64 FR 44496 August 16, 1999
DEPARTMENT OF COMMERCE
International Trade Administration
[C-489-502]
Certain Welded Carbon Steel Pipes and Tubes and Welded Carbon
Steel Line Pipe from Turkey; Final Results of Countervailing Duty
Administrative Reviews
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
-----------------------------------------------------------------------
SUMMARY: On April 7, 1999, the Department of Commerce (the Department)
published in the Federal Register its preliminary results of
administrative reviews of the countervailing duty orders on certain
welded carbon steel pipes and tubes (pipe and tube) and welded carbon
steel line pipe (line pipe) from Turkey for the period January 1, 1997
through December 31, 1997 (64 FR 16924). The Department has now
completed these administrative reviews in accordance with section
751(a) of the Tariff Act of 1930, as amended. For information on the
net subsidy for each reviewed company, and for all non-reviewed
companies, please see the Final Results of Review section of this
notice. We will instruct the U.S. Customs Service to assess
countervailing duties as detailed in the Final Results of Review
section of this notice.
EFFECTIVE DATE: August 16, 1999.
FOR FURTHER INFORMATION CONTACT: Stephanie Moore or Eric Greynolds,
Office of CVD/AD Enforcement VI, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)
482-3692 or (202) 482-6071, respectively.
SUPPLEMENTARY INFORMATION:
Background
Pursuant to 19 CFR 351.213(b), these reviews cover only those
producers or exporters of the subject merchandise for which a review
was specifically requested. Accordingly, the review on pipe and tube
covers Yucel Boru ve Profil Endustrisi A.S., and its affiliated
companies, Cayirova Boru Sanayi ve Ticaret A.S., and Yucelboru Ihracat
Ithalat ve Pazarlama A.S. (Yucel Boru Group), and the review on line
pipe covers Mannesmann--Sumerbank Boru Endustrisi T.A.S. (Mannesmann).
These reviews also cover 21 programs during the period January 1, 1997
through December 31, 1997.
Since the publication of the preliminary results on April 7, 1999
(64 FR 16924), the following events have occurred. We invited
interested parties to comment on the preliminary results. On May 7,
1999, case briefs were submitted by the Yucel Boru Group, which
exported pipe and tube, and Mannesmann, which exported line pipe, to
the United States during the review period (respondents). On May 12,
1999, a rebuttal brief was submitted by Maverick Tube Corporation and
Wheatland Tube Company (petitioners).
Applicable Statute and Regulations
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 these administrative reviews in
accordance with section 751(a) of the Act. Because these administrative
reviews were initiated in April 1998, 19 CFR part 355 is applicable.
Scope of the 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
more than 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 more than 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) as item numbers 7306.30.10 and 7306.30.50. The
HTSUS item numbers are provided for convenience and Customs purposes.
The written descriptions remain dispositive.
[[Page 44497]]
Analysis of Programs
Based upon the responses to our questionnaires and written comments
from the interested parties, we determine the following:
I. Programs Conferring Subsidies
A. Programs Previously Determined To Confer Subsidies
1. Pre-Shipment Export Credit
In the preliminary results we found that this program conferred
countervailable subsidies on the subject merchandise. Our review of the
record and our analysis of the comments submitted by the interested
parties, summarized below, has not led us to change our findings from
the preliminary results. Accordingly, the net subsidies for this
program remain unchanged from the preliminary results and are as
follows:
------------------------------------------------------------------------
Rate
Manufacturer/exporter of pipe and tube (percent)
------------------------------------------------------------------------
Yucel Boru Group............................................ 0.84
------------------------------------------------------------------------
------------------------------------------------------------------------
Rate
Manufacturer/exporter of line pipe (percent)
------------------------------------------------------------------------
Mannesmann.................................................. 0.19
------------------------------------------------------------------------
2. Foreign Exchange Loan Assistance
In the preliminary results we found that this program conferred
countervailable subsidies on the subject merchandise. We did not
receive any comments on this program from the interested parties. In
the preliminary results, we stated that Mannesmann received foreign
currency loans that were used for shipments to the United States and
Germany. For the denominator, we used the indexed monthly total exports
of the subject merchandise to the United States, and the company's
total export sales (unindexed) of the subject merchandise to Germany.
