66 FR 14521, March 13, 2001

DEPARTMENT OF COMMERCE

International Trade Administration

[C-357-813]
 
Honey from Argentina: Preliminary Affirmative Countervailing Duty 
Determination and Alignment with Final Antidumping Duty Determination 
on Honey from the People's Republic of China

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce

EFFECTIVE DATE: March 13, 2001.

FOR FURTHER INFORMATION CONTACT: Dana Mermelstein or Doug Campau, 
Office of AD/CVD Enforcement VII, Import Administration, U.S. 
Department of Commerce, Room 7866, 14th Street and Constitution Avenue, 
NW., Washington, DC 20230; telephone (202) 482-1391 and (202) 482-1395 
respectively.

Preliminary Determination

    The Department of Commerce (the Department) preliminarily 
determines that countervailable subsidies have been provided to 
producers and/or exporters of honey from Argentina. For information on 
the estimated countervailing duty rate, please see the

[[Page 14522]]

``Suspension of Liquidation'' section of this notice.

SUPPLEMENTARY INFORMATION:

Petitioners

    The petition in this investigation was filed on behalf of the 
American Honey Producers Association and the Sioux Honey Association 
(the petitioners).

Case History

    On September 29, 2000, the Department received a countervailing 
duty petition filed in proper form on behalf of the American Honey 
Producers Association and the Sioux Honey Association. The Department 
initiated this countervailing duty investigation of honey from 
Argentina on October 26, 2000. The notice of initiation was published 
in the Federal Register on November 2, 2000. See Notice of Initiation 
of Countervailing Duty Investigation: Honey from Argentina, 65 FR 65835 
(Initiation Notice). Since the initiation, the following events have 
occurred.
    Due to the large number of producers and exporters of honey in 
Argentina, and based on discussions with the Government of Argentine 
(GOA) , the Department decided to solicit information from the GOA on 
an aggregate or industry-wide basis in accordance with section 
777A(e)(2)(B) of the Act, rather than from individual producers and 
exporters. See Memorandum to the File, Countervailing Duty 
Investigation of Honey From Argentina: Conducting the Investigation on 
an Aggregate Basis, dated November 3, 2000, (Aggregation Memo). On 
November 9, 2000, we issued a countervailing duty questionnaire to the 
GOA. On November 22, 2000, the GOA submitted a letter claiming green 
box status pursuant to the WTO Agreement on Agriculture for twenty-
seven of the programs under investigation (see ``Green Box Claims'' 
section below for a detailed discussion of these claims). On November 
21 and 22, 2000, the Department conducted a questionnaire presentation 
in Argentina. See Memorandum to the File, Honey from Argentina: 
Countervailing Duty Questionnaire Presentation in Buenos Aires, dated 
December 4, 2000.
    On December 5, 2000, petitioners made a timely request pursuant to 
19 CFR 351.205(e) for postponement of the preliminary determination in 
accordance with section 703(c)(1) of the Tariff Act of 1930, as amended 
(the Act). Pursuant to section 703(c)(1)(A) of the Act, on December 15, 
2000, the Department postponed the preliminary determination to March 
5, 2001 (65 FR 78474).
    On December 22, 2000, the Department issued an additional 
questionnaire addressing the GOA's green box claims. The Department 
received questionnaire responses from the GOA on January 2 and January 
18, 2001. The Department issued supplemental questionnaires to the GOA 
on January 26 and January 31, 2001. The Department received the GOA's 
supplemental responses on February 14 and 16, 2001.

Scope of Investigation

    For purposes of this investigation, the products covered are 
natural honey, artificial honey containing more than 50 percent natural 
honeys by weight, preparations of natural honey containing more than 50 
percent natural honeys by weight, and flavored honey. The subject 
merchandise includes all grades and colors of honey whether in liquid, 
creamed, combs, cut comb, or chunk form, and whether packaged for 
retail or in bulk form.
    The merchandise subject to this investigation is currently 
classifiable under subheadings 0409.00.00, 1702.90, and 2106.90.99 of 
the Harmonized Tariff Schedule of the United States (HTSUS). Although 
the HTSUS subheadings are provided for convenience and U.S. Customs 
Service (U.S. Customs) purposes, the Department's written description 
of the merchandise under investigation is dispositive.
    In the scope section of the Initiation Notice for this 
investigation, the Department encouraged all parties to submit comments 
regarding product coverage by November 9, 2000. The Department did not 
receive any comments regarding scope.

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, all citations to the 
Department's regulations are to the regulations codified at 19 CFR part 
351 (2000).

Injury Test

    Because Argentina is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, the International Trade 
Commission (ITC) is required to determine whether imports of the 
subject merchandise from Argentina materially injure, or threaten 
material injury to, a U.S. industry. On November 13, 2000, the ITC 
published its preliminary determination that there is a reasonable 
indication that an industry in the United States is being materially 
injured, or threatened with material injury, by reason of imports from 
Argentina of the subject merchandise (64 FR 41458). The views of the 
Commission are contained in USITC Publication 3369 (November 2000), 
Honey from Argentina and China; Investigations Nos. 701-TA-402 and 731-
TA-892-893 (Preliminary).

Alignment with Final Antidumping Duty Determination

    On February 27, 2000, petitioners submitted a letter requesting 
alignment of the final determination in this investigation with the 
final determination of the antidumping duty investigation of honey from 
the People's Republic of China. See Initiation of Antidumping Duty 
Investigations: Honey From Argentina and the People's Republic of 
China, 65 FR 65831 (November 2, 2000). In accordance with section 
705(a)(1) of the Act, we are aligning the final determination in this 
investigation with the final determination in the companion antidumping 
investigation of honey from the People's Republic of China.

Period of Investigation

    The period for which we are measuring subsidies (the period of 
investigation or POI) is calendar year 1999.

Aggregation

    Under section 777A(e)(2)(B) of the Act, the Department may 
calculate a single country-wide rate applicable to all exporters if the 
Department determines it is not practicable to determine individual 
countervailable subsidy rates due to the large number of exporters or 
producers involved in the investigation or review.
    In the current countervailing duty investigation of honey from 
Argentina, petitioners' allegations show that there are between 18,000 
and 20,000 honey producers in Argentina (see p. 20 of the petition, 
citing to the Argentine National Statistics Office, export statistics 
for 1998). Further information provided by the GOA indicates that there 
are approximately 25,000 honey producers in the country. (See 
Aggregation Memo.) The GOA also expressed concern, in meetings with the 
Department, about the difficulty of identifying individual producers, 
and the producers' ability to provide information. Thus, due to the 
extremely large number of honey producers subject to this investigation 
and the complexities associated with identifying and investigating 
individual producers, the Department determined that it

[[Page 14523]]

would not be practicable to investigate alleged countervailable 
subsidies received by individual honey producers and exporters in 
Argentina. In making this decision, it was our understanding that the 
GOA would be in a position to provide the information on an aggregate 
basis that would be necessary to conduct our subsidy analyses. 
Accordingly, we are following the statutory provision that permits the 
Department ``to determine a single countrywide subsidy rate to be 
applied to all exporters and producers.'' See section 777A(e)(2)(B) of 
the Act. See also Aggregation Memo.

Green Box Claims

    In accordance with section 771(5B)(F) of the Act, the Secretary 
will treat as non-countervailable domestic support measures that are 
provided with respect to certain agricultural products listed in Annex 
1 of the WTO Agreement on Agriculture (Agriculture Agreement), provided 
such measures conform to the criteria of Annex 2 of the same agreement. 
Furthermore, in accordance with section 351.522(a) of the Department's 
regulations, the Department will determine that a particular domestic 
support measure conforms fully to the green box criteria in the 
Agriculture Agreement if it finds that the measure (1) is provided 
through a publicly-funded program (including government revenue 
foregone) not involving transfers from consumers; (2) does not have the 
effect of providing price support to producers; and (3) meets the 
relevant policy-specific criteria and conditions laid out in Annex 2 of 
the Agriculture Agreement. According to Sec. 351.301(d)(6) of the 
Department's regulations, a claim that a particular agricultural 
support program should be accorded green-box status under section 
771(5B)(F) of the Act must be made by the competent government with the 
full participation of the government authority responsible for funding 
and/or administering the program. Because the GOA, in consultations 
prior to initiation of this investigation had indicated that most of 
the alleged programs met the criteria for green box treatment, the 
Department, in its initial questionnaire cover letter issued on 
November 9, 2000, gave the GOA specific instructions for submitting 
claims that programs meet the requirements of Annex 2. The Department 
also addressed green box issues in its questionnaire presentation in 
Argentina, on November 20 and 21, 2000.
    As noted in the ``Case History'' section, on November 22, 2000, the 
GOA submitted a letter claiming green box status for twenty-seven of 
the programs under investigation. This letter made reference to the 
specific paragraph(s) of Annex 2 with which the particular programs 
were claimed to conform. The Department issued a questionnaire 
addressing the GOA's claims on December 22. In its January 18, 2001 
response, the GOA reduced to three the number of programs for which it 
is claiming green box status. The three remaining programs for which 
the GOA claims green box status are the PROMEX Consortium for Honey 
Exportation (PROMEX), PROAPI, and the Law 22,913 Emergency Aid program. 
The Department issued a supplemental green box questionnaire on January 
31, 2001, and the GOA submitted its response on February 16, 2001. The 
green box issues with respect to each of these programs are discussed 
in the relevant program-specific sections below.

Use of Facts Available

    Section 776(a)(2)(B) of the Act states the Department ``shall use 
facts otherwise available in reaching the applicable determination'' if 
an interested party ``fails to provide the information requested in a 
timely manner and in the form required.'' For several programs 
(discussed under the relevant programs below), the GOA did not provide 
all of the information requested by the Department and needed for a 
complete analysis. We must therefore resort to the facts otherwise 
available in reaching the applicable determination for those programs.
    Furthermore, section 776(b) of the Act provides that in selecting 
from among the facts available, the Department may use an inference 
that is adverse to the interests of a party if it determines that a 
party has failed to cooperate to the best of its ability. In this 
investigation, the Department requested that the GOA submit information 
necessary to determine the potential countervailablity of the alleged 
subsidy programs and to calculate potential subsidy rates applicable to 
those programs. When the Department was making its decision to apply an 
aggregate methodology to this case, the GOA indicated that it would be 
in a position to provide the information on an aggregate basis that 
would be necessary to conduct our subsidy analyses.
    For most of the programs, the GOA submitted sufficient information 
for the Department to conduct its analysis of the countervailablity of 
such programs and to calculate a benefit from those programs. However, 
for some of the programs, the GOA has not provided sufficient 
information for the Department to analyze at least one or more of the 
three elements that are necessary to determine whether a program is 
countervailable: (1) Specificity; (2) financial contribution; and (3) 
benefit. For these particular programs, and in light of the information 
the GOA did provide, we preliminarily determine that the GOA had the 
ability to provide the additional information, as requested. Therefore, 
we determine that, in these few instances, it is appropriate for us to 
make adverse inferences. See section 776(b) of the Act. The specific 
information that is lacking is discussed under the relevant program 
section below.
    In selecting from the facts available, when the Department 
determines that an adverse inference is warranted, the statute 
indicates that the Department may rely upon information derived from 
(1) the petition; (2) a final determination in a countervailing duty or 
an antidumping investigation; (3) any previous administrative review, 
new shipper review, expedited antidumping review, section 753 review, 
or section 762 review; or (4) any other information placed on the 
record. See 19 CFR 351.308(c). As adverse facts available in this 
preliminary determination, we have relied upon information derived from 
the GOA's questionnaire responses to supply missing information 
regarding the specificity, financial contribution, and/or benefit for 
certain programs. The Department's selection of the information used as 
adverse facts available is discussed in more detail in the program-
specific sections below.

Subsidies Valuation Information

Allocation Period

    Section 351.524(d)(2) of the Department's regulations states that 
we will presume the allocation period for non-recurring subsidies to be 
the average useful life (AUL) of renewable physical assets for the 
industry concerned, as listed in the Internal Revenue Service's (IRS) 
1977 Class Life Asset Depreciation Range System, as updated by the 
Department of Treasury. The presumption will apply unless a party 
claims and establishes that these tables do not reasonably reflect the 
AUL of the renewable physical assets for the company or industry under 
investigation, and the party can establish that the difference between 
the company-specific or country-wide AUL for the industry under 
investigation is significant.
    No party requested, or submitted information which yielded, an 
industry-

[[Page 14524]]

wide AUL different from the AUL listed in the IRS tables. We are 
therefore using the 10-year AUL as reported in the IRS tables to 
allocate any non-recurring subsidies under investigation.

Loan Benchmark Interest Rates

    In selecting benchmark interest rates for use in calculating the 
benefits conferred by the various loan programs under investigation, we 
would normally look for the interest rate a borrower had received on a 
comparable commercial loan. See 19 CFR 351.505(a)(3)(i). However, since 
we are conducting this investigation on the aggregate level, and we are 
not examining individual companies, we have sought information on the 
national average interest rates for comparable commercial loans. See 19 
CFR 351.505(a)(3)(ii). The GOA provided information compiled by the 
Central Bank of Argentina showing the national average interest rates 
for various types of financing: Fixed-rate and variable-rate; 
denominated in Argentine pesos or in foreign currency; long-term or 
short-term; and secured and unsecured. For each loan program found to 
be countervailable, we have selected a benchmark from the information 
provided depending upon the terms and characteristics of the particular 
loan program.
    As discussed in the individual loan program sections below, many of 
the investigated loan programs require the borrower to provide a 
guarantee and pay commissions and other administrative fees. When we 
asked the GOA to provide information about fees normally charged on 
loans by commercial banks, the GOA indicated that many such fees are 
applied, but provided no indication of the rates or the values of such 
fees. As such, we are not able to calculate effective interest rates, 
which we would normally do by taking account of all such fees and 
commissions on both the actual loans and the benchmark loans. Thus, 
when calculating the benefits from countervailable loans, we have 
compared the loans' nominal interest rates to nominal benchmark 
interest rates.

