Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices 31437

lower value-added products. This is

consistent with the methodology used

in Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From France, Germany, Italy,

Japan, Romania, Singapore, Sweden,

and The United Kingdom: Notice of

Preliminary Results of Antidumping

Duty Administrative Reviews and

Partial Termination of Administrative

Reviews, 63 FR 6512 (February 9, 1998).

We do not agree with the petitioners’

argument that, due to shortcomings in

Aguas Claras’ recordkeeping discovered

at verification, it would be more

appropriate to apply a fixed average

selling expense to all products.

However, we cannot address the

specifics of the petitioners’ argument in

this public forum, as a meaningful

discussion is only possible by means of

reference to business proprietary

information. We have addressed the

petitioners’ argument in a separate

memo to the file, which has been placed

on the official record, and served upon

parties with access to such information

under administrative protective order.

We note that, although only Aguas

Claras requested that the Department

recalculate CV indirect selling expenses,

to ensure consistency in our

calculations for the other respondents

we have also revised their CV indirect

selling expenses on the same basis.

Continuation of Suspension of

Liquidation

In accordance with section

735(c)(4)(B) of the Act, we are directing

the Customs Service to continue

suspending liquidation of all entries of

fresh Atlantic salmon from Chile, except

for subject merchandise produced and

exported by Camanchaca and Marine

Harvest (which have de minimis

weighted-average margins), that are

entered, or withdrawn from warehouse,

for consumption on or after January 16,

1998 (the date of publication of the

preliminary determination in the

Federal Register). The Customs Service

shall continue to require a cash deposit

or the posting of a bond equal to the

weighted-average amount by which the

normal value exceeds the EP or CEP, as

indicated in the chart below. These

instructions suspending liquidation will

remain in effect until further notice.

The weighted-average dumping

margins are as follows:

Exporter/manufacturer

Weighted-average margin percentage

Aguas Claras ................................ 8.27

Camanchaca ................................. 0.21

Exporter/manufacturer

Weighted-average margin percentage

Eicosal .......................................... 10.91

Mares Australes ............................ 2.24

Marine Harvest ............................. 1.36

All Others ...................................... 5.19

Section 735(c)(5)(A) of the Act directs

the Department to exclude all zero and

de minimis weighted-average dumping

margins, as well as dumping margins

determined entirely under facts

available under section 776 of the Act,

from the calculation of the ‘‘all others’’

rate. As explained above in Comment 5,

we have therefore excluded the de

minimis dumping margins for

Camanchaca and Marine Harvest from

the calculation of the ‘‘all others’’ rate.

No dumping margins were based

entirely on facts available.

ITC Notification

In accordance with section 735(d) of

the Act, we have notified the ITC of our

determination. As our final

determination is affirmative, the ITC

will, within 45 days, determine whether

these imports are materially injuring, or

threaten material injury to, the U.S.

industry. If the ITC determines that

material injury or threat of material

injury does not exist, the proceeding

will be terminated and all securities

posted will be refunded or canceled. If

the ITC determines that such injury

does exist, the Department will issue an

antidumping duty order directing the

Customs Service to assess antidumping

duties on all imports of the subject

merchandise entered for consumption

on or after the effective date of the

suspension of liquidation.

This determination is published

pursuant to sections 735(d) and 777(i) of

the Act.

Dated: June 1, 1998.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 98–15183 Filed 6–8–98; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[C–337–802]

Final Negative Countervailing Duty

Determination: Fresh Atlantic Salmon

from Chile

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: June 9, 1998.

FOR FURTHER INFORMATION CONTACT: Rosa

Jeong, Marian Wells or Todd Hansen,

Office of Antidumping/Countervailing

Duty Enforcement, Group 1, Office 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.

Final Determination

The Department of Commerce (the

‘‘Department’’) 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; Treats Island

Fisheries; and Trumpet Island Salmon

Farm, Inc. (collectively referred to

hereinafter as the ‘‘petitioners’’).

Case History

Since the publication of the

preliminary negative determination in

the Federal Register on November 19,

1997 (62 FR 61803) (‘‘Preliminary

Determination’’), the following events

have occurred.

On December 3, 1997, the petitioners

requested that the Department collect

information on Law 889, a program

which we had not included in our

investigation because information in the

petition indicated that the program was

no longer in existence. The petitioners’

submission included evidence that

indicated that this program was in

operation during the POI.

Upon a review of information on the

record, we determined that because the

program was included in the petition,

the petitioners’ request constituted a

timely submission of factual

information rather than a new subsidy

allegation. Accordingly, on December

11, 1997, we requested that the

Government of Chile (‘‘GOC’’) provide

information regarding benefits provided

under Chilean Law 889. The GOC

submitted the requested information on

January 21, 1998.

We conducted verification of the

responses of the GOC from January 28

through February 11, 1998.

The petitioners and the GOC filed

case and rebuttal briefs on March 4 and
31438 Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices

March 10, 1998, respectively. The

Department held a hearing on March 13,

1998.

On March 9, 1998, the petitioners

amended the petition to include

Trumpet Island Salmon Farm, Inc., a

U.S. producer of the subject

merchandise, as an additional

petitioner.

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

(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 item

numbers 0302.12.0003 and

0304.10.4093 of the Harmonized Tariff

Schedule of the United States

(‘‘HTSUS’’). Although the HTSUS

numbers are provided for convenience

and customs purposes, the written

description of the merchandise is

dispositive.

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’’).

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 weightedaverage useful life of productive assets

for the Chilean salmon industry, as the

allocation period in this investigation.

De Minimis Countervailable Subsidy

Pursuant to its authority under

section 771(36) of the Act, the United

States Trade Representative (‘‘USTR’’)

has designated Chile as a ‘‘developing

country.’’ See USTR Interim Final Rule:

Developing and Least-Developed

Country Designations Under the

Countervailing Duty Law (15 CFR 2013).

Consequently, a net countervailable

subsidy rate that does not exceed two

percent ad valorem is considered de

minimis, in accordance with section

703(b)(4)(B) of the Act and Article 27 of

the Agreement on Subsidies and

Countervailing Measures (‘‘SCM

Agreement’’). As discussed below, we

determine that the net countervailable

subsidy bestowed on fresh Atlantic

salmon from Chile is less than two

percent ad valorem, and therefore, de

minimis.

Based upon our analysis of the

petition, the responses to our

questionnaires, and the information

reviewed at verification, we determine

the following:

I. Programs Determined To Be

Countervailable

A. ProChile Export Promotion

Assistance

In the preliminary determination, we

found that this program conferred

countervailable subsidies on the subject

merchandise. Our review of the record,

our findings at verification and our

analysis of the comments submitted by

the interested parties, summarized

below, have led us to modify our

findings from the preliminary

determination for this program. See

infra Comments 2 and 4 for a discussion

of issues related to this program. See

also memorandum from the team to the

file, ‘‘Calculations for Final

Determination,’’ dated June 1, 1998

(public version on file in the Central

Records Unit of the Department of

Commerce) (‘‘Calculation

Memorandum’’). The benefit in the POI

was calculated using our standard grant

allocation methodology. The

countervailable subsidy rate for this

program is changed and is determined

to be 0.04 percent ad valorem.

B. CORFO Export Credit Insurance

Premium Assistance

In the preliminary determination, we

found that this program conferred

countervailable subsidies on the subject

merchandise. We did not receive any

comments on this program from the

interested parties, and our review of the

record has not led us to change any

findings or calculations. Accordingly,

the countervailable subsidy for this

program is unchanged and is

determined to be 0.01 percent ad

valorem.

C. Law 18,634

In the preliminary determination, we

found that the fiscal credit and the

waiver provisions of this program

conferred countervailable subsidies on

the subject merchandise. Based on our

review of the record and our analysis of

comments on this program from the

interested parties, we have changed our

findings and find the entirety of Law

18,634, including the duty deferral

provision which was preliminarily

determined to be not countervailable,

constitutes a countervailable export

subsidy. See infra Comment 5; see also

infra Comment 6 for a discussion of

another issue that did not affect our

findings. We changed our methodology

for calculating the fiscal credit benefit to

account for the difference between the

date the GOC records the loan and the

date the funds are disbursed to

participants. In addition, we corrected

our calculations for certain clerical

errors discovered in the data submitted

by the GOC. See infra Comment 7.

