20406 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices

DEPARTMENT OF COMMERCE

International Trade Administration

[C–421–601]

Standard Chrysanthemums From the

Netherlands; Preliminary Results of

Countervailing Duty Administrative

Reviews

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of

countervailing duty administrative

review.

SUMMARY: The Department of Commerce

(the Department) is conducting two

administrative reviews of the

countervailing duty order on standard

chrysanthemums from the Netherlands.

We preliminarily determine the net

subsidy to be 0.43 percent ad valorem

for the period January 1, 1992, through

December 31, 1992, and 0.80 percent ad

valorem for the period January 1, 1993,

through December 31, 1993. If the final

results of these reviews remain the same

as these preliminary results, the

Department intends to instruct the U.S.

Customs Service to assess

countervailing duties as indicated

above. Interested parties are invited to

comment on these preliminary results.

EFFECTIVE DATE: May 6, 1996.

FOR FURTHER INFORMATION CONTACT:

Lorenza Olivas or Richard Herring,

Office of Countervailing Compliance,

Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230, telephone:

(202) 482–2786.

SUPPLEMENTARY INFORMATION:

Background

On March 12, 1987, the Department

published in the Federal Register (52

FR 7646) the countervailing duty order

on standard chrysanthemums from the

Netherlands. On March 12, 1993, and

March 4, 1994, the Department

published notices of ‘‘Opportunity to

Request Administrative Review’’ of this

countervailing duty order (58 FR 13583)

and (59 FR 10368), respectively. We

received timely requests for reviews for

the 1992 and the 1993 review periods

from petitioner, Floral Trade Council.

We initiated the review covering the

period January 1, 1992 through

December 31, 1992, on May 6, 1993 (58

FR 26960). We initiated the review

covering the period January 1, 1993,

through December 31, 1993, on April

15, 1994 (59 FR 18099). We conducted

a verification of the questionnaire

responses in the 1992 administrative

review from February 7 through 14,

1994. These reviews are being

conducted on an aggregate basis.

Applicable Statute and Regulations

The Department is conducting these

administrative reviews in accordance

with section 751 of the Tariff Act of

1930, as amended (the Act). Unless

otherwise indicated, all citations to the

statute and to the Department’s

regulations are in reference to the

provisions as they existed on December

31, 1994. However, references to the

Department’s Countervailing Duties;

Notice of Proposed Rulemaking and

Request for Public Comments, 54 FR

23366 (May 31, 1989) (Proposed

Regulations), are provided solely for

further explanation of the Department’s

countervailing duty practice. Although

the Department has withdrawn the

particular rulemaking proceeding

pursuant to which the Proposed

Regulations were issued, the subject

matter of these regulations is being

considered in connection with an

ongoing rulemaking proceeding which,

among other things, is intended to

conform the Department’s regulations to

the Uruguay Round Agreements Act.

See 60 FR 80 (Jan. 3, 1995).

Scope of Review

Imports covered by these reviews are

shipments of Dutch standard

chrysanthemums. Such merchandise is

classifiable under item number

0603.10.70 of the Harmonized Tariff

Schedule (HTS). The HTS item number

is provided for convenience and

Customs purposes. The written

description remains dispositive.

Verification

As provided in section 776(b) of the

Act, we verified information provided

by the Government of the Netherlands.

We followed standard verification

procedures, including meeting with

government officials and examining

relevant original source documents. Our

verification results are outlined in the

public versions of the verification

report, which are on file in the Central

Records Unit (Room B–099 of the Main

Commerce Building).

Calculation Methodology for

Assessment and Cash Deposit Purposes

We calculated the net subsidy on a

country-wide basis by first calculating

the subsidy rate for each program. We

then summed the subsidy rates from all

programs benefitting exports of the

subject merchandise to the United

States.

Analysis of Programs

I. Programs Conferring Subsidies

A. Programs Previously Determined to

Confer Subsidies

1. Aids for the Creation of Cooperative

Organizations

Under European Community (EC)

Regulation 355/77, the EC has provided

grants to Dutch auction houses, which

are flower grower cooperatives. These

funds were provided by the EC through

the Agricultural Guidance and

Guarantee Fund, with matching grant

contributions from EC member states.

The purpose of the program was to

improve the processing, marketing and

distribution of agricultural products in

member states. This program was

terminated on January 1, 1986, and no

grants were disbursed after 1987.

