30366 Federal Register / Vol. 61, No. 116 / Friday, June 14, 1996 / Notices

the ITC determines that such injury

does exist, the Department will issue an

antidumping duty order directing

Customs officials to assess antidumping

duties on all imports of the subject

merchandise entered, or withdrawn

from warehouse, for consumption on or

after the effective date of the suspension

of liquidation.

This determination is published

pursuant to section 735(d) of the Act.

Dated: June 3, 1996.

Paul L. Joffe,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 96–14736 Filed 6–13–96; 8:45 am]

BILLING CODE 3510–DS–P

[C–489–806]

Final Affirmative Countervailing Duty

Determination: Certain Pasta (‘‘Pasta’’)

from Turkey

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: June 14, 1996.

FOR FURTHER INFORMATION CONTACT:

Elizabeth Graham or Kristin Mowry,

Office of Countervailing Investigations,

Import Administration, U.S. Department

of Commerce, Room 3099, 14th Street

and Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone

(202) 482–4105 and 482–3798,

respectively.

Final Determination

The Department determines that

countervailable subsidies are being

provided to manufacturers, producers,

or exporters of pasta in Turkey. For

information on the countervailing duty

rates, please see the Suspension of

Liquidation section of this notice.

Case History

Since the publication of the

preliminary affirmative determination

in the Federal Register (60 FR 53747,

October 17, 1995), the following events

have occurred.

On October 21, 1995, we aligned the

date of our final determination with the

date of the final determination in the

companion antidumping duty

investigation of certain pasta from

Turkey (60 FR 54847, October 26, 1995).

Subsequently, the final determinations

in the antidumping and countervailing

duty determinations were postponed

until June 3, 1996 (61 FR 1351, January

13, 1996).

Verification of the responses of the

Government of Turkey (GOT), Filiz Gida

Sanayi ve Ticaret (Filiz), Maktas

Makarnacilik ve Ticaret (Maktas), Andas

Gida Dagitim ve Ticaret A.S. (Andas),

Dogus Holding A.S. (Dogus), and Aytac

Dis Ticaret Yatirim Sanayi A.S. (Aytac)

was conducted between October 30,

1995, and November 10, 1995. We

verified that Aytac did act as the

exporter of record for certain of Maktas’’

sales of pasta to the United States

during 1994 and that Aytac had

transferred its rights to benefits with

respect to those exports to Maktas.

Furthermore, we verified that Aytac

received no benefits during the POI.

Based on this information, we have not

calculated an individual countervailing

duty rate for Aytac. If this company

exports to the United States, it will be

subject to the all others rate.

On February 14, 1996, we terminated

the suspension of liquidation of all

entries of the subject merchandise

entered, or withdrawn from warehouse,

for consumption on or after that date (61

FR 3672, February 1, 1996) (see

Suspension of Liquidation section,

below).

Petitioners and respondents filed case

and rebuttal briefs on April 17, 1996

and April 22, 1996. The hearing in this

case was held on April 25, 1996.

Scope of Investigation

The product covered by this

investigation is certain non-egg dry

pasta in packages of five pounds (or 2.27

kilograms) or less, whether or not

enriched or fortified or containing milk

or other optional ingredients such as

chopped vegetables, vegetable purees,

milk, gluten, diastases, vitamins,

coloring and flavorings, and up to two

percent egg white. The pasta covered by

this investigation is typically sold in the

retail market in fiberboard or cardboard

cartons or polyethylene or

polypropylene bags, of varying

dimensions.

Excluded from the scope of this

investigation are refrigerated, frozen, or

canned pastas, as well as all forms of

egg pasta, with the exception of non-egg

dry pasta containing up to two percent

egg white. In the companion

countervailing and antidumping duty

investigations involving pasta from

Italy, we have excluded imports of

organic pasta that are accompanied by

the appropriate certificate issued by the

Associazione Marchigiana Agricultura

Biologica (AMAB). The Department has

determined that AMAB is legally

authorized to certify foodstuffs as

organic for the Government of Italy

(GOI). If certification procedures similar

to those implemented by the GOI are

established by the GOT for exports of

organic pasta to the United States, we

would consider an exclusion for organic

pasta at that time.

The merchandise under investigation

is currently classifiable under

subheading 1902.19.20 of the

Harmonized Tariff Schedule of the

United States (HTS). Although the HTS

subheading is provided for convenience

and customs purposes, our written

description of the scope of this

proceeding is dispositive.

The 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 effective January 1,

1995 (the Act). References to the

Countervailing Duties: Notice of

Proposed Rulemaking and Request for

Public Comments, 54 FR 23366 (May 31,

1989) (Proposed Regulations), which

have been withdrawn, are provided

solely for further explanation of the

Department’s CVD practice.

Petitioners

The petition in this investigation was

filed by Borden, Inc., Hershey Foods

Corp., and Gooch Foods, Inc.

Period of Investigation

The period for which we are

measuring subsidies (the ‘‘POI’’) is

calendar year 1994.

Facts Available

Section 776(a)(2)(A) of the Act

requires the Department to use the facts

available ‘‘if an interested party or any

other person withholds information that

has been requested by the administering

authority or the Commission under this

title.’’ One of the companies included in

this investigation, Oba, did not respond

to our questionnaire. Section 776(b) of

the Act provides that the administering

authority may use an inference that is

adverse to the interests of such a party

in selecting from among the facts

otherwise available. Such adverse

inference may include reliance on

information derived from: (1) The

petition, (2) a final determination in the

investigation under this title, (3) any

previous review under section 751 or

determination under section 753, or (4)

any other information placed on the

record. Because the petition did not

provide subsidy rates, we were unable

to use the petition as a source for facts

available.

In the absence of verified data

concerning benefits received by Oba

during the POI, we have determined

that rates based on record data obtained

from similarly situated firms constitute

the most appropriate data available.

Therefore, we have used as the facts

available for Oba the sum of the highest
Federal Register / Vol. 61, No. 116 / Friday, June 14, 1996 / Notices 30367

rate calculated for each program used by

any of the companies.

