Standard Chrysanthemums From the Netherlands; Preliminary Results of Countervailing Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[C-421-601]

Standard Chrysanthemums From the Netherlands; 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 standard

chrysanthemums from the Netherlands. We preliminarily determine the net

subsidy to be de minimis for all exports of the subject merchandise to

the United States for the period January 1, 1994, through December 31,

1994. If the final results of this review remain the same as these

preliminary results, the Department intends to instruct the U.S.

Customs Service to liquidate, without regard to countervailing duties,

all shipments of the subject merchandise from the Netherlands exported

on or after January 1, 1994, and on or before December 31, 1994.

Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE: May 6, 1996.

FOR FURTHER INFORMATION CONTACT: Lorenza Olivas or Richard Herring,

Office of Countervailing Compliance, Import 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 March 12, 1987, the Department published in the Federal Register

(52 FR 7646) the countervailing duty order on standard chrysanthemums

from the Netherlands. On March 7, 1995, the Department published a

notice of ``Opportunity to Request Administrative Review'' (60 FR

12540) of this countervailing duty order. We received a timely request

for review from petitioner, Floral Trade Council, and we initiated the

review, covering the period January 1, 1994, through December 31, 1994,

on April 14, 1995 (60 FR 19018). On November 2, 1995, we fully extended

the period for completion of the preliminary and final results,

[[Page 20412]]

pursuant to section 751(a)(3) of the Tariff Act of 1930, as amended

(see Extension of the Time Limit for Certain Countervailing Duty

Administrative Reviews (60 FR 55699). As explained in the memoranda

from the Assistant Secretary for Import Administration dated November

22, 1995, and January11, 1996, all deadlines were further extended to

take into account the partial shutdowns of the Federal Government from

November 15 through November 21, 1995, and December 15, 1995, through

January 6, 1996. Therefore, the deadline for these preliminary results

is no later than April 30, 1996, and the deadline for the final results

of this review is no later than 180 days from the date on which these

preliminary results are published. This review is being conducted on an

aggregate basis. See Preliminary Results of Review section of this

notice.

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions of the Tariff Act of 1930, as amended by

the Uruguay Round Agreements Act (URAA), effective January 1, 1995 (the

Act). The Department is conducting this administrative review in

accordance with section 751(a) of the Act. 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

countervailing duty 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 URAA. See 60 FR 80 (January 3, 1995).

Scope of Review

Imports covered by this review are shipments of Dutch standard

chrysanthemums. Such merchandise is classifiable under item number

0603.10.70 of the Harmonized Tariff Schedule (HTS). The HTS item number

is provided for convenience and Customs purposes. The written

description remains dispositive.

Subsidy Calculations for Assessment and Cash Deposit Purposes

Because this review is being conducted on an aggregate basis, we

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

the subsidy rate for each program. We then summed the subsidy rates

from all programs benefitting exports of the subject merchandise to the

United States. The rate will be applied to all exports of the subject

merchandise as discussed in the Preliminary Results of Review section

of this notice.

Analysis of Programs

I. Programs Conferring Subsidies

Programs Previously Determined To Confer Subsidies

1. Aids for the Creation of Cooperative Organizations

Under European Community (EC) Regulation 355/77, the EC has

provided grants to Dutch auction houses, which are flower grower

cooperatives. These funds were provided by the EC through the

Agricultural Guidance and Guarantee Fund, with matching grant

contributions from EC member states. The purpose of the program was to

improve the processing, marketing and distribution of agricultural

products in member states. This program was terminated on January 1,

1986, and no grants were disbursed after 1987.

In the 1986 and 1987 reviews, the Department determined that this

grant program was countervailable because it was limited to a specific

enterprise or industry, or group of enterprises or industries, in the

Netherlands. (See Standard Chrysanthemums From the Netherlands;

Preliminary Results of Countervailing Duty Administrative Review (54 FR

43977, 43978; October 30, 1989) and Standard Chrysanthemums From the

Netherlands; Final Results of Countervailing Duty Administrative Review

(55 FR 462; January 5, 1990) (1987 Preliminary and Final Results)). We

have received no new information or evidence of changed circumstances

to warrant reconsideration of this finding. Although this program was

officially terminated in 1986, under our grant methodology, benefits

are still accruing from this program.

To calculate the benefit, we used a declining balance grant

methodology, as determined in Final Affirmative Countervailing Duty

Determination; Certain Fresh Cut Flowers From the Netherlands (52 FR

3301; February 3, 1987) (Netherlands Flowers). We allocated the

benefits from each grant over 10 years, the average useful life of

renewable physical assets in the agricultural sector as determined

under the U.S. Internal Revenue Service's Asset Depreciation Range

System. This methodology is in accordance with the Proposed Regulations

(51 FR at 23385). We used the average interest rate for long-term

commercial loans published by the Netherlands Bank (the Central Bank)

as the discount rate for each year in which grants were provided. We

divided the sum of these benefits by the f.o.b. value of total auction

sales in the relevant review period. On this basis, we preliminarily

determine the net subsidy to be 0.03 percent ad valorem for the period

January 1, 1994, through December 31, 1994.