In the 1986 and 1987 reviews, the

Department determined that this grant

program was countervailable because it

was limited to a specific enterprise or

industry, or group of enterprises or

industries in the Netherlands. (See

Standard Chrysanthemums From The

Netherlands; Preliminary Results of

Countervailing Duty Administrative

Review (54 FR 43977, 43978; October

30, 1989) and Standard

Chrysanthemums From the

Netherlands; Final Results of

Countervailing Duty Administrative

Review (55 FR 462; January 5, 1990)

(1987 Preliminary and Final Results)).

Although this program was officially

terminated in 1986, under our grant

methodology, benefits are still accruing

from this program.

To calculate the benefit, we used a

declining balance grant methodology, as

determined in the Final Affirmative

Countervailing Duty Determination;

Certain Fresh Cut Flowers From the

Netherlands (52 FR 3301; February 3,

1987) (Netherland Flowers). We

allocated the benefits from each grant

over 10 years, the average useful life of

renewable physical assets in the

agricultural sector as determined under

the U.S. Internal Revenue Service’s

Asset Depreciation Range System. This

methodology is in accordance with the

Proposed Regulations (51 FR 23366,

23385; May 31, 1989). We used the

average interest rate for long-term

commercial loans published by the

Netherlands Bank (the Central Bank) as

the discount rate for each year in which

grants were provided. We divided the

sum of these benefits by the f.o.b. value

of total auction sales in the relevant

review period. On this basis, we

preliminarily determine the net subsidy

to be 0.07 percent ad valorem for 1992

and 0.04 percent ad valorem for 1993.
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices 20407

2. Glasshouse Enterprises Program

Under the Glasshouse Enterprises

Program, the Ministry of Agriculture,

Nature Management and Fisheries

(MAF) provided grants to greenhouse

growers to stimulate private investment

in energy saving methods in the

horticulture industry. This program was

terminated in June 1985. However,

grants approved prior to the termination

were disbursed through 1987.

We previously determined that this

program was a countervailable domestic

subsidy because it was available only to

greenhouse growers. (See 1987

Preliminary and Final Result). Although

this program officially terminated in

1985, under our grant methodology,

benefits are still accruing from this

program.

To calculate the benefit from this

program, we used the grant

methodology described in section 1.

above. We divided the total benefits

from these grants by the value of total

greenhouse sales in the relevant review

period. On this basis, we preliminarily

determine the net subsidy to be 0.17

percent ad valorem for the period

January 1, 1992, through December 31,

1992, and 0.09 percent ad valorem for

the period January 1, 1993 through,

December 31, 1993.

3. Aids for the Reduction of Glass

Surface

Under the Aids for the Reduction of

Glass Surface program, the MAF

provided grants to greenhouse growers

for the purpose of increasing the energy

efficiency of greenhouses by replacing

existing glass with modern energysaving glass. The program was

terminated in November 1984. However,

grants approved prior to the termination

of the program were disbursed through

1987.

We previously determined that this

program was countervailable because it

was limited to a specific enterprise or

industry, or group of enterprises or

industries. (See 1987 Preliminary and

Final Results). Although this program

was officially terminated in 1984, under

our grant methodology, benefits are still

accruing under this program.

To calculate the benefit from this

program, we used the grant

methodology described in section 1.

above. We divided the total benefits

from these grants by the value of total

greenhouse sales in the relevant review

period. On this basis, we preliminarily

determine the net subsidy to be less

than 0.005 percent ad valorem for the

period January 1, 1992, through

December 31, 1992, and less than 0.005

percent ad valorem for the period

January 1, 1993, through December 31,

1993.

4. Steam Drainage Systems

In January 1981, the Government of

the Netherlands (GON) banned the use

of methylbromide as a means of soil

disinfection due to the potential health

hazards caused by the chemical. In

December of that year, the MAF

established a program making available

cash grants to encourage the use of

steam drainage as an alternative method

of soil disinfection for greenhouses. The

program was terminated in September

1984. However, some grants were

disbursed through 1987.

In the 1990 administrative review, we

determined that this program was

countervailable because it was limited

to a specific enterprise or industry, or

group of enterprises or industries. (See

Standard Chrysanthemums From the

Netherlands; Preliminary Results of

Countervailing Duty Administrative

Review (57 FR 9539; March 19, 1992)

and Standard Chrysanthemums From

the Netherlands; Final Results of

Countervailing Duty Administrative

Review (57 FR 24249; June 8, 1992)

(1990 Preliminary and Final Results)).

Although this program was officially

terminated in 1984, under our grant

methodology, benefits are still accruing

under this program.

