NOTICES
DEPARTMENT OF COMMERCE
[C-355-001]
Leather Wearing Apparel From Uruguay; Preliminary Results of
Countervailing
Duty Administrative Review
Monday, October 31, 1988
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AGENCY: International Trade Administration,
Import Administration, Department of Commerce.
ACTION: Notice of preliminary results of countervailing duty
administrative review.
SUMMARY: The Department of Commerce has conducted an
administrative review of the countervailing duty order on
leather wearing apparel from Uruguay. We preliminarily
determine the net subsidy to be 1.27 percent ad valorem for the
period January 1, 1984 through December 31, 1984, and 0.93
percent ad valorem for the period January 1, 1985 through
December 31, 1985. We invite interested parties to comment on
these preliminary results.
EFFECTIVE DATE: October 31, 1988.
FOR FURTHER INFORMATION CONTACT: Patricia W. Stroup or Paul
J. McGarr, Office of Compliance, International Trade
Administration, U.S. Department of Commerce, Washington, DC
20230; telephone: (202) 377-2786.
SUPPLEMENTARY INFORMATION:
Background
On December 9, 1986, the Department of Commerce ("the
Department") published in the Federal Register (51 FR 44325) the
final results of its last administrative review of the countervailing
duty order on leather wearing apparel from Uruguay (47 FR
31032, July 16, 1982). On July 30 and July 31, 1986, respectively,
the Amalgamated Clothing and Textile Workers Union , AFL- CIO, a
domestic interested party, and the Government of Uruguay
requested in accordance with 19 CFR 355.10 an administrative
review of this order. We published the initiation on August 26, 1986
(51 FR 30259). The Department has now conducted that review in
accordance with section 751 of the Tariff Act of 1930 ("the Tariff
Act").
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Scope of Review
The United States has developed a system of tariff classification
based on the international harmonized system of Customs
nomenclature. We will be providing both the appropriate Tariff
Schedules of the United States Annotated ("TSUSA") item numbers
and the appropriate Harmonized Tariff System ("HTS") item numbers
with our product descriptions. As with the TSUSA, the HTS item
numbers are provided for convenience and Customs purposes. The
written description remains dispositive.
We are requesting petitioners to include the appropriate HTS item
number(s) as well as the TSUSA item number(s) in all new petitions
filed with the Department. A reference copy of the proposed
Harmonized Tariff System schedules is available for consultation at
the Central Records Unit, Room B- 099, U.S. Department of
Commerce, 14th Street and Constitution Avenue NW., Washington,
DC 20230. Additionally, all Customs offices have reference copies,
and petitioners may contact the Import Specialist at their local
Customs office to consult the schedule.
Imports covered by this review are shipments of Uruguayan leather
wearing apparel and parts and pieces thereof. Such merchandise is
currently classifiable under TSUSA item numbers 791.7620,
791.7640 and 791.7660. These products are currently classifiable
under HTS item numbers 4203.10.40.30, 4203.10.40.60 and
4203.10.40.90. We invite comments from all interested parties on
these HTS classifications. The review covers the period January 1,
1984 through December 31, 1985 and four programs.
Analysis of Programs
(1) Export Tax Refunds ("ETRs")
On July 25, 1983, the Government of Uruguay instituted a system of
indirect tax refunds on exports of leather wearing apparel (Decree
289/983) for all shipments of the merchandise exported on or after
January 1, 1983. Until May 24, 1984, the amounts of these refunds,
which are issued in the form of tax certificates, ranged from 1.7 to
2.9 percent of the f.o.b., value of the merchandise, depending on the
type of leather used in the garment. The Government of Uruguay
suspended this program from May 25, 1984 (Decree 200/984) until
July 10, 1985, when it was reinstated with the same or slightly lower
(1.7 to 2.6 percent) refund rates (Decree 309/985).
In our last review, we established the requisite linkage between the
payment of ETRs and the incidence of indirect taxes. In this review,
we verified that the total indirect tax incidence of leather wearing
apparel exports to the United States was higher than the rebate
rates. Accordingly, we preliminarily determine that there were no
overrebates under this program during the review period.
