47 FR 56160


                             NOTICES

                     DEPARTMENT OF COMMERCE

    Float Glass From Italy; Preliminary Results of Administrative Review of
                     Countervailing Duty Order

                     Wednesday, December 15, 1982

*56160

AGENCY: International Trade Administration, Commerce.

ACTION: Notice of Preliminary Results of Administrative Review of
  Countervailing Duty Order.

SUMMARY: The Department of Commerce has conducted an administrative review
of the countervailing duty order on float glass from Italy. The review
covers the two firms currently covered by the order and the period January 1, 1980
through December 31, 1980. As a result of this review, the Department has 
preliminarily determined the amount of net subsidy for Fabbrica Pisana, S.p.A. to be
0.88 percent of the f.o.b. invoice price of the merchandise, and for Societa Italiano
Vetro, S.p.A to be 3.77 percent. Interested parties are invited to comment on these
preliminary results.

EFFECTIVE DATE: December 15, 1982.

FOR FURTHER INFORMATION CONTACT:Charles Anderson or Richard Moreland,
Office of Compliance, Room B099, International Trade Administration,
U.S. Department of Commerce, Washington, D.C. 20230; telephone: (202)
377-2786.

SUPPLEMENTARY INFORMATION:

Background

On February 3, 1982, the Department of Commerce ("the Department") published in
the Federal Register (46 FR 5026) the final results of its first administrative review
of the countervailing duty order on float glass from Italy (41 FR 0274,
January 7, 1976) and announced its intent to begin immediately the next
administrative review. As required by section 751 of the Tariff Act of 1930 ("the
Tariff Act"), the Department has now conducted that 
administrative review.

Scope of the Review

The merchandise covered by this review is flat glass manufactured by the float
process. Such glass may be either tinted or clear and is produced in a wide variety of
sizes ranging from 0.125'' to 1'' in thickness. Such glass is currently classifiable under
items 543.2100 through 543.6900 of the Tariff Schedules of the United States
Annotated. Entries of float glass which has been substantially further manufactured
or modified (e.g., into tempered glass or laminated glass) are not subject to this
  countervailing duty order. The review covers the period January 1, 1980
through December 31, 1980, and includes the five programs determined to be
countervailable in the final results of the last administrative review, plus three other
programs, all with regard to the two companies currently covered by the order,
Fabbrica Pisana, S.p.A. ("Pisana") and Societa Italiana Vetro, S.p.A. ("SIV"). Of the
eight programs, we preliminarily determine the following four to be
countervailable: (1) Exemption from local corporate income taxes, (2) Reductions
in social security and health benefits payments, (3) capital grants, and (4)
preferential long-term financing. We preliminarily determine that the following
programs are not countervailable: (1) Reductions in turnover and 
value-added taxes (found countervailable in the last administrative review), and (2)
accelerated depreciation. In addition, we preliminarily determine that the two
producers did not utilize the following two programs on the subject merchandise:
(1) Reductions in national corporate income taxes, and (2) preferential loans for
applied research.

Analysis of Programs

(1) Local Corporate Income Tax Reductions. Presidential Decree number 218
(March 6, 1978) provides industrial plants located in the Mezzogiorno region of
  Italy with a complete exemption from the 15 percent local corporate income
tax ("ILOR") for 10 years after the newly-established plants first show a profit. In the
last administrative review, we calculated the net subsidy as the amount of
exemption attributable to income earned in the years under review. In the current
review, we have calculated the ad valorem benefit attributable to this program by
looking at the benefit received from the previous tax year, for it is only after a
company's books have closed that the magnitude of the benefit, if any, can be known
to the firms under review.
For this review, this change in methodology necessitates a transitional reallocation
of benefits. In this case, the Department countervailed the tax savings received by
SIV and Pisana in 1980 in the administrative review for 
1979, as though the benefit from tax 

*56161

exemptions on income earned in 1979 were received in that year. According to the
principle set forth in the notice of "Final Results of Administrative Review of
  Countervailing Duty Order" on certain castor oil products from Brazil (46 FR
62487), we do not countervail the same benefit twice when changes in methodology
create an overlap in the allocation of that particular benefit.
We will allocate tax benefits earned as a result of the company's performance during
the current period of review (1980) over total sales for the next period of review
(1981). Therefore, for the purpose of this review, the estimated duty deposit rate on
future entries will include benefits under this program basd on the new method of
calculation.
For deposit purposes, we have calculated the ad valorem benefit attributable to this
program to be 0 percent for Pisana and 1.20 percent for SIV.