Based upon the responses to our

questionnaires and the results of

verification, we determine the

following:

I. Programs Determined to be

Countervailable

A. Pre-Shipment Export Loans

The Export Credit Bank of Turkey

(Turk Eximbank) provides short-term

pre-shipment export loans to exporters

through intermediary commercial

banks. The program was commenced in

March 1989 in order to meet the

financing needs of exporters and

overseas contractors. Loans are made

available to certified exporters who

commit to a certain value of exports

within a specified time period.

Generally, loans are extended for 180

days, covering between 50 and 75

percent of the FOB value of the

committed export value. During the POI,

the food sector (including pasta) was

eligible for pre-shipment export loans

amounting to 75 percent of the

committed FOB value of exports, for a

maximum of 180 days. These loans were

denominated in Turkish lira (TL).

Of the companies investigated, only

Maktas received Eximbank PreShipment Export Loans.

Short-term Loan Benchmark: Due to

an average inflation rate in Turkey of 91

percent during the POI, interest rates

have fluctuated significantly. Hence, we

have calculated monthly benchmarks.

(See section 355.44(b)(3)(iii) of the

Proposed Regulations.)

As illustrated by section 355.44(b)(3)

of our Proposed Regulations, the

Department’s practice is to use as its

short-term benchmark the interest rate

on the predominant alternative source

of short-term financing in the country in

question. Typically, we use national

average benchmarks and not companyspecific interest rates. However, the

GOT responded that there is no

predominant source of short-term

financing in Turkey and that it does not

maintain statistics concerning shortterm interest rates. Moreover, our

review of the Annual Report of the

Central Bank of Turkey did not reveal

any national average short-term interest

rates.

Therefore, in the absence of our

preferred benchmark, we have turned to

company-specific interest rates.

Specifically, we have used the average

cost of Maktas’ short-term commercial

loans outstanding during each of the

months it received Pre-Shipment Export

Loans as our benchmark. We note that

because of the way in which Maktas

kept its records we were not able to

calculate monthly benchmarks based

only on loans taken out in each month.

However, given the information

available, we believe this monthly

average cost of borrowing provides the

most accurate measure of what Maktas

would pay on a comparable commercial

loan that it could actually obtain on the

market. (See section 771(5)(E)(ii) of the

Act.)

Based on our comparison of the

benchmark interest rate to the rate paid

by Maktas on its export loans, we have

determined that these loans provide a

countervailable subsidy within the

meaning of section 771(5) of the Act.

The loans are a direct transfer of funds

from the GOT through commercial

banks. They provide a benefit because

the interest rate paid on these loans is

less than the amount the recipient

would pay on a comparable commercial

loan. Finally, the loans are specific

because their receipt is contingent upon

export performance.

We calculated the countervailable

subsidy as the difference between actual

interest paid on loans for shipments to

the United States during the POI and the

interest that would have been paid

using the benchmark interest rates. This

difference was divided by Maktas’ total

exports to the United States during the

POI. On this basis, we determine the

countervailable subsidy from this

program to be 8.82 percent ad valorem

for Maktas.

Respondents argue that the

Department should use as its benchmark

the interest rate on Central Bank

Rediscount Loans. They point to the fact

that Maktas received such loans during

the POI and that this type of loan was

available throughout the POI. Moreover,

respondents argue, if the Department

elects to use this benchmark, it must

find that Eximbank Pre-Shipment

Export Loans are not countervailable

because, in two of nine months that

Maktas received Pre-Shipment Export

Loans, the interest rate on Central Bank

Rediscount loans was lower than the

rate for commercial loans obtained by

Maktas.

We have not used the Central Bank

Rediscount Loan rates as our

benchmark, nor have we included

Central Bank Rediscount Loans received

by Maktas in calculating Maktas’

average monthly cost of outstanding

loans. Information obtained at

verification indicates that the Central

Bank Rediscount Loans are offered to

increase liquidity in the economy. In

light of the policy objectives of these

loans, and the lack of any information

that would support the conclusion that

they were made as part of the Central

Bank’s commercial operations (if any),

we have concluded that these loans

should not be viewed as commercial

loans. Moreover, while we have

information on the terms of the Central

Bank Rediscount Loans (90 days), we do

not have information on the lengths of

the other short-term loans Maktas had

outstanding. Therefore, we have no

basis to say that the Central Bank

Rediscount Loans are more comparable

to the Pre-Shipment Export Loans taken

out by Maktas.

Petitioners urge the Department to

rely on adverse facts available and use

the highest rate per month from the

various sources on the record (this

includes Maktas’ own rates, the

overnight rates, the sale of government

securities, etc.) as the benchmark rate.

Petitioners believe adverse facts

available is justified because they claim

Maktas ‘‘manipulated its rates’’ and

failed to cooperate with the

Department’s attempts to find the

appropriate company-specific rates.

We disagree that adverse facts

available are warranted in this situation.

In seeking short-term loan benchmarks,

it is our practice to request this

information of the government.

Companies are not asked to provide any

short-term benchmark data. In this case,

Maktas provided its own borrowing

rates. As we learned at verification,

those rates included the interest rate on

the Eximbank Pre-Shipment Export

loans. We have since verified the correct

company specific interest rates and have

used them in our calculation.

B. Pasta Export Grants

During 1994, the Central Bank of

Turkey provided cash grants and

government promissory notes or bonds

to exporters of pasta. According to the

GOT, the purpose of the program was to

develop Turkey’s export potential. In

order to receive the grants, exporters

were required to submit applications

(including proof of exportation and

payment from the customer) to the local

office of the Central Bank. The exporter

received a specified percentage of the

FOB U.S. dollar price, subject to a cap.

We have determined that these export

grants and bonds are countervailable

subsidies within the meaning of section

771(5) of the Act. The grants and bonds

are a direct transfer of funds from the

GOT providing a benefit in the amount

of the grant. Also, the grants and bonds

are specific because their receipt is

contingent upon export performance.

