Final Affirmative Countervailing Duty Determination: Certain Carbon Steel Butt-Weld Pipe Fittings From Israel

DEPARTMENT OF COMMERCE.

[C-508-808]

Final Affirmative Countervailing Duty Determination: Certain

Carbon Steel Butt-Weld Pipe Fittings From Israel

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: February 27, 1995.

FOR FURTHER INFORMATION CONTACT:

Gary Bettger or Jennifer Yeske, Office of Countervailing

Investigations, Import Administration, U.S. Department of Commerce,

Room B099, 14th Street and Constitution Avenue, NW., Washington, DC

20230; telephone (202) 482-2239 or 482-0189, respectively.

Final Determination

The Department of Commerce (``the Department'') determines that

benefits which constitute subsidies within the meaning of Section 701

of the Tariff Act of 1930, as amended (``the Act''), are being provided

to manufacturers, producers, or exporters in Israel of certain carbon

steel butt-weld pipe fittings (``pipe fittings''). For information on

the estimated net subsidy, please see the Suspension of Liquidation

section of this notice.

Case History

Since the publication of the notice of the preliminary

determination in the Federal Register (59 FR 28340, June 1, 1994), the

following events have occurred.

On June 1, 1994, petitioner requested that the final determination

in this investigation be postponed and aligned with the date for the

final determination in the companion antidumping investigation of the

same subject merchandise from Israel. On June 27, 1994, the Department

published in the Federal Register a notice postponing and aligning the

publication of the final determination in this investigation (59 FR

32955).

On October 5, 1994, Pipe Fittings Carmiel, Ltd. (``Carmiel''), the

sole company respondent, requested that the Department postpone the

final antidumping and countervailing duty determinations. Therefore, on

November 14, 1994, the Department published in the Federal Register a

notice postponing the final antidumping and countervailing duty

determinations until no later than February 16, 1995 (59 FR 56461).

We conducted verification of the responses submitted by the

Government of Israel (``GOI'') and Carmiel from November 27 through

December 4, 1994. Both respondents and petitioner submitted case and

rebuttal briefs on January 24 and January 31, 1995, respectively.

Scope of Investigation

The products covered by this investigation are certain carbon steel

butt-weld pipe fittings having an inside diameter of less than fourteen

inches (355 millimeters), imported in either finished or unfinished

condition. Pipe fittings are formed or forged steel products used to

join pipe sections in piping systems where conditions require permanent

welded connections, as distinguished from fittings based on other

methods of fastening (e.g., threaded, grooved, or bolted fittings).

Butt-weld fittings come in a variety of shapes which include

``elbows,'' ``tees,''``caps,'' and ``reducers.'' The edges of finished

pipe fittings are beveled, so that when a fitting is placed against the

end of a pipe (the ends of which have also been beveled), a shallow

channel is created to accommodate the ``bead'' of the weld which joins

the fitting to the pipe. These pipe fittings are currently classifiable

under subheading 7307.93.3000 of the Harmonized Tariff Schedule of the

United States (HTSUS). Although the HTSUS subheading is provided for

convenience and customs purposes, our written description of the scope

of this proceeding is dispositive.

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute and to the

Department's regulations are references to the provisions as they

existed on December 31, 1994. References to the Countervailing Duties:

Notice of Proposed Rulemaking and Request for Public Comments, 54 FR

23366 (May 31, 1989) (Proposed Regulations), are provided solely for

further explanation of the Department's CVD practice. Although the

Department has withdrawn the particular rulemaking proceeding pursuant

to which the Proposed Regulations were issued, the subject matter of

these regulations is being considered in connection with an ongoing

rulemaking proceeding which, among other things, is intended to conform

the Department's regulations to the Uruguay Round Agreements Act. See

60 FR 80 (January 3, 1995).

Injury Test

Because Israel is a ``country under the Agreement'' within the

meaning of section 701(b) of the Act, the U.S. International Trade

Commission (``ITC'') must determine whether imports of the subject

merchandise from Israel materially injure, or threaten material injury

to, a U.S. industry. On April 20, 1994, the ITC published its

preliminarily determination that there is a reasonable indication that

industries in the United States are being materially injured or

threatened with material injury by reasons of imports from Israel of

the subject merchandise (59 FR 18825).

