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DEPARTMENT OF COMMERCE



International Trade Administration

[C-489-502]



 

Certain Welded Carbon Steel Pipes and Tubes and Welded Carbon 

Steel Line Pipe From Turkey; Preliminary Results of Countervailing Duty 

Administrative Reviews



AGENCY: Import Administration, International Trade Administration, 

Department of Commerce.



ACTION: Notice of preliminary results of countervailing duty 

administrative reviews.









SUMMARY: The Department of Commerce (``the Department'') is conducting 

administrative reviews of the countervailing duty orders on certain 

welded carbon steel pipes and tubes and welded carbon steel line pipe 

from Turkey. For information on the net subsidy for each reviewed 

company for each class or kind of merchandise, as well as for all non-

reviewed companies, see the Preliminary Results of Reviews section of 

this notice. If the final results remain the same as these preliminary 

results of administrative reviews, we will instruct the U.S. Customs 

Service to access countervailing duties as detailed in the Preliminary 

Results of Reviews section of this notice. Interested parties are 

invited to comment on these preliminary results. (See Public Comment 

section of this notice.)



EFFECTIVE DATE: April 8, 1997.



FOR FURTHER INFORMATION CONTACT:

 Stephanie Moore or Cameron Cardozo, Office of Countervailing Duty/

Antidumping Enforcement VI, Import Administration, International Trade 

Administration, U.S. Department of Commerce, 14th Street and 

Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-

2849 or (202) 482-2786.



SUPPLEMENTARY INFORMATION:



Background



    On March 7, 1986, the Department published in the Federal Register 

(51 FR 7984) the countervailing duty orders on certain welded carbon 

steel pipes and tubes (pipe and tube) and certain welded carbon steel 

line pipe (line pipe) from Turkey. On March 4, 1996, the Department 

published a notice of ``Opportunity to Request Administrative Review'' 

(61 FR 8238) of these countervailing duty orders. We received timely 

requests for reviews, and we initiated the reviews, covering the period 

January 1, 1995 through December 31, 1995, on April 25, 1996 (61 FR 

18378).





---- page 16783 ----





    In accordance with 19 CFR 355.22(a), the review on pipe and tube 

covers Erciyas Boru Sanayii ve Ticaret A.S. (Erbosan), a pipe and tube 

producer and exporter, who specifically requested the review. The 

review on line pipe covers Mannesmann-Sumerbank Boru Endustrisi T.A.S. 

(Mannesmann), a line pipe producer and exporter, who specifically 

requested the review. These reviews also cover 28 programs.

    On November 6, 1996, we extended the period for completion of the 

preliminary results pursuant to section 751(a)(3) of the Tariff Act of 

1930, as amended. We extended the preliminary results to no later than 

March 31, 1997 (see 61 FR 57398). The final results will be issued no 

later than 120 days from the date on which the preliminary results are 

published.



Applicable Statute



    Unless otherwise indicated, all citations to the statute are 

references to the provisions of the Tariff Act of 1930, as amended by 

the Uruguay Round Agreements Act (``URAA'') effective January 1, 1995 

(the Act). The Department is conducting this administrative review in 

accordance with section 751(a) of the Act.



Scope of Reviews



    Imports covered by these reviews are shipments from Turkey of two 

classes or kinds of merchandise: (1) Certain welded carbon steel pipe 

and tube, having an outside diameter of 0.375 inch or more, but not 

over 16 inches, of any wall thickness. These products, commonly 

referred to in the industry as standard pipe and tube or structural 

tubing, are produced to various American Society for Testing and 

Materials (ASTM) specifications, most notably A-53, A-120, A-135, A-

500, or A-501; and (2) certain welded carbon steel line pipe with an 

outside diameter of 0.375 inch or more, but not over 16 inches, and 

with a wall thickness of not less than .065 inch. These products are 

produced to various American Petroleum Institute (API) specifications 

for line pipe, most notably API-L or API-LX. These products are 

classifiable under the harmonized Tariff Schedule of the United States 

(HTSUS) item numbers 7306.30.10 and 7306.30.50. The HTSUS item numbers 

are provided for convenience and Customs purposes. The written 

description remains dispositive.



Verification



    As provided in section 782(i) of the Act, we verified information 

submitted by the Government of Turkey (GOT), Erbosan, and Mannesmann, 

We followed standard verification procedures, including meeting with 

government and company officials and examination of relevant accounting 

and financial records and other original source documents. Our 

verification results dated March 17 and March 25, 1997, are outlined in 

the public versions of the verification reports, which are on file in 

the Central Records Unit (CRU) (Room B-099 of the Main Commerce 

Building).



