Roses and Other Cut Flowers From Colombia; Miniature Carnations From Colombia Final Results of Countervailing Duty Administrative Reviews of Suspended Investigations

DEPARTMENT OF COMMERCE

[C-301-003, C-301-601]

Roses and Other Cut Flowers From Colombia; Miniature Carnations

From Colombia Final Results of Countervailing Duty Administrative

Reviews of Suspended Investigations

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Final Results of Countervailing Duty Administrative

Reviews of Suspended Investigations.

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SUMMARY: On August 16, 1995, the Department of Commerce (``the

Department'') published the preliminary results of its administrative

reviews of the agreements suspending the countervailing duty

investigations on roses and other cut flowers (roses) from Colombia and

on miniature carnations (minis) from Colombia. We gave interested

parties an opportunity to comment on the preliminary results. After

reviewing all the comments received, we determine that the Government

of Colombia (``GOC'') and producers/exporters of roses and minis have

complied with the terms of the suspension agreements during the period

January 1, 1993 through December 31, 1993.

EFFECTIVE DATE: March 8, 1996.

FOR FURTHER INFORMATION CONTACT: N. Gerard Zapiain or Jean Kemp, Office

of Agreements Compliance, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Ave., N.W., Washington, D.C. 20230; telephone: (202) 482-

3793.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

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 Although the Department has withdrawn the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 (January

3, 1995)).

Background

On August 16, 1995, the Department published in the Federal

Register (60 FR 42535) the preliminary results of its administrative

reviews of the agreements suspending the countervailing duty

investigations on roses and minis from Colombia (See Roses and Other

Cut Flowers From Colombia; Suspension of Investigation, 48 FR 2158

(January 18, 1983); Roses and Other Cut Flowers From Colombia; Final

Results of Countervailing Duty Administrative Review and Revised

Suspension Agreement, 51 FR 44930 (December 15, 1986); and Miniature

Carnations from Colombia; Suspension of Countervailing Duty

Investigation, 52

[[Page 9430]]

FR 1353 (January 13, 1987)). We have now completed this administrative

review in accordance with section 751 of the Tariff Act of 1930, as

amended (the Tariff Act), and 19 CFR 355.22.

Scope of Review

The products covered by this administrative review constitute two

``classes or kinds'' of merchandise: roses and minis from Colombia.

During the period of review (``POR''), such merchandise covered by

these suspension agreements was classifiable under Harmonized Tariff

Schedule (``HTS'') item numbers 0603.10.60, 0603.10.70, 0603.10.80, and

0603.90.00 for roses, and 0603.10.30 for minis. The HTS item numbers

are provided for convenience and Customs purposes only. The written

descriptions remain dispositive.

This review of the suspended investigations involves over 450

Colombian flower growers/exporters of roses, over 100 Colombian flower

growers/exporters of minis, as well as the GOC. We verified the

responses from six growers/exporters of the subject merchandise: Flores

La Conchita German Ribon E. en C. (roses and minis); Tuchany, S.A.

(roses); Flores de Exportacion, S.A. (roses and minis); Queen's Flowers

of Colombia Ltda. (roses and minis); Florval, S.A. (roses and minis);

and Flores de Funza, S.A. (roses and minis) (collectively, the six

companies). The suspension agreement for minis covers ten programs: (1)

Tax Reimbursement Certificate Program (``CERT''); (2) ``BANCOLDEX''

(funds for the promotion of exports); (3) Plan Vallejo; (4) Free

Industrial Zones; (5) Export Credit Insurance; (6) Countertrade; (7)

Research and Development; (8) Instituto de Fomento Industrial

(``IFI''); (9) Financiero de Desarrollo Territorial (``FINDETER''); and

(10) Fondo Financiero de Proyectos de Desarrollo (``FONADE''). The

suspension agreement for roses covers the ten programs listed above, as

well as (11) Air Freight Rates. The POR is January 1, 1993 through

December 31, 1993.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. We received comments from the respondents, the GOC

and Associacion de Flores (``Asocolflores''); and the petitioners, the

Floral Trade Council (``FTC''). Comments submitted consist of

petitioner's case brief of November 17, 1994 and rebuttal brief of

November 28, 1994; and respondent's rebuttal brief of November 28,

1994. Petitioner and respondents resubmitted identical comments to the

issues addressed previously in the 1991-1992 administrative reviews of

these suspension agreements. Therefore, the parties' comments refer to

the record of the 1991-1992 reviews of these agreements. The Department

has addressed the substance of parties' comments as they pertain to

this POR.

