NOTICES

                        DEPARTMENT OF COMMERCE

                               [C-614-501]

   Preliminary Affirmative Countervailing Duty Determination: Low-Fuming Brazing
                    Copper Rod and Wire From New Zealand

                           Thursday, May 23, 1985

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 AGENCY: Import Administration, International Trade Administration,
 Commerce.

 ACTION: Notice.

 SUMMRRY: We preliminarily determine that certain benefits which constitute bounties
 or grants within the meaning of the countervailing duty law are being provided to
 manufacturers, producers, or exporters in New Zealand of low-fuming brazing copper
 rod and wire. The estimated net bounty or grant is 9.46 percent ad valorem for all
 manufacturers, producers, or exporters in New Zealand of low-fuming brazing copper
 rod and wire.

 We are directing the U.S. Customs Service to suspend liquidation of all entries of
 low-fuming brazing copper rod and wire from New Zealand that are entered, or
 withdrawn from warehouse, for consumption on or after the date of publication of this
 notice, and to require a cash deposit or bond on entries of these products in the amount
 equal to the estimated net bounty or grant.

 If this investigation proceeds normally, we will make our final determination by July 29,
 1985.

 EFFECTIVE DATE: May 23, 1985.

 FOR FURTHER INFORMATION CONTACT: Jack Davies, Roy Malmrose, or Mary Martin,
 Office of Investigations, Import Administration, International Trade
 Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue
 NW., Washington, D.C. 20230; telephone: (202) 377-1784, 377-8320, or 377-3464.

 SUPPLEMENTARY INFORMATION:

 Preliminary Determination

 Based upon our investigation, we preliminarily determine that there is reason to believe
 or suspect that certain benefits which constitute bounties or grants within the meaning of
 section 303 of the Tariff Act of 1930, as amended (the Act), are being provided to
 manufacturers, producers, or exporters in New Zealand of low-fuming brazing copper
 rod and wire. For purposes of this investigation, the following programs are found to
 confer bounties or grants:
 - Export Performance Taxation Incentive (EPTI)
 - Export Market Development Taxation Incentive (EMDTI)
 We preliminarily determine the estimated net bounty or grant to be 9.46 percent ad
 valorem for all manufacturers, producers, or exporters in New Zealand of low-fuming
 brazing copper rod and wire.

 Case History 

 On February 19, 1985, we received a petition in proper form from American Brass,
 Century Brass, and Cerro Metal Products of Rolling Meadows, IL, Waterbury, CT, and
 Bellefonte, PA, respectively, filed on behalf of the U.S. industry producing low-fuming
 brazing copper rod and wire. In compliance with the filing requirements of  355.26 of
 our regulations (19 CFR 355.26), the petition alleges that manufacturers, producers, or
 exporters in New Zealand of low-fuming brazing copper rod and wire, directly or
 indirectly, receive benefits which constitute bounties or grants within the meaning of
 section 303 of the Act. On May 10, a letter supporting the petition was filed by J.W. Harris
 Company of Cincinnati, Ohio, another domestic producer of low-fuming brazing copper
 rod and wire.
 We found that the petition contained sufficient grounds upon which to initiate a
 countervailing duty investigation, and on March 11, 1985, we initiated the
 investigation (50 FR 11004). We stated that we expected to issue our preliminary
 determination by May 15, 1985.
 At the time of our initiation, New Zealand was a "country under the Agreement" within
 the meaning of section 710(b) of the Act, and an injury determination was required for
 this investigation. Therefore, we notified the U.S. International Trade Commission (ITC)
 of our initiation. Effective April 1, 1985, however, the Office of the United States Trade
 Representative terminated New Zealand's status as a "country under the Agreement"
 within the meaning of section 701(b)(1) of the Act. Accordingly, the ITC has terminated
 its investigation and will not determine whether imports of these products cause or
 threaten material injury to a U.S. industry.
 Since New Zealand is no longer a "country under the Agreement" within the meaning of
 section 701(b) of the Act and the merchandise being investigated is dutiable, sections
 303(a)(1) and 303(b) of the Act apply to this investigation.
 On March 22, 1985, we presented a questionnaire to the New Zealand government in
 Washington, D.C. concerning the petitioners' allegations. On April 26 and 30, 1985, w
 received responses to our questionnaire from McKechnie Brothers (N.Z.) Ltd. and the
 government of New Zealand, respectively. McKechnie Metals Products Ltd., a
 subsidiary of McKechnie Brothers (N.Z.) Ltd., is the sole manufacturer and exporter in
 New Zealand of the products under investigation.

