Standard Chrysanthemums From the Netherlands; Final Results of Countervailing Duty Administrative Reviews

DEPARTMENT OF COMMERCE

[C-421-601]

Standard Chrysanthemums From the Netherlands; Final Results of

Countervailing Duty Administrative Reviews

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Final Results of Countervailing Duty Administrative

Reviews.

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SUMMARY: On May 6, 1996, the Department of Commerce (the Department)

published in the Federal Register (61 FR 20406) its preliminary results

of administrative reviews of the countervailing duty order on standard

chrysanthemums from the Netherlands for the periods January 1, 1992

through December 31, 1992 and January 1, 1993 through December 31,

1993. We have completed these reviews and determine the net subsidies

to be 0.43 percent ad valorem for the period January 1, 1992 through

December 31, 1992, and 0.80 percent ad valorem for the period January

1, 1993 through December 31, 1993. The Department will instruct the

Customs Service to assess countervailing duties as detailed in the

Final Results of Reviews section of this notice.

EFFECTIVE DATE: September 11, 1996.

FOR FURTHER INFORMATION CONTACT: Lorenza Olivas or Anne D'Alauro,

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 May 6, 1996, the Department published in the Federal Register

(61 FR 20406) the preliminary results of its administrative reviews of

the countervailing duty order on standard chrysanthemums from the

Netherlands (Preliminary Results). We invited interested parties to

comment on the preliminary results. The Floral Trade Council,

petitioner, and the Government of the Netherlands (GON), respondent,

submitted both case and rebuttal briefs. The Department has now

completed these administrative reviews in accordance with section 751

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

The periods covered by the reviews were January 1, 1992 through

December 31, 1992 and January 1, 1993 through December 31, 1993. These

reviews were conducted on an aggregate basis and involve 13 programs.

Applicable Statute and Regulations

The Department is conducting these administrative reviews in

accordance with section 751(a) of 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.

However, references to the Department's 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 Uruguay Round Agreements

Act. See 60 FR 80 (Jan. 3, 1995).

Scope of the Reviews

Imports covered by these reviews 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.

Analysis of Programs

Based on our analysis of questionnaire responses, verification, and

written comments from the interested parties, we determine the

following:

I. Programs Conferring Subsidies

A. Programs Previously Determined To Confer Subsidies

1. Aids for the Creation of Cooperative Organizations

In the preliminary results, we found that this program conferred

countervailable benefits on the subject merchandise. We received no

comments on our preliminary results, and our findings remain unchanged

in these final results. On this basis, the net subsidy for this program

is 0.07 percent ad valorem for 1992 and 0.04 percent ad valorem for

1993.

2. Glasshouse Enterprises Program

In the preliminary results, we found that this program conferred

countervailable benefits on the subject merchandise. We received no

comments on our preliminary results, and our findings remain unchanged

in these final results. On this basis, the net subsidy for this program

is 0.17 percent ad valorem for 1992 and 0.09 percent ad valorem for

1993.

3. Aids for the Reduction of Glass Surface

In the preliminary results, we found that this program conferred

countervailable benefits on the subject merchandise. We received no

comments on our preliminary results, and our findings remain unchanged

in these final results. On this basis, the net subsidy for this program

is less than 0.005 percent ad valorem for 1992 and less than 0.005

percent ad valorem for 1993.

4. Steam Drainage System

In the preliminary results, we found that this program conferred

countervailable benefits on the subject merchandise. We received no

comments on our preliminary results, and our findings remain unchanged

in these final results. On this basis, the net subsidy for this program

is less than 0.005 percent ad valorem for 1992 and less than 0.005

percent ad valorem for 1993.

B. New Program Found to Confer Subsidies Stimulation for the Innovation

of Electric Energy Program

In the preliminary results, we found that this program conferred

benefits on the subject merchandise. Our analysis of

[[Page 47887]]

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

not led us to modify our findings from the preliminary results for this

program. On this basis, the net subsidy for this program is 0.18

percent ad valorem for 1992 and 0.66 percent ad valorem for 1993.

II. Programs Found Not to Confer Subsidies

In the preliminary results, we found the following programs to be

non-countervailable.

1. Arrangement for Stimulation of Innovation Projects

2. Arrangement for Structural Improvements and the Complementary Scheme

for Investment in Agricultural Holdings

3. Natural Gas Provided at Preferential Rates

4. Income Tax Deduction

5. 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

6. Guarantee Fund for Agriculture

Our analysis of the comments submitted by interested parties,

summarized below, has not led us to modify our findings from the

preliminary results.