2. Glasshouse Enterprises Program

Under the Glasshouse Enterprises Program, the Ministry of

Agriculture, Nature Management and Fisheries (MAF) provided grants to

greenhouse growers to stimulate private investment in energy saving

methods in the horticulture industry. This program was terminated in

June 1985. However, grants approved prior to the termination were

disbursed through 1987.

Because this program was available only to greenhouse growers, we

previously determined that this program was limited to a specific

enterprise or industry, or group of enterprises or industries, and

provided a countervailable domestic subsidy. (See 1987 Preliminary and

Final Results). We have received no new information or evidence of

changed circumstances to warrant reconsideration of this finding.

Although this program officially was terminated in 1985, under our

grant methodology, benefits are still accruing from this program.

To calculate the benefit from this program, we used the grant

methodology described in section 1. above. We divided the total

benefits from these grants by the value of total greenhouse sales in

the relevant review period. On this basis, we preliminarily determine

the net subsidy to be 0.05 percent ad valorem for the period January 1,

1994, through December 31, 1994.

3. Aids for the Reduction of Glass Surface

Under the Aids for the Reduction of Glass Surface program, the MAF

provided grants to greenhouse growers for the purpose of increasing the

energy efficiency of greenhouses by replacing existing glass with

modern energy-saving glass. The program was terminated in November

1984. However, grants approved prior to the termination of the program

were disbursed through 1987.

We previously determined that this program was countervailable

because it was limited to a specific enterprise or industry, or group

of enterprises or

[[Page 20413]]

industries. (See 1987 Preliminary and Final Results). We have received

no new information or evidence of changed circumstances to warrant

reconsideration of this finding. Although this program was officially

terminated in 1984, under our grant methodology, benefits are still

accruing under this program.

To calculate the benefit from this program, we used the grant

methodology described in section 1. above. We divided the total

benefits from these grants by the value of total greenhouse sales in

the relevant review period. On this basis, we preliminarily determine

the net subsidy to be less than 0.005 percent ad valorem for the period

January 1, 1994, through December 31, 1994.

4. Steam Drainage Systems

In January 1981, the Government of the Netherlands (GON) banned the

use of methylbromide as a means of soil disinfection due to the

potential health hazards caused by the chemical. In December of that

year, the MAF established a program making available cash grants to

encourage the use of steam drainage as an alternative method of soil

disinfection for greenhouses. The program was terminated in September

1984. However, some grants were disbursed through 1987.

In the 1990 administrative review of this case, we determined that

this program was countervailable because it was limited to a specific

enterprise or industry, or group of enterprises or industries. See

Standard Chrysanthemums From the Netherlands; Preliminary Results of

Countervailing Duty Administrative Review (57 FR 9539; March 19, 1992)

and Standard Chrysanthemums From the Netherlands; Final Results of

Countervailing Duty Administrative Review (57 FR 24249; June 8, 1992)

(1990 Preliminary and Final Results). We have received no new

information or evidence of changed circumstances to warrant

reconsideration of this finding. Although this program was officially

terminated in 1984, under our grant methodology, benefits are still

accruing under this program.

To calculate the benefit from this program, we used the grant

methodology described in section 1. above. We divided the benefits from

these grants by the value of total greenhouse sales in the relevant

review period. On this basis, we preliminarily determine the net

subsidy to be less than 0.005 percent ad valorem for the period January

1, 1994, through December 31, 1994.

5. Stimulation for the Innovation of Electric Energy (SES)

The SES program was implemented in 1988 to stimulate energy

conservation. Under the administration of the Ministry of Economic

Affairs (MEA), the program is designed to encourage the installation of

cogeneration equipment by providing payments of up to 25 percent of the

equipment cost, with a cap of 20 million guilders per project.

Cogeneration equipment reduces energy consumption by up to 30 percent.

The Department preliminarily determined that this program is

countervailable in Standard Chrysanthemums From the Netherlands;

Preliminary Results of Administrative Review for the 1992 and 1993

periods (1992/93 Preliminary Results), being simultaneously published

with this notice, because horticulture received a disproportionate

share of benefits under this program.

Our policy with respect to grants is (1) to expense recurring

grants in the year of receipt and (2) to allocate non-recurring grants

over the average useful life of assets in the industry, unless the sum

of grants provided under a particular program is less than 0.50 percent

of a firm's total or export sales (depending on whether the program is

a domestic or export subsidy) in the year in which the grants were

received. See section 355.49(a) of the Proposed Regulations and the

General Issues Appendix, at 37226, which is attached to Final

Affirmative Countervailing Duty Determination: Certain Steel Products

from Austria (58 FR 37217; July 9, 1993) (General Issues Appendix).