Analysis of Programs



I. Programs Conferring Subsidies



A. Programs Previously Determined To Confer Subsidies

    1. Pre-Shipment Export Credit. The Export Credit Bank of Turkey 

(Turk Eximbank) provides short-term pre-shipment export loans to 

exporters through intermediary commercial banks. The program is 

designed to support export-related industries from the initial stage of 

production. Loans are made to exporters who commit to export within a 

specified period of time. Generally, loans are extended for 120 days 

for industrial goods and cover 50 to 75 percent of the FOB export 

value. During the period of review (POR), both companies under review 

were eligible for pre-shipment export loans amounting to 50 percent of 

the FOB value of exports, for a maximum of 120 days. These loans are 

denominated in Turkish Lira (TL) and repaid in TL. The interest rate 

charged on these pre-shipment loans is established by Turk Eximbank and 

is tied to the Central Bank's rediscount rate.

    In the Final Affirmative Countervailing Duty Determination: Certain 

Pasta from Turkey 61 FR 30366 (June 14, 1996) (Pasta), the Department 

found this program specific and, therefore, countervailable because 

receipt of the loans is contingent upon export performance and the 

interest rate paid on these loans is less than the amount the recipient 

would pay on a comparable commercial loan. In Pasta, we found that 

these loans were tied to specific destinations; however, in these 

reviews, we find these loans to be untied. Although an exporter files a 

loan application in which the export destination is listed, we verified 

that the actual destination of the shipments may be different from the 

one(s) stated in the loan application. The exporter has to only show 

that an export has taken place, and provide the foreign currency 

exchange receipts from the commercial bank to close out the loan with 

Turk Eximbank. Because the loans are not specifically tied to a 

particular destination at the time of approval, we preliminarily 

determine that the pre-shipment loan program is an untied export loan 

program. For further discussion, see the GOT and the company 

Verification Reports (Public Versions) dated March 17 and March 25, 

1997, which are on file in the CRU.

    Section 771(5)(E)(ii) of the Act states that, in the case of a 

loan, if there is a difference between the amount the recipient of the 

loan pays on the loan and the amount the recipient would pay on a 

comparable commercial loan that the recipient could actually obtain on 

the market, then a countervailable benefit is bestowed. In this case, 

as the benchmark interest rates, we are using company-specific interest 

rates on comparable commercial loans to calculate the benefit for any 

pre-shipment loans that were taken out by Erbosan or Mannesmann in 1994 

and repaid in 1995, and any pre-shipment loans that were taken out in 

1995 and repaid in 1995. (See company Verification Reports). Because 

the Department considers Turkey to be hyper-inflationary based on a 

Consumer Price Index rate of approximately 67 percent during the POR. 

(see Pasta at page 30367; see, also, Preliminary Results of Antidumping 

Duty Administrative Review: Gray Portland Cement and Clinker from 

Mexico, 61 FR 51676, 51681 (October 3, 1996)), we also preliminarily 

determine that it is appropriate to use monthly average short-term 

interest rates. Where monthly company-specific interest rates for 

Erbosan or Mannesmann are unavailable, we have used the monthly average 

interest rates charged by a commercial bank in Turkey on domestic TL 

loans. See commercial bank Verification Report (Public Version) on file 

in CRU. Using these benchmarks, we continue to find these pre-shipment 

export loans countervailable because the interest rate charged is less 

than the rate for comparable commercial loans that the company could 

actually obtain in the market.

    Government Resolution Number: 94/5782, Article 4, effective June 

13, 1994, allows for the exemption of certain fees that are normally 

charged on loans provided that the loans are used in financing 

exportation and other foreign exchange earning activities. For pre-

shipment loans, which are denominated in TL, the fees that are exempted 

are the Bank and Insurance and Services Tax (BIST) of 5 percent of the 

interest rate, and the Resource Utilization Support Fund (RUSF) fee of 

6 percent of the interest rate. The Department's current practice is 

normally to compare effective interest rates rather than nominal rates. 

The ``effective'' interest





---- page 16784 ----





rates are intended to take account of the actual cost of the loan, 

including the amount of any fees, commissions, compensating balances, 

government charges or penalties paid in addition to the ``nominal'' 

interest rate. Therefore, we have added the exempted customary banking 

fees to the commercial bank's benchmark interest rates. See e.g., 

Certain Iron-Metal Castings from India: Final Results of Countervailing 

Duty Administrative Review, 60 FR 44843 (August 29, 1995) (Castings).

    To determine the benefit, we calculated the countervailable subsidy 

as the difference between actual interest paid on pre-shipment loans 

during the POR and the interest that would have been paid using the 

benchmark interest rates plus the customary banking fees. This 

difference was divided by the company's total export sales during the 

POR. On this basis, we preliminarily determine the countervailable 

subsidy to be 1.77 percent ad valorem for Erbosan, the pipe and tube 

producer, and 0.73 percent ad valorem for Mannesmann, the line pipe 

producer.

