Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices 61803

practicable to complete the review

within the statutory time limit (see

Memorandum to Robert S. LaRussa from

Joseph A. Spetrini, November 12, 1997).

Since it is not practicable to complete

this review within the time limits

mandated by the Act (245 days from the

last day of the anniversary month for

preliminary results, 120 additional days

for final results), in accordance with

section 751(a)(3)(A) of the Act, the

Department is extending the time limit

as follows:

Product Country Review period Initiation

date

Prelim due

date

Final due

date*

Certain Welded Carbon Steel Pipes and Tubes (A–549–

502).

Thailand ....... 03/01/96–02/28/97 04/24/97 03/31/98 08/05/98

*The Department shall issue the final determination 120 days after the publication of the preliminary determination. This final due date is estimated based on publication of the preliminary notice five business days after signature.

Dated: November 12, 1997.

Joseph A. Spetrini,

Deputy Assistant Secretary, AD/CVD

Enforcement Group III.

[FR Doc. 97–30398 Filed 11–18–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[C–337–802]

Preliminary Negative Countervailing

Duty Determination and Alignment of

Final Countervailing Duty

Determination With Final Antidumping

Duty Determination: Fresh Atlantic

Salmon From Chile

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: November 19, 1997.

FOR FURTHER INFORMATION CONTACT: Rosa

Jeong, Marian Wells or Todd Hansen,

Office of Antidumping/Countervailing

Duty Enforcement, Group 1, Import

Administration, U.S. Department of

Commerce, Room 3099, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone

(202) 482–1278, 482–6309 or 482–1276,

respectively.

Preliminary Determination

The Department of Commerce (the

‘‘Department’’) preliminarily determines

that countervailable subsidies are not

being provided to producers or

exporters of fresh Atlantic salmon

(‘‘salmon’’) in Chile.

Petitioners

The petition in this investigation was

filed by the Coalition for Fair Atlantic

Salmon Trade (‘‘FAST’’) and the

following individual members of FAST:

Atlantic Salmon of Maine; Cooke

Aquaculture U.S., Inc.; DE Salmon, Inc.;

Global Aqua—USA, llc; Island

Aquaculture Corp.; Maine Coast Nordic,

Inc.; ScanAm Fish Farms; and Treats

Island Fisheries (collectively referred to

hereinafter as ‘‘petitioners’’).

Case History

Since the publication of the notice of

initiation in the Federal Register (62 FR

36772 (July 9, 1997) (‘‘Initiation

Notice’’), the following events have

occurred.

We deemed this case to be

extraordinarily complicated and on July

28, 1997, we postponed the preliminary

determination until November 10, 1997

(62 FR 40335).

On July 23, 1997, we issued a

countervailing duty questionnaire to the

Government of Chile (‘‘GOC’’). Due to

the large number of producers and

exporters of fresh Atlantic salmon in

Chile, and with the GOC’s assurance

that it could provide aggregate data for

most programs, we solicited information

from the GOC on an aggregate or

industry-wide basis, rather than from

the individual producers and exporters.

On August 1, 1997, the GOC notified us

that it lacked usage information for the

following programs: Chilean Production

Development Corporation (‘‘CORFO’’)

Export Credits and Long-Term Export

Financing, Law 18,439 Export Credit

Limits, Law 18,449 (Stamp Tax

Exemption), and Article 59 of Decree

Law 824. Therefore, on August 7, 1997,

we issued an additional questionnaire to

four producers/exporters of the subject

merchandise concerning the above four

programs as well as Chapter XVIII and

Chapter XIX. The questionnaire was

sent to the following companies:

Pesquera Mares Australes Ltda., Marine

Harvest Chile, Aguas Claras S.A., and

Pesquera Eicosal Ltda.

On August 1, 1997, petitioners

submitted comments arguing that the

Law No. 18,480 program should have

been included in the initiation. In the

Initiation Notice, the Department

declined to initiate on Law No. 18,480,

partly based on information provided

during consultations with the GOC.

Upon further review of information on

the record, we determined that our

initial rejection of petitioners’ allegation

was unwarranted. On August 21, 1997,

we decided to include certain benefits

allegedly provided under Law No.

18,480 in our investigation (see

Memorandum from team to Richard W.

Moreland, Acting Deputy Assistant

Secretary for Import Administration).

On August 25, 1997, the Department

requested that the GOC provide

information regarding rebates for

exports using domestically produced

inputs provided under Law No. 18,480.

The Department received the GOC

and company questionnaire responses

on September 15, 1997 and September

22, 1997. The Department issued

supplemental questionnaires to the GOC

and the four companies, and their

affiliates, on September 30, 1997, and

received the supplemental responses on

October 14, 1997. On October 21, 1997,

the Department issued a second

supplemental questionnaire to the GOC.

The GOC responded to this

questionnaire on October 27 and

October 29, 1997.

On November 6, 1997, we received a

request from petitioners, pursuant to 19

CFR 355.20(c), to postpone the final

determination in this investigation to

coincide with the final determination in

the antidumping duty investigation of

the fresh Atlantic salmon from Chile.