Denominator Issues

    The GOA has provided information for the POI relating to the total 
volume of honey produced in Argentina, the volume and value of total 
honey exports, and the volume and value of exports of honey to the 
United States. They have also broken down, where possible, the export 
volumes and values according to the province in which the honey was 
produced. However, the GOA was unable to provide information relating 
to total sales of honey during the POI. As a proxy for total sales 
information, the GOA provided data showing the volume of honey 
production by province during the POI. However, no data was provided 
showing the value of production. We have estimated the value of the 
total production reported by the GOA using the volume and value data 
provided for exports to the United States. We divided the value of 
Argentine honey exports to the United States by the volume of those 
exports to calculate a per kilogram value in U.S. dollars. (We note 
that, throughout the POI, the exchange rate was one U.S. dollar equal 
to one Argentine peso.) We then multiplied this per kilogram value by 
the provincial production data provided to arrive at the value of total 
Argentine honey production during the POI. We have used this estimated 
total production value as our denominator when calculating the subsidy 
from federal domestic programs and we have used the relevant provincial 
production value as our denominator when calculating the subsidy from 
domestic subsidies provided at the provincial level; and, we have used 
the total or provincial export values, as reported, as our denominators 
when calculating the subsidy from programs we have determined to be 
export subsidies.
    To determine the final subsidy from each provincial program that is 
attributable to exports of honey to the United States we applied the 
following methodologies: (1) For provinces for which we have reported 
export data, we weight-averaged the subsidies from each provincial 
program by multiplying each subsidy by that province's share of total 
honey exports, by value, to the United States during the POI; and (2) 
for provincial domestic subsidy programs in provinces that do not have 
reported exports of honey to the United States during the POI, but do 
have reported honey production during the POI, and for which the GOA 
did not specifically report that that province had no exports to the 
United States, we divided the benefits by the value of total Argentine 
honey production during the POI.
    Based upon our analysis of the petition and responses to our 
questionnaires, we preliminarily determine the following:

I. Programs Preliminarily Determined to be Countervailable

A. Federal Programs

1. Argentine Internal Tax Reimbursement /Rebate Program (Reintegro)
    The Reintegro program entitles Argentine exporters of honey 
produced in Argentina to a rebate of many internal or domestic taxes 
that are levied during the production and distribution process in 
Argentina on the finished export product. The Reintegro program 
provides a cumulative tax rebate paid upon export, calculated as a 
percentage of the FOB invoice price of exported product.
    According to the questionnaire responses, the GOA established a 
rebate system in 1971, which was known as the ``reembolso'' program. In 
1986, Decree 1555/86 was promulgated to implement the reembolso program 
in a manner consistent with the General Agreement on Tariffs and Trade. 
In May 1991, the GOA issued Decree 1011/91, which renamed the reembolso 
program as Reintegro and modified the legal structure of the program. 
Under Decree 1011/91, Reintegro rebated indirect taxes only. Decree 
1011/91 has been the relevant governing decree since 1991. The nature 
and structure of the program have remained unchanged since then, 
although the Ministry of Economics modifies Reintegro rebate levels 
from time to time. Exports of bulk and processed honey have been 
eligible for Reintegro since at least August 1996.
    The Reintegro rate applicable to bulk honey was 4.1 percent from 
February 1998 through April 2000. The Reintegro rate applicable to 
processed honey was 8.1 percent from February 1998 until August 1999, 
when it increased to 10 percent. In April 2000, the Reintegro rate for 
bulk honey increased to 5.4 percent while the rate for processed honey 
increased to 12 percent.
    The Reintegro is specific under section 771(5A)(B) of the Act 
because it is contingent upon export performance. The Reintegro confers 
a financial contribution in the form of a direct transfer of funds from 
the GOA to exporters of the subject merchandise. (See Section 
771(5)(D)(i) of the Act.)
    To determine whether a benefit exists for a tax rebate program, the 
Department will normally examine whether the amount remitted or rebated 
exceeds the amount of prior-stage cumulative indirect taxes paid on 
inputs that are consumed in the production of the exported honey, 
making normal allowances for waste, and if there is an excess, will 
find it to be the benefit. (See Sec. 351.518(a) of the Department's 
regulations.) However, there is an exception to this rule under 
Sec. 351.518(a)(4)(i-ii) of the Department's regulations. Section 
351.518(a)(4)(i-ii) states that the Department will consider the entire 
amount of the tax rebate or remission to confer a benefit unless the 
Department finds that:

[[Page 14525]]

    (i) The government in question has in place and applies a system or 
procedure to confirm which inputs are consumed in the production of the 
exported products and in what amounts, and to confirm which indirect 
taxes are imposed on these inputs, and the system or procedure is 
reasonable, effective for the purposes intended, and is based on 
generally accepted commercial practices in the country of export; or
    (ii) If the government in question does not have a system or 
procedure in place, if the system or procedure is not reasonable, or if 
the system or procedure is instituted and considered reasonable, but is 
found not to be applied or not to be applied effectively, the 
government in question has carried out an examination of actual inputs 
involved to confirm which inputs are consumed in the production of the 
exported product, in what amounts and which indirect taxes are imposed 
on the inputs.
    In both our original and supplemental questionnaires, we asked the 
GOA to describe the system or procedures that it had used to establish 
the appropriate level of Reintegro for bulk and processed honey (i.e., 
how it had initially determined that honey exporters were entitled to a 
rebate, and how it determined the level of rebate including the goods 
consumed in production and the indirect tax incidence on those goods). 
The GOA responded that for certain sectors (e.g., steel and textiles), 
it monitors and evaluates which inputs are consumed in the production 
of the exported products and in what amounts, and confirms which 
indirect taxes are imposed on these inputs through the collection of 
production and tax incidence information from representative producers. 
However, the GOA reported that it does not have the resources necessary 
to monitor the tax incidence of numerous representative honey 
producers. Instead, the GOA stated that its approach to the honey 
sector has been to gather information from the private sector, and the 
agricultural and tax authorities. The GOA claimed that this information 
is then corroborated through publicly-available sources and through 
studies done by independent third parties.
    The GOA explained that the Directory for Industrial Alimentation of 
the Agricultural Secretariat (SAGyP) is in constant contact with 
Provincial governments, honey producers, acopiadors (honey 
intermediaries who collect and consolidate raw honey from multiple 
producers for sale and export), and exporters. The GOA states that 
their communications with members of the honey sector take the form of 
phone calls, electronic mail, etc. The GOA submitted copies of written 
communications between it and the honey sector dated July 2000. These 
communications appear to be questionnaires to sample beekeeping costs, 
and responses to those questionnaires, from the Corrientes and Rio 
Cuarto zones.
    In addition, the GOA submitted a study entitled ``Production, 
Industrialization, and Commercialization of Honey,'' prepared by the 
Federal Administration of Public Revenue (AFIP), and dated September 
1997, which the GOA states is a ``study of the beekeeping sector.'' The 
GOA stated that the objective of this study was to provide AFIP agents 
with a guide to ``understanding the manner in which the taxpayers 
comply with their obligation to pay taxes'' and ``new alternatives for 
increasing the amount and efficiency of tax payments in the sector.'' 
The study's introduction is translated and describes the study as 
follows. Chapter I deals with the macroeconomic aspects, production 
system, and commercialization system of honey. Chapter II explains the 
motive for creating an inspection strategy and examples of tax evasion. 
Chapters I and II are not translated. Chapter III, which is partially 
translated, describes the inspection strategy recommended by the study.
    Thus, this study appears to deal primarily with improving the 
efficiency of tax payments from the honey sector and increasing the tax 
compliance from the honey sector with respect to direct taxes. As such, 
it is not clear how this study is relevant to the establishment of the 
appropriate levels of Reintegro applicable to bulk and processed honey. 
In addition, the GOA did not explain how the guidelines listed in the 
1997 AFIP study were, if ever, used to confirm the appropriate level of 
Reintegro for bulk and processed honey.
    The information and documentation submitted by the GOA does not 
demonstrate that the government had, or has, in place a system or set 
of procedures to confirm which inputs are consumed in the production of 
the exported products and in what amounts, and to confirm which 
indirect taxes are imposed on these inputs. While the GOA apparently 
gathers various types of information from a number of sources about the 
honey sector and its production processes and costs, it has provided no 
evidence demonstrating that there was or is a system or set of 
procedures in place that is followed to determine the specific inputs 
consumed in production of honey and the indirect tax incidence on those 
inputs. Moreover, the GOA did not explain, let alone substantiate, the 
process through which it analyzed the general information collected on 
the honey industry to determine the specific Reintegro rate for bulk 
and processed honey exports. Therefore, we find that the requirements 
for non-countervailablity set forth in Sec. 351.518(a)(4)(i) of the 
regulations have not been met.
    However, as outlined in Sec. 351.518(a)(4)(ii), even if the 
government does not have a system or procedure in place, it may still 
carry out ''. . . an examination of actual inputs involved to confirm 
which inputs are consumed in the production of the exported product, in 
what amounts, and which indirect taxes are imposed on the inputs.''
    In the questionnaire response, the GOA submitted a report entitled 
``Reintegros for Argentine Honey Exports,'' prepared by EcoLatina, an 
independent third party, in December 2000. In commissioning the study, 
the GOA requested that EcoLatina calculate the incidence of indirect 
taxes on the average honey FOB price. The report presents information 
on the cost structure and tax incidence of what are described as a 
``representative'' producer, acopiador (distributor), and exporter. 
However, the report does not address the cost structure and tax 
incidence for processed honey. In response to supplemental questions, 
the GOA stated that the cost structure and tax incidence data reported 
in the study are not based on the cost structure and tax incidence of 
specific producers, acopiadors, and exporters. Rather, the cost 
structure and tax incidence were constructed for a ``typical'' 
producer, acopiador, and exporter based on certain characteristics 
which the GOA relates to characteristics of the sector.
    The GOA has stated that Argentine honey producers can be placed in 
several different groups depending on the level of dedication and on 
the number of hives. However, the GOA maintains that the main 
distinction among groups is between industrial producers and all others 
and that the characteristics of non-industrial producers are very 
similar.
    In its narrative, the GOA has described the representative producer 
as a part-time producer who maintains 250 hives and has an alternative 
source of income. The report classifies honey producers by level of 
dedication to beekeeping and number of hives and indicates the percent 
of honey produced by each level of producer. Based on the criteria of 
the report, the ``representative

[[Page 14526]]

producer'' fits into the category described as having ``all personnel 
dedicated to beekeeping'' and having between 200 and 499 hives in 
production. This category accounts for only 24 percent of Argentine 
honey production. By contrast, the report indicates that 49 percent of 
Argentine honey is produced by producers described in the report as 
``household beekeepers'' who have fewer than 49 hives. Moreover, the 
report indicates that 24 percent of Argentine honey is produced by 
producers described as having only a ``partial dedication to 
beekeeping'' and between 50 and 199 hives. As such, it is unclear how 
the producer level and the relative production level information 
detailed in the report supports the GOA's narrative description of what 
constitutes a representative Argentine honey producer. Thus, the 
``representative producer'' which the GOA states is the ``basic 
assumption'' of the report apparently bears little resemblance to the 
household and partially-dedicated beekeepers which account for 71 
percent of Argentine honey production.
    We do not disagree that it would be an enormous burden for a 
government to collect the necessary data from the thousands of honey 
producers in Argentina or that the use of an alternative method for 
collecting the necessary information automatically invalidates the 
data. However, this report was not based on even a representative 
sample of actual companies, nor were its identification of inputs and 
indirect tax incidence (which had been collected from public sources) 
tested against actual company information or experience. Moreover, as 
noted in the report, tax incidence at the producer level accounts for 
the vast majority of the claimed indirect tax incidence on exports of 
Argentine bulk honey. As such, the report cannot be considered 
representative of the honey industry in Argentina, and, as such, it 
cannot meet the standard set forth in Sec. 351.518(a)(4)(ii) that an 
examination of the ``actual'' inputs has been carried out.
    Even if the report were to be considered an examination of the 
``actual'' inputs involved, it does not demonstrate that the Reintegro 
is based solely on the indirect tax incidence on the inputs consumed in 
production. The report provided by the GOA includes a list of virtually 
all of the costs associated with production, distribution, and export 
of bulk honey and bases its calculation of indirect tax incidence on 
this list. The list contains numerous items, such as spare parts, 
transportation, and insurance, which cannot be considered to be 
consumed in the production of bulk honey. In our supplemental 
questionnaire, we asked the GOA to explain how it was determined that 
each of the costs listed for the representative producer, acopiador, 
and exporter could be considered to be inputs consumed in the 
production of bulk honey. In its supplemental questionnaire response, 
the GOA offered descriptions of eight general cost categories found at 
the producer level. The GOA did not explain or substantiate how it was 
determined that each of the costs listed for the representative 
producer, acopiador, and exporter could be considered to be inputs 
consumed in the production of bulk honey.
    We also examined whether the listed taxes paid on the listed inputs 
were accurately characterized as ``indirect taxes'' paid on inputs 
consumed in the production of bulk honey. Some of the taxes in the 
report were described as Real Estate Tax, Minimum Prospective Income 
Tax, and Tax on Debt. In our supplemental questionnaire, we asked the 
GOA to explain how it was determined that each of the taxes listed for 
the representative producer, acopiador, and exporter in its report 
could be considered to be indirect taxes paid to be inputs consumed in 
the production of bulk honey. In its supplemental questionnaire 
response, the GOA simply made the conclusory statements that its report 
only considered indirect taxes and did not explain how it determined 
that each of the taxes listed for the representative producer, 
acopiador, and exporter in the report could be considered to be 
indirect taxes paid on inputs consumed in the production of bulk honey.
    Furthermore, the report did not list any additional inputs or 
indirect taxes incurred in the production of processed honey. 
Accordingly, based on our analysis of the report and other information 
submitted by the GOA, the Department preliminarily determines, pursuant 
to Sec. 351.518(a)(4)(ii) of the regulations, that the GOA has not 
carried out a ``reasonable examination'' of actual inputs involved to 
confirm which inputs are consumed in the production of exported bulk 
and processed honey, in what amounts, and which indirect taxes are 
imposed on those inputs. As such, the Department preliminarily 
determines that the entire amount of the Reintegro for bulk and 
processed honey confers a countervailable benefit.
    Because we find the entire amount of the Reintegro for bulk and 
processed honey to be countervailable, we need not address the 
Reintegro's countervailablity under Sec. 351.518(a)(2) of the 
Department's regulations.
    Because the Reintegro is calculated as a percentage of the FOB 
value of the exports, the percentage rebated serves as the subsidy 
rate. To calculate a single subsidy rate for subject merchandise, which 
includes both bulk and processed honey, we weight-averaged the 
Reintegro rates for bulk and processed honey by the FOB value of 
exports to the United States of bulk and processed honey during the 
POI. Thus, we preliminarily determine that Reintegro provided a 
countervailable subsidy of 4.16 percent ad valorem.
    In April 2000, the Reintegro rates for bulk and processed honey 
changed. These changes affected all firms that export subject 
merchandise and were effectuated by a change in the rebate schedule of 
the existing decree. These changes constitute program-wide changes in 
accordance with Sec. 351.526(b)(1-2) of the regulations. Therefore, 
consistent with Sec. 351.526(c)(1), for the purposes of establishing 
the cash deposit rate of estimated countervailing duties we have 
weight-averaged the Reintegro rates currently in effect (5.4 percent 
for bulk honey and 12 percent for processed honey) by the FOB value of 
exports of bulk and processed honey to the United States during the 
POI. The cash deposit rate applicable to this program is 5.48 percent 
ad valorem.
2. BNA Pre-Financing of Exports Regime for the Agriculture Sector
    According to the questionnaire responses, the Pre-Financing of 
Exports Regime for the Agriculture Sector program was established by 
the Banco de la Nacion de Argentina (BNA), a government-owned bank. In 
our notice of initiation, we identified this program as Law 24,467 
Short- and Long-term Export Financing based on petitioners' allegation 
and supporting documentation which indicated that such assistance was 
either being provided pursuant to Law 24,467, or that companies meeting 
the criteria in Law 24,467 were eligible for such assistance. In its 
questionnaire response, the Government of Argentina clarified that Law 
24,467 is the Argentine law pertaining to small and medium-sized 
companies (PYMES). The GOA explained that only a few programs are 
explicitly provided for in Law 24,467 and that there have been 
budgetary constraints in fulfilling the legislative intent of the law. 
Therefore, ``. . . mechanisms which predated Law 24, 467 and which were 
already in place have been used to show some progress toward the goal 
of helping the small and