Accordingly, the countervailable

subsidy for this program is changed and

is determined to be 0.48 percent ad

valorem.

D. Promotion and Development Fund

(Decree 15)

In the preliminary determination, we

found that this program conferred

countervailable subsidies on the subject

merchandise. Our review of the record

and our analysis of the comments on

this program from the interested parties

have not led us to change our findings

or calculations. See infra Comment 11.

Accordingly, the countervailable

subsidy for this program is unchanged
Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices 31439

and is determined to be 0.01 percent ad

valorem.

E. Law 18,480

In the preliminary determination, we

found that this program conferred

countervailable subsidies on the subject

merchandise. Our review of the record

and our analysis of the comments

submitted by the interested parties have

led us to modify our calculations from

the preliminary determination for this

program. Specifically, we adjusted the

denominator used to calculate the

benefit for this program. See infra

Comment 8; see also Calculation

Memorandum. Accordingly, the

countervailable subsidy for this program

has been changed and is determined to

be 0.06 percent ad valorem.

F. Law 889 (Workers’ Support Program)

(As discussed in the ‘‘Case History’’

section above, Law 889 was not

considered at the preliminary

determination.)

Law 889, enacted in 1975, established

the ‘‘Workers’’ Support Program’’ for

Regions I, XI and the province of Chiloe ́

in Region X. In 1993, the eligibility was

extended to the province of Palena, also

in Region X. The Workers’ Support

Program provides grants to employers

operating in those named regions in an

amount equivalent to 17 percent of the

taxable remuneration of the worker. The

taxable remuneration of the employee

must not exceed 90,000 pesos. This

limit is adjusted every year according to

the Consumer Price Index of the

corresponding year (adjusted to 109,967

pesos during the period January 1, 1996,

through May 31, 1996, and then again

to 118,984 pesos for the remainder of

1996). The GOC reports that the

government policy behind this program

was to provide an incentive to generate

new jobs in certain economically

disadvantaged territories of the country

by compensating for a portion of the

cost of labor to employers operating in

those regions.

To be eligible, the company must

employ workers who are both domiciled

and permanently employed in the

identified regions. Certain employers

including the public sector, large and

medium copper and iron mining

companies, state-controlled enterprises,

banking and financing companies,

insurance companies, and domestic

(household) workers are excluded from

benefits under this program. The GOC

has provided information on the amount

of grants received under this program by

the producers and exporters of fresh

Atlantic salmon.

We determine that the Workers’

Support Program under Law 889

provides countervailable subsidies

within the meaning of section 771(5) of

the Act. The grants are a direct transfer

of funds providing a benefit in the

amount of the grant. Pursuant to section

771(5A)(D)(iv) of the Act, the grants are

specific because they are limited to

firms located in a designated

geographical region.

Because these grants are made on an

ongoing basis, we have treated these

grants as recurring based on the analysis

set forth in the General Issues Appendix

(‘‘GIA’’), attached to the Final

Affirmative Countervailing Duty

Determination: Certain Steel Products

from Austria, 58 FR 37217, 37226 (July

9, 1993).

To calculate the subsidy rate, we

divided the benefit attributable to the

POI by the value of all sales by

producers and exporters of salmon

during the POI. See infra Comment 11.

On this basis, we determine the

countervailable subsidy for this program

to be 0.51 percent ad valorem.

II. Programs Determined To Be Not

Countervailable

Based on the information provided in

the responses and the results of

verification, we continue to find the

following programs not countervailable

for the same reasons identified in the

preliminary determination:

A. Fundacio ́n Chile Assistance

B. Fund for Technological and

Productive Development (FONTEC)

C. Central Bank Chapter XIX

D. Law 18,449 (Stamp Tax Exemption)

E. Article 59 of Law 824

III. Programs Determined To Be Not

Used

Based on the information provided in

the responses and the results of

verification, we determine that 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 18,392 (Tax Exemptions)

IV. Programs Determined Not To Exist

Based on information provided by the

GOC and the results of verification, we

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

V. Other Programs Examined

A. Export Credit Limits

In our preliminary determination, we

found that Law 18,576, which

authorizes banks to lend an additional

five percent of their paid-in capital to

exporters for their foreign currency

loans, did not confer countervailable

benefits on the subject merchandise.

(See Preliminary Determination at

61808.) In Final Affirmative

Countervailing Duty Determination;

Standard Carnations from Chile, 52 FR

3313, 3315 (February 3, 1987), we found

this program to be not used, stating:

‘‘[W]e found no indication that the

exporters under investigation received

more loans than domestic sellers.’’ At

verification, we met with several

representatives from private banks in

Chile, as well as representatives from

the Central Bank and from the SBIF.

These experts indicated that bank credit

limits are designed to limit a bank’s loss

exposure to any one client. They further

stated that the decision to lend funds to

an individual customer is based on a

variety of factors, and that the bank will

seek to prudently assess the risk

associated with lending to that customer

(see memorandum from the team to Roy

A. Malmrose, Acting Director, Office I,

‘‘Verification of the Questionnaire

Responses of the Government of Chile,’’

dated February 27, 1998, page 33 and

Appendix 3 at page 2).

Because Law 18,576 limits the

amount that a bank may lend to any

individual customer, and it allows

higher credit limits for export loans, it

may constitute a countervailable

subsidy within the meaning of section

771(5) of the Act. The GOC is directing

the actions of financial institutions by

setting credit limits for otherwise

similarly situated domestic borrowers at

a lower level than that which is

available to exporters. The higher

lending limits for exporters may result

in exporters receiving more credit from

any one bank than would otherwise be

available from that bank. The higher

credit limits are specific because they

are contingent on exportation or

anticipated exportation.

A review of the record evidence,

however, has led us to conclude that

any potential benefit to the subject

merchandise resulting from this

program would be minuscule. First, the

salmon industry in Chile is fragmented,

with many small- and medium-sized

producers and exporters. Accordingly,

the borrowing needs of any individual

producer are relatively insignificant.

Second, the banking industry in Chile

has undergone a period of

consolidation, such that the available
31440 Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices

capital at larger banks for an individual

domestic borrower is substantial.

Further, record evidence indicates that

the Chilean banking industry is highly

competitive; there is no reason to

believe loans on similar terms are not

available from other banks. In fact,

information on the record does not

demonstrate any differential between

interest rates on export loans compared

to domestic loans that can be attributed

to Law 18,576. Because there would

likely be no impact on the overall

subsidy rate in the instant investigation

for the POI, we do not consider it

necessary to address the issue of

whether this program is countervailable

or what would be the appropriate

methodology for measuring any benefit

accruing to the subject merchandise.

Interested Party Comments

Comment 1: The petitioners argue that

Chile should be treated as a developed

country subject to a de minimis

threshold of one percent for purposes of

the countervailing duty law. The GOC

rebuts that Chile is a developing country

and should, therefore, be subject to a

two percent de minimis threshold.

Department’s Position: As

acknowledged by the parties, section

771(36) of the Act reserves the authority

to designate Chile’s status as developed

or developing for purposes of the

countervailing duty law to the USTR.

Accordingly, we are not addressing this

issue. See supra section entitled ‘‘De

Minimis Countervailable Subsidy.’’

Comment 2: The GOC claims that

ProChile assistance is not

countervailable because ProChile’s

services are not contingent upon exports

and ProChile does not promote certain

products over others. According to the

GOC, the fact that 46 percent of the

companies using ProChile’s services in

1996 did not export evinces the lack of

an export requirement. The GOC further

contends that the ProChile program is

used by a broad range of industries from

all regions of Chile, thereby proving that

the program is neither de jure nor de

facto specific.