To calculate the benefit from this

program, we used the grant

methodology described in section 1,

above. We divided the benefits from

these grants by the value of total

greenhouse sales in the relevant review

period. On this basis, we preliminarily

determine the net subsidy to be less

than 0.005 percent ad valorem for the

period January 1, 1992, through

December 31, 1992, and less than 0.005

percent ad valorem for the period

January 1, 1993, through December 31,

1993.

B. New Program Preliminarily Found to

Confer Subsidies

Stimulation for the Innovation of

Electric Energy (SES)

The SES program was implemented in

1988 with the goal of stimulating energy

conservation. Under the administration

of the Ministry of Economic Affairs

(MEA), the program is designed to

encourage the installation of

cogeneration equipment by providing

payments of up to 25 percent of the

equipment cost, with a cap of 20 million

guilders per project. Cogeneration

equipment reduces energy consumption

by up to 30 percent.

At verification, we found that this

program is available to virtually all

industries. Although the program is

neither designed nor administered with

any particular industry in mind, we

were told by MEA officials that

greenhouse growers were ideal

candidates for the program due to their

enormous demand for energy. See

Verification Report of the Questionnaire

Response in the 1992 Administrative

Review (April 3, 1995) (public

document).

We examined disbursements made

under the program on an industryspecific basis to determine whether

horticulture was the dominant user or

received a disproportionate share of

benefits under this program. We based

our analysis on payments to all

horticulture recipients because

information is not available on a plantby-plant basis. Based on our analysis,

we found that horticulture accounted

for 69 percent of all grant approvals and

received 36 percent of all

disbursements. Horticulture was,

therefore, the largest recipient of grants

under this program compared to the

share of benefits to other recipients

whose disbursements ranged from less

than 0.01 percent to 13.9 percent. In

prior cases where the Department has

found disproportionality, we analyzed

whether a program provided a

disproportionate share of benefits by

comparing their collective or individual

share of benefits provided to all other

users of the program in question. (See,

e.g., Final Affirmative Countervailing

Duty Determination: Grain-Oriented

Electrical Steel From Italy (59 FR 18357;

April 18, 1994) (Electrical Steel)). In

Electrical Steel, steel producers received

34 percent of the benefits under the

examined program. In that case, we

found that steel producers received a

disproportionate share of the program

being considered. Similarly, in this case

we compared the share of benefits

received by horticulture to the collective

share of benefits to all others. On this

basis, we determine that the SES

program provided a disproportionate

share of benefits to horticulture. Thus,

we preliminarily determine that this

program provides a countervailable

benefit to producers of the subject

merchandise.

Our policy with respect to grants is (1)

to expense recurring grants in the year

of receipt and (2) to allocate nonrecurring grants over the average useful

life of assets in the industry, unless the

sum of grants provided under a

particular program is less than 0.50

percent of a firm’s total or export sales

(depending on whether the program is

a domestic or export subsidy) in the

year in which the grants were received.

(See section 355.49(a) of the Proposed
20408 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices

Regulations and the General Issues

Appendix, at 37226, which is attached

to Final Affirmative Countervailing Duty

Determination: Certain Steel Products

from Austria (58 FR 37217; July 9, 1993)

(General Issues Appendix)).

For the 1992 administrative review,

the amount of grants received under this

program was not less than 0.50 percent

of greenhouse sales. Therefore, we must

determine whether the grants provided

under the SES program are recurring or

nonrecurring to determine whether the

grants should be expended in the year

of receipt or allocated over time. For the

1993 administrative review, the total

amount of grants provided to

greenhouses under the SES program was

less than 0.50 percent of total

greenhouse sales. Therefore, the total

value of all grants provided under this

program in 1993 have been allocated to

that year.

The Department considers that a grant

is nonrecurring if the benefits are

exceptional, the recipient cannot expect

to receive benefits on an ongoing basis

from year to year, and/or the provision

of funds by the government must be

approved every year. The Department

also considers that grants used for the

purchase of fixed assets would generally

be considered nonrecurring. (See

General Issues Appendix, at 37226). We

therefore determine that benefits from

grants provided under the SES program

are nonrecurring. On this basis, we

allocated the benefit from the grants

provided under this program during

1992 over the useful life of assets.

Grants were also provided to

greenhouses during the years 1988

through 1991. In those years, the grants

provided were less than 0.50 percent of

total greenhouse sales. Therefore, we

would have allocated all grants

provided under this program solely to

the year of receipt.

To calculate the benefit from this

program, we allocated the benefits from

grants received in 1992 using the

declining balance grant methodology

described in section I.A.1. above. For

1993, the benefit is the total value of all

grants provided in that year, plus the

benefits from the 1992 grants that were

allocable to 1993. We then divided the

total benefits from these grants by the

value of greenhouse sales for the

respective review period. On this basis,

we preliminarily determine the net

subsidy to be 0.18 percent ad valorem

for the period January 1, 1992, through

December 31, 1992, and 0.66 percent ad

valorem for the period January 1, 1993,

through December 1, 1993.

