Preliminary Results of Full Sunset Review: Industrial Phosphoric Acid From Israel

DEPARTMENT OF COMMERCE

International Trade Administration

[C-508-605]

Preliminary Results of Full Sunset Review: Industrial Phosphoric

Acid From Israel

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of full sunset review: industrial

phosphoric acid from Israel.

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SUMMARY: On March 1, 1999, the Department of Commerce (``the

Department'') initiated a sunset review of the countervailing duty

order on industrial phosphoric acid from Israel (64 FR 9970) pursuant

to section 751(c) of the Tariff Act of 1930, as amended (``the Act'').

On the basis of the notices of intent to participate and adequate

substantive responses filed on behalf of the domestic and respondent

interested parties, the Department is conducting a full (240 day)

review. In conducting this sunset review, the Department preliminarily

finds that termination of the countervailing duty order would be likely

to lead to continuation or recurrence of a countervailable subsidy. The

net countervailable subsidy and the nature of the subsidy are

identified in the ``Preliminary Results of Review'' section of this

notice.

FOR FURTHER INFORMATION CONTACT: Kathryn B. McCormick or Melissa G.

Skinner, Office of Policy for Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street &

Constitution Avenue, NW, Washington, D.C. 20230; telephone: (202) 482-

1698 or (202) 482-1560, respectively.

Effective Date: September 27, 1999.

Statute and Regulations

This review was conducted pursuant to sections 751(c) and 752 of

the Act. The Department's procedures for the conduct of sunset reviews

are set forth in Procedures for Conducting Five-year (``Sunset'')

Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516

(March 20, 1998) (``Sunset Regulations'') and 19 CFR Part 351(1998) in

general. Guidance on methodological or analytical issues relevant to

the Department's conduct of sunset reviews is set forth in the

Department's Policy Bulletin 98:3--Policies Regarding the Conduct of

Five-year (``Sunset'') Reviews of Antidumping and Countervailing Duty

Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset Policy

Bulletin'').

Scope

This order covers shipments of Israeli industrial phosphoric acid

(``IPA''). The subject merchandise was originally classifiable under

item number 416.30 of the Tariff Schedules of the United States

Annotated (``TSUSA''); currently, it is classifiable under item number

2809.20.00 of the Harmonized Tariff Schedule of the United States

(``HTSUS''). Although the TSUSA and HTSUS item numbers are provided for

convenience and customs purposes, the written description remains

dispositive.

This review covers all producers and exporters of industrial

phosphoric acid from Israel.

History of the Order

The Department published its final affirmative countervailing duty

determination on industrial phosphoric acid from Israel in the Federal

Register on July 7, 1987 (52 FR 25447) and issued the countervailing

duty order on August 19, 1987 (52 FR 31057). The Department found the

following programs to confer subsidies:

(1) Encouragement of Capital Investments Law Grants

(2) Long-Term Industrial Development Loans

(3) Bank of Israel Export Production, Shipment, and Import-for Export

Fund Loans

(4) Exchange Rate Risk Insurance Scheme

(5) Encouragement of Research and Development Law Grants

The Department determined the estimated net subsidy to be 19.46

percent for Haifa Chemicals Ltd.(``Haifa'') and 6.02 percent for all

other producers and exporters of IPA from Israel. In this case, the

Government of Israel (``GOI'') provided to eligible exporters

preferential short-term financing in local and foreign currencies

through the Bank of Israel Export Production, Shipment, and Import-for

Export Fund Loans programs. However, the Department verified that,

since 1985, the loans under these funds were provided only in foreign

currencies and were no longer at preferential terms. In cases in which

program-wide changes have occurred prior to a preliminary determination

and where the changes are verifiable, the Department's practice is to

adjust the duty deposit rate to correspond to the eventual duty

liability. Accordingly, the Department did not include the BOI export

loan benefits in the duty deposit rate, for which the final results

were 15.11 for Haifa and 5.36 percent for all others. 1

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\1\ See Final Affirmative Countervailing Duty Determination:

Industrial Phosphoric Acid from Israel, 52 FR 25447, 25449 (July 7,

1987).

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The Department has conducted the following administrative reviews

since the issuance of the order:

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Net subsidy

Period of review Citation (percent)

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(1) 5 Feb 87-31 Dec 87............. 56 FR 2751............ 5.96

(2) 1 Jan 88-31 Dec 88............. 56 FR 50854........... 9.18

(3) 1 Jan 89-31 Dec 89............. 56 FR 50854........... 11.26

(4) 1 Jan 90-31 Dec 90............. 57 FR 39391........... 12.11

(5) 1 Jan 91-31 Dec 91............. 59 FR 5176............ 6.98

(6) 1 Jan 92-31 Dec 92............. 61 FR 28841........... 3.84

(7) 1 Jan 93-31 Dec 93............. 61 FR 28841........... 5.49

(8) 1 Jan 94-31 Dec 94............. 61 FR 53351........... 8.06

[[Page 51955]]