Accordingly, we are aligning the final

determination in this investigation with

the date of the final determination in the

antidumping duty investigation of the

fresh Atlantic salmon from Chile.

Scope of Investigation

The scope of this investigation covers

fresh, farmed Atlantic salmon, whether

imported ‘‘dressed’’ or cut. Atlantic

salmon is the species Salmo salar, in the

genus Salmo of the family salmoninae.

‘‘Dressed’’ Atlantic salmon refers to

salmon that has been bled, gutted, and

cleaned. Dressed Atlantic salmon may

be imported with the head on or off;

with the tail on or off; and with the gills

in or out. All cuts of fresh Atlantic

salmon are included in the scope of the

investigation. Examples of cuts include,

but are not limited to: crosswise cuts
61804 Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices

(steaks), lengthwise cuts (fillets),

lengthwise cuts attached by skin

(butterfly cuts), combinations of

crosswise and lengthwise cuts

(combination packages), and Atlantic

salmon that is minced, shredded, or

ground. Cuts may be subjected to

various degrees of trimming, and

imported with the skin on or off and

with the ‘‘pin bones’’ in or out.

Excluded from the scope are: (1) fresh

Atlantic salmon that is ‘‘not farmed’’

(i.e., wild Atlantic salmon); (2) live

Atlantic salmon; and (3) Atlantic

salmon that has been subjected to

further processing, such as frozen,

canned, dried, and smoked Atlantic

salmon, or processed into forms such as

sausages, hot dogs, and burgers.

The merchandise subject to this

investigation is classifiable at statistical

reporting numbers 0302.12.0003 and

0304.10.4091 of the Harmonized Tariff

Schedule (HTS) of the United States.

Although the HTS numbers are

provided for convenience and Customs

purposes, the written description of the

merchandise is dispositive.

Comment on Scope

As discussed in the Initiation Notice

at 36773, we invited comments on the

scope of this proceeding. On August 8,

1997, we received a comment from the

National Restaurant Association, an

interested party, regarding product

coverage. Specifically, the National

Restaurant Association argued that

‘‘dressed’’ whole Atlantic salmon and

‘‘cut’’ salmon are not ‘‘like products.’’

Most of the National Restaurant

Association’s arguments have already

been addressed in the Initiation Notice,

where the Department adopted the

single domestic like product definition

set forth in the petition. In addition, the

fact that ‘‘dressed’’ salmon and ‘‘cut’’

salmon are classified under separate

HTS categories is irrelevant. Like

products can and often do comprise

several HTS categories or a subset of

merchandise covered by a single HTS

number. Finally, the specific exclusion

of ‘‘cut’’ salmon from the scope of the

Salmon from Norway proceeding was a

result of the fact that the petition in that

case did not include cut salmon,

whereas, due to changing market

conditions, the petition in this case

specifically did. See, e.g., Antidumping

Duty Order: Fresh and Chilled Atlantic

Salmon from Norway, 56 Fed. Reg.

14920 (1991).

The Applicable Statute

Unless otherwise indicated, all

citations to the statute are references to

the provisions of the Tariff Act of 1930,

as amended by the Uruguay Round

Agreements Act effective January 1,

1995 (the ‘‘Act’’).

Injury Test

Because Chile 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 Chile

materially injure, or threaten material

injury to, a U.S. industry. On August 6,

1997, the ITC published its preliminary

determination finding 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 Chile

of the subject merchandise (62 FR

42262).

Period of Investigation (‘‘POI’’)

The period for which we are

measuring subsidies is calendar year

1996.

Subsidies Valuation Information

Benchmarks for Loans and Discount

Rates

To calculate the countervailable

benefit from loans and nonrecurring

grants, we have used the average rates

for U.S. dollar lending in Chile, as

calculated by the Superintendencia de

Bancos e Instituciones Financieras

(‘‘SBIF’’), the Chilean bank supervisory

agency. The U.S. dollar interest rates

were used because the loans in question

were denominated in U.S. dollars and

the grant that was allocated over time

was made in U.S. dollars.

Allocation Period

Based on information provided by the

GOC, we have used nine years, the

weighted-average useful life of

productive assets for the Chilean salmon

industry, as the allocation period in this

investigation.

Based upon our analysis of the

petition and the responses to our

questionnaires, we determine the

following:

I. Programs Preliminarily Determined

To Be Countervailable

A. ProChile Export Promotion

Assistance

ProChile, the Export Promotion

Bureau of the Chilean Ministry of

Foreign Affairs, aims to promote and

diversify Chile’s exports by providing

grants to private companies or

industries for export promotional

activities. Each ProChile project is

designed and developed through a joint

participation of ProChile and the private

sector. The projects are aimed at the

‘‘internationalization’’ of the private

sector participant.

‘‘Internationalization’’ refers to the

extension of a company’s commercial

operations to the external markets,

which can be achieved through

exportation, mixed-ownership (foreign

and domestic), joint ventures, and

international subsidiaries. Typical

ProChile projects include advertising

and promotional campaigns, creation of

catalogs and brochures, and

organization of trade fairs. These

projects are co-financed by ProChile and

the private sector participants.