(2) Reductions in Social Security Payments. Italian law grants firms located in the
Mezzogiorno reduction in social security payments to the Istituto Nazionale
Previdenza Sociale ("INPS") ranging from 8.5 to 28.5 percent for each worker,
depending on gender, labor classification, date of employment, and size of the
workforce. Because these exemptions are known and reported in monthly INPS
declarations, we have allocated the benefit received from the exemptions to the
year in which the wages and salaries upon which they are based are earned. As these
exemptions cover workers from all of the production lines and 
administrative offices of the companies, we have allocated them over the total value
of sales.

During verification, we discovered an additional 2.54 percent reduction in health
benefit payments, known as "fiscalizazzione." This program was in effect in July and
August of the year under review.
For 1980, we preliminarily determine that the total ad valorem benefit attributable
to reductions in social security and health benefits payments is 0.63 percent for
Pisana and 2.66 percent for SIV.

As part of Italy's earthquake relief program, Pisana received a 100 percent
exemption for its Caserta plant from social security payments for the months of
November and December 1980. As outlined in the notice of "Final Affirmative
  Countervailing Duty Determinations on Certain Steel Products from Italy"
(47 FR 39356), we do not countervail against disaster relief programs, for
eligibility in such programs, unlike regional development schemes, is not
predetermined; no part of the country or sector of industry is excluded, in
principle, from participation. Therefore, we preliminarily determine that the INPS
payments exemption to Pisana because of the earthquake relief program is not
countervailable.

(3) Capital Grants. Both SIV and Pisana utilized grants awarded by the Cassa per il
Mezzogiorno for company-wide construction and expansion programs. These grants
were awarded from 1975 through 1980 for major investment programs which 
encompassed more than just unmodified float glass production facilities. Following
our methodology established in Appendix 2, we considered these grants to be
untied and allocated them over 10 years, the average useful life of glass production
facilities as calculated from the standard depreciation schedules of the Italian tax
tables. Because these benefits were provided to all glass production, we allocated
them over the value of total glass sales. To calculate the value of these grants over
time, we applied the present value methodology, using the risk-free rate of return in 
  Italy, as represented by the yearly average percentage yield on Italian Treasury
bills in the secondary market in Italy, as the discount rate.
For 1980, the ad valorem benefit attributable to capital grants is preliminarily
determined to be 0.13 percent for Pisana and 0.49 percent for SIV.

(4) Preferential Long-Term Financing. Both SIV and Pisana received preferential
loans from 1973 through 1980. For loans made in those years with principal
outstanding in 1980, we have compared a repayment schedule of a comparable
commercial loan. For a benchmark, we have used the average unsubsidized
long-term interest rate in Italy on loans from the special credit institutions. As
we noted in certain steel products from Italy, this rate represents the most
comparable commercial interest rate available, since these special credit
institutions provide almost all medium- and long-term loans in 
                     (Cite as: 47 FR 56160, *56161)

  Italy. Where we found preferential loans, we used the general loan methodology
for loans to creditworthy firms set forth in Appendix 2 to calculate the subsidy.
Because the loans in question were not expressly tied to costly pieces of capital
equipment, we allocated the benefits over the life of the loan and the total value of
sales.
Using the methodology described above, we preliminarily determine the ad
valorem benefit attributable to preferential loans to be 0.12 percent for Pisana and
0.62 for SIV.
(5) Reductions in Turnover and Value-Added Taxes. The partial exemption from
turnover taxes was eliminated simultaneously with the introduction of the
value-added tax on January 1, 1973. From 1977 through 1980, however, a
nationwide 4 percent reduction in the value-added tax ("IVA") was in effect in
  Italy. We preliminarily determine that this program is not countervailable
because it was generally available on equal terms to all.