Comment 1: The FTC contends that the GOC is unable to monitor the

ultimate shipment destination of exports for which CERT rebates were

granted and therefore unable to monitor compliance with the suspension

agreements with regard to the CERT program (See Miniature Carnations

from Colombia; Final Results of Countervailing Duty Administrative

Review and Determination not to Terminate Suspended Investigation, 59

FR 10790, 10793 (March 8, 1994); FTC Public Factual Submission at

Exhibits 9 and 10 (August 1, 1992); FTC Public Request for Verification

(July 23, 1993) submitted as part of the 1991-1992 reviews of these

agreements).

Department's Position: We disagree with petitioner. At verification

for the 1993 POR, the Department reviewed documentation provided by the

six companies and by the Banco de la Republica (the Central Bank),

including applications and records of official government approval and

disapproval for CERT payments. The Department also examined export

documents (``DEX'') and other shipping documents to determine

destinations of shipments receiving CERT payments, and verified that no

shipments of the subject merchandise received CERT payments. We also

verified documentation at the six companies confirming that the GOC did

not grant CERT payments on subject merchandise (See verification

reports for each company). Thus, we have determined that the GOC has

adequately monitored the suspension agreements and has provided the

Department the relevant reports in accordance with the terms of the

suspension agreements (See also Miniature Carnations from Colombia;

Final Results of Countervailing Duty Administrative Review and

Determination not to Terminate Suspended Investigation, 59 FR 10790

(Comment 7) (March 8, 1994) and Roses and Other Cut Flowers from

Colombia: Miniature Carnations from Colombia: Final Results of

Countervailing Duty Administrative Reviews of Suspended Investigations

60 FR 42540 (August 16, 1995).

Comment 2: The FTC asserts that export documents offer no objective

support for the conclusion that CERT payments were made only for third-

country exports. The FTC contends that the GOC granted CERT payments on

certain shipments which may either have been transhipped to the United

States without traveling the entire distance to Canada and Europe or

have been reshipped to the United States from the Netherlands Antilles

and Panama. Moreover, the FTC cites the BANCOLDEX annual report for

1992 and asserts that the GOC admitted that Panama and the Netherlands

Antilles ``have been traditionally identified as destinations for

fictitious and over-invoiced exports'' in order to receive CERT

rebates, and that ``it was precisely for this reason that the CERT

program was abolished for these countries in early 1992.'' The FTC

asserts that the sheer volume shipped to Panama and the Netherlands

Antilles indicates that it was a substantial conduit for transhipment.

Consequently, the FTC alleges that this is a prima facie breach of the

suspension agreements, which are no longer in the public interest, and

that the Department is required pursuant to 19 U.S.C. 1671c(i) to

resume the investigation and/or issue countervailing duty orders.

The GOC argues that the value of total exports of all Colombian

products to Panama (or even the Netherlands Antilles) does not indicate

that a single flower was transshipped through the Netherlands Antilles.

Department's Position: The suspension agreements obligate Colombian

growers/exporters to renounce CERT payments on exports of the subject

merchandise to the United States and Puerto Rico. Additionally, in

January 1987, the GOC set the level of CERT payments at zero percent

for exports of the subject merchandise. (See Roses and Other Cut

Flowers from Colombia: Miniature Carnations from Colombia: Final

Results of Countervailing Duty Administrative Reviews of Suspended

Investigations FR 42540 (August 16, 1995). At verification for the 1993

POR, the Department fully verified the non-receipt of CERT payments on

exports of the subject merchandise by reviewing the Central Bank's CERT

printouts by destination. At the six companies examined at

verification, we examined several third-country sales, including sales

to Panama and the Netherlands Antilles, by reviewing the DEXs, the

receipt of payments, and airway bills. In addition, we examined the

ultimate destination of specific sales of the subject merchandise.

