Leather Wearing Apparel From Argentina; Preliminary Results of Countervailing Duty Administrative Review

DEPARTMENT OF COMMERCE

[C-357-001]

Leather Wearing Apparel From Argentina; Preliminary Results of

Countervailing Duty Administrative Review

AGENCY: International Trade Administration/Import Administration

Department of Commerce.

ACTION: Notice of Preliminary Results of Countervailing Duty

Administrative Review.

SUMMARY: The Department of Commerce is conducting an administrative

review of the countervailing duty order on leather wearing apparel from

Argentina during the period January 1, 1991 through December 31, 1991.

We preliminarily determine the total net subsidy to be zero for all

companies during this review period. We invite interested parties to

comment on these preliminary results.

EFFECTIVE DATE: May 17, 1994.

FOR FURTHER INFORMATION CONTACT: Sylvia Chadwick or Rick Herring,

Office of Countervailing Compliance, International Trade

Administration, U.S. Department of Commerce, Washington, DC 20230;

telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

On March 5, 1992, the Department of Commerce (the Department)

published in the Federal Register a notice of ``Opportunity to Request

Administrative Review'' (57 FR 7910) of the countervailing duty order

on leather wearing apparel (LWA) from Argentina (48 FR 11480; March 18,

1983). On March 19, 1992, the Amalgamated Clothing and Textile Workers

Union (ACTWU), requested an administrative review of the order. We

published the notice of initiation on April 13, 1992 (57 FR 12798)

covering the period January 1, 1991 through December 31, 1991. On April

20, 1992, the government of Argentina (GOA) objected to ACTWU's

request, alleging that ACTWU lacked standing as an interested party as

defined under the law. The GOA neither submitted evidence nor presented

any argument that ACTWU lacked standing. The Department determined that

the ACTWU had standing to request a review pursuant to 19 CFR

355.2(i)(4), as ``a certified or recognized union or group of workers

which is representative of the industry or of sellers * * * in the

United States of the like product produced in the United States.''

ACTWU had participated as an interested party in the original

investigation and subsequent reviews of this case. For further

discussion of the Department's position on the standing of ACTWU to

request a review, see decision memorandum to Joseph A. Spetrini dated

October 15, 1992; ``Interested Party'' Status of Domestic Party

Concerning the Countervailing Duty Order on Leather Wearing Apparel

from Argentina which is on file in the Central Records Unit (room B099

of the Main Commerce Building).

Scope of Review

Imports covered by this review are shipments of Argentine leather

coats, jackets and other apparel including leather vests, pants and

shorts for men, boys, women, girls and infants. Also included are outer

shells and parts and pieces of leather wearing apparel. This

merchandise is classifiable under item number 4203.10.40 of the

Harmonized Tariff Schedule (HTS). The HTS item number is provided for

convenience and Customs purposes. The written description remains

dispositive.

The review period is January 1, 1991 through December 31, 1991.

This review involves one company, Comercio Internacional S.A.C.I.F.I.A.

(Comercio), which accounts for virtually all exports to the U.S., and

nine government programs.

Analysis of Programs

1. Rebate of Indirect Taxes (Reembolso)

The Reembolso program provides a cumulative tax rebate paid upon

export and is calculated as a percentage of the f.o.b. invoice price of

the exported merchandise. As stated in Sec. 355.44(d)(4)(ii) of the

Proposed Regulations (54 FR 23382), the Department will find that the

entire amount of any such rebate is countervailable unless the

following conditions are met: (1) the program operates for the purpose

of rebating prior stage cumulative indirect taxes and/or import

charges; (2) the government accurately ascertained the level of the

rebate; and (3) the government reexamines its schedules periodically to

reflect the amount of actual indirect taxes and/or import charges paid.

In prior investigations and administrative reviews of the Argentine

Reembolso program, the Department determined that these conditions have

been met, and, as such, the entire amount of the rebate has not been

countervailed (see, e.g., Leather Wearing Apparel from Argentina, Final

Results of Countervailing Duty Administrative Review (56 FR 10410;

March 12, 1991); Cold Rolled Carbon Steel Flat-rolled Products from

Argentina, Final Results of Countervailing Duty Administrative Review

(56 FR 28527; June 21, 1991); Oil Country Tubular Goods from Argentina,

Final Results of Countervailing Duty Administrative Review (56 FR

64493; December 10, 1991).