In the 1992 review, we determined that SES grants were

nonrecurring. For the 1992 administrative review, we found that the

amount of grants received under this program was not less than 0.50

percent of greenhouse sales. Following our grant methodology, we

allocated the grants over the average useful life of assets in the

industry. See 1992/93 Preliminary Results. As a result, residual

benefits from the program are allocable to 1994. Greenhouse growers

also received SES grants in 1994. We determine that the total amount of

SES grants received was less than 0.50 percent of greenhouse sales in

1994. Therefore, following our grant methodology, the total value of

all grants provided under this program in 1994 has been allocated to

that year.

To calculate the benefit for 1994, we added the benefit from the

1992 grants that were allocable to 1994 and the total value of grants

provided in 1994. We then divided the results by the value of

greenhouse sales in 1994. On this basis, we preliminarily determine the

net subsidy to be 0.35 percent ad valorem for the period January 1,

1994, through December 31, 1994.

II. Programs Preliminarily Determined Not to Confer Subsidies

Guarantee Fund for Agriculture

The Stichting Borgstellingsfonds voor de Landbouw (Foundation

Security Fund for Agriculture, or ``Fund'') is used to guarantee the

servicing and repayment of loans made by banks to farmers. The Fund

acts as an institutional guarantor, not as a lender itself, providing

guarantees only when the security offered by the farmer is inadequate

for the total loan amount. A loan application may be made to the Fund

only after all of the farmer's own securities or collateral have been

provided for the loan. If an application is approved under the Fund,

the guarantee applies only to the portion of the loan not originally

approved by the bank. This program was originally found countervailable

in Netherlands Flowers because it was administered in such a way as to

confer a benefit on a specific group of industries (i.e.,

horticulture).

In reviews subsequent to Netherlands Flowers, we found that the

average long-term annual interest rates charged on loans under this

Fund were consistent with the average interest rates charged on long-

term bank loans, as reported by De Nederlandsche Bank. See 1990

Preliminary and Final Results and 1992/93 Preliminary Results.

Based on our analysis of information provided in the 1994 review,

we again determine that the average long-term annual interest rates

charged on loans under this Fund were consistent with the average

interest rates charged on long-term bank loans. On this basis, we

determine that this program does not provide a countervailable benefit.

Because this program has not been terminated, we will continue to

review it in subsequent administrative reviews to determine whether the

interest rates on these loans are consistent with the interest rates on

comparable commercial loans.

III. Programs Preliminarily Found Not to be Countervailable

We examined the following programs during the 1992 review (See

1992/93 Preliminary Results) and determined these programs not to be

countervailable:

A. Arrangement for Stimulation of Innovation Projects

B. Arrangement for Structural Improvement and the Complementary

[[Page 20414]]

Scheme for Investment in Agricultural Holdings

C. Natural Gas Provided at Preferential Rates

D. Income Tax Deduction

E. Value-Added Tax (VAT) Reduction of 6 Percent for Natural Gas Users

and Partial Restitution of VAT for Mineral Oils, Fuels, Bulk or Bottled

Gas.

IV. Programs Preliminarily Determined To Be Not Used

We examined the following programs and preliminarily determine that

the producers and/or exporters of the subject merchandise did not apply

for or receive benefits under these programs during the period of

review:

A. Investment Incentive (WIR)--Regional Program

B. Loans at preferential interest rates.

Preliminary Results of Review

For the period January 1, 1994, through December 31, 1994, we

preliminarily determine the net subsidies to be 0.43 percent ad

valorem. In accordance with the Act, any rate less than 0.5 percent ad

valorem in an administrative review is de minimis.

The URAA replaced the general rule in favor of a country-wide rate

with a general rule in favor of individual rates for investigated and

reviewed companies. The procedures for countervailing duty cases are

now essentially the same as those in antidumping cases, except as

provided for in section 777A(e)(2)(B) of the Act. In the original

investigation of this order, it was determined that there were over

8,000 flower growers in the Netherlands. Therefore, we requested that

the GON provide information on an aggregate basis. See Netherlands

Flowers. Consistent with the decision made in the investigation,

administrative reviews of this order have been conducted on an

aggregate basis. In accordance with section 777A(e)(2)(B) of the Act,

we have also conducted this administrative review on an aggregate basis

because of the large number of producers and exporters, and on the

basis of the aggregate information submitted by the GON, we have

determined a single country-wide subsidy rate to be applied to all

producers and exporters of the subject merchandise.

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

preliminary results, the Department intends to instruct the U.S.

Customs Service to liquidate, without regard to countervailing duties,

all shipments of the subject merchandise from the Netherlands exported

on or after January 1, 1994, and on or before December 31, 1994.

Because we preliminarily determine that all net subsidies are de

minimis for the period January 1, 1994, through December 31, 1994, no

cash deposit will be required.

Public Comment

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. 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 briefs. Parties who

submit written arguments in these proceedings are requested to submit

with the argument (1) a statement of the issue and (2) a brief summary

of the argument. Any hearing, if requested, will ordinarily 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.

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, under 19 CFR 355.38, 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 Tariff Act (19 U.S.C. 1675(a)(1)).

Dated: April 30, 1996.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 96-11243 Filed 5-3-96; 8:45 am]

BILLING CODE 3510-DS-P