48 FR 25255

                                      NOTICES

                              DEPARTMENT OF COMMERCE

              Float Glass From Italy; Final Results of Administrative Review and
                       Revocation of Countervailing Duty Order

                                 Monday, June 6, 1983

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AGENCY: International Trade Administration, Commerce.

ACTION: Notice of Final Results of Administrative Review and Revocation of Countervailing Duty
Order.

SUMMARY: On December 15, 1982, the Department of Commerce published in the Federal Register
preliminary results of its administrative review of the countervailing duty order on float glass
from Italy. The review covered the period January 1, 1980 through December 31, 1980. The notice
stated that the 
Department had preliminarily determined the net subsidy to be 0.88 percent ad valorem for Fabbrica
Pisana S.p.A., and 3.77 percent ad valorem for Societa Italiana Vetro S.p.A.

Interested parties were invited to comment on the preliminary results. At the request of the petitioner, the
Department held a hearing on February 18, 1983. After review of all comments received, the Department
has determined the amount of the net subsidy during 1980 to be 0.88 percent ad valorem for Fabbrica
Pisana S.p.A., and 3.61 percent ad valorem for Societa Italiana Vetro S.p.A.

As a result of a request by the Delegation of the Commission of the European Communities, the
International Trade Commission conducted an investigation and determined that revocation of the
  countervailing duty order would not cause injury to an industry in the United States. The
Department consequently is revoking the order. All entries of this merchandise made on or after April 3,
1980, shall be liquidated without regard to countervailing duties.

EFFECTIVE DATE: June 6, 1983

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

SUPPLEMENTARY INFORMATION:

Background

On January 1, 1976, the Department of the Treasury published in the Federal Register (41 FR 1274) a
  countervailing duty order on float glass from Italy.
On April 3, 1980, the International Trade Commission ("the ITC") notified the Department of Commerce
("the Department") that the Delegation of the Commission of the European Communities ("the EC") had
requested an injury determination for this order under section 104(b) of the Trade Agreements Act of 1979
("the TAA"). It was not necessary for the Department, upon notification by the ITC, to suspend liquidation of
entries of the merchandise pursuant to that section of the TAA, since previous suspensions remained in
effect. For a discussion of the procedural background of this order, see the final results of the last
administrative review (47 FR 5026).
On December 15, 1982, the Department published in the Federal Register (47 FR 56160) the preliminary
results of its administrative review of the order. The Department has now completed that administrative
review.
On February 15, 1983, the ITC published its determination that an industry in 
the United States would not be materially injured, or threatened with material injury, by reason of imports
of Italian float glass if the order were revoked (48 FR 6794).

Scope of the Review

The merchandise covered by the 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 found 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.

Analysis of Comments Received

Interested parties were invited to comment on our preliminary results. At the request of the petitioner, PPG
Industries, Inc. ("PPG"), the Department held a public hearing on February 18, 1983. We also received
written comments from two Italian float glass manufacturers.
Comment 1: PPG argues that the effective date of revocation is not April 3, 1980, but November 10, 1980,
the date on which the ITC notified the Department for a second time of a section 104(b) request for this
order. PPG contends that the earlier notification date is inoperative because the case was then under
judicial review.
Department's Position: The Department and the ITC consider the date of the first notification to be the
effective date for revocation because: (1) the order on float glass from Italy was in effect at that
time; and (2) the initial request by the EC conformed to all of the criteria stipulated 
in section 104(b) of the
TAA.
Comment 2: PPG contends that the Department erred in calculating the benefit attributable to the
exemption from local corporate income taxes by considering the benefit in the year of review, 1980, to be
the savings from the tax year 
1979. PPG maintains that a benefit is not bestowed when the final extent of the benefit becomes known;
rather, it is bestowed when the (preferential) cost of the program is knowable and accountable. Standard
business practice calls for firms to 