B. Other Programs Preliminarily Determined To Confer Subsidies

    1. Investment Allowance. The General Incentives Program (GIP) is 

designed to increase investment in Turkey and to expand the Turkish 

economy. Under the GIP, companies may apply to the Undersecretariat of 

Treasury (UT) for investment incentive certificates. The investment 

incentive certificates entitle the holders to a number of specified 

benefits, such as investment allowances, related to an investment 

project. The investment allowance provides companies with a corporate 

tax exemption of between 30 percent and 100 percent of their total 

fixed investment depending upon the geographical location, sector and 

the value of the investment. During the POR, for purposes of GIP, 

Turkey was divided into four types of geographic regions: (1) 

Developed; (2) normal; (3) priority two; and (4) priority one. 

Companies located in first or second priority regions for development 

within Turkey, which are lesser-developed regions, are entitled to 

higher rates of deduction than companies located in the developed or 

normal regions.

    Both companies were approved in 1994 for GIP investment 

certificates. They claimed an investment allowance on their corporate 

income tax returns filed during the POR. Erbosan, because it is located 

in a normal region, is eligible for an investment allowance of 40 

percent, while Mannesmann, because it is located in a development 

region, is only eligible for the minimum investment allowance of 30 

percent, which is the minimum investment allowance provided to all 

companies under GIP regardless of location or type of industry. See 

e.g., Certain Welded Carbon Steel Pipe and Tube Products from Turkey; 

Preliminary Results of Countervailing Duty Administrative Review, 52 FR 

47621, 47622 (December 15, 1987) and Certain Welded Carbon Steel Pipe 

and Tube Products from Turkey; Final Results of Countervailing Duty 

Administrative Review, 53 FR 9791 (March 25, 1988), Because the 30 

percent investment tax is not limited to a specific enterprise or 

industry or group thereof, nor limited to companies located in specific 

regions, pursuant to section 771(5A)(D) we preliminarily determine that 

the 30 percent minimum investment allowance under GIP is not 

countervailable.

    However, because the investment allowance of 40 percent received by 

Erbosan (designated for companies located in a normal region) is 10 

percent higher than the minimum 30 percent allowance provided to all 

sectors and geographic regions within Turkey, the difference results in 

a higher tax savings to the company due to its geographic location. 

Therefore, we preliminarily determine that the provision of a higher 

investment allowance of 40 percent to certain regions is specific and, 

therefore, countervailable within the meaning of section 771(5A)D)(iv) 

of the Act. See also Industrial Phosphoric Acid from Israel; 

Preliminary Results of Countervailing Duty Administrative Reviews, 61 

FR 8255, 8257 (March 4, 1996) and Industrial Phosphoric Acid from 

Israel; Final Results of Countervailing Duty Administrative Reviews, 61 

FR 28841 (June 6, 1996).

    We preliminarily determine that the benefits under the investment 

allowance program are ``recurring'' because once a company has a fixed 

asset investment project approved, it becomes eligible to deduct an 

investment allowance from its corporate income tax returns; therefore, 

the receipt of the benefit is automatic and continues year to year. To 

calculate the benefit for Erbosan, we first multiplied its total fixed 

investment by 10 percent, the amount Erbosan receives about the 30 

percent allowance available throughout the country. We then computed 

the company's tax rate. The company paid four separate corporate taxes. 

These included a 25 percent corporate tax, an interim tax in the amount 

of 10 percent of the corporate tax, a ``stopaj'' tax equal to 10 

percent of 75 percent of its net taxable income and a fund tax equal to 

10 percent of the ``stopaj'' tax. The sum of these taxes equals a total 

corporate tax rate of 35.75 percent. We the multiplied the 

countervailable portion of the investment allowance deduction by the 

tax rate of 35.75 percent, and obtained the tax savings for the 

company. Next, we divided the tax savings by the company's total sales. 

On this basis, we preliminarily determine the countervailable subsidy 

to be 0.02 percent ad valorem for Erbosan, for pipe and tube.



    2. Export Incentive Certificate Customs Duty and Other Tax 

Exemptions. Under Turkey's duty drawback program, companies are 

permitted to import spare parts free of customs duties and other taxes 

levied on imports used in the manufacture of goods to be exported. To 

obtain these benefits, companies must file a project application with 

the Undersecretariat for Foreign Trade (UFT) that describes the spare 

parts to be imported and the FOB value of the exports that they will be 

used to produce. The CIF value of the imported spare parts cannot 

exceed two percent of the FOB export commitment. On July 17, 1995, the 

program was changed to permit spare parts to be imported provided that 

the CIF value of the spare parts did not exceed 5 percent of the FOB 

export commitment. The UFT subsequently issues duty drawback 

certificates to the companies that describe the spare parts and 

instructed Customs that these items are to be free of duties. However, 

the companies must pay value added tax on the imports.