Based on the findings of verification, we found no evidence to support

the allegation of transshipment or reshipment of the subject

merchandise (See verification reports

[[Page 9431]]

for each company). As a result, we have determined that with respect to

this issue the GOC and the flower growers/exporters were in compliance

with the suspension agreements during the POR.

Comment 3: The FTC argues that because CERT rebates are not

necessarily tied to third-country exports, the Department should

reconsider its position that ``rebates tied to exports to third

countries do not benefit the production or export of the subject

merchandise.''

Department's Position: It is the Department's policy that rebates

tied to exports to third countries do not benefit the production or

export of the subject merchandise destined for the United States. We

found no evidence in the questionnaire responses or at the most recent

verification that would cause us to reconsider our position. (See

Miniature Carnations from Colombia; Final Results of Countervailing

Duty Administrative Review and Determination not to Terminate Suspended

Investigation, 59 FR 10790 (Comment 7) (March 8, 1994), and Roses and

Other Cut Flowers from Colombia; Miniature Carnations from Colombia;

Final Results of Countervailing Duty Administrative Reviews of

Suspended Investigations, 60 FR 42541 (Comment 4) (August 16, 1995)).

Comment 4: The FTC asserts that both suspension agreements allow

the Department to terminate the suspension agreements if producers/

exporters account for less than 85 percent of the total exports of the

subject merchandise to the United States and Puerto Rico. Further, the

FTC claims that there is effectively no suspension agreement for the

minis because the GOC does not have an up-to-date list of signatories

during the 1991-1992 PORs (See Roses and Other Cut Flowers From

Colombia; Final Results of Countervailing Duty Administrative Review

and Revised Suspension Agreement, 51 FR 44930, and 44933 (December 15,

1986); and Miniature Carnations from Colombia; Suspension of

Countervailing Duty Investigation, 52 FR 1353, and 1356 (January 13,

1987)).

Department's Position: The suspension agreement on minis states

that should exports to the United States by the producers and exporters

account for less than 85 percent of the subject merchandise imported

directly or indirectly into the United States from Colombia, the

Department may attempt to negotiate an agreement with additional

producers or exporters or may terminate this Agreement and reopen the

investigation under 19 CFR 355.18 (b)(3)(c) of the Commerce

Regulations. (See Roses and Other Cut Flowers from Colombia: Miniature

Carnations from Colombia: Final Results of Countervailing Duty

Administrative Reviews of Suspended Investigations, 60 FR 42540 (August

16, 1995).

We have found that the GOC has not maintained an up-to-date list of

signatories for both suspension agreements. Nonetheless, the record

evidence indicates that signatories have been in full compliance with

the agreement. At verification for this review, we analyzed the

Colombian Customs Authority's export statistics of all flower companies

exporting minis to the United States and Puerto Rico. The Department

reviewed and verified at each GOC agency information for all producers

of the subject merchandise, despite their signatory status. At the

Central Bank, we checked computer records of exports with U.S. and

Puerto Rican country identification codes showing that no CERT payments

were made to any flower growers/exporters for shipments of the subject

merchandise.

At BANCOLDEX, we reviewed and verified all PROEXPO/BANCOLDEX loans

issued and outstanding in the POR (See also Government Verification

Reports of May 27, 1994 and August 11, 1995) and we have determined

that the Colombian flower growers/exporters have complied with the

terms of the suspension agreements during the POR. Similarly, we

verified that no countervailable benefits were granted to or received

by any flower growers/exporters for Plan Vallejo, Air Freight Rates,

Free Industrial Zones, and Export Credit Insurance Program. Based on

this evidence, the Department verified more than 85 percent of the

Colombian flower growers/exporters of the subject merchandise during

the POR. Consequently, the Department will neither renegotiate the

minis suspension agreement with the GOC and the growers/exporters of

the subject merchandise, nor terminate the suspension agreements and

reopen the investigations.