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accure their income tax liabilities as the tax year progresses.
Department's Position: Whether the exemption is partial or complete, the exact benefit for a particular tax
year cannot be known until the firm's books have closed, because it is only then that the firm can determine
with finality its taxable income. The Department therefore maintains that it must allocate income tax
benefits to the year in which the total income is knowable.
To accept argument that benefits should be considered conferred when a firm is able to adjust its cash flow
or business efforts with regard to estimated tax liabilities would saddle the Department with the prohibitive
burden of determining exactly when each company under review may or should be able to account for
potential benefits, and determining when subsequent reconciliations are possible. We doubt the wisdom of
attempting such a subjective approach.
Comment 3: PPG objects to the use of a "risk free" rate as the discount rate used to calculate and allocate
over time the present value of grant benefits. PPG argues that the time value of money to the grant recipient
is equal to the benefit from a loan at zero percent interest with no required repayment of 
principal. To be consistent with its treatment of loans, the Department must take into account the
creditworthiness of the firm and accordingly use as a discount rate a rate which includes an imputed risk
element. The proper discount rate would be the interest rate commercially available to that firm for a
comparable loan.
Department's Position: The basic function of the "present value" exercise is to allocate money received in
one year to other years. Domestic interest rates perform this function within the context of an economy.
The foundation of a country's interest rate structure is usually its government debt interest rate ("the
risk-free rate"). All other borrowings incorporate this risk-free rate and add interest overlays reflecting the
riskiness of the funded investment.
When we allocate a subsidy over a number of years it is not the intention of the Department to comment on
nor judge the riskiness of the project undertaken with the subsidized funds nor to evaluate the riskiness of
the company as a whole. Nor do we intend to speculate how a project would have been financed absent
government involvement in the provision of funds. Rather, we simply need a financial mechanism to move
money through time so as to accurately reflect the benefit the company receives. We believe that the best
discount rate for our purposes is one which is risk free and applicable to all commercial actors in the
country.
Comment 4: SIV argues that we should use documents it submitted after the 
verification but prior to the publication of our preliminary results to calculate its benefit attributable to
reductions in social security and health benefits payments.
Department's Position: We agree. Because we solicited this information at verification and received it in a
timely fashion after verification, we have used it in our final calculations. Adjusting our 
calculations for this
information, we determine that the benefit in 1980 to SIV from this program is 2.48 percent ad valorem.
We have also recalculated SIV's benefit from long-term preferential loans, using supplemental information
on two additional preferential loans discovered during verification. This has raised the ad valorem benefit
attributable to this program from 0.62 percent, to 0.64 percent.
As a result of these recalculations, we have determined that the aggregate net subsidy in 1980 on float
glass produced by SIV is 3.61 percent as valorem.
Comment 5: Pisana and SIV maintain that the Department may countervail only the face value of grant, and
nothing more.
Department's Position: We are charged with determining the magnitude of the benefit bestowed upon the
recipient. In the case of grants, the benefit over time is best measured by calculating the amounts allocated
to future years in a way that recognizes the time value of money. As long as the present value (in 
the year of grant receipt) of the amounts allocated over time does not exceed the face value of grant, we are
consistent with domestic law and our international obligations; the amount countervailed will not exceed
the total net subsidy.
Comment 6: Pisana argues that the Department should assess separate rates for Pisana's two plants, only
one of which is located in the Mezzogiorno and receives countervailable regional benefits.
Department's Position: The Department considers a benefit bestowed on the production of the merhandise
at one plant to be a benefit bestowed on the production of all of that merchandise produced by the
recipient.
Final Results of the Review
After review of all comments received, we determine that the aggregate net subsidy conferred on this
merchandise during 1980 is 0.88 percent ad valorem for Pisana and 3.61 percent ad valorem for SIV.
Accordingly, the Department will instruct the Customs Service to assess countervailing duties of
0.88 percent of the f.o.b. invoice price on all shipments by SIV, of Italian float glass exported on or
after January 1, 1980 and entered, or withdrawn from warehouse, for consumption on or before April 2,
1980.
Further, as a result of the ITC's recent finding of an injury, the Department is revoking the
  countervailing duty order concerning float glass from Italy, 
effective April 3, 1980, the date the Department received notification of the request for an injury
determination. The Department will instruct the Customs Service to proceed with liquidation of all entries
of this merchandise entered, or withdrawn from warehouse, for consumption on or after April 3, 1980,
without regard to countervailing duties and to refund any estimated coutervailing duties collected
with respect to such entries.
This administrative review, revocation, and notice are in accordance with section 751(a)(1) of the Tariff Act
of 1930 (19 U.S.C 1675(a)(1)), section 104(b)(4)(B) of the TAA (19 U.S.C. 1671 note), and § 355.41 of the
Commerce Regulations (19 CFR 355.41).
Dated: May 27, 1983.

Gary N. Horlick,

Deputy Assistant Secretary for Import Administration.

[FR Doc. 83-15063 Filed 6-3-83; 8:45 am]

BILLING CODE 3510-25-M