    We preliminarily determine that this program is a subsidy and is 

specific within the meaning of section 771(5A)(B) of the Act, because 

eligibility for the program is contingent upon export performance and 

the spare parts imported under this program were utilized in machinery 

that produces, among other things, the subject merchandise. See e.g., 

Ball Bearings and Parts Thereof from Thailand: Final Results of 

Countervailing Duty Administrative Review, 62 FR 728, 731 (January 6, 

1997).

    To calculate the benefit, we divided the total amount of duties and 

taxes exempted on spare parts imported during the POR for each company 

under review, by the total value of exports during the POR. On this 

basis, we preliminarily determine the benefit from this program to be 

0.06 percent ad valorem for Erbosan for pipe and tube, and 0.02 percent 

ad valorem for Mannesmann for line pipe.



    3. Foreign Exchange Loan Assistance. The GOT Resolution Number: 94/

5782, Article 4, effective June 13, 1994 concerning the encouragement 

of exportation, allows commercial banks to exempt certain fees provided 

that the



---- page 16785 ----



loans are used in the financing of exportation and other foreign 

exchange earning activities. We preliminarily determine that this 

program is specific and, therefore, countervailable within the meaning 

of section 771(5A)(B) because the exemption of the fees is contingent 

upon export performance.

    Both companies received and paid interest on foreign currency loans 

from commercial banks and were exempted from paying the customary BIST 

of 5 percent of the interest rate and the RUSF fee of 6 percent of the 

principal. Unlike pre-shipment loans that are denominated in TL where 

the RUSF fee is 6 percent of the interest rate, the RUSF fee for 

foreign currency loans is calculated as 6 percent of the principal. At 

verification, we found that Mannesmann's foreign currency loans were 

tied to destinations other than to the United States. We found that 

Erbosan's foreign currency loans were provided for both U.S. and non-

U.S. shipments, and were not tied to a particular destination. For 

further discussion, see the companies' Verification Reports.

    We preliminarily determine that these fee exemptions are a direct 

transfer of funds from the GOT providing a benefit in the amount of the 

exemption. (See discussion of the ``Pre-shipment Loans'' program 

above). See also, Castings at 44843. We also preliminarily determine 

that the benefits are recurring because once the company obtains a 

foreign currency loan it is automatically exempted from paying the 

fees. To calculate the benefit for this program, we computed the 

exempted fees on the interest or principal of Erbosan's foreign 

currency loans. These loans are dollar denominated. Therefore, we 

converted these exempted fee amounts to TL using the exchange rate in 

effect during the month in which the loans were repaid or interest 

paid, and divided the result by the company's total exports. On this 

basis, we preliminarily determine the net subsidy to be 1.14 percent ad 

valorem for Erbosan for pipe and tube.



    4. Freight Program. The GOT Decree number 93/43, effective October 

13, 1993, provided freight rebate payments to exporters in the amount 

of $50 per ton for merchandise exported on Turkish vessels, and $30 per 

ton for merchandise exported on non-Turkish vessels, capped at 10 

percent of the FOB value of the goods. In February 1994, Decree number 

94/4 raised the cap to 15 percent of the FOB value of the goods. 

Benefits under this program were provided in the form of 30 percent 

cash and 70 percent treasury bonds with a two-year maturity. Companies 

were eligible to receive interest on bonds on the one-year anniversary 

date of the issuance of the bonds and on the date of the maturity of 

the bonds. The program was terminated on December 31, 1994, and there 

will be no payments on shipments made after January 1, 1995.

    We preliminarily determine that these export grants and bonds are 

countervailable export subsidies within the meaning of section 

771(5A)(B) of the Act. The grants and bonds are a direct transfer of 

funds from the GOT providing a benefit in the amount of the cash grants 

and bonds. We further preliminarily determine that the benefits under 

the Freight Program are ``recurring.'' Once a company has exported and 

submitted documentation to the Central Bank it becomes eligible for the 

cash grants or bonds. The receipt of benefits is automatic and 

continued throughout the life of the program. (Pasta at page 30369). 

See also Allocation Section of the General Issues Appendix in Final 

Affirmative Countervailing Duty Determination: Certain Steel Products 

from Austria (58 FR 37217, 37268-69, July 9, 1993) (``General Issues 

Appendix'').

    During the POR, Erbosan received cash and bonds under the freight 

rebate program based on exports made in 1994. The bonds were received 

by Erbosan on May 1, 1995 and mature on May 1, 1997; interest was 

payable on May 1, 1996 and on the date of maturity. During the POR, 

Mannesmann received cash and bonds for exports made in 1994, but we 

verified that the company did not receive any payments under the 

freight program during the POR for exports to the United States.