We subsequently requested the monthly total export sales of the subject
merchandise to Germany so that we could index for inflation, as we had
indexed sales of subject merchandise to the United States. We have now
indexed the monthly total exports of the subject merchandise to the
United States and to Germany to account for Turkey's high rate of
inflation. See Preliminary Results, 64 FR 16924, 16926, where we found
that Turkey experienced an inflation rate of 81 percent during the POR.
Accordingly, the net subsidies for this program changed from the
preliminary results and are as follows:
------------------------------------------------------------------------
Rate
Manufacturer/exporter of pipe and tube (percent)
------------------------------------------------------------------------
Yucel Boru Group............................................ 0.00
------------------------------------------------------------------------
------------------------------------------------------------------------
Rate
Manufacturer/exporter of line pipe (percent)
------------------------------------------------------------------------
Mannesmann.................................................. 0.58
------------------------------------------------------------------------
3. Freight Program
In the preliminary results we found that this program conferred
countervailable subsidies on the subject merchandise. Our review of the
record and our analysis of the comments submitted by the interested
parties, summarized below, has not led us to change our findings from
the preliminary results. Accordingly, the net subsidies for this
program remain unchanged from the preliminary results and are as
follows:
------------------------------------------------------------------------
Rate
Manufacturer/exporter of pipe and tube (percent)
------------------------------------------------------------------------
Yucel Boru Group............................................ 0.00
------------------------------------------------------------------------
------------------------------------------------------------------------
Rate
Manufacturer/exporter of line pipe (percent)
------------------------------------------------------------------------
Mannesmann.................................................. 3.43
------------------------------------------------------------------------
II. Program Found Not To Confer Subsidies Special Importance Sector
Under Investment Allowances
In the preliminary results we found this program did not confer
subsidies during the POR. We did not receive any comments on this
program from the interested parties, and our review of the record has
not led us to change any findings from the preliminary results.
III. Programs Found To Be Not Used
In the preliminary results we found that the producers and/or
exporters of the subject merchandise did not apply for or receive
benefits under the following programs:
A. Resource Utilization Support Fund
B. State Aid for Exports Program
C. Advance Refunds of Tax Savings
D. Export Credit Through the Foreign Trade Corporate Companies
Rediscount Credit Facility (Eximbank)
E. Past Performance Related Foreign Currency Export Loans (Eximbank)
F. Export Credit Insurance (Eximbank)
G. Subsidized Turkish Lira Credit Facilities
H. Subsidized Credit for Proportion of Fixed Expenditures
I. Fund Based Credit
J. Investment Allowances (in excess of 30% minimum)
K. Resource Utilization Support Premium
L. Incentive Premium on Domestically Obtained Goods
M. Deduction from Taxable Income for Export Revenues
N. Regional Subsidies
1. Additional Refunds of VAT (VAT + 10%)
2. Postponement of VAT on Imported Goods
3. Land Allocation (GIP)
4. Taxes, Fees (Duties), Charge Exemption (GIP)
We did not receive any comments on these programs from the
interested parties, and our review of the record has not led us to
change our findings from the preliminary results.
IV. Program Found To Be Terminated
In the preliminary results we found the following program to be
terminated and that no residual benefits were being provided:
Export Incentive Certificate Customs Duty & Other Tax Exemptions
We did not receive any comments on this program from the interested
parties, and our review of the record has not led us to change our
findings from the preliminary results.
Analysis of Comments
Comment 1: Appropriate Benchmark Interest Rates
The Yucel Boru Group argues that the Department's use of monthly-
average interest rates is inconsistent with the Department's policies
and practices in antidumping cases. They argue that it is the
Department's policy, in high inflation economies, to require
contemporaneity for measurements that are affected by inflation. In
support of their argument, they cite the Final Determination of Sales
at Less than Fair Value: Certain Pasta from Turkey, 61 FR 30309, (June
14, 1996), in which the Department used daily exchange rates for
currency conversion. Therefore, according to the Yucel Boru Group,
because currency exchange rates and interest rates reflect the degree
of inflation in the economy, they both should be treated the same way
under the principle of contemporaneity in antidumping cases, as well as
countervailing duty cases, as provided for under 19 CFR 351.415
(Currency Conversion). Thus, they argue that the Department should use,
as a benchmark, the weekly short-term interest rates rather than the
monthly average short-term interest rates based on a simple average of
the weekly figures corresponding for that month.
