(Cite as: 49 FR 12731)
NOTICES
DEPARTMENT OF COMMERCE
[C-469-054]
Ampicillin Trihydrate and Its Salts From Spain; Preliminary Results of Administrative Review of Countervailing Duty Order
Friday, March 30, 1984
*12731 AGENCY: International Trade Administration, Commerce.
ACTION: Notice of preliminary results of administrative review of countervailing duty order.
*12732 SUMMARY: The Department of Commerce has conducted an administrative review of the countervailing duty order on ampicillin trihydrate and its salts from Spain. The review covers the period January 1, 1982 through December 31, 1982. As a result of the review, the Department has preliminarily determined the net subsidy to be 1.67 percent ad valorem. Interested parties are invited to comment on these preliminary results.
EFFECTIVE DATE: March 30, 1984.
FOR FURTHER INFORMATION CONTACT: Susan Silver or Laura Kneale, Office of Compliance, International Trade Administration, U.S. Department of Commerce, Washington, D.C. 20230; telephone: (202) 377-2786.
SUPPLEMENTARY INFORMATION:
Background
On February 28, 1983, the Department of Commerce ("the Department") published in the Federal Register (48 FR 8323) the final results of its last administrative review of the countervailing duty order on ampicillin, trihydrate and its salts from Spain (44 FR 17484, March 22, 1979) and announced its intent to conduct 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
Imports covered by the review are shipments of Spanish ampicillin trihydrate and its salts ("ampicillin"), an antibiotic which is a semi-synthetic penicillin. Such merchandise is currently classifiable under item 411.6000 of the Tariff Schedules of the United States Annotated.
The review covers the period January 1, 1982 through December 31, 1982, and four programs: (1) A rebate of indirect taxes upon exportation, under the Desgravacion Fiscal a la Exportacion ("the DFE"); (2) an operating capital loans program; (3) a short-term export credit program; and (4) research and development incentives. There were no known shipments of ampicillin to the United States in 1982 and there are no known unliquidated entries for the period.
Analysis of Programs
(1) Desgravacion Fiscal a la Exportacion
Spain employs a cascading tax system. Under this system, the government levies a turnover tax ("IGTE") on each sale of a product through its various stages of production, up to (but not including) the final sale in Spain. Upon exportation of the product, the government, under the DFE, rebates both these accumulated IGTE indirect taxes and certain final stage taxes.
Although the Spanish government rebates upon exportation all indirect taxes paid under the cascading tax system, the Tariff Act and the Commerce Regulations allow the rebate of only the following: (1) Indirect taxes borne by inputs which are physically incorporated in the exported product (see Annex 1.1 of part 355 of the Commerce Regulations); and (2) indirect taxes levied at the final stage (see Annex 1.2 of part 355 of the Commerce Regulations). If the payment upon export exceeds the total amount of allowable indirect taxes described above, the Department considers the difference to be an overrebate of indirect taxes and, therefore, a subsidy.
Physical incorporation is a question of fact to be determined for each product in each case. In this case, the physically incorporated inputs are the raw materials previously allowed by the Department. The rebate of two final stage taxes, the parafiscal tax on export licenses and the tax on freight and insurance, is also allowable when calculating whether or not there is an overrebate of indirect taxes under the DFE.
As of January 1, 1982, the Spanish government increased the IGTE rate from 3.80 percent to 4.60 percent, while maintaining the previous rate for the export rebate. We concluded in our last review that an earlier increase in the IGTE rate had eliminated the overrebate previously found countervailable. Based on our analysis of the indirect taxes on physically incorporated inputs and the two indirect taxes on the final product, we preliminarily find that the additional change in the IGTE rate for 1982 continues to eliminate the overrebate. Therefore, we preliminarily determine the net subsidy attributable to this program during the period of review to be zero percent.
The Spanish government requires banks to set aside funds to provide short-term operating capital loans, as part of its Privileged Circuit Exporter Credit Program. These loans are granted for a period of less than one year. For 1982, the Spanish government fixed the interest rate for such loans at 10 percent. To determine the interest rate on comparable commercial loans, we took the average national prime interest rate for loans of comparable length, added the prevailing interest charge over prime facing borrowers of average creditworthiness and added the legally established fees and commissions. Comparing this benchmark with the 10 percent interest rate established for the operating capital loans program, we found a differential of 9.38 percent during the period of review.
The maximum loan principal available to a given exporter is determined as a percentage of the firm's previous year's exports. This amount may be increased by 10 percent if the firm has a government-issued Exporter's Card. The only known exporter of this merchandise to the United States, Antibioticos, S.A., has such a card. Effective January 1, 1984, the Spanish government reduced the maximum percentage of eligibility for operating capital loans (including Exporter's Card eligibility) to 10.5 percent of the previous year's exports.
By multiplying this eligibility level by the interest rate differential for 1982 (9.38 percent) as the most recent information available, we preliminarily determine, for purposes of cash deposits of estimated countervailing duties, the net subsidy currently attributable to this program is 0.98 percent ad valorem.
The short-term export credit program, which is part of the Privileged Circuit Exporter Credit Program, provides loans for up to 90 percent of the value of a company's export shipment at a 10 percent interest rate for a maximum of one year.
Absent shipments of ampicillin to the U.S., we estimated the potential benefit from this program to be the subsidy received by Antibioticos under this program on exports of amoxicillin to the U.S. in 1982. We have made this decision based on our knowledge that Antibioticos is eligible for and has received loans under this program. Therefore, we have reason to believe that the firm would have received loans on exports of ampicillin. We preliminarily find a potential ad valorem benefit of 0.69 percent.
(4) Research and Development Incentives
In its final determination in the countervailing duty investigation on certain steel products from Spain, the Department found that firms may receive government loans covering up to 50 percent of the cost of R&D projects. In its questionnaire response, the Spanish government informed us that Antibioticos received assistance under this program. However, we preliminarily determine that the project for which Antibioticos received funding was for *12733 the development of new products and did not benefit the production of ampicillin.
Preliminary Results of the Review
As a result of the review, we preliminarily determine the potential aggregate net subsidy conferred by the four programs is 1.67 percent ad valorem.
Accordingly, as provided by section 751(a)(1) of the Tariff Act, the Department intends to instruct the Customs Service to collect a cash deposit of estimated countervailing duties of 1.67 percent of the entered value on all shipments of Spanish ampicillin entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of the current 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 45 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 issues raised in any 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 s 355.41 of the Commerce Regulations (19 CFR 355.41).
Dated: March 26, 1984.
Alan F. Holmer,
Deputy Assistant Secretary Import Administration.