We have also determined that the

benefits under this program are

bestowed when the cash is received, in

the case of grants, and on maturity date,

in the case of promissory notes or
30368 Federal Register / Vol. 61, No. 116 / Friday, June 14, 1996 / Notices

bonds. Regarding the bonds, although

we note that there are no restrictions on

their transfer or sale, markets have not

developed that would allow exporters to

convert their bonds to cash. Therefore,

we have treated the subsidy as being

received at the first point in time when

the exporter knows with certainty the

amount being received, which is the

date of maturity.

We have further determined that the

benefits under the Pasta Export Grant

program are ‘‘recurring.’’ Once a

company has exported and provided

documentation to the local office of the

Central Bank it becomes eligible for the

Pasta Export Grants. The receipt of

benefits is automatic and continues

from year to year. (See General Issues

Appendix in Final Affirmative

Countervailing Duty Determination:

Certain Steel Products from Austria (58

FR 37217, 37268–69, July 9, 1993)

(‘‘General Issues Appendix’’).)

To calculate the countervailable

subsidy, we divided the total amount of

cash grants received and the value of

bonds maturing during the POI for

exports to the United States

(denominated in Turkish lira) by the

total exports to the United States

denominated in Turkish lira. On this

basis, we determine the countervailable

subsidy from this program to be 1.17

percent ad valorem for Filiz and 3.79

percent ad valorem for Maktas.

The GOT has stated that this program

was terminated for pasta exports made

on or after January 1, 1995, by a

confidential government decree.

However, we saw at verification that

while this program had expired, it was

reinstated with a new formula for

determining the subsidy amount and a

new time line for implementation. This

reinstatement was effective September

29, 1995. Therefore, we do not view this

program as having been terminated.

Respondents further argue that,

should the Department value the

benefits on an earned basis, it should

then treat this program as having

undergone a program-wide change, and

benefits should be adjusted to reflect the

newly-announced formula. As

discussed above, we are not valuing the

benefits on an earned basis. Moreover,

we are not aware of any change in the

reinstated program that would lead us to

value the benefits on an earned basis.

Therefore, because the benefits of the

Pasta Export Grant Program are being

valued on a received basis which, in the

case of bonds is the date of maturity, the

changes effectuated in September 1995

are not measurable and do not qualify

as a program-wide change. (See section

355.50 of the Proposed Regulations.)

C. Free Wheat Program

During our verification of Filiz, we

discovered that the company received

free wheat under a GOT program. The

program, established by Decree 93/4534,

provides free wheat to companies that

agree to export flour, pasta, semolina, or

biscuits. The companies sign contracts

with the Turkish Grain Board (TMO)

committing to export a certain amount

of their product in return for a predetermined amount of durum wheat.

Once the company has exported the

product, it provides the TMO with

copies of its export documents. The

TMO examines the documents, and

upon TMO approval, wheat is delivered

to the company. We verified that the

price of wheat is determined on the date

of the TMO invoice and Filiz received

seven invoices during 1994.

Filiz argues that it did not receive a

benefit under the Free Wheat Program

during the POI. Although the company

received wheat in 1994, Filiz contracted

with the TMO in 1993, and knew at the

time of the contract precisely how much

wheat it would receive for each ton of

pasta exported. Filiz cites to section

355.48(b)(7) of the Proposed Regulations

in support of its claim that the benefit

of the Free Wheat Program was received

in 1995. Petitioners assert that the

applicable section of the Proposed

Regulations is 355.48(b)(2), which

discusses the governmental provision of

goods or services. According to section

355.48(b)(2), the benefit for

governmental provision of goods or

services occurs ‘‘at the time a firm pays,

or in the absence of payment would

have paid for the good or service.’’

Section 355.48(b)(7) states that, in the

case of an export benefit provided as a

percentage of the value of the exported

merchandise, the cash flow effect of the

subsidy is deemed to occur on the date

of export. Because the benefit from the

Free Wheat program is not provided as

a percentage of the value of the exported

merchandise, we agree with petitioners

that section 355.48(b)(7) does not apply

to this program. The benefit from the

GOT’s provision of free wheat occurred

when Filiz actually received the wheat.

Therefore, pursuant to section

355.48(b)(2) we have determined that

Filiz benefitted from the Free Wheat

Program during the POI.

We have determined that the

provision of free wheat to exporters of

pasta is a countervailable subsidy

within the meaning of section 771(5) of

the Act. The program provides goods for

less than adequate remuneration and is

specific because its receipt is contingent

upon export performance. To calculate

the countervailable subsidy, we divided

the total value of the free wheat

provided to Filiz during the POI by the

total value of the company’s exports

during the POI. On this basis, we

determine the countervailable subsidy

from this program to be 1.99 percent ad

valorem for Filiz.

We have further determined that the

benefits under the Free Wheat Program

are ‘‘recurring.’’ Once a company has

exported and provided documentation

to the TMO it becomes eligible for the

free wheat. The receipt of benefits is

automatic and continues from year to

year. (See Allocation section of the

General Issues Appendix.)

Respondents argue that if the

Department finds that Filiz received

benefits during the POI, then the

Department should treat the program as

terminated and adjust the deposit rate

accordingly. They assert that the GOT’s

statement that ‘‘the subsidy program

that was supposed to end on October 31,

1993 will be extended until November

28, 1993,’’ and the statement that ‘‘the

wheat subsidy program will be

terminated’’ constitute clear evidence

that the program has been terminated.

Petitioners disagree that the

Department should consider the Free

Wheat program terminated. They state

that the only documentation on the

record refers to the possible termination

of the program. As such, the Department

has insufficient evidence on the record

to treat the program as terminated. We

agree with petitioners and have not

adjusted the deposit rate.