 Standing

 On March 20, 1985, Aufhauser Brothers Corporation (Aufhauser) requested that we
 rescind our initiation of this investigation, alleging that the petitioners had not filed "on
 behalf of" the domestic industry, as required by section 702 of the Act. Section 771(4)(A)
 of the Act defines the industry as domestic producers of all or a major proportion of
 domestic production of the like product. The petitioners are manufacturers of bare
 low-fuming brazing rod and wire, at least one of which also flux-coats low-fuming brazing
 rod and wire. Aufhauser is a domestic company that purchases domestically produced
 and imported bare low-fuming brazing rod and wire and coats the rod and wire with flux
 for final sale. Aufhauser challenged a statement in the petition that the petitioners
 "account for all domestic production, manufacture, and sales of low-fuming brazing rod
 and wire," and identified three other domestic companies which, like itself, flux-coat the
 rod and wire but do not manufacture bare low- fuming brazing rod and wire, and one,
 J.W. Harris, which both manufactures and flux-coats low-fuming brazing rod and wire.
 Aufhauser did not indicate whether these other firms oppose the petition. J.W. Harris
 now supports the petition.
 Neither the Act nor the regulations require a petitioner to establish affirmatively that it
 has the majority 

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 support of a particular industry. Thus, the ITA is entitled to rely
 on petitioners' representations that they have, in fact, filed on behalf of the domestic
 industry, until it is affirmatively shown that they have not done so. See, "Final Negative
 Countervailing Duty Determinations: Certain Textile Mill Products and Apparel from
 Malaysia," 50 FR 9852 (1985), interpreting the requirements of Gilmore Steel Corp. v.
 United States, 585 F. Supp. 670, 676 (Ct. Int'l Trade 1984).
 Aufhauser's letter raised questions as to the nature of the industry. Almost all low-fuming
 brazing rod and wire imported into the U.S. is bare, yet the scope of the investigation
 covers both bare and flux-coated merchandise. The petition expressly included
 flux-coated as well as bare low-fuming brazing rod and wire because a potential
 countervailing duty order covering only bare low-fuming brazing rod and wire could
 be circumvented by importation of the product after flux-coating.
 Although not required to do so, the Department sent a questionnaire to Aufhauser on
 April 2, 1985, in order to elicit further information about the nature of the industry. We
 received an answer to the questionnaire on April 18. Even as supplemented by its
 questionnaire response, the information provided by Aufhauser, the only company that
 has expressed opposition to the petition, has not rebutted the evidence of record that the
 petition was, in fact, filed on behalf of the U.S. industry.

 Scope of the Investigation

 The products covered by this investigation are low-fuming brazing copper rod and wire,
 principally of copper and zinc alloy ("brass"), of varied dimension in terms of diameter,
 whether cut-to-length or coiled, whether bare or flux- coated, currently classified in the
 Tariff Schedules of the United States, Annotated (TSUSA) under items 612.6205,
 612.7220, and 653.1500. The chemical composition of the products under investigation
 is defined by Copper Development Association (CDA) standards 680 and 681.