II. Programs Preliminarily Found Not to

be Countervailable

1. Arrangement for Stimulation of

Innovation Projects

Petitioner alleged that floricultural

products benefitted from the

Arrangement for Stimulation of

Innovation Projects. This program was

implemented in 1991 as the

continuation of two innovation

programs (the Subsidy Scheme for Large

Innovation Projects of 1989 and the

Grant Scheme for Small Innovation

Projects of 1984.) Under the program,

the MAF provided funds to promote

innovation within the agriculture sector,

including entities engaged in flower

production. To qualify for assistance,

projects must have an innovative

element and offer new technological

and economic perspectives that have

not yet been in practice. In addition, the

projects must be such that the results

can be passed on to other firms in the

Netherlands. Project applications are

assessed yearly by technical experts in

consultation with agribusiness.

Approval or rejection of an application

is not based on the type of agricultural

production engaged by the applicant,

but rather on whether the project meets

the criteria outlined above.

The GON divides agriculture into four

major subsectors: horticulture, arable

farming (crops grown on arable land),

livestock farming and cattle farming. We

found that grants were provided to all

of the subsectors within agriculture. We

examined at verification a table listing

disbursement of funds, by industry,

showing cumulative payments made

under the program through December

1993. We verified that flowers

accounted for only 0.59 percent of total

disbursements under this program.

Because all agricultural subsectors are

eligible for and used the Stimulation of

Innovation Projects program, and

because no disproportionate benefits

were provided under this program, we

preliminarily determine this program is

not countervailable because it is not

limited to a specific enterprise or

industry, or group thereof.

2. Arrangement for Structural

Improvement and the Complementary

Scheme for Investment in Agricultural

Holdings

Petitioner alleged that floricultural

products received benefits from this

program. The Arrangement for

Structural Improvement (SVL) was

implemented in 1985 as a result of the

EC Improvement of Efficiency of

Agriculture Structures Regulation,

which mandated that each member state

develop a program to improve efficiency

within the agricultural sector. Through

the provision of grants to cover the

interest on loans for farm improvement

projects, the arrangements aim to

promote a more rapid adjustment of

businesses to environmental and animal

welfare requirements. The MAF

provides assistance to specified

investments which must benefit certain

environmental and animal welfare

policy objectives. Each year applications

from the entire agricultural sector are

approved by the MAF. These projects

must generate a return but cannot lead

to an expansion of production capacity.

Any farmer with a farm production

income between 15,155 and 43,300

guilders is eligible to apply for SVL

assistance. There are no restrictions on

the types of agricultural or horticultural

products raised or produced by the

eligible farmer.

The EC regulation distinguishes

between two types of investments, real

estate and non-real estate, and allows

funding levels of up to 35 percent and

25 percent, respectively. The level of

funding allowed by the Dutch

regulations, however, is lower than the

EC regulation levels. According to

Dutch regulations, funding levels range

from 7.5 percent to 25 percent,

depending upon the type of project.

The SVL program receives cofinancing from the EC in the amount of

25 percent of the payments made by the

Dutch government. For example,

although the EC regulation allows

funding levels up to 35 percent for real

estate related investments, the Dutch

regulation (SVL) allows only 7.5 percent

funding. Of the 7.5 percent that is paid

by the Dutch government, the EC

reimburses 25 percent of the payment.

The Complementary Scheme for

Investment in Agricultural Holdings

(CRL) was implemented in 1989 by EC

Regulation 2328/91. Under this scheme,

the MAF provides assistance to farmers

which do not meet the farm income

requirement for SVL grants.

As with the SVL scheme, the CRL

arrangement aims to promote a more

rapid adjustment of businesses to

environmental and animal welfare

through the provision of grants for farm

improvement projects. Grants are given

for specified investments which must

benefit certain environmental and

animal welfare policy objectives. These

projects, too, must generate some return

but must not lead to an expansion of

production capacity. The main

eligibility requirement for assistance

under the CRL is that the agricultural

holding must have a production

capacity of a one man-work unit. In

addition, the investment cannot have

been initiated prior to applying for CRL
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices 20409

funds. All sectors of agriculture are

eligible to apply for assistance under the

CRL scheme.

The CRL provides funds for projects

in three areas of investments:

environmental protection and

improvement, quality improvement, and

improvement of working conditions.