[[Page 14527]]

medium-sized companies in Argentina.'' (Questionnaire Response at 24). 
As such, assistance has been provided through other programs to fulfill 
the goal of Law 24,467 to assist small and medium-sized companies. 
Therefore, for certain programs identified as Law 24,467 programs in 
the notice of initiation, the GOA has identified the correct 
legislative or authorizing authority for the program, and clarified the 
title of the program. As reported in the questionnaire response, this 
program, the BNA Pre-Financing of Exports Regime for the Agriculture 
Sector, was established pursuant to Annex B to the BNA Circular No. 
10715/I.
    This line of credit is offered by BNA to final exporters, for the 
financing of agricultural exports. In addition to fulfilling the 
standard application process for seeking a loan before the BNA, the BNA 
requires all applicants to submit an irrevocable letter of credit 
opened to his/her order, or, in the alternative, a firm offer or firm 
purchase order stating the terms and conditions of the export 
transaction, or a confirmation obtained from the intervening broker. 
This line of credit is offered in U.S. dollars, at a variable interest 
rate tied to LIBOR plus a spread added by the BNA. The additional 
spread is calculated based on the credit risk of the borrower, as 
determined on a case-by-case basis by the BNA. Financing under this 
line of credit is available for up to 80 percent of the FOB value of 
the export goods. Financing can be granted for a maximum period of 180 
days. During the POI, there were loans outstanding to honey exporters 
under this program.
    We preliminarily determine that these lines of credit are specific 
within the meaning of section 771(5A)(B) of the Act because they are 
contingent upon export performance. Furthermore, a financial 
contribution is conferred in the transfer of funds through loans, under 
section 771(5)(D) of the Act.
    To determine whether there is a benefit, we compared the interest 
rate charged on loans provided under this program to the commercial 
interest rates for loans that most closely resemble loans under this 
program. Based on this comparison, there is a difference in the amount 
the recipient of the loan pays and the amount the recipient would pay 
on a comparable commercial loan that the recipient could actually 
obtain on the market. Thus, these lines of credit provide a benefit 
under section 771(5)(E) of the Act.
    The GOA reported that there were five loans granted under this 
program to honey producers that were outstanding during the POI. Two of 
the loans were shown to have been for honey exports to a country other 
than the United States; two of the loans were shown to have been for 
honey exports to the United States; and, for the fifth loan, the GOA 
did not indicate the destination of the export shipment financed. Thus, 
in addition to the two loans specifically identified as providing 
financing for shipments to the United States, and because it appears 
that BNA loan records must contain information on the destination of 
the fifth loan, we have assumed adversely that the fifth loan also 
provided financing for honey shipments to the United States. The GOA 
reported all of the relevant loan information for these loans.
    To calculate the benefit, we applied our standard short-term loan 
methodology, multiplying the difference between the actual interest 
rate and the benchmark interest rate by the loan principal amount and 
the number of days outstanding. We then divided the sum of the benefits 
from all loans by the value of honey exports to the United States 
during the POI. We thus preliminarily determine the countervailable 
subsidy for this program to be 0.044 percent ad valorem.
3. BNA Financing for the Acquisition of Goods of Argentine Origin
    According to the questionnaire responses, the BNA established a 
line of credit for financing the acquisition of goods of Argentine 
origin for the agricultural sector. In our notice of initiation, this 
program was identified as the Law 24,467 Line of Credit for the 
Acquisition of New Capital Goods of Argentine Origin. However, the GOA 
has reported that this program is a BNA program for Financing the 
Acquisition of Goods of Argentine Origin. (See discussion of alleged 
Law 24,467 programs under the ``BNA Pre-Financing of Exports Regime for 
the Agricultural Sector'' above).
    Under this program, the goods financed must be of Argentine origin, 
or must have a maximum foreign component of 40 percent. The financing 
is provided for up to five years, is limited to 80 percent of the 
purchase price, excluding VAT, and cannot exceed US$500,000 per 
borrower. The applicable interest rate is 11 percent. The BNA also 
charges an administration of guarantees fee for all investment and 
working capital loans offered for 90 days or more, which are secured 
with a mortgage, warrant, assignment of credit, third party surety 
bond, or a security interest in personal property.
    A program that is contingent upon the use of domestic goods over 
imported goods, ``alone, or as 1 of 2 or more conditions,'' is an 
import substitution subsidy under section 771(5A)(C) of the Act. 
Because the goods for which financing is requested under this program 
must be of Argentine origin, or must have a maximum foreign component 
of 40 percent, we preliminarily determine that under section 771(5A)(C) 
of the Act, the BNA Line of Credit for the Acquisition of New Capital 
Goods of Argentine Origin is specific as an import substitution 
subsidy.
    Loans under this program provide a financial contribution under 
section 771(5)(D) of the Act in the form of a transfer of funds. To 
determine whether there is a benefit, we compared the interest rate 
charged on loans provided under this program to the commercial interest 
rate for loans that most closely resemble loans under this program. 
Based on this comparison, there is a difference in 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. Thus, this line of credit provides a 
benefit under section 771(5)(E) of the Act.
    To calculate the benefit, we used the following methodology. 
Because the GOA did not provide requested information regarding the 
specific loans to honey producers granted under this program that were 
outstanding during the POI, or information showing the aggregate value 
of loans outstanding to the honey industry under this program during 
the POI, we had to estimate, from other information on the record, the 
amount of loans to the honey industry that were outstanding during the 
POI under this program.
    In the 1999 BNA annual report provided by the GOA, there is data 
showing the balance of all BNA lending (regardless of program) to the 
agricultural sector for the years ending December 31, 1998 and 1999. 
Absent any other information on the record, we have used this 
information to calculate a proxy for the loans provided to honey 
producers under this program. First, we determined the ratio of the 
value of honey production during the POI to the value of total 
Argentine agricultural production during the POI, based on information 
provided in the questionnaire responses. We have multiplied this ratio 
by the average balance of total loans outstanding to the agriculture 
sector during the POI (calculated by averaging the two year-end loan 
balance amounts) to estimate the average outstanding loan balance for 
all BNA lending to the honey sector.

[[Page 14528]]

    Because this figure represents the total of all BNA lending to 
honey producers and because there are multiple BNA loan programs under 
investigation, we had to adjust this figure to derive the outstanding 
loan balance during the POI for loans to the honey industry under this 
program. First, because actual loan information was submitted for all 
loans provided to honey under the ``BNA Pre-Financing of Exports Regime 
for the Agriculture Sector,'' we subtracted that amount from the total 
amount that we calculated for all BNA loans outstanding to honey during 
the POI. The balance was then divided by the remaining number of BNA 
loan programs under investigation in order to estimate the outstanding 
loan balance from this particular BNA program.
    Because these are long-term loans, the benefit is calculated by 
multiplying the outstanding loan balance during the POI by the 
difference between the interest rate charged under the program and the 
benchmark interest rate in accordance with section 351.505(c) of the 
regulations. We then divided this amount by the value of total honey 
production in Argentina during the POI. We thus preliminarily determine 
the countervailable subsidy from this program to be 0.173 percent ad 
valorem.
4. Regional Productive Revitalization: National Program for the 
Promotion and Development of Local Productive Initiative (Dinamizacion 
Productiva Regional Nacional de Promocion y Fomenta de la Iniciativa 
Productiva Local)
    According to the questionnaire responses, the GOA established the 
Regional Productive Revitalization: National Program for the Promotion 
and Development of Local Productive Initiative (Regional Productive 
Revitalization Program) to strengthen the economies of small and 
medium-sized towns in the Argentine interior. In our notice of 
initiation, we identified this program as Law 24,467 Program for the 
Enhancement of Regional Production. (See discussion of alleged Law 
24,467 programs under the ``BNA Pre-Financing of Exports Regime for the 
Agricultural Sector'' above). As reported in the questionnaire 
response, the Regional Productive Revitalization program was 
established by the Ministry of the Interior to improve the quality of 
life in small and medium-sized towns in the Argentine interior, and 
increase employment and incomes in these areas through the 
transformation and modernization of the local productive base. 
Individual projects are not eligible for this line of credit; only 
collective projects, involving three to five producers associated with 
the development of the project, are eligible. Eligibility is also 
contingent upon a two-year residency requirement in the area where the 
project is to be developed. The associated producers must also provide 
a guarantee covering 130 percent of the loan. The program provides 
credit for the acquisition of capital goods, technology, working 
capital, training needs, and technical assistance.
    There are two levels of loans under this line of credit. The first 
level provides loans for municipal projects based in a single 
municipality for financing up to $200,000. The second level provides 
credit for inter-municipal projects that are based in more than one 
municipality. These projects are eligible for financing up to 
$1,000,000. These loans are granted at 8.0 percent interest, for a 
period of up to five years, with a grace period of up to 18 months. 
Interest accrues and is payable after the expiration of the grace 
period. There were loans to honey projects under this program 
outstanding during the POI.
    We preliminarily determine this program to be specific under 
section 771(5A)(D) of the Act because the program is limited to only 
certain regions of Argentina. Enterprises or industries located within 
the provincial capitals are not eligible for use of this program. This 
program is therefore de jure regionally specific. This program provides 
a financial contribution in the form of a transfer of funds, as defined 
by section 771(D)(i) of the Act. To determine whether there is a 
benefit, we compared the interest rate charged on loans provided under 
this program to the commercial interest rates for loans that most 
closely resemble loans under this program. Because there is a 
difference in the amount the recipient of the loan paid on the loan and 
the amount the recipient would have paid on a comparable commercial 
loan during the POI, this line of credit provided a benefit during the 
POI under section 771(5)(E) of the Act.
    The GOA reported that there were two loans outstanding to honey 
producers during the POI. The GOA did not report the dates that these 
loans were granted, or whether any interest or principal payments were 
made prior to or during the POI. Thus, we have made certain assumptions 
regarding the specifics of these loans in order to calculate the 
benefit: we assume that the loans were granted on January 1, 1999 and 
that during the POI, the loans are in the 18-month grace period on 
principal and interest repayment and the entire loan principal is 
outstanding during the POI. However, since interest is accruing during 
the grace period and will be payable thereafter, we have calculated the 
benefit by multiplying the principal outstanding during the POI by the 
difference between the loan interest rate and the benchmark interest 
rate. We then divided this benefit by the value of honey production in 
Argentina during the POI. Thus we preliminarily determine the 
countervailable subsidy from this program to be 0.055 percent ad 
valorem.
5. BNA Warrant-Based Export Financing
    In our notice of initiation, we identified this program as 
Preferential Export Financing Based on Warrants based on petitioners' 
allegation and the supporting documentation which indicated that 
preferential financing was administered pursuant to Law 9643 and 
contingent upon export performance.
    According to the questionnaire responses, the warrant is a 
financing instrument that was created by Law 9643/14 in 1914 to secure 
commercial lending transactions. A warrant and a certificate of deposit 
can be issued upon the storage of products in a certified warehouse, 
under certain conditions. Both the certificate of deposit and the 
warrant are negotiable instruments. The certificate of deposit is a 
legal title to the stored goods. A warrant is a financing instrument 
attached to the certificate of deposit, which may be used to secure 
commercial financing. Once detached from the certificate of deposit, 
the warrant can be pledged as collateral, thereby perfecting a security 
interest in the stored goods. A warrant can be pledged as collateral 
for a financing transaction if the owner of the instrument endorses it 
to the lending institution.
    The GOA reported that the Argentine Small Business Association (the 
SePYME) has no substantive responsibility or regulatory authority over 
warrant-based financing and there is no specific warrant-based program 
in Argentina. However, the GOA indicated that the BNA, like other 
banks, offers warrant-based financing for a maximum term of 180 days. 
Furthermore, Law 9643 specifically indicates that warrant-based 
financing can be used as a form of export prefinancing. With no other 
information on the record to examine BNA's Warrant-Based financing, we 
preliminarily determine on the basis of facts available that the BNA 
provides warrant-based financing for export purposes.
    The BNA Warrant-Based Export Financing program is a de jure 
specific export subsidy pursuant to section 771(5A)(B). These lines of 
credit