 Analysis of Programs

 Throughout this notice, we refer to certain general principles applied to the facts of the
 current investigation. These principles are described in the "Subsidies Appendix"
 attached to the notice of "Cold-Rolled Carbon Steel Flat- Rolled Products from Argentina;
 Final Affirmative Countervailing Duty Determination and Countervailing Duty
 Order," which was published in the April 26, 1984, issue of the Federal Register (49 FR
 18006).
 Consistent with our practice in preliminary determinations, where a response to an
 allegation denies the existence of a program, receipt of benefits under a program, or
 eligibility of a company or industry under a program, and the Department has no
 persuasive evidence showing that the response is incorrect, we accept the response for
 purposes of the preliminary determination. All such responses, of course, are subject to
 verification. If a response cannot be supported at verfication, and the program is
 otherwise countervailable, the program will be considered a bounty or grant in the final
 determination.
 For purposes of this preliminary determination, the period for which we are measuring
 bounties or grants (the review period) is the 1984 company fiscal and tax year (August 1,
 1983 to July 31, 1984). Based upon our analysis of the petition and the responses
 submitted by the government of New Zealand and McKechnie Brothers (N.Z.) Ltd. to
 our questionnaire, we preliminarily determine the following.

 I. Programs Preliminarily Determined To Confer Bounties or Grants

 We preliminarily determine that bounties or grants are being provided to manufacturers,
 producers, exporters in New Zealand of low-fuming brazing copper rod and wire under
 the following programs.

 A. Export Performance Taxation Incentive (Section 156A, Income Tax Act 1976)

 Under the 1979 Amendment of the Income Tax Act 1976, exporters receive a tax credit
 based on the f.o.b. value of qualifying goods exported. Credits are available as a
 deduction against income tax payable. It the tax credit exceeds the income tax payable,
 the remainder is paid to the taxpayer in cash. The rate of the tax credit is dependent upon
 the government predetermined value- added category into which the product falls. The
 amount of the tax credit is calculated by multiplying the rate corresponding to the
 value-added category into which the product falls by the f.o.b. value of export sales. The
 products covered by this investigation fall into value-added category C for which the
 corresponding rate is 9.1 percent.
 According to the company response, benefits under this program will be completely
 phased out beginning in tax year 1988 (that is, after August 1, 1987). However, we
 preliminarily determine that McKechnie Metals Products Ltd., a subsidiary of McKechnie
 Brothers (N.Z). Ltd., received benefits under this program during the review period.
 Because eligibility for this program is limited to exporters, we preliminarily determine
 that it provides a bounty or gant within the meaning of the countervailing duty law.
 To calculate tax benefits, we examine the amount of tax savings received by the company
 during the review period. The amount of tax savings received by McKechnie Metals
 Products Ltd. should be based on the tax credit claimed by the company on its 1983 tax
 return (covering the period August 1, 1982 to July 31, 1983). Therefore, the estimated
 net bounty or grant should be equal to the amount of the tax credit claimed for brazing
 copper rod and wire exports by McKechnie on its 1983 tax return divided by the total
 amount of brazing copper rod and wire exports during the review period. However,
 because we do not have the company's 1983 tax return, we are using the 1984 tax return
 (covering the period August 1, 1983 to July 31, 1984) which specifies the tax credit rate
 for category C goods into which brazing copper rod and wire fall. Based on the 1984 tax
 return and the specified tax credit rate, we determine that the estimated net bounty or
 grant is 9.1 percent ad volorem.

 B. Export Market Development Taxation Incentive (Section 156F, Income Tax Act 1976)

 Under the 1979 Amendment of the Income Tax Act 1976, export market development
 expenditures include expenses incurred principally for seeking and developing markets,
 retaining existing markets, and obtaining market information. These exporter
 expenditures may qualify for a tax credit of 67.5 percent of the total expenditure. If the
 exporter takes advantage of section 156F, however, he may not deduct the qualifying
 expenditures as ordinary business expenses in calculating his assessable income. Because
 the normal corporate tax rate is 45 percent, the net benefit to the exporter under this
 program is 22.5 percent of the qualifying expenditure amount.
 According to the company response, this program will end on March 31, 1986, and the
 company will no longer receive benefits under the program as of July 31, 1986. However,
 in its response McKechnie Metals Products Ltd. reported receiving benefits under this
 program during the review period. Because eligibility for this program is limited to
 exporters, we preliminarily determine that it is a bounty or grant 

