NOTICES
DEPARTMENT OF COMMERCE
[C-355-001]
Leather Wearing Apparel From Uruguay; Preliminary Results of
Countervailing
Duty Administrative Review
Monday, July 23, 1990
AGENCY: International Trade Administration/Import
Administration, 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 0.12 percent ad valorem for the
period January 1, 1988 through December 31, 1988. In accordance
with 19 CFR 355.7, any rate less than 0.50 percent ad valorem is de
minimis. We invite interested parties to comment on these
preliminary results.
EFFECTIVE DATE: July 23, 1990.
FOR FURTHER INFORMATION CONTACT:Patricia W. Stroup or Paul
J. McGarr, Office of Countervailing Compliance, International
Trade Administration, U.S. Department of Commerce,
Washington, D.C. 20230; telephone: (202) 377-2786.
SUPPLEMENTARY INFORMATION:
Background
On November 13, 1989, the Department of Commerce (the
Department) published in the Federal Register (54 FR 47251) 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 31, 1989, we received a request from
the Government of Uruguay that we conduct an administrative
review of this order. We published the initiation on August 22, 1989
(54 FR 34804) for the period January 1, 1988 through December 31,
1988. The Department has now conducted its
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review in
accordance with section 751 of the Tariff Act of 1930 (the Tariff
Act).
Scope of Review
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 item numbers 4203.10.4030, 4203.10.4060 and
4203.10.4090 of the Harmonized Tariff Schedule (HTS). The HTS
item numers are provided for convenience and Customs purposes.
The written description remains dispositive.
The review covers the period January 1, 1988 through December
31, 1988, 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 subsequent reviews, 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 current period of review. Accordingly, we
preliminarily determine that there were no overrebates under this
program during the review period.
(2) Bonification Payments
Bonification Payments (BPs) are export rebates bestowed on 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 an export subsidy.
Two of the 20 known Uruguayan exporters of leather wearing
apparel received such payments on shipments of this merchandise
to the United States during the period of review. Because we found
that the exporters were able to tie their BPs to exports to the United
States, we measured the benefit only from BPs on U.S. shipments.
We allocated each company's benefit over the value of its U.S.
shipments during the review period and then weight-averaged the
resulting benefits by each company's proportion of total exports to
the United States during the period of review. We preliminarily
determine the benefit from this program to be 0.12 percent ad
valorem.
(3) Uncollected Social Security Taxes
On May 11, 1982, the Government of Uruguay notified the
Department that it has 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 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 0.001 percent ad valorem for the period of review.
(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.
Preliminary Results of Review
As a result of our review, we preliminarily determine the net
subsidy to be 0.12 percent ad valorem for shipments of Uruguayan
leather wearing apparel exported to the United States during the
period January 1, 1988 through December 31, 1988. In accordance
with 19 CFR 355.7, any rate less than 0.05 percent ad valorem is de
minimis.
The Department intends to instruct the Customs Service to
liquidate, without regard to countervailing duties, all shipments
of this merchandise exported from Uruguay on or after January
1, 1988 and on or before December 31, 1988.
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 all shipments of
this merchandise from Uruguay which are entered, or withdrawn
from warehouse, for consumption on or after the date of publication
of the final results of this review.
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 arguements 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 briefs.
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(e). Any request for disclosure
under 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 case or rebuttal brief or
at a hearing.
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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 355.22.
Dated: July 11, 1990.
Francis J. Sailer,
Acting Assistant Secretary for Import Administration.
[FR Doc. 90-17041 Filed 7-20-90; 8:45 am]
BILLING CODE 3510-DS-M