The Yucel Boru Group also argues that the Department selected the
[[Page 44498]]
incorrect short-term weekly rates from The Economist. Therefore, they
argue that if the Department elects to retain the monthly average
methodology, the Department should select the correct short-term weekly
rates from The Economist.
Department's Position: We disagree with the Yucel Boru Group's
contention that the Department should use the weekly short-term
interest rate rather than the average monthly rate in calculating the
benefit from the pre-shipment export credit program. First, the Group
is incorrect in equating antidumping duty practice and the currency
conversion regulation (351.415) (only applicable in antidumping duty
cases) with countervailing duty practice. In antidumping duty cases
because we are comparing costs and prices in different markets,
contemporaneous comparisons are necessary to ensure that the
comparisons are appropriate and not unduly influenced by exchange rate
fluctuations. With regard to prices, our regulation on currency
conversion effectuates this purpose. See 19 CFR 351.415. In
countervailing duty cases we are not comparing prices or costs, rather,
in choosing a benchmark interest rate, we are determining whether a
benefit exists to the extent that the amount a firm pays on a
government-provided loan is less than the amount the firm would pay on
a comparable commercial loan obtained during the year in which the
government-provided loan was given, in accordance with section
771(5)(E(ii) of the Act. If the government-provided loan is a short-
term loan, the Department calculates a single, annual average benchmark
interest rate, unless short-term interest rates in the country in
question fluctuated significantly during the year in question. Because
we determine that Turkey continued to experience a high rate of
inflation, based on a Wholesale Price Index rate of approximately 81
percent during the POR, we find that using an average monthly rate as
the short-term benchmark interest rate sufficiently accounts for such
inflation. It has been the Department's practice in countervailing duty
cases to use the average monthly interest rate for purposes of deriving
a benchmark interest rate in an inflationary economy. See e.g., Final
Affirmative Countervailing Duty Determination: Certain Pasta from
Turkey, 61 FR 30366, 30367 (June 14, 1996). In prior countervailing
duty reviews of subject merchandise, the Department has consistently
used, as the benchmark interest rates, the monthly average interest
rates. See Certain Welded Carbon Steel Pipes and Tubes and Welded
Carbon Steel Line Pipe from Turkey; Preliminary Results of
Countervailing Duty Administrative Reviews, 62 FR 16782,16783 (April 8,
1997) and Final Results, 62 FR 43984 (August 18, 1997) (1995 Pipe and
Tubes and Line Pipe), and Certain Welded Carbon Steel Pipes and Tubes
and Welded Carbon Steel Line Pipe from Turkey; Preliminary Results and
Partial Recission of Countervailing Duty Administrative Reviews, 62 FR
64808, 64809 (December 9, 1997) and Final Results, 63 FR 18885 (April
16, 19998) (1996 Pipes and Tubes and Line Pipe). Moreover, we note that
Mannesmann, the other producer of subject merchandise in the instant
reviews, supplied the Department with the monthly average cost of its
company-specific borrowing rates during the POR.
We also disagree with the Yucel Boru Group's contention that the
Department used the incorrect benchmark interest rate. The Group's
contention appears to stem from their argument that interest rate
benchmarks should be contemporaneous with when the interest payments
are made. As discussed above, in selecting an appropriate benchmark, we
are not comparing prices or costs. Instead, we are determining what the
interest rate would have been had the company obtained a commercial
loan comparable to the government-provided loan. Therefore, the
Department bases its benchmark interest rate on the date the
government-provided loan is taken out because the interest rate on a
comparable commercial loan would have been established at the time the
loan is given, and not on the date the interest payment is made, as
argued by the Yucel Boru Group. See 1996 Pipes and Tubes and Line Pipe,
62 FR 64308, 64809.
Comment 2: Countervailability of Exempted Loan Fees
The Yucel Boru Group argues that the Department's inclusion of loan
fees in the benchmark interest rate used to calculate the benefit of
the pre-shipment loan program is contrary to both the World Trade
Organization (WTO) Agreement and section 771 of the Tariff Act of 1930.
