Ceramic Tile from Mexico; Preliminary Results of Countervailing Duty Administrative Review

DEPARTMENT OF COMMERCE

[C-201-003]

Ceramic Tile from Mexico; 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 ceramic tile

from Mexico. The review period is January 1, 1992 through December 31,

1992. We preliminarily determine the total bounty or grant to be zero

or de minimis for 32 companies, and 2.55 percent ad valorem for all

other companies during this review period. In accordance with 19 CFR

355.7, any rate less than 0.5 percent ad valorem is de minimis. We

invite interested parties to comment on these preliminary results.

EFFECTIVE DATE: November 10, 1994.

FOR FURTHER INFORMATION CONTACT: Gayle Longest or Kelly Parkhill,

Office of Countervailing Compliance, 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 April 28, 1993, the Department published a notice of

``Opportunity to Request Administrative Review'' (58 FR 25802) of the

countervailing duty order on ceramic tile from Mexico. We received a

request for review from Ceramica Regiomontana, S.A., (Ceramica) a

Mexican exporter of the subject merchandise. We initiated the review on

June 25, 1993 (58 FR 34414). The review period is January 1, 1992

through December 31, 1992. This review involves 33 companies and 10

programs.

On February 7, 1994, the Government of Mexico submitted a request

for partial revocation for 14 companies with their questionnaire

response. According to 19 CFR 355.25(b)(3), a request for revocation

can only be submitted in the fifth and subsequent anniversary months of

an order. Since the anniversary month for the review period January 1,

1992 through December 31, 1992 is May 1993, and the request was

submitted on February 7, 1994, the request was untimely. Therefore, the

Department is unable to consider partial revocation for these 14

companies in this administrative review.

The Department is conducting this review in accordance with section

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

of the last administrative review of this order were published in the

Federal Register on January 19, 1994 (59 FR 2823).

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.

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 33 companies

subject to review to determine the overall subsidy from all programs

benefitting exports of the subject merchandise to the United States. In

weight-averaging the benefits, we used each firm's share of exports to

the United States as weights.

Because the overall weighted-average country-wide rate was above de

minimis, as defined by 19 CFR 355.7, we proceeded to the next step in

our analysis and examined the ad valorem rate we had calculated for

each company for all programs combined, to determine whether individual

company rates differed significantly from the weighted-average country-

wide rate. Thirty-two companies received aggregate benefits which were

zero or de minimis (significantly different within the meaning of 19

CFR 355.22(d)(3)(ii)). Therefore, these companies were treated

separately for assessment and cash deposit purposes.

Ceramica's rate was not significantly different from the weighted-

average country-wide rate. Since Ceramica was the only company

receiving subsidies greater than de minimis, the all other rate was

calculated based on the unweighted aggregate benefits that Ceramic

received from all countervailing programs.

Analysis of Programs

(1) BANCOMEXT Financing for Exporters

Effective January 1, 1990, the Mexican Treasury Department

eliminated the Fondo para el Fomento de las Exportaciones de Productos

Manufacturados (FOMEX) loan program and transferred the FOMEX trust to

the Banco Nacional de Comercio Exterior, S.N.C. (BANCOMEXT). BANCOMEXT

offers short-term financing to producers or trading companies engaged

in export activities; any company generating foreign currency through

exports is eligible for financing under this program. The BANCOMEXT

program operates much like its predecessor, FOMEX. BANCOMEXT provides

two types of financing, both in U.S. dollars, to exporters: working

capital loans (pre-export loans), and loans for export sales (export

loans). In addition, BANCOMEXT may provide financing to foreign buyers

of Mexican goods and services.

The Department has previously found this program to confer an

export subsidy to the extent that the loans are provided at

preferential terms (See 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)). In this review the Government of Mexico

provided no new information or evidence of changed circumstances that

would lead the Department to alter that determination.

We found that the annual interest rates that BANCOMEXT charged to

borrowers for certain loans on which interest payments were due during

the review period were lower than commercial rates. The BANCOMEXT

dollar-denominated loans under review were granted at annual interest

rates ranging from 7.1 percent to 9.8 percent. As discussed in Certain

Steel Products from Mexico; Final Countervailing Duty Determination (58

FR 37357; July 9, 1993), because loans are funded by BANCOMEXT through

commercial banks in dollars and indexed to dollars for repayment, we

used a dollar benchmark. As the benchmark for BANCOMEXT pre-export and

export dollar-denominated loans granted in 1992, we used the average of

the quarterly weighted-average effective interest rates published in

the Federal Reserve Bulletin, which resulted in an annual benchmark of

7.18 percent in 1992.

We consider the benefits from short-term loans to occur at the time

the interest is paid. Because interest on BANCOMEXT pre-export loans is

paid at maturity, we calculated benefits based on loans that matured

during the review period; these were obtained between March 1992 and

May 1992. Interest on BANCOMEXT export loans is paid in advance; we

therefore calculated benefits based on BANCOMEXT loans received during

the review period.