Period of Investigation

For purposes of this final determination, the period for which we

are measuring subsidies (the period of investigation (the ``POI'')) is

calendar year 1993.

Analysis of Programs

Based upon our analysis of the petition, responses to our

questionnaires, verifications and comments made by interested parties,

we determine the following:

I. Programs Determined To Be Countervailable

A. Grants under the Encouragement of Capital Investments Law of 1959

(``ECIL'')

The ECIL program was established to develop the production capacity

of the Israeli economy by providing investment grants for industrial

projects. In order to be eligible to receive benefits under the ECIL,

an applicant first must obtain ``Approved Enterprise'' status, which is

granted by the Investment Center of the Israeli Ministry of Industry

and Trade.

Among the benefits provided under ECIL are investment grants. The

amount of an investment grant is calculated as a percentage of the

total approved investment in fixed assets, and this percentage depends

on the geographic location of the enterprise. For purposes of the ECIL

program, Israel is divided into three zones--the Central Zone,

Development Zone A and Development Zone B. The Central Zone comprises

the geographic center of Israel, including its largest and most

developed population centers. Companies in the Central Zone could not

receive grants under this program at all in 1988, and only at a much

lower rate than companies in Development Zones A and B in 1983, with

Development Zone A companies receiving a higher level of funding than

those in Development Zone B. [[Page 10570]]

In the Final Affirmative Countervailing Duty Determination:

Industrial Phosphoric Acid from Israel (``IPA'') (52 FR 25447; July 7,

1987), the Department found the investment grants program under the

ECIL to be de jure specific and, therefore, countervailable because the

grants are limited to enterprises located in specific regions (i.e.,

Development Zones A and B). In the course of this proceeding, the GOI

provided no new information indicating that the grants are not limited

to particular regions. Therefore, we are continuing to find ECIL grants

to be de jure specific.

Carmiel's production facility is located in Development Zone A.

According to the responses and verification, the company received

approval, in 1983 and 1988, for grants for two projects related to the

production of subject merchandise. These grants were disbursed over the

period 1983-1993.

At verification, we noted that for certain of the grant

disbursements, the Israeli Ministry of Finance subtracted a small

``computer commission.'' Consistent with section 771(6) of the Act and

section 355.46 of Countervailing Duties; Notice of Proposed Regulations

and Request for Public Comments, 54 FR 23366 (May 31, 1989) (``Proposed

Regulations''), we have determined that this commission constitutes an

allowable offset. Therefore, we have subtracted the commission in those

instances in which Carmiel was able to document that a commission was

subtracted from a grant amount.

It is our policy to allocate non-recurring grants over a period

equal to the average useful life of assets in the industry, unless the

sum of grants provided under a program in a particular year is less

than 0.50 percent of a firm's total sales in that year. See Section

355.49(a) of the Department's Proposed Regulations and the General

Issues Appendix to the Final Affirmative Countervailing Duty

Determination: Certain Steel Products From Austria, 58 FR 37217, July

9, 1993. In this instance, Carmiel has not provided sales information

for years prior to 1989. Therefore, we have no reason to believe that

grants made before 1989 were less than 0.50 percent of sales in the

year of receipt for these years and, therefore, have determined that

the yearly disbursements should be allocated over time. In 1990, the

sum of grants disbursed under the ECIL program accounted for less than

0.5 percent of Carmiel's total sales in that year. Therefore, benefits

for 1990 were allocated to that year and are not included in our

calculations. For all other years after 1989, the sum of the grants

disbursed under the ECIL program accounted for more than 0.5 percent of

Carmiel's total sales each year. Therefore, these benefits were

allocated over time.

For ECIL grants allocated over time, we used a twelve year

allocation period (the average useful life of assets with respect to

the manufacture of fabricated metal products, as determined by the U.S.