[[Page 14529]]

provide a financial contribution within the meaning of section 
771(5)(D)(i) of the Act because they are in the form of a transfer of 
funds from the government.
    To determine whether there is a benefit, we compared the interest 
rate charged on loans provided under this program to the commercial 
interest rates for loans that most closely resemble loans under this 
program. Based on this comparison, there is a difference in 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. Thus, this line of credit provides a 
benefit under section 771(5)(E) of the Act.
    To calculate the benefit, we used the following methodology. 
Because the GOA did not provide information regarding the specific 
loans to honey producers granted under this program that were 
outstanding during the POI, or information showing the aggregate value 
of loans outstanding to the honey industry under this program during 
the POI, we had to derive, from other information on the record, the 
amount of loans to the honey industry that were outstanding during the 
POI under this program. Our methodology to derive the amount of loans 
to the honey industry that were outstanding during the POI from this 
BNA program is set forth in detail in the section on ``BNA Financing 
for the Acquisition of Goods of Argentine Origin'' above. After 
calculating the loans outstanding to the honey industry during the POI 
under this BNA program, we multiplied that amount by the difference 
between the benchmark and the program interest rate.
    Because these are short-term loans, the product of the prior 
calculation is multiplied by the number of days the loan is outstanding 
divided by 365 days. We have assumed that these loans were outstanding 
for 180 days, the maximum term available for warrant-based financing. 
Because this program provides export financing, we then divided this 
amount by the total value of honey exports during the POI. We thus 
preliminarily determine the countervailable subsidy from this program 
to be 0.153 percent ad valorem.
6. Fundacion Export*Ar
    The GOA's Fundacion Export*Ar (Export*Ar) program was established 
in 1995. Though it was originally funded through the United Nations 
Development Program (UNDP), the Argentine Foreign Ministry was the 
source of all funds provided during the POI. Export*Ar's objective is 
the promotion of Argentine exports. To achieve this objective, the 
program provides advice to small and medium-sized businesses, supplies 
information on international markets and purchasers, and organizes 
participation in trade missions, fairs, seminars and meetings. 
According to the GOA, all information services provided under Export*Ar 
are offered free of charge. Only participants in trade fairs must pay 
for their participation. Such participants must pay all costs 
associated with their participation, along with at least fifty percent 
of the cost of their stand. Export*Ar will pay the remainder of the 
stand cost.
    According to the questionnaire responses, during the POI, general 
export promotion information, in the form of profiles and studies of 
potential markets, and reports on trade opportunities, was made 
available to members of the honey industry by Export*Ar. The honey 
sector also participated in one Export*Ar-sponsored overseas trade show 
during the POI. This trade show was held in the United States. 
Export*Ar provided a grant to the honey sector participant in that 
trade show to help offset the cost of that participant's exhibit stand.
    Under Sec. 351.514 of the regulations, general export promotion 
activities undertaken by the government are not countervailable if the 
activities consist of general informational activities that do not 
promote particular products over others. See, e.g., Fresh Cut Flowers 
from Mexico, 49 FR 15007 (1984). However, where such activities 
provided financial assistance to a firm, the Department has found the 
subject programs to be countervailable. See, e.g., Fresh Atlantic 
Salmon from Chile, 63 FR 31437 (1998); and Fresh Atlantic Groundfish 
from Canada, 51 FR 10041 (1986) (government funding of attendance at 
trade fair which targeted the exports of specific product to the U.S. 
market found to be countervailable); and Fresh Cut Flowers from Israel, 
52 FR 3316 (1987) (government reimbursements of up to 50 percent of 
actual expenses incurred by the firm for promotional activities found 
to be countervailable).
    Based on the information provided in the questionnaire responses, 
we preliminarily determine that the information services provided by 
Export*Ar on countries and markets and trade opportunities constitute 
general export promotion activities, and, as such are not 
countervailable in accordance with Sec. 351.514 of the regulations. 
However, with regard to the financial assistance provided to honey 
producers/exporters during the POI to attend an overseas trade fair, we 
preliminarily determine that such financial assistance is not part of 
general export promotion activities, and is thus, countervailable 
within the meaning of section 771(5) of the Act. The financial 
assistance that was provided during the POI covered the costs 
associated with a stand at a trade fair in the United States. This 
financial contribution provides a benefit equivalent to the amount of 
the grant. The grants are also specific within the meaning of section 
771(5A)(B) of the Act because their receipt is tied to the anticipated 
exportation of honey to the United States.
    To calculate the subsidy, we divided the amount of the grant 
received during the POI by the value of honey exports to the United 
States during the POI. We preliminarily determine the countervailable 
subsidy for this program is 0.008 percent ad valorem.
7. Line of Credit for the Acquisition of Industrial and Agricultural 
Machinery, Silos and Transportation Vehicles
    According to the questionnaire responses, the BNA established a 
line of credit for the Acquisition of Industrial and Agricultural 
Machinery, Silos and Transportation Vehicles in 1996. In our notice of 
initiation, we identified this program as Law 24,467 Additional Lines 
of Credit to Foment the Purchase of Capital Goods of Argentine Origin. 
As reported in the questionnaire response, the ``Acquisition of 
Industrial and Agricultural Machinery, Silos and Transportation 
Vehicles'' is not a Law 24,467 program, but rather a BNA program. (See 
discussion of alleged Law 24,467 programs under the ``BNA Pre-Financing 
of Exports Regime for the Agricultural Sector'' above).
    Through this program, BNA aims to assist companies in the 
industrial, commercial, services, transportation, and agricultural 
sectors by providing financing for the purchase of capital goods of 
Argentine origin or of goods that have a maximum foreign component of 
40 percent. To receive financing, the BNA requires all applicants to 
submit a pro-forma invoice indicating that the merchandise is of 
Argentine origin or has a maximum foreign component of 40 percent. Loan 
applications are evaluated by the standard criteria of creditworthiness 
established by the Argentine Central Bank, set forth by Circular No. 
2180.
    Under this line of credit, financing is limited to up to 75 percent 
of the purchase value, excluding the VAT, and must not exceed US 
$500,000 per application. Interest rates under this line of credit vary 
based on industry. Generally, the applicable interest rate for 
agricultural loans is 14.5 percent. Approved loans under this line of 
credit

[[Page 14530]]

are subject to an ``administration of guarantees'' fee, and a fee for 
the evaluation of investment projects. Repayments for the agricultural 
sector are amortized in equal installments, quarterly or biannually, 
based on the seasonal activity of the borrower. The repayment period is 
not to exceed five years.
    We preliminarily determine that the Acquisition of Industrial and 
Agricultural Machinery, Silos and Transportation Vehicles line of 
credit is specific because it is an import substitution subsidy within 
the meaning of section 771(5A)(C) of the Act. This line of credit also 
provides a financial contribution under section 771(5)(D)(i) of the Act 
because the loans are a transfer of funds from the GOA.
    To determine whether there is a benefit, we compared the interest 
rate charged on loans provided under this program to the commercial 
interest rates for loans that most closely resemble loans under this 
program. Based on this comparison, there is a difference in 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. Thus, this line of credit provides a 
benefit under section 771(5)(E)(ii) of the Act.
    To calculate the benefit, we used the following methodology. 
Because the GOA did not provide requested information regarding the 
specific loans to honey producers granted under this program that were 
outstanding during the POI, or information showing the aggregate value 
of loans outstanding to the honey industry under this program during 
the POI, we had to derive, from other information on the record, the 
amount of loans to the honey industry that were outstanding during the 
POI under this program. Our methodology to derive the amount of loans 
to the honey industry that was outstanding during the POI from this BNA 
program is set forth in detail in the section on ``BNA Financing for 
the Acquisition of Goods of Argentine Origin'' above. After calculating 
the loan balance outstanding to the honey industry during the POI under 
this BNA program, we multiplied that amount by the difference between 
the benchmark and the program interest rate. We then divided this 
amount by the value of total honey production in Argentina during the 
POI. We thus preliminarily determine the countervailable subsidy from 
this program to be 0.027 percent ad valorem.
8. PROAPI
    According to the questionnaire responses, the GOA established 
PROAPI as a project for honey sector research, development and 
technology transfer. In our notice of initiation, we identified this 
program as ``PROMEX/PROAPI Development Plan for the Enhanced 
Exportation of Honey'' based on petitioners' allegation and supporting 
documentation indicating that the aforementioned assistance was being 
provided under a program partially coordinated by PROMEX. According to 
the GOA, PROMEX is a separate export promotion program. PROAPI is not 
an export promotion program.
    PROAPI was created by the National Institute for Agricultural and 
Livestock Technology (INTA) in 1995, and was initially funded by both 
INTA and the Argentine Technology Fund (FONTAR), an IDB-funded project. 
FONTAR provided a loan to PROAPI through the BNA, while INTA supplied 
an equivalent amount of in-kind services, equipment and overhead 
expenses.
    According to the GOA, PROAPI has been self-sustaining since 1998, 
and now finances itself entirely through the sale of goods and services 
produced from the project. These goods and services are reportedly sold 
at market rates. Furthermore, according to the GOA, the terms of the 
IDB/FONTAR loan initially funding PROAPI require that PROAPI achieve a 
twelve percent rate of return, and that, because of this, PROAPI must 
make returns on sales greater than its costs.
    The goods provided to honey producers under PROAPI during the POI 
were fertilized queen bees and a disease control product called 
``BeeVar.'' The services provided during the POI were inspection and 
certification services for live beehive materials and sponsorship for 
trade fairs. However, when PROAPI sponsored trade fairs, it did so in 
name only; PROAPI did not provide benefits to individual trade fair 
participants or groups. According to the GOA, PROAPI is the only 
Argentine supplier of BeeVar, and of inspection and certification 
services for live beehive material.
    On November 22, 2000, the GOA claimed green box status for the 
PROAPI program. According to the GOA, PROAPI is a general services 
program which qualifies for green box status under paragraphs 2(c), 
(d), and (f) of Annex 2 of the Agriculture Agreement. In order to 
determine whether the assistance provided under PROAPI qualifies for 
green box status under section 771(5B)(F) of the Act, we examined 
whether PROAPI met the criteria set forth in the Agriculture Agreement. 
As noted in the ``Green Box Claims'' section above, according to 
Sec. 351.522 of the regulations, the Department will determine that a 
particular domestic support measure conforms fully to the green box 
criteria in the Agriculture Agreement if it finds that the measure (1) 
is provided through a publicly-funded program (including government 
revenue foregone) not involving transfers from consumers; (2) does not 
have the effect of providing price support to producers; and (3) meets 
the relevant policy-specific criteria and conditions laid out in Annex 
2.
    With regard to the first criterion of Sec. 351.522, the GOA 
indicated that all monies used to initially fund this program came 
directly from public sources (i.e., INTA and FONTAR). As for the second 
criterion of Sec. 351.522, the GOA claimed that PROAPI does not have 
the effect of providing price support to producers, and is not tied in 
any manner to international or domestic prices. According to the GOA, 
producers must pay fees for all goods and services provided to them 
under this program. As for the third criterion of Sec. 351.522, because 
the GOA claimed green box status for this program under paragraphs 1 
and 2 of Annex 2, the assistance provided under PROAPI must meet the 
policy-specific conditions and criteria contained in those paragraphs.
    According to paragraph 1 of Annex 2, domestic support measures for 
which exemption from the reduction commitments is claimed must meet the 
fundamental requirement that they have no, or at most minimal, trade-
distorting effects or effects on production. The support in question 
must be provided through a publicly-funded government program not 
involving transfers from consumers. Furthermore, the support in 
question must not have the effect of providing price support to 
producers. In this case, as noted above, the GOA has reported that 
support under this program is provided through a publicly-funded 
government program not involving transfers from consumers. The GOA also 
reported that support provided under PROAPI is not tied in any manner 
to production or prices, and, in conjunction with the fact that users 
pay for the services provided under the program, could therefore not 
have trade-distorting effects or effects on production. Finally, the 
GOA has claimed that, since PROAPI is self-sustaining from fees paid by 
users of the program's services, these users do not receive any price 
support from the program.
    According to paragraph 2 of Annex 2, government service programs 
for which exemption from the reduction commitments is claimed shall not