Specifically, they argue that while section 771(5)(E)(iii) of the Act
and Part V, Article 14(c) of the Agreement on Subsidies and
Countervailing Measures (SCM), dealing with loan guarantees, include
provisions for adjusting for fees, the statutory provisions addressing
loans in section 771(5)(E)(ii) of the Act and part V, Article 14(c) of
the SCM contain no such provision with respect to fees incurred on
direct loans. Thus, they argue that because the statute and the WTO do
not explicitly include a provision for adjusting for fees in the case
of loans, the Department should not include fees in benchmark interest
rate used to calculate the benefit under the pre-shipment export credit
program.
Petitioners counter that the Yucel Boru Group's contention is not
tenable. Rather, according to petitioners, the waived fees are export
promotion subsidies and are prohibited. Petitioners also counter that
the adjustment for loan guarantee fees is necessary to prevent a
finding of a subsidy where the net effect of the guarantee transaction
provides no interest benefit to the loan recipient. However, the waiver
of fees, which would otherwise be applicable to a loan, but for the
fact the loan finances export sales, is an export subsidy in its own
right. Therefore, to exclude the fee from the benchmark interest rates
would ignore the subsidy benefit.
Department's Position: We disagree with the Yucel Boru Group's
contention that the Department's inclusion of loan fees in the
benchmark interest rate used to calculate the benefit under the pre-
shipment export credit program is contrary to law. Although there is no
explicit reference to adjusting for fees on direct loans in either
Articles 14(b) and 14(c) of the SCM, and sections 771(5)(E)(ii) and
771(5)(E)(iii) of the Act, the Department has interpreted language
contained in both provisions as permitting the Department to add
exempted fees to benchmark interest rates used to calculate the benefit
in appropriate circumstances. Section 771(5)(E)(ii) of the Act defines
the benefit in the case of loans as,
``* * * [the] 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.''
The Department believes that this interpretation is in compliance
with the SCM and the Act because the inclusion of loan fees in the
benchmark interest rate to calculate the benefit accurately derives the
amount that the recipient would pay on a comparable commercial loan.
While section 351.505 of the Department's regulations are not in
effect for the instant reviews, the Preamble restates the Department's
practice of using the ``effective interest rate'' rather than the
``nominal interest rate'' because effective interest rates are intended
to take account of the actual cost of the loan, including the amount
[[Page 44499]]
of any fees, commissions, compensating balances, government charges or
penalties paid in addition to the nominal interest. See section
351.505(a)(1); Preamble to the Regulations, 63 FR 65362 (November 25,
1998).
As explained in the Preliminary Results at 16926, the pre-shipment
export credit program 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. In
light of the exemption granted under this program, the only way to
determine the amount that the recipient would normally pay on a
comparable commercial loan would be to factor in the fees a recipient
would incur on this type of transaction. For this reason, consistent
with the Department's practice, we compare effective rates rather than
nominal rates. See e.g., Certain Iron-Metal Castings from India: Final
Results of Countervailing Duty Administrative Review, 60 FR 44843
(August 29, 1995) (Castings from India).
Comment 4: Measurement of Countervailable Benefit: Earned Versus
Receipt Basis
Mannesmann argues that the Department deviated from its long-
standing practice of measuring benefits on an earned basis, i.e., on
the date of export where the benefit is earned, either as a fixed
percentage of the f.o.b. value or as a fixed amount per ton, on a
shipment-by-shipment basis, and the exporter knows the total amount of
the benefit at the time of export. Mannesmann cites several cases,
which they claim demonstrates that the Department has taken this
approach even in cases where the benefit was denominated in local
currency, in high inflationary economies, and in cases where there were
long delays between the date of exportation and the date of actual
receipt of the benefit.
They argue that the Department measured the benefits on an earned
basis in Brazilian, as well as Mexican cases in the 1980's, a period in
which both countries experienced high inflation, although the benefits
could not have been known at the time of export because of the ongoing
currency devaluations. Further, Mannesmann argues that because the
Department is not applying its long-standing practice in the instant
case, it is arbitrarily changing its methodology without an
explanation, which is contrary to the principle of administrative law.