Respondents further assert that

exporters were not allowed to receive

benefits from the Free Wheat and Pasta

Export Grant programs for the same

exportation. Consequently, if

countervailed, the Free Wheat program

should not be subject to a deposit rate

above the rate for the Pasta Export Grant

program. Petitioners rebut respondents’

claim that the Pasta Export Grant

program and the Free Wheat program

are mutually exclusive. They claim that

respondents have provided no

documentation to that effect.

We agree with respondents that

Turkish pasta exporters cannot claim

Pasta Export grants and Free Wheat on

the same exportation. (Contrary to

petitioners’ assertions, the record

evidence is clear on this point.) We

further believe that our methodology

appropriately accounts for this.

Regarding Pasta Export grants, we have

divided the total amount of benefit

received on U.S. shipments in the POI

by the total U.S. exports during the

same period. The fact that export grants

were not received on every shipment is

reflected in this calculation. For the

Free Wheat program, we divided the
Federal Register / Vol. 61, No. 116 / Friday, June 14, 1996 / Notices 30369

value of free wheat received as a

consequence of exports to all markets by

total exports. The two rates, when

added together, reflect the total grants

and free wheat that were received on

exports to the United States.

D. Payments for Exports on Turkish

Ships/State Aid for Exports Program

At verification, GOT officials

explained that the Payments for Exports

on Turkish Ships program was

instituted to aid industries producing

processed goods. Under the program,

exporters applied to the Central Bank

for cash grants or bonds based on the

number of tons of product transported

by sea. As with the Pasta Export Grant

program, payments are made to

companies in the form of cash grants or

bonds.

Filiz reported in its questionnaire

response that it did not apply for, use,

or benefit from this program during the

POI. However, we discovered during

verification that Filiz had applied for

benefits on shipments made in both

1993 and 1994. We further verified that

the company received payment during

1994 in the form of both cash grants and

maturing bonds for certain of its 1993

applications, and was still waiting for

payment in 1995 for applications filed

in both 1993 and 1994. Additionally,

contrary to the explanation provided by

the GOT, Filiz officials explained that

the program provided the company 15

U.S. dollars per ton for its exports made

using Turkish ships and 7.50 U.S.

dollars per ton for its exports made on

non-Turkish ships.

We have determined that these export

grants and bonds are countervailable

subsidies within the meaning of section

771(5) of the Act. The grants and bonds

are a direct transfer of funds from the

GOT providing a benefit in the amount

of the grant and bonds. Also, the grants

and bonds are specific because their

receipt is contingent upon export

performance.

We have further determined that the

benefits under the Payments for Exports

on Turkish Ships program are

‘‘recurring.’’ Once a company has

exported and provided documentation

to the Central Bank it becomes eligible

for the cash grants or bonds. The receipt

of benefits is automatic and continues

from year to year. (See Allocation

section of the General Issues Appendix.)

To calculate the countervailable

subsidy we divided the total amount of

grants received and bonds maturing

during the POI by Filiz’s total exports.

On this basis, we determine the

countervailable subsidy from this

program to be 0.45 percent ad valorem

for Filiz.

Petitioners assert that in light of

Filiz’s failure to report these benefits in

its questionnaire response, the

Department should calculate an adverse

facts available rate by including all

transportation subsidy amounts on the

record, regardless of when the amounts

were received. They also state that the

benefit should be divided by exports of

the subject merchandise to the United

States. We disagree with petitioners.

Although we agree that these benefits

should have been included in the

questionnaire response, we collected

and verified all of the necessary data

required to calculate a benefit under this

program. Therefore, there is no basis for

applying an adverse facts available rate.

Respondents assert that the Freight

Premium for Distance Program should

not be countervailed because it has been

modified to exclude pasta products.

However, respondents argue if the

Department determines that the program

is countervailable, then the benefit

should be treated as having been

bestowed when the cash was received

(for grants) and on the maturity date (for

bonds). In their view, the benefit should

be allocated over total exports.

We agree with respondents that the

program was terminated. We verified

that this program was terminated by

confidential government decree.

Although a new transportation program

entitled ‘‘State Aid for Exports’’ was

instituted on September 29, 1995, we

verified that this program differs from

the former program in that it covers sea,

air, and truck transportation, and

specifically excludes exports of pasta.

We are calculating the benefit as of the

time the cash grant was received or the

date on which the bond matures. Filiz

has still not received all of its payments

from applications made in 1993 and

1994. Based on the fact that residual

benefits continue to be bestowed under

the program, we are not adjusting the

cash deposit rate for the termination.

(See section 355.50 of the Proposed

Regulations.)

E. Incentive Premium on Domestically

Obtained Goods

The Incentive Premium on

Domestically Obtained Goods is part of

the General Incentives Program (GIP),

which is discussed further below.

Although we have analyzed certain of

the benefits provided under the GIP

within the context of the GIP as a whole,

two types of benefits merit separate

consideration. These are the Incentive

Premium on Domestically Obtained

Goods and the Resource Utilization

Support Fund, discussed below. In both

instances, the benefit is tied to the

purchase of domestic over imported

goods. Therefore, because receipt of

both of these benefits is contingent upon

the use of domestically-sourced inputs,

these particular benefits are specific

pursuant to section 771(5A)(C) of the

Act.

The Incentive Premium program

provides companies holding investment

incentive certificates under the GIP with

rebates of the 15 percent VAT paid on

locally-sourced machinery and

equipment plus a 10 percent premium.

We verified that imported machinery

and equipment is subject to the VAT

and is not eligible for the rebate.

Respondents argue that we should not

countervail the Incentive Premium

because VAT paid on imported

equipment may be deferred, which, in a

hyperinflationary economy, results in

the amount of VAT ultimately paid

having a present value substantially less

than the amount of VAT originally

incurred. Hence, they argue, there is

essentially no difference between

exempting domestically-sourced goods

from the VAT and deferring payment of

the VAT on imported goods. Petitioners

argue that the complementarity of the

two programs does not eliminate the

benefit provided by the Incentive

Premium program. They assert that the

two types of benefits are not identical

and that hyperinflationary pressures

would not necessarily nullify the

difference between these two benefits.