(6) Accelerated Depreciation. We also preliminarily determine that accelerated
depreciation programs in Italy are not countervailable because they are
generally available on equal terms to all.

(7) Exemption from National Corporate Income Tax. The law governing the
reduction in the rate of national corporate income tax ("IRPEG") (Article 105 of
Decreto del Presidente della Repubblica, March 6, 1978, no. 218) states that a
company establishing its headquarters within the Mezzogiorno region will 
receive a 50 percent exemption during the first ten years of its operation. Having
started production in 1965, SIV's eligibility for the IRPEG reduction expired in
1975. Pisana has never been eligible for this reduction because its headquarters are
located outside of the Mezzogiorno region.

(8) Preferential Loans for Applied Research. During verification, we discovered that
SIV had received a loan from the Istituto Mobiliare Italiano ("IMI") at a preferential
interest rate for applied research. This loan, however, was tied to research on a
particular modification process for float glass. As it did not benefit unmodified float
glass production nor was it an untied program which benefitted total production, we
preliminarily determine the loan in question not to be countervailable in this case,
and the program not to be used for products covered by the order.

Verification

We verified the information presented by Pisana and SIV, through examination of
Italian government laws and documents, company books and records, and
consulation with economic officials of the United States Enbassy in Italy.

Preliminary Results of Review

As a result of our review, we preliminarily determine that the net subsidy conferred
by the four programs cited above during the period of review for Pisana is 0.88
percent ad valorem, and for SIV is 3.77 percent ad valorem.
Accordingly, the Department intends to instruct the Customs Service to assess
  countervailing duties of 0.88 percent of 

*56162

the f.o.b. invoice price on all shipments by Pisana, and 3.77 percent of the f.o.b.
invoice price on all shipments by SIV on the merchandise exported on or after
January 1, 1980 and on or before April 3, 1980. On April 3, 1980, the International
Trade Commission ("the ITC") notified the Department that the Delegation of the
Commission of the European Communities had requested an injury determination
for this order under section 104(b) of the Trade Agreements Act of 1979 ("the
TAA"). Should the ITC find that there is material injury or likelihood of material
injury to an industry in the United States, the Department shall instruct the Customs
Service to assess countervailing duties at the prevailing deposit rate at the
time of entry on all unliquidated entries of float glass manufactured by Pisana and
SIV entered, or withdrawn from warehouse, for consumption on or after April 3,
1980 and exported on or before December 31, 1980.
Further, as provided by section 751(a)(1) of the Tariff Act, we intend to instruct the
Customs Service to collect a cash deposit of estimated countervailing duties
of 0.88 percent of the f.o.b. invoice price on all shipments by Pisana, and 4.97
percent of the f.o.b. price on all shipments by 
SIV, of unmodified float glass entered, or withdrawn from warehouse, for
consumption on or after the date of publication of the final results of this
administrative review. This deposit requirement shall remain in effect until
publication of the final results of the next administrative review.
Interested parties may submit written comments on these preliminary results
within 30 days of the date of publication of this notice and may request disclosure
and/or a hearing within 10 days of the date of publication. Any hearing, if
requested, will be held 30 days after the date of publication or the first workday
thereafter. Any request for an administrative protective order must be made no
later than 5 days after the date of publication. The Department will publish the final
results of the administrative review including the results of its analysis of any issues
raised in such written comments or at a hearing.
This administrative review and notice are in accordance with section 751(a)(1) of
the Tariff Act (19 U.S.C. 1675(a)(1)) and section 355.41 of the Commerce
Regulations (19 CFR 355.41).
Dated: December 8, 1982.

Gary N. Horlick,

Deputy Assistant Secretary for Import Administration.

[FR Doc. 82-34012 Filed 12-14-82; 8:45 am]

BILLING CODE 3510-25-M