66 FR 51019, October 5, 2001
C-489-806
Sunset Review
Public Document
MEMORANDUM TO: Faryar Shirzad
Assistant Secretary
for Import Administration
FROM: Jeffrey A. May
Director
Office of Policy
SUBJECT: Issues and Decision Memo for the Expedited Sunset Review of the
Countervailing Duty Order on Certain Pasta from Turkey; Final Results
Summary:
We have analyzed the substantive response of the domestic interested
parties in the expedited sunset review of the countervailing duty order on
certain pasta ("pasta") from Turkey. We recommend that you approve the
positions we have developed in the Discussion of the Issues section of
this memorandum for this final results of review. Below is the complete
list of the issues in this expedited sunset review for which we received
comments from interested parties:
- Likelihood of Continuation or Recurrence of Countervailable Subsidies
- Continuation of subsidy programs
- Net Countervailable Subsidy Likely to Prevail
- Net countervailable subsidy from the investigation
- Nature of the Subsidies
History of the Order:
On July 14, 1996, the Department published in the Federal Register a
final affirmative countervailing duty determination on pasta from Turkey
(61 FR 30366). On July 24, 1996, the Department published the
countervailing duty order (61 FR 38546). The following programs were found
to confer countervailable subsidies:
(1) Pre-Shipment Export Loans
(2) Pasta Export Grants
(3) Free Wheat Program
(4) Payments for Exports on Turkish Ships/State Aid for Exports Program
(5) Incentive Premium on Domestically Obtained Goods
(6) Resource Utilization Support Fund (GIP)
(7) Tax Exemption Based on Export Earnings
The list below identifies manufacturers/producers/exporters and the net
subsidies determined by the Department in the original investigation.
_______________________________________________________________________
Manufacturers/Producers/Exporters Net subsidy
(percent)
_______________________________________________________________________
Filiz Gida Sanayi ve Ticaret ("Filiz") 3.87
Maktas Makarnacilik ve Ticaret ("Maktas") 13.12
Oba Makarnacilik Sanayi ve Ticaret ("Oba") 15.82
"All Other" (Turkish manufacturers/producers/exporters) 9.70
_______________________________________________________________________
There have been no completed administrative reviews of the countervailing
duty order on pasta from Turkey. However, on September 6, 2000, the
Department initiated an administrative review of this order covering the
period January 1, 1999, through December 31, 1999 (65 FR 53980). On August
8, 2001, the Department published the preliminary results of review (66 FR
41553). The Department is scheduled to reach its final results in this
review no later than December 6, 2001.
The Department issued one scope ruling with respect to this order. (1)
In the final countervailing duty investigation determination the
Department found that two programs had been terminated: the Support and
Price Stabilization Program and the Wharfage Fee Exemption Program. (2)
These programs were not included in the investigation margin rate and are
not included in the rate reported in this sunset review. This order
remains in effect for all Turkish pasta manufacturers, producers, and
exporters.
Background:
On June 1, 2001, the Department initiated a sunset review of the
countervailing duty order on pasta from Turkey (66 FR 29771), pursuant to
section 751(c) of the Tariff Act of 1930, as amended, ("the Act"). The
Department received a notice of intent to participate on behalf of the New
World Pasta Company, Dakota Growers Pasta Company, Borden Foods
Corporation, and American Italian Pasta Company (collectively "the
domestic interested parties"), within the applicable deadline (June 15,
2001) specified in section 351.218(d)(1)(i) of the Sunset Regulations. The
domestic parties claimed interested-party status under section 771(9)(C)
of the Act, as domestic producers of certain pasta.
On June 29, 2001, we received a request for an extension of time in which
to file substantive responses and rebuttal comments on behalf of the
domestic interested parties. (3) Pursuant to 19 CFR 351.302(b), the
Department extended the deadlines for the domestic interested parties and
all eligible participants in this review until July 16, 2001, for the
submission of substantive responses and July 23, 2001, for the submission
of rebuttal comments. (4)
On July 16, 2001, we received a complete substantive response from the
domestic interested parties, within the 30-day deadline specified in the
Sunset Regulations under section 351.218(d)(3)(i). The domestic interested
parties assert that most of domestic parties participated in the original
investigation and the scope clarification proceeding. (5) In addition,
they maintain that they are committed to full participation in this review
to preserve and maintain this order. (6)
The Department did not receive a substantive response from any respondent
interested party, as defined under 771(9)(A) of the Act. (7) As a result,
we determined foreign interested party participation to be inadequate, and
pursuant to 19 CFR 351.218 (e)(1)(ii)(A) of the Department's Sunset
Regulations, we determined to conduct an expedited (120-day) sunset review
of this order. (8)
Discussion of the Issues:
In accordance with section 751(c)(1) of the Act, the Department is
conducting this review to determine whether termination of the
countervailing duty order would be likely to lead to continuation or
recurrence of a countervailable subsidy. Section 752(b) of the Act
provides that, in making this determination, the Department shall consider
the net countervailable subsidy determined in the investigation and
subsequent reviews, and whether any change in the program which gave rise
to the net countervailable subsidy has occurred and is likely to affect
that net countervailable subsidy. Pursuant to section 752(b)(3) of the
Act, the Department shall provide to the International Trade Commission
("the Commission") the net countervailable subsidy likely to prevail if
the order is revoked. In addition, consistent with section 752(a)(6), the
Department shall provide to the Commission information concerning the
nature of the subsidy and whether it is a subsidy described in Article 3
or Article 6.1 of the 1994 World Trade Organization ("WTO") Agreement on
Subsidies and Countervailing Measures ("Subsidies Agreement").