According to a 1992 MAF Annual

Report, 74 percent of the approved

investments under this program during

that year were in the area of

environmental protection and

improvement. The GON typically

provides funds for 15 to 25 percent of

the approved projects. The application

process for CRL grants is the same as for

assistance in the SVL.

During verification, the Department

confirmed that grants under the SVL

and CRL schemes were provided to the

entire agricultural community and that

the evaluation criteria for approval were

not product-based. We found that, in

1992, horticulture accounted for 11

percent of total applications for SVL

assistance and 3.2 percent of total

investments under the SVL.

In the investigation, the Department

reviewed a similar program which

provided funding of interest on loans for

the modernization of agricultural

ventures under the Decree for Structural

Improvement of Agricultural

Enterprises. That program was found

not countervailable, since there was no

indication that the program was targeted

toward flower growers, or was otherwise

limited to a specific enterprise or

industry. (See Netherland Flowers.)

Because all agricultural products are

eligible for and used SVL and CRL

grants, and because no disproportionate

of benefits were provided under the SVL

and CRL program, we preliminarily

determine this program is not limited to

a specific enterprise or industry or

group thereof.

3. Natural Gas Provided at Preferential

Rates

Natural gas in the Netherlands is sold

directly to major customers by the N.V.

Nederlandse Gasunie (Gasunie), the

utility company. The Agricultural

Industrial Board, or ‘‘Landbouwschap,’’

a quasi-governmental body created

under the Industrial Organizations Act,

negotiates with Gasunie prices and

general terms of gas delivery for Dutch

greenhouse growers. The

Landbouwschap is the central

consultative and cooperative

organization for agriculture in the

Netherlands. Its purpose is to represent

the economic and political interests of

the agricultural sector. All agriculturists

are required to be members of the

organization and pay dues. Gasunie is

40 percent owned by DSM Aardgas (a

company wholly-owned by the GON),

10 percent by the GON, 25 percent by

Shell Nederland, and 25 percent by Esso

Nederland N.V. While the GON does not

own a controlling interest in Gasunie, it

plays a significant role in setting the

price of natural gas. The Minister of

Economic Affairs reserves the right to

approve selling prices and terms of

delivery for supplies to public

distributors in the Netherlands, large

export contracts, and contracts between

Gasunie and the Landbouwschap.

Natural gas prices are based on levels

of consumption, which are broken down

into four categories or ‘‘zones’’, zones a

through d. Zone a consumers use

between 0 and 170,000 cubic meters

(m3) of gas per year; zone d consumers

use between 10 million to 50 million m3

of gas per year. Zone a users pay the

highest price per m3; zone d the lowest.

In the October 1984 contract

negotiated with Gasunie by the

Landbouwschap on behalf of

greenhouse growers, a maximum ceiling

price was established. In Netherlands

Flowers, we determined that this

contract with the price ceiling provision

was countervailable. Accordingly, in

Netherlands Flowers, we determined

that the benefit to greenhouse growers

was the difference between the price of

gas actually paid by greenhouse growers

in the period of the investigation and

the zone d price they would have had

to pay under the contract absent the

price ceiling provision.

In the 1987 administrative review (54

FR 43977,43978; October 30, 1989), a

renegotiated contract was in effect.

Because the new contract did not

contain a provision for a ceiling price,

we determined greenhouse growers did

not receive natural gas at preferential

rates and, therefore, the program did not

confer a countervailable benefit. This

contract expired on October 1, 1989.

In the last administrative review, we

found that greenhouse growers, through

the Landbouwschap, had negotiated a

new contract with Gasunie for the

period October 1, 1989 through October

1, 1994. The terms of the new contract

were basically the same as the 1987

contract. Therefore, we determined that

such a contract did not confer a

countervailable benefit. (See 1990

Preliminary and Final Results).

With respect to the pricing

arrangement under this program, we

confirmed during the verification of the

1992 administrative review that the

terms of the contract in effect during

this review period, which were still in

effect during the subsequent 1993

review period, had not changed from

the previous contract found not

countervailable in the 1990

administrative review. Therefore, we

continue to determine that the contract

rate for greenhouse growers does not

provide a countervailable benefit to

producers and exporters of the subject

merchandise.

However, in the 1992 administrative

review, petitioners alleged that an

additional aspect of the contract may

confer a countervailable benefit upon

the production of the subject

merchandise. Petitioner alleged that the

contract in effect during the 1992 review

period contained a new compensation

arrangement for ‘‘small’’ consumption

users of natural gas. During verification

of the 1992 administrative review, we

found that this compensation

arrangement was part of the contract in

effect during October 1989 through

October 1994 (the 1989–1994 contract).