Moreover, the GOC argues that

ProChile’s activities consist mostly of

general informational activities, similar

to those practiced by the U.S.

Department of Commerce, International

Trade Administration’s Foreign

Commercial Service (‘‘FCS’’) and Trade

Development (‘‘TD’’) divisions.

According to the GOC, ProChile

provides the same services for a broad

spectrum of Chilean goods and services

and does not seek to promote a

particular product over others.

The petitioners contend that the

GOC’s argument does not address the

presumption of per se specificity for

export subsidies. The petitioners argue

that because the GOC assesses export

potential when considering a company

for participation in ProChile export

promotion events, the program is

contingent on exports or anticipated

exports and, thus, countervailable. The

petitioners note that even if 46 percent

of the participating companies did not

export, the majority, 54 percent, did

export. The petitioners argue that the

name of the division of the GOC

administering the ProChile program, the

Export Promotion Bureau, is further

evidence that the organization provides

a countervailable export promotion

subsidy.

The petitioners also reject the GOC’s

argument that ProChiles’ activities

should be considered ‘‘general

informational activities.’’ The

petitioners assert that export promotion

programs that promote a specific

product or provide financial assistance,

are not general export promotion.

Department’s Position: For this final

determination we continue to find that

payments by ProChile to underwrite the

cost of trade fairs held in the United

States and other marketing expenses to

promote, inter alia, Chilean salmon, are

countervailable export subsidies within

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

At these trade fairs, ProChile promoted

specific products and assumed certain

advertising and marketing costs for the

participating firms. Consistent with

footnote 4 to Article 3.1(a) of the SCM

Agreement, the payments made by

ProChile are tied to anticipated

exportation of Chilean salmon.

Our treatment of this program as a

countervailable export promotion

program is consistent with our

determination in Final Affirmative

Countervailing Duty Determination:

Certain Fresh Atlantic Groundfish from

Canada, 51 FR 10041 (March 24, 1986)

(‘‘Groundfish from Canada’’). In that

case, we countervailed a program in

which the Canadian government

promoted certain products at a trade

show abroad, covering advertising costs

among other costs.

We agree with the GOC that ProChile

provides varied services to many

companies, including non-exporters,

and supports general informational

activities. However, our finding of

countervailability in this investigation

does not extend to those services and

activities. We have only found

countervailable ProChile’s assumption

of costs in connection with the salmon

producers’ and exporters’ participation

in trade fairs held in the United States.

Comment 3: The GOC claims that the

trade fair, ‘‘Event Bon Appe ́tit,’’ is not

countervailable because it is part of a

much broader Chilean promotion

campaign that does not promote salmon

over other products. According to the

GOC, this program works to promote the

image of Chile without assuming costs

that the salmon industry would

otherwise incur. In the event that the

Department continues to find ‘‘Event

Bon Appe ́tit’’ to be countervailable, the

GOC asserts that certain payments made

after the POI should not be considered

countervailable.

The petitioners counter that ‘‘Event

Bon Appe ́tit’’ is countervailable because

it conferred an export subsidy to the

salmon industry by promoting the

export of salmon and wine to the United

States over other Chilean goods. The

petitioners note that this is consistent

with the treatment of a similar program

in the Groundfish from Canada, where

the Department countervailed a program

in which the Canadian government

promoted certain products at a trade

show abroad, covering advertising costs

among other expenses.

The petitioners further argue that the

entirety of ‘‘Event Bon Appe ́tit’’ funding

should be countervailed because it is

the Department’s practice to find that

the benefit occurs when the recipient

experiences the economic effect of the

subsidy. The petitioners cite to Final

Affirmative Countervailing Duty

Determination and Countervailing Duty

Order; Certain Steel Wire Nails from

New Zealand, 52 FR 37196, 37197

(October 5, 1987) (‘‘Wire Nails from New

Zealand’’) where the Department

measured tax benefits on an earned

basis because the amount of the benefit

was known at the time a firm made an

export transaction. The petitioners argue

that it is irrelevant when the GOC

actually disbursed funds to pay for the

events that had already benefitted the

salmon exporters. What is important,

according to the petitioners, is when the

salmon exporters experienced the

economic effect of the subsidy, i.e., at

the time of the ProChile-sponsored

event.

Department’s Position: While we

agree with the petitioners that ‘‘Event

Bon Appe ́tit’’ is specific in that it is

contingent on exports within the

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

Act , we disagree with them concerning

the timing of the subsidy benefits. The

Department’s practice deems benefits to

be received at the time that there is an

effect on the recipient’s cash flow. In the

case of the provision of a good or

service, this would be the time a firm

pays, or in the absence of payment,

would have paid, for the good or

service. (See, e.g., Countervailing Duties:

Notice of Proposed Rulemaking, 54 FR
Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices 31441

23368 (May 31, 1989) (‘‘1989 Proposed

Regulations’’) section 355.48(b)(2), and

GIA at 37228–29, ‘‘[B]enefits are

generally deemed to be received at the

time there is a cash flow effect on the

company receiving the benefit.’’) The

Department occasionally makes an

exception to this general rule where

benefits are earned on a shipment-byshipment basis and are known at the

time of export, as was the case in Wire

Nails from New Zealand, but, because

the benefits are not associated with

specific export transactions, this is not

the case here. (See also Final Results of

Countervailing Duty Administrative

Review: Certain Iron-Metal Castings

from India, 56 FR 52521, 52527

(October 21, 1991).)

Where the GOC paid fees in

connection with this event after the POI

to the firms that provided the services,

the salmon exporter experienced the

cash flow effect after the POI.

Accordingly, we have not included

payments made after the POI in our

calculation of benefits from ‘‘Event Bon

Appe ́tit.’’

We have continued to find the costs

paid by the GOC during the POI in

putting on this event countervailable,

however, as they were costs that would

normally have been paid by the

producers and exporters of the

promoted merchandise, were targeted to

the U.S. market, and were contingent on

exportation.

Comment 4: The GOC argues that the

‘‘Summer Harvest’’ event is not

countervailable because it was

sponsored as an ‘‘image’’ event

involving a broad range of products that

did not promote particular products

over others. The GOC asserts that many

of the costs of the event were covered

by private participants and no funds

were provided by the GOC directly to

the Chilean companies or associations.

The GOC argues that if the Department

calculates a benefit from the ‘‘Summer

Harvest’’ event, it must use a

denominator that reflects the

participation of the salmon industry as

one of many participating products

rather than allocating all of the benefits

of the event to salmon.

The petitioners assert that the

‘‘Summer Harvest’’ event is fully

countervailable. The petitioners argue

that the GOC should have reported the

program prior to verification and that its

decision not to report the program does

not demonstrate that the program

constitutes general export promotion.

The petitioners argue that the GOC’s

analysis is flawed because the

Department’s determination of an export

subsidy considers neither the

examination of the number of

participants nor the amount of the

government contribution. According to

the petitioners, the ‘‘Summer Harvest’’

event is fully countervailable because it

was not limited to general informational

activities, promoted particular products

over others, and targeted the U.S.

market. The petitioners contend that

because the record lacks adequate

information to properly calculate the

value of the benefit conferred by this

event, the Department must apply facts

available.

Department’s Position: We agree with

the GOC that the ‘‘Summer Harvest’’

event does not constitute a

countervailable subsidy. A review of the

information on the record indicates that

‘‘Summer Harvest’’ was an ‘‘image’’

event that falls within the category of

activities defined as ‘‘general export

promotion’’ which the Department has

declined to countervail in past cases.