According to Mannesmann, the fact that the benefit was fixed for a
period of time in U.S. dollars before being converted into local
currency means that the value of the benefit was more stable during
that period in the Turkish case than it was in the Brazilian and
Mexican cases. In the Brazilian and Mexican cases, the value of the
benefit was converted into local currency at the time of exportation
and began immediately to lose value during the period between the date
of export and the date of receipt of the benefit because of the effects
of inflation. Furthermore, Mannesmann argues that in the Turkish,
Brazilian and Mexican cases, the ``real'' value of the benefit that
would ultimately be received by the exporters was not known at the time
of export. Thus, the benefits from the Freight Rebate program should be
measured on the same basis as the Brazilian and Mexican cases.
Mannesmann states that in 1995 Pipe and Tube and Line Pipe, the
Department countervailed benefits received under the Export Performance
Credit program on the date they were earned, and not when they were
received. Mannesmann argues that despite the Department's attempts to
distinguish the Freight Rebate program from the Export Performance
Credit program, the two programs were virtually identical. Mannesmann
also argues that the exporters did not know, at the time of export, the
exact exchange rate that would be used to convert the dollar amount to
Turkish Lira (TL) in either program; therefore, the exporters did not
know the ``precise'' amount of the benefit in TL on the date of export.
On the other hand, they argue that under both programs, the exporters
knew the exact U.S. dollar amount of the benefit on the date of export,
and the exporters expected to receive the equivalent value in TL at a
later date. Therefore, they argue that the price effect and the volume
effect of the benefit were exerted at the time of export and not at a
later date.
Petitioners counter that the Brazilian cases cited by Mannesmann do
not contradict the Department's finding in the instant case. In the
Brazilian cases, the respondents knew the exact amount of local
currency they would receive as a benefit at the time of exportation.
However, in the instant case, the amount of local currency to be
received was not known at the time of export. Petitioners also contend
that the focus on local currency is critical because this is how the
benefit was paid. According to petitioners, in inflationary economies,
valuing a benefit at the time it is earned, where conversion from U.S.
dollars to local currency will occur at some future date, understates
the value of the benefit received. Furthermore, because the conversion
to local currency occurred at a future date renders the value of the
benefit uncertain at the time it is earned.
Department's Position: The Department has previously addressed the
arguments raised by Mannesmann. See 1996 Pipe and Tube and Line Pipe,
63 FR at 18887-88. No new information has been presented that would
warrant reconsideration of the Department's prior findings. Our normal
practice is to countervail benefits when they affect the firm's cash
flow, usually when the company receives the benefit. See e.g.,
Ferrochrome from South Africa, Final Results of Countervailing Duty
Administrative Review, 56 FR 33254, 33255 (July 19, 1991) (Ferrochrome
from South Africa). However, the Department has deviated from its long-
standing practice to countervail an export subsidy on the date the
benefit is received on an ``earned basis'' where the benefit is
provided as a percentage of the value of the exported merchandise on a
shipment-by-shipment basis, and the exact amount of the countervailable
subsidy is known at the time of export. See e.g., Castings from India,
60 FR at 44844. As stated in 1995 Pipe and Tube and Line Pipe, and in
1996 Pipe and Tube and Line Pipe, the exporter could not have known at
the time of export the exact amount of the countervailable benefit from
the Freight Rebate program because the freight payments were only
stated in U.S. dollars per ton, but the benefit was not tied to the
U.S. dollar. The Government of Turkey (GRT) did not initially commit to
use the exchange rate existing on the date of export. Therefore,
because of the high rate of inflation in Turkey, the exporters could
not have known the amount of the benefit ultimately to be received at
the time of export. See 1996 Pipe and Tube and Line Pipe, 63 FR at
18888. In the Brazilian and Mexican cases cited by Mannesmann, the
benefits in these high inflationary economies were paid at the time of
export, thus exporters knew with certainty the benefit to be received
in the local currency at the time of export. See e.g., Final
Affirmative Countervailing Duty Determinations: Certain Stainless Steel
Products from Brazil, 48 FR 21610, 21612 (May 13, 1983) and Toy
Balloons (Including Punchballs) and Playballs from Mexico: Final
Results of Administrative Review of Countervailing Duty Order, 49 FR
45039, 45040 (November 14, 1984).