Comment 5: The FTC claims that under the terms of the suspension

agreements, the Department is forced to apply outdated/subsidized

benchmark interest rates to determine ``compliance'' with the

suspension agreements. The FTC objects to the Department's practice in

setting prospective and outdated benchmark interest rates to determine

compliance with the terms of the suspension agreements and argues that

the Department should either terminate the suspension agreements with

respect to the BANCOLDEX program, or, at least, amend the agreements by

prohibiting Colombian growers from receiving loans at non-preferential

rates. The FTC asserts that the Department should refrain from

establishing fixed benchmark interest rates, and instead the Department

should determine a benchmark for each review period by adhering to the

precedents set in the Final Affirmative Countervailing Duty

Determination and Countervailing Duty Order, Steel Wire Rope from

Thailand, 56 FR 46299 (September 11, 1991); and Final Results of the

Administrative Review for Rice from Thailand, 59 FR 8906, and 8907

(1994).

The FTC claims that the suspension agreements are not in the public

interest because Colombian flower growers/exporters can ``technically''

comply with the terms of the suspension agreements while at the same

time receive loans at preferential interest rates. Because the

benchmarks are outdated, the FTC asserts, they are incapable of

eliminating the net subsidy on flowers. Thus, the FTC contends that if

Colombian flower growers continue to receive loans at preferential

interest rates, the Department should either impose countervailing

duties or fashion a suspension agreement that eliminates the subsidy,

offsets the subsidy completely, or ceases the exports.

In addition, the FTC asserts that the Department cannot predict

future interest rates, especially because interest rates fluctuated

widely between 19 and 32 percent during the 1991-1992 PORs, or predict

what Colombian flower growers/exporters could receive in non-peso based

interest rates years after establishing benchmarks which may not be

applicable to unforeseen loan programs.

Department's Position: We disagree with petitioner. The Department

determines that suspension agreements are forward-looking, and that the

Department sets benchmark interest rates prospectively. (See Miniature

Carnations from Colombia: Final Results of Countervailing Duty

Administrative Review; 56 FR 14240 (April 8, 1991), Miniature

Carnations from Colombia; Final Results of Countervailing Duty

Administrative Review and Determination Not To Terminate Suspended

Investigation, 59 FR 10790, (March 8, 1994), and Roses and Other Cut

Flowers from Colombia: Miniature Carnations from Colombia: Final

Results of Countervailing Duty Administrative Reviews of Suspended

Investigations, 60 FR 42541 (August 16, 1995)).

At verification for the 1993 POR, the Department examined

documentation that indicated that BANCOLDEX

[[Page 9432]]

charged interest rates on its short- and long-term loans above the

Department's established benchmark rates in effect during the POR. The

Department also found that the companies received BANCOLDEX loans on

terms consistent with the suspension agreements. Consequently, we have

determined that signatories were in compliance with the terms of the

suspension agreements for the BANCOLDEX programs. Because BANCOLDEX

loans were above the benchmark rates, the Department determines that

the GOC did not confer any countervailable benefits through the

BANCOLDEX programs during the POR. The Department finds that

signatories complied with the suspension agreements' benchmarks and

avoided receiving countervailable benefits during the POR, resulting in

a situation analogous to non-use for the BANCOLDEX programs by

Colombian flower growers/exporters of the subject merchandise.

Therefore, there is no basis for petitioner's claim that the suspension

agreements are not in the public interest.

To ensure timely updates of the benchmarks for BANCOLDEX financing,

the Department requests information on FINAGRO, commercial dollar loans

and other alternative sources of financing in Colombia outside of the

annual administrative review process (See Section III, ``Monitoring of

the Agreement'' in Roses and Other Cut Flowers from Colombia: Final

Results of Countervailing Duty Administrative Review and Revised

Suspension Agreement, 51 FR 44930 and 44933 (December 15, 1986) and

Suspension of Countervailing Duty Investigation: Miniature Carnations

from Colombia, 52 FR 1353 and 1355 (January 13, 1987)).

Comment 6: Petitioner asserts that the GOC did not comply with the

suspension agreements regarding Colombian peso (peso) loans for the

following reasons:

First, the FTC claims that were the Department to compare the

interest rates on 1991 and 1992 PROEXPO/BANCOLDEX (``BANCOLDEX'') loans

to the weighted-average commercial lending rates published by the

International Monetary Fund (``IMF'') or the (FFA/FINAGRO ``FINAGRO'')

rates during those PORs, the Department would have found that Colombian

flower growers/exporters received loans at preferential interest rates.