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 within the
 meaning of the countervailing duty law.
 The amount of the bounty or grant is the net benefit of the tax credit resulting specifically
 from U.S. related expenditures for marketing brazing copper rod and wire divided by the
 amount of brazing copper rod and wire exported to the U.S. Because we do not have the
 1983 tax return, which is needed under out tax benefits methodology explained above,
 we calculate the amount of the bounty or grant by dividing 22.5 percent of the U.S.
 related qualifying expenditures taken by McKechnie in the 1984 tax year by the amount
 of 1984 exports of the subject merchandise to the U.S. We find an estimated net bounty or
 grant amount of 0.36 percent ad valorem.

 II. Program Preliminarily Determined Not To Confer Bounties or Grants

 We preliminarily determine that bounties or grants are not being provided to
 manufacturers, producers, or exporters in New Zealand of low-fuming brazing copper
 rod and wire under the following program.

 A. Export Credit Insurance From the Export Guarantee Office (EXGO) 

 Established by the Export Guarantee Act of 1964, EXGO is a government agency which
 provides export credit insurance for goods and services sold outside of New Zealand.
 McKechnie Metals Products Ltd. has been a policyholder of EXGO since July 2, 1969, and
 has obtained export credit insurance for export shipments to the United States
 throughout the review period.
 The Export Guarantee Act mandates that EXGO secure revenues sufficient to cover all its
 expenses. The response of the government indicates that the premiums charged by EXGO
 have been sufficient to cover operating costs and the payment of claims in five of the last
 seven years. Because the premiums charged for export credit insurance are not
 manifestly inadequate to cover the long-term operating costs and losses of the program,
 we preliminarily determine that the EXGO export credit insurance program does not
 confer a bounty or grant upon McKechnie Metals Products Ltd.

 III. Programs Preliminarily Determined Not To Be Used

 In accordance with our practice of accepting a response to an allegation which denies the
 receipt of benefits under a program, we preliminarily determine, subject to verification,
 that manufacturers, producers, or exporters in New Zealand of low-fuming brazing
 copper rod and wire did not use the following programs which were listed in our notice of
 initiation.

 A. Export Programme Suspensory Loan Scheme (EPSLS)

 Petitioners allege that suspensory loans for up to 40 percent of eligible expenditures are
 available to established exporters who increase their net foreign exchange earnings
 through the marketing of specific goods or services in a designated foreign market. If a
 predetermined sales forecast is accomplished, the suspensory loan is converted into a
 grant; if the forecast is not met the exporter must repay the loan with interest.

 B. Export Programme Grant Scheme (EPGS)

 The EPGS was superseded by the EPSLS as of June, 1982. However, petitioners allege that
 grants under the EPGS could continue until June, 1985. Grants under the EPGS were given
 to exporters to encourage marketing research in targeted foreign markets. The grants,
 amounting to 64 percent of budgeted expenditures, were available for up to three years.

 C. Industrial Development Investment Allowance (IDPIA)

 Petitioners allege that an export investment allowance of up to 40 percent of the cost of
 new manufacturing plants and machinery is available to industries which have a
 significant export performance but whose products do not qualify for the increased
 exports taxation incentive.

 D. Extraordinary Depreciation Allowance

 Petitioners allege that, to encourage export production, the standard rate for the first
 year depreciation allowance on new and second-hand plant and machinery used for
 export production is 25 percent. After the first year, the rate is 10 percent or higher if
 approved by the Inland Revenue Department.

 E. Export Suspensory Loans (ESL)

 Petitioners allege that the New Zealand Development Finance Corporation makes
 suspensory loans for up to 40 percent of actual expenditures on plants and machinery
 used in the manufacturing of designated products. The suspensory loans are repayable at
 commerical rates but can become grants if the borrower meets predetermined export
 sales targets.

