De Matteis Calc Memo.
(b) Article 25, Paragraph 9
Under Law 223/91, Article 25, Paragraph 9, an employer is exempted
from social security contributions for a period of 18 months when the
worker is hired from the mobility list on a permanent basis. See GOI
Verification Report, at 13-14.
In the Seventh Administrative Review, we determined that Law 223/91
conferred a countervailable subsidy within the meaning of section
771(5) of the Act. The reduction or exemption of taxes was treated as
revenue forgone and was, therefore, a financial contribution within the
meaning of section 771(5)(D)(ii) of the Act. The benefit is the amount
of tax savings in accordance with 19 CFR 351.509(a). Additionally, we
found that the program was regionally specific within the meaning of
section 771(5A)(D)(iv) of the Act because it was limited to companies
in the Mezzogiorno or because the higher levels of benefits were
limited to companies in the Mezzogiorno.
Based on our review of the record of the seventh administrative
review and our verification in this administrative review, we continue
to find the exemption or reduction of taxes as revenue forgone, with
the benefit equal to the amount not collected; however, we now find no
basis for de jure specificity under Law 223/91, Article 25, Paragraph
9. See GOI Verification Report, at 13-14. However, on June 16, 2008, we
sent a supplemental questionnaire to the GOI which in part asked for a
list of the industries that received benefits under this Law. The GOI
did not respond to this portion of the supplemental questionnaire. See
GOI's June 27, 2008, SQR. Therefore, the GOI has not provided
information to support a finding that Law 223/91, Article 25, Paragraph
9, is not de facto specific, within the meaning of section 771(5A)(iii)
of the Act. Accordingly, we continue to find the exemptions provided
under Law 223/91, Article 25, Paragraph 9, countervailable. After these
preliminary results, we intend to issue another supplemental
questionnaire to the GOI asking about industry usage of Law 223/91,
Article 25, Paragraph 9.
To calculate the countervailable subsidy, we divided De Matteis's
savings in social security contributions during the POR by its total
sales in the POR. On this basis, we preliminarily determine the
countervailable subsidy from Law 223/91, Article 25, Paragraph 9, to be
0.00 percent ad valorem for De Matteis. See De Matteis Calc Memo.
F. Law 289/02
1) Article 62 - Investments in Disadvantaged Areas
Article 62 of Law 289/02 provides a benefit in the form of a credit
towards direct taxes, indirect taxes, or social security contributions.
See GOI Verification Report, at 2-4. The credit must be used within
three years. Id. The law was established to promote investment in
disadvantaged areas by providing credits to companies that undertake
new investment by purchasing capital goods, equipment, patents,
licenses, or know how. Id. The granting of new benefits under Article
62 of Law 289/02 expired as of December 31, 2006, but the credits
obtained prior to this date may be used in future years. Id.
In the Tenth Administrative Review,\6\ we determined that Article
62 of Law 289/02 confers a countervailable subsidy. The credits are a
financial contribution within the meaning of section 771(5)(D)(ii) of
the Act because they represent revenue foregone by the GOI, and a
benefit is conferred in the amount of the tax savings in accordance
with 19 CFR 351.509(a). Finally, the program is specific within the
meaning of 751(5A)(D)(iv) of the Act because it is limited to certain
geographical regions in Italy, specifically, the regions of Calabria,
Campania, Basilicata, Pugilia, Sicilia, and Sardegna, and certain
municipalities in the Abruzzo and Molise region, and certain
municipalities in central and northern Italy. No new information has
been placed on the record of this review that would cause us to depart
from this treatment.
---------------------------------------------------------------------------
\6\ See Certain Pasta From Italy: Preliminary Results of the
Tenth Countervailing Duty Administrative Review, 72 FR 43616 (August
6, 2007) (``Tenth Administrative Review''); Certain Pasta From
Italy: Final Results of the Tenth (2005) Countervailing Duty
Administrative Review, 72 FR 7251 (February 7, 2008) (unchanged in
Final Results).
---------------------------------------------------------------------------
De Matteis is located in Campania and took advantage of this
program. It did so by constructing a new semolina milling
[[Page 45727]]
facility, including wheat silos, by-product storage silos, semolina
silos, and milling equipment. A tax credit for De Matteis was approved
in 2005 and a portion was used to reduce the company's income taxes for
2005 and 2006.