The producers and exporters of

salmon in Chile received funding under

this program for several salmon-related

projects targeted to the U.S. and other

export markets.

In the past, the Department has

recognized that general export

promotion programs which provide

only general informational services, do

not constitute a countervailable benefit.

See, e.g., Fresh Cut Flowers from

Mexico, 49 FR 15007 (1984). However,

where such activities promoted a

specific product, or provided financial

assistance to a firm, we have found the

programs to be countervailable. See,

e.g., 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 on the record,

we find that ProChile’s projects went

beyond what we normally consider to

be general export promotional activities.

The projects were aimed at the

promotion of specific products to

targeted export markets and also

provided direct financial assistance to

the participating firms.

Accordingly, we preliminarily

determine that the ProChile grants

provide countervailable subsidies

within the meaning of section 771(5) of

the Act. The grants are a direct transfer

of funds from the GOC providing a

benefit in 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 the subject

merchandise to the United States and

other export markets.

We are treating these grants as ‘‘nonrecurring’’ based on the analysis set

forth in the Allocation section of the

General Issues Appendix because they

are exceptional rather than ongoing
Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices 61805

events. Each project funded by a grant

requires a separate application and

approval, and the projects represent

one-time events.

To calculate the countervailable

subsidy, we used our standard grant

methodology. In accordance with our

past practice, we allocated over time

grants from those years in which the

benefits from this program exceeded 0.5

percent of the value of appropriate

exports in the year of receipt. We

divided the benefit attributable to the

POI by the value of appropriate exports

in the POI. On this basis, we determine

the countervailable subsidy rate for this

program to be 0.05 percent ad valorem.

For a discussion of the denominators

used in the calculation of the subsidy

rate for this program, see November 10,

1997 Calculation Memorandum to file

from team.

B. CORFO Export Credit Insurance

Premium Assistance

In 1995, CORFO established a

program entitled ‘‘Export Credit

Insurance Premium Assistance For

Small and Medium-Sized Companies.’’

This program provides a grant of up to

50 percent of the value of the export

credit insurance premium, subject to a

cap of one percent of the particular

export invoice, for export insurance

purchased by small and medium-sized

Chilean exporting companies from

private insurance companies. Only

those Chilean exporters with annual

sales of up to US $10,000,000 are

eligible for this program. CORFO’s

liability to the insurers is limited to the

payment of a portion of the insurance

premium for the eligible company. Once

the exporter is approved, the agreed

portion of the insurance premium is

paid directly to the insurance company

by CORFO. CORFO made payments to

insurance companies on behalf of

eligible salmon-exporters under this

program.

We preliminarily determine that

CORFO’s payments of the insurance

premiums constitute countervailable

grants within the meaning of section

771(5) of the Act. They are a direct

transfer of funds from the GOC that

confer a benefit in the amount of the

grant. These grants are specific within

the meaning of section 771(5A)(B) of the

Act because their receipt is contingent

upon export performance. Because these

grants are made on an ongoing basis, we

have treated the benefits as recurring in

accordance with the analysis set forth in

the General Issues Appendix.

To calculate the subsidy rate, we

divided the benefit attributable to the

POI by the value of all exports of fresh

Atlantic salmon by producers and

exporters of salmon during the POI. On

this basis, we determine the

countervailable subsidy for this program

to be 0.01 percent ad valorem.

C. Law No. 18,634 (Deferred and Waived

Import Duties on Capital Goods)

Law Number 18,634 of August 5,

1987, established a program whereby

customs duties may be deferred and

subsequently waived on imported

capital goods used in the production of

exports. Under this program, both

exporters and non-exporters are allowed

to defer paying duties on certain capital

goods. During the deferral period, the

amount of duties owed is treated as a

loan on which the producer is required

to pay interest. If the capital goods are

ultimately used for the production of

exported goods, the outstanding balance

and interest on the loan are waived.

The Law 18,634 deferral program is

available to exporters as well as nonexporters. The usage data provided by

the GOC indicates that the fishing and

aquaculture sector is neither a

predominant nor disproportionate user

of the program. Moreover, many sectors

not normally considered to be exporters,

such as the construction, electric, gas

and water industries, participated in the

duty deferral program. Accordingly, we

preliminarily determine that the benefit,

if any, under the deferral program is not

specific within the meaning of section

771(5A) of the Act.

Under the Law 18,634 waiver

program, the waiver of duties is

allowed, in whole or in part, if imported

capital goods are used in the production

of merchandise that is later exported.

We preliminarily determine that the

waiver program provides

countervailable subsidies within the

meaning of section 771(5) of the Act.

The waiver of import duties represents

revenue foregone by the GOC, providing

a benefit in the amount of the waiver.

Because the waiver program is

contingent on export performance, we

preliminarily determine that it is

specific within the meaning of section

771(5A)(B) of the Act.

The GOC has provided the amounts of

customs duties waived during the POI

for exporters of subject merchandise.

Because these waivers are automatic

when exportation is demonstrated, we

determine that the benefits under this

program are recurring. To calculate the

countervailable subsidy from this

program, we divided the total amount of

waivers granted during the POI by the

value of all exports of producers and

exporters of salmon. On this basis, we

determine the countervailable subsidy

from this program to be 0.23 percent.

