NOTICES
DEPARTMENT OF COMMERCE
[C-355-001]
Leather Wearing Apparel From Uruguay; Preliminary Results of
Countervailing
Duty Administrative Review
Wednesday, August 16, 1989
AGENCY: International Trade Administration/Import
Administration, Department of Commerce.
ACTION: Notice of preliminarily 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 preliminary determine
the net
*33752
subsidy to be de minimis for nine firms and 2.10
percent ad valorem for all other firms for the period January 1,
1986 through December 31, 1986. For the period January 1, 1987
through December 31, 1987, we preliminarily determine the net
subsidy to be de minimis for 12 firms and 3.21 percent ad valorem
for all others. We invite interested parties to comment on these
preliminary results.
EFFECTIVE DATE: August 16, 1989.
FOR FURTHER INFORMATION CONTACT:Patricia W. Stroup or Paul
J. McGarr, Office of Countervailing Compliance, International
Trade Administration, U.S. Department of Commerce,
Washington, DC 20230; telephone: (202) 377-2786.
SUPPLEMENTARY INFORMATION:
Background
On January 4, 1989, the Department of Commerce ("the
Department") published in the Federal Register (54 FR 168) 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). We received requests from the Amalgamated
Clothing and Textile Workers Union, AFL-CIO, a domestic interested
party, and the Government of Uruguay, that we conduct
administrative reviews of this order. We published the initiation on
August 19, 1987 (52 FR 31056) for the period January 1, 1986
through December 31, 1986, and on August 30, 1988 (53 FR 33163)
for the period January 1, 1987 through December 31, 1987. The
Department has now conducted its review in accordance with
section 751 of the Tariff Act of 1930 ("the Tariff Act").
Scope of Review
The United States, under the auspices of the Customs Cooperation
Council, has developed a system of tariff classification based on the
international harmonized system of customs nomenclature. On
January 1, 1989, the United States fully converted to the
Harmonized Tariff Schedule ("HTS"), as provided for in section 1201
et seq. of the Omnibus Trade and Competitiveness Act of 1988. All
merchandise entered, or withdrawn from warehouse, for
consumption on or after that date is now classified solely according
to the appropriate HTS item number(s).
Imports covered by this review are shipments of Uruguayan leather
wearing apparel and parts and pieces thereof. During the period of
review, such merchandise was classifiable under item numbers
791.7620, 791.7640 and 791.7660 of the Tariff Schedules of the
United States Annotated. These products are currently classifiable
under HTS item numbers 4203.10.4030, 4203.10.4060 and
4203.10.4090. The written description remains dispositive.
The review covers the period January 1, 1986 through December
31, 1987, 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 review of the period April 17, 1982 through December 31,
1983, we established the requisite linkage between the payment of
ETRs and the incidence of indirect taxes. In that review and in our
last review, we verified that the total indirect tax incidence of
leather wearing apparel exports to the United States was higher than
the rebate rates. There were no changes in this program or in the
amounts of the ETRs during the period of review. Accordingly, we
preliminary 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.
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.
The Uruguayan government made such payments on shipments to
the United States from one exporter in both 1986 and 1987.
Although the weighted-average country-wide benefit from this
program was greater than de minimis, the aggregate benefit from all
programs was de minimis for nine of the ten known exporters of the
subject merchandise during the period January 1, 1986 through
December 31, 1986, and 12 of the 13 known exporters during the
period January 1, 1987 through December 31, 1987. Therefore, we
calculated company-specific rates in accordance with §
355.22(d)(3)(ii) of the Commerce Department's regulations,
published in the Federal Register on December 27, 1988 (53 FR
52306) (to be codified at 19 CFR 355.22).
Because these payments can be tied to specific shipments, we
calculated the benefit by dividing the amount received by the
recipient firm on U.S. shipments in each year by the total value of its
exports from Uruguay to the United States in that year. On this
basis, we preliminarily determine the benefits udner this program to
be zero for nine firms and 2.10 percent ad valorem for all other
firms for the period January 1, 1986 through December 31, 1986.
For the period January 1, 1987 through December 31, 1987, we
preliminarily determine the benefits to be zero for 12 firms and 3.21
percent ad valorem for all others.
(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.
We allocated the benefit attributable to each year of the review
period over total Uruguayan production of the merchandise for that
year. On this basis, we preliminarily determine the benefit from this
program to be 0.003 percent ad valorem for the period January 1,
1986 through December 31, 1986, and 0.001 percent ad valorem
for the 1987 period.
*33753
(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.
Accordingly, we preliminarily determine that this program was not
used by Uruguayan leather wearing apparel exporters during the
review period.
Firms Not Receiving Benefits
A. We preliminarily determine that the following nine firms received
de minimis benefits during the period January 1, 1986 through
December 31, 1986:
1. Cubalan, S.A.
2. Osami, S.A.
3. Orolon, S.A.
4. Ness, LTDA
5. Fair Play, LTDA
6. Sirfil, S.A.
7. Modur, S.A.
8. Laren, S.A.
9. Paris New York, S.A.
B. We preliminarily determine that the following twelve firms
received de minimis benefits during the period January 1, 1987
through December 31, 1987:
1. Cubalan, S.A.
2. Osami, S.A.
3. Orolon, S.A.
4. Ness, LTDA
5. Exportador Esporadico
6. Cleson, S.A.
7. Orwix, S.R.L.
8. Modur, S.A.
9. Union Euroamericana, S.A.
10. Raulin, S.A.
11. Ladibel, S.A.
12. Bicron, S.A.
Preliminary Results of Review
As a result of our review, we preliminarily determine the net
subsidy to be 0.003 percent for nine firms and 2.10 percent ad
valorem for all other firms for shipments of Uruguayan leather
wearing apparel exported to the United States during the period
January 1, 1986 through December 31, 1986. For the period
January 1, 1987 through December 31, 1987, we preliminarily
determine the net subsidy to be 0.001 percent for 12 firms and 3.21
percent ad valorem for all other firms. The Department considers
any rate less than 0.50 percent ad valorem to be de minimis.
The Department intends to instruct the Customs Service to
liquidate, without regard to countervailing duties, shipments of
this merchandise from the nine firms listed in section A above and
to assess countervailing duties of 2.10 percent of the f.o.b.
invoice price on all other shipments of the merchandise exported
from Uruguay on or after January 1, 1986 and on or before
December 31, 1986. The Department also intends to instruct the
Customs Service to liquidate, without regard to countervailing
duties, shipments of this merchandise from the 12 firms listed in
section B above and to assess countervailing duties of 3.21
percent of the f.o.b. invoice price for all shipments exported on or
after January 1, 1987 and on or before December 31, 1987.
Further, the Department intends to instruct the Customs Service to
waive cash deposits of estimated countervailing duties, as
provided by section 751(a)(1) of the Tariff Act, on shipments of this
merchandise from the 12 firms listed in section B above and to
collect cash deposits of estimated countervailing duties of 3.21
percent of the f.o.b. invoice price on shipments of this merchandise
from all other firms which are entered, or withdrawn from
warehouse, for consumption on or after the date of publication of
the final results of this 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 44
days from the date of publication or the first workday thereafter.
Rebuttal briefs and rebuttals to written comments, limited to issues
in those comments, must be filed not later than 37 days after the
date of publication.
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 §
355.22 of the new Commerce Regulations.
Dated: August 8, 1989.
Lisa B. Barry,
Acting Assistant Secretary for Import Administration
[FR Doc. 89-19124 Filed 8-15-89; 8:45 am]
BILLING CODE 3510-DS-M