In the Tenth Administrative Review, the Department treated the
amount credited against 2005 income as a non-recurring grant in
accordance with the criteria in 19 CFR 351.524(c)(2)(i)-(iii).
Specifically, the tax credit is exceptional because it was only
available for a limited period of time, and was dependent upon
companies making specific investments. Further, the tax credit required
the GOI's authorization, and was tied to capital assets of the firm.
Moreover, in accordance with 19 CFR 351.524(b)(2), we determined that
the tax credit received by De Matteis exceeded 0.5 percent of its sales
in the year in which the tax credit was approved. Therefore, we treated
the portion of the tax credit used to offset income in 2005 as a grant
received in that year and allocated the benefit over the AUL using the
formula described in 19 CFR 351.524(d).
We have followed the same methodology for the portion of the tax
credit used to offset income earned during the POR. Consequently, we
divided the benefit received by De Matteis from the 2005 and 2006
grants in the POR by the company's total sales in the POR. On this
basis, we preliminarily determine the countervailable subsidy from Law
289/02 Article 62 to be 0.74 percent ad valorem for De Matteis. See De
Matteis Calc Memo.
2) Article 63 - Increase in Employment
Article 63 of Law 289/02 provides a benefit in the form of a credit
towards direct taxes, indirect taxes, or social security contributions.
See GOI Verification Report, at 4-5. The law was established to promote
employment by providing a tax credit to companies that increase the
number of employees at the company by hiring new workers to long-term
contracts. Id. The monthly credit is 100 euros for a new hire for any
company in Italy. If the employee is 45 years old or older, the monthly
amount increases to 150 euros. The monthly credit is 300 euros if the
company is located in the Mezzogiorno. Id. Under the law, the granting
of new credits ceased as of December 31, 2006. Id. There is no limit as
to when the credits can be applied as these credits carry over from one
year to the next. Id. However, as of 2007, the credits must be used as
soon as possible and failure to do so forfeits the portion of the
credit that could have been taken during the given year. Id.
In the Tenth Administrative Review, we determined that Article 63
of Law 289/02 confers a countervailable subsidy. The credits are a
financial contribution within the meaning of section 771(5)(D)(ii) of
the Act because they represent revenue foregone by the GOI, and a
benefit is conferred in the amount of the tax savings in accordance
with 19 CFR 351.509(a). Finally, the program is specific within the
meaning of 751(5A)(D)(iv) of the Act because the greater benefit amount
is limited to certain geographical regions in Italy, specifically,
Campania, Basilicata, Puglia, Calabria, Sicilia, Sardegna, Abruzzo,
Molise, and the municipalities of Tivoli, Formia, Sora, Cassino,
Frosnone, Viterbo, and Massa. No new information has been placed on the
record of this review that would cause us to depart from this
treatment.
De Matteis and Garofalo are located in Campania; however, only De
Matteis claimed the higher tax credits on the income tax forms filed
during the POR.
Consistent with the Tenth Administrative Review, we are treating
these as recurring subsidies and attributing the benefit to the year in
which the taxes would otherwise have been due, i.e., the year in which
the company filed its tax form.\7\ Based upon findings at verification,
we revised De Matteis's reported amount to reflect the amount
associated with the tax return filed during the POR. See De Matteis
Verification Report and De Matteis Calc Memo. To calculate the
countervailable subsidy, we divided the credit taken by De Matteis on
the tax return filed during the POR by its total sales in the POR.
---------------------------------------------------------------------------
\7\ See 19 CFR 351.509(b).
---------------------------------------------------------------------------
On this basis, we preliminarily determine the countervailable
subsidy from Law 289/02 Article 63 to be 0.05 percent ad valorem for De
Matteis. See De Matteis Calc Memo.
G. Law 662/96
The GOI describes Patti Territoriali grants (Law 662/96 Article 2,
Paragraph 203, Letter d) as being provided to companies for
entrepreneurial initiatives such as new plants, additions,
modernization, restructuring, conversion, reactivation, or transfer.