D. Import Substitution of Capital Goods

In addition to the duty deferral and

waiver program discussed above, Law

18,634 also contains a provision related

to the purchase of domestically sourced

capital goods. According to the GOC,

this program is intended to encourage

capital investment in Chile and to avoid

a preference for imported capital goods

resulting from the import duty deferral

and waiver provisions of the same law.

Under this provision, companies

purchasing capital equipment

domestically can borrow up to 73

percent of the amount of customs duties

that would have been paid on the

capital goods if they had been imported.

If the capital goods are ultimately used

in the production of exports, the loan

balances and any unpaid interest are

waived and the producer is not required

to repay the loan. The GOC has

provided the amounts of loans and

waivers received under this program by

exporters of subject merchandise for the

POI.

Because the receipt of loans under

this program is contingent upon the

purchase of domestically produced

capital equipment, we determine that

these loans are specific in accordance

with section 771(5A)(C) of the Act.

Based on a comparison of the

benchmark interest rates (see Subsidies

Valuation section of this notice) to the

rates charged on the loans, we

preliminarily determine that certain

loans confer benefits within the

meaning of section 771(5)(E)(ii) of the

Act because the rate charged is less than

the benchmark rate. We calculated the

benefit from these loans by subtracting

the interest charged during the POI

under the program from interest under

the benchmark rate and dividing this

difference by the value of all sales of

producers and exporters of salmon. On

this basis, we determine the

countervailable subsidy from this

program to be 0.02 percent ad valorem.

Regarding the waivers provided under

the program, we preliminarily

determine that the waivers are

countervailable subsidies within the

meaning of section 771(5) of the Act.

The waiver of the loan balances

represents a direct transfer of funds

from the GOC, providing a benefit in the

amount of the balance and any unpaid

interest waived. Further, the waivers are

specific within the meaning of section

771(5A)(B) of the Act because their

receipt is contingent upon export

performance.

Because these waivers are automatic

when exportation occurs, we determine

that the benefit from this program is

recurring. To calculate the
61806 Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices

countervailable subsidy from the waiver

portion of this program, we divided the

total amount of waivers granted during

the POI by the value of all exports of

producers and exporters of salmon from

Chile. On this basis, we determine the

countervailable subsidy from this

program to be 0.25 percent ad valorem.

E. Promotion and Development Fund

The Promotion and Development

Fund for Extreme Regions was

established pursuant to Decree Law No.

3,529, published on December 6, 1980.

Article 38 of this law established the

fund to aid in the development of

remote regions of Chile. These regions

are Tarapaca, Aysen del Presidente

Carlos Ibanez del Campo, Magallanes

and Antartica Chilena and the provinces

of Chiloe and Pelena. The fund was

established to assist small and mediumsized investors who make investments

or reinvestments in these regions.

Decree 15 of Decree Law 3,529

(published April 20, 1981) established

the regulations pertaining to the fund.

These investments must be directly

linked to the production process and

involve capital assets relating to the

company’s regular business activities.

The program provides grants in the

amount of 15 percent of the cost of new

investments or reinvestments made

between January 1 and December 31,

1981, and 20 percent of the cost of

investments and reinvestments made

between January 1, 1982 and December

31, 1999. The GOC has provided

information on the amount of grants

received under this program by the

producers and exporters of the fresh

Atlantic salmon.

We preliminarily determine that

Promotion and Development Fund

grants provide countervailable subsidies

within the meaning of section 771(5) of

the Act. The grants are a direct transfer

of funds from the GOC providing a

benefit in the amount of the grant. The

grants are specific within the meaning

of section 771(5A)(D)(iv) because they

are limited to firms located in a

designated geographical region. We have treated these grants as nonrecurring based on the analysis set forth

in the Allocation section of the General

Issues Appendix. In accordance with

our practice, we allocated over time, the

grants from those years in which the

benefits from this program exceeded 0.5

percent of the value of all sales of

producer and exporters of salmon in the

year of receipt. To calculate the

countervailable subsidy, we used our

standard grant methodology. We

divided the benefit attributable to the

POI by the value of all sales of

producers and exporters of salmon

during the POI. On this basis, we

determine the countervailable subsidy

for this program to be 0.01 percent ad

valorem.

F. Law No. 18,480

Law 18,480 of December 19, 1985,

established a simplified duty drawback

system for inputs used in small volume

exports. In addition to the duty

drawback provision for imported inputs,

the law also contains a provision

whereby exporters using domestically

produced inputs in their export

operations are entitled to the amount of

the duty drawback that the exporter

would otherwise have realized if they

had imported the inputs. Because fresh

Atlantic salmon is excluded from the

duty drawback portion of the program,

our investigation of Law No. 18,480 is

limited to the payments for using

domestically sourced inputs in the

production of exported goods.

The maximum export values for

which the rates are applicable and the

list of eligible inputs are updated each

year. For an input to be eligible as a

domestic input, the CIF value of its

imported raw materials and inputs may

not exceed 50 percent of its net value.