Second, the FTC asserts that the Department should not equate

compliance with pre-established benchmark interest rates with

compliance with the terms of the suspension agreement covering minis,

because under the minis suspension agreement the Colombian flower

growers/exporters have two distinct obligations: (1) not to apply for

or receive financing at preferential terms; and (2) not to apply for or

receive financing other than that offered at or above the most recent

benchmark interest rates determined by the Department.

Finally, the FTC argues that if the Department's 1989 benchmark for

minis were to be applied to 1991 and 1992 loans received for roses, the

Department would likely find Colombian producers/exporters receiving

BANCOLDEX loans at preferential rates during the PORs. Consequently,

the FTC asserts that the suspension agreements should either be revised

or found unworkable.

The GOC argues that all Colombian flower producers/exporters of

minis and roses have fully complied with the terms of their respective

suspension agreements. Furthermore, the GOC asserts that the FTC

incorrectly applies the minis benchmark interest rates to loans for

exports of roses. The GOC explains that the current benchmarks for

roses and minis differ, not because there is a defect in the suspension

agreements or because of the Department's approach, but instead because

the FTC had requested a review of only the minis suspension agreement

in 1989. Regardless, the GOC claims that loans issued to roses growers/

exporters met the benchmarks established under the minis suspension

agreement.

Department's Position: We disagree with petitioner. The Department

has determined in previous reviews that any changes to benchmark

interest rates for the suspension agreements should be set

prospectively, because suspension agreements are forward-looking. (See

Roses and Other Cut Flowers from Colombia: Miniature Carnations from

Colombia: Final Results of Countervailing Duty Administrative Reviews

of Suspended Investigations, 60 FR 42542 (August 16, 1995)).

Furthermore, the Department verified that the Colombian flower growers/

exporters of the subject merchandise have fulfilled the two distinct

obligations in the suspension agreements during the 1993 POR: (1) not

to apply for or receive financing at preferential terms; and (2) not to

apply for or receive financing other than that offered at or above the

most recent benchmark interest rates determined by the Department (See

verification reports for each company).

At verification for this review, the Department reviewed all loans

issued by BANCOLDEX during the POR, in particular the six companies we

examined at verification, and found that the loans granted were on

terms consistent with the suspension agreements. Additionally, because

BANCOLDEX loans were pegged to the floating DTF rate, and the DTF rate

fluctuated widely over the review period, we did not compare the rate

on an individual loan with the annual average DTF rate (See

verification reports for each company). Therefore, Colombian flower

growers/exporters did not apply for or receive financing at

preferential terms, and the Department determines that the GOC did not

confer any countervailable benefits during the POR, and that

signatories complied with the terms of the suspension agreements for

the BANCOLDEX programs during the POR.

Finally, the Department agrees with the respondents that because

the suspension agreements are two separate agreements, it would be

erroneous to apply the 1989 minis benchmark interest rates to the roses

suspension agreement during this POR. We have applied the benchmark

interest rate of each suspension agreement appropriately.

Coincidentally, the rates in effect for each agreement are now

identical. (See Roses and Other Cut Flowers from Colombia: Miniature

Carnations from Colombia: Final Results of Countervailing Duty

Administrative Reviews of Suspended Investigations 60 FR 42542 (August

16, 1995)).

Comment 7: The FTC asserts that the Department should reconsider

its use of the subsidized FINAGRO interest rate, when establishing new

short- and long-term benchmarks. The FTC argues instead that the

Department use weighted-average interest rates of available non-

government-related financing at commercial lending rates maintained by

the Central Bank. In addition, the FTC asserts that the Department is

not required to look to interest rates available to the agricultural

sector, when the rates are not available to flower growers/exporters

(See Rice From Thailand; Preliminary Results of Countervailing Duty

Administrative Review, 57 FR 8437, and 8439 (March 10, 1992)).