Companies that can apply for the grants must be involved in mining,
manufacturing, production of thermal or electric power from biomasses,
service companies, tourist companies, agricultural, maritime and salt-
water fishing businesses, aquaculture enterprises, or their
associations.
The Patti Territoriali provides grants to companies located within
regions which meet the criteria of Objective 1 or Objective 2 under the
Structural Funds or article 87.3.c of the Treaty of Rome. A Patti
Territoriali is signed between the provincial government and the GOI.
See GOI Verification Report, at 5-7. Based upon project submissions,
the provincial government ranks the projects and selects the projects
it considers to be the best. Id. The provincial government submits the
detailed plans to the GOI and, if approved, a special authorizing
decree is issued for each company specifying the investment required
and a schedule of the benefits. Id.
The GOI reported that De Matteis received disbursements from the
Patti Territoriali in 2000 and 2004 from a grant approved on January
29, 1999.
In the Tenth Administrative Review, the Department determined that
this grant confers a countervailable subsidy within the meaning of
section 771(5) of the Act. It is a direct transfer of funds from the
GOI bestowing a benefit in the amount of the grant. See Section
771(5)(D)(i); see also 19 CFR 351.504(a). Also, this grant was found to
be regionally specific within the meaning of section 771(5A)(D)(iv) of
the Act because it is limited to companies located within regions which
meet the criteria of Objective 1 or Objective 2 under the Structural
Funds or article 87.3.c of the Treaty of Rome. 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 the Tenth Administrative Review, the Department treated the
Patti Territoriali 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 have followed the methodology described in 19 CFR
351.524(b)(2) 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 expensed in the year of
receipt. We determined that the grant received by De Matteis under Law
662/96 exceeded 0.5 percent of its sales in the year in which the grant
as approved.
We used the grant methodology described in 19 CFR 351.524(d) to
allocate the benefits over time. We divided the benefit received by De
Matteis in the POR by its total sales in the POR.
[[Page 45728]]
On this basis, we preliminarily determine the countervailable
subsidy from the Patti Territoriali grant to be 0.50 percent ad valorem
for De Matteis. See De Matteis Calc Memo.
II. Programs Preliminarily Determined to be Not Countervailable
A. Research and Investigation Program of Legislative Decree 297/99 and
Ministerial Decree 593/00
Garofalo has reported receiving benefits under Legislative Decree
(``L.D.'') 297/99 which is implemented by Ministerial Decree (``M.D.'')
593/00. M.D. 593/00 provides a tax credit or contribution to costs for
planned research or analytical investigations aimed at acquiring new
knowledge for new products, production processes, or services or to
improve existing products, production processes, or services. See GOI's
April 1, 2008, SQR at Exhibit 3. Requests for these benefits can be
filed by (1) companies engaged in industrial activities aimed at the
production of goods and/or services, (2) companies engaged in
transportation by land, sea, or air; (3) companies engaged in
handicraft activities; (4) research centers, and (5) consortia
companies. See GOI's April 1, 2008, SQR. The benefits are paid
automatically after the filing of the request and after verification of
eligibility. Id. Additionally, M.D. 593 has no provisions that restrict
eligibility by region.
We preliminarily find that L.D. 297/99 is a nationwide program that
potentially provides a similar level of deductions to all recipients
and is not de jure specific to any particular company or industry
pursuant to sections 771(5A)(D)(i) or 771(5A)(D)(ii) of the Act. We
reviewed the translated text of this law and find the only location
requirement for consideration under L.D. 297/99 Article 5 is that
applicants must have a permanent establishment in the national
territory. See GOI's April 1, 2008, SQR at Exhibit 3. Therefore, it
appears to be not regionally specific under section 771(5A)(D)(iv) of
the Act. Additionally, we find that L.D. 297/99/M.D. 593/00 is not de
facto specific pursuant to 771(5A)(D)(iii), as during the POR,
companies from diverse sectors were granted benefits under this law and
the agro-food sector received only 3.7 percent of the total
disbursements granted by the Ministry of University and Research. See
GOI's May 19, 2008, SQR at Exhibit 2. Moreover, there is no record
evidence indicating that there are a limited number of recipients under
this program. See section 771(5A)(D)(iii)(I) of the Act. Accordingly,
we preliminarily determine that assistance provided under L.D. 297/99
and M.D. 593/00 is not countervailable.