We preliminarily determine that Law

18,480 is a countervailable subsidy

within the meaning of section 771(5) of

the Act. It is specific within the

meaning of section 771(5A)(B) of the

Act because the receipt of the payment

is contingent upon export performance.

The program provides a financial

contribution because it is a direct

transfer of funds from the GOC to the

exporters and producers of salmon.

Because the payment is automatic for

eligible products, we have treated these

grants as recurring. To calculate the

countervailable subsidy from this

program, we divided the total amount of

grants received during the POI by the

value of all exports of producers and

exporters of salmon during the POI. On

this basis, we determine the

countervailable subsidy from this

program to be 0.05 percent ad valorem.

II. Programs Preliminarily Determined

Not to Be Countervailable

A. Fundacio ́n Chile Assistance

Fundacio ́n Chile (‘‘FCH’’) is a private,

non-profit organization established in

1976 through an agreement between the

GOC and the International Telephone

and Telegraph Corporation (‘‘ITT’’) with

an original endowment fund of US $50

million. This agreement (Decree No.

1528) stemmed from an earlier

agreement (Decree No. 801) in which

the GOC agreed to compensate ITT for

the value of certain ITT property that a

former Chilean government had

previously expropriated from ITT.

Under the terms of the agreement, ITT

agreed to contribute its $25 million

compensation to FCH’s endowment, and

the GOC matched this amount.

FCH’s mission is to carry out

scientific and technological research

and apply the research to industrial

production and service areas of Chile.

To meet these objectives, FCH forms

companies to pursue technologies of

interest, which are later sold to private

investors, and also provides technical

assistance, consulting services, and

training to companies for a fee. In 1996,

a major portion of FCH’s operating

budget came from fees for services and

profit from the sale of its companies

with the remaining amount from the

original endowment.

Under section 771(5)(B) of the Act, a

countervailable subsidy exists where the

government provides a financial

contribution or ‘‘makes a payment to a

funding mechanism to provide a

financial contribution, or entrusts or

directs a private entity to make a

financial contribution, if providing the

contribution would normally be vested

in the government and the practice does

not differ in substance from practices

normally followed by governments.’’

The GOC has argued that FCH should

not be viewed as the government, nor

was FCH entrusted or directed by the

GOC to take actions that would

normally be vested in the government.

We have not addressed these claims

because, as explained below, we have

preliminarily determined that the

financial contributions provided by FCH

do not confer a benefit.

With respect to the company start-up

ventures, FCH created or co-invested in

three salmon-related companies. The

first venture was Salmones Antartica

(‘‘Antartica’’), created in 1982, which

became the first company to

successfully demonstrate the technical

and economic viability of salmon

farming in Chile. FCH made three

separate equity infusions in Antartica,

the last of which was disbursed in 1988.

Antartica was sold to private investors

in 1989. Although Antartica produced

the subject merchandise during the POI,

it did not do so during the time FCH

had ownership interest. The second

venture was in 1988 when FCH,

together with three other private

companies, formed Salmones Huillinco

(25 percent equity participation by FCH)

which produces and commercializes

smolts. Finally, Salmotec S.A.

(Salmotec) was created by FCH and

Antartica in 1988. Salmotec was sold to

a private company in 1995. FCH made

equity infusions in Salmotec in 1988

and 1990.
Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices 61807

Section 771(5)(E)(i) of the Act

provides that in the case of an equity

infusion, a benefit is conferred if the

investment decision is inconsistent with

the usual investment practice of private

investors, including the practice

regarding the provision of risk capital,

in the county in which the equity

infusion is made.

In making this determination, the

Department examines the following

factors, among others:

1. Current and past indicators of a

firm’s financial condition;

2. Future financial prospects of the

firm including market studies, economic

forecasts, and projects or loan

appraisals;

3. Rates of return on equity in the

three years prior to the equity infusion;

4. Equity investment in the firm by

private investors; and

5. Prospects in world markets for the

product under consideration.

In start up situations and major

expansion programs, where past

experience is of little use in assessing

future performance, we recognize that

the factors considered and the relative

weight placed on such factors may differ

from the analysis of an established

enterprise. (For a more detailed

discussion of the Department’s

equityworthiness criteria see the

General Issues Appendix at 37244.)

With respect to FCH’s investments in

Antartica, the decision to invest was

made in 1981. FCH provided the

Department with three separate

feasibility studies that it considered at

that time. The factors evaluated in the

studies included the environmental

conditions of Chile, world market

conditions, and projected costs and

profits. One of the studies in particular

projected an internal rate of return, in

U.S. dollar terms, of over 30 percent on

investment. Based on these factors, the

studies conclude that the conditions in

Chile were such that salmon farming

would be profitable. In light of the

studies, we preliminarily determine that

FCH’s 1982 decision to invest in

Antartica was consistent with the usual

investment practice of private investors

in Chile.