Internal Revenue Service Asset Depreciation Range System). The formula

described in Section 355.49(b)(3) of the Proposed Regulations for

allocating grants relies on a fixed discount rate, which is based on

the cost of long-term, fixed-rate debt of the firm or generally in the

country under investigation. However, we confirmed at verification that

no long-term loans with fixed interest rates (or other long-term fixed-

rate debt) were available in Israel during the years 1983-1993.

Instead, the only long-term loans (or other long-term debt) available

to companies in Israel utilized variable interest rates, i.e., a fixed

real interest rate added to the Consumer Price Index (CPI) or the

dollar/shekel exchange rate.

Therefore, we have determined to adapt the grant allocation method

described in our proposed regulations to use variable rather than fixed

interest rates as the discount rate, given the absence of long-term

fixed interest rates in the years these grants were disbursed. This

methodology reflects the actual long-term options open to Israeli firms

(i.e., that long-term financing was only available through variable

rate loans) and also ensures that the net present value of amounts

countervailed in the year of receipt does not exceed the face value of

the grant.

In this determination, we have used as the discount rate the rate

of return on CPI-indexed commercial bonds (the real rate of return, as

published in the Bank of Israel Annual Reports, plus the CPI), as no

actual borrowing rates for Carmiel were available.

We divided the benefit allocated to 1993 by Carmiel's 1993 total

sales. On this basis, we determine the estimated net subsidy for this

program to be 2.31 percent ad valorem for the POI.

B. Long-Term Industrial Development Loans

Prior to July 1985, companies in Israel were eligible to receive

long-term industrial development loans funded by the GOI. This program

was used in conjunction with ECIL; however, a company was not required

to be an Approved Enterprise in order to receive a development loan.

We confirmed, as the GOI reported, that loans under this program

were provided to a number of different industries in Israel. However,

we also confirmed that the interest rates on these loans varied

depending on the location of the borrower. The interest rates on loans

to borrowers in Development Zone A were lowest, while those on loans to

borrowers in the Central Zone were highest. In previous cases, the

Department has found long-term industrial development loans in Israel

to be regional subsidies and countervailable to the extent that the

applicable interest rates are less than those on loans to companies in

the Central Zone (see IPA). The GOI has provided no new information to

warrant reconsideration of this finding.

Carmiel received loans for a project located in Zone A. These loans

were received between the year 1983-1989. Under the terms of the

program, the interest rates on these loans have two components--a fixed

real interest rate and a variable interest rate, the latter of which is

based on either the CPI or the dollar/shekel exchange rate. We

confirmed at verification that Carmiel received some loans that were

linked to the CPI and others linked to the dollar-shekel exchange rate.

Because the CPI and dollar-shekel exchange rate vary from year-to-

year, we cannot calculate a priori the payments that will be made over

the life of these loans and, hence, we cannot calculate the ``grant

equivalent'' of the loans. Accordingly, we have compared the interest

that would have been paid by a company in the Central Zone, as a

benchmark, to the amount actually paid by Carmiel during the POI (see

Section 355.49(d)(1) of the Proposed Regulations). We divided the

interest savings by Carmiel's total sales in 1993.

On this basis, we determine the net subsidy from this program to be

0.36 percent ad valorem during the POI.

C. Exchange Rate Risk Insurance Scheme

Introduced in 1981, the Exchange Rate Risk Insurance Scheme (EIS),

operated by the Israel Foreign Trade Insurance Corporation Inc.

(IFTRIC), was designed to allow exporters to insure themselves against

the risk of losses which might occur when the rate of devaluation of

the Israeli shekel lagged behind the rate of inflation. The EIS was

optional and open to exporters willing to pay a premium to IFTRIC.

Under this program, if the rate of inflation was greater than the

rate of devaluation, the exporter was compensated by an amount equal to

the difference between these two rates [[Page 10571]] multiplied by the

value-added of the exports. If the rate of devaluation was higher than

the change in the domestic price index, however, the exporter was

required to compensate IFTRIC. Companies using EIS paid a premium,

calculated for each exporter as a percentage of the insured value of

exports.

