Ceramic Tile From Mexico; Final Results of Countervailing Duty Administrative Review and Revocation in Part of the Countervailing Duty Order

DEPARTMENT OF COMMERCE

International Trade Administration

[C-201-003]

Ceramic Tile From Mexico; Final Results of Countervailing Duty

Administrative Review and Revocation in Part of the Countervailing Duty

Order

AGENCY: International Trade Administration/Import Administration/

Department of Commerce.

ACTION: Notice of Final Results of Countervailing Duty Administrative

Review and Revocation in Part of the Countervailing Duty Order.

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SUMMARY: On June 3, 1993, the Department of Commerce published the

preliminary results of its administrative review of the countervailing

duty order on ceramic tile from Mexico (58 FR 31505). We have now

completed this review and determine the total bounty or grant to be

zero or de minimis for the period January 1, 1991 through December 31,

1991. In addition, because we have determined that the following

companies have met the requirements for partial revocation from the

order, the Department is revoking the countervailing duty order with

respect to these companies: Azulejos Orion, S.A., Ceramica Santa Julia,

Eduardo Garcia de la Pena, Jesus Garza Arocha, Ladrillera Monterrey,

S.A., Pisos Coloniales de Mexico, S.A., Reynol Martinez Chapa, and

Teofilo Covarrubias.

EFFECTIVE DATE: January 19, 1994.

FOR FURTHER INFORMATION CONTACT: Gayle Longest or Kelly Parkhill,

Office of Countervailing Compliance, International Trade

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

telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

On June 3, 1993, the Department of Commerce (the Department)

published in the Federal Register (58 FR 31505) the preliminary results

of its administrative review of the countervailing duty order on

ceramic tile from Mexico (47 FR 20012; May 10, 1982). The Department

has now completed that administrative review in accordance with section

751 of the Tariff Act of 1930, as amended (the Act).

Scope of Review

Imports covered by this review are shipments of Mexican ceramic

tile, including non-mosaic, glazed, and unglazed ceramic floor and wall

tile. During the review period, such merchandise was classifiable under

the Harmonized Tariff Schedule (HTS) item numbers 6907.10.0000,

6907.90.0000, 6908.10.0000 and 6908.90.0000. The HTS item numbers are

provided for convenience and Customs purposes. The written description

remains dispositive.

The review covers the period January 1, 1991 through December 31,

1991, sixty-one companies, and the following programs: (1) FOMEX; (2)

BANCOMEXT Financing for Exporters; (3) PITEX; (4) NAFINSA Long-term

Loans; (5) Other BANCOMEXT preferential financing; (6) CEPROFI; (7)

import duty reductions and exemptions; (8) state tax incentives; (9)

NAFINSA FONEI-type financing; and (10) NAFINSA FOGAIN-type financing.

Calculation Methodology for Assessment and Cash Deposit Purposes

In calculating the benefits received during the review period, we

followed the methodology described in the preamble to 19 CFR 355.20(d)

(53 FR 52306, and 52325; December 27, 1988). We calculated a country-

wide rate, weight-averaging the benefits received by the sixty-one

companies subject to review to determine the overall subsidy from all

countervailing programs benefitting exports of the subject merchandise

to the United States. Because the overall weighted-average country-wide

rate was de minimis, as defined by 19 CFR 355.7, we did not proceed any

further in the calculation methodology.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. We received comments from two respondents,

Ceramica Regiomontana and Ceramica Santa Julia.

Comment 1: As in past reviews, Ceramica Regiomontana contends that

the Department does not have the legal authority to impose

countervailing duties on ceramic tile from Mexico and must revoke the

countervailing duty order. Effective April 23, 1985, the date of the

``Understanding Between the United States and Mexico Regarding

Subsidies and Countervailing Duties'' (the Understanding), Mexico

became a ``country under the Agreement''. Therefore, Ceramica

Regiomontana argues that 19 U.S.C. 1671 requires an affirmative injury

determination as a prerequisite to the imposition of countervailing

duties on any Mexican merchandise imported on or after April 23, 1985,

regardless of whether the countervailing duty order was published

before or after the date.

Ceramica Regiomontana further contends that the Department's

failure to revoke this order is inconsistent with past practice. In two

previous countervailing duty administrative reviews, Certain Fasteners

from India; Final Results of Administrative Review and Partial

Revocation of Countervailing Duty Order (47 FR 44129; October 6, 1982)

and Carbon Steel Wire Rod from Trinidad and Tobago; Preliminary Results

of Changed Circumstances Administrative Review and Tentative

Determination to Revoke Countervailing Duty Order (50 FR 19561; May 9,

1985), where an outstanding countervailing duty order was issued

pursuant to 19 U.S.C. 1303(a) without benefit of an ITC injury

determination, the Department determined that it did not have the

authority to impose countervailing duties when events subsequent to the

issuance of the order required an affirmative ITC injury determination

prior to imposition of countervailing duties. Since the ITC has

indicated that it does not have the legal authority to conduct an

injury investigation concerning merchandise already subject to a

countervailing duty order, the Department has in the past concluded

that it could not impose countervailing duties and revoked, or

preliminarily determined to revoke, the order effective the date the

affirmative injury determination became a requirement. Therefore, the

Department should revoke the countervailing duty order on ceramic tile

and refund all deposits of estimated countervailing duties by Ceramica

Regiomontana during the 1991 review period.