[[Page 14531]]

involve direct payments to producers or processors. These general 
service programs must meet both the general criteria in paragraph 1 of 
Annex 2 and the relevant policy-specific conditions set forth in 
paragraph 2. Although the GOA has argued that the entire PROAPI program 
meets the requirements for green box treatment, there are different and 
distinct types of assistance provided under PROAPI. Because there are 
different types of assistance, we must examine each one to determine 
whether it meets the green box requirements for domestic support 
measures.
    With regard to inspection and certification services, the GOA 
reported that users pay for the inspection and certification services 
and receive no direct payments under the PROAPI program. In addition, 
the PROAPI inspection and certification services appear to conform to 
the policy-specific conditions set out in paragraph 2(e) of Annex 2. 
Although the GOA did not claim green box status under paragraph 2(e) 
specifically, paragraph 2 states that general service programs include, 
but are not restricted to, the services discussed in the illustrative 
list of subparagraphs (a) through (g). As this is an illustrative list, 
we may analyze the potential green box status of the support components 
of a program by considering all of the policy-specific conditions 
listed in paragraph 2. Thus, since the PROAPI inspection and 
certification services appear to conform to the policy-specific 
conditions set out in paragraph 2(e) of Annex 2, we preliminarily 
determine that the inspection and certification services component of 
PROAPI is entitled to green box status under section 771(5B)(F) of the 
Act.
    The second type of assistance provided under PROAPI involves the 
sale of BeeVar, a disease control product, to honey producers. PROAPI 
is the only supplier of this product in Argentina. The GOA submitted 
proprietary information on the costs and sales prices charged by PROAPI 
for the BeeVar provided during the POI. Paragraph 2 of Annex 2 states 
that green box status may be granted to certain programs which ``. . . 
provide services or benefits to agriculture or the rural community'' 
(emphasis added). It is not clear whether goods could be considered 
``benefits'' for purposes of government services programs under the 
Agreement. However, we need not reach that issue if we determine that 
the assistance in question is otherwise non-countervailable based on 
the statutory provisions.
    With respect to the provision of goods, section 771(5)(E) of the 
Act provides that a benefit is conferred where goods or services are 
provided for less than adequate remuneration. In accordance with 
Sec. 351.511(a)(2)(i) of the regulations, the adequacy of such 
remuneration is determined in relation to prevailing market conditions 
for the goods or services in the country which is subject to the 
investigation. Prevailing market conditions include price, quantity, 
availability, and other conditions of purchase. Under section 
351.511(a)(2)(ii) of the regulations, if there is no usable market-
determined price with which to make the comparison, we will seek to 
measure the adequacy of remuneration by comparing the government price 
to a world market price where it is reasonable to conclude that such a 
price would be available to purchasers in the country in question. 
Pursuant to Sec. 351.511(a)(2)(iii) of the regulations, if there is no 
world market price available to purchasers in the country in question, 
the Secretary will normally measure the adequacy of remuneration by 
assessing whether the government price is consistent with market 
principles. Based on our analysis of the proprietary data provided by 
the GOA, we preliminarily determine that the sales prices set by PROAPI 
for BeeVar were consistent with market principles, and, as such, that 
PROAPI received adequate remuneration for the sale of BeeVar. Because 
we have determined that BeeVar is not provided for less than adequate 
remuneration, and, this element of the PROAPI program is not 
countervailable, we need not reach the issue of whether a good can be 
considered a ``benefit'' under the Agreement.
    The third type of assistance provided under PROAPI involves the 
sale of fertilized queen bees. As discussed above with respect to 
BeeVar, even if goods could be considered ``benefits'' under paragraph 
2 of Annex 2 of the Agreement, such benefits must meet the policy-
specific conditions set forth in subparagraphs (a) through (g). Based 
upon our review, nothing in any of these paragraphs should be construed 
to cover the provision of a key component in the production of a 
specific product. The provision of a good, such as fertilized queen 
bees, involved in the production of honey, cannot be considered to be 
research (subparagraph a), pest and disease control (subparagraph b), 
training (subparagraph c), extension and advisory services 
(subparagraph d), inspection services (subparagraph e), marketing and 
promotion services (subparagraph f), or infrastructural services 
(subparagraph g). Accordingly, we preliminarily determine that the 
provision of fertilized queen bees cannot meet the green box 
requirements set forth in Annex 2, and we have analyzed whether the 
provision of queen bees is countervailable under the countervailing 
duty statute.
    The provision of fertilized queen bees under PROAPI is specific to 
the honey industry pursuant to section 771(5A)(D)(iii) of the Act. The 
provision of fertilized queen bees provides honey producers with a 
financial contribution through the provision of goods and services 
under section 771(5)(D)(iii) of the Act.
    As noted above, section 771(5)(E) of the Act provides that in the 
case of goods or services provided, a benefit is conferred where such 
goods and services are provided for less than adequate remuneration. 
The GOA did not provide information related to what factors affect 
market prices for fertilized queen bees, and how such factors apply to 
PROAPI's fertilized queen bees. However, the GOA did provide what are 
described as market prices in Argentina for fertilized queen bees. 
Since the average of the market prices reported by the GOA is higher 
than the price charged by PROAPI for fertilized queen bees, we 
preliminarily determine that the fertilized queen bees are sold by 
PROAPI for less than adequate remuneration in accordance with section 
771(5)(E)(iv) of the Act. We calculated the benefit by subtracting the 
price PROAPI charged for its queen bees from the average market price. 
We divided this amount by the value of honey production in Argentina 
during the POI. We preliminarily determine the countervailable subsidy 
for this component of the PROAPI program to be 0.004 percent ad 
valorem.

B. Provincial Government Programs

1. Buenos Aires Honey Program
    In 1996, the Province of Buenos Aires created the Buenos Aires 
(Bonaerense) Honey Program. The purpose of this program is to increase 
provincial honey production, and improve production efficiency and 
quality within the province's honey sector. Through the program, the 
Banco de la Provincia de Buenos Aires (Banco Provincia), a bank owned 
by the Province of Buenos Aires, provides two types of credit lines to 
honey producers in the province: the Line of Credit for Working 
Capital; and the Line of Credit for the Acquisition of Capital Goods. 
Eligibility for both credit lines requires honey producers to be

[[Page 14532]]

registered in the Province's Registry of Honey Producers.
    a. Line of Credit for Working Capital. The Line of Credit for 
Working Capital enables beekeepers to finance their operating expenses. 
There are two elements of this line of credit. The first element offers 
US$15.00 per active producing beehive with no limit on the number of 
beehives. The term for repayment of the loan may not exceed nine months 
from the date of the loan. The principal and accrued interest are 
payable at the expiration of the repayment term. This line of credit 
also allows pre-production cash advances for the purpose of acquiring 
inert material for beehives. Financing in this case is limited to 50 
percent of the value of the assets to be acquired, not exceeding US$30 
per beehive. Repayment for cash advances must be made within 90 days of 
the date of the disbursement. The interest rates applied to this 
element are variable.
    The second element of this line of credit provides that, if 
applicants demonstrate that the honey is for exportation, they can 
receive a lower interest rate. To receive the lower interest rate, 
beekeepers must submit a commitment letter stating that the honey 
obtained from the beehives for which financing is requested has been 
sold for export, and a letter issued by the purchaser of the honey 
indicating that it was acquired for export purposes. Loans under the 
first element of this line of credit for working capital are de jure 
specific under section 771(5A)(D)(i) of the Act because they are 
limited to honey producers. Loans under the second element constitute 
export subsidies under section 771(5A)(B) because receipt of the lower 
interest rate is contingent upon exportation. For both elements of this 
line of credit, a financial contribution is conferred in the transfer 
of funds through loans, under section 771(5)(D)(i) of the Act.
    To determine whether there is a benefit, we compared the interest 
rate charged on loans provided under this program to the commercial 
interest rates for loans that most closely resemble loans under this 
program. Based on this comparison, there is a difference in 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. Thus, this line of credit provides a 
benefit under section 771(5)(E)(ii) of the Act.
    To determine the benefit for those loans provided for exports, we 
multiplied the loan balance outstanding during the POI by the 
difference between the interest rate and the benchmark, and the number 
of days outstanding during the POI. We divided this amount by the value 
of honey exports from Buenos Aires. To determine the final subsidy that 
is attributable to exports of honey to the United States from this 
provincial program, we weight-averaged the subsidy from this program by 
multiplying the subsidy by the Province of Buenos Aires' share of total 
honey exports to the United States during the POI. We thus 
preliminarily determine the countervailable subsidy from this line of 
credit to be 0.002 percent ad valorem.
    To determine the benefit from all other loans under the honey-
specific element of this line of credit, we multiplied the balance 
outstanding during the POI by the difference between the interest rate 
and the benchmark, and the number of days outstanding during the POI. 
We divided this amount by the value of honey production in Buenos Aires 
during the POI, and then weight-averaged this rate by multiplying it by 
Buenos Aires' share of total exports of honey to the United States. We 
thus preliminarily determine the countervailable subsidy from this line 
of credit to be 0.012 percent ad valorem.
    b. Line of Credit for the Acquisition of Capital Goods. The Line of 
Credit for the Acquisition of Capital Goods under the Buenos Aires 
Honey Program extends a line of credit for the acquisition of capital 
goods to beekeepers in the Province of Buenos Aires. This line of 
credit was implemented by the Banco Provincia through Circular ``A'' 
No. 13,854 in July 1997, pursuant to an agreement between the Banco 
Provincia and Banco de Inversion y Comercio Exterior S.A. (BICE), and 
utilizes funding provided through the BICE Norms 006 and 006/1. The 
BICE is a GOA entity which functions as a ``second-tier'' bank, lending 
money to other banks (both commercial and other government-owned or 
controlled banks) for the purpose of implementing government lending 
programs.
    Beekeepers are able to finance the acquisition of capital goods and 
are eligible to receive financing for the acquisition of beehives, new 
nuclei, inert material, extraction and processing material, among other 
goods. Applicants must provide a technical-economic proposal to the 
Provincial Ministry of Agriculture, and must meet the standard 
requirements of creditworthiness of the Banco Provincia. Financing for 
this line of credit carries a maximum repayment term of five years. 
Interest and principal payments are scheduled annually or semiannually 
based on the seasonality of honey production. Interest rates are 
variable and are calculated based upon LIBOR, plus a spread imposed by 
the BICE and a spread added by the Banco Provincia. The spreads given 
by both the BICE and Banco Provincia vary depending upon the repayment 
schedule of the loan.
    Because financing under this program is limited to honey producers, 
it is de jure specific within the meaning of section 771(5A)(D)(i) of 
the Act. Furthermore, a financial contribution is conferred in the 
transfer of funds through loans, consistent under section 771(5)(D)(i) 
of the Act. To determine whether there is a benefit, we compared the 
interest rate charged on loans provided under this program to the 
commercial interest rates for loans that most closely resemble loans 
under this program. Based on this comparison, there is a difference in 
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. Thus, this line of 
credit provides a benefit, under section 771(5)(E)(ii) of the Act.
    To calculate the benefit, we have multiplied the outstanding loan 
balance during the POI by the difference between the interest rate 
charged under the program and the benchmark interest rate. We then 
divided this amount by the value of honey production in Buenos Aires 
during the POI. To determine the final subsidy that is attributable to 
exports of honey to the United States from this provincial program, we 
weight-averaged the subsidy from this program by multiplying the 
subsidy by the Province of Buenos Aires' share of total honey export to 
the United States during the POI. We thus preliminarily determine the 
countervailable subsidy from this line of credit to be 0.117 percent ad 
valorem.
2. Entre Rios Honey Program: Law No. 7435/84
    The Entre Rios Honey Program is a provincial honey development 
program originally established in 1984. As detailed in Law No. 7435/84, 
the program was designed to provide a wide range of services and 
support for promoting honey production in the province. However, 
according to the GOA, the only function performed by the Government of 
Entre Rios (GER) pursuant to Law No. 7435/84 is that it puts on 
presentations and exhibitions related to beekeeping activities 
throughout the province. The GOA provided a list of all such 
presentations

[[Page 14533]]

and exhibitions put on during the POI, along with an estimate of the 
average costs and expenses incurred by the GER in preparation of these 
events. According to the GOA, such events are open to the public, free 
of charge. There are no records of attendance at these events.
    The Entre Rios Honey Program is de jure specific pursuant to 
section 771(5A)(D)(iii) of the Act because it is expressly limited in 
the law to the honey industry. It provides honey producers with a 
financial contribution through the provision of services under section 
771(5)(D)(iii) of the Act.
    Section 771(5)(E) of the Act provides that in the case of goods or 
services, a benefit is conferred where such goods and services are 
provided for less than adequate remuneration. The adequacy of such 
remuneration is determined in relation to prevailing market conditions 
for the goods or services in the country which is subject to the 
investigation. Prevailing market conditions include price, quantity, 
availability, and other conditions of purchase. We preliminarily 
determine that the provision of services under the Entre Rios Honey 
Program conferred a benefit to honey producers during the POI under 
section 771(5)(E)(iv) of the Act because all services were provided 
free of charge.
    Because these exhibitions and presentations were provided free of 
charge, and because there are no other providers of similar services, 
there is no basis on which we can measure the benefit from the free 
provision of these services using a market-determined price. Therefore, 
for purposes of this preliminary determination, we are using the total 
of the costs incurred by the GER in preparation of the aforementioned 
exhibitions and presentations during the POI to determine the benefit.
    To calculate the subsidy, we divided the costs incurred during the 
POI by the total value of honey production in Entre Rios during the 
POI. To determine the final subsidy that is attributable to exports of 
honey to the United States from this provincial program, we weight-
averaged the subsidy from this program by multiplying the subsidy by 
the Province of Entre Rios's share of total honey exports to the United 
States during the POI. We thus preliminarily determine the 
countervailable subsidy from this line of credit to be less than 0.001 
percent ad valorem.
3. Province of Chaco Line of Credit Earmarked for the Honey Sector
    According to the questionnaire responses, the Ministry of 
Production in the province of Chaco, through Provincial Law No. 4320, 
issued Decree No. 2076/96 in December 1996, establishing an emergency 
line of credit following a natural disaster that affected the 
agricultural production of the province. Through this decree, the 
Ministry allocated a total of 830,000 pesos specifically to assist the 
affected beekeeping sector. Financing is provided by the Nuevo Banco 
del Chaco S.A. (Chaco Bank), acting as an agent of the Government of 
Chaco Province. Terms and conditions for this line of credit are in 
accordance with Resolution No. 196/96. To be eligible for this line of 
credit, beekeepers must have no outstanding debt with the Provincial 
Government. Each producer can receive a maximum of 10,000 pesos and the 
principal is repayable in four equal annual installments following a 
two-year grace period (interest is payable during the grace period). 
Funding is utilized for the purpose of acquiring capital goods for 
beekeeping activity. The interest rate is 12 percent plus applicable 
taxes. Qualified candidates for this line of credit are also subject to 
a 1.5 percent bank commission over the principal and a 2 percent 
commission to cover administrative expenses related to the loan. 
Additionally, in September 1999, 450,000 pesos was allocated under this 
program in accordance with Resolution No. 253/99, and offered under the 
same loan terms and conditions as described above.
    Because this line of credit was created specifically to assist the 
beekeeping sector of the Province of Chaco, we preliminarily determine 
that it does not meet the provision of the regulations under which 
disaster relief is not countervailable. See 19 CFR 351.502(f). Because 
it is only available to beekeepers, we preliminarily determine that it 
is de jure specific in accordance to section 771(5A)(D)(i) of the Act. 
This line of credit provides a financial contribution because it is a 
transfer of funds in the form of loans within the meaning of section 
771(5)(D)(i) of the Act. To determine whether there is a benefit, we 
compared the interest rate charged on loans provided under this program 
to the commercial interest rates for loans that most closely resemble 
loans under this program. Because these are long-term loans, we 
selected from information provided by the GOA a long-term benchmark 
from 1996 to apply to the 1996 tranche and a long-term benchmark from 
1999 to apply to the 1999 tranche. Based on this comparison, there is a 
difference in the amount the recipient of the loan pays on the loan and 
the amount the recipient would have paid on a comparable commercial 
loan that the recipient could have actually obtained on the market. 
Thus, this line of credit is providing a benefit, under section 
771(5)(E)(ii) of the Act.
    For the loans granted pursuant to both the 1996 and 1999 Decrees, 
the GOA provided information about actual loans granted but did not 
indicate the actual principal outstanding during the POI. Thus, we are 
assuming that the entire principal was outstanding during the POI.
    We determined the difference between the program interest rate and 
the benchmark interest rate and multiplied the differential by the loan 
principal outstanding during 1999. We have added the benefits from both 
tranches of loans and divided that amount by total Argentine honey 
production during the POI. (See ``Denominator Issues'' section above.) 
We thus preliminarily determine the countervailable subsidy from this 
line of credit to be 0.029 percent ad valorem.
4. Province of San Luis Honey Development Program
    The San Luis Honey Development Program was created in 1990 by the 
Ministry of Social Development of the Province of San Luis. The purpose 
of the program is to promote honey production in underdeveloped 
geographic areas and to provide training to the citizens of San Luis on 
beekeeping activity. Eligibility for this program targets unemployed 
and under-employed people with little income, and with no access to 
credit. The program provides assistance in two forms: leasing 
agreements, and financing through several types of credit lines.
    a. Leasing Agreements. When the leasing agreement program was 
created, it was carried out in two different stages each governed by a 
contract for rental of hives. The first stage was implemented by 
forming 10 groups of 10 people, all of whom received training. Each 
group received 10 beehives and colonies for five years. In addition, 
each group received equipment for the extraction of the honey produced. 
Repayment for the extraction equipment and beehives was made to the 
Bank of San Luis. The repayment terms for the beehives included 24 
installments over a period of eight years, with a one-year grace 
period. Repayment terms for the extraction equipment involved two 
consecutive equal annual installments. The second stage of the program 
involved forming groups of 10 to 15 people, each of which received 150 
beehives and 50 colonies. The

