Developing and Least-Developed Country Designations under the Countervailing Duty Law

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

15 CFR Part 2013

Developing and Least-Developed Country Designations under the

Countervailing Duty Law

AGENCY: Office of the United States Trade Representative.

ACTION: Interim Final Rule and Request for Comments.

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SUMMARY: This rule designates a list of members of the World Trade

Organization (``WTO'') that are eligible for special de minimis

countervailable subsidy and negligible import volume standards under

the countervailing duty law.

DATES: This rule is effective June 2, 1998. Comments on the Interim

Final Rule should be submitted by July 31, 1998.

ADDRESSES: Comments may be submitted to William D. Hunter, Office of

General Counsel, Office of the United States Trade Representative, 600

17th Street, NW, Washington, DC 20508. Attn: Eligible Country List.

FOR FURTHER INFORMATION CONTACT:

William D. Hunter, (202) 395-3582, [email protected].

SUPPLEMENTARY INFORMATION:

General Background

In the Uruguay Round Agreements Act (``URAA''), Pub. L. No. 103-

465, Congress amended the countervailing duty (``CVD'') law to conform

to U.S. obligations under the Agreement on Subsidies and Countervailing

Measures (``SCM Agreement'') administered by the WTO. Under the SCM

Agreement, WTO members that have not yet reached the status of a

developed country are entitled to special treatment for purposes of

countervailing measures. Specifically, imports from such Members are

subject to different standards for purposes of determining whether

countervailable subsidies are de minimis and whether import volumes are

negligible.

Under section 771(36) of the Tariff Act of 1930, as amended (``the

Act''), 19

[[Page 29946]]

U.S.C. 1677(36), Congress delegated to the United States Trade

Representative (``USTR'') the responsibility for designating those WTO

members whose imports are subject to these special standards. In

addition, section 771(36)(D) requires USTR to publish a list of such

designations (hereinafter referred to as ``the list''), updated as

necessary, in the Federal Register. The list that is set forth and

described below implements the requirements of section 771(36)(D).

Explanation of the List

Introduction

For purposes of countervailing measures, the SCM Agreement extends

special and differential treatment to developing and least-developed

members in the following manner:

De Minimis Thresholds: Under Article 11.9, authorities

must terminate a countervailing duty (``CVD'') investigation if the

amount of the subsidy is de minimis, which normally is defined as less

than 1 percent ad valorem. Under Article 27.10(a), however, for a

developing member the de minimis standard is 2 percent or less. In

addition, under Article 27.11, the de minimis standard is 3 percent or

less for (a) a least-developed member; or (b) a developing member that

has eliminated its export subsidies prior to the expiry of the 8-year

phase-out period provided for in Article 27.4

Negligible Import Volumes: Under Article 11.9, authorities

must terminate a CVD investigation if the volume of subsidized imports

from a country is negligible. Under the CVD law, imports from an

individual country normally are considered negligible if they are less

than 3 percent of total imports of a product into the United States.

Imports are not considered negligible if the aggregate volume of

imports from all countries whose individual volumes are less than 3

percent exceeds 7 percent of all such merchandise. However, under

Article 27.10(b), imports from a developing or least-developed member

are considered negligible if the import volume is less than 4 percent

of total imports, unless the aggregate volume of imports from countries

whose individual volumes are less than 4 percent exceeds 9 percent.

In the URAA, Congress incorporated these standards into the CVD

law. Section 703(b)(4)(B)-(D) of the Act, 19 U.S.C. 1671b(b)(4)(B)(-

(D), incorporates the de minimis standards, while section 771(24)(B),

19 U.S.C. 1677(24)(B), incorporates the negligible import standards.

However, in the statute itself, Congress did not identify by name those

WTO members eligible for such special treatment. Instead, section 267

of the URAA added section 771(36) to the Act, which delegates to USTR

the responsibility for designating those WTO members subject to special

de minimis and negligible import volume standards. In addition, section

771(36) requires USTR to publish in the Federal Register, and update as

necessary, a list of those members designated by USTR as eligible for

special treatment under the CVD law.