The decision to invest in Salmotec

was approved by FCH in 1988. The GOC

claims that at the time, the Chilean

salmon industry was well-established

and profitable. The GOC points to the

fact that by 1988, there were 20

producers and/or exporters of salmon in

operation in Chile and more private

companies were investing in the salmon

industry. Moreover, the Chilean salmon

industry had been growing at an

extraordinary rate, as evidenced by the

dramatic increase in volume and value

of salmon production. The growth was

projected to continue at an even greater

rate (see Concurrence Memorandum to

Richard W. Moreland, Deputy Assistant

Secretary, Import Administration from

team dated November 10, 1997). Based

on the growth projections and the health

of the Chilean salmon industry in 1988

and the entry into that industry by

private investors in the same year, we

preliminarily determine that FCH’s

decision to invest in Salmotec was

consistent with the usual investment

practice of private investors in Chile.

We have not analyzed nor

investigated FCH’s investment in

Salmones Huillinco because this

company is not a producer or exporter

of the subject merchandise.

The GOC reported that FCH did not

provide any aquaculture infrastructure

to the salmon industry during the AUL

period, and there can be no residual

benefits from the provision of

infrastructure prior to the AUL period.

Therefore, we did not examine this

program further.

Finally, regarding the technical

assistance provided by FCH, this

assistance included research and

development, consultations, seminars

and inspection services. For each type

of service provided, FCH charged a fee.

Pursuant to section 771(5)(E)(iv) of the

Act, a countervailable benefit exists in

this situation if the services are

provided for less than adequate

remuneration. The adequacy of

remuneration is determined in relation

to prevailing market conditions for the

service.

We have examined the fees charged

by private companies which are FCH’s

major competitors and have found that

the fees charged by FCH are in line with

those charged by the private service

providers. Accordingly, we

preliminarily determine that FCH’s fees

provided adequate remuneration for the

services it provided.

For the foregoing reasons, we

preliminarily determine that the Chilean

salmon industry has not received a

benefit from financial contributions

provided by FCH.

B. Fund for Technological and

Productive Development (FONTEC)

FONTEC was established in 1991 by

CORFO to promote, guide, finance, and

assist the execution of technological

research and development projects in

Chile. FONTEC is a committee

composed of eight members from the

public and private sectors with

significant experience and reputation in

technological fields. This program

provides grants and loans for research

and development projects that are

aimed at innovations in technology and

for investment projects in technological

infrastructure.

The amount of FONTEC financing

was subject to a ceiling dependent on

the line of financing: (1) the first line

was for ‘‘technology innovation’’

projects involving financing requests

lower than US $100,000; (2) the second

line was for projects involving financing

requests larger than US $100,000; and

(3) the third line was for technological

infrastructure projects. Any private

company or entity in the production

sector is eligible for FONTEC funding,

provided that the company

demonstrates that it has the proper

technical, administrative and financial

capacity to execute and implement the

proposed project and that the project is

aimed at technological innovation in

products or processes. In addition, the

third line of financing is only available

to entities which: (1) are formed by at

least five companies; (2) organized as a

corporation or a foundation whose main

line of business is technological

transfer; and (3) can show stable

projections of the project over time.

Applicants, regardless of the line of

financing under which they are

applying, must demonstrate the

eligibility of the project and the

applicant company as well as the

economic benefits of the project. In

particular, the evaluation guidelines for

the second line of financing (projects

over US $100,000) specifies that the

economic benefit criterion may be

satisfied by factors such as ‘‘cost

savings, production increases, export

increases, etc.’’ (Emphasis added). The

guidelines for the other two lines of

financing do not enumerate specific

factors to measure the economic benefit.

Chilean salmon producers received

grants under all three lines of financing

of this program.

We analyzed whether the program is

specific ‘‘in law or fact’’ within the

meaning of section 771(5A) of the Act.

We preliminarily determine that the

program is not de jure specific because

the receipt of the benefits, in law, is not

contingent on export performance or on

use of domestically goods over imported

goods nor are the benefits limited to an

enterprise, industry or region. As stated

above, we note that anticipated

exportation could have been a factor in

the approval process of projects under

the second line of financing.

Nevertheless, we have no evidence that

the GOC approved the salmon project

under the second line of financing based

on the export factor. In other words,

although the applicant may have

fulfilled the economic benefits criterion

by demonstrating anticipated increases
61808 Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices

in exports, it is also possible that the

criterion was met by other factors such

as savings in cost and production

increases. At verification, we will

closely examine the actual application

and approval documents of the project

under the second line of financing to

determine whether the GOC’s approval

of the project was actually contingent on

the company’s export performance.

Pursuant to section 771(5A)(D)(iii) of

the Act, a subsidy is de facto specific if

one or more of the following factors

exists: (1) the number of enterprises,

industries or groups thereof, which use

a subsidy is limited; (2) there is

predominant use of a subsidy by an

enterprise, industry, or group; (3) there

is disproportionate use of a subsidy by

an enterprise, industry, or group; or (4)

the manner in which the authority

providing a subsidy has exercised

discretion indicates that an enterprise or

industry is favored over others. As

explained in the Statement of

Administrative Action (‘‘SAA’’) (H.R.

Doc. No. 316, Vol. I, 103d Cong., 2d

Session (1994) at 931), the fourth

criterion normally serves to support the

analysis of other de facto specificity

criteria.