Additionally, they argue that not all

companies receive the same GIP benefits

and, therefore, not all companies would

receive both the Incentive Premium

VAT rebates and the VAT deferral.

Despite respondents’ assertions, the

benefit is not related to the treatment of

imported merchandise. The VAT rebates

constitute revenue foregone by the GOT

and provide a benefit in the amount of

the rebates.

We have determined that these VAT

rebates are countervailable subsidies

within the meaning of section 771(5) of

the Act. As stated above, the rebates

constitute revenue foregone by the GOT

and provide a benefit in the amount of

the VAT savings to the company. Also,

as discussed above, they are specific

because their receipt is contingent upon

the use of domestic goods rather than

imported goods. Maktas received

incentive premiums in 1991 and Filiz

received incentive premiums in 1993

and 1994.

We have further determined that the

benefits under the Incentive Premium

program are ‘‘recurring.’’ Once a

company has received an investment

incentive certificate it becomes eligible

for the Incentive Premium benefits. The

receipt of benefits is automatic and

continues from year to year. (See
30370 Federal Register / Vol. 61, No. 116 / Friday, June 14, 1996 / Notices

Allocation section of the General Issues

Appendix.)

For the rebates received by Filiz

during the POI, we divided the amount

received by the total value of the

company’s sales during the POI. On this

basis, we determine the countervailable

subsidy to be 0.0022 percent ad valorem

for Filiz.

F. Resource Utilization Support Fund

(GIP)

Filiz reported that it received

Resource Utilization Support Fund

(RUSF) rebates during the POI, but

failed to identify the nature of the

benefit. Because RUSF payments are

made under the GIP, we treated RUSF

benefits like other GIP benefits and we

did not consider them to be

countervailable in the preliminary

determination. However, during

verification of Filiz, we learned that the

RUSF program actually operates like the

Incentive Premium program in that it

provides rebates of the 15 percent VAT

paid on domestically-sourced

machinery and equipment.

We have determined that the RUSF

rebates are countervailable subsidies

within the meaning of section 771(5) of

the Act. The rebates represent revenue

foregone by the GOT and provide a

benefit in the amount of the VAT

savings to the company. Also, they are

specific because their receipt is

contingent upon the use of domestic

goods over imported goods. Filiz

received RUSF rebates during 1993 and

1994.

We have further determined that the

benefits under the RUSF program are

‘‘recurring.’’ Once a company has

received an investment incentive

certificate it becomes eligible for the

RUSF benefits. The receipt of benefits is

automatic and continues from year to

year. (See Allocation section of the

General Issues Appendix.)

For the rebates received by Filiz

during the POI, we divided the amount

received by the total value of the

company’s sales during the POI. On this

basis, we determine the countervailable

subsidy to be 0.27 percent ad valorem

for Filiz.

G. Tax Exemption Based on Export

Earnings

Corporate Tax Law 3946, dated

December 25, 1993, provided that

companies exporting industrial

products valued in excess of

U.S.$250,000 (or the equivalent) were

entitled to deduct five percent of total

export revenues from taxable profit. We

verified that tax returns for fiscal year

1993 filed in 1994 provided the last

opportunity for companies to benefit

from this program.

We have determined that this tax

exemption is a countervailable subsidy

within the meaning of section 771(5) of

the Act. The exemption represents

revenue foregone by the GOT and

provides a benefit in the amount of the

tax saving to the company. Also, the

subsidy is specific because its receipt is

contingent upon export performance. Of

the exporters investigated, only Maktas

claimed this tax exemption on the tax

return it filed in 1994.

Petitioners argue that the Department

does not have sufficient evidence on the

record to consider this program

terminated. They assert that the GOT is

required to do more than just show that

the current law is silent regarding a

previous subsidy in order for the

Department to treat the program as

terminated. Furthermore, given the

GOT’s practice of revising, renaming,

and reinstating subsidy programs,

petitioners argue that the Department

should treat the program as a suspended

subsidy rather than as a terminated

subsidy.

We disagree with petitioners.

Although the GOT did not publish a

specific decree describing the

termination of this program, through a

detailed review of the Budget Laws (Tax

Code) and an examination of the tax

return for fiscal year 1994 filed in 1995,

we were able to verify that the GOT had

abolished the Tax Exemption for Export

Earnings program for tax returns for

fiscal year 1994 (filed in 1995).

Therefore, based on this information, we

have determined that the termination of

the program qualifies as a program-wide

change. (See section 355.50 of the

Proposed Regulations.) Moreover, there

is no evidence on the record which

would indicate that residual benefits are

being bestowed or that a substitute

program has been implemented.

Therefore, we have adjusted the cash

deposit rate to account for this change.

To calculate the countervailable

subsidy, we divided the tax savings

realized during the POI by the

company’s export sales during the POI.

On this basis, we determine the

countervailable subsidy from this

program to be 0.50 percent ad valorem

for Maktas. For cash deposit purposes

the subsidy rate for Maktas is zero.

II. Benefits Determined to be Not

Countervailable

Certain GIP Benefits to Filiz

The GIP is designed to eliminate the

developmental differences between

regions in Turkey and to support

investments in industry sectors where

the country is lacking investment. The

regions and sectors targeted by the GIP

are generally selected by the

Undersecretariat of the Treasury (UT).

The UT is also responsible for issuing

investment incentive certificates under

the GIP. Investment incentive

certificates identify the types of GIP

benefits for which certificate holders are

eligible.

In deciding whether to issue

investment incentive certificates, the UT

considers whether the proposed

investment project meets certain criteria

and financial thresholds set by the

Council of Ministers. These criteria

include whether the project: (1)

Provides international competitiveness;

(2) incorporates appropriate advanced

technology; and (3) satisfies at least a

minimum of economic capacity or scale

determined on a sectoral basis. We

verified that exportation was not a

prerequisite for receiving benefits under

this program. Each application for an

investment incentive certificate must be

accompanied by a feasibility study and

detailed financial projection. The GOT

stated that approximately 99 percent of

the applications for investment

incentive certificates are approved.

