61 FR 65546
NOTICES
DEPARTMENT OF COMMERCE
[C-791-001]
Ferrochrome From South Africa: Preliminary Results of the 1992 Countervailing
Duty Administrative Review
Friday, December 13, 1996
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AGENCY: International Trade Administration/Import Administration Department
of Commerce.
ACTION: Notice of preliminary results of 1992 Countervailing Duty Administrative
Review.
SUMMARY: The Department of Commerce (the Department) is conducting the 1992
administrative review of the countervailing duty order on ferrochrome from South
Africa. We preliminarily determine the net subsidy to be 0.27 percent ad valorem, which is
de minimis, for all companies for the period January 1, 1992 through December 31, 1992. If
the final results remain the same as these preliminary results of administrative review, we will
instruct the U.S. Customs Service to liquidate entries without regard to countervailing
duties. We invite interested parties to comment on these preliminary results. Parties who
submit an argument in this proceeding are requested to submit with the argument (1) a
statement of the issue, and (2) a brief summary of the argument.
EFFECTIVE DATE: December 13, 1996.
FOR FURTHER INFORMATION CONTACT: Cynthia Thirumalai, Office 1, Group I, Import
Administration, International Trade Administration, U.S. Department of Commerce,
Washington, D.C. 20230; telephone: (202) 482-4087.
SUPPLEMENTARY INFORMATION:
Background
On April 9, 1981, the Department published in the Federal Register (55 FR
11417) the countervailing duty order on Ferrochrome from South Africa. On
March 12, 1993, the Department published a notice of "Opportunity to Request Administrative
Review" (58 FR 13583) of this countervailing duty order. We received timely requests
for review from Chromecorp Technology (Pty) Ltd. (Chromecorp), Consolidated Metallurgical
Industries Ltd. (CMI), Ferralloys Limited (Ferralloys), and Samancor Ltd. (Samancor), all
South African producers/exporters of ferrochrome.
We initiated the review, covering the period January 1, 1992 through December 31, 1992, on
May 6, 1993 (58 FR 26960). This review covers three producers/exporters of the subject
merchandise (CMI, Ferralloys, and Samancor), which account for all exports of the subject
merchandise to the United States from South Africa, and the following eight programs:
(1) Export Incentive Program
(2) Regional Industrial Development Incentives
(3) Preferential Rail Rates
(4) Government Loan Guarantees
(5) Beneficiation Allowances--Electric Power Cost Aid Scheme
(6) General Export Incentive Scheme
(7) Industrial Development Corporation Loans
(8) Rail Transport Rebate on Outgoing Goods (subprogram of the Regional Industrial
Development Incentives)
One company, Chromecorp, reported having no exports to the United States during the review
period, although Chromecorp received benefits pursuant to export subsidy programs for
which there was no program-wide measurable change. In cases where a company does not
ship to the United States but benefits from export subsidies for which there are not measurable
program-wide changes, we do not include the company in the review (see, e.g., Certain
Electrical Conductor Aluminum Redraw Rod From Venezuela; Final Results of
Countervailing Duty Administrative Review, 57 FR 41918, September 14, 1992).
Therefore, we have not included Chromecorp in this 1992 review.
Applicable Statute
The Department is conducting this administrative review in accordance with section 751(a) of
the Tariff Act of 1930, as amended (the Act). Unless otherwise indicated, all citations to the
statute and to the Department's regulations are references to the provisions as they existed on
December 31, 1994. However, references to the Department's Countervailing Duties;
Notice of Proposed Rulemaking and Request for Public Comments, (May 31, 1989) (Proposed
Regulations), are provided solely for further explanation of the Department's
countervailing duty practice. Although the Department has withdrawn the particular
rulemaking proceeding pursuant to which the Proposed Regulations
were issued, the subject matter of these regulations is
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being considered in connection with an ongoing rulemaking proceeding which, among other
things, is intended to conform the Department's regulations to the Uruguay Round Agreements
Act. (See 60 FR 80, January 3, 1995.)
Scope of Review
The imported product covered by this review is ferrochrome from South Africa which is
currently classifiable under items 7202.41.00, 7202.49.10 and 7202.49.50 of the
Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS item numbers are
provided for convenience and Customs purposes, but our written description of the scope of
this proceeding remains dispositive.