During the period 1991 through 1996,

assistance under this program was

distributed to a large number and wide

variety of users in the majority of

regions of Chile. Therefore, the program

is not limited based on the number of

users. The evidence also indicates that

neither the salmon nor the fishing and

aquaculture industry received a

predominant or a disproportionate share

of the total funding. Given our findings

that the number of users is large and

that there is no predominant or

disproportionate use of the program by

the salmon industry, we do not reach

the issue of whether administrators of

the program exercised discretion in

awarding benefits. Accordingly, we

preliminarily determine that the

funding of projects by FONTEC is not

specific and has not conferred

countervailable subsidies to the Chilean

salmon industry within the meaning of

section 771(5) of the Act.

Of the several salmon-related projects

funded by FONTEC, the GOC has

argued in the alternative that the

funding provided to the Instituto

Tecnolo ́gico del Salmo ́n, S.A.

(‘‘INTESAL’’) falls within the definition

of a non-actionable subsidy under

Article 8 of the WTO Agreement on

Subsidies and Countervailing Measures

(‘‘SCM Agreement’’). Because we have

preliminarily determined that the

project funding provided by FONTEC

does not constitute countervailable

subsidies, we do not reach the issue of

whether FONTEC’s grants to INTESAL

constituted a non-actionable subsidy.

C. Central Bank Chapter XIX

Chapter XIX of the Central Bank’s

Compendium of International Exchange

Rules was designed to reduce the strain

on Chile’s foreign currency reserves

following the country’s external debt

crisis at the beginning of the 1980s.

Chapter XIX permitted non-resident

investors who bought Chilean external

debt to trade that debt in Chile for local

currency to be used in carrying out

investment projects in Chile. The debt

swap and subsequent investment had to

be authorized by the Executive Council

of the Central Bank. Chapter XIX came

into effect on May 14, 1985, and was

abolished on August 3, 1995. No

operations were carried out after 1991,

however, because Chile’s external debt

appreciated in international markets,

reducing the attractiveness of the debt

swap operations.

Petitioners alleged that the Central

Bank used its authority in approving the

debt swaps to promote export-oriented

industries and import substitution.

Based on the evidence provided by the

GOC, we have determined that the

benefit, if any, of these debt swaps and

equity investments is not specific.

Neither the laws nor the regulations

concerning Chapter XIX debt for equity

swaps contained any formal provision

favoring exports or import substitution

at the time the investments at issue were

approved. Moreover, based on

information provided by the GOC,

nearly 30 percent of the operations

carried out under Chapter XIX were for

sectors producing non-traded goods.

While certain anecdotal evidence exists

regarding a bias towards export

industries, other anecdotal evidence

indicates that the Central Bank did not

favor exporters in its authorizations.

The GOC has claimed that the Central

Bank’s purpose in authorizing these

transactions was to ensure that the

parties were legally eligible to

participate and that the investment was

not fraudulent.

We note that the Central Bank rejected

a large number of proposed operations.

Because it was not obligated to publish

its reasons for accepting or rejecting an

application, we are unable to determine

whether the Central Bank directed

operations under Chapter XIX to exportoriented or import substituting

industries. At verification, we intend to

review closely the rejected proposals to

determine if the Central Bank used

discriminatory criteria to favor

orientation towards specific sectors of

the economy.

The GOC provided information on the

amount of debt renegotiated and

invested in each industry and region for

each of the years in which Chapter XIX

operations occurred. Only 4.4 percent of

the operations were in the fishing and

aquaculture sector; other sectors

represented in Chapter XIX operations

included mining, forestry,

communications, and financial

institutions, among others. Manufacture

of paper and printing was the industry

sector with the highest representation at

nearly 20 percent of operations.

Accordingly, we preliminarily

determine that the farmed salmon

industry was neither a predominant nor

a disproportionate user of this program.

D. Export Credit Limits

Law Number 18,576 of 1986 governs

lending limits for Chilean banks. Under

this law, Chilean banks are prohibited

from extending more than five percent

of their paid-in-capital in nonguaranteed loans to any single borrower.

(For guaranteed loans, the limit is 25

percent.) However, this law also allows

Chilean banks to lend an additional five

percent of their paid-in-capital to

exporters for their foreign currency

loans.

While this program allows a Chilean

bank to lend a greater percentage of its

paid-in capital to an exporter than to a

customer that does not export, we have

preliminarily determined that this does

not confer a benefit on exporters. Based

on the information submitted, it does

not appear that non-exporting borrowers

have less access to credit because, if

their borrowings will exceed the lending

limit at one bank, they can simply

borrow from another commercial bank

at equivalent rates and terms. We intend

to examine the information closely at

verification. Therefore, we preliminarily

determine that the export credit limits

do not constitute a countervailable

subsidy within the meaning of section

771(5)(E)(ii) of the Act because there is

no benefit conferred on exporters.

E. Law No. 18,449 (Stamp Tax

Exemption)

Under Decree Law 3,475 of 1980, a

stamp tax is levied on checks, letters of

exchange, money orders, promissory

notes and loan documents in Chile. The

tax is levied on checks at the flat rate

of 109 pesos, and on other types of

documents at the rate of 0.1 percent of

the capital amount per month, to a

maximum of 1.2 percent per annum, or

0.5 percent on obligations payable on

demand or with no specified maturity

date. The stamp tax is paid at the time

a loan is disbursed, as the issuing bank

withholds the amount of the stamp tax
Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices 61809

from the gross amount of the loan. Law

18,449 exempts documents relating to

the financing of exports from this tax.