The FTC asserts that if the Department decides to base its peso

loan benchmarks on FINAGRO interest rates, then it should use the

maximum interest rates for large producers, i.e., DTF plus 6 percentage

points. In addition, the FTC argues that the Department should adjust

the interest rates to reflect the spread between short- and long-term

BANCOLDEX loans. The FTC argues that the Department should not

establish a two-tier benchmark system, or a range of interest rate

benchmarks,

[[Page 9433]]

because there would be no criteria by which the Department could

determine what is preferential.

The GOC asserts that the FTC offers no basis upon which the

Department could support a change from a FINAGRO based benchmark to a

weighted-average interest rates on available non-government-related

financing at commercial lending rates. The GOC argues that FINAGRO

lending rates are appropriate because the rates are not enterprise or

industry specific, which otherwise would make them a countervailable

subsidy (See Final Affirmative Countervailing Duty Determination;

Miniature Carnations from Colombia, 52 FR 32033, and 32037 (August 25,

1987); and Roses and Other Cut Flowers From Colombia; Final Results of

Countervailing Duty Administrative Review and Revised Suspension

Agreement, 51 FR 44930, and 44,932 (December 15, 1986)).

Department's Position: We have determined that FINAGRO is a major

intermediary lender to the agricultural sector, and therefore is an

appropriate alternative basis for the Department's benchmarks. Because

there is insufficient information on the record about non-government-

related financing at commercial rates, we have determined that it is

inappropriate to weight average the commercial interest rates. (See

Roses and Other Cut Flowers from Colombia: Miniature Carnations from

Colombia: Final Results of Countervailing Duty Administrative Reviews

of Suspended Investigations 60 FR 42542 (August 16, 1995)).

The most recent FINAGRO short-term rate is equal to the Colombian

fixed deposit rate, DTF, plus up to 6 percentage points. We agree with

petitioner that by establishing a range of interest rate benchmarks

(i.e., DTF plus up to 6 percentage points), as suggested by

respondents, there is in effect no benchmark because this would be

equivalent to setting the benchmark (minimum rate) at DTF--a rate that

does not reflect commercial rates or an alternative rate of financing.

Therefore, the Department determines that, as verified, the most recent

average official interest rate on all loans financed by FINAGRO through

Caja Agraria, i.e., nominal DTF plus 3.66 percentage points, is the

appropriate benchmark for short-term financing. (See Calculation

Memorandum for Interest Rate Benchmark Methodology for BANCOLDEX Peso-

and Dollar-Denominated Loans, January 17, 1996, and Government

Verification Report, Exhibit BR-1). Because BANCOLDEX also administered

long-term loans, we determine that the same nominal DTF plus 3.66

percentage points, plus an additional 0.25 percentage point for each

year after the first, is the appropriate benchmark. Furthermore, loans

provided at or above the benchmark will not be considered preferential

(See Comments 6 and 10).

The Department determines not to adopt the two-tier interest rate

system (borrowers can receive different interest rates depending on the

size of the company) because BANCOLDEX interest rates are not

determined on the basis of the size of flower growers (See BANCOLDEX

resolution 007, article 6, paragraph d (June 16, 1993)).

The Department determines that the short- and long-term benchmarks

for peso-denominated financing will become effective 14 days after the

date of publication of the final results of these administrative

reviews.

Comment 8: The FTC requests that the Department weight-average Caja

Agraria interest rates with FINAGRO rates as done in previous reviews.

In the case that there is conflicting data, the FTC suggests rejecting

such data and using commercial lending rates maintained by the Central

Bank as best information available.

In response, the GOC claims that the reported Caja Agraria interest

rates are lower than reported FINAGRO rates (Submission of June 3,

1994) and further argues that the submitted information does not

conflict with rates provided in the questionnaire response, which were

reported as applicable rates for different denomination loans.