Negotiated by the Landbouwschap,

that contract was made on behalf of the

horticulture sector. Gas prices in the

1989–1994 contract were based on two

annual gas consumption levels: Level 1,

0–30,000 cubic meters (m3); and Level 2,

30,000 m3 and over. Since gas prices

were lower for Level 2 consumption,

there were concerns that users

consuming less than 30,000 m3 of gas

might waste gas in order to qualify for

the lower rate. Therefore,

Landbouwschap and Gasunie

established a compensation arrangement

which provided rebates to small gas

users to offset the difference in the

consumption prices. The purpose of this

compensation arrangement was twofold:

to ensure energy conservation as well as

to protect the environment.

According to the provisions of the

contract, the arrangement was funded

through monies paid by those

Landbouwschap members which were

large gas users. The fund, administered

by Landbouwschap, was derived from a

surcharge built into the price of gas paid

by the large gas users under the 1989–

1994 contract. The criteria for eligibility,

as outlined in the contract, were that the

recipient had to be a registered

agriculturist or horticulturist and that

the gas had to be used for the growing

process of horticulture. We noted at

verification that virtually all

horticulturists (95–98 percent) fell

under Level 2 with an average

consumption of 450,000 m3 a year; these

users were covered by the 1989–1994

contract between the Landbouwschap

and Gasunie. The remaining

horticulturists were the small gas users

who could be eligible for a rebate.

With respect to the separate rebate

program for small growers, we

determine that the program does not

provide a countervailable benefit. This
20410 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices

rebate program was established under

the contract between Landbouwschap

and Gasunie, and the funds used to

provide the rebates are collected from

the large growers and then are

distributed to the small growers of the

cooperative. The utility company

received the full rates due it under the

contract from both the large and small

grower-members of the Landbouwschap.

Under this arrangement, the role of

Gasunie is to collect the surcharge from

the larger members of the

Landbouwschap. These funds are then

returned to the Landbouwschap, which

administers the program and provides

the rebates to the small growers. In

addition, there is no evidence to

indicate that the Landbouwschap was

required by Government of the

Netherlands to enter into this specific

contract arrangement with Gasunie. As

such, this rebate program is not

countervailable.

4. Income Tax Deduction

The Income Tax Deduction was

established in January 1990 under

Article 11 of The Netherlands Tax Code

and was geared towards small

businesses. The program provides for a

tax allowance on investments in

tangible assets. Any entrepreneur is

eligible for this deduction as long as the

business reports the investments on the

income tax form, the investment amount

does not exceed 471,000 guilders, and

the investment is substantiated by

attaching the capital improvement

invoices to the tax form. The allowance

ranges from 2 percent to 18 percent,

depending on the amount of the

investment, and is deducted from the

profits made during the year in which

the investment is made. The legislation

provides that all industries are eligible

to claim the income tax deduction if the

aggregate annual investments are at least

3,100 guilders, but not more than

471,000 guilders. As the investment

amount increases, the investment

deduction decreases. For example: for

an investment in the 3,100–53,000

guilder range, the allowable deduction

is 18 percent of the investment; for

investments in the 419,000–471,000

guilder range, it is 2 percent. Companies

exceeding the investment cap are not

eligible for a deduction under this

program.

At verification, we found that as long

as any entrepreneur meets the

investment criteria the receipt of the

deduction is automatic and that there is

no formal application process to apply

for the deduction. We also found that no

specific government approval is

required prior to a company filling its

tax form. Therefore, because any

business in the Netherlands who makes

an investment no greater than 471,000

guilders automatically receives the

income tax deduction under this

program by merely claiming it in its tax

return, we preliminarily determine this

program to be not countervailable

because it is not limited to a specific

enterprise or industry, or group thereof.

5. Value Added Tax (VAT) Reduction of

6 Percent for Natural Gas Users and

Partial Restitution of VAT for Mineral

Oils, Fuels, Bulk or Bottled Gas

Petitioner alleged that the

horticultural industry benefits from a

reduced VAT on natural gas and a

partial restitution of the VAT on

purchases of mineral oils, fuel and bulk

or bottled gas used for heating

greenhouses. The VAT system was first

introduced in 1960 by the EC. The VAT

is a country-wide internal consumption

tax paid by consumers. As a commodity

goes through various processing or

production stages, each downstream

consumer pays a tax on the value added

portion of the product. The seller

subtracts the tax already paid and

forwards the VAT owed on the

‘‘enhanced or improved portion’’ of the

commodity to the Dutch Internal

Revenue Service. The general VAT rate

for the Netherlands was 17.5 percent

during the review period.