III. Programs Preliminarily Determined to Not be 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:
A. Grant Received Pursuant to the Community Initiative Concerning the
Preparation of Enterprises for the Single Market (PRISMA)
PRISMA, a program funded by the European Structural Fund, seeks to
contribute to the creation of a single EU market by improving
standardization and quality control procedures, and seeks to assist
small- and medium-sized enterprises in Objective 1 regions to adapt to
a single EU market and increased competition. Garofalo received a
PRISMA grant in 1996.
In the First Administrative Review,\8\ the Department determined
that PRISMA 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. See section
771(5)(D)(i); see also 19 CFR 351.504(a). Also, these grants were found
to be regionally specific within the meaning of section 771(5A)(D)(iv)
of the Act because they are limited to firms located in designated
geographic regions. 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.
---------------------------------------------------------------------------
\8\ See Certain Pasta From Italy: Preliminary Results of the
First Countervailing Duty Administrative Review, 63 FR 17372 (April
9, 1998) (``First Administrative Review''); Certain Pasta From
Italy: Final Results of Countervailing Duty Administrative Review,
63 FR 43905 (August 17, 1998) (unchanged in Final Results).
---------------------------------------------------------------------------
Because the grant received by Garofalo was less than 0.5 percent of
the company's sales in 1996, the year in which the grant was approved,
we expensed the entire grant in the year of receipt, i.e., 1996.
Therefore, this program was not used in the POR. See Garofalo Calc
Memo.
B. European Regional Development Fund (``ERDF'') Programma Operativo
Multiregionale (P.O.M.) Grant
The P.O.M. Grants are managed by the central government and the
Ministry of Industry (now the Ministry of Economic Development) is
responsible for the administration of grants related to industry and
services. See GOI's May 19, 2008, SQR.
Garofalo was approved to receive a P.O.M. Grant from the GOI in
1998. The P.O.M. Grants are co-funded by the EU and the GOI. Because
the amount was less than 0.5 percent of Garofalo's sales in 1998, we
expensed the entire grant in the years of receipt, i.e., 1998 and 2000.
Therefore, this program was not used in the POR. See Garofalo Calc
Memo.
C. Certain Social Security Reductions and Exemptions - Sgravi
(including Law 223/91, Article 8, Paragraph 4)
D. Law 236/93 Training Grants
E. Law 1329/65 Interest Contributions (Sabatini Law) (Formerly Lump-Sum
Interest Payment Under the Sabatini Law for Companies in Southern
Italy)
F. Development Grants Under Law 30 of 1984
G. Law 908/55 Fondo di Rotazione Iniziative Economiche (Revolving Fund
for Economic Initiatives) Loans
H. Law 317/91 Benefits for Innovative Investments
I. Brescia Chamber of Commerce Training Grants
J. Ministerial Decree 87/02
K. Law 10/91 Grants to Fund Energy Conservation
L. Export Restitution Payments
M. Export Credits Under Law 227/77
N. Capital Grants Under Law 675/77
O. Retraining Grants Under Law 675/77
P. Interest Contributions on Bank Loans Under Law 675/77
Q. Preferential Financing for Export Promotion Under Law 394/81
R. Urban Redevelopment Under Law 181
S. Industrial Development Grants under Law 183/76
T. Interest Subsidies Under Law 598/94
U. Duty-Free Import Rights
V. European Social Fund Grants
W. Law 113/86 Training Grants
X. European Agricultural Guidance and Guarantee Fund
[[Page 45729]]
Y. Law 341/95 Interest Contributions on Debt Consolidation Loans
(Formerly Debt Consolidation Law 341/95)
Z. Interest Grants Financed by IRI Bonds
AA. Article 44 of Law 448/01
IV. Programs for Which More Information is Required
A. Social Security Reductions and Exemptions - Sgravi
1) Legislative Decree (``L.D.'') 276/03
De Matteis, Garofalo, and De Cecco have reported receiving benefits
under L.D. 276/03. L.D. 276/03 is aimed at making the labor market more
flexible by providing incentives for apprentice contracts. See GOI's
April 1, 2008, SQR. Companies receive benefits for hiring workers under
mixed contracts possessing a work component and a training component.