Department's Position: We disagree with petitioner. FINAGRO is the

major alternative source of agricultural financing in Colombia that

provides rediscount rates to intermediary banks in Colombia. We have

determined that because information submitted by respondents about Caja

Agraria's rates conflicts with what we found at verification and

because Caja Agraria's interest rates are similar to the rates offered

by FINAGRO, FINAGRO's interest rates represent the best alternative

source of financing for agricultural entities in Colombia (See Roses

and Other Cut Flowers from Colombia: Miniature Carnations from

Colombia: Final Results of Countervailing Duty Administrative Reviews

of Suspended Investigations, 60 FR 42542 (August 16, 1995).

Comment 9: The FTC asserts that the Department should use effective

rather than nominal interest rates. The FTC contends that effective

rates are a more accurate measure of a subsidy and reflect a

considerably higher rate. The FTC asserts that nominal rates vary

widely, because commissions and other surcharges can add to the cost of

a loan. In addition, the FTC asserts, the GOC has not established that

the financial intermediary does not assess surcharges for its services

or use of its own funds in financing loans.

In response, the GOC argues that the nominal and effective interest

rates are equivalent, because the nominal rate is the rate expressed as

if interest were due at the beginning of each quarter, while the

effective rate is the equivalent rate calculated on the basis of

interest being payable at the end of the quarter. Furthermore, the GOC

argues that there are no surcharges by financial intermediaries on

BANCOLDEX loans for the portion of the loan provided by the financial

intermediary.

Department's Position: We agree with respondents. The Department

determines that the nominal and effective interest rates are

equivalent. In addition, the Department verified that there are no

surcharges by financial intermediaries on BANCOLDEX loans for the

portion of the loan provided by the financial intermediary. Therefore,

we will continue using nominal interest rates (See Roses and Other Cut

Flowers from Colombia: Miniature Carnations from Colombia: Final

Results of Countervailing Duty Administrative Reviews of Suspended

Investigations, 60 FR at 42542 (August 16, 1995).

Comment 10: The FTC contends that the Department must determine

whether Colombian flower growers/exporters have received U.S. Dollar

(Dollar) loans at preferential interest rates. To the extent that the

suspension agreements restrict the Department's ability to administer

the law, the FTC asserts that the agreements must be terminated or

amended for the POR.

Respondents state that, as noted in its original case brief in

connection with the 1991-1992 annual review periods, BANCOLDEX's

dollar-denominated loans are not financed by the GOC and are therefore

non-countervailable.

Department's Position: We disagree with respondents. It is long-

standing Department policy that loans from certain international

institutions, such as the World Bank or the Inter-American Development

Bank (IADB), are not countervailable subsidies. However, Dollar loans

administered by BANCOLDEX are potentially countervailable and the

Department has calculated dollar benchmarks accordingly (as discussed

in Comment 11 below) (See Roses and Other Cut Flowers from Colombia:

Miniature Carnations from Colombia: Final Results of Countervailing

Duty Administrative Reviews of Suspended

[[Page 9434]]

Investigations 60 FR at 42543 (August 16, 1995).

Comment 11: The FTC asserts that, by using the annual weighted-

average effective U.S. prime lending rates reported in the Federal

Reserve, rather than one quarter of 1994 as done in the preliminary

determination for the 1991-1992 review periods, the Department would

find that the dollar-denominated BANCOLDEX loans issued during these

PORs were preferential (the weighted-average U.S. lending rate for 1992

was 8.72 percent, compared to the dollar denominated loans issued to

the five leading exporters of roses and minis in 1992) (See Public

questionnaire response). Consequently, the FTC requests that the

Department either terminate the suspension agreements or remove their

reference to benchmarks and determine compliance with the suspension

agreements based on current rates for the review period.

Department's Position: The Department in its final results in

connection with the 1991-1992 annual review periods agreed with

respondents that the calculation of the dollar loan benchmark in the

Department's preliminary results was incorrect because it was not

necessarily representative of dollar-based interest rates in Colombia.

(See Roses and Other Cut Flowers from Colombia: Miniature Carnations

from Colombia: Final Results of Countervailing Duty Administrative

Reviews of Suspended Investigations, 60 FR 42543 (August 16, 1995). We

corrected this error in the 1993 preliminary results of review.

Consequently, this issue does not apply to the current POR.