[[Page 14534]]

repayment terms for this element of the program required 15 quarterly 
payments over the course of five years, with a one-year grace period.
    Because this program is only available to the honey industry in the 
Province of San Luis, we preliminarily determine that under section 
771(5A)(D)(i) of the Act, the leasing agreement section of the San Luis 
Honey Development Program is de jure specific. While the participants 
in this program are required to repay the cost of the materials 
provided to them, there is no interest component involved. Although the 
activity under this program is described as leasing, it appears that 
companies simply receive the goods directly from the supplier and pay 
for them over time rather than borrowing money from a third party. 
However, they paid no interest even though they are allowed to pay for 
the goods over five years. Thus, this program essentially operates as 
an interest-free loan. As such, this program provides a financial 
contribution within the meaning of section 771(5)(D)(i) of the Act and 
it provides a benefit within the meaning of section 771(5)(E)(ii) 
because no interest is charged. The GOA did not provide any information 
on the value of the materials provided under the leasing agreement but 
did report the funding allocated for this program for each year since 
its inception in 1994. Thus, we are assuming that the total funding 
allocated was actually used. We calculated the benefit by treating each 
annual funding allocation as an interest-free loan. We estimated the 
loan balance outstanding during the POI by assuming equal annual 
principal payments, accounting for the grace period on principal 
repayment, and subtracting them from the total loan principal for each 
year the loan was outstanding. We selected as our benchmark a long-term 
interest rate for each of the years funding was allocated. Since the 
loans are interest-free, we multiplied the outstanding principal by the 
benchmark.
    We summed the benefits provided by each year's loan, and divided 
that amount by the value of total Argentine honey production during the 
POI. (See ``Denominator Issues'' section above.) We thus preliminarily 
determine the countervailable subsidy from this line of credit to be 
0.389 percent ad valorem.
    b. CFI Lines of Credit Provided Through the Banco de San Luis. In 
addition to the leasing agreements provided under the San Luis Honey 
Development Program, there are multiple lines of credit made available 
through the Banco de San Luis within the framework of the Federal 
Investment Board (Consejo de Inversiones; CFI) Credit for Small 
Business Ventures program. (See discussion of ``Credit for Small 
Business Ventures'' below). The CFI established four lines of credit 
available to the beekeepers of the province, identified as Lines 600, 
700, 900, and 950. Because these CFI lines of credit are made available 
only to the honey industry in the Province of San Luis, we 
preliminarily determine that under section 771(5A)(D)(i) of the Act, 
these CFI lines of credit are de jure specific. These lines of credit 
provide a financial contribution because they are transfers of funds 
from the GOA in the form of loans within the meaning of section 
771(5)(D)(i) of the Act. To determine whether there is a benefit, we 
compared the interest rate charged on loans under each line of credit 
to a benchmark interest rate. Based on this comparison, there is a 
difference in the amount the recipient 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. Thus, these lines of 
credit provide a benefit under section 771(5)(E)(ii) of the Act. The 
specifics of the four lines of credit are discussed below.
    Funding under Lines of Credit 600 and 700 was available with a nine 
percent interest rate and with a repayment term of either two and a 
half years or four and a half years depending on the purpose of the 
loan. These two lines of credit were terminated in 1994 and 1995, 
respectively. The GOA has provided information for each loan granted 
under these two credit lines. However, the GOA did not provide any 
information, in response to our requests, about the principal balance 
outstanding during the POI. Thus, we have assumed that all loans were 
for a four and a half year term and made in 1995, and thus, principal 
remains outstanding during the POI. We estimated the loan balance 
outstanding during the POI by assuming equal annual principal payments, 
accounting for the grace period on principal repayment, and subtracting 
them from the total loan principal for each year the loan was 
outstanding. We selected as our benchmark a long-term interest rate for 
each of the years funding was allocated. Since the loans are long-term, 
we multiplied the outstanding principal by the difference between the 
benchmark and the loan interest rate to determine the benefit during 
the POI from Lines of Credit 600 and 700.
    CFI Line of Credit 900 is another line of credit that is extended 
to the beekeepers in the Province of San Luis. Funding under this line 
of credit is also available with a nine percent interest rate and with 
a repayment term of either two and a half years or four and a half 
years depending on the purpose of the loan. This line of credit was 
terminated in 1997. However, documentation provided by the GOA 
demonstrates that loan balances for this line of credit were still 
outstanding during the POI.
    CFI line of credit 950 has not been terminated and credit is still 
being extended to beekeepers within the Province. There are two 
elements to this line of credit. Under the first element, beekeepers 
with a minimum of 50 active beehives are eligible to receive funding. 
This line of credit provides loans for (1) the acquisition of beehives; 
(2) the construction of extraction chambers; (3) the construction of 
separation chambers; and, (4) the construction of plants for the 
production of material used for honey production. The maximum financing 
available depends upon the number of beehives per applicant. A 
beekeeper with 50 to 100 hives, can receive up to $5,000; a beekeeper 
with more than 100 beehives can receive up to $25,000. The repayment 
term for this line of credit is four and half years, with an 18-month 
grace period for the repayment of principal. The interest rate is 10 
percent and the loan requires a guarantee in the form of a security 
interest or mortgage equal to 130 percent of the value of the acquired 
property. The total funding allocated for this line of credit is 
$500,000.
    The second element of Line of Credit 950 is designed both for 
active beekeepers, and for individuals with beekeeping experience who 
are willing to start up a beekeeping business. The amount of financing 
provided depends upon the purpose of the loan. Loans are provided up to 
$25,000 for the acquisition of capital goods; up to $10,000 for working 
capital; and up to $2,000 for training. Repayment terms for this line 
of credit vary depending upon the purpose of the loan and the loans 
require a guarantee in the form of a security interest or mortgage 
equal to 130 percent of the value of the acquired property. The 
applicable interest rate is 9 percent. The total funding (both CFI and 
provincial funding) allocated under this line of credit total 
$1,000,000.
    The GOA reported that all loans provided under lines 900 and 950 
were included in the loan information reported under the ``Credit for 
Small Business Ventures'' (CFI) program (See, ``Programs Preliminarily 
Determined to be Not Countervailable'' section below). Therefore, to 
determine the benefit from Lines of Credit 900 and 950, we have 
extracted from the CFI list those loans that were listed as being 
provided to San Luis. While the loan information

[[Page 14535]]

specifies the original amounts of all of the loans which were granted 
to San Luis that were outstanding during the POI, the data provided did 
not indicate the actual loan balances outstanding during the POI for 
the San Luis loans. Thus, as facts available, we are assuming that the 
entire loan balance was outstanding during the POI. However, all loans 
granted under line 950 were granted in 1999 and are therefore still in 
the grace period for repayment of both interest and principal. In 
accordance with Sec. 351.505(b), benefits resulting from 
countervailable loans are considered to have been received in the year 
in which the firm otherwise would have had to make a payment on the 
comparable commercial loan. Since the repayment terms on long-term 
commercial loans would not likely differ significantly from repayment 
terms on these loans, and since the first payments of interest and 
principal would occur after the POI, we preliminarily determine that no 
benefits were received during the POI from the loans provided under 
line 950 during the POI. To calculate the benefit from line 900 loans, 
we multiplied the difference between the interest rate under the line 
of credit and the benchmark interest rate by the outstanding loan 
balance.
    To determine the subsidy from these various lines of credit, we 
summed the benefits calculated for Lines of Credit 600, 700, and 900 
and divided that sum by the value of total Argentine honey production 
during the POI. (See ``Denominator Issues'' section above.) We thus 
preliminarily determine the countervailable subsidy from these lines of 
credit to be 0.055 percent ad valorem.

II. Programs Preliminarily Determined to be Not Countervailable

A. Federal Programs

1. BNA Line of Credit for Working Capital and Investment Purposes
    According to the questionnaire responses, the BNA offers a line of 
credit to businesses for working capital and investment purposes. In 
our notice of initiation, we identified this program as Law 24,467 
Preferential Lines of Credit for Working Capital Purposes. As reported 
in the questionnaire response, the BNA Line of Credit for Working 
Capital and Investment Purposes was established under BNA's own 
authority. (See discussion of alleged Law 24,467 programs under the 
``BNA Pre-Financing of Exports Regime for the Agricultural Sector'' 
above).
    This line of credit is offered to businesses in all economic 
sectors in Argentina, and to agricultural and livestock producers 
associated with agricultural cooperatives. The actual interest rate 
varies according to the transaction, and the maximum length of the loan 
is five years.
    We preliminarily determine that these lines of credit are not de 
jure specific within the meaning of section 771(5A) of the Act. Thus, 
we analyzed whether the actual use of these lines of credit gives rise 
to de facto specificity under section 771(5A)(D)(iii) of the Act. 
However, based on the information provided in the questionnaire 
responses, these credit lines were used by a broad range of borrowers, 
both within and outside the agricultural sector, and there is no 
apparent concentration of lending to any group of borrowers. Thus, 
there is no basis for concluding that benefits under this program are 
de facto specific to an enterprise, industry or group of enterprises or 
industries under section 771(5A) of the Act. As a result, we 
preliminarily determine that the lines of credit offered under the BNA 
Line of Credit for Working Capital and Investment Purposes are not 
countervailable subsidies under section 771(5) of the Act.
2. Global Credit Program for Micro and Small Businesses
    According to the questionnaire responses, the GOA established the 
Global Credit Program for Micro and Small Businesses to provide 
assistance to small businesses. In our notice of initiation, we 
identified this program as Law 24,467 Global Credit Program. As 
reported in the questionnaire response, the Global Credit Program for 
Micro and Small Businesses was established pursuant to an GOA/IDB 
agreement. (See discussion of alleged Law 24,467 programs under the 
``BNA Pre-Financing of Exports Regime for the Agricultural Sector'' 
above).
    The Global Credit Program for Micro and Small Businesses is 
administered by the Ministerio de Economia y Obras y Servicios Publicos 
(The Ministry of Economy and Public Services or MECON) through the 
Secretaria de la Pequena y Mediana Empresa (the Argentine Small 
Business Administration or the SEPyME). The SEPyME was established in 
1992 to serve new and existing micro-and small businesses involved in 
primary or industrial production, or services. The goals of the program 
are to increase the access of micro-and small businesses to credit and 
technical assistance in an attempt to raise employment and income 
levels through increased productivity, and to develop and strengthen 
the technical support groups that supply training, technical assistance 
and other services to micro-and small businesses.
    The GOA reported that the Global Credit Program for Micro and Small 
Businesses is funded entirely by the IDB and is administered by the 
Argentine Ministry of Economy. However, information provided in the 
GOA's exhibits suggests that this program is only partially funded by 
the IDB, with the balance of funding provided by the GOA. While 
eligibility for this program is limited to small and micro-enterprise 
companies involved in primary or industrial production, trade or the 
service sector in Argentina, in accordance with section 351.502(e) of 
the Department's regulations, a subsidy is not specific solely because 
the subsidy is limited to small firms or small and medium-sized firms. 
As such, we preliminarily determine that this program is not de jure 
specific. We analyzed whether the actual use of these lines of credit 
gives rise to de facto specificity under section 771(5A)(D)(iii) of the 
Act. Based on information submitted in the questionnaire responses, 
these credit lines were used by a broad range of borrowers and there is 
no apparent concentration of lending to any category of borrowers. 
Thus, there is no basis for concluding that benefits under this program 
are de facto specific to an enterprise, industry or group of 
enterprises or industries within the meaning of section 771(5A)(D)(iii) 
of the Act. As a result, we preliminarily determine that the lines of 
credit offered under the Global Credit Program for Micro and Small 
Businesses are not countervailable subsidies within the meaning of 
section 771(5) of the Act.
3. Credit for Small Business Ventures
    According to the questionnaire responses, the GOA established the 
Credit for Small Business Ventures program to provide assistance to 
small businesses. In our notice of initiation, this program was 
identified as Law 24,467 Credit for Small Business Establishments. As 
reported in the questionnaire response, the Credit for Small Business 
Ventures program was established pursuant to Annex B to Circular BNA 
No. 10,111/1. (See discussion of alleged Law 24,467 programs under the 
``BNA Pre-Financing of Exports Regime for the Agricultural Sector'' 
above).
    The Federal Investment Board (CFI) administers the Credit for Small 
Business Ventures (Creditos para Microemprendimentos) program. The CFI 
is a government agency created through an agreement between Argentina's 
provinces, the municipality