The effect of these designations is limited to Title VII of the

Act. Specifically, section 771(36)(E) of the Act provides that the fact

that a WTO member is designated in the list as developing or least-

developed has no effect on how that member may be classified with

respect to any other law.

Data Sources

In making the designations set forth in the list, USTR relied on

data on per capita gross national product (GNP) and certain social

development indicators contained in the World Bank's Selected World

Development Indicators, and on trade data contained in the

International Monetary Fund's Direction of Trade Statistics.

Designation of TWO Members Eligible for 3 Percent De Minimis Standard

\1\

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\1\ The discussions in this section and in the following section

address the 2 and 3 percent de minimis standards only. However, a

WTO member that is eligible for either the 2 or 3 percent de minimis

standard also is eligible for the special negligible import standard

under section 771(24)(B) of the Act.

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Section 771(36)(B) of the Act describes those WTO members eligible

for a 3 percent de minimis standard by incorporating the standards

contained in Annex VII to the SCM Agreement. Annex VII provides that

the following categories of members are eligible for a 3 percent de

minimis standard:

WTO members designated as least-developed countries by the

United Nations (Annex VII(a)); and

A WTO member named in Annex VII(b), provided its per

capita GNP has not reached $1,000 per annum.

Applying Annex VII, the following WTO members are eligible for a 3

percent de minimis standard:

Table 1

Column A WTO Members Included in Column B WTO Members Included In

the UN's List of ``The 48 Least Annex VII(b) with per capita GNP of

Developed Countries'' \1\ less than $1,000 \2\

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Angola Maldives Bolivia $800

Bangladesh Mali Cameroon 650

Benin Mauritania Congo 680

Burkina Faso Mozambique Cote d'Ivoire 660

Burma Niger Egypt 790

Burundi Rwanda Ghana 390

Central African Sierra Leone Guyana 590

Republic

Chad Solomon Islands India 340

Djibouti Tanzania Indonesia 980

Gambia Togo Kenya 280

Guinea Uganada Nicaragua 380

Guinea-Bisseau Zambia Nigeria 260

Haiti Dem. Rep. of the Pakistan 460

Congo

Lesotho Senegal 600

Madagascar Sri Lanka 700

Malawi Zimbabwe 540

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\1\ United Nations Statistical Yearbook: Forty-First Issue, pp. 869-870

(1996), referring to General Assembly Resolution 49/133.

\2\ Selected World Development Indicators (1997), http://

www.worldbank.org/html/iecdd/wdipdf.htm

[[Page 29947]]

In addition to those WTO members described in Annex VII to the SCM

Agreement, under section 703(b)(4)(C)(ii) of the Act, if USTR notifies

the Department of Commerce that a developing member has eliminated its

export subsidies on an expedited basis, that member is eligible for the

3 percent de minimis standard. Under section 771(36)(C)(i), the list

must identify any such members. Currently, no developing member of the

WTO meets this criterion. Therefore, no such member is included in the

list on the basis of that section.

Designation of WTO Members Eligible for 2 Percent De Minimis

Standard

Introduction

Based on section 771(36)(D) of the Act, in determining which WTO

members should be considered as developing and, thus, eligible for the

2 percent de minimis standard, USTR has considered appropriate

economic, trade and other factors, including the level of economic

development of a country (based on a review of the country's per capita

GNP) and a country's share of world trade. USTR developed the list of

members eligible for the 2 percent de minimis standard based primarily

on per capita GNP due to the availability of reliable indices, with

share of world trade and other factors used as supplemental analytical

tools in determining whether a particular member should be moved from

one GNP-based classification to another.

Per Capita GNP

In developing its interim final list, USTR relied on the World

Bank's dividing line separating ``high income'' countries from those

with lower per capita GNPs.\4\ This means that WTO members with per

capita GNP's below $9,386 were treated as eligible for the 2 percent de

minimis standard, subject to possible change based on other factors as

discussed below. The advantages of this approach are that it (1) is

straightforward to apply; (2) is based on a recognized GNP dividing

line between developed and developing countries for purposes of the

world's primary multilateral lending institution; and (3) conforms to

the test for beneficiary developing country status set out in the U.S.