See GOI Verification Report, at 14-15. Specifically, three categories
of employee contracts recognized under this decree are: (1) working
toward completion of compulsory schooling, (2) working toward
completion of trade schooling, and (3) high-level training of special
skills for a worker. Id.
Except for a weekly flat fee paid by the employer on behalf of the
employee, the employer receives a total exemption from its social
security contribution. See GOI Verification Report, at 14-15. The
contributions are applied in equal measure across Italy and the decree
may be used in all sectors of activity. See GOI's May 19, 2008, SQR and
Exhibit 1; see also GOI Verification Report, at 14-15.
Based on our review of the record of this administrative review and
our verification, we find no basis for de jure specificity.
Additionally, based on record evidence and our verification, the law
does not appear to be regionally specific under section 771(5A)(D)(iv)
of the Act. However, at this time, we do not have sufficient
information to determine whether this program is de facto specific
under section 771(5A)(D)(iii) of the Act. Therefore, we intend to seek
further information regarding specificity of this program from the GOI
and we will provide parties an opportunity to comment on this
information before the final results.
Verification
In accordance with 19 CFR 351.222(f)(2)(ii) and 351.307(b)(1)(v),
we verified information submitted by the GOI for De Matteis in Rome,
Italy on May 26-28, 2008. See GOI Verification Report. We verified
information submitted by De Matteis in Flumeri, Italy on May 29-30,
2008. See De Matteis Verification Report.
Preliminary Results of Review
In accordance with 19 CFR 351.221(b)(4)(i), we calculated
individual subsidy rates for De Matteis, Garofalo, and De Cecco.
Felicetti had no countervailable subsidies.
For the period January 1, 2006, through December 31, 2006, we
preliminarily determine the net subsidy rates for the producers/
exporters under review to be those specified in the chart shown below:
------------------------------------------------------------------------
Net Subsidy
Producer/Exporter Rate
------------------------------------------------------------------------
De Matteis Agroalimentare S.p.A......................... 2.65[percnt]
Pastificio Lucio Garofalo S.p.A......................... 1.60[percnt]
F.lli De Cecco di Filippo Fara San Martino S.p.A........ 0.83[percnt]
Pastificio Felicetti SrL................................ 0.00[percnt]
All-Others Rate......................................... 3.85[percnt]
------------------------------------------------------------------------
Consequently, if these preliminary results are adopted in our final
results of this review, the Department will instruct U.S. Customs and
Border Protection (``CBP'') to assess countervailing duties at these
net subsidy rates. The Department will issue appropriate instructions
directly to CBP 15 days after publication of the final results of this
review.
For all other companies that were not reviewed (except Barilla G. e
R. F.lli S.p.A. and Gruppo Agricoltura Sana S.r.l., which are excluded
from the order, and Pasta Lensi S.r.l. which was revoked from the
order), the Department has directed CBP to assess countervailing duties
on all entries between January 1, 2006, and December 31, 2006, at the
rates in effect at the time of entry.
The Department also intends to instruct CBP to collect cash
deposits of estimated countervailing duties in the amounts shown above.
No cash deposits of estimated duties will be required for Felicetti.
For all non-reviewed firms (except Barilla G. e R. F.lli S.p.A. and
Gruppo Agricoltura Sana S.r.l., which are excluded from the order, and
Pasta Lensi S.r.l. which was revoked from the order), we will instruct
CBP to collect cash deposits of estimated countervailing duties at the
most recent company-specific or all-others rate applicable to the
company. These rates shall apply to all non-reviewed companies until a
review of a company assigned these rates is requested.
Public Comment
Pursuant to 19 CFR 351.224(b), the Department will disclose to
parties to the proceeding any calculations performed in connection with
these preliminary results within five days after the date of the public
announcement of this notice.
Pursuant to 19 CFR 351.309(c)(ii), 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 no later than five days after the date of
filing the case briefs, in accordance with 19 CFR 351.309(d). 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, pursuant to 19 CFR 351.310(c). 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, in accordance with section 751(a)(3) of the Act.
We are issuing and publishing these results in accordance with
sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.221(b)(4).
Dated: July 30, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E8-18030 Filed 8-5-08; 8:45 am]
BILLING CODE 3510-DS-S