See, e.g., Certain Fresh Cut Flowers

From Mexico, 49 FR 15007, 15008 (April

16, 1984) and Final Affirmative

Countervailing Duty Determination and

Countervailing Duty Order; Cotton

Sheeting and Sateen From Peru, 48 FR

4501, 4504 (February 1, 1983); see also

1989 Proposed Regulations (section

355.44(m)) and Countervailing Duties;

Proposed Rule, 62 FR 8818, 8825

(February 26, 1997) (‘‘1997 Proposed

Regulations’’). While the GOC did

consider the export potential of

products on display at the event, a very

broad range of products was invited to

participate in an effort to position the

image of Chile as a producer of high

quality food products for the world

market. We note that in the

documentation, the participants were

referred to by the GOC as ‘‘donors’’ of

the merchandise on display. Although

the GOC covered certain expenditures

related to the event, we note that none

of the outlays by the GOC for this event

went to the Chilean associations

participating, nor did the GOC cover

any of their costs. In fact, the

participants covered a significant

portion of the general costs associated

with this event, in addition to

contributing merchandise for display

(including transportation costs from

Chile). Accordingly, we have not

included an amount for the ‘‘Summer

Harvest’’ event in our calculation of

benefits to the subject merchandise from

ProChile’s export promotion activities.

Comment 5: The GOC argues that the

fiscal credit program of Law 18,634 is

not an import substitution subsidy and,

thus, should not be countervailed. The

GOC contends that the fiscal credit

provision and the duty deferral

provision are in fact a single loan

program, rather than two separate ones,

and when considered together for the

Department’s specificity analysis, the

program does not constitute an import

substitution subsidy.

According to the GOC, the fiscal

credit and duty deferral provisions of

Law 18,634 are both part of a single,

unified statutory loan program whose

purpose is to promote investment in

capital goods regardless of the source of

those goods. The GOC points out both

the fiscal credit and the duty deferral

are established in the same law,

administered in the same manner, and

their rules are set forth in the same

Chilean Customs resolution. Referring to

the factors set forth in the Department’s

1997 Proposed Regulations (at 8825)

and 1989 Proposed Regulations (section

355.43(b)(6)) with respect to the

Department’s practice in evaluating

programs that are ‘‘integrally linked,’’

the GOC states that the fiscal credit and

duty deferral provisions of Law 18,634

meet all of the factors. According to the

GOC, an evaluation of factors

demonstrates that the duty deferral and

fiscal credit are not only integrally

linked, but they in fact are a single loan

program.

The GOC argues that the purpose and

design of the fiscal credit was to ensure

that imports and domestic products

would be treated equally. Referring to

the legislative history of Law 18,634, the

GOC asserts that the fiscal credit was

specifically adopted to offset the

pecuniary benefits to imported goods

created by the duty deferral provision.

When the fiscal credit and duty

deferral provisions are considered

together, the GOC argues that the fiscal

credit does not create a preference for

domestic goods nor are the loans issued

contingent upon the purchase of

domestic goods. The GOC points out

that the amount of fiscal credit is equal

to 73 percent of the amount of the

customs duty that would be deferred

under the duty deferral provision.

Consequently, the GOC asserts, the

program avoids any preference for

domestic goods since the amount of the

fiscal credit for domestic goods can

never exceed the amount of the duty

deferral for imported goods. The GOC

further states that the conditions for

obtaining a loan under this program are

the same for both provisions of the law

which is limited to the type and the

value of the good. According to the

GOC, the source of the good as either

foreign or domestic does not affect the

eligibility, the issuance or the condition

of the loan. The GOC states that the

source is only relevant in determining

whether the form of the loan will be that

of a fiscal credit or a duty deferral.
31442 Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices

When considered as a single domestic

subsidy program, the GOC contends that

the usage information on the record

demonstrates that the two provisions are

not specific in that there is no

disproportionate or dominant usage by

the salmon industry.

The petitioners argue that the fiscal

credit and the duty deferral provisions

are properly analyzed as separate

programs. Because the receipt of

benefits is available only to purchasers

of domestic goods, the petitioners assert

that the fiscal credit program is a de jure

import substitution subsidy which is

per se specific pursuant to section

771(5A)(A) of the Act. According to the

petitioners, whether the fiscal credit

provision or both provisions of Law

18,634 taken together creates any

‘‘preference’’ is irrelevant to the analysis

of an import substitution subsidy, i.e.,

whether receipt of benefit is contingent

on the purchase of domestic goods over

imported goods. Moreover, the

petitioners argue that contrary to the

GOC’s claims, the program encourages

firms to purchase domestic goods

through the issuance of interest-free

credits. According to the petitioners, the

duty deferral provision addresses the

distortion caused by the imposition of

the import tariff and, thus, allows

imported capital goods to compete on

an equal basis with domestic capital

goods. The petitioners contend that the

fiscal credit provision, on the other

hand, artificially reduces the price of

the domestic good that was made

comparable through the duty deferral,

thereby creating a preference to

purchase domestic goods.

Furthermore, the petitioners argue

that the ‘‘integral linkage’’ test does not

apply in this situation because the test

is only relevant in analyzing the de

facto specificity of domestic subsidies.

Because the fiscal credit program is

specific as an import substitution

subsidy, the petitioners assert that a de

facto specificity analysis is unnecessary

and irrelevant. Even assuming the

integral linkage test were appropriate in

this case, the petitioners argue that Law

18,634 does not satisfy the criteria set

forth in the Department’s integral

linkage analysis. In particular, the

petitioners claim that the GOC has not

proven that the programs share the same

purpose and that all recipients are

treated equally.

Department’s Position: In our

preliminary determination, we analyzed

the assistance provided under Law

18,634 by considering separately four

components of the law. First, firms that

import capital equipment are eligible to

defer payment of duty. Second, if the

firm that imports the equipment meets

a specified export target, then the

deferred duty and accrued interest are

waived. Third, firms that purchase their

equipment domestically are eligible to

borrow up to 73 percent of the value of

the duty that would have been paid if

the equipment had been imported.

Finally, if the firm that purchases

domestically sourced equipment meets

a specified export target, then the loan

and accrued interest are forgiven. In our

preliminary determination, we found

that all the components of Law 18,634

except the first conferred

countervailable subsidies. This was

consistent with our determinations in

past cases (see, e.g., Final Affirmative

Countervailing Duty Determinations:

Certain Steel Products from Brazil, 58

FR 37295, 37299 (July 9, 1993)

(Exemption of IPI and Duties on Imports

under Decree-Law 2324)). With respect

to the duty deferral, we found that the

benefit was not specific.

The GOC argues that two components

of the program, the duty deferral

component and the loans to purchasers

of domestically sourced equipment,

should be treated as a single program for

specificity analysis. We have not

adopted this position because it

amounts to picking and choosing which

elements of the law should be combined

in order to achieve the result that the

loans to purchasers of domestically

sourced equipment are not specific.

Based on our review of the law and its

legislative history, we have determined

that the four components should be

analyzed as a single program.

In its argument, the GOC points to the

legislative history discussing the

purpose of introducing the loans and

waivers for purchases of domestically

sourced equipment, i.e., to avoid a

preference for imported equipment.

However, the same legislative history

indicates that the purpose of the preexisting duty deferral and waiver system

was to promote importation of capital

goods and, at the same time, to promote

exports. (See January 21, 1998 GOC

Submission, exhibit 8, page 2, paragraph

2.) We further note that all components

of Law 18,634 are administered by

Chilean Customs, and the list of eligible

goods is the same for the duty deferral/

waiver components as for the loan/

waiver for domestically sourced

equipment. Thus, the loan/waiver for

domestically sourced equipment was

added to and became part of an overall

scheme to, inter alia, promote exports.

While we acknowledge that the duty

deferrals and loans for purchases of

domestically sourced equipment are not

strictly contingent upon exportation,

their overarching purpose, along with

the waiver components, is to promote

exports. Viewed as a whole, we

determine that the benefits provided

under Law 18,634 constitute an export

subsidy within the meaning of section

771(5A)(B) of the Act are, therefore,

specific. A benefit is conferred on the

recipient firms in the amount of the

waivers and to the extent that the

benchmark interest exceeds the program

interest on the duty deferrals and on the

loans for purchases of domestically

sourced equipment.

Comment 6: The petitioners argue that

the fiscal credits under Law 18,634

constitute contingent liabilities which

should be treated as short-term, interestfree loans in the final determination.