Generalized System of Preferences statute, section 502(e) of the Trade

Act of 1974.

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\2\ The most recent World Bank data set this dividing line at

$9,386.

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Share of World Trade

USTR considered whether any of the countries with per capita GNPs

below $9,386 account for a significant share of world trade and, thus,

should be treated as ineligible for the 2 percent de minimis standard.

USTR considered a share of world trade of 2 percent or more to be

``significant'' for these purposes because the Administration committed

in the Statement of Administration Action (``SAA'') approved by the

Congress along with the URAA that Hong Kong, Korea, and Singapore would

be ineligible for developing country treatment, and each of these

countries accounts for a share of world trade in excess of 2 percent.

There are no current WTO members with per capita GNPs close to

$9,386 that account for a share of world trade above 2 percent.

Accordingly, while USTR finds that share of world trade is a relevant

factor to consider, at present this factor does not warrant any changes

to the designations based on per capita GNP.

Social Development Indicators

Because the URAA and the SAA do not limit USTR to an analysis of

per capita GNP and world trade shares, USTR also took into account the

social development indicators of infant mortality rates, adult

illiteracy rates, and life expectancy at birth, as reported in Selected

World Development Indicators (1997). However, in the case of those WTO

members with per capita GNPs below $9,386, these social development

indicators do not provide a sufficient basis for finding such members

to be ineligible for the 2 percent de minimis standard.

Other Factors

Section 771(36)(D) contemplates that USTR may consider additional

factors. To that end, for purposes of this interim final list, USTR

took into account membership in the European Union (``EU''). Membership

in the EU indicates a relatively high level of economic development. In

addition, under section 771(3) of the Act, the EU may be treated as a

single country for purposes of the CVD law and, while not common, there

have been CVD investigations against merchandise from the ``European

Communities.'' Because the EU is indisputably ineligible for the 2

percent de minimis standard, it would be anomalous to treat an

individual EU member as eligible for that standard. Accordingly, USTR

has concluded that all EU members be designated as developed for CVD

purposes. Thus, Greece is ineligible for the 2 percent de minimis

standard, notwithstanding the fact that, based on the most recent World

Bank data, Greece's per capita GNP is below $9,386.

USTR also took into account OECD membership. The characterization

of the OECD as a grouping of developed countries has been confirmed

throughout its existence in a number of published OECD documents, and

the OECD consistently has been viewed as, and acts itself in the

capacity of, the principal organization developed economies worldwide.

Thus, by joining the OECD, a country effectively has declared itself to

be developed. Consistent with this self-designation, USTR has

determined that an OECD member should not be eligible for the 2 percent

de minimis standard.

Furthermore, USTR has not included in this interim final list WTO

members that in the past have been (or could have been) considered as

nonmarket economy countries not subject to the CVD law. Because there

are no pending CVD investigations involving any of these members, USTR

has not designated such countries at this time.

Immediate Effect and Request for Comments

USTR has determined that there is good cause for the publication of

this rule with an immediate effective date and without prior notice and

comment. Publication of the rule implements treaty obligations of the

United States under the Marrakesh Agreement Establishing the WTO. Delay

in the effective date of the rule may adversely affect the trade

relations of the United States with countries subject to designation

under this section. In addition, the absence of a rule designating

countries under the URAA may prevent another Federal agency from being

able to timely adjudicate one or more pending CVD proceedings on its

docket. Due to these factors, and because prior notice and other public

procedures with respect to this action are impracticable, USTR finds

good cause under 5 U.S.C. 553 to make the rule effective upon

publication in the Federal Register.

Because this action is in the form of an interim final rule,

comments are invited on the rule. Interested persons are invited to

comment on this rule by submitting such written comments by July 31,

1998. Each person submitting a comment should include his or her name

and address, and give reasons for any recommendations. After the

comment period closes, USTR will publish in the Federal Register a

final rule on this subject, together with a discussion of comments

received and any amendments made to the interim rule as a result of the

comments.

To simplify the processing and consideration of comments,

commenters

[[Page 29948]]

are encouraged to submit documents in electronic form accompanied by an

original and two paper copies. All documents submitted in electronic

form should be on DOS formatted 3.5'' diskettes, and should be prepared

in either WordPerfect format or a format that the WordPerfect program

can convert and import into WordPerfect.