[[Page 14536]]

of Buenos Aires, and the National Territory of Tierra del Fuego, 
Antarctic, and the Islands of the South Atlantic. The CFI program has 
as its objective promoting the development of small business ventures 
through the financing of economically viable projects designed to 
increase productivity, increase employment, and improve income 
distribution. Eligibility for this program is limited to applicants 
whose net worth does not exceed US$200,000 and who are planning 
economically viable projects designed to increase production and 
generally improve the welfare of the population. The CFI can finance up 
to 100 percent of the investment for acquisition of capital goods, 
working capital, and training. For capital goods, the CFI will 
authorize financing up to US$50,000, up to US$20,000 for working 
capital, and up to US$4,000 for training. The CFI will not authorize a 
combined sum for all three categories exceeding US$50,000. The 
repayment term for capital goods financing is up to four and one half 
years and the repayment term for working capital financing is up to two 
and one half years.
    This financing is limited to small businesses, but under 
Sec. 351.502(e) of the regulations, the Department will not regard a 
subsidy as being specifically provided solely because it is limited to 
small firms. However, even though this program cannot be considered de 
jure specific, we must analyze whether these lines of credit are de 
facto specific under section 771(5A)(D)(iii) of the Act. The GOA 
provided a list showing the distribution, by industry, of all lending 
provided under this program from 1992 through 1999. A number of 
agricultural industries, as well as numerous non-agricultural 
industries received CFI loans. Moreover, based on the information 
provided, no industry appears to be a predominant user of the program, 
or to have received a disproportionately large share of the subsidy. 
However, as discussed above in the section on the ``San Luis Honey 
Development Program,'' based on the information provided, it appears 
that some CFI funds are funneled through provincial authorities, 
including government-owned provincial banks. Where the information 
provided in the response indicated that CFI funds were allotted to 
provinces or provincial banks, and either the CFI designated that a 
line of credit was to be provided to a specific industry within the 
province, or the province decided how to expend those funds within the 
province, we have conducted a separate analysis of whether such loans--
funded by the CFI, but for which recipients within the province are 
expressly designated by either the CFI or the province--are specific 
(See, ``San Luis Honey Development Program'' above). Except for those 
CFI loans for which the lending decision appears to be controlled by a 
provincial government or for which the CFI appears to have designated a 
specific group of recipients within the province, we preliminarily 
determine that CFI loans are not provided on either a de jure or de 
facto basis to a specific enterprise or industry or group thereof, and 
are, therefore, not countervailable.
4. National Income Tax Exemption Pursuant to Article 20(1) of Law 
20,628
    Based on our review of the questionnaire responses on this program, 
we preliminarily determine that this income tax program is the same 
program which was found not countervailable in Carbon Steel Wire Rod 
from Argentina; Suspension of Investigation, 47 FR 42393. As such, we 
preliminarily determine that this program is not countervailable.
5. Law 22,913 Emergency Aid/Emergency Agricultural and Livestock Law
    In 1983, Law 22,913 established an agricultural disaster relief 
program administered by the National Commission on Agricultural 
Emergencies (CNEA). The purpose of the program is to provide financial, 
tax and transportation relief to areas designated to be in a state of 
emergency or state of disaster. When there is a natural or weather-
related disaster, provincial authorities can declare a state of 
emergency or state of disaster and present information related to the 
emergency or disaster to the CNEA. After reviewing the information, the 
CNEA makes a recommendation to the Ministry of Economy regarding 
whether to issue a national decree. Article 5(a) of Law 22,913, states 
that the CNEA can declare an agricultural emergency or disaster when 
``weather related, telluric, biological or physical factors . . . 
unforeseeable or inevitable'' seriously impedes the agricultural 
production or the capacity to produce in a region.
    Any agricultural and livestock producer is eligible for emergency 
aid when its province is certified as an emergency or a disaster area. 
Producers who experience a loss of at least 50 percent of production 
capacity are eligible to receive benefits for emergency relief. 
Producers with a minimum loss of 80 percent receive disaster relief. 
Assistance under this program is provided in the form of loans at 
preferential rates and tax benefits. Beneficiaries can receive a 
deferral of taxes owed, an exemption from taxes owed, and deductions 
from earnings from forced sales. According to the GOA, the most common 
form of tax relief given is tax deferrals. In addition, an affected 
agricultural producer who receives a certificate from the provincial 
authority after an emergency has been formally declared can receive 
loans at preferential rates from the BNA.
    We preliminarily determine that Law 22,913 is not a countervailable 
subsidy in accordance with Department's regulations. According to 
section 531.502(f) of the regulations, the Department will not find 
disaster relief countervailable when ``such relief constitutes general 
assistance available to anyone in the area affected by the disaster.'' 
The GOA has provided information that its emergency/disaster aid is 
provided in this manner. The GOA claimed that Law 22,913 was entitled 
to green box treatment and was therefore not countervailable. However, 
because we preliminarily determine that this program is not a 
countervailable subsidy under section 351.502(f), we do not need to 
examine the GOA's green box claim.

B. Provincial Government Program

Exemption from Municipal Gross Income Tax Contingent on Export Activity 
Pursuant to Article 116(12) of Law 150 (Buenos Aires Gross Income Tax 
Exemption)
    Article 109 of Law 150 (the Buenos Aires Tax Code), provides that a 
levy on gross income will be imposed upon each transaction of commerce, 
industry, professional services, or any other business activity which 
occurs in the City of Buenos Aires. The GOA reported that the gross 
income tax is an indirect tax levied on each transaction which 
constitutes the taxpayer's revenue stream. The GOA states that the 
gross income tax on sales of bulk and processed honey occurring within 
the City of Buenos Aires is 1.5 percent.
    Article 116(12) of the Buenos Aires Tax Code provides that revenue 
obtained from exports is exempt from the application of the local gross 
income tax. The City of Buenos Aires exempted export revenues from this 
indirect tax in order to prevent the tax from increasing the export 
price of Argentine products. The GOA states that ``rather than require 
payment and then pay a rebate,'' the exemption ``arises automatically 
upon completion of the tax forms by the exporter, who simply applies 
zero tax rate to revenues obtained from all export transactions.'' The 
GOA contends that

[[Page 14537]]

the exporter must provide copies of documentation related to the export 
sales e.g., commercial invoice, bill of lading, etc., in order to 
enable the local tax authorities to verify that a specific transaction 
is entitled to an exemption.
    Section 351.517(a) of the Department's regulations states that in 
the case of an exemption upon export of indirect taxes, a benefit 
exists only to the extent that the Department determines that the 
amount exempted ``exceeds the amount levied with respect to the 
production and distribution of like products when sold for domestic 
consumption.'' Information on the record of this review indicates that 
gross income tax is an indirect tax levied on business transactions for 
export and that the amount exempted by the Buenos Aires Gross Income 
Tax Exemption does not exceed the amount levied with respect to the 
production and distribution of like products when sold for domestic 
consumption. Therefore, the Department preliminarily determines that, 
for purposes of this investigation, the Buenos Aires Gross Income Tax 
Exemption does not confer a countervailable benefit. We note that if we 
had found the Reintegro to be not countervailable (see section on 
``Reintegro'' in ``Programs Preliminarily Determined to be 
Countervailable,'' above), this exemption from a final stage indirect 
tax would need to be reexamined to ensure that exporters in the city of 
Buenos Aires were not receiving both a rebate of these same indirect 
taxes under the Reintegro program (which includes a rebate of both 
prior stage and final stage indirect taxes upon export) as well as an 
exemption of these indirect taxes upon export.

III. Programs Preliminarily Determined to be Not Used

A. Federal Programs

3. BICE Norm 011: Financing of Production of Goods Destined for Export
    According to the questionnaire responses, the GOA established the 
BICE Norm 011 program to provide assistance to small businesses. In our 
notice of initiation, we identified this program as Law 24,467 Short-
Term Financing, Including Pre-Financing of Export Sales. As reported in 
the questionnaire response, this type of financing is provided by the 
BICE. (See discussion of alleged Law 24,467 programs under the ``BNA 
Pre-Financing of Exports Regime for the Agricultural Sector'' above).
    Through Norm 011, the BICE offers a line of credit which finances 
the production of goods destined for export as well as the 
transformation, modernization, repair or assembly of goods imported 
under the temporary import regime. As a second-tier bank, the BICE 
offers this credit line to the ``Participating Agents'' (the first-tier 
banks) which the BICE considers eligible to participate. BICE 
determines the interest rate that it will charge to the Participating 
Agent. The interest rate ultimately charged to the borrower will be 
determined by the participating agent. Financing is available for up to 
90 percent of the FOB value of either the exported goods, or the value 
of goods imported under the temporary import regime. Generally this 
line of credit is limited to projects that require a minimum investment 
of $20,000 and a maximum of $5 million. However, the BICE may consider 
financing requests for amounts outside of this.
    The GOA reported that the BICE did not grant any loans through this 
line of credit to honey producers or exporters that were outstanding 
during the POI. Therefore, we preliminarily determine that this program 
is not used.
2. BNA Line of Credit to the Agricultural Producers of the Patagonia 
(Regulation Annex to Circular BNA No. 10,111/1)
    According to the questionnaire responses, the GOA established the 
BNA Line of Credit to the Agricultural Producers of the Patagonia to 
provide assistance to agricultural producers in the Patagonian region 
of Argentina. In our notice of initiation, we identified this program 
as Law 24,467 Preferential Line of Credit to Increase Agricultural and 
Agro-Industrial Production in the Southern Argentine Provinces. As 
reported in the questionnaire response, the BNA Line of Credit to the 
Agricultural Producers of the Patagonia was established pursuant to 
Regulation Annex to Circular BNA No. 10,111/1. (See discussion of 
alleged Law 24,467 programs under the ``BNA Pre-Financing of Exports 
Regime for the Agricultural Sector'' above).
    The BNA offers a line of credit to the agricultural producers in 
the Patagonian region (the provinces of Rio Negro, Neuquen, Chubut, 
Santa Cruz, Tierra del Fuego, Antarctica, and the islands of the South 
Atlantic) to promote and finance investments oriented to diversifying 
production activities in eligible provinces. This line of credit is 
limited to those producers who had previously obtained loans pursuant 
to the credit line ``Supervised Loans for the Agricultural and Agro-
Industrial Production'' that was implemented by the Board of Directors 
of the BNA in May 1992. These producers are eligible to benefit from 
the new BNA line of credit as long as they have not refinanced their 
prior loans, and have fulfilled their investment plans and obligations 
pursuant to their prior loan agreements. According to the questionnaire 
responses, honey producers and exporters are not among those eligible 
to receive this financing. As a result, we preliminarily determine this 
program to be not used during the POI.
3. ``Production Pole'' Program for Honey Producers
    According to the questionnaire responses, the GOA established the 
``Production Poles'' program to provide assistance to small businesses 
pursuant to Decree 1304/94. The Production Poles program was created in 
order to integrate different producers and manufacturers of each of the 
production sectors in the Argentine provinces. The program attempts to 
stimulate business initiatives with the ultimate purpose of enhancing 
the quality of the regional producers and increasing their products' 
marketability. Businesses interested in participating in a production 
pole enter into an agreement with the National and Provincial 
Government and the respective municipality. The administering authority 
provides technical advice, grants for capital goods and working 
capital.
    According to the GOA, there is one production pole that benefitted 
the honey sector and it was established prior to the enactment of 
Decree 1304/94. However, pursuant to section 5 of Decree 1304/94, 
certain groups that had entered into agreements similar to those under 
the Production Pole program are eligible for benefits under Decree 
1304/94. A preexisting honey production pole in the municipality of 
Castelli, Chaco Province (Castelli Honey Production Pole), is one of 
the groups that qualified under section 5 of Decree 1304/94.
    The GOA has stated that the Castelli Honey Production Pole only 
received grants under this program during 1994. These were grants for 
working capital and grants for the acquisition of capital equipment. 
Such grants are treated as non-recurring and are allocated over time, 
provided they do not meet the exception outlined in Sec. 351.524(b)(2) 
of the regulations, i.e., the grant amount is not greater than 0.5 
percent of total sales in the year of receipt. Because this program is 
federally-administered, the appropriate denominator for conducting the 
0.5 percent test is the value of Argentine production (as a proxy for 
sales) in the year the grants were approved. Since we do not have that 
information on the record, we used as