In determining whether an export insurance program provides a

countervailable benefit, we examine whether the premiums and other

charges are adequate to cover the program's long-term operating costs

and losses. See Section 355.44(d) of the Proposed Regulations and IPA.

We have reviewed EIS data in this investigation which showed that EIS

operated at a loss from 1981 through 1991. We believe that this 11 year

history is more than adequate to establish that the premiums and other

charges are ``manifestly inadequate'' to cover the long-term operating

costs and losses of the program. The Department's determination that

this program is countervailable is consistent with our determination in

IPA.

We confirmed at verification that this program was terminated

during our POI by the GOI. However, we also found at verification that

the GOI will continue to honor outstanding claims for exports made

prior to the date of termination, August 31, 1993, as long as the

claims are made within three years of the date of export. Because of

the possibility of residual benefits, we have not adjusted the cash

deposit rate to reflect the termination of this program.

We have calculated the benefit during the POI as the net amount of

compensation (compensation received less compensation and fees paid)

Carmiel received during that period expressly for pipe fittings

exported to the United States. We confirmed by reviewing company

records that a certain portion of the total benefit reported by Carmiel

as having been received during the POI was actually received by the

company in 1992. Therefore, we have not included this amount in our

calculations for purposes of this determination.

We divided the resulting net compensation amount by the value of

the company's exports of pipe fittings to the United States during the

POI. On this basis, we determine the estimated net subsidy from this

program to be 0.19 percent ad valorem during the POI.

D. Exemption From Wharfage Fee

The Ports and Trains Authority administers all import/export

operations and the train system in Israel. Wharfage fees represent 45-

50 percent of the revenues of the Authority to cover its infrastructure

and overhead costs.

We confirmed at verification that during the POI, importers were

obligated to pay wharfage fees equal to 1.5 percent ad valorem of

import value and exporters 0.2 percent ad valorem of export value.

However, we also found that, during the POI, exporters were exempted by

a Ports and Trains Authority decision from paying the wharfage fee

altogether. The exemption of this fee does not relate to the imported

input (see the Rebate of Wharfage Fees section below), but rather to

the finished product. Government officials explained that an exemption

for exporters was made possible by the Authority's sound financial

position.

We determine that the exemption from the wharfage fee provides an

export subsidy insofar as export are allowed an exemption (unlike the

other users of the port, i.e., importers) solely due to their status as

exporters. Cf. Final Affirmative Countervailing Duty Determination;

Certain Fresh Atlantic Groundfish From Canada, 51 FR 10041 (Mar. 24,

1986).

In order to calculate the benefit resulting from this program,

which provides recurring benefits, we multiplied the total value of the

company's exports during the POI by the 1.5 percent ad valorem

coefficient and divided this amount by the total value of the company's

exports.

On this basis, we determined the estimated net subsidy from this

program to be 1.50 percent ad valorem during the POI.

E. Rebate of Wharfage Fees

We confirmed at verification that an additional program allows

exporters, upon export of the finished product, rebates of the wharfage

fees paid on imports of physically incorporated inputs. We were

informed at verification that since the Israeli Customs Service

administers the drawback system, the GOI asked it to take

responsibility for rebating wharfage fee under this program. Under the

rebate program, a company can receive a rebate for up to 80 percent of

the wharfage fees paid on imported inputs that are physically

incorporated into exported products.

This program provides preferential treatment for exporters and does

not qualify for non-countervailable treatment under section 355.44(i)

of the Proposed Regulations, as wharfage fees do not constitute

indirect taxes or import charges. (See DOC Position to Comment 3

below.)

To calculate the benefit provided by this program, which provides

recurring benefits, we divided the total amount of rebate received

during the POI by the total value of the company's exports during the

same period.

On this basis, we determine the estimated net subsidy from this

program to be 0.34 percent ad valorem.