Department's Position: We fully addressed this issue in a previous

administrative review of this countervailing duty order. See Ceramic

Tile from Mexico; Final Results of Countervailing Duty Administrative

Review (55 FR 50744; December 10, 1990). The U.S. Court of

International Trade and the U.S. Court of Appeals for the Federal

Circuit (CAFC) have sustained the Department's legal position that

Mexican imports subject to an outstanding countervailing duty order

already in effect when Mexico entered into the Understanding are not

entitled to an injury test pursuant to section 701 of the Tariff Act

and paragraph 5 of the Understanding (Cementos Anahuac del Golfo, S.A.

v. U.S., 879 F.2d 847 (Fed. Cir. 1989), cert. denied, 110 S. CT. 1318

(1989)). The countervailing duty order on ceramic tile from Mexico was

published prior to Mexico's entering into the Understanding, therefore,

imports of ceramic tile are not entitled to an injury test pursuant to

section 701 of the Tariff Act. Ceramica Regiomontana has provided

neither new evidence nor new arguments on this issue.

Comment 2: As in the last administrative review of ceramic tile,

Ceramica Regiomontana contests the Department's determination that

BANCOMEXT and FOMEX loans taken out by the company were

countervailable. The respondent contends that the use of a commercial

rate as a benchmark in the Department's calculation is inconsistent

with Item (k) of the Illustrative List of Export Subsidies annexed to

the Agreement on Interpretation and Application of Articles VI, XVI,

and XXIII of the General Agreement on Tariffs and Trade (GATT). Item

(k) of the Illustrative List defines an export subsidy as the granting

of export credits by governments at interest rates below the cost of

funds to the government. BANCOMEXT and FOMEX financing meets the cost

to government standard and therefore do not provide countervailable

subsidies.

Department's Position: We disagree. Although FOMEX was examined in

this administrative review, there were no outstanding loans under this

program during the review period. Therefore comments on this program

are moot. With regard to BANCOMEXT, the Department fully addressed this

issue in the previous administrative review of this countervailing duty

order. See Ceramic Tile From Mexico; Final Results of Countervailing

Duty Administrative Review (57 FR 24247; June 8, 1992). The cost to

government standard which defines an export subsidy in Item (k) of the

Illustrative List does not limit the United States in applying its own

national countervailing duty law to determine the countervailability of

benefits bestowed on merchandise exported from Mexico. See Certain

Textile Mill Products From Mexico; Final Results of Countervailing Duty

Order Administrative Review (54 FR 36841, 36843-36844; September 5,

1989) and Certain Textile Mill Products From Mexico; Final Results of

Countervailing Duty Administrative Review (56 FR 12175, 12177; March

22, 1991). BANCOMEXT loans have been determined to be countervailable

because they are limited to exporters. Ceramic Tile From Mexico;

Preliminary Results of Countervailing Duty Review (57 FR 5997, February

19, 1992) and Ceramic Tile From Mexico; Final Results of Countervailing

Duty Review (57 FR 24247, June 8, 1992). Furthermore, when we compared

our benchmark with the interest rates reported under the BANCOMEXT

financing, we found countervailable benefits. Ceramica Regiomontana has

not provided any new evidence or arguments on this issue.

Comment 3: As in past administrative review, Ceramica Regiomontana

contends that the Department incorrectly treated the benefit from the

PITEX program as a grant and this overstated the company's net

benefits. Ceramica Regiomontana claims that after five years the

company will have to pay the import duties and should be treated as an

interest-free loan instead of an outright grant.

Department's Position: We fully addressed this issue in the

previous administrative review of this case. See Ceramic Tile From

Mexico; Final Results of Countervailing Duty Administrative Review (57

FR 24247; June 8, 1992). Although exporters anticipate re-export of

machinery after five years under PITEX, an exporter may choose to keep

the machinery as a permanent import. It appears that after the five

year period, any reimbursement made to the Mexican Government of import

duties previously exempted would not be significant. Therefore, duty

exemptions under PITEX are properly treated as grants and we expensed

them in full at the time of importation, when the exporters otherwise

would have paid duties on the imported machinery. Id.; Final Negative

Countervailing Duty Determination; Silicon Metal From Brazil (56 FR

26988; June 12, 1991). Ceramica Regiomontana has presented us with no

new evidence or arguments on this issue.

