Porcelain-on-Steel Cookingware From Mexico; Final Results of Countervailing Duty Administrative Review

DEPARTMENT OF COMMERCE

[C-201-505]

Porcelain-on-Steel Cookingware From Mexico; Final Results of

Countervailing Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of Countervailing Duty Administrative

Review.

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SUMMARY: On August 2, 1995, the Department of Commerce (the Department)

published in the Federal Register its preliminary results of

administrative review of the countervailing duty order on porcelain-on-

steel cookingware from Mexico for the period January 1, 1993 through

December 31, 1993. We have completed this review and determine the net

subsidy to be de minimis for all companies. The Department intends to

instruct the Customs Service to liquidate, without regard to

countervailing duties, all shipments of the subject merchandise from

Mexico exported on or after January 1, 1993, and on or before December

31, 1993.

EFFECTIVE DATE: October 12, 1995.

FOR FURTHER INFORMATION CONTACT: Norma Curtis or Kelly Parkhill, Office

of Countervailing Compliance, Import

[[Page 53166]]

Administration, International Trade Administration, U.S. Department of

Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.

20230; telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

On August 2, 1995, the Department published in the Federal Register

(60 FR 39360) the preliminary results of its administrative review of

the countervailing duty order on porcelain-on-steel cookingware from

Mexico. The Department has now completed this administrative review in

accordance with section 751 of the Tariff Act of 1930, as amended (the

Act).

We invited interested parties to comment on the preliminary

results. On September 1, 1995, case briefs were submitted by Acero

Porcelanizado, S.A. de C.V. (APSA) and Cinsa, S. A. De C.V. (Cinsa),

producers of the subject merchandise which exported porcelain-on-steel

cookingware to the United States during the review period

(respondents), and the Government of Mexico (GOM). The review covers

the period January 1, 1993 through December 31, 1993. The review covers

two companies, which account for virtually all exports of subject

merchandise from Mexico, and ten programs.

Applicable Statute and Regulations

The Department is conducting this administrative review in

accordance with section 751(a) of the Tariff Act of 1930, as amended

(the Act). Unless otherwise indicated, all citations to the statute and

to the Department's regulations are in reference to the provisions as

they existed on December 31, 1994.

Scope of the Review

Imports covered by this review are shipments of porcelain-on-steel

cookingware from Mexico. The products are porcelain-on-steel

cookingware (except teakettles), which do not have self-contained

electric heating elements. All of the foregoing are constructed of

steel, and are enameled or glazed with vitreous glasses. During the

review period, such merchandise was classifiable under item number

7323.94.0020 of the Harmonized Tariff Schedule (HTS). The HTS item

number is provided for convenience and Customs purposes. The written

description remains dispositive.

Calculation Methodology for Assessment and Cash Deposit Purposes

We calculated the net subsidy on a country-wide basis by first

calculating the subsidy rate for each company subject to the

administrative review. We then weight-averaged the rate received by

each company using as the weight its share of total Mexican exports to

the United States of subject merchandise, including all companies, even

those with de minimis and zero rates. We then summed the individual

companies' weight-averaged rates to determine the subsidy rate from all

programs benefitting exports of subject merchandise to the United

States.

Since the country-wide rate calculated using this methodology was

de minimis, as defined by 19 CFR Sec. 355.7 (1994), no further

calculations were necessary.

Analysis of Programs

Based upon our analysis of our questionnaire, verification, and

written comments from the interested parties we determine the

following:

I. Programs Conferring Subsidies

1. Bancomext Financing for Exporters

In the preliminary results, we found that this program conferred

countervailable benefits on the subject merchandise. Our analysis of

the comments submitted by the interested parties, summarized below, has

led us to modify our findings in the preliminary results for this

program. On this basis, the net subsidy for this program was changed

from 0.62 percent ad valorem to 0.48 percent ad valorem.