Comment 12: The FTC asserts that according to 19 CFR 355.19(b), the

Department can revise the suspension agreements if it ``has reason to

believe that the signatory government or exporters have violated an

agreement or that an agreement no longer meets the requirements of

section 704(d)(1) of the Act.'' The FTC claims that respondents have

violated the terms of the suspension agreements during the PORs (See

Comments 6 and 10).

The GOC argues that all Colombian flower producers/exporters of

minis and roses have fully complied with the terms of their respective

suspension agreements and that it supports the Department's past policy

of having suspension agreements be forward-looking, and that the

Department sets benchmarks interest rates prospectively. The GOC

asserts that there is no need to amend or clarify the suspension

agreements and it was inappropriate for the Department to have

requested comments from interested parties for the following reasons:

first, the suspension agreements cannot be unilaterally amended or

clarified by the Department or the Colombian flower growers/exporters.

Second, the Department has no power to amend or clarify the agreements

without the consent of all signatories. Third, the Department should

first raise the issue with the signatories and negotiate an amendment,

which then can be subject to public comments (See 19 CFR 355.18(g)).

The GOC contends that there is no basis for considering to amend

the suspension agreements. Because dollar loans were provided by

international financial institutions, the GOC asserts that the loans

are non-countervailable and there is no need for the Department to

determine whether these loans were granted on non-preferential terms.

The GOC argues that based on FTC's proposed amendments of the

suspension agreements (See Comment 5), no Colombian flower grower/

exporter would sign such an agreement where signatories would agree to

a blanket commitment that all PROEXPO/BANCOLDEX loans have to be ``non-

preferential'' without any understanding as to how the Department would

interpret that term. Further, the GOC argues that suspension agreements

are supposed to provide certainty so that when BANCOLDEX loans are

issued, the GOC knows what rate must be charged to comply with the

suspension agreements.

Department's Position: The Department has determined not to

initiate an amendment to the suspension agreements, based on the

information received. The Secretary has no reason to believe at this

time that the exporters of the subject merchandise have violated the

suspension agreements or that the agreements no longer meet the

requirements of section 704(d)(1). Consequently, the Department will

not currently renegotiate the suspension agreements with the GOC and

the producers/exporters of the subject merchandises nor will it

terminate the suspension agreements, nor will it reopen the

investigation. (See Roses and Other Cut Flowers from Colombia:

Miniature Carnations from Colombia: Final Results of Countervailing

Duty Administrative Reviews of Suspended Investigations 60 FR 42544

(August 16, 1995).

Refinancing Outstanding Dollar and Peso Loans

At the time of the final results of the 1991-1992 reviews, the GOC

asserted that if any dollar loans needed to be refinanced or repaid,

the Department should grant 90 days after the publication of the final

results for the process of refinancing to occur. This is the same

period initially established in the minis suspension agreement (See 52

FR 1355, para. II.B., 1986, and Roses and Other Cut Flowers from

Colombia; Miniature Carnations from Colombia; Final Results of

Countervailing Duty Administrative Reviews of Suspended Investigations,

60 FR 42544 (Comment 11) (August 16, 1995)).

For the 1993 POR, the Department determines that the effective date

for completing the repayment and/or refinancing of any outstanding

dollar and peso loans to meet the new short and long-term dollar and

peso benchmarks is 90 days after publication of these final results in

the Federal Register.

Final Results of Reviews

After considering all of the comments received, we determine that

the GOC and the Colombian flower growers/exporters of the subject

merchandise have complied with the terms of the suspension agreements

for the period January 1, 1993, through December 31, 1993. In addition,

we determine that the peso and dollar benchmarks established in this

final notice will be effective 14 days after the date of publication of

this notice. Moreover, the Department determines that the effective

date for completing the repayment and/or refinancing for any

outstanding peso and dollar loans to meet the new short- and long-term

benchmarks is 90 days after publication of these final results in the

Federal Register.

This administrative review and notice are in accordance with

sections 751(a)(1)(C) of the Tariff Act (19 U.S.C. 1675(a)(1)(C) and 19

CFR 355.22 and 355.25.

Dated: February 28, 1996.

Paul L. Joffe,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-5440 Filed 3-6-96; 8:45 am]

BILLING CODE 3510-DS-P