Below we address the response of interested parties.
1. Continuation or Recurrence of a Countervailable Subsidy:
Interested Party Comments
The domestic interested parties argue that there is a strong likelihood
of continuation or recurrence of subsidization by Turkish pasta producers
if the order is revoked. (9) The domestic interested parties claim that
in the investigation, the Department found seven programs to be
countervailable, five of which provided export subsidies. (10) According
to the domestic interested parties, with the exception of the most recent
administrative review period, neither the Government of Turkey nor any
Turkish pasta producers have requested administrative reviews. In
addition, they have provided no information to establish whether the
investigated programs have been terminated or are no longer used. The
domestic interested parties point out that the Department's policy is
that it cannot determine that programs have been terminated without
having conducted an administrative review of an order. Consequently,
the domestic interested parties argue that the Department should
conclude these programs continue to provide benefits to Turkish producers
and exporters, and that revocation of the order would be likely to lead
to continued subsidization. (11) As stated in the Department's Sunset
Policy Bulletin, the domestic interested parties maintain that if subsidy
programs continue, the Department will determine that revocation is
likely to lead to continuation or recurrence of subsidization. (12)
Department's Position
Drawing on the guidance provided in the legislative history accompanying
the Uruguay Round Agreements Act ("URAA"), specifically, the Statement of
Administrative Action ("SAA"), H.R. Doc. No. 103-316, vol. 1 (1994); the
House Report, H.R. Rep. No. 103-826, pt.1 (1994); and the Senate Report,
S. Rep. No. 103-412 (1994), the Department issued its Sunset Policy
Bulletin providing guidance on methodological and analytical issues,
including the basis for likelihood determinations. The Department
clarified that determinations of likelihood will be made on an order-wide
basis (see section III.A.2 of the Sunset Policy Bulletin). Additionally,
the Department normally will determine that revocation of a countervailing
duty order is likely to lead to continuation or recurrence of a
countervailable subsidy where (a) a subsidy program continues, (b) a
subsidy program has been only temporarily suspended, or (c) a subsidy
program has been only partially terminated (see section III.A.3.a of the
Sunset Policy Bulletin). Exceptions to this policy are provided where a
company has a long record of not using a program (see section III.A.3.b of
the Sunset Policy Bulletin).
In addition to considering the guidance on likelihood cited above,
section 751(c)(4)(B) of the Act provides that the Department shall
determine that revocation of an order is likely to lead to continuation or
recurrence of a countervailable subsidy where a respondent interested
party waives its participation in the sunset review. In the instant
review, the Department did not receive a response from any respondent
interested party, and pursuant to section 351.218(d)(2)(iii) of the Sunset
Regulations, this constitutes a waiver of participation.
Given that there has been no completed administrative review of this
order, and no evidence has been submitted to the Department demonstrating
the termination of the countervailable programs since the investigation,
it is reasonable to assume that all programs countervailed in the original
investigation continue to exist and are utilized. Moreover, section
751(c)(4)(B) of the Act provides that the Department shall determine that
revocation of an order is likely to lead to continuation or recurrence of
a countervailable subsidy where the foreign government and/or a respondent
interested party waives its participation in the sunset review. As a
result, we determine that the subsidy programs found to be countervailable
in the investigation continue to confer countervailable benefits above de
minimis. Therefore, we believe that revocation of the order would be
likely to lead to a continuation or recurrence of a countervailable
subsidy for Turkish manufacturers, producers, and exporters of pasta.