Referring to section 355.49(f) of the 1989

Proposed Regulations, the petitioners

assert that ‘‘where a government

provides a long-term, interest-free loan,

the obligation for repayment of which is

contingent upon subsequent events,’’

the Department’s practice is to treat

such loans as short-term, interest-free

loans. According to the petitioners, all

the conditions of section 355.49(f) are

met here.

The petitioners first state that the

loans are long-term because the

repayment of the fiscal credits under

Law 18,634 occurs at years three, five

and seven from the date of receipt.

Second, the petitioners point out that

even though interest may be accruing,

the recipient company is not required to

make any principal or interest payments

until the occurrence of subsequent

events. According to the petitioners, the

lack of payments during the period that

the fiscal credits are outstanding and

given the significant likelihood of a

salmon company having its fiscal credit

waived, the fiscal credits are in effect

equivalent to a zero interest rate loan. In

addition, the petitioners assert that

because repayment of principal and

interest is subject to a condition relating

to a specific export target, the fiscal

credits represent contingent liabilities.

The petitioners further state that the

Department treated loans with similar

payment structures to Law 18,634 fiscal

credits as contingent liabilities in past

cases such as Final Affirmative

Countervailing Duty Determination:

Carbon Steel Products from Sweden, 50

FR 33375 (August 19, 1985) and Final

Affirmative Countervailing Duty

Determinations: Certain Steel Products

from Germany, 58 FR 37315 (July 9,

1993).

The GOC counters that because Law

18,634 fiscal credits are in fact not

interest-free, the petitioners’ proposed

methodology of treating the loans as

interest-free would effectively doublecount interest—once when accrued

interest has been waived and again
Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices 31443

when the amount of interest is

calculated. The GOC states that the

cases cited by the petitioners are clearly

distinguishable because the programs

examined actually did involve interestfree loans. By contrast, the GOC asserts

that the fiscal credits accrue interest

from the invoice date of the capital good

and, thus, are not interest-free for any

period of time. According to the GOC,

the Department’s preliminary

determination methodology of

calculating the difference between

program interest and benchmark interest

accurately captured all benefits offered

by the fiscal credits.

Department’s Position: We agree with

the GOC. While the fiscal credits may

represent contingent liabilities in that

repayment is conditioned upon

subsequent events, the methodology

contained in section 355.49(f) of the

1989 Proposed Regulations is

inapplicable because the loans are in

fact not interest-free. Under the terms of

Law 18,634, the interest on the fiscal

credit accrues from the date of the

invoice of the capital good until the

time of repayment. Although the

accrued interest, along with the

principal, may ultimately be waived, we

cannot ignore the fact that the interest

may have to be paid. Despite the

petitioners’ argument that a salmon

company was significantly more likely

to have its fiscal credit waived, the fact

remains that some of the borrowers did

not meet the conditions and did repay

the accrued interest and the principal.

As stated by the GOC, by countervailing

the difference between the program and

the benchmark interest rate during the

time the fiscal credit is outstanding and

then countervailing the entire waived

amount, we have accurately captured all

benefits that arise from the fiscal credits.

Comment 7: The GOC argues that the

Department should adjust the reported

amounts for waivers of deferred duties

and fiscal credits under Law 18,634 to

correct for amounts that were doublecounted in the database submitted by

the GOC, as detailed in the GOC’s

January 21, 1998 submission, and

supplemented in the January 27, 1998

submission.

The GOC notes that the Department

verified that when there was a change

in ownership of equipment on which

the duty deferral or fiscal credit was

claimed, that asset was reentered in the

fiscal credit database although the

original balance was not deleted from

the original database. The GOC argues

that to avoid double-counting, the

Department should delete all fiscal

credit entries with reference numbers

less than 500,000 from the database.

Department’s Position: We have

corrected the amount of waivers in our

final determination to exclude doublecounted waivers of interest, deferred

duties and fiscal credits identified by

the GOC in the January 28, 1998

submission. We have not deleted all

balances with reference numbers of less

than 500,000 as suggested by the GOC,

however, as it is the original reference

number that represents the obligation of

the original owner and should be

deleted, not the number that represents

the obligation by the subsequent

purchaser. The GOC has not identified

the matching reference numbers for all

reference numbers less than 500,000.

Accordingly, we have no assurance that

the seller was a producer of the subject

merchandise and that the seller’s

obligation for the duty deferral or fiscal

credit was included in the submitted

databases.

Comment 8: The petitioners argue that

the Department should recalculate the

benefit provided under Law 18,480 to

reflect the Department’s practice of

tying a subsidy to the particular product

that it benefits. The petitioners suggest

that the Department divide the amount

of grants received by the value of the

salmon producers’ exports of only those

products eligible to receive such

benefits.

The petitioners contend that by using

a denominator comprised of all exports

by the salmon producers and exporters,

the Department significantly

understated the benefits conferred by

this program in the preliminary

determination.

The petitioners suggest that because

the GOC has not provided the

information needed to calculate the

correct denominator, i.e., a denominator

that includes only eligible merchandise,

the Department should use a numerator

that would include total receipts under

both prongs of Law 18,480. The

petitioners also assert that the GOC

should have been able to identify the

subject merchandise in question and the

amount of benefits tied to that

merchandise through the paperwork

required to document each refund with

the Servicio Nacional de Aduanas

(‘‘Chilean Customs’’) and the Tesoreria

General de la Republica (‘‘Chilean

Treasury’’).

The GOC argues that the petitioners

have an incorrect understanding of Law

18,480 and that the Department should

continue to calculate the benefits from

Law 18,480 by using all exports as the

denominator and all subsidy benefits

received under the domestically sourced

inputs program as the numerator. The

GOC asserts that using the denominator

of total exports is appropriate because

the reported amount of benefits for the

domestic input prong of Law 18,480 was

the total amount of benefits received by

the responding companies on all of their

exports. The GOC asserts that the

petitioners’ statement that there are

categories of exports that are not eligible

for either prong of Law 18,480 is

erroneous, as eligibility for the domestic

input prong of Law 18,480 is not related

to the product exported.

The GOC also argues that it is not

practicable for the GOC to report

benefits received only on exports of the

subject merchandise. The GOC insists

that databases at the Chilean Customs

and the Chilean Treasury do not contain

a link allowing them to cross-reference

and determine the amount of benefits

claimed on domestic inputs based on

exports of a given category of

merchandise. The GOC states that it has

no way to identify the exported

merchandise on which benefits were

claimed and therefore had no alternative

but to report only the benefits received

for domestically sourced inputs on all

exports by producers and exporters of

the subject merchandise. The GOC

contends that it has acted to the best of

its ability to comply with all requests

from the Department during this

proceeding, therefore eliminating any

grounds to apply adverse facts available.

According to the GOC, the Department

should not add a value for the

simplified duty drawback to the input

credit benefits, i.e., increase the

numerator to match the denominator,

because salmon is not eligible for the

simplified duty drawback. The GOC

argues that it would clearly be incorrect

for the Department to countervail

benefits that do not and cannot relate to

the subject merchandise. The GOC

argues that if the Department considers

it necessary to adjust the calculation of

the benefit rate for this program, the

Department should reduce the

denominator to exclude only those

exports where the exporter was shown

to have claimed simplified duty

drawback on that category of

merchandise.

Department’s Position: The selection

of an appropriate calculation

methodology for this program has been

complicated because there are two,

potentially overlapping provisions to

Law 18,480, and because of the manner

in which the GOC maintains records

concerning benefits under this program.

The first provision of Law 18,480

provides a simplified duty drawback for

small-volume, ‘‘non-traditional,’’

exports. The second provision enables

exporters to claim benefits for certain

domestically sourced inputs which are

incorporated into exports of other
31444 Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices

merchandise. The subject merchandise

is not eligible for the simplified duty

drawback provision, however, during

the POI, exporters of the subject

merchandise claimed benefits for

domestically sourced inputs

incorporated in their exports of salmon.

Exporters of the subject merchandise

also exported other merchandise, for

which they may have claimed benefits

for domestically sourced inputs or

simplified duty drawback.