In the Final Affirmative

Countervailing Duty Determination:

Standard Carnations from Chile, 52 FR

3313, 3314 (February 3, 1987), the

Department found the stamp tax

exemption countervailable, stating:

‘‘Neither the Government of Chile nor

the respondent companies gave us clear

explanations as to what is meant by

‘export credit operations.’ ’’ In this

proceeding, the GOC has placed on the

record the copies and translations of

regulations relating to this program

which describe the types of operations

and instruments eligible for the

exemption. We have previously

determined that the non-excessive

rebate or exemption of indirect taxes

levied at the final stage is not

considered a subsidy (see, e.g., Final

Negative Countervailing Determination:

Welded Carbon Steel Line Pipe from

Taiwan, 50 FR 53364 (December 31,

1985)). Because the amount of the

exemption is not greater than the

amount of the stamp tax due, we

preliminarily determine that this

program does not confer countervailable

benefits within the meaning of section

771(5)(E) of the Act.

F. Article 59 of Decree Law 824

Under Article 59 of Decree Law 824,

effective January 1, 1994, all foreign

service providers doing business in

Chile are required to pay income tax at

the rate of 35 percent. This tax is

withheld by the Chilean company to

which the service is provided and then

paid to the government. The law

exempts the foreign service providers

from paying the tax if the income was

for certain services related to exportable

goods and services produced in Chile. If

the services are eligible for the

exemption, the Chilean company (i.e.,

the purchaser of the services) is also

exempt from the withholding

requirement.

We found no evidence that the

benefit, if any, resulting from the

exemption from the tax and the

withholding requirement accrues to the

subject merchandise. Therefore, we

preliminarily determine that this

program does not constitute a

countervailable subsidy.

III. Programs Preliminarily Determined

To Be Not Used

The following programs were not

used:

A. Institute for Technological Research

(INTEC)

B. Central Bank Chapter XVIII

C. Export Promotion Fund

D. CORFO Export Credits and LongTerm Export Financing

E. Law No. 18,392 (Tax Exemptions)

IV. Programs Preliminarily Determined

Not To Exist

Based on information provided by the

GOC, we preliminarily determine that

the following programs do not exist:

A. GOC Guarantee of Private Bank

Loans

B. Import Substitution Subsidy for New

Industries

C. Tax Deductions Available to

Exporters

Summary

The total estimated preliminary net

countervailable subsidy rate for all

producers or exporters of fresh Atlantic

salmon in Chile is 0.62 percent, AD

VALOREM, which is de minimis.

Therefore, we preliminarily determine

that countervailable subsidies are not

being provided to producers, or

exporters of fresh Atlantic salmon in

Chile.

Verification

In accordance with section 782(i) of

the Act, we will verify the information

submitted by respondents prior to

making our final determination.

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 nonprivileged and nonproprietary

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 Deputy Assistant

Secretary, Import Administration.

If our final determination is

affirmative, the ITC will make its final

determination within 45 days after the

Department make its final

determination.

Public Comment

In accordance with 19 CFR 355.38, we

will hold a public hearing, if requested,

to afford interested parties an

opportunity to comment on this

preliminary determination. The hearing

will be held on March 6, 1998, at the

U.S. Department of Commerce, Room

3708, 14th Street and Constitution

Avenue, N.W., Washington, D.C. 20230.

Individuals who wish to request a

hearing must submit a written request

within ten days of the publication of

this notice in the Federal Register to the

Assistant Secretary for Import

Administration, U.S. Department of

Commerce, Room B099, 14th Street and

Constitution Avenue, N.W.,

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; (3) the reason for

attending; and (4) a list of the issues to

be discussed. In addition, ten copies of

the business proprietary version and

five copies of the nonproprietary

version of the case briefs must be

submitted to the Assistant Secretary no

later than February 24, 1998. Ten copies

of the business proprietary version and

five copies of the nonproprietary

version of the rebuttal briefs must be

submitted to the Assistant Secretary no

later than March 3, 1998. 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

355.38 and will be considered if

received within the time limits specified

above.

This determination is published

pursuant to section 703(f) of the Act.

Dated: November 10, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–30387 Filed 11–18–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF DEFENSE

Department of the Army

Availability of U.S. Patents for NonExclusive, Exclusive, or PartiallyExclusive Licensing

AGENCY: U.S. Army Research

Laboratory, Adelphi, Maryland.

ACTION: Notice.

SUMMARY: In accordance with 37 CFR

404.6, announcement is made of the

availability of the following U.S. patents

for non-exclusive, partially exclusive or

exclusive licensing. All of the listed

patents have been assigned to the

United States of America as represented

by the Secretary of the Army,

Washington, DC.

These patents cover a wide variety of

technical arts including: A new type

kinetic energy projectile; a new ceramic

nanocomposite; a device to locate the

position of impact of a projectile on a