Comment 4: Ceramica Santa Julia contests the Department's

determination not to revoke the countervailing duty order with respect

to them. Ceramica Santa Julia contends that they should be revoked

because: (1) Ceramica Santa Julia met all regulatory requirements for a

company-specific revocation; (2) the administrative record contains

sufficient evidence of non-use of export subsidies by Ceramica Santa

Julia; and (3) the administrative record contains sufficient evidence

that Ceramica Santa Julia will not apply for or receive countervailable

benefits in the future.

Department's Position: Upon further examination of Ceramica Santa

Julia's record, we agree that the company should be revoked.

For the purpose of revoking a countervailing duty order in part

pursuant to 19 CFR 355.25(a)(3), the Department's current policy is

that administrative reviews must be requested and conducted for each of

five consecutive years, with the year of request for revocation being

the fifth consecutive year of review. See Memorandum to Joseph A.

Spetrini, Acting Assistant Secretary for Import Administration, Basis

for Revocation of Individual Companies from Countervailing Duty Orders

under 19 CFR 355.25(a)(3) regarding Ceramica Santa Julia in the

Countervailing Duty Administrative Review of Ceramic Tile From Mexico,

dated January 10, 1994. This is consistent with the Department's

recently established policy for revocation of countervailing duty

orders in full pursuant to 19 CFR 355.25(a)(1), set forth in Roses and

Other Cut Flowers from Colombia; Preliminary Results of Countervailing

Duty Administrative Review and Intent Not to Terminate Suspended

Investigation (58 FR 52272; October 7, 1993).

Although Ceramica Santa Julia did not participate in the

administrative review the year prior to it's request for revocation,

the Department chose to review whether Ceramica Santa Julia had met the

minimum requirements for revocation because the above-stated policy had

not been clearly articulated prior to their revocation request.

Due to the unique circumstances in this case, the Department

concludes that Ceramica Santa Julia has met the requirements of

Sec. 355.25(a)(3) based on the following facts: First, both the

Government of Mexico and Ceramica Santa Julia have submitted

certifications stating that the company had not applied for or received

any net subsidy during the review period and would not apply for or

receive any net subsidy in the future; second, Ceramica Santa Julia has

agreed to the immediate suspension of liquidation and reinstatement of

the order if the Department determines that subsequent to revocation

the company received a net subsidy; third, in the current review

period, we verified the company and found no evidence that they had

applied for or received subsidies, and; fourth, the record shows that

prior to the year for which there was no review, Ceramica Santa Julia

was found to have received no net subsidies in seven consecutive

reviews.

Based on these unique facts and circumstances, and because there

was no clearly articulated policy detailing the requirements of 19 CFR

355.25(a)(3), the Department has decided to revoke Ceramica Santa

Julia. The Department finds that under the current regulations,

Ceramica Santa Julia clearly would have met requirements for revocation

after the seven consecutive reviews in which the Department found no

receipt of subsidies. Furthermore, the eight years of non-receipt of

subsidies coupled with the company and government certifications of

non-receipt are sufficient evidence for a finding of no past subsidy

receipt or no likelihood of receipt of subsidies in the future.

Final Results of Review

After reviewing all of the comments received, we determine the

total bounty or grant to be de minimis for all companies for the period

January 1, 1991 through December 31, 1991.

The Department will instruct the Customs Service to liquidate,

without regard to countervailing duties, shipments of this merchandise

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

before December 31, 1991.

The Department will instruct the Customs Service to collect cash

deposits of zero estimated countervailing duties, as provided by

section 751(a)(1) of the Act, on shipments of this merchandise from all

companies entered, or withdrawn from warehouse, for consumption on or

after the date of publication of this notice. This deposit requirement

shall remain in effect until publication of the final results of the

next administrative review.

In addition, we have determined that the following companies have

met the requirements for revocation from the order: Azulejos Orion,

S.A., Ceramica Santa Julia, Eduardo Garcia de la Pena, Jesus Garza

Arocha, Ladrillera Monterrey, S.A., Pisos Coloniales de Mexico, S.A.,

Reynol Martinez Chapa, and Teofilo Covarrubias. We have determined that

these companies have not applied for or received any net subsidy for

five consecutive years and they have filed the certifications and

agreement required by 19 CFR 355.25(b)(3). Based on the foregoing, we

also determine that there is no likelihood that these companies will

apply for or receive any net subsidy in the future. Therefore, the

Department will instruct the Customs Service to terminate suspension of

liquidation on entries from these companies and to liquidate, without

regard to countervailing duties, merchandise exported by these

companies on or after January 1, 1992.

This administrative review and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)), 19 CFR 355.22 and

19 CFR 355.25.

Dated: January 10, 1994.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 94-1263 Filed 1-18-94; 8:45 am]

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