We also disagree with Mannesmann's arguments that the Freight
Rebate program is indistinguishable from the Export Performance Credit
program. We previously determined that the
[[Page 44500]]
programs are distinguishable. See 1995 Pipe and Tube and Line Pipe, 62
FR at 43991, and 1996 Pipe and Tube and Line Pipe, 63 FR at 18888.
Under the Export Performance Credit program, because the value of the
benefit was tied to the U.S. dollar, the benefit remained the same in
U.S. dollar terms. Therefore, the value of the benefit from the Export
Performance Credit program was known at the time of export, and could
be calculated on an earned basis.
Comment 5: Policy Considerations for Measurement of Benefits
Mannesmann argues that policy considerations and the Department's
Regulations require the Freight Rebate program be countervailed on the
date the benefit was earned because the benefits should be
countervailed when they will have the greatest potential effect on a
company's export volumes or pricing to the United States. Mannesmann
states that since the Freight Rebate program was terminated at the end
of 1994, there were no longer any incentive for companies to export.
Therefore, they argue that because the countervailing duty law is
intended to offset export subsidies, it makes little sense for the
Department to countervail a benefit once a program has been terminated.
In support of its policy argument, Mannesmann points to section
351.514 of the Department's regulations, which deals with freight
charges. Mannesmann states that although this provision relates to
domestic freight charges on export shipments, it is instructive in that
it specifically recognizes that freight-related benefits should be
countervailed on the date that the subsidies were actually used to
encourage shipments to the United States. Therefore, they argue that
the Department should follow this policy when countervailing benefits
from the Freight Rebate program.
Petitioners counter that regardless of whether a countervailable
program has been terminated, the Department should not ignore the
residual benefits received under the program.
Department's Position: The Department has previously addressed the
arguments raised by Mannesmann. See 1996 Pipe and Tube and Line Pipe,
63 FR at 18888. No new information has been presented that would
warrant reconsideration of the Department's prior findings. We continue
to disagree with Mannesmann's argument that it makes little sense for
the Department to countervail a benefit once a program has been
terminated. As we stated, under section 771(5)(C), we are not required
to consider the potential effect of a subsidy. Moreover, under the Act,
a benefit that is contingent upon export is an export subsidy and thus
countervailable. See Section 771(5A)(B). Finally, under the logic of
respondents argument, we could never countervail export subsidies
unless the benefit could be measured at the time of shipment. This
clearly conflicts with the Act and our long-standing practice to
countervail benefits at the time the subsidy affects the company's cash
flow, which includes residual benefits from a terminated program. See
e.g., Ferrochrome from South Africa, 56 FR 33254, 33255 (July 19,
1991).
Mannesmann's citation to section 351.514 is not applicable to the
instant reviews. However, Mannesmann's argument that this section of
the regulations is instructive is flawed. We previously determined that
the Freight Rebate program was a freight bonus, i.e., a benefit
contingent upon export. Therefore, we continue to follow our normal
practice and countervail this benefit at the time the financial
contribution affects the cash flow of the company, which is when the
company receives the payment of the subsidy to which it is entitled as
a result of prior exportations. See 1996 Pipe and Tube and Line Pipe,
63 FR at 18889.
Comment 6: Treatment of Foreign Exchange Difference (Kur Farki)
The Yucel Boru Group argues that the Department's statement that
``we find that foreign exchange differences are not viewed as sales
income generated by a company's main operations,'' is contrary to
Turkish accounting principles, as well as the Turkish government's own
Standard Accounting Plan. The Yucel Boru Group also argues that the
Department's quote from Price Waterhouse's publication, Doing Business
in Turkey (1992, as amended July 31, 1995) that ``the lack of clearly
defined commercial accounting principles and the predominance of tax
law mean that Turkish law should be treated with extreme caution, and
international accounting standards are preferred'' has nothing to do
with income classification issues. The Group claims that the same
article directly addresses the treatment of exchange gains and losses,
and states that ``exchange gains and losses are part of normal trading
income and expense to be taken into account when realized.'' Thus, they
argue that kur farki should be considered as trading revenue for
purposes of the denominator of subsidy calculations (total net sales).