When the EC first introduced the

VAT, it decided that the agricultural

sector could be exempted from the

normal VAT system because the

required record keeping was too

burdensome. Under Article 25 of the EC

Sixth Council Directive of May 17, 1977

(the 1977 Directive), member countries

could exclude all or partial sectors of

agriculture and establish different rates

for this sector.

Agricultural producers in the

Netherlands fall under a flat-rate

scheme established to offset the VAT

‘‘expense’’ included in the price of the

goods and services they provide. Under

this scheme, farmers are not entitled to

deduct the VAT they have already paid

when purchasing their own goods and

services, but instead pass it along in

their selling price(s). Commodities sold

by farmers to individual consumers

incorporate the prior stage VAT,

resulting in a higher price to the

consumer.

The 1977 Directive and the Dutch

National Tax Law also stipulate a

reduced VAT rate of 6 percent for

virtually all goods and services

purchased or used by flat-rate farmers.

Therefore, during this review, farmers

(which also includes all greenhouse

growers and horticulturists) paid only a

6 percent VAT rate on natural gas

purchased for heating their greenhouses.

In addition to the flat-rate scheme

outlined above, farmers are eligible for

a reduced VAT rate of 6 percent, as per

Article 34b of the Dutch National Tax

Law, on the purchase of fuels, mineral

oils, and bulk or bottled gas used for

heating their greenhouses. In purchasing

these products, farmers paid the

standard 17.5 percent VAT rate and

then applied for a VAT rebate with the

MAF. The rebate is 11.5 percent of the

value of the gas or oil (not including the

VAT). The rebate represents the

difference between the 17.5 percent

VAT already paid and the 6 percent

VAT the farmers are entitled to pay

under the Dutch National Tax Law.

We verified that under Article 17 of

the Dutch National Tax Law the VAT

rate established for farmers was 6

percent. We also found that the Dutch

Value Added Tax Act of 1968 provides

a 6 percent reduced tax rate for a variety

of goods and services used in

agriculture; such as, foodstuffs, cereals,

seeds, cattle, sheep, goats, pigs, horses,

breeding eggs, veterinary medicines,

water, gas and mineral oil, beetroot,

agricultural seeds, fertilizer, feed, round

wood, flax, wool, agricultural tools,

bulbs, plants, and services to

agriculture, such as, contracting, repairs,

breeding, inspections, accounting,

drying, cooling, cleaning and packaging

of agricultural products.

To receive a refund of the VAT, any

taxpayer entitled to the reduced tax rate

was required only to present proof of

the amount of VAT tax already paid

when purchasing the goods and

services. No other approval process was

necessary. With respect to the farmer,

we found that to obtain a VAT refund,

he merely provided proof that his

purchases of natural gas, mineral oils,

and bulk and bottled gas were used for

heating his greenhouse and then

received the reduced rate automatically.

Therefore, because the 6 percent VAT

rate charged to farmers is the same as

the 6 percent VAT rate paid by all

farmers on virtually all their purchases

of goods and services under the Dutch

Tax Law, and because no

disproportionate benefits were provided

under this program, we preliminarily

find that this program is not limited to

a specific enterprise or industry or

group thereof.

6. Guarantee Fund for Agriculture

The Stichting Borgstellingsfonds voor

de Landbouw (Foundation Security

Fund for Agriculture, or ‘‘Fund’’) is

used to guarantee the servicing and

repayment of loans made by banks to

farmers. The Fund acts as an
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices 20411

institutional guarantor, not as a lender

itself, providing guarantees only when

the security offered by the farmer is

inadequate for the total loan amount. A

loan application may be made to the

Fund only after all of the farmer’s own

securities or collateral have been

provided for the loan. If an application

is approved under the Fund, the

guarantee applies only to the portion of

the loan not originally approved by the

bank. This program was originally

found countervailable in the

Netherlands Flowers.

In the 1990 administrative review, we

found that the average long-term annual

interest rates charged on loans under

this Fund were consistent with the

average interest rates charged on longterm bank loans, as reported by De

Nederlandsche Bank. (See 1990

Preliminary and Final Results).

Based on verification of the 1992

review and on our analysis of

information provided in the 1993

review, we again determine that the

average long-term annual interest rates

charged on loans under this Fund were

consistent with the average interest rates

charged on long-term bank loans. On

this basis, we determine that this

program does not provide a

countervailable benefit. Because this

program has not been terminated, we

will continue to review it in subsequent

administrative reviews.