 F. Regional Development Investment Incentives

 Petitioners allege that the New Zealand governments offers companies a variety of
 regional development incentives for regions classified as either priority regions or
 slow-growth regions.

 G. Flexible Incentives Under the Investment Unit of the Department of Trade and
 Industry

 Petitioners allege various flexible incentives are available to industries through the
 Investment Unit of the Department of Trade and Industry.

 Exemption From Import Duties and Sales Taxes

 Petitioners allege that full or partial waiver of import duties on imports of capital
 equipment and qualifying raw materials used to manufacture exports can be received if
 such items are not available domestically. Petitioners also allege sales tax paid on
 equipment and intermediate goods used to produce goods for export may be refunded.

 I. Export Production Assistance Scheme

 Petitioners allege that import licensing concessions are provided to companies which
 import materials for incorporation in goods to be exported. Such concessions may
 include additional availability of import licenses on components for incorporation in
 goods to be exported.

 J. Export Promotion From the Export-Import Corporation

 Petitioners allege that the Export-Import Corporation, created by the New Zealand
 government, assists exporters with marketing overseas, negotiating contracts, arranging
 for the importation of goods, and generally promoting New Zealand exports.

 K. Research and Development Assistance

 Petitioners allege that the New Zealand government provides grants and investment
 financing for research and development through the Industrial Research and
 Development Grants Advisory Committee and the Applied Technology Program (ATP)
 administered by the Development Finance Corporation (DFC).

 L. Export Credits From the Development Finance Corporation

 Petitioners allege that the Development Finance Corporation provides credits for
 exporters below commercial rates.

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 IV. Program Preliminarily Found Not To Exist

 According to the government response, industry investment allowances are only
 available under IDPIA (see Section III. C. above) and the following program does not
 exist.

 A. Industry Study Investment Allowance

 Petitioners allege that when a company participates in an industry study which results in
 a plan for the industry it is eligible for an investment allowance for a percentage of the
 costs incurred for projects approved under the industry plan.

 Suspension of Liquidation

 In accordance with section 703(d) of the Act, we are directing the U.S. Customs Service
 to suspend liquidation of all entries of low-fuming brazing copper rod and wire from New
 Zealand which are entered, or withdrawn from warehouse, for consumption on or after
 the date of publication of this notice in the Federal Register and to require a cash deposit
 or bond for each entry of this merchandise in the amount of the estimated ad valorem
 rate. The estimated net bounty or grant is 9.46 percent ad valorem for all manufacturers,
 producers, or exporters in New Zealand of low-fuming brazing copper rod and wire.
 This suspension will remain in effect until further notice.

 Public Comment

 In accordance with section 355.35 of our regulations, we will hold a public hearing, if
 requested, to afford interested parties an opportunity to comment on these preliminary
 determinations at 1:30 p.m. on July 1, 1985, at the U.S. Department of Commerce, room
 1851, 14th Street and Constitution Avenue NW., Washington, D.C., 20230. Individuals
 who wish to participate in the hearing must submit a request to the Deputy Assistant
 Secretary for Import Administration, Room B-099, at the above address within 10 days
 of the publication of this notice.
 Requests for a hearing should contain: (1) The party's name, address, and telephone
 number; (2) the number of participants; (3) the reason for attending; and (4) a list of the
 issues to be discussed. In addition, pre- hearing briefs in at least 10 copies must be
 submitted to the Deputy Assistant Secretary by June 25, 1985. Oral presentations will be
 limited to issues raised in the briefs.
 In accordance with 19 CFR 355.33(d) and 19 CFR 355.34, written views will be
 considered if received not less than 30 days before the final determination or, if a hearing
 is held, within 10 days after the hearing transcript is available.
 This notice is published pursuant to section 703(f) of the Act (19 U.S.C. 1671b(f)).

 Alan F. Holmer,

 Deputy Assistant Secretary for Import Administration.

 May 15, 1985.

 [FR Doc. 85-12372 Filed 5-22-85; 8:45 am]

 BILLING CODE 3510-DS-M