    The Department's practice has been to deem the benefit to be 

received at the time of export countervailable if the benefit is 

calculated as a percentage of the FOB value and the amount of the 

benefit is known at the time of export. See e.g., Castings at 44843. 

Although the benefit under the freight program is calculated based on 

tonnage and not the percent of exports, we note that a benefit 

determined by the amount of the tonnage may also be known at the time 

of export.

    However, the facts in this case establish that the exporter did not 

know the amount of benefit at the time of export. Although the freight 

payments were stated in U.S. dollars per ton, the exporter received the 

benefit in TL. The exporter did not know at the time of export what 

exchange rate would be used to convert the dollar equivalent payments 

into TL. Given the high inflation rate in Turkey (based on a CPI rate 

of approximately 65 percent in 1993, and 114 percent in 1994), there 

was no way for the exporter to predict at the time of export what the 

dollar equivalent in TL would be. In February 1995, the GOT announced 

that it would convert the dollar amount of the freight payments using 

the exchange rate that was in effect on December 31, 1994. Thus, the 

exporter did not know the amount of the benefit at the time of export. 

See the GOT Verification Report (page 12). This position is consistent 

with the Department's analysis of a similar program in Pasta where we 

determined that the benefit should be treated as having been bestowed 

when the cash was received rather than earned. (See discussion of 

Payments for Exports on Turkish Ships program in Pasta at 30369). As 

such, we preliminarily determine that the benefits under this program 

are bestowed when the cash is received with respect to the cash 

payments, and not when the benefit is earned.

    With regard to the bonds portion of the rebate, we preliminarily 

determine that the benefits from the bonds are bestowed on the date of 

maturity. This is due to the fact that, even though there were not 

restrictions on the sale or transfer of the bonds, because of the rate 

of inflation, there was no secondary market to allow exporters to 

convert their bonds to cash (see GOT, company, and commercial bank 

Verification Reports). Therefore, the exporters have no choice but to 

hold the bonds until maturity. (Pasta at page 30368).

    The benefits under the freight program are made on a shipment-by-

shipment basis. Because the benefits are shipment-specific, and we are 

able to segregate the shipments according to the country of 

destination, we preliminarily determine that they are tied to a 

particular destination. Therefore, where a benefit is tied or can be 

tied to exports to the United States, we calculate the ad valorem 

subsidy rate by dividing the benefit by the firm's total exports to the 

United States. See, e.g., Notice of Final Results of Countervailing 

Duty Administrative Review: Roses and Other Cut Flowers from Columbia, 

52 FR 48847, 48848 (December 28, 1987). We have preliminarily 

calculated Erbosan's benefit from this program by dividing the total 

amount of grants received for exports to the United States during the 

POR by Erbosan's total exports to the United States during the POR. On 

this basis, we preliminarily determine the net subsidy to be 1.02 

percent ad valorem for Erbosan for pipe and tube.



    5. Resource Utilization Support Premium. a. Program Description. 

Under the Resource Utilization Support Premium program (RUSP), a 

company can request benefits for a proposed



---- page 16786 ----



investment project, as well as other General Incentives Program (GIP) 

benefits, at the time it submits an application to the General 

Directorate of Incentive and Applications (GDIA) for an investment 

incentive certificate (see discussion of the ``Investment Allowance'' 

program above). If the GDIA approves the investment project described 

in the application, it will issue to the company an investment 

incentive certificate which lists the GIP benefits bestowed. During the 

POR, Erbosan received RUSP payments for an investment project related 

to the production of standard pipe and tube.

    RUSP payments were given to companies to encourage them to use 

their own equity, rather than loans or credit, to finance their GIP 

investment project. The amount of the benefit is applied to that 

portion of the fixed investment which is financed by the investor's own 

resources. Erbosan is located in a region designated as a normal region 

by the GDIA. All companies located in normal regions are eligible for 

RUSP payments of 15 percent of their investment. Companies located in 

developed regions are not eligible for RUSP payments. Mannesmann is 

located in a developed region and is not eligible for RUSP payments, 

and we also verified that Mannesmann never received RUSP payments.

    The RUSP was terminated in 1991, and GIP investment incentive 

certificates issued after 1991 were no longer eligible to receive RUSP 

payments. Erbosan's investment incentive certificate was issued in 1990 

and expired on December 31, 1994. Erbosan received its RUSP benefits in 

1994 in the form of treasury bonds with a maturity date in 1995. During 

the POR, Erbosan received the full amount of the face value of the 

bonds, plus interest.