Two exporters of ceramic tile products used BANCOMEXT pre-export

and export financing. Because we found that the exporters were able to

tie their BANCOMEXT loans to specific sales, we measured the benefit

only from the BANCOMEXT loans tied to sales of the subject merchandise

to the United States. To determine the benefit for each exporter, we

multiplied the difference between the interest rate charged to

exporters for these loans and the benchmark interest rate by the

outstanding principal and then multiplied this amount by the term of

the loan divided by 365. Because one company's monthly sales figures

are indexed to account for inflation, we adjusted that company's

benefit amounts to be on the same terms as the sales figures. On this

basis, we preliminarily determine the benefit from this program to be

0.01 percent ad valorem for Internacional de Ceramica and zero for all

other companies listed in the preliminary results of review section of

this notice.

(2) PITEX

The Program for Temporary Importation of Products used in the

Production of Exports (PITEX) was established by a decree published in

the Diario Oficial on May 9, 1985, and amended in the Diario Oficial on

September 19, 1986, and May 3, 1990. The program is jointly

administered by the Ministry of Commerce and Industrial Development

(SECOFI) and the Customs Administration. Under PITEX, exporters with a

proven export record may receive authorization to temporarily import

products to be used in the production of exports for up to five years

without having to pay the import duties normally imposed on those

imports. PITEX allows for the exemption of import duties for the

following categories of merchandise used in export production: raw

materials, packing materials, fuels and lubricants, machinery used to

manufacture products for export, and spare parts and other machinery.

The importer must post a bond or other security to guarantee the

reexportation of the temporary imports. Because it is only available to

exporters, the Department previously found in Certain Textile Mill

Products From Mexico; Final Results of Countervailing Duty

Administrative Review (56 FR 50859; October 9, 1991) and Ceramic Tile

From Mexico; Final Results of Countervailing Duty Administrative Review

(57 FR 24247; June 8, 1992) that PITEX provides countervailable

benefits to the extent that it provides duty exemptions on imports of

merchandise not physically incorporated into exported products. The

Government of Mexico provided no new information or evidence of changed

circumstances that would lead the Department to alter that

determination.

During the review period, Ceramica used the PITEX program for

imports of machinery and spare parts which are not physically

incorporated into exported products. To calculate the benefit from this

program, we calculated the duties that should have been paid on the

non-physically incorporated items that were imported under the PITEX

program during the review period. We then divided that amount by the

company's total exports. On this basis, we preliminarily determine the

benefit from this program to be zero for the 32 companies listed in the

preliminary results of review section of this notice and 2.55 percent

ad valorem for all other companies.

(3) Other Programs

We also examined the following programs and preliminarily determine

that exporters of the subject merchandise did not use them during the

review period:

(A) Other BANCOMEXT preferential financing;

(B) Other Dollar-Denominated Financing Programs;

(C) Fiscal Promotion Certificates (CEPROFI);

(D) Import duty reductions and exemptions;

(E) State tax incentives;

(F) Article 15 Loans;

(G) NAFINSA FONEI-type financing; and

(H) NAFINSA FOGAIN-type financing.

Preliminary Results of Review

We preliminarily determine that the following 32 companies received

zero or de minimis benefits during the 1992 review period. In

accordance with 19 CFR 355.7, any rate less than 0.5 percent ad valorem

is de minimis.

(1) Adrian Sifuentes Jimenez.

(2) Agustin Cedillo Ruiz.

(3) Alejandro Estrada Silva.

(4) Apolonio Arias Vasquez.

(5) Arturo Leija Lucio.

(6) Aurelio Cedillo Ruiz.

(7) Azuelejos Decorativos Carrillo, S.A.

(8) Efrain Medina Carrillo.

(9) Emilio Pacheco.

(10) Faustino Nuncio Silva.

(11) Ima Regiomontana, S.A. de C.V.

(12) Industrias Intercontinental, S.A. de C.V.

(13) Internacional de Ceramica, S.A. de C.V.

(14) Javier Leija Lucio.

(15) Jesus Gallegos Olivares.

(16) Jesus Jimenez Lucio.

(17) Jose Arellano Valdez.

(18) Jose Dolores Hernandez.

(19) Jose Silva Romero.

(20) Juan Cortex Coronel.

(21) Leopoldo Montiel Rincon.

(22) Luis Najera Flores.

(23) Luis Paulino Flores.

(24) Norberto Cuellar Zuniga.

(25) O.H. Internacional, S.A. de C.V.

(26) Pedro Lopez Alonso.

(27) Raul Leija.

(28) Recubrimientos Mezquital, S.A. de C.V.

(29) Ricardo Berrones.

(30) Taller de Azuelejos Coloniales.

(31) Vicente Jalomo Reyna.

(32) Zenon Cortez Coronel.

In addition, we preliminarily determine the total bounty or grant

to be 2.55 percent ad valorem for all other companies during the period

January 1, 1992 through December 31, 1992.

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

preliminary results, the Department intends to instruct the Customs

Service to liquidate, without regard to countervailing duties,

shipments of this merchandise from Mexico exported by the 32 companies

listed above for the period on or after January 1, 1992, and on or

before December 31, 1992, and to assess countervailing duties of 2.55

percent of the f.o.b. invoice price of shipments from all other

companies for the same period.

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. Pursuant to 19

CFR 355.38(c), 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 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.

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 Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.

Dated: November 4, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-27918 Filed 11-9-94; 8:45 am]

BILLING CODE 3510-DS-P