2. Fonei Long-Term Financing

In the preliminary results, we found that this program conferred

countervailable benefits on the subject merchandise. Our analysis of

the comments submitted by the interested parties, summarized below, has

not led us to reconsider our findings in the preliminary results. On

this basis, the net subsidy for this program remains 0.01 percent ad

valorem.

II. Programs Found Not To Be Used

In the preliminary results, we found that the producers and/or

exporters of the subject merchandise did not apply for or receive

benefits under the following programs during the period of review

(POR):

A. Certificates of Fiscal Promotion (CEPROFI)

B. PITEX

C. Other Bancomext Preferential Financing

D. Import Duty Reductions and Exemptions

E. State Tax Incentives

F. Article 15 Loans

G. NAFINSA FOGAIN-type Financing

H. NAFINSA FONEI-type Financing

Our analysis of the comments submitted by the interested parties,

summarized below, has not led us to reconsider our findings in the

preliminary results.

Analysis of Comments

Comment 1: Respondents contest the Department's determination that

Bancomext export financing constitutes a countervailable subsidy.

Respondents contend that during the 1993 POR Bancomext financing was

provided at interest rates higher than the cost of funds to Bancomext

or the GOM. Under item (k) of the Illustrative List of export

subsidies, only the provision of financing at interest rates below the

government's cost of borrowing is countervailable. Since the GATT

Subsidies Code's Illustrative List of export subsidies does not include

government financing at rates above the government's cost of funds, the

Department should determine that Bancomext was not a countervailable

program, and that the loans obtained through the Bancomext facilities

were not countervailable during the POR. Respondents contend that the

Department confirmed at verification that the audited financial

statements showed no funding from government sources, and that

Bancomext was a profit making operation throughout the POR.

Department's Position: We disagree. With the broad definition of a

subsidy contained in 19 U.S.C. section 1677(5), Congress specifically

included government action which results in the provision of capital

and loans on ``terms inconsistent with commercial considerations,'' the

provision of goods or services at ``preferential rates,'' and the like,

to a specific group of beneficiaries. See 19 U.S.C. section

1677(5)(A)(ii). 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 subsidy benefits. The Department

determines the countervailability of subsidies by measuring the benefit

to the recipient rather that the cost to the government. Where, as

here, loans are given below commercial market rates, a benefit is

conferred. Because these benefits were limited to exporters, we

determine that this program is countervailable. See e.g., Final

Affirmative Countervailing Duty Determination: Certain Steel Products

From Austria (58 FR 37217, 37260; July 9, 1993), Certain Textile Mill

Products

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From Mexico; Final Results of Countervailing Duty Order Administrative

Review (54 FR 36841, 36843-36844; September 5, 1989), Certain Textile

Mill Products From Mexico; Final Results of Countervailing Duty

Administrative Review (56 FR 12175, 12177; March 22, 1991) and

Porcelain-on-Steel Cookingware From Mexico; Final Results of

Countervailing Duty Administrative Review (57 FR 562; January 7, 1992).

Comment 2: Both the respondents and the GOM argue that the

Department's preliminary results erroneously state that APSA received a

``FOMEX'' export loan in 1992, with a maturity date in 1993.

Respondents argue that APSA did not receive a FOMEX loan, nor could

have, as the FOMEX program was terminated in 1989. Rather, exporters

commonly referred to export loans as ``FOMEX'' loans regardless of

whether such loans were actually obtained from FOMEX. Respondents argue

that the mere fact that APSA's internal loan ledger erroneously

referred to the loan as ``FOMEX'' cannot contradict previous Department

determinations, based on verified information received from GOM, that

the FOMEX program was terminated in 1989.