    Because RUSP assistance is provided by the GOT only to industries 

located within specifically designated geographical regions of Turkey--

i.e., in this case, the normal region--we preliminarily determine that 

this program provides a countervailable regional subsidy within the 

meaning of section 771(5A)(D)(iv).

    b. Claim for ``Green Light'' Subsidy Treatment of RUSP. Section 

771(5B) of the Act describes subsidies that are non-countervailable 

(``green light'' subsidies). Among these green light subsidies are 

subsidies to disadvantaged regions. The GOT requested that the RUSP 

program be considered non-countervailable under section 771(5B)(C) of 

the Act because the benefit is provided only to disadvantaged regions.

    The RUSP program is one of many programs that distribute benefits 

on a regional basis under the umbrella of the General Incentives 

Program (GIP). Under GIP, provinces were categorized by the GOT into 

one of the following four types of development regions: developed; 

normal; priority two; and priority one according to their level of 

development. By offering an increasing level of benefits to lesser 

developed regions, regional assistance programs under GIP were designed 

not only to further development, particularly in the two priority 

regions, but also to reduce the disparities among the four regions. As 

stated in the Fifth Five Year Development Plan (1984-1989), the GOT's 

goal was to ``develop the Priority Development areas * * * and reduce 

and, in time, eradicate, the difference of development existing between 

these and other regions.'' (See Attachment 1 of January 21, 1997 GOT 

response.) The various economic incentive programs would complement 

other development activities such as housing and infrastructure 

projects.

    According to the questionnaire responses, Turkish provinces are 

classified into these development regions based on the results of the 

Principal Component Analysis, an econometric model that generates a 

development coefficient based on the selected socioeconomic development 

variables. The State Planning Organization (SPO) conducts a Principal 

Component Analysis for every province and creates an index that ranks 

the provinces from most to least developed according to the development 

coefficients generated by the Principal Component Analysis.

    Section 771(5B)(C) of the Act specifies the conditions that must be 

met for a program to qualify for green light status: it is part of a 

general regional development policy and each region is a clearly 

designated contiguous geographical area with a definable economic and 

administrative identity; the assistance is generally available; the 

assistance is not for regions suffering only temporary disadvantage; 

the eligibility criteria are clearly stated in law or an official 

document and capable of verification; and the eligibility criteria are 

neutral and objective, and include a measurement of economic 

development. The SAA states that the green light provision governing 

assistance for disadvantaged regions must be strictly construed and 

that the Department must determine that all of these statutory criteria 

have been satisfied. (See Statement of Administrative Action 

accompanying the URAA, reprinted in H.R. Doc. No. 316, 103d Cong., 2d 

Sess. 919 (1994)) (SAA).

    In order to examine the criteria regarding economic development, 

section 771(5B)(C)(ii) of the Act instructs the Department to examine 

the respondent's measurement of economic development over a three-year 

period. Although it received benefits under this program during the 

POR, Erbosan was approved for receipt of these benefits in 1991. The 

Department's standard practice when analyzing the countervailability of 

programs is to examine data from the time period when the subsidy was 

approved. In this case, the RUSP was in effect from 1989-1991, and this 

time period serves as our three-year period for analysis.

    In their January 29, 1997 questionnaire response, the GOT provided 

an excerpt from a 1991 SPO publication which listed the 53 economic and 

social variables used in the Principal Component Analysis to generate 

the socioeconomic development index that is the basis for the SPO's 

ranking of the provinces from most to least developed. The excerpt also 

included a list of 67 provinces ranked by the SPO from most to least 

developed. Respondents claimed that this list, originally published in 

a 1973 SPO publication, was still valid for the 1989-1991 period.

    At verification, we requested to see documentation, such as the 

index generated by the Principal Component Analysis, the Principal 

Component Analysis for that period, or SPO publications or reports that 

supported the ranked list of 67 provinces described above and the 

classification of provinces into the four development regions during 

the relevant 1989-1991 period. Although respondents had supporting 

documentation for a 1996 Principal Component Analysis used to reexamine 

the regional designations, no supporting documentation was available 

for the Principal Component Analysis used to designate provinces into 

development regions during the applicable 1989-1991 period. According 

to respondents, the supporting documentation for that period was no 

longer available. For further discussion, see the GOT Verification 

Report (pages 10-11).

    Using the limited information provided in the response and at 

verification, the team sought to examine whether the 1989-1991 

Principal Component Analysis rankings (based on the list from the 

January 29, 1997 submission) corresponded with the provinces' regional 

designations for 1989-1991. The provinces were rank





---- page 16787 ----





ordered from first, most developed, to 67th, least developed. 

Presumably, the actual designations of the provinces--developed, 

normal, first priority, and second priority--should have closely 

followed the Principal Component Analysis index of economic 

development. However, the designation of provinces into development 

regions did not track closely to the Principal Component Analysis 

rankings. For example, Bilecik and Ordu provinces, respectively ranked 

at 52 and 58 (out of a possible 67) were listed as normal regions, 

while Zonguldak, ranked at 13, was listed as Priority One in 1990 and 

1991. In addition, four provinces, Zonguldak, Erzincan, Artvin and 

Sanliurfa, were reclassified between 1989 and 1991 without any 

Principal Component Analysis being undertaken.