The Yucel Boru Group also discusses the Department's treatment of
costs, interest expense, and price adjustment in the context of two
antidumping cases that involve cost issues, both in a high inflationary
economy (Turkey) and a non-high inflationary economy (Germany). The
Group argues that in those cases, the Department treated the foreign
exchange gain as sales income, and that the Department should do
likewise in the instant case.
Petitioners counter that the Yucel Boru Group points to one source
cited by the Department. However, the Group does not address the
extensive citations the Department provided from other publications
regarding the treatment of income obtained from foreign exchange gains
and losses. Petitioners also counter that there is overwhelming support
in the record that foreign exchange gain or loss is not related to
sales activities, and is therefore ``other income.''
Department's Position: The Yucel Boru Group mistakenly argues that
the Department excluded foreign exchange gains and losses from the
total sales figure used as the denominator for the calculation of the
subsidy. However, we note that we used the total sales denominator
reported by the companies. In addition, as stated in the preliminary
results, the Department departed from how it had treated such gains and
losses in earlier reviews of subject merchandise, and in the instant
reviews the Department has indexed both the subsidy benefits
(numerator) and sales revenue (denominator), as reported in the
questionnaire responses. See Preliminary Results at 16925-26. Thus, the
Group's argument regarding whether foreign exchange gains or losses
constitute sales revenue or other income and should be included in the
sales denominator is not germane to the Department's calculation of the
net subsides in the instant reviews.
The Group's discussion of the antidumping cases also lacks merit.
In the instant case, we are examining neither cost issues nor price
adjustments. However, as discussed above, to account for high inflation
in Turkey, the Department has used indexation in the instant case, as
well as in the Notice of Final Results and Partial Recission of
Antidumping Duty Administrative Review: Certain Pasta from Turkey, 63
FR 68429, 68435.
Final Results of Review
In accordance with 19 CFR 355.22(c)(4)(ii), we calculated an
individual subsidy rate for each producer/exporter subject to these
administrative reviews. For the period January 1, 1997 through December
31, 1997, we determine the net subsidy to be as follows:
[[Page 44501]]
------------------------------------------------------------------------
Rate
Manufacturer/exporter of pipe and tube (percent)
------------------------------------------------------------------------
Yucel Boru Group............................................ 0.84
------------------------------------------------------------------------
------------------------------------------------------------------------
Rate
Manufacturer/exporter of line pipe (percent)
------------------------------------------------------------------------
Mannesmann.................................................. 4.20
------------------------------------------------------------------------
We will instruct the U.S. Customs Service (``Customs'') to assess
countervailing duties as indicated above. The Department will also
instruct Customs to collect cash deposits of estimated countervailing
duties in the percentages detailed above 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.
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 Sec. 777A(e)(2)(B) of the Act. The requested review
will normally cover only those companies specifically named. See 19 CFR
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).
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 at the most recent company-specific or country-
wide rate applicable to the company. Accordingly, the cash deposit
rates that will be applied to non-reviewed companies covered by this
order will be the rate for that company established in the most
recently completed administrative proceeding conducted under the URAA.
If such a review has not been conducted, the rate established in the
most recently completed administrative proceeding pursuant to the
statutory provisions that were in effect prior to the URAA amendments
is applicable. See Certain Welded Carbon Steel Pipe and Tube Products
from Turkey; Final Results of Countervailing Duty Administrative
Reviews, 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, 1997 through December
31, 1997, the assessment rates applicable to all non-reviewed companies
covered by this order are the cash deposit rates in effect at the time
of entry.
This notice serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 C.F.R. Sec. 355.34(d). Timely written
notification of return/destruction of APO materials or conversion to
judicial protective order is hereby requested. Failure to comply with
the regulations and the terms of an APO is a sanctionable violation.
These administrative reviews and notice are issued and published in
accordance with section 751(a)(1) and 777(i)(1) of the Act (19 U.S.C.
1675(a)(1) and 19 U.S.C. 1677f(i)(7)).
Dated: August 5, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-21198 Filed 8-13-99; 8:45 am]
BILLING CODE 3510-DS-P