As noted by the GOC, exporters of

merchandise that is eligible for the

simplified duty-drawback provision also

have the option of claiming benefits for

the inputs into that merchandise. They

cannot, however, receive payments

under both the simplified drawback and

the provision for domestically sourced

inputs for the same export transaction.

Also, as noted by the petitioners, not all

exports are eligible to claim benefits for

domestically sourced inputs. These

include, e.g., exports for which regular

duty drawback was claimed, exports

where imported inputs exceed 50

percent of the f.o.b. value of the

exported merchandise, and exports

whose raw materials or main factor of

production is ineligible for the

simplified duty drawback and

represents 85 percent or more of the

f.o.b. value of the exported

merchandise.

To calculate the countervailing duty

rate for this program, we would prefer

to have information on the benefits

provided for exports of the subject

merchandise, and divide that amount by

the value of exports of the subject

merchandise. That is not possible in this

instance, however, because when the

GOC receives claims for benefits for

domestically sourced inputs, it records

this information under the customs

category of the input, not based on the

merchandise that is exported. Based on

our verification, we are satisfied that the

GOC was not able to provide

information on the amount of benefits

paid on exports of the subject

merchandise.

The GOC was able to provide total

payments to exporters of salmon under

the provision for domestically sourced

inputs, which may include payments for

non-subject merchandise exported by

these companies. In our preliminary

determination, we divided these total

receipts by the value of all products

exported by the salmon exporters.

For our final determination, we have

modified our calculation from the

preliminary determination because we

believe it understated the benefit to

exports of the subject merchandise. In

particular, because certain exports of

non-subject merchandise are eligible for

the simplified drawback and because

the amount of benefits the exporters

would receive under the simplified

drawback is generally greater than the

amount they would receive under the

provision for domestically sourced

inputs, we have assumed that in most

cases, if a claim were filed, the

simplified drawback would be claimed

for eligible exports. Consequently, at our

request, the GOC provided information

on the amount of exports eligible for

simplified duty drawback and we have

adjusted the denominator used in our

preliminary determination to exclude

exports of such merchandise.

The GOC has argued that salmon

exporters may have claimed benefits for

domestically sourced inputs where

merchandise was also eligible for the

simplified drawback and, hence,

payments related to merchandise

excluded from our denominator may be

included in our numerator. If our

assumption is correct that salmon

exporters can be expected to use

simplified drawback for exports of nonsubject merchandise eligible for that

program, rather than claim benefits for

domestically sourced inputs, then our

preliminary methodology dilutes the

benefit calculation for the subject

merchandise. This dilution would result

from including exports of non-subject

merchandise in the denominator that

had already benefited from the

simplified drawback and did not and

could not have received the payments

included in our numerator (benefits for

domestically sourced inputs). To the

extent that benefits for domestically

sourced inputs were claimed for exports

eligible for simplified drawback by

salmon exporters, we acknowledge that

the denominator may be slightly

understated.

We disagree with the petitioners that

the correct way to adjust our calculation

would be to increase the numerator by

including simplified drawback

payments received on shipments of nonsubject merchandise. Because the

benefits available under the simplified

drawback are generally much greater,

this would have the effect of

significantly overstating the benefit to

subject merchandise. Additionally, we

have not calculated the benefit from this

program by using only exports of subject

merchandise as the denominator,

because such a methodology would

clearly overstate the benefit from this

program. We note that while certain

exports may not receive benefits for

domestically sourced inputs, this is

dependent on the inputs, and not the

category of merchandise exported. Thus,

exports of non-subject merchandise

included in our denominator are not

precluded from claiming benefits for

domestically sourced inputs.

Consequently, to the extent that nonsubject merchandise is included in the

denominator, we have no evidence or

reason to believe that the benefit rate

claimed on this merchandise was less

than the rate for benefits claimed on

exports of the subject merchandise.

Under the circumstances of this

investigation, we have matched our

denominator to our numerator as best

we can to measure the benefit to the

subject merchandise. As noted above,

we are satisfied that the GOC acted to

the best of its ability in providing the

information we requested and, hence,

we are not drawing an adverse

inference. However, we believe we have

made reasonable assumptions and have

calculated the most accurate rate

possible given the information available.

Comment 9: The petitioners argue that

Chile’s Chapter XIX debt-for-equity

swap program provided countervailable

benefits to the producers of the subject

merchandise. The petitioners contend

that the debt-for-equity swap provided a

financial contribution and that the

acceptance by the Central Bank of Chile

of a proposed swap was contingent,

either in law or in fact, upon

exportation by the applicant.

The petitioners cite anecdotal

evidence included in articles written on

Chapter XIX that indicate that one of the

goals of the Chapter XIX program was to

promote exports. The petitioners further

point to regulations issued in July 1990

for Chapter XIX transactions which

indicate that a preference would be

given to export-oriented or importsubstituting projects. Although these

regulations were not in effect at the time

the transactions involving producers of

the subject merchandise occurred, the

petitioners argue that the regulations

merely codified pre-existing policies.

The petitioners cite documents gathered

at verification claiming that these

documents demonstrate that anticipated

exportation was a condition for

acceptance of a proposed swap. As

further evidence that Chapter XIX

approvals were biased in favor of

exports, and particularly in favor of

non-traditional exports, the petitioners

point to statistics which indicate that 70

percent of Chapter XIX projects through

1989 were in export-oriented industries,

while only 11 percent were in mining

which previously accounted for 58

percent of Chile’s exports. The

petitioners acknowledge that not every

participant in the Chapter XIX debt

conversion program was in an exportoriented industry however, the

petitioners argue that in Final

Affirmative Countervailing Duty
Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices 31445

Determination and Countervailing Duty

Order; Extruded Rubber Thread From

Malaysia, 57 FR 38472 (August 25,

1992) (‘‘Extruded Rubber Thread’’), the

Department found that benefits were

countervailable where Pioneer status

was conferred on a respondent company

subject to an export commitment,

stating:

The combination of the necessary export

orientation of the industry due to lack of

domestic market opportunities and the

explicit export condition attached to Pioneer

status approval, lead us to conclude that the

‘‘export’’ side of the Pioneer Program confers

an export subsidy.

The petitioners note that in the

companion antidumping investigation,

the Department stated that the home

market for fresh Atlantic salmon is

incidental to Chilean growers and that

growth in the Chilean salmon industry

has been almost entirely export-driven.

The GOC counters that there are

statements in the same articles cited by

the petitioners which indicate that the

GOC took a laissez-faire approach to

regulating Chapter XIX transactions.

Concerning the July 1990 regulations,

the GOC points to the transcript of a

speech made in 1989 by Francisco

Garce ́s, who at the time was the

International Director of the Central

Bank. In the speech, Mr. Garce ́’s states

that the election of a new government in

Chile may change the focus of the

Chapter XIX program to favor exportoriented industries. The GOC notes that

Mr. Garce ́s refers to a ‘‘change’’ in the

focus, not a mere formalization of

existing practice in the form of

regulations. The GOC argues that the

documents reviewed at verification

demonstrate the opposite of what the

petitioners claim, and that the

documents show that the GOC did not

make acceptance of proposed

transactions contingent on export

performance.

While the GOC does not dispute that

a large number of the Chapter XIX

projects involved export-oriented

industries, the GOC argues that the

investment projects were selected by the

investors, without any guidance from

the GOC. Further, the GOC notes that

participants in the Pioneer Program in

Extruded Rubber Thread made specific

export commitments in order to receive

benefits. According to the GOC, the

Central Bank’s role in reviewing

proposed transactions was simply to

insure that the investors were eligible

and that the transactions were not

fraudulent.

Finally, the GOC argues that there was

no financial contribution, because the

Chapter XIX projects were carried out

by private individuals, with terms

negotiated at arm’s length.