(2) Bonification Payments
Bonification payments are export rebates of 22 percent of the value
of the processed wool portion of the leather wearing apparel. The
Uruguayan government made such payments on eligible shipments
to the United States in both 1984 and 1985. Because these payments
are limited to exporters and not linked to the payment of indirect
taxes, we preliminarily determine that this program confers a
subsidy.
Because these payments can be tied to specific shipments, we
calculated the benefit by dividing the amount received on U.S.
shipments in each year by the total value of Uruguayan exports of
this merchandise to the United States in that year. On this basis, we
preliminarily determine the benefit from this program to be 1.25
percent ad valorem for the period January 1, 1984 through
December 31, 1984, and 0.92 percent ad valorem for the period
January 1, 1985 through December 31, 1985.
(3) Uncollected Social Security Taxes
On May 11, 1982, the Government of Uruguay notified the
Department that it had ceased its efforts to collect social security
taxes that the leather wearing apparel industry had not paid in
1980.
Because the Government of Uruguay was not able to collect these
taxes, we consider the uncollected taxes to be a grant given on the
date the government officially declared the taxes uncollectable. We
consider the amount of the grant to be the total amount of the
uncollected taxes plus the interest which would have accrued from
June 16, 1981 (the date on which the Uruguayan government agreed
to eliminate all benefits on leather wearing apparel exports to the
United States) to May 11, 1982. We used as our benchmark interest
rate the prime rate available in Uruguay in 1981.
To calculate the benefit, we used a declining balance methodology.
We allocated the grant over 11 years, the average useful life of assets
in the leather wearing apparel industry, according to the Asset
Guideline Classes of the Internal Revenue Service. We used as the
discount rate the short-term 1982 interest rate, as published by the
Central Bank of Uruguay, because we have no information on
long-term interest rates or on the weighted cost of capital in the
leather wearing apparel industry for that year. On this basis, we
preliminarily determine the benefit from this program to be 0.02
percent ad valorem for the period January 1, 1984 through
December 31, 1984, and 0.01 percent ad valorem for the 1985
period.
(4) Preferential Export Financing
Central Bank Circular No. 1.229 of July 5, 1985, instituted a system
of short- term preferential rate loans for "non-traditional" exports.
Leather wearing apparel is considered a non-traditional export.
However, Article 3 of Decree 309/985 of July 10, 1985 (the Decree
which reinstituted the ETRs), prohibited these loans on certain
specified exports, including leather wearing apparel. In addition, we
found no evidence of use of this program by any of the leather
wearing apparel exporters we verified.
Accordingly, we preliminarily determine that this program was not
used by Uruguayan leather wearing apparel exporters during the
review period.
Preliminary Results of Review
As a result of our review, we preliminarily determine the net
subsidy to be 1.27 percent ad valorem for shipments of Uruguayan
leather wearing apparel exported to the United States for the period
January 1, 1984 through December 31, 1984, and 0.93 percent ad
valorem for the period January 1, 1985 through December 31, 1985.
The Department intends to instruct the Customs Service to assess
countervailing duties of 1.27 percent of the f.o.b. invoice price
on all shipments of this merchandise exported on or after January 1,
1984 and on or before December 31, 1984, and 0.93 percent of the
f.o.b. invoice price for all shipments exported on or after January 1,
1985 and on or before December 31, 1985.
Further, the Department intends to instruct the Customs Service to
collect cash deposits of estimated countervailing duties, as
provided by section 751(a)(1) of the Tariff Act, of 0.93 percent of
the f.o.b. invoice price on all shipments of this merchandise
entered, or withdrawn from warehouse, for consumption on or after
the date of publication of the final results of this review. This deposit
requirement shall remain in effect until publication of the final
results of the next administrative review.
Interested parties may submit written comments on these
preliminary results within 30 days of the date of publication of this
notice and may request disclosure and/or a hearing within 10 days
of the date of publication. Any hearing, if requested, will be held 30
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days from the date of publication or the first workday
thereafter. Any request for an administrative protective order must
be made no later than five days after the date of publication. The
Department will publish the final results of this administrative
review including the results of its analysis of issues raised in any
such written comments or at a hearing.
This administrative review and notice are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
355.10.
Date: October 25, 1988.
Jan W. Mares,
Assistant Secretary, Import Administration.
[FR Doc. 88-25116 Filed 10-28-88; 8:45 am]
BILLING CODE 3510-05-M