Those applications which are rejected

are generally revised, resubmitted, and

eventually obtain approval.

For purposes of the GIP, Turkey is

divided into four types of regions: (1)

Developed; (2) normal; (3) priority

regions of the second degree; and (4)

priority regions of the first degree. The

level of investment needed to obtain an

investment incentive certificate for the

priority regions is lower than the level

needed for normal and developed

regions (e.g., the minimum investment

requirement during 1994 in priority

regions was 1 billion TL and the

minimum investment in normal and

developed regions was 5 billion TL).

Moreover, we learned on verification

that companies located in the developed

region are required to utilize a greater

percentage of their own funds and less

bank financing in connection with the

investment than companies located in

any of the other three regions. Finally,

we discovered that there are distinctions

between the amounts granted in the

different regions for the Fund-Based

Credit and Investment Allowance

benefits.

Filiz, located in a normal region,

received the following benefits under

the GIP during the POI: (1) Customs

duty exemptions on imported

machinery and equipment, (2) VAT

deferrals on imported machinery and

equipment, (3) Resource Utilization

Support Fund Rebates, and (4) Incentive

Premiums on Domestically-Obtained
Federal Register / Vol. 61, No. 116 / Friday, June 14, 1996 / Notices 30371

Goods. Maktas, located in a developed

region, only received Incentive

Premiums on Domestically-Obtained

Goods. As discussed above, we have

determined that the Incentive Premiums

on Domestically-Obtained Goods and

RUSF rebates are countervailable.

Therefore, the following analysis is

limited to customs duty exemptions and

VAT deferrals on imported machinery

and equipment.

For these two types of benefits, the

amount does not vary by region. Hence

the issues before us are: (1) Whether the

different eligibility requirements for

each region render the program

regionally specific, and (2) if not,

whether the benefits received by Filiz

under the GIP are otherwise specific.

Regarding the first issue, although Filiz

is located in the normal region and,

thus, is subject to more lenient

eligibility requirements than the

developed region (which has the

strictest requirements), Filiz surpassed

the eligibility requirements for the

developed region. Hence, Filiz’s

location did not affect its eligibility for

benefits during the POI and we need not

reach the issue of whether differing

eligibility criteria by region make these

benefits under the GIP specific.

Since Filiz would have qualified to

receive benefits under the strictest

eligibility requirements, we went on to

analyze whether the customs duty

exemptions and VAT deferrals granted

under the GIP are being provided to a

specific industry or enterprise or group

thereof within the meaning of section

771(5A)(D) (i)–(iii).

In our original questionnaire, we

asked the GOT to provide specificity

information for each type of GIP benefit.

In response to this request, the GOT

stated that it did not maintain its

records in such a way as to easily

provide the requested information.

Accepting their claim about the

difficulty posed by our request, we

asked the GOT to provide instead the

total number of qualified applicants for

investment incentive certificates by

region. We relied on this data for our

preliminary determination. At

verification, we examined the GIP

database and confirmed the enormous

burden of retrieving the specificity

information by type of benefit.

Therefore, we have continued to rely on

program-wide information for purposes

of analyzing the specificity of customs

duty exemptions and VAT deferral

benefits under the GIP.

There are no de jure limitations on the

types of industries that are eligible for

benefits under the GIP. Regarding de

facto specificity, we consider the

following four factors, in accordance

with section 771(5A)(D)(iii) of the Act:

(1) The number of enterprises,

industries or groups thereof which

actually use a subsidy; (2) predominant

use of a subsidy by an enterprise,

industry, or group; (3) the receipt of

disproportionately large amounts of a

subsidy by an enterprise, industry, or

group; and (4) the manner in which the

authority providing a subsidy has

exercised discretion in its decision to

grant the subsidy.

We verified the statistics provided by

the GOT for the period 1991–1994

concerning the awarding of investment

incentive certificates to the various

sectors of the economy. For 1994, these

statistics indicate that during the POI,

thirty-four industries, within the

agriculture, mining, manufacturing,

energy, and services sectors, received

investment incentive certificates. We

consider this distribution of industries

sufficiently broad. We further verified

that during the POI, the food and

beverages industry received 7.5 percent

of the investment incentive certificates

issued. Pasta producers received less

than 3.8 percent of the investment

incentive certificates issued to the food

sector. During the same period, the

textiles and clothing industry received

24.6 percent and the transportation

industry received 14.8 percent of the

investment incentive certificates issued.

Each of the thirty-one other industries

accounted for 4.8 percent or less of the

total investment incentive certificates

issued. The statistics for the period

1991–1993 indicate a similar

distribution of investment incentive

certificates.

Based on this distribution of

certificates (including the fact that pasta

accounts for a fraction of the certificates

issued to the food and beverage

industry), we determine that the pasta

industry was neither a dominant user of

the program nor did it receive a

disproportionate amount of the

investment incentive certificates.

Moreover, if the actual users of the

subsidy are too large in number to

reasonably be considered a specific

group, and if there is no evidence of

dominant or disproportionate use, the

fact that a foreign authority

administering a subsidy program may

have exercised discretion in selecting

the recipients of the subsidy is

insufficient for a finding of de facto

specificity. (See, SAA p. 261.)

Therefore, we determine that customs

duty exemptions and VAT deferrals on

imported machinery and equipment are

not specific and do not confer

countervailable subsidies on Filiz.

Petitioners argue that because the

Fund-Based Credit and the Investment

Allowance programs provide different

levels of benefits for each region, the

Department cannot conclude that all

GIP programs are not countervailable.

They state further that the Department

verified that GIP regulations issued in

1995 provide that no new investment

certificates will be issued to companies

located in developed regions. They

conclude that because certain regions

will no longer be able to receive

benefits, a regional subsidy exists.