Department’s Position: We determine

that the weight of the record evidence

does not support a conclusion that

approval of Chapter XIX proposals was

contingent on export performance. The

anecdotal evidence in the published

articles on the record of this case is

contradictory and cannot be considered

conclusive. We further disagree that

evidence gathered at verification

indicates that export performance was a

consideration in acceptance by the

Central Bank of proposed transactions.

Due to the proprietary nature of the

verification documents, a further

discussion of this issue is included in a

memorandum from the team to Richard

W. Moreland, Deputy Assistant

Secretary for AD/CVD Enforcement,

‘‘Analysis of Proprietary Comments

Concerning Chapter XIX Debt-for-Equity

Swaps,’’ dated June 1, 1998.

Because we have determined any

potential subsidy arising under Chapter

XIX is not specific, we need not reach

the question of whether there was a

financial contribution on the part of the

GOC.

Comment 10: The petitioners argue

that Law 18,449 which provides an

exemption from the Chilean stamp tax

on certain financial transactions for

exporters is countervailable because it is

contingent upon exportation. The

petitioners contend that the Chilean

stamp tax exemption is not analogous to

the indirect taxes ‘‘in respect of the

production and distribution of exported

products’’ referenced in the Illustrative

List of Export Subsidies in Annex 1 of

the SCM Agreement because the tax is

assessed on loan documents and not the

exported merchandise. The petitioners

further contend that the stamp tax, as it

is crafted in Chile, is not an indirect tax

because it is borne by the recipient of

the loan, i.e., the exporter, and not borne

by the merchandise. According to the

petitioners, the stamp tax is not shifted

forward and, therefore, behaves more

like a direct than an indirect tax.

The GOC rebuts that the SCM

Agreement specifically enumerates

stamp taxes as an example of an indirect

tax in footnote 58 to item (g) on the

Illustrative List. The GOC contends that

an indirect tax is almost necessarily

levied on financial documents, whether

the document be an invoice or a letter

of credit. The GOC notes that letters of

credit have been used for financing

export sales for centuries, and that

Chilean law requires that the financing

be repaid with proceeds from export

sales in order to qualify for exemption.

The GOC cites Countervailing Duties;

Bicycle Tires and Tubes From Taiwan;

Final Results of Administrative Review,

48 FR 43366 (September 23, 1983) and

Final Affirmative Countervailing Duty

Determination; Operators for Jalousie

and Awning Windows From El

Salvador, 51 FR 41516, 41517

(November 17, 1986) as examples of

previous cases where the Department

has found the exemption of exporters

from stamp taxes to be noncountervailable.

Department’s Position: We disagree

with the petitioners. First, stamp taxes

are specifically enumerated in the

Illustrative List as ‘‘indirect taxes.’’

Second, although the stamp tax applies

to loan documents, the financing of

sales through arrangements such as

letters of credit is a normal activity in

the distribution of exported goods. As

the GOC notes, and as we confirmed at

verification, Law 18,449 requires that

exporters demonstrate that export

financing transactions that are exempt

from the stamp tax be repaid with

proceeds from the financed export sales.

Accordingly, we determine that the

exemption of Chilean salmon exporters

from the stamp tax does not give rise to

countervailable benefits within the

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

Comment 11: In calculating the

amount of countervailable benefits

provided under the two regional

programs, Law 889 and the Promotional

and Development Fund, the petitioners

argue that the Department should

attribute the subsidies to only those

products that actually benefited from

the programs. The petitioners note that

the Department’s practice in the case of

domestic subsidies is to divide the

benefit by a firm’s total sales of the

product to which the benefit is ‘‘tied.’’

Because the benefits under both Law

889 and the Promotion and

Development Fund are only available to

companies located in specified regions,

the petitioners argue that the subsidies

are ‘‘tied’’ to the products produced in

those regions.

The GOC disagrees that a

‘‘longstanding policy’’ exists with

respect to tying benefits only to

production in that region. The GOC

asserts that the Department only ties

benefits in two specific situations: (1)

when the receipt of benefits is tied to

sales to a particular market; or (2) when

it is tied to the production of a specific

good. Because neither of these situations

applies to the two Chilean regional

programs, the GOC contends that the

subsidy rates for both programs are

correctly calculated by dividing the total

amount of benefits over total sales.

Department’s Position: We disagree

with the petitioners that our policy of

tying subsidies requires us to attribute
31446 Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices

regional subsidies only to merchandise

produced in the affected regions. Our

tying policy, as articulated in section

355.47 of the 1989 Proposed

Regulations, discusses tying subsidies to

particular products, not to products

produced in particular countries or

locations. In attributing a subsidy to

sales of the product or products to

which it is tied, the Department

normally does not define the product at

a level more specific than the subject

merchandise. In the present case, for

example, the subject merchandise is

specifically defined as ‘‘fresh Atlantic

salmon from Chile,’’ not ‘‘fresh Atlantic

salmon from Region X’’ or ‘‘fresh

Atlantic salmon from the Island of

Chiloe ́.’’ Furthermore, the Department

does not tie the benefits of federally

provided regional programs to the

product produced in the specified

regions. See, e.g., Final Affirmative

Countervailing Duty Determination:

Fresh and Chilled Atlantic Salmon

From Norway, 56 FR 7678 (February 25,

1991). Accordingly, we have continued

to calculate the countervailable subsidy

from these programs by dividing the

total benefit from these programs by the

value of all sales of producers and

exporters of salmon.

Comment 12: The petitioners argue

that the Department should not use the

SBIF rates it used in the preliminary

determination to calculate benefits from

loans and nonrecurring grants. Instead,

the petitioners urge the Department to

use the interest rate from a private bank,

Banco Security, reported in the

petitioners’ June 26, 1997 submission.

In the petitioners’ view, the

Department should not use the SBIF rate

because it is based on government

lending rates. They cite to Preliminary

Affirmative Countervailing Duty

Determination and Alignment of Final

Countervailing Duty Determination with

Final Antidumping Duty Determination:

Certain Stainless Steel Wire Rod from

Italy, 63 FR 809 (January 7, 1998) where

the Department stated it ‘‘normally does

not use government interest rates in

benchmark calculations,’’ and to section

355.44(b)(7) of the 1989 Proposed

Regulations which stipulates that the

Department use a non-governmental

interest rate as a benchmark rate.

The petitioners further contend that

the Export Credit Limits program as

well as the Chilean encaje distort the

SBIF rates. The petitioners cite Certain

Iron-Metal Castings from India: Final

Results of Countervailing Duty

Administrative Review, 61 FR 64687,

64688 (December 6, 1996) (‘‘Castings

from India’’) where the Department

recognized that export financing

measures, similar to those in Chile,

distorted the cost of financing for nonexporters. In that case, the Department

used an alternative benchmark to

measure the preference provided by the

program.

The GOC contends that the SBIF rate

is not a government rate but rather an

average of Chilean commercial bank

rates, where only one of the 30 to 35

banks averaged is a state-owned bank.

The GOC argues that the Banco del

Estado, the only state-owned bank

included in the SBIF interest rate

average pool, operates as a commercial

bank and that the rates it charges are

commercial rates. The GOC also cites to

the 1989 Proposed Regulations which

state at section 355.44(b)(9) that the

Department can consider loans from

government-owned banks as

commercial loans. The GOC insists that

the Chilean lending rates are not

distorted, noting that no Chilean

lending program has ever been found

countervailable and Chilean law

prohibits the SBIF or any other body

from interfering with the lending

process at private banks, thus

eliminating any question of

manipulation of the Chilean financial

markets. The GOC asserts that the SBIF

rate is the appropriate rate to use in the

calculations of these final results.

Department’s Position: We disagree

with the petitioners that the SBIF rate is

not an appropriate benchmark. As stated

earlier, at verification, we met with

several representatives from private

banks in Chile, as well as

representatives from the Central Bank

and from the SBIF. All of the experts

with whom we met indicated that the

Chilean credit markets have ample

liquidity, and that Central Bank and

other government intervention in

financial markets is minimal. We note

that virtually all governments intervene,

to some degree, in financial markets. We

found no evidence that government

intervention in Chile’s financial markets

is so pervasive that it undermines our

reliance on the SBIF interest rate.

