[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Notices]
[Pages 20411-20414]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11243]



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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.

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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,

[[Page 20412]]

pursuant to section 751(a)(3) of the Tariff Act of 1930, as amended 
(see Extension of the Time Limit for Certain Countervailing Duty 
Administrative Reviews (60 FR 55699). As explained in the memoranda 
from the Assistant Secretary for Import Administration dated November 
22, 1995, and January11, 1996, all deadlines were further extended to 
take into account the partial shutdowns of the Federal Government from 
November 15 through November 21, 1995, and December 15, 1995, through 
January 6, 1996. Therefore, the deadline for these preliminary results 
is no later than April 30, 1996, and the deadline for the final results 
of this review is no later than 180 days from the date on which these 
preliminary results are published. This review is being conducted on an 
aggregate basis. See Preliminary Results of Review section of this 
notice.

Applicable Statute and Regulations

    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 (URAA), effective January 1, 1995 (the 
Act). The Department is conducting this administrative review in 
accordance with section 751(a) of the Act. References to the 
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 URAA. See 60 FR 80 (January 3, 1995).

Scope of Review

    Imports covered by this review 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.

Subsidy Calculations for Assessment and Cash Deposit Purposes

    Because this review is being conducted on an aggregate basis, 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. The rate will be applied to all exports of the subject 
merchandise as discussed in the Preliminary Results of Review section 
of this notice.

Analysis of Programs

I. Programs Conferring Subsidies

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)). We 
have received no new information or evidence of changed circumstances 
to warrant reconsideration of this finding. 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 Final Affirmative Countervailing Duty 
Determination; Certain Fresh Cut Flowers From the Netherlands (52 FR 
3301; February 3, 1987) (Netherlands 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 at 23385). 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 0.03 percent ad valorem for the period 
January 1, 1994, through December 31, 1994.
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.
    Because this program was available only to greenhouse growers, we 
previously determined that this program was limited to a specific 
enterprise or industry, or group of enterprises or industries, and 
provided a countervailable domestic subsidy. (See 1987 Preliminary and 
Final Results). We have received no new information or evidence of 
changed circumstances to warrant reconsideration of this finding. 
Although this program officially was 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 0.05 percent ad valorem for the period January 1, 
1994, through December 31, 1994.
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 energy-saving 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

[[Page 20413]]

industries. (See 1987 Preliminary and Final Results). We have received 
no new information or evidence of changed circumstances to warrant 
reconsideration of this finding. 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, 1994, through December 31, 1994.
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 of this case, 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). We have received no new 
information or evidence of changed circumstances to warrant 
reconsideration of this finding. 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, 1994, through December 31, 1994.
5. Stimulation for the Innovation of Electric Energy (SES)
    The SES program was implemented in 1988 to stimulate 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.
    The Department preliminarily determined that this program is 
countervailable in Standard Chrysanthemums From the Netherlands; 
Preliminary Results of Administrative Review for the 1992 and 1993 
periods (1992/93 Preliminary Results), being simultaneously published 
with this notice, because horticulture received a disproportionate 
share of benefits under this program.
    Our policy with respect to grants is (1) to expense recurring 
grants in the year of receipt and (2) to allocate non-recurring 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 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).
    In the 1992 review, we determined that SES grants were 
nonrecurring. For the 1992 administrative review, we found that the 
amount of grants received under this program was not less than 0.50 
percent of greenhouse sales. Following our grant methodology, we 
allocated the grants over the average useful life of assets in the 
industry. See 1992/93 Preliminary Results. As a result, residual 
benefits from the program are allocable to 1994. Greenhouse growers 
also received SES grants in 1994. We determine that the total amount of 
SES grants received was less than 0.50 percent of greenhouse sales in 
1994. Therefore, following our grant methodology, the total value of 
all grants provided under this program in 1994 has been allocated to 
that year.
    To calculate the benefit for 1994, we added the benefit from the 
1992 grants that were allocable to 1994 and the total value of grants 
provided in 1994. We then divided the results by the value of 
greenhouse sales in 1994. On this basis, we preliminarily determine the 
net subsidy to be 0.35 percent ad valorem for the period January 1, 
1994, through December 31, 1994.

II. Programs Preliminarily Determined Not to Confer Subsidies

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 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 Netherlands Flowers because it was administered in such a way as to 
confer a benefit on a specific group of industries (i.e., 
horticulture).
    In reviews subsequent to Netherlands Flowers, 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 long-
term bank loans, as reported by De Nederlandsche Bank. See 1990 
Preliminary and Final Results and 1992/93 Preliminary Results.
    Based on our analysis of information provided in the 1994 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 to determine whether the 
interest rates on these loans are consistent with the interest rates on 
comparable commercial loans.

III. Programs Preliminarily Found Not to be Countervailable

    We examined the following programs during the 1992 review (See 
1992/93 Preliminary Results) and determined these programs not to be 
countervailable:

A. Arrangement for Stimulation of Innovation Projects
B. Arrangement for Structural Improvement and the Complementary

[[Page 20414]]

Scheme for Investment in Agricultural Holdings
C. Natural Gas Provided at Preferential Rates
D. Income Tax Deduction
E. 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.

IV. Programs Preliminarily Determined To Be Not Used

    We examined the following programs and preliminarily determine that 
the producers and/or exporters of the subject merchandise did not apply 
for or receive benefits under these programs during the period of 
review:

A. Investment Incentive (WIR)--Regional Program
B. Loans at preferential interest rates.

Preliminary Results of Review

    For the period January 1, 1994, through December 31, 1994, we 
preliminarily determine the net subsidies to be 0.43 percent ad 
valorem. In accordance with the Act, any rate less than 0.5 percent ad 
valorem in an administrative review is de minimis.
    The URAA replaced the general rule in favor of a country-wide rate 
with a general rule in favor of individual rates for investigated and 
reviewed companies. The procedures for countervailing duty cases are 
now essentially the same as those in antidumping cases, except as 
provided for in section 777A(e)(2)(B) of the Act. In the original 
investigation of this order, it was determined that there were over 
8,000 flower growers in the Netherlands. Therefore, we requested that 
the GON provide information on an aggregate basis. See Netherlands 
Flowers. Consistent with the decision made in the investigation, 
administrative reviews of this order have been conducted on an 
aggregate basis. In accordance with section 777A(e)(2)(B) of the Act, 
we have also conducted this administrative review on an aggregate basis 
because of the large number of producers and exporters, and on the 
basis of the aggregate information submitted by the GON, we have 
determined a single country-wide subsidy rate to be applied to all 
producers and exporters of the subject merchandise.
    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. 
Because we preliminarily determine that all net subsidies are de 
minimis for the period January 1, 1994, through December 31, 1994, no 
cash deposit will be required.

Public Comment

    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 
seven days after the time limit for filing the case briefs. 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. Any hearing, if requested, will ordinarily be held 
seven days after the scheduled date for submission of rebuttal briefs. 
Copies of case briefs and rebuttal briefs must be served on interested 
parties in accordance with 19 CFR 355.38.
    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, are due. The Department will 
publish the final results of this administrative review, including the 
results of its analysis of issues raised in any case or rebuttal brief 
or at a hearing.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)).

    Dated: April 30, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-11243 Filed 5-3-96; 8:45 am]
BILLING CODE 3510-DS-P