F. Fund for the Promotion of Marketing Abroad

During verification we learned that Carmiel received benefits in

1992 under the Fund for the Promotion of Marketing Abroad. GOI

officials explained that under the Fund, companies apply for three-year

financing for overseas market research projects. The company is

obligated to repay the financing (in part) based on export earnings. We

also learned that Carmiel has been informed that the funds approved in

1992 have been cancelled because the company did not timely submit its

implementation report. Consequently, the Fund Director has asked the

company to repay the previously received amount. As of the time of

verification, Carmiel had not yet made any repayments.

Given the information we have received, we determine that this

program provides benefits solely to exporters. Consequently, we

determine that the assistance provided to Carmiel constitutes an export

subsidy. Moreover, although Carmiel has been asked to repay the funds,

the company has yet to repay anything. Consequently, we are treating

the amount as a short-term, interest-free loan still outstanding as of

the end of our POI.

In order to calculate the benefit received by Carmiel, we have used

the 1992 rate for short-term financing as outlined in a Bank of Israel

Annual Report on the record of this proceeding. We have divided the

interest savings by Carmiel's total export sales in 1993.

On this basis, we determine the net subsidy from this program to be

0.23 percent ad valorem during the POI.

II. Programs Determined Not To Be Countervailable

A. Rebate of Peace of Galilee Levy

We confirmed that the Peace of Galilee (Shlom-Hagalil) Levy was

instituted on imports to help the balance of payments problem in Israel

caused by incessant war with its neighbors. We confirmed that since at

least 1986 the GOI has allowed rebates on this levy in a manner similar

to that on the Rebate of Wharfage Fee program. Under the rebate

program, a company can receive a rebate for 100 percent of the levies

paid on imported inputs that are physically incorporated into exported

products. [[Page 10572]]

We confirmed that the company is tasked to provide information to

the GOI regarding which inputs are physically incorporated into its

exported products, and this information does not give rise to an

excessive rebate. We also found that the Customs Authority is tasked

with verifying the claims made by companies such as Carmiel.

Consequently, we find this program to provide a nonexcessive rebate of

the levies. See Proposed Regulations at Section 355.44(i). Therefore,

we have found this program to be not countervailable.

III. Programs Determined Not To Be Used

We determine that Carmiel did not receive benefits during the POI

for exports of the subject merchandise to the United States under the

following programs:

A. Additional Incentives under the ECIL

1. Preferential Accelerated Depreciation

2. Tax Benefits

3. Preferential Loans

4. Industry Subsidy Payments

B. Labor Training Grants

C. Encouragement of Industrial Research and Development (EIRD) Grants

D. Special Export Financing Loans

E. Provision of Funds for Transportation to Eilat Harbor

Interested Party Comments

Comment 1: With respect to the Exchange Rate Risk Insurance Scheme,

petitioner argues that Carmiel originally reported that it received a

certain amount during the POI based on IFTRIC records. At verification,

however Carmiel claimed that the original figure incorrectly included a

payment received in 1992. Petitioner argues that according to IFTRIC

records verified by the Department, the disputed payment was received

by Carmiel during the POI. Therefore, the Department should use the

figure originally reported by Carmiel.

Carmiel notes that the disputed amount was actually received by the

company in 1992. According to Carmiel, it is the date of receipt by the

company that is controlling; hence, the benefit from the EIS should be

adjusted to reflect only the amount received during the POI.

DOC Position

We agree with Carmiel. We confirmed at the verification of Carmiel

that the company actually received the disputed amount in 1992, not

during the POI. It is unclear why IFTRIC recorded a later date of

payment. Nevertheless, we have countervailed only the amount received

by the company under this program during the POI.

Comment 2: Carmiel argues that since the Department verified that

the Exchange Rate Risk Insurance Scheme was terminated during the POI,

the deposit rate should be set at zero.

Petitioner argues that the Department should reject Carmiel's

claim. Petitioner notes that the Department found that, although this

program was terminated during the POI, the GOI will continue to honor

outstanding claims as long as they are made within three years of the

date of export. Therefore, residual benefits from the program will

continue to be available after the POI.