With respect to the specific arguments

raised by the petitioners, we agree that

the Department normally does not use

government rates as benchmarks (see

section 355.44(b)(7) of the 1989

Proposed Regulations). However, in this

instance, the SBIF rate is based on the

rates of more than 30 banks, only one

of which is government-owned.

Moreover, there is no information to

indicate that this bank, Banco del

Estado, operates on anything other than

commercial terms. Therefore, we do not

believe the SBIF rate should be rejected

on this basis.

Regarding the alleged distortions in

the credit market caused by the Export

Credit Limits program, we disagree that

this program is analogous to the

situation described in Castings from

India. While the higher re-discount ratio

on export credit financing available to

banks in Castings from India effectively

reduced the cost of advancing export

credit compared to domestic credit, we

have found, as discussed supra, that any

effect on lending rates from the

increased export credit ceilings is

minimal.

Finally, regarding the encaje, we have

analyzed the potential distortion and

concluded that the encaje has not

resulted in lower SBIF rates. The

Chilean encaje requires banks to place

30 percent of foreign currency deposits

with the Central Bank without interest

for the first year. (Alternatively, the

bank can pay to the Central Bank the

equivalent of the interest earnings that

would have been realized by the Central

Bank, if such an amount had been

placed in its account.) Deposits that are

used to finance qualifying export

credits, however, are not subject to the

encaje. Such a requirement would be

expected to lower interest rates on

export loans denominated in a foreign

currency, including dollar-denominated

export loans. Because it is our

understanding that these export loan

rates are included in the SBIF rate,

along with non-export-related dollar

denominated loans, use of the SBIF rate

as a benchmark could understate the

benefit to the recipient. However, we

have reviewed interest rate information

included in the Central Bank’s June

1997 Boletin Mensual concerning dollar

indexed loans with terms of three years

or greater. Dollar-indexed loans in Chile

are available to domestic borrowers, and

would not be subject to any potential

distortion resulting from the Central

Bank deposit rules regarding the encaje.

Additionally, although there may be

slight differences in the exchange rates

actually applied, a borrower in Chile

should be indifferent when choosing

between a dollar-indexed loan and a

dollar-denominated loan. The

information on the record concerning

interest rates charged on dollar-indexed

loans for the five years for which data

was reported indicates that the rates on

dollar indexed loans were very similar

to the SBIF rates. On average, the

interest rate charged on dollardenominated loans was slightly higher

than that charged on dollar-indexed

loans. Accordingly, the information on

the record does not appear to support

the petitioners’ claim that the encaje

renders inappropriate our use of the

SBIF rate as a benchmark. Therefore, we

have continued to use the SBIF rate to
Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices 31447

calculate benefits for the ProChile and

the fiscal credit and duty deferral

program of Law 18,634.

Summary

The total net countervailable subsidy

rate for all producers or exporters of

fresh Atlantic salmon in Chile is 1.11

percent, ad valorem, which is de

minimis. Therefore, we 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 verified the information

used in making our final determination.

We followed our standard verification

procedures, including meeting with

government officials and examination of

relevant government records and

original source documents. Our

verification results are outlined in detail

in the public versions of the verification

reports, which are on file in the Central

Records Unit (Room B–099 of the Main

Commerce Building).

Return or Destruction of Proprietary

Information

This notice serves as the only

reminder to parties subject to

Administrative Protective Order

(‘‘APO’’) of their responsibility

concerning the return or destruction of

proprietary information disclosed under

APO in accordance with 19 CFR

355.34(d). Failure to comply is a

violation of the APO.

This determination is published

pursuant to section 703(f) of the Act.

Dated: June 1, 1998.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 98–15184 Filed 6–8–98; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

National Telecommunications and

Information Administration

Reviewer Information Form

ACTION: Proposed collection; comment

request.

SUMMARY: The Department of

Commerce, as a part of its continuing

effort to reduce paperwork and

respondent burden, invites the general

public and other Federal agencies to

take this opportunity to comment on

proposed and/or continuing information

collections, as required by the

Paperwork Reduction Act of 1995, Pub.

L. 104–13 (44 U.S.C. 3506 (c)(2)(A)).

DATES: Written comments must be

submitted on or before August 10, 1998.

ADDRESSES: Direct all written comments

to Linda Engelmeier, Departmental

Forms Clearance Officer, Department of

Commerce, Room 5327, 1401

Constitution Avenue NW., Washington,

DC 20230.

FOR FURTHER INFORMATION CONTACT:

Requests for additional information or

copies of the information collection

instrument and instructions should be

directed to Gay Shrum, NTIA—Room

4892, 1401 Constitution Avenue NW.,

Washington, DC 20230. (202–482–1056).

SUPPLEMENTARY INFORMATION:

I. Abstract

The purpose of the

Telecommunications and Information

Infrastructure Assistance Program

(TIIAP) is to promote the widespread

and efficient use of advanced

telecommunications services in the

public and non-profit sectors to serve

America’s communities. It does this by

providing matching funds to public and

non-profit sector organizations to use

information infrastructure to provide

community-wide information, health,

life-long learning, public safety and

other public services.

As part of the TIIAP’s process to

select projects for funding, external

experts are used to review applications.

Collection of information about

potential reviewers is used to determine

their eligibility and availability and to

facilitate payment for services rendered

if they are selected to review.

II. Method of Collection

The reporting requirements associated

with this request have been updated

annually during the four year history of

the TIIAP program. The collection

continues to be by mail with some

supplementary information received via

facsimile.

III. Data

OMB Number: 0660–0018.

Form Number: N/A.

Type of Review: Regular

Submission—Reinstatement.

Affected Public: Experts from state

and local government, non-profit

institutions, and the private sector.

Estimated Number of Respondents:

130.

Estimated Time Per Response: .1 hour

each.

Estimated Total Annual Burden

Hours: 13 hours.

Estimated Total Annual Cost: Cost to

respondents is consistent with their

normal administrative overhead. No

material or equipment will need to be

purchased to provide information.

IV. Request for Comments

Comments are invited on: (a) whether

the proposed collection of information

is necessary for the proper performance

of the functions of the program,

including whether the information shall

have practical utility; (b) the accuracy of

the agency’s estimate of the burden of

collection of information; (c) ways to

enhance the quality, utility and clarity

of the information to be collected; and

(d) ways to minimize the burden of the

collection of information on

respondents, including through the use

of automated collection techniques or

other forms of information technology.

Comments submitted in response to

this notice will be summarized and/or

included in the request for OMB

approval of the information collection;

they also become a matter of public

record.

Dated: June 3, 1998.

Linda Engelmeier,

Departmental Forms Clearance Officer, Office

of Management and Organization.

[FR Doc. 98–15297 Filed 6–8–98; 8:45 am]

BILLING CODE 3510–60–P

COMMITTEE FOR THE

IMPLEMENTATION OF TEXTILE

AGREEMENTS

Announcement of Public Comment

Period on the Elimination of the Paper

Visa Requirement for Taiwan

June 3, 1998.

AGENCY: Committee for the

Implementation of Textile Agreements

(CITA).

ACTION: Seeking public comments on the

elimination of the paper visa

requirement for Taiwan.

FOR FURTHER INFORMATION CONTACT: Lori

Mennitt, Office of Textiles and Apparel,

U.S. Department of Commerce, (202)

482–3821.

SUPPLEMENTARY INFORMATION:

Authority: Section 204 of the Agricultural

Act of 1956, as amended (7 U.S.C. 1854);

Executive Order 11651 of March 3, 1972, as

amended.

The Electronic Visa Information

System (ELVIS) allows foreign

governments to electronically transfer

shipment information to the U.S.

Customs Service on textile and apparel

shipments subject to bilateral

provisions. On November 9, 1995, a

notice was published in the Federal

Register (60 FR 56576) seeking public

comments on the implementation of

ELVIS. Subsequently, a document

published on October 31, 1997 (62 FR