    GOT officials accounted for these discrepancies by explaining that 

the Principal Component Analysis is not the only basis for determining 

a province's regional designation. The Principal Component Analysis is 

only one step (albeit the primary one) toward determining the regional 

designations. The final determination is made by the Council of 

Ministers, taking into account factors that cannot be enumerated by the 

Principal Component Analysis, including the promotion of other 

development policies and goals (e.g., privatization,), the impacts 

upon, and relationships with, other regional and non-regional 

development policies and programs, and the Ministers experience in 

development issues and programs. (For a further discussion, see the GOT 

Verification Report (page 11).)

    In order for a subsidy to be considered non-countervailable because 

it is provided in a disadvantaged region, section 771(5B)(C)(i)(II) of 

the Act states that ``[e]ach region is considered a disadvantaged 

region on the basis of neutral and objective criteria indicating that 

the region is disadvantaged * * *.'' On this basis, the RUSP assistance 

is not entitled to green light treatment. The information on the record 

indicates that the designations of disadvantaged regions do not 

correspond with an analysis based on neutral and objective criteria, 

purportedly the Principal Component Analysis. Rather, the GOT can make 

the final decisions regarding the designation of economic development 

regions based on criteria that are neither neutral nor objective. Since 

the SAA states that all of the green light criteria, listed above, must 

be met, we do not intend to analyze the GOT's compliance with the 

remaining criteria. As a result, benefits provided under the RUSP 

program do not qualify as non-countervailable green light subsidies. 

See e.g., Preliminary Affirmative Countervailing Duty Determination; 

Certain Pasta from Italy, 60 FR 53739, 53742 (October 17, 1995) and 

Final Affirmative Countervailing Duty Determination: Certain Pasta from 

Italy, 61 FR 30288 (June 14, 1996).

    c. Subsidy Calculation. Although Erbosan received the RUSP bonds in 

1994, the cash flow was realized in 1995 when the principal and 

interest from the bonds were paid. We verified that there is no 

secondary market for the resale of treasury bonds in Turkey and, 

therefore, Erbosan could not realize a cash flow until 1995 (the POR) 

when the bonds reached maturity. See Erbosan Verification Report (page 

7). We also preliminarily determine that the RUSP benefits are non-

recurring because they are exceptional and the recipient cannot expect 

to receive benefits on an ongoing basis. However, because the amount 

received under this program is less than 0.50 percent of Erbosan's 

total sales, we are allocating the total benefit to the POR. See e.g., 

Industrial Phosphoric Acid from Israel; Preliminary Results of 

Countervailing Duty Administrative Review, 61 FR 28845, 28847 (June 6, 

1996) and Industrial Phosphoric Acid from Israel; Final Results of 

Countervailing Duty Administrative Review, 61 FR 53351 (October 11, 

1996). We calculated the benefit for the POR by dividing the RUSP 

payments by Erbosan's total sales of subject merchandise during the 

POR. On this basis, we preliminarily determine the benefit from this 

program to be 0.05 percent ad valorem for the POR.

    The GOT terminated the RUSP program in 1991 and GIP investment 

incentive certificates issued after 1991 were no longer eligible to 

receive RUSP payments. We verified that Erbosan has no investment 

incentive certificates that were issued before 1991 that are still 

valid. Therefore, we consider this program terminated with no residual 

benefits. The termination of RUSP constitutes a program-wide change; 

and because there are no residual benefits, the cash deposit rate for 

Erbosan will be adjusted to zero for this program. See e.g., Pasta, 61 

FR 30370.

III. Programs Preliminarily Determined To Be Terminated



    We preliminarily determine that the following programs have been 

terminated and there are no residual benefits:



1. Export Performance Credits



    The Export Performance Credit program, which was administered by 

the Central Bank of Turkey, provided credits to manufacturers and 

exporters based on a percentage of the FOB value of their exports. 

The certificates were issued for shipments made between March 7, 

1994 and December 31, 1994. It is the Department's practice in the 

case of an export benefit provided as a percentage of the value of 

the exported merchandise that the benefit is bestowed on the date of 

the export. See e.g., Castings at 44843. Under this program, the 

exporters received the TL equivalent of a fixed percentage of their 

U.S. dollar exports. Although at the time of receipt, the exporters 

received more TL than at the time of export, the value of the TL 

amount remained the same in U.S. dollar terms. Therefore, we 

preliminarily determine that the benefit occurred at the time of 

export in 1994.