However, once a rebate program meets this threshold, the Department

must still determine in each case whether there is an overrebate; that

is, the Department must still analyze whether the rebate for the

subject merchandise exceeds the total amount of indirect taxes and

import duties borne by inputs that are physically incorporated into the

exported product. If the rebate exceeds the amount of allowable

indirect taxes and import duties, the Department will, pursuant to

Sec. 355.44(d)(4)(i) of the Proposed Regulations, find a

countervailable benefit equal to the difference between the Reembolso

rebate rate and the allowable rate determined by the Department (i.e.,

the overrebate).

To determine whether there was an overrebate during the review

period, the Department requested the Government of Argentina to provide

information on any changes to the Reembolso program for Leather Wearing

Apparel. According to the information provided by the Government of

Argentina, on October 16, 1986, Decree 1555/86 modified the reembolso

program and set precise and transparent guidelines to implement the

refund of indirect taxes and import charges. The decree established

three broad rebate levels covering all products and industry sectors.

The rates for levels I, II and III were 10 percent, 12.5 percent, and

15 percent, respectively. Based on the GOA's 1986 calculation of the

tax incidence in the leather wearing apparel industry, this industry

was classified in level II.

The GOA suspended cash payment of rebates under the reembolso

program in April 1989. Pursuant to the Emergency Economic Law dated

September 25, 1989 (Law 23,697), the suspension of cash payments was

continued for an additional 180 days. Rebates accrued during the

suspension period were to be paid in export credit bonds. On March 4,

1990, the entire program was suspended for 90 days by Decree 435/90.

Decree 1930/90 suspended payments of the reembolso for an additional

12-month period.

Decree 612/91 dated April 10, 1991, reinstated cash payments of the

indirect tax rebates and import charges and reduced the rate for the

leather wearing apparel industry from 12.5 percent to 8.3 percent.

Decree 1011/91 dated May 29, 1991, abolished Decree 1555/86 and

incorporated the reduced rebate rates introduced by Decree 612/91.

Therefore, during the period of review, rebates were suspended from

January through April 10, 1991, and the rebate rate was 8.3 percent

from April 11 through December 31, 1991.

Based on the information provided in the questionnaire response, we

calculated the allowable tax incidence for the subject merchandise

based on the 1986 study which was in effect during the review period.

We found that the rebate of taxes did not exceed the total amount of

allowable cumulative indirect taxes and/or import charges paid on

physically incorporated inputs, and prior stage indirect taxes levied

on the exported product at the final stage of production. Therefore, we

preliminarily determine that there was no benefit from this program

during the review period.

2. Other Programs

Based on the questionnaire responses, we preliminarily determine

that the following programs were not used during the review period: (1)

Drawback of customs duties on imported raw materials used in the

manufacture of LWA; (2) income tax deduction under Decree 173/85; (3)

income tax exemption on exported goods; (4) exemption from stamp-tax;

(5) exemption from or rebate of tariff, tributes or taxes levied on

goods imported under temporary import certificates; (6) exemption from

value-added taxes on exported goods or reimbursement of value-added

taxes on purchases of inputs; (7) pre- or post-export financing

programs; and (8) benefits for exporting from the ports south of the

Rio Colorado.

Preliminary Results of Review

We preliminarily determine the total net subsidy to be zero during

the period January 1, 1991 through December 31, 1991.

If the final results of this review remain the same as these

preliminary results, the Department intends to instruct the Customs

Service not to assess countervailing duties on shipments of the subject

merchandise from all companies, exported on or after January 1, 1991

and on or before December 31, 1991. Further, as provided by section

751(a)(1) of the Act, the Department will instruct Customs not to

collect cash deposits on shipments of this merchandise from all

companies entered or withdrawn from warehouse for consumption on or

after the date of publication of the final results of this

administrative review.

Parties to this proceeding may request disclosure of the

calculation methodology and interested parties may request a hearing

not later than ten days after the date of publication of this notice.

In accordance with 19 CFR 355.38(c)(1)(ii), interested parties may

submit written arguments in case briefs on these preliminary results

within 30 days of the date of publication of this notice. Rebuttal

briefs, limited to arguments raised in case briefs, may be submitted

seven days after the time limit for filing the case brief. Any hearing,

if requested, will 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(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 are due under 19 CFR 355.38.

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 being published in

accordance with section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and

19 CFR 355.22.

Dated: May 10, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-11966 Filed 5-16-94; 8:45 am]

BILLING CODE 3510-DS-P