III. Programs Found to be Not Used

We determine that producers and/or exporters of the subject

merchandise did not apply for or receive benefits under the following

programs:

1. Investment Incentive (WIR)--Regional Program

2. Loans at preferential interest rates

Analysis of Comments

Comment 1: Respondent contends that the Department improperly

determined the Stimulation for the Innovation of Electric Energy (SES)

program to be countervailable. Respondent states that the Uruguay Round

Agreement Act (URAA) exempts from countervailability assistance to

promote adaptation of existing facilities to new environmental

requirements.

Petitioner disagrees that there is a general exemption for

subsidies which provide environmental benefits. Instead, the petitioner

notes that Article 8(c) of the Agreement on Subsidies and

Countervailing Measures lists certain non-actionable subsidies

benefitting the environment and that one of the criteria necessary for

the exemption is that the new environmental requirements are imposed by

law or regulation. Petitioner argues that the GON program encouraging

the installation of cogeneration equipment is not pursuant to a new

environmental requirement imposed by law or regulation.

Department's Position: The Department disagrees with respondent.

The URAA amendments to the Act, including amendments pursuant to 8.2(c)

of the Agreement on Subsidies and Countervailing Measures, apply to

reviews initiated pursuant to requests for administrative reviews filed

after January 1, 1995. As such, the provisions of the URAA referenced

by respondent do not apply to these reviews because these reviews were

initiated prior to the enactment of the URAA. Therefore, the Department

properly determined the SES program to be countervailable.

Comment 2: Respondent argues that, if the Department continues to

find the SES program countervailable, the Department should change the

calculation methodology. Respondent alleges that the Department's

decision to allocate the total value of all grants provided under the

SES program in 1993 to that year was entirely arbitrary and contends

that the Department should, instead, allocate those grants over the

average useful life of assets in the industry.

Petitioner, on the other hand, argues that the Department properly

expensed the benefits received in 1993 in the year of receipt in

conformance with its prior practice.

Department's Position: The Department followed its practice, in

accordance with the Proposed Regulations, of expensing non-recurring

grants in the year of receipt when the sum of grants provided under a

particular program is less than 0.50 percent of total sales in the year

in which the grant was received. In this case, the amount of SES grants

provided to greenhouse growers in 1993 was less than 0.50 percent of

total greenhouse sales in that year. Therefore, under long-standing,

established Department practice, these grants were expensed in the year

of receipt, 1993. See, e.g., Final Affirmative Countervailing Duty

Determination; Oil Country Tubular Goods from Austria (60 FR 33534,

33535; June 28, 1995).

Comment 3: Petitioner argues that the Department should reverse its

determination that the reduced VAT rate and VAT rebates, applicable to

purchases of mineral oils, fuels, or gas for greenhouses are not

countervailable. Petitioner argues that the VAT reduction and rebates

provide greenhouse growers with preferential gas prices and that these

benefits are targeted to greenhouse growers and, therefore, are

countervailable. Other reasons noted in support of its argument are

that recipients must produce affidavits attesting that the gas is used

only to heat greenhouses and that inspection programs ensure that the

reduced rate only benefits greenhouse production. Petitioner further

contends that, absent this program, flower growers would pay the higher

VAT. Therefore, according to petitioner, the program is specifically

targeted to greenhouse growers. In support of its arguments, petitioner

cites Bicycle Tires and Tubes from Taiwan, 46 FR 53201 (October 28,

1981) (tax ceiling for bicycle manufactures); Certain Steel Products

from Belgium, 58 FR 32273 (July 9, 1993) (exemptions for companies in

development zone); Certain Steel Products from Brazil (58 FR 37295;

July 9, 1993) (tax rebates to a specific industry); and Certain Steel

Products from Italy, 58 FR 37327; July 9, 1993) (increased VAT

deduction for a firm in a specific region).

Respondent disputes petitioner's argument that the special VAT

regime is countervailable. Respondent argues that the special regime is

available to the entire agricultural sector and that the administrative

procedures that reduce the VAT on oil and natural gas are necessary to

arrive at the reduced VAT level and rebates to which the recipients in

the entire agricultural sector are entitled.

Department's Position: Section 771.5 of the Act and section

355.43(b)(1) of the Proposed Regulations require the Department to

countervail a subsidy that is limited, in law, or in fact, to an

enterprise or industry or group thereof. However, section 355.43(b)(8)

provides that the Department ``will not regard a program as being

specific, within the meaning of paragraph (b)(1) of this section,

solely because the program is limited to the agricultural sector.''