2. Deduction from Taxable Income for Export Revenues

3. Preferential Export Financing Under Decree 84/8861

4. Interest Spread Return Program (GIP)

5. Export Credits Under Communique No. 1

6. Corporate Tax Deferral

7. Payment of Certain Obligations of Firms Undertaking Large Investments  

8. Subsidized Credit in Foreign Currency



Preliminary Results of Review



    In accordance with 19 C.F.R. 355.22(c)(4)(ii), we calculated an 

individual subsidy rate for each producer/exporter subject to each 

administrative review. For the period January 1, 1995 through December 

31, 1995, we preliminarily determine the net subsidy to be as follows:





---- page 16788 ----









------------------------------------------------------------------------

                                                              Assessment

             Manufacturer/exporter of line pipe                  rate   

                                                               (percent)

------------------------------------------------------------------------

Mannesmann..................................................        0.75

------------------------------------------------------------------------





------------------------------------------------------------------------

                                                              Assessment

         Manufacturer/exporter of line pipe and tube             rate   

                                                               (percent)

------------------------------------------------------------------------

Erbosan.....................................................        4.06

------------------------------------------------------------------------



    If the final results of these reviews remain the same as these 

preliminary results, the Department intends to instruct the U.S. 

Customs Service (``Customs'') to assess countervailing duties as 

indicated above.

    The Department also intends to instruct Customs to collect cash 

deposits of estimated countervailing duties as indicated below of the 

f.o.b. invoice price on all shipments of each class or kind of 

merchandise from reviewed companies, entered, or withdrawn from 

warehouse, for consumption on or after the date of publication of the 

final results of these reviews.



------------------------------------------------------------------------

                                                                  Cash  

                                                                deposit 

              Manufacturer/exporter of line pipe                  rate  

                                                               (percent)

------------------------------------------------------------------------

Mannesmann...................................................       0.75

------------------------------------------------------------------------





------------------------------------------------------------------------

                                                                  Cash  

                                                                deposit 

            Manufacturer/exporter of pipe and tube                rate  

                                                               (percent)

------------------------------------------------------------------------

Erbosan......................................................       4.01

------------------------------------------------------------------------



    Because the URAA replaced the general rule in favor of a country-

wide rate with a general rule in favor of individual rates for 

investigated and reviewed companies, the procedures for establishing 

countervailing duty rates, including those for non-reviewed companies, 

are now essentially the same as those in antidumping cases, except as 

provided for in section 777A(e)(2)(B) of the Act. The requested review 

will normally cover only those companies specifically named. See 19 CFR 

section 355.22(a). Pursuant to 19 CFR 355.22(g), for all companies for 

which a review was not requested, duties must be assessed at the cash 

deposit rate, and cash deposits must continue to be collected, at the 

rate previously ordered. As such, the countervailing duty cash deposit 

rate applicable to a company can no longer change, except pursuant to a 

request for a review of that company. See Federal-Mogul Corporation and 

The Torrington Company  v. United States, 822 F.Supp. 782 (CIT 1993) 

and Floral Trade Council v. United States, 822 F.Supp. 766 (CIT 1993) 

(interpreting 19 CFR 353.22(e), the antidumping regulation on automatic 

assessment, which is identical to 19 CFR section 355.22(g)). Therefore, 

the cash deposit rates for all companies except those covered by these 

reviews will be unchanged by the results of these reviews.

    We will instruct Customs to continue to collect cash deposits for 

non-reviewed companies under each order at the most recent company-

specific or country-wide rate applicable to the company under that 

order. Accordingly, the cash deposit rates that will be applied to non-

reviewed companies covered by these orders are those established in the 

most recently completed administrative proceeding. See Certain Welded 

Carbon Steel Pipe and Tube Products from Turkey; Final Results of 

Countervailing Duty Administrative Review, 53 FR 9791. These rates 

shall apply to all non-reviewed companies until a review of a company 

assigned these rates is requested. In addition, for the period January 

1, 1995 through December 31, 1995, the assessment rates applicable to 

all non-reviewed companies covered by these orders are the cash deposit 

rates in effect at the time of entry.



Public Comments



    Parties to the 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. Rebuttal 

briefs, limited to arguments raised in case briefs, may be submitted 

seven days after the time limit for filing the case brief. Parties who 

submit 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. 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.

    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, under 19 CFR 355.38, are due. The Department will 

publish the final results of these administrative reviews, including 

the results of its analysis of issues raised in any case or rebuttal 

brief or at a hearing.

    These administrative reviews and notice are in accordance with 

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)).



    Dated: March 31, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-8955 Filed 4-7-97; 8:45 am]

BILLING CODE 3510-DS-M









The Contents entry for this article reads as follows:



International Trade Administration

NOTICES

Countervailing duties:

 Welded carbon steel pipes and tubes and 

   welded carbon steel line pipe from--Turkey, 16782