[[Page 14538]]

our denominator the value of Argentine honey production during 1999. 
The grants under the ``Production Poles'' program are significantly 
less than 0.5 percent and therefore would be expensed in the year of 
receipt, 1994. Therefore, we preliminarily determine that the 
Production Pole for Honey program was not used by producers or 
exporters of honey to the United States during the POI.
4. Enterprise Restructuring Program (PRE)
    According to the questionnaire responses, the GOA established the 
Enterprise Restructuring Program (PRE) to provide assistance to small 
and medium-sized businesses. In our notice of initiation, we identified 
this program as Law 24,467 Enterprise Restructuring Program (PRE). As 
reported in the questionnaire response, the Enterprise Restructuring 
Program was established by the GOA with IDB funds. (See discussion of 
alleged Law 24,467 programs under the ``BNA Pre-Financing of Exports 
Regime for the Agricultural Sector'' above).
    The Secretary for Small and Medium-Sized Enterprises administers 
the PRE which was established in 1997 by the Government of Argentina. 
The purpose of the program is to assist small and medium-sized 
businesses in increasing administrative and technical capacity with the 
aim of increasing competitiveness. Companies receive direct support, 
information gathering (through a business information system (BIS) made 
available nationwide), and business re-orientation support. The PRE 
program also makes management consultants available to small and 
medium-sized businesses.
    The PRE is available to any Argentine small and medium-sized 
enterprise that meets PRE qualifications, possesses a tax 
identification number, and whose imported products do not represent 
more than 25 percent of its sales. Grants, or non-disbursed 
contributions, under this program are not limited to any sector or any 
geographic region. Although funding is still provided by the IDB, the 
PRE relies upon contributions from the national budgetary process and 
the private sector to cover its overhead costs. The size of PRE grants 
vary based upon need as assessed by each consultant.
    According to the GOA, the honey sector has preliminarily been 
approved for 12 projects under the PRE. A listing of all approved 
grants has been provided by the GOA. Only one honey project has 
received a grant from the PRE, and the GOA reported that no 
disbursements were made before March 2000. Because no disbursements 
were made under the PRE program until after the POI, we preliminarily 
determine that this program was not used by honey producers or 
exporters during the POI.
5. Government Backed Loan Guarantees (SGR)
    Under Law 24,467, the GOA established the Reciprocal Guarantee 
Company (SGR). The SGR is essentially a new type of legal entity under 
Argentine corporate law which can be formed for the specific purpose of 
reducing the credit risks confronting small and medium-sized 
businesses. While several GOA agencies have regulatory authority over 
the SGRs, none of them has direct administrative authority over them. 
The SGRs are private companies consisting of small and medium-sized 
enterprises and large companies and banks that join together for the 
purpose of minimizing the credit risks facing the small and medium-
sized companies who are part of the SGR. The purpose of the SGR is to 
issue certificates of guarantee to the small and medium-sized business 
members of the SGR so that those companies have greater access to 
sources of financing. There have been only five SGRs organized under 
Law 24,467, none of which involve honey producers or exporters. 
Accordingly, we preliminarily determine that this program was not used 
during the POI.

B. Provincial Government Programs

1. Province of Chubut Honey Program under Law No. 4430/98
    Law No. 4430/98 was promulgated in 1998 to provide support to the 
provincial honey industry, instructing executive government agencies to 
implement programs to develop honey production, standardization, 
processing, industrialization, marketing, use of products and 
byproducts, and to support and encourage research, experimentation and 
training geared toward the development and use of apiarian byproducts. 
According to the questionnaire responses, Law No. 4430/98 has not yet 
been wholly implemented. The only portion of Law No. 4430/98 which has 
been implemented is Article 5.9, which authorizes measures necessary 
for the opening of lines of credit in official government and private 
regional banks, with promotional interest rates and loan structures in 
alignment with the goals of commercial and industrial honey production. 
Article 5.9 was implemented in 1999 via Decree 491. On March 24, 1999, 
and in accordance with the stated purposes of Law No. 4430/98, CORFO, 
the agency responsible for implementation of agricultural policy in 
Chubut, implemented Resolution 057/99, creating the Honey Activity 
Development Program to provide the credit lines approved under Decree 
491. This program provides lines of credit for the acquisition of 
beehives, nuclei, work clothing, beekeeping material and equipment, and 
the purchasing of queen bees. Under this program, interest-free loans 
are provided for five-year terms, with repayments due annually and 
consecutively. The maximum loan amount authorized is 2,000 pesos.
    According to the questionnaire responses, the first repayments of 
principal on loans issued under this program were not due until June 
2000. In accordance with Sec. 351.505(b), benefits resulting from 
countervailable loans are considered to have been received in the year 
in which the firm otherwise would have had to make a payment on the 
comparable commercial loan. Since the repayment terms on long-term 
commercial loans would not likely differ significantly from repayment 
terms on these loans, and since the first payments occurred in June 
2000, after the POI, we preliminarily determine that no benefits were 
received from these loans during the POI.
2. Province of Santiago del Estero: Creditos de Confianza (Trust 
Credits)
    In 1997, the Government of Santiago del Estero authorized the Trust 
Credits program. The program was administered by the Government of 
Santiago del Estero through the private sector entity Grupo Taxco S.A. 
The line of credit provided under this program is designed for low-
income honey producers. A producer's beehives and profits earned from 
honey production comprise the collateral for the loans.
    According to the GOA, none of the honey produced in Santiago del 
Estero was exported to the United States during the POI. Therefore, we 
preliminarily determine that this program did not benefit honey exports 
for the United States during the POI.

IV. Programs Preliminarily Determined to be Terminated

A. Federal Programs

1. PROMEX Consortium for Honey Exportation
    The GOA's PROMEX export promotion program was created in 1990 
through joint funding from the World Bank and the IDB. PROMEX provided 
export promotion assistance to small and medium-sized businesses.

[[Page 14539]]

According to the GOA, PROMEX was terminated in 1998, and the last grant 
provided under this program was distributed on September 15, 1997.
    Export promotion assistance is normally treated as a recurring 
benefit. Since the last grant under this program was distributed in 
1997, there are no residual benefits after the date of the grant 
distribution. Therefore, the termination of this program constitutes a 
program-wide change in accordance with Sec. 351.526. We note that the 
GOA submitted a green box claim for this program, but since we have 
determined that it has been terminated, we do not address this issue.
2. Regional Promotional Scheme-Reimbursement ``Patagonico'': Exemption 
of Import Duties on Capital Goods
    The GOA administered a regional promotion regime for provinces in 
the Patagonian region, including Rio Negro, Neuquen, Chubut, Santa 
Cruz, the National Territory of Tierra del Fuego, the Antarctic, the 
Falkland Islands, and part of the Patagonian region located in the 
Province of Buenos Aires. The program, implemented via Decree 2332/83, 
provided exemptions or deductions from import duties on capital goods 
utilized in certain industrial activities. The program was terminated 
as of December 31, 1983.
    Even assuming that benefits provided under this program were non-
recurring and should be allocated over the honey industry's 10-year 
AUL, there would be no benefits from this program allocable to the POI. 
Therefore, we determine that this program has been terminated in 
accordance with section 351.526 of the regulations.

V. Programs Preliminarily Determined Not to Exist

A. Federal Program

Honey-Specific Line-of-Credit Program for the Pre-Financing of 
Development Expenses Associated with Export Sales
    The Honey-Specific Line-of-Credit Program for the Pre-Financing of 
Development Expenses Associated with Export Sales is, according to the 
questionnaire responses, the same as one of the lines of credit 
available under the Buenos Aires Honey Program. See the discussion of 
the section on ``Buenos Aires Honey Program'' above.

B. Provincial Government Programs

1. La Pampa Lines of Credit
    In our notice of initiation, we identified a program as La Pampa 
Lines of Credit. According to the questionnaire responses, the La Pampa 
Lines of Credit are the same lines of credit offered under the Federal 
Investment Board's (CFI's) ``Credit for Small Business Ventures'' 
program, discussed above.
2. Province of San Luis: Creditos de Confianza (Trust Credits)
    According to the questionnaire responses, the Province of San Luis: 
Creditos de Confianza (Trust Credits) does not exist.

VI. Program For Which Additional Information Is Needed

Federal Program

BICE Norm 007: Line of Credit Offered to Finance Industrial Investment 
Projects, and Projects to Restructure and/or Modernize the Argentine 
Industry
    According to the questionnaire responses, the GOA established the 
BICE Norm 007 program to provide assistance to small businesses. In our 
notice of initiation, we identified this program as Law 24,467 
Investment-Expenditure Credits for Exports. As reported in the 
questionnaire response, the BICE Norm 007 program was established by 
the BICE. (See discussion of alleged Law 24,467 programs under the 
``BNA Pre-Financing of Exports Regime for the Agricultural Sector'' 
above).
    As noted above, BICE is a GOA entity which functions as a ``second-
tier'' bank, lending money to other banks (both commercial and other 
government-owned or controlled banks) for the purpose of implementing 
government lending programs. The commercial banks then offer the credit 
to the borrower with substantially the same terms and conditions set 
forth in the regulations of the particular BICE line of credit, plus an 
additional spread for their services. These first-tier banks, or 
intervening financial entities (IFEs), are authorized by the Central 
Bank of Argentina as eligible to participate in BICE programs. For each 
loan application, the IFE will analyze the technical, economic and 
financial feasibility of the transactions and make the decision whether 
to assume the credit risk and make the loan to the ultimate borrower. 
If the IFE decides to extend the loan, the IFE presents the application 
to the BICE with all supporting documentation, and BICE will decide 
whether the transaction is eligible.
    Through Norm 007, the BICE offers a line of credit to finance 
industrial investment projects, directed to both the production sector 
and the services sector. Under this line of credit, financing is 
available for up to 90 percent of the total value of the eligible 
projects. A list of eligible projects is provided in section 2 of the 
BICE Norm 007; these projects include investment projects in the 
agricultural sector, involving the incorporation of machinery, 
equipment, and investment goods, and associated working capital. 
Generally, credit under this program is limited to projects that 
require a minimum investment of US $100,000, and a maximum investment 
of US $10 million. The financing is granted for a period of no more 
than 10 years, including a two-year grace period for the repayment of 
the principal, and interest rates are determined on a case-by-case 
basis.
    In our notice of initiation, we identified this program as one 
providing export financing based on petitioner's allegation and the 
supporting documentation, which indicated that this financing was being 
provided to improve export capacity. The GOA has indicated that one of 
the first-tier banks which received funding through Norm 007, the BNA, 
used the funding to establish an export-related financing facility, as 
documented in the petition. The GOA has also indicated that BNA 
terminated this facility in 1997, and further, that no honey producers 
received such financing when the program was active.
    However, the information related to the BNA export financing 
facility highlights the necessity of examining whether other first-tier 
banks have similarly established export financing facilities with Norm 
007 funds. For purposes of this preliminary determination, we are not 
making a finding with respect to this program. We will seek additional 
information from the GOA prior to our verification and final 
determination.

Verification

    In accordance with section 782(i)(1) of the Act, we will verify the 
information submitted by respondents prior to making our final 
determination.

Suspension of Liquidation

    In accordance with sections 703(d)(1)(A)(ii) and 777A(e)(2)(B) of 
the Act, we calculated a single, country-wide rate for Argentina, 
applicable to all exporters and producers. The total estimated 
countervailable subsidy rate is 5.23 percent ad valorem. Because of a 
program-wide change, discussed above in the Reintegro section, we have 
calculated a cash deposit rate of estimated countervailing duties of 
6.55 percent ad valorem.

[[Page 14540]]

    In accordance with section 703(d)(1)(A)(ii) of the Act, we are 
directing the U.S. Customs Service to suspend liquidation of all 
entries of honey from Argentina, which are entered or withdrawn from 
warehouse, for consumption on or after the date of the publication of 
this notice in the Federal Register, and to require a cash deposit or 
bond for such entries of the merchandise in the amount listed above. 
This suspension of liquidation will remain in effect until further 
notice.

ITC Notification

    In accordance with section 703(f) of the Act, we will notify the 
ITC of our determination. In addition, we are making available to the 
ITC all non-privileged and non-proprietary information relating to this 
investigation. We will allow the ITC access to all privileged and 
business proprietary information in our files, provided the ITC 
confirms that it will not disclose such information, either publicly or 
under an administrative protective order, without the written consent 
of the Assistant Secretary for Import Administration.
    If our final determination is affirmative, the ITC will make its 
final determination within 45 days after the Department makes its final 
determination.

Public Comment

    In accordance with 19 CFR 351.310, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
this preliminary determination. The hearing is tentatively scheduled to 
be held 57 days from the date of publication of the preliminary 
determination at the U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230. Individuals who wish to 
request a hearing must submit a written request within 30 days of the 
publication of this notice in the Federal Register to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, 14th Street and Constitution Avenue, NW., Washington, DC 20230. 
Parties should confirm by telephone the time, date, and place of the 
hearing 48 hours before the scheduled time.
    Requests for a public hearing should contain: (1) The party's name, 
address, and telephone number; (2) the number of participants; and, (3) 
to the extent practicable, an identification of the arguments to be 
raised at the hearing. In addition, unless otherwise informed by the 
Department, six copies of the business proprietary version and six 
copies of the non-proprietary version of the case briefs must be 
submitted to the Assistant Secretary no later than 50 days from the 
date of publication of the preliminary determination. As part of the 
case brief, parties are encouraged to provide a summary of the 
arguments not to exceed five pages and a table of statutes, 
regulations, and cases cited. Six copies of the business proprietary 
version and six copies of the non-proprietary version of the rebuttal 
briefs must be submitted to the Assistant Secretary no later than 5 
days from the date of filing of the case briefs. An interested party 
may make an affirmative presentation only on arguments included in that 
party's case or rebuttal briefs. Written arguments should be submitted 
in accordance with 19 CFR 351.309 and will be considered if received 
within the time limits specified above.
    This determination is published pursuant to sections 703(f) and 
777(i) of the Act. Effective January 20, 2001, Bernard T. Carreau is 
fulfilling the duties of the Assistant Secretary for Import 
Administration.

    Dated: March 5, 2001.
Bernard T. Carreau,
Deputy Assistant Secretary, Import Administration.
[FR Doc. 01-6223 Filed 3-12-01; 8:45 am]
BILLING CODE 3510-DS-P