Because Filiz did not benefit from the

Fund-Based Credit and Investment

Allowance programs during the POI, we

have not made a determination as to the

countervailability of these programs.

With respect to the new regulations,

they pertain to investment incentive

certificates issued after our POI and,

hence, are not relevant to our analysis.

Petitioners also assert that for certain

GIP programs, e.g., the Tax, Duty, and

Charge Exemptions program, companies

cannot receive benefits without

pledging to meet a certain export

commitment. They cite Extruded

Rubber Thread from Malaysia (Rubber

Thread), 57 FR 38,472, 38,476 (August

25, 1992), where the Department

determined that a program may be ‘‘twofaceted’’ in the sense that certain

companies receive benefits under any

number of eligibility criteria, but others

receive it based on less neutral criteria

(e.g., export). As with the Fund-Based

Credit and the Investment Allowance,

Filiz did not receive benefits under the

Tax, Duty, and Charge Exemptions

program. Therefore, we have not

determined whether the Tax, Duty, and

Charge Exemptions program is specific.

Finally, petitioners claim that the

GOT uses discretion in its distribution

of GIP benefits, by designating certain

projects as ‘‘particularly worthwhile.’’

These are projects in sectors targeted by

the GOT and that are not subject to the

normal GIP requirements. Additionally,

petitioners point out that companies do

not always receive the same array of

benefits under the GIP, as the GOT

determines which benefits will be

provided to which companies.

Respondents claim that petitioners’

assertion that government discretion is

used in the distribution of GIP benefits

is without merit, as the Department

found no evidence at verification to this

effect.

We verified that the GOT did not

designate pasta as a ‘‘particularly

worthwhile’’ industry during the POI.

Furthermore, as stated above, and in the

SAA, if the actual users of the subsidy

are too large in number to reasonably be

considered as a specific group, and if

there is no dominant or

disproportionate use of the program, the
30372 Federal Register / Vol. 61, No. 116 / Friday, June 14, 1996 / Notices

fact that a government may have

exercised discretion in selecting the

recipients of a subsidy is insufficient to

justify a finding of de facto specificity.

Such is the case here. Moreover, we saw

no evidence that the GOT in anyway

used its discretion to award benefits to

selected companies and to deny them to

others.

III. Programs Determined to be

Terminated

A. Support and Price Stabilization

Program (SPSF)

Petitioners argue that despite the

Department’s preliminary determination

that this program was not used, and the

GOT’s claim that the program was

terminated in 1992, the Department

should countervail Filiz’s reported SPSF

payment. Respondents assert that they

did not benefit from the SPSF program

during the POI. It is simply a matter of

nomenclature that the SPSF appears on

Filiz’s application for pasta export

grants.

During verification, we reviewed the

Official Gazette dated August 20, 1991,

which discusses the termination of the

SPSF. The Gazette states that the SPSF

program was terminated effective

February 1, 1992. Furthermore, we are

confident that the term SPSF on Filiz’s

application for pasta export grants was

simply an error on the company’s part.

Because this program was administered

pursuant to a confidential government

decree, companies were not aware

which agency was providing the grants.

Filiz mistakenly believed that the SPSF

was providing the grants. However,

during verification, we confirmed that

the Central Bank and not the SPSF was

the provider of the pasta export grants.

We found no evidence during the

verification of Filiz that the company

received benefits from the SPSF.

B. Wharfage Fee Exemption (GIP)

During verification, we reviewed the

Official Gazette dated July 11, 1992,

which discusses the termination of the

Wharfage Fee Exemption. The Gazette

states that the Wharfage Fee Exemption

program was terminated effective

January 1, 1993. We saw no evidence

during verification that companies

could receive residual benefits or that

the program had been reinstated.

IV. 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.

1. Advance Refunds of Tax Savings

2. Export Credit Through the Foreign

Trade Corporate Companies

Rediscount Credit Facility

3. Normal Foreign Currency Export

Loans

4. Performance Foreign Currency Export

Loans

5. Export Credit Insurance

6. Regional Subsidies

a. Investment Allowances

b. Mass Housing Fund Levy

Exemptions

c. Customs Duty Exemptions

d. Rebate of VAT on DomesticallySourced Machinery and Equipment

e. Additional Refunds of VAT

f. Postponement of VAT on Imported

Goods

g. Other Tax Exemptions

h. Payment of Certain Obligations of

Firms Undertaking Large

Investments

i. Corporate Tax Deferral

j. Subsidized Turkish Lira Credit

Facilities

k. Subsidized Credit for Proportion of

Fixed Expenditures

l. Subsidized Credit in Foreign

Currency

m. Land Allocation

7. Exemption from Mass Housing Fund

Levy (Duty Exemptions)

8. Direct Payments to Exporters of

Wheat Products to Compensate for

High Domestic Input Prices

9. Interest Spread Return Program (GIP)

V. Programs Determined Not To Exist

Based on the information provided in

the responses and the results of

verification, we determine that the

following programs do not exist.

1. Export Promotion Program

2. Export Credit Program

3. Interest Rebates on Export Financing

(GIP)

4. Foreign Exchange Allocation Program

(GIP)

Interested Party Comments

Comment 1: Petitioners argue that

because there is no evidence on the

record concerning certain tax programs

discussed at verification, the

Department should conclude that its

subsidy calculations understate the tax

benefits, and identify these other

programs as subsidies to be examined in

future proceedings. Petitioners also

assert that the Department should not

treat the Advanced Refund for Tax

Savings program as terminated in the

final determination. They state that the

program is still in existence and that the

Department verified this.

Respondents assert that the

Department verified that neither Filiz

nor Maktas received benefits under the

Advance Refund of Tax Savings

program. Hence, this program should

not be included in any countervailing

duty order issued in this case.

Respondents also assert that the

Department has no record evidence with

which to conclude that the other tax

exemptions listed on the Turkish

corporate income tax form constitute

countervailable subsidies.