(See Proposed Regulations at 23380.) In the final determination of the

original investigation, the Department found that if a program is

available to virtually all agriculture and is not limited to flower

growers or otherwise limited to a specific enterprise or industry, or

group of enterprises or industries, within agriculture, then the

program is not countervailable. See Final Affirmative Countervailing

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

FR 3303; February 3, 1987) (Final Determination). See also, Final

Affirmative Countervailing Duty Determination and Countervailing Duty

Order; Lamb Meat from New Zealand (50 FR 37708; September 17, 1985). In

Lamb Meat, we found that the examined program was not limited to a

specific enterprise or industry, or group thereof, because it was

available to and used by a wide variety of agricultural producers.

[[Page 47888]]

In the preliminary results of these reviews, we found that under the

Dutch National Tax Law, farmers in the Netherlands pay the reduced VAT

rate on purchases of virtually all the goods and services required in

agriculture, including natural gas and oil. The application procedure,

noted by petitioner, for obtaining the reduced VAT rate and rebates is

merely a mechanism which enables farmers to receive the reductions to

which they are entitled under the Dutch National Tax Law.

The cases cited by petitioner in its brief are not relevant to the

issue at hand. The issue in those cases dealt with benefits limited to

specific industries or to specific zones or regions. The issue in these

reviews is whether the reduced VAT rates are applied to virtually all

of the goods and services used within the agricultural sector and

whether there is any limitation within agriculture to provide benefits

to specific commodities under this program. The issue is not whether

the agricultural sector pays lower VAT rates on its purchases than the

other industries in the Netherlands. We found that the reduced VAT rate

is applied to a wide variety of goods in the agricultural sector; such

as, foodstuffs, cereals, seeds, cattle, sheep, goats, pigs, horses,

breeding eggs, veterinary medicines, water, gas and mineral oil,

beetroot, agricultural seeds, fertilizer, feed, round wood, flax, wool,

agricultural tools, bulbs and plants, as well as to services in the

agricultural sector; such as, contracting, repairs, breeding,

inspections, accounting, drying, cooling, cleaning and packaging of

agricultural products. Therefore, since virtually all goods purchased

by and required in the agricultural sector receive the reduced VAT

rate, we determine that this program is not specific. As such, the

reduced VAT rate for agriculture does not provide a countervailable

benefit.

Comment 4: Petitioner argues that the Department understated the

benefits derived from the SES program by allocating the grants received

over estimated greenhouse sales, rather than floricultural sales.

Petitioner claims that because the GON did not provide data regarding

disbursements to flower growers or chrysanthemums growers, the

Department must apply best information available.

Respondent, on the other hand, agrees with the Department's

allocation methodology. Respondent argues that aid from the program is

spread over the entire horticultural sector and is not specific to

flowers or standard chrysanthemums.

Department's Position: Petitioner incorrectly asserts that the

Department understated the benefits from the SES program. We are

conducting this review on an aggregate basis due to the large number of

growers of the subject merchandise. Therefore, we collected information

on program usage from the government rather than from individual

producers. The GON does not maintain records on the grants provided

under this program on a product-specific basis. However, the grants

under this program were provided to greenhouse growers, and we

allocated the value of the grants over the value of greenhouse sales.

Therefore, the Department has not understated the benefits under this

program attributable to the subject merchandise.

Final Results of Reviews

For the period January 1, 1992 through December 31, 1992, we

determine the net subsidy to be 0.43 percent ad valorem. For the period

January 1, 1993 through December 31, 1993, we determine the net subsidy

to be 0.80 percent ad valorem. In accordance with 19 CFR 355.7, any

rate less than 0.5 percent ad valorem is de minimis.

The Department will instruct the U.S. Customs Service to liquidate,

without regard to countervailing duties, all shipments of the subject

merchandise exported on or after January 1, 1992 and on or before

December 31, 1992, and to assess countervailing duties of 0.80 percent

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

merchandise exported on or after January 1, 1993 and on or before

December 31, 1993.

Because this notice is being published concurrently with the final

results of the 1994 administrative review, the 1994 administrative

review will serve as the basis for setting the cash deposit rate, as

provided for under section 751(c)(1) of the Act.

This notice also 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 CFR 355.43(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.

These administrative reviews 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: August 30, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-23230 Filed 9-10-96; 8:45 am]

BILLING CODE 3510-DS-P