III. Programs Preliminarily Found Not to

be Used

We determine that the producers or

exporters of the subject merchandise did

not apply for or receive countervailable

benefits under these programs during

these review periods:

A. Investment Incentive (WIR)—

Regional Program.

B. Loans at preferential interest rates.

Preliminary Results of Reviews

For the period January 1, 1992,

through December 31, 1992, we

preliminarily determine the total net

subsidy to be 0.43 percent ad valorem.

For the period January 1, 1993 through

December 31, 1993, we preliminarily

determine the net subsidy to be 0.80

percent ad valorem.

If the final results of these reviews

remain the same as these preliminary

results, the Department intends to

instruct the Customs Service to assess

countervailing duties of 0.43 percent of

the f.o.b. invoice price on shipments of

the subject merchandise exported on or

after January 1, 1992, and on or before

December 31, 1992, and 0.80 for all

shipments of the subject merchandise

exported on or after January 1, 1993,

and on or before December 31, 1993.

The Department also intends to

instruct Customs to collect cash

deposits of estimated countervailing

duties, as provided for by section

751(a)(1) of the Act, of 0.80 percent of

the f.o.b. invoice price on all shipments

of the subject merchandise from the

Netherlands entered, or withdrawn from

warehouse, for consumption on or after

the date of publication of the final

results of these administrative reviews.

Parties to the proceeding may request

disclosure of the calculation

methodology and interested parties may

request a hearing not later than 10 days

after the date of publication of this

notice. Interested parties may submit

written arguments in case briefs on

these preliminary results within 30 days

of the date of publication. Rebuttal

briefs, limited to arguments raised in

case briefs, may be submitted 7 days

after the time limit for filing the case

brief. Parties who submit written

arguments in these proceedings are

requested to submit with the argument

(1) a statement of the issue and (2) a

brief summary of the argument. Written

arguments that are intended to comment

on the preliminary results for both the

1992 and 1993 reviews must be

submitted to the file for each

proceeding. Any hearing, if requested,

will be held 7 days after the scheduled

date for submission of rebuttal briefs.

Copies of case briefs and rebuttal briefs

must be served on interested parties in

accordance with 19 CFR 355.38(e).

Representatives of parties to the

proceeding may request disclosure of

proprietary information under

administrative protective order no later

than 10 days after the representative’s

client or employer becomes a party to

the proceeding, but in no event later

than the date the case briefs, under 19

CFR 355.38(c), are due. The Department

will publish the final results of these

administrative reviews including the

results of its analysis of issues raised in

any case or rebuttal brief or at a hearing.

These administrative reviews and

notice are in accordance with section

751(a)(1) of the Tariff Act (19 U.S.C.

1675(a)(1)) and 19 CFR 355.22.

Dated: April 29, 1996.

Susan G. Esserman,

Assistant Secretary for Import

Administration.

[FR Doc. 96–11242 Filed 5–3–96; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[C–421–601]

Standard Chrysanthemums From the

Netherlands; Preliminary Results of

Countervailing Duty Administrative

Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of

Countervailing Duty Administrative

Review.

SUMMARY: The Department of Commerce

(the Department) is conducting an

administrative review of the

countervailing duty order on standard

chrysanthemums from the Netherlands.

We preliminarily determine the net

subsidy to be de minimis for all exports

of the subject merchandise to the United

States for the period January 1, 1994,

through December 31, 1994. If the final

results of this review remain the same

as these preliminary results, the

Department intends to instruct the U.S.

Customs Service to liquidate, without

regard to countervailing duties, all

shipments of the subject merchandise

from the Netherlands exported on or

after January 1, 1994, and on or before

December 31, 1994. Interested parties

are invited to comment on these

preliminary results.

EFFECTIVE DATE: May 6, 1996.

FOR FURTHER INFORMATION CONTACT:

Lorenza Olivas or Richard Herring,

Office of Countervailing Compliance,

Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230, telephone:

(202) 482–2786.

SUPPLEMENTARY INFORMATION:

Background

On March 12, 1987, the Department

published in the Federal Register (52

FR 7646) the countervailing duty order

on standard chrysanthemums from the

Netherlands. On March 7, 1995, the

Department published a notice of

‘‘Opportunity to Request Administrative

Review’’ (60 FR 12540) of this

countervailing duty order. We received

a timely request for review from

petitioner, Floral Trade Council, and we

initiated the review, covering the period

January 1, 1994, through December 31,

1994, on April 14, 1995 (60 FR 19018).

On November 2, 1995, we fully

extended the period for completion of

the preliminary and final results,