DOC Position: We agree with

petitioners that the Advanced Refund

for Tax Savings program is still in

existence and, therefore, should not be

treated as a terminated program.

However, we disagree with petitioners’

contention concerning the other tax

programs. We found no evidence during

verification which would lead us to

believe that these programs should be

considered countervailable subsidies.

Therefore, we are not including them in

our final determination.

Comment 2: Petitioners assert that the

Department should allocate the benefits

from the Pasta Export Grants to pasta

exports to the United States. Petitioners

also assert that certain subsidies

attributed to Maktas appear in the

company’s ‘‘Other Income’’ account,

which is a component of total sales.

These subsidies should be subtracted

from total sales so that they are not

included in the denominator. Finally,

petitioners argue that the Department

should exclude from the denominator

Filiz’s sales of bulk pasta, because pasta

sold in bulk is not subject merchandise.

Respondents agree with petitioners

that where it is clear that the benefit is

tied to sales of pasta to the United

States, the denominator should be total

exports to the United States. However,

they assert that for certain invoices, it

was impossible for respondents to

separate benefits between retail and

bulk pasta sales. Therefore, the

Department should not adjust for bulk

sales.

DOC Position: We have followed our

standard practice of allocating

countervailable benefits according to

whether the benefit is tied to a

particular product or market, or is

untied. See, section 355.47 of the

Proposed Regulations. Consequently,

we have allocated the export grants

received by Filiz for shipments to the

U.S. to the company’s exports to the

United States. Because we were unable

to distinguish between the pasta export

grants received on bulk and those

received on retail sales, we have

included both retail and bulk sales in

Filiz’s total export sales. Finally, only

the amount of foreign exchange gains

from Maktas’ ‘‘Other Sales’’ is included

in the Maktas denominators used to

calculate the benefit of the used subsidy

programs.
Federal Register / Vol. 61, No. 116 / Friday, June 14, 1996 / Notices 30373

Comment 3: Petitioners assert that

because Maktas reported that it applied

for Normal Foreign Currency loans

during the POI, the Department should

not treat this program as not used, but

rather as countervailable without benefit

during the POI. Respondents state that

Maktas did not apply for or use Normal

Foreign Currency loans during the POI,

and therefore, the Department should

only consider this program in any future

review.

DOC Position: We found no evidence

during verification of Maktas that the

company had benefitted from the

Normal Foreign Currency Loan program

during the POI. Therefore, we will

follow our standard practice of

categorizing the program as not used.

We may consider this program in future

reviews.

Comment 4: Petitioners argue that the

Department should use effective interest

rates when calculating the benefit in the

Eximbank loan program.

DOC Position: We agree with

petitioners and have calculated the

benefit from this program by comparing

the effective Eximbank rates to the

effective benchmark rates. Both the

Eximbank and benchmark rates include

legally-mandated commissions and fund

surcharges.

Comment 5: Petitioners argue that the

Department should countervail the two

additional grants received in 1994 that

were discovered at the Filiz verification.

Petitioners also argue that Filiz failed

to establish that it did not use the

Eximbank loan program. Therefore, the

Department should use adverse facts

available and apply to Filiz the rate

calculated for Maktas under this

program. Respondents state that the

Department did, in fact, verify that Filiz

did not benefit from the Eximbank loan

program.

DOC Position: The additional grants

described by petitioners were Pasta

Export Grants for shipments to third

countries. As they can be tied to other

markets, we have not included these

two additional grants in our

calculations.

With respect to the Eximbank loan

program, we agree with respondents

that there is no evidence on the record

to support the claim that Filiz benefitted

from the Eximbank loan program. We

examined Filiz’s Chart of Accounts,

General Ledger, and various accounts

within each of these records, and found

no evidence that Filiz had received

loans through any GOT programs.

Suspension of Liquidation

In accordance with section

705(c)(1)(B)(i) of the Act, we have

calculated an individual subsidy rate for

each company investigated. For

companies not investigated, we have

determined an ‘‘all others’’ rate by

weighting individual company subsidy

rates by each investigated company’s

exports of the subject merchandise to

the United States, if available, or pasta

exports to the United States. The all

others rate does not include zero or de

minimis rates, or any rates based solely

on the facts available.

Based on our affirmative preliminary

determination, we instructed the U.S.

Customs Service to suspend liquidation

of all entries of pasta from Turkey

which were entered, or withdrawn from

warehouse, for consumption on or after

October 17, 1995, the date of

publication of our preliminary

determination in the Federal Register.

In accordance with section 703(d) of the

Act, we instructed the U.S. Customs

Service to terminate the suspension of

liquidation for merchandise entered on

or after February 14, 1996, but to

continue the suspension of liquidation

of entries made between October 17,

1995, through February 13, 1996. We

will reinstate suspension of liquidation

under section 706(a)(1) of the Act, if the

ITC issues a final affirmative injury

determination, and will require a cash

deposit of estimated countervailing

duties for such entries of merchandise

in the amounts indicated below.

Company Ad valorem rate

Cash

deposit

rate

Filiz ................................ 3.87 3.87

Maktas ........................... 13.12 12.61

Oba ............................... 15.82 15.82

All Others ...................... 9.70 9.38

If the ITC determines that material

injury, or threat of material injury, does

not exist, this proceeding will be

terminated and all estimated duties

deposited or securities posted as a result

of the suspension of liquidation will be

refunded or canceled.

ITC Notification

In accordance with section 705(d) of

the Act, we will notify the ITC of our

determination. In addition, we are

making available to the ITC all

nonprivileged and nonproprietary

information relating to this

investigation. We will allow the ITC

access to all privileged and business

proprietary information in our files,

provided the ITC confirms that it will

not disclose such information, either

publicly or under an administrative

protective order, without the written

consent of the Deputy Assistant

Secretary for Investigations, Import

Administration.

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 705(d) of the Act.

Dated: June 3, 1996.

Paul L. Joffe,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 96–14737 Filed 6–13–96; 8:45 am]

BILLING CODE 3510–DS–P