DOC Position

We agree with petitioner. The Department's practice, as outlined in

Section 355.50(d)(1)(2) of the Proposed Regulations, is not to adjust

the cash deposit rate when it determines that residual benefits may

continue to be bestowed under a terminated program. As we verified that

residual benefits are possible under this program, we have not made an

adjustment to the cash deposit rate.

Comment 3: According to petitioner, the Department verified that

wharfage fees, assessed in order to finance the Ports and Trains

Authority, differ for importers and exporters, even though the costs

associated with both activities do not differ. Moreover, for the last

ten years, exporters have been exempt from paying a fee altogether.

Since the Department was unable to verify the value of the wharfage fee

exemption to Carmiel, it should as best information available (``BIA'')

establish a 1.5 percent ad valorem countervailing duty for this

program. Petitioner further argues that the record does not indicate

that these fees cover costs that have nothing to do with the services

suggested by the term ``wharfage,'' and, therefore, do not operate as a

tax.

Respondent counters that the wharfage fee is, in fact, a general

levy intended to cover myriad government activities that have nothing

to do with the services suggested by the term ``wharfage.'' The fee is

paid to a government agency and is not tied to any specific cost or

service. It is a tax, and more particularly an indirect tax on exports.

Therefore, it should not be considered a countervailable subsidy.

DOC Position

We agree with petitioner that wharfage fees represent fees rather

than indirect taxes. Consistent with the concept of a fee, the wharfage

fees here are paid only by users of the port facilities, and the funds

raised are used to pay for the costs incurred by the Port Authority and

the maintenance of those facilities.

We note that we have not used BIA, as petitioner suggests, to

calculate the countervailable benefit provided by this program. Rather,

as noted above, for the exemption of the fee, we have determined that

the correct method by which to calculate the benefit received by

Carmiel is to multiply the 1.5 percent exemption by total export sales

during the POI, and divide the resulting amount by the same total

export sales value.

Comment 4: Petitioner notes that, with respect to the Rebate of the

Peace of Galilee Levy Program, the record does not provide enough

information to determine the extent to which the rebate provided to

Carmiel is excessive. Although remission of import duties for imports

consumed as ``normal waste'' may not be excessive, the Israeli Customs

has made no effort to identify ``normal waste'' in the production of

butt-weld pipe fittings. Therefore, petitioner submits that, as BIA,

the entire amount rebated under this program should be treated as a

countervailable subsidy. Petitioner notes that in Final Affirmative

Countervailing Duty Determination: Oil Country Tubular Goods from

Israel (52 FR 1649; January 15, 1987) (``OCTG''), the Department found

that this program did not provide an excessive rebate of duties paid on

imported inputs physically incorporated into the exported product.

However, in this investigation, unlike OCTG, Customs indicated that it

makes no attempt to determine a value for the carbon steel pipe wasted

in producing subject merchandise.

Respondent argues that this program does not provide a

countervailable subsidy in that it is an indirect tax on items

physically incorporated into the final exported product. In fact, in

OCTG, the Department found this program to be not countervailable.

Respondent also argues that there is absolutely nothing in the record

of this case to suggest that, while the rebate was ``nonexcessive'' in

OCTG, the rebate to Carmiel is excessive. Petitioner's attempt to make

the rebate appear excessive by focusing on the Custom's official's

statement about wastage is misplaced. Such percentages are not

determined as they are not relevant to the payments. The rebate is

based on the proportion of export sales to home market sales. No

calculation for wastage is necessary; Customs simply compares the

tonnage of finished product exported to the tonnage sold in the Israeli

market. [[Page 10573]]

DOC Position

We agree with respondent that this program is not countervailable

because it provides a non-excessive rebate of the levies on imported

inputs that are used in the production of subsequently exported

finished products. We confirmed at the Israeli Customs Department that

its personnel monitor company reports regarding which imports are

physically incorporated into the end product and the total amount of

levies paid on such inputs. We also note that a rebate is only given on

physically incorporated inputs. Consequently, waste is not an issue

here. For this reason, we do not find anything in the remarks of the

Customs official at verification that is inconsistent with our finding

here, or in OCTG.