Department's Position: We disagree. The Department is not

contradicting its previous determination that the FOMEX program was

terminated on December 31, 1989. Effective January 1, 1990, the Mexican

Treasury Department eliminated the FOMEX loan program and transferred

the FOMEX trust to Bancomext. FOMEX was a program previously found

countervailable by the Department and operates much like the Bancomext

program which the Department has also found countervailable (See

Porcelain-on-Steel Cookingware From Mexico; Preliminary Results of

Countervailing Duty Administrative Review (56 FR 48163; September 24,

1991) and Porcelain-on-Steel Cookingware From Mexico; Final Results of

Countervailing Duty Administrative Review (57 FR 562; January 7,

1992)). As discussed in the preliminary results of this review, during

verification at APSA, we noted that one short-term loan was identified

by APSA as a FOMEX loan. This loan was not reported in APSA's

questionnaire responses. At verification, company officials at APSA

were given the opportunity to provide loan documentation for the loan

in question demonstrating that the loan was not from a countervailable

program; however, they failed to do so. (See Short-Term and Long-Term

Loans Section of APSA's Verification Report (Public Version) dated May

9, 1995 on file in the public file of the Central Records Unit, Room B-

099 of the Department of Commerce). Therefore, the Department treated

this loan as a Bancomext loan. However, as stated in the Department's

preliminary results, because the interest rate provided for this loan

during verification was higher than the commercial benchmark, there was

no benefit to APSA from the loan (See Porcelain-on-Steel Cookingware

From Mexico; Preliminary Results of Countervailing Duty Administrative

Review (60 FR 39360; August 2, 1995)).

Comment 3: Respondents and the GOM argue that the Department

incorrectly treated as Bancomext loans all loans CINSA and APSA had

reported as being financed by Bancomext. Respondents assert that the

loan documents received from commercial banks do not indicate whether

the loans were financed through Bancomext. Further, respondents assert

that the only definitive source of Bancomext financing is Bancomext

itself. The printout (Verification Exhibit BXMT-3) from Bancomext

indicates that APSA had only one loan outstanding in the POR, with the

first interest payment due after the POR. Therefore, the Department

should not have treated other loans as Bancomext loans.

Department's Position: We disagree. As stated in the Department's

regulations, ``the Department will visit with producers, exporter, or

government agencies in order to verify the accuracy and completeness of

submitted factual information. As part of the verification * * * the

Department will request access to all files, records, and personnel of

the producers, exporters, or the government agencies which the

Secretary considers relevant to factual information submitted by those

persons.'' 19 CFR 355.36. It is not possible to completely verify the

Bancomext loan program at Bancomext. Bancomext records do not include

the terms or interest rates established between the companies and the

commercial banks. (See Bancomext Section of the GOM's Verification

Report (Public Version) dated May 9, 1995 on file in the public file of

the Central Records Unit, Room B-099 of the Department of Commerce).

Therefore, verification must be conducted at both the government and

the companies. The loans in question were originally reported by the

companies as Bancomext loans in their questionnaire responses. At

verification, the Department noted discrepancies between the number and

values of the loans reported by Bancomext and those reported by the

companies in their questionnaire responses. Cinsa and APSA were given

the opportunity to identify through their records which loans were in

fact Bancomext loans. (See Bancomext Section of the GOM's Verification

Report (Public Version) dated May 9, 1995, Short-Term Loans Section of

Cinsa's Verification Report (Public Version) dated May 9, 1995 and

Short-Term and Long-Term Loans Section of APSA's Verification Report

(Public Version) dated May 9, 1995 on file in the public file of the

Central Records Unit, Room B-099 of the Department of Commerce). The

companies were unable to demonstrate that the loans they had originally

reported as Bancomext loans were not, in fact, Bancomext loans.

Therefore, the Department has appropriately treated these loans as

Bancomext loans.

Comment 4: Respondents and the GOM contend that the zero percent

interest rate selected by the Department for the unreported Bancomext

loan for Cinsa as best information available (BIA) is inappropriate.