Analysis of Programs
I. Export Incentive Program
The Export Incentive Program (EIP) provides assistance to exporters through a number of
different subprograms. Because the availability of this program is limited to exporters, the
Department previously determined that the benefits available under this program constitute
bounties or grants within the meaning
of the Act. See, Ferrochrome From South Africa; Preliminary Results of
Countervailing Duty Administrative Review (58 FR 59988, November 12, 1993) (1991
Ferrochrome Preliminary Results); Ferrochrome from South Africa; Final Results of
Countervailing Duty Administrative Review (60 FR 7043, February 6, 1995) (1991
Ferrochrome Final Results). In this review, neither the Government of South Africa nor
the respondents provided new information which would warrant reconsideration of this
determination.
Category A of the EIP
Category A of the EIP allowed exporters to claim a rebate of 50 percent of the import duties
applicable to inputs used in the production of goods for export. Exporters could claim this
rebate regardless of whether the inputs were actually imported or obtained domestically.
Additionally, Category A benefits were independent of normal duty drawback which operated
under section 4703 of the Customs and Excise program.
Although the Category A program was terminated on March 30, 1990, two companies
received residual benefits under Category A during the review period. These benefits resulted
from the Department of Trade and Industry's practice of using promissory notes to pay claims.
The companies had received promissory notes pursuant to claims filed in an earlier period,
but the notes
either matured or were discounted by the company during the review period. Therefore,
consistent with the Department's practice of recognizing the occurrence of the benefit at the
time that the benefit has a cash-flow effect on the recipient (see section 355.48(a) of the
Proposed Regulations), we determine that promissory notes which either matured or were
discounted during the review period constitute a bounty or grant within the meaning of the
Act.
Two companies reported receiving benefits under Category A of the EIP; both claimed that the
benefits were tied to exports to countries other than the United States. In each case, the
company calculated its full, potential Category A claim applicable to all exports, and then
multiplied this amount by the percentage of exports to countries other than the United States.
The Electrical Power Cost Aid Scheme (EPCAS), a program providing rebates of electricity
costs looked at in previous reviews, is similar to the Category A program in that benefits are
not directly linked to sales to particular markets but, instead, are allocated. However, claims
for rebates under the EPCAS program are required by the GOSA to be externally audited.
There is no comparable auditing procedure for Category A. Since Category A benefits must be
allocated in some fashion, we find that, in the absence of government oversight, we cannot be
assured that the benefits claimed are tied, in fact, to markets other than the United States.
Therefore, we find that benefits received pursuant to Category A benefit all export sales.
To calculate the benefit, we divided the total amount of the value at maturity, or the
discounted price of the promissory notes, by the recipient companies' total exports of all
products to all markets during the review period. We then weight-averaged the resulting rate
by each company's share of exports of subject merchandise to the United States during the
review period. On this basis, we preliminarily determine the benefits from Category A
promissory notes to be 0.27 percent ad valorem for all companies.
Category D of the EIP
Category D of the EIP provided exporters an additional tax deduction for marketing expenses
related to export sales. Based on export performance, an exporter could deduct from taxable
income an additional 75 or 100 percent of export marketing expenses, in addition to the
deductions normally allowed.
Section 355.44 (i)(1) of the Proposed Regulations states that the countervailable benefit
conferred by a tax program is the amount of additional taxes a company would have paid
absent the use of the program. All of the responding companies either did not file a tax return
during the review period or experienced operating losses and were not, therefore, in a taxable
position before taking into account the Category D deductions. Since the tax liability of each
company during the review period was unchanged by the Category D
deductions, we preliminary find that no company received benefits pursuant to Category D of
the EIP (see Certain Iron-Metal Castings From India: Final Results of Countervailing Duty
Administrative Review, (60 FR 44843, 44847 August 29, 1995) and Extruded Rubber
Thread From Malaysia; Preliminary Results of Countervailing Duty Administrative
Review, 61 FR 29534, 29536, June 11, 1996).
II. Regional Industrial Development Incentives
The Government of South Africa offered several incentives to companies located in
geographically remote areas designated as Industrial Development Points. These incentives
were: the Labor Incentive, the Interest Concession and the Subsidy on Housing for Key
Personnel.
We determined in our previous review of this order that, as regional subsidies, these
incentives constitute bounties or grants within the meaning of the Act. (See 1991 Ferrochrome
Preliminary Results; 1991 Ferrochrome Final Results.) In this review, neither the Government
of South Africa nor the respondents have provided new information which would warrant
reconsideration of this determination.