Regulatory Flexibility Act

In accordance with the Regulatory Flexibility Act (5 U.S.C.

606(b)), USTR certifies that this regulation will not have a

significant impact on a substantial number of small entities.

Paperwork Reduction Act

This rule contains no information collection or recordkeeping

requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501

et seq.).

Executive Order 12866

This rule has been and reviewed by the Office of Management and

Budget in accordance with Executive Order 12866, Sec. 1(b), Principles

of Regulation.

Executive Order 12612

This notice does not contain federalism implications described in

Executive Order 12612 warranting the preparation of a Federalism

Assessment.

Small Business Regulatory Enforcement Fairness Act of 1996

This rule is not a major rule as defined by Sec. 804 of the Small

Business Regulatory Enforcement Act of 1996. This rule will not result

in an annual effect on the economy of $100,000,000 or more; a major

increase in costs or prices; or significant adverse effects on

competition, employment, investment, productivity, innovation, or on

the ability of United States-based companies to compete with foreign-

based companies in domestic and export markets.

List of Subjects in 15 CFR Part 2013

Countervailing duties, Foreign trade, Imports

Dated: May 29, 1998.

Charlene Barshefsky.

United States Trade Representative.

For the reasons stated, a new Part 2013 is added to 15 CFR Chapter

XX to read as follows:

PART 2013 DEVELOPING AND LEAST--DEVELOPING COUNTRY DESIGNATIONS

UNDER THE COUNTERVAILING DUTY LAW

Authority: Section 267, Pub. L. 103-465; 108 Stat. 4915 (19

U.S.C. 1677(36))

Sec. 2013.1 Designations.

In accordance with section 771(36) of the Tariff Act of 1930, as

amended, 19 U.S.C. 1677(36), imports from members of the World Trade

organization are subject to de minimis standards and negligible import

standards as set forth in the following list:

De Minimis=3%; Negligible Imports=4%; Section 771(36)(B):

Angola

Bangladesh

Benin

Bolivia

Burkina Faso

Burma

Burundi

Cameroon

Cent. Afr. Rep.

Chad

Congo

Cote d'Ivoire

Dem. Rep. of the Congo

Djibouti

Egypt

Gambia

Ghana

Guinea

Guinea-Bissau

Guyana

Haiti

India

Indonesia

Kenya

Lesotho

Madagascar

Malawi

Maldives

Mali

Mauritania

Mozambique

Nicaragua

Niger

Nigeria

Pakistan

Rwanda

Senegal

Sierra Leone

Solomon Isl.

Sri Lanka

Tanzania

Togo

Uganda

Zambia

Zimbabwe

De Minimus=2%; Negligible Imports=4%; Section 771(36)(A):

Antigua & Barbuda

Argentina

Bahrain

Barbados

Belize

Botswana

Brazil

Chile

Colombia

Costa Rica

Dominica

Dominican Republic

Ecuador

El Salvador

Fiji

Gabon

Grenada

Guatemala

Honduras

Jamaica

Malaysia

Malta

Mauritius

Morocco

Namibia

Panama

Papua New Guinea

Paraguay

Peru

Philippines

South Africa

St. Kitts & Nevis

St. Lucia

St. Vincent & Grenadines

Slovenia

Suriname

Swaziland

Thailand

Tunisia

Trinidad & Tobago

Uruguay

Venezuela

De Minimis=1%; Negligible Imports=3%:

Australia

Austria

Belgium

Brunei

Canada

Cyprus

Denmark

European Communities

Finland

France

Germany

Greece

Hong Kong

Iceland

Ireland

Israel

Italy

Japan

Korea

Kuwait

Liechtenstein

Luxembourg

Macao

Mexico

Netherlands

New Zealand

Norway

Portugal

Qatar

Singapore

Spain

Sweden

Switzerland

Turkey

United Arab Emirates

United Kingdom

[FR Doc. 98-14737 Filed 5-29-98; 2:48 pm]

BILLING CODE 3190-01-M