Respondents argue that this rate does not reflect information contained

in the administrative record. Alternatively, respondents suggest that

the Department recalculate the net benefit for the unreported loan

using (1) the lowest rate for Bancomext loans offered during the POR,

(2) an interest rate based on publicly available data (LIBOR) plus the

verified Bancomext spread (the rate charged to commercial banks by

Bancomext to cover operating expenses), or (3) the verified Bancomext

spread that was applicable to Bancomext loans during the POR. The GOM

argues that sufficient information about Bancomext interest rates,

applicable to the specific type of loan provided to Cinsa, was

available on the record. The GOM suggests the Department use one of the

following as the effective interest rate for the unreported loan for

Cinsa: (1) LIBOR + the Bancomext spread, (2) LIBOR, or (3) the

Bancomext spread, respectively.

Department's Position: We disagree. During verification at the GOM,

we discovered one Bancomext loan for Cinsa that had not been reported

in the questionnaire responses. Subsequently, Cinsa did not provide the

interest rate for this loan upon request at verification. (See

Bancomext Section of the GOM's Verification Report (Public Version)

dated May 9, 1995 and Short-Term Loan Section of Cinsa's Verification

Report (Public Version) dated May 9, 1995, on file in the public file

of the Central Records Unit, B-099 of the Department of Commerce).

Section 776 (c) of the Act requires the Department to use BIA whenever

a party refuses or is unable to produce the

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information requested. Furthermore, 19 CFR 355.37 of the Department's

regulations gives the Department broad discretion in the use of BIA to

calculate benefits for non-cooperating companies who do not submit a

complete response. Both the GOM and Cinsa were informed of the need to

provide the interest rate for the previously unreported loan. In light

of the respondent's failure to respond to our request for complete loan

information, we are continuing to use a zero interest rate as BIA.

Comment 5: Respondents contend that the Department incorrectly

calculated the commercial dollar interest rate benchmark to which all

Bancomext loans are compared. The Department's benchmark was calculated

using a weighted average of the commercial interest rates of U.S.

dollar loans reported in the Federal Reserve Bulletins ranging from

$1,000 to $999,000. Respondents argue that, because a significant

portion of the loans obtained during the period of review were in

excess of $999,000, the Department should include in its calculation of

the commercial interest rate benchmark the interest rates for dollar

loans valued between $1 million and $5 million.

Department's Position: We agree. The Department has recalculated

its benchmark for dollar-denominated short-term loans to include the

interest rates reported in the Federal Reserve Bulletin on comparably

sized loans. In addition, the Department inadvertently used the 1993

benchmark for two short-term loans contracted in 1992. It is the

Department's practice to select a benchmark interest rate for loans at

the time the terms of the loan are established, which in this case was

when the loans were received. (See Rice From Thailand; Final Results of

Countervailing Duty Administrative Review (59 FR 8906; February 24,

1994)). Therefore, the Department has recalculated the benefit for the

Bancomext loans received in 1992, but on which interest was paid in

1993, using the 1992 benchmark rate instead of the 1993 benchmark rate.

Because of these changes, we now determine the benefit conferred by the

Bancomext program to be zero for APSA and 0.48 percent ad valorem for

Cinsa.

Final Results of Review

For the period January 1, 1993 through December 31, 1993, we

determine the net subsidy to be 0.42 percent ad valorem for all

companies. In accordance with 19 CFR 255.7, any rate less than 0.5

percent ad valorem is de minimis.

The Department intends to instruct the Customs Service to

liquidate, without regard to countervailing duties, all shipments of

the subject merchandise from Mexico exported on or after January 1,

1993, and on or before December 31, 1993.

The Department will also instruct the U.S. Customs Service to

collect a cash deposit of estimated countervailing duties of zero

percent of the f.o.b. invoice price on all shipments of the subject

merchandise from all companies entered, or withdrawn from warehouse,

for consumption on or after the date of publication of the final

results of this review.

This notice serves as a reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 C.F.R. 355.34(d). Timely written notification

of return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations and the terms of an APO is a sanctionable violation.

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: September 29, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-25302 Filed 10-11-95; 8:45 am]

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