2. Net Countervailable Subsidy Likely to Prevail
Interested Party Comments:
The domestic interested parties assert that the Department normally will
select the rate from the investigation, or, if appropriate, the rate from
a preliminary determination. In this instance, because the Department has
not conducted and completed an administrative review and has not received
requests to adjust the subsidy rates from the investigation, the domestic
interested parties maintain that the Department should determine that the
net countervailable subsidy rates from the original investigation are the
rates likely to prevail if the order were revoked. These rates are: 3.87
percent for Filiz, 13.12 percent for Maktas, 15.82 percent for Oba, and
9.70 percent for "all other" manufacturers, producers, exporters of pasta
from Turkey. (13)
Department's Position:
In the Sunset Policy Bulletin, the Department stated that, consistent
with the SAA and House Report, the Department normally will select a
rate from the investigation as the net countervailable subsidy likely
to prevail if the order is revoked, because that is the only calculated
rate that reflects the behavior of exporters and foreign governments
without the discipline of an order or suspension agreement in place.
However, this rate may not be the most appropriate rate if, for example,
the rate was derived from subsidy programs which were found in subsequent
reviews to be terminated, there has been a program-wide change, or the
rate ignores a program found to be countervailable in a subsequent
administrative review. (14)
Additionally, where the Department determined company-specific
countervailing duty rates in the original investigation, the Department
normally will report to the Commission company-specific rates from the
original investigation or, where no company-specific rate was determined
for a company, the Department normally will provide to the Commission the
country-wide or "all-others" rate (see Sunset Policy Bulletin at section
III.B.2.).
The Department agrees with domestic interested parties that the rates
likely to prevail if the order were revoked are those from the original
investigation. As noted in the Sunset Policy Bulletin, the Department
normally will not make adjustments to the net countervailable subsidy rate
determined in the original investigation where the Department had not
conducted an administrative review of the order, because the Department
cannot determine that the programs found to confer subsidies in the
original investigation have been terminated. (15) Thus, we will report to
the Commission the rate found in the investigation, as contained in the
Final Results of Review section of this memorandum.
Final Results of Review:
As a result of this review, the Department finds that revocation of the
countervailing duty order on pasta from Turkey would likely lead to
continuation or recurrence of a countervailable subsidy at the rates
listed below:
-----------------------------------------------------------------------
Manufacturers/Producers/Exporters Net Countervailable
Subsidy (percent)
-----------------------------------------------------------------------
Filiz 3.87
Maktas 13.12
Oba 15.82
"All Other" Turkish Manufacturers/ Producers/Exporters 9.70
_______________________________________________________________________
Based on our analysis of the comments received, we recommend adopting all
of the above positions. If these recommendations are accepted, we will
publish the Final Results of Review in the Federal Register.
AGREE________ DISAGREE________
_________________________
Joseph A. Spetrini
Acting Assistant Secretary
for Import Administration
__________________________
(Date)
________________________________________________________________________
footnotes:
1. See Notice of Scope Rulings, 65 FR 41957(July 7, 2000).
2. The Support and Price Stabilization Program: terminated effective
February 1, 1992 (Official Gazette (August 20, 1991). The Wharfage Fee
Exemption Program: terminated effective January 1, 1993 (Official Gazette
(July 11, 1992). See 61 FR 30366.
3. See June 29, 2001, Letter from Collier, Shannon, Scott, PLLC, to the
Department.
4. See June 29, 2001, Letter from James P. Maeder, Jr., Office of
Policy to Collier, Shannon, Scott, PLLC.
5. See July 16, 2001, Substantive Response of domestic interested
parties at 4. The domestic interested parties state that Hershey Foods
Corporation (the predecessor to New World), Borden, Inc., and Gooch Foods,
Inc., filed the countervailing duty petition on May 12, 1995.
6. Id.
7. In the June 20, 2001 letter to the Department, the GOT expressed
interest as an interested-party in this review. However, the GOT did not
submit a substantive response in this review. Section 351.218(d)(2)(iv)
provides that where the foreign government waives participation in a CVD
sunset review, either by filing a Statement of Waiver or by failing to
file a complete substantive response to a Notice of Initiation, the
Department will conduct an expedited sunset review under section
751(c)(3)(B) of the Act and, consistent with the SAA at 881, and the House
Report at 57, normally will conclude that revocation of the order or
termination of the suspended investigation would be likely to lead to
continuation or recurrence of a countervailable subsidy for all respondent
interested parties.
8. See July 23, 2001, Letter from Jeffrey A. May, Director of Policy,
to Lynn Featherstone, Director of Investigations, International Trade
Commission, regarding inadequate response to the notice of initiation from
respondent interested parties.
9. See July 16, 2001, Substantive Response of domestic interested
parties at 5.
10. Id.
11. Id. at 6.
12. Id.
13. See July 16, 2001, Substantive Response of domestic interested at 8.
14. See section III.B.3 of the Sunset Policy Bulletin.
15. Id.