Labor Incentive and Interest Concession
No ferrochrome exporter under review claimed to have received benefits pursuant to the
Labor Incentive or the Interest Concession during the review period. (See Programs Not Used
section below.)
Subsidy on Housing for Key Personnel
The Regional Industrial Development Authorities subsidize housing for key personnel at
regional development points for a maximum of 20 years on new mortgage loans and the
outstanding principal of existing loans. Companies pay an interest rate that is a fixed amount
(e.g., 4.25% per annum) less than the Official Building Society rate, subject to a floor of 6.00%
per annum. The Regional Industrial Development Authorities pay the difference between the
interest paid by the companies and
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the Official Building Society rate monthly.
As stated above, one company reported having loans under this program. Because the loans
received under this program were long-term variable rate loans, we calculated the interest
differential in accordance with section 355.49(d)(1) of the Department's Proposed Regulations.
Consistent with our methodology in Ferrochrome From South Africa; Preliminary
Results of Countervailing Duty Administrative Review (61 FR 19259, May 1, 1996)
(1994 Ferrochrome Preliminary Results), and in accordance with section 355.44(b)(5) of the
Proposed Regulations, we used as our benchmark rate the Official Building Society Rate, as
reported in the questionnaire response. To calculate the benefit, we compared the amount of
interest which was actually paid during the review period to the interest which would have
been paid at the benchmark rate. To the extent that the interest actually paid was less than that
calculated using the benchmark rate, we took this amount and divided it by the company's
total sales of all merchandise during the review period. We then weight-averaged the resulting
rate by the company's share of exports of subject merchandise to the United States during the
review period. Based on the above, we preliminarily determine the ad valorem subsidy rate for
benefits received pursuant to this program to be 0.003 percent ad valorem for all companies.
III. Programs Not Used
We also examined the following seven programs and preliminarily determine that
producers/exporters of ferrochrome to the United States did not use them during the review
period:
(1) Industrial Development Corporation Loans
(2) Export Incentive Program
(a) Category B
(b) Category C
(3) Regional Industrial Development Incentives
(a) Labor Incentive
(b) Interest Concession
(4) Preferential Rail Rates
(5) Government Loan Guarantees
(6) Beneficiation Allowances--Electric Power Cost Aid Scheme
(7) General Export Incentive Scheme
(8) Rail Transport Rebate on Outgoing Goods (subprogram of the Regional Industrial
Development Incentives)
Preliminary Results of Review
As a result of our review, we preliminarily determine the net subsidy to be 0.27 percent ad
valorem, which is de minimis, for all companies for the period January 1, 1992 through
December 31, 1992. If the final results of this review remain the same as these preliminary
results, we intend to instruct the U.S. Customs Service to liquidate, without regard to
countervailing duties, all shipments of subject merchandise exported on or after
January 1, 1992 and entered on or before December 31, 1992. Because the countervailing
duty order was revoked effective January 1, 1995 (see Revocation of Countervailing
Duty
Orders (60 FR 40568, August 9, 1995)) pursuant to section 753 of the Act, as amended by the
Uruguay Round Agreements Act, no other instructions will be sent to the U.S. Customs
Service.
Parties to this proceeding may request disclosure of the calculation methodology and
interested parties may request a hearing not later than 10 days after the date of publication of
this notice. Interested parties may submit written arguments in case briefs on these
preliminary results within 30 days of the date of publication of this notice. Rebuttal briefs,
limited to arguments raised in case briefs, may be submitted seven days after the time limit for
filing the case briefs. Any hearing, if requested, will be held seven days after the scheduled date
for submission of rebuttal briefs. Copies of case briefs and rebuttal briefs must be served on
interested parties in accordance with 19 CFR 355.38(e).
Representatives of parties to the proceeding may request disclosure of proprietary
information under administrative protective order no later than 10 days after the
representative's client or employer becomes a party to the proceeding, but in no event later
than the date the case briefs are due under 19 CFR 355.38(c).
The Department will publish the final results of this administrative review including the results
of its analysis of issues raised in any case or rebuttal brief or at a hearing.
This administrative review and notice are in accordance with section 751(a)(1) of the Act (19
U.S.C. 1675(a)(1)).
Dated: November 25, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-31727 Filed 12-12-96; 8:45 am]
BILLING CODE 3510-DS-P