Comment 5: With respect to the Fund for the Promotion of Marketing

Abroad, Carmiel states that the record is clear that it received funds

for this program in 1992 (which is outside the POI), and that the

company must refund the money to the government since it did not

fulfill its obligations under the program. Accordingly, Carmiel

maintains the money it received does not constitute a countervailable

subsidy during the POI.

DOC Position

We confirmed at verification that the company is obligated to repay

the benefit, has not yet done so. Therefore, during the POI, Carmiel

had use of money to which it would not have otherwise had access.

Consequently, we have found that this amount constituted a

countervailable interest-free loan during the POI.

Comment 6: Petitioner notes that according to the verification

report, Carmiel receives ``certain advantages'' if 90 percent of its

sales represent its own production. The exact nature of these

advantages is not, unfortunately, further explained in the verification

report. However, the fact that these otherwise undefined advantages are

only available to a specific class of sellers in Israel demonstrates

that the ``advantages'' are not generally available within the country.

Respondent argues that, as outlined in the verification report,

producing companies in Israel are eligible for certain benefits while

trading companies are not. Hence, in order to preserve its status as a

producing company, Carmiel formed a trading company. There are,

however, no additional subsidies available to production companies

other than the ones already investigated in this case.

DOC Position

We agree with respondent. We found no evidence at verification to

suggest that Carmiel received any additional benefits than those

already noted above. The company explained that it formed a trading

company in order to preserve its ``producing company status.''

Consequently, we find no reason to pursue this issue any further.

Verification

In accordance with section 776(b) of the Act, we verified the

information used in making our final determination. We followed

standard verification procedures, including meeting with government and

company officials, and examination of relevant accounting records and

original source documents. Our verification results are outlined in

detail in the public versions of the verification reports, which are on

file in the Central Records Unit (Room B-099 of the Main Commerce

Building).

Suspension of Liquidation

In accordance with our affirmative preliminary determination, we

instructed the U.S. Customs Service to suspend liquidation of all

entries of carbon steel butt-weld pipe fittings from Israel, which were

entered or withdrawn from warehouse for consumption, on or after June

1, 1994, the date our preliminary determination was published in the

Federal Register. This final countervailing duty determination was

aligned with the final antidumping duty determination of certain carbon

steel butt-weld pipe fittings from Israel, pursuant to section

705(a)(1) of the Act.

Under Article 5, paragraph 3 of the GATT Subsidies Code,

provisional measures cannot be imposed for more than 120 days without

final affirmative determinations of subsidization and injury.

Therefore, we instructed the U.S. Customs Service to discontinue

suspension of liquidation on the subject merchandise beginning

September 30, 1994, but to continue suspension of liquidation of all

entries, or withdrawals from warehouse, for consumption of the subject

merchandise entered from June 1 through September 29, 1994. We will

reinstate suspension of liquidation under section 703(d) 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 amount indicated below.

Certain Carbon Steel Butt-Weld Pipe Fittings

Country-Wide Ad Valorem Rate: 4.93 percent

ITC Notification

In accordance with section 705(c) 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 administrative protective order, without the written consent of

the Deputy Assistant Secretary for Investigations, Import

Administration.

If the ITC determines that material injury, or threat of material

injury, does not exist, these proceedings will be terminated and all

estimated duties deposited or securities posted as a result of the

suspension of liquidation will be refunded or canceled. If, however,

the ITC determines that such injury does exist, we will issue a

countervailing duty order directing Customs officers to assess

countervailing duties on carbon steel butt-weld pipe fittings from

Israel.

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 and 19 CFR 355.20(a)(4).

Dated: February 16, 1995.

Barbara R. Stafford,

Acting Assistant Secretary for Import Administration.

[FR Doc. 95-4718 Filed 2-24-95; 8:45 am]

BILLING CODE 3510-DS-M