(7) 1 Jan 95-31 Dec 95............. 63 FR 20612........... 8.77

(9) 1 Jan 96-31 Dec 96............. 64 FR 2879............ 5.89

(10) 1 Jan 97-31 Dec 97............ 64 FR 49460........... 5.65

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In the first administrative review (56 FR 2751), the Department

determined that Israeli producers of IPA benefitted from the following

countervailable subsidy programs: (1) Encouragement of Capital

Investments Law (``ECIL'') Grants; (2) Long-Term Industrial Development

(``LTID'') Loans; (3) the Exchange Rate Risk Insurance Scheme

(``ERIS''); and (4) Encouragement of Research and Development Law

(``EIRD'') Grants. The Department continued to find net subsidies from

ECIL and ERIS Grants, and LTID Loans in the administrative reviews from

1988 through 1991.2

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\1\ (Haifa: 19.46).

\2\ See Industrial Phosphoric Acid from Israel; Final Results of

Countervailing Duty Administrative Reviews, 56 FR 50854 (October 9,

1991); Industrial Phosphoric Acid from Israel; Final Results of

Countervailing Duty Administrative Reviews, 57 FR 39391(August 31,

1992); Industrial Phosphoric Acid from Israel; Final Results of

Countervailing Duty Administrative Reviews, 59 FR 5176 (February 3,

1994).

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In the 1992 period of review, the Department found benefits flowing

from (1) ECIL Grants, (2) LTID Loans, and (3) EIRD Grants; in 1993, the

programs (1) ECIL Grants, (2) LTID Loans, and (3) ERIS, were found to

confer subsidies (61 FR 28841).

In the administrative reviews of periods after 1993,3

the Department found no further benefits from the ERIS; however,

continued net subsidies were found under the ECIL Grants program and

the resumption of net subsidies under the EIRD program. In 1999, the

Department completed its administrative review (64 FR 2879) for the

1996 period of review, and again, net subsidies were found under the

ECIL and EIRD Grants programs. Additionally, the Department found net

subsidies from two new programs: the Infrastructure and Environmental

Grants programs (id.).

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\3\ See Industrial Phosphoric Acid from Israel; Final Results of

Countervailing Duty Administrative Reviews, 61 FR 53351 (October 11,

1996); Industrial Phosphoric Acid from Israel; Amended Final Results

of Countervailing Duty Administrative Reviews, 63 FR 20612 (April

27, 1998); Industrial Phosphoric Acid from Israel; Final Results of

Countervailing Duty Administrative Reviews, 64 FR 2879 (January 19,

1999); Industrial Phosphoric Acid from Israel; Final Results and

Partial Recission of Countervailing Duty Administrative Review, 64

49460 (September 13, 1999).

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Background

On March 1, 1999, the Department published a notice of initiation

of a sunset review of the countervailing duty order on IPA from Israel

(64 FR 9970), pursuant to section 751(c) of the Act. The Department

received a Notice of Intent to Participate on the behalf of domestic

producers Albright and Wilson Americas Inc. (``A&W''), FMC Corporation

(``FMC''), and Solutia Inc. (``Solutia'') (hereinafter, collectively

``domestic interested parties'') and respondent interested parties, the

Government of Israel (``GOI'') and Rotem Amfert Negeve Ltd.

(``Rotem''), an exporter of industrial phosphoric acid, on March 15,

1999, within the deadline specified in section 351.218(d)(1)(i) of the

Sunset Regulations. The domestic interested parties claimed interested

party status under sections 771(9)(C) of the Act, as domestic producers

of IPA. The GOI is an interested party pursuant to section 771(9)(B) of

the Act as the government of a country in which IPA is produced and

exported; Rotem is an interested party pursuant to section 771(9)(A) of

the Act as a foreign producer and exporter of subject merchandise.

The GOI has participated in every segment of the proceeding before

the Department related to the subject merchandise. Rotem, the 1992

successor to Negev Phosphates Ltd. (``Negev''),4 the initial

respondent interested party, has participated in every administrative

review after 1990.

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\4\ See Industrial Phosphoric Acid from Israel; Final Results of

Antidumping Changed Circumstances Review, 59 FR 6944 (February

14,1994).

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Of the domestic interested parties, FMC and Monsanto Company

(``Monsanto'') were the petitioners in the original countervailing duty

investigation,5 and they requested and participated in each

administrative review through 1994. A&W joined with FMC in requesting

and participating in each review thereafter.

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\5\ In the United States, there is a newly created company,

Solutia, that is now responsible for the IPA business previously

operated by Monsanto (see March 31, 1999 Substantive Response of

domestic interested parties at 3).

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We received adequate substantive responses from the domestic and

respondent interested parties on March 31, 1999, within the 30-day

deadline specified in the Sunset Regulations under section

351.218(d)(3)(i). As a result, pursuant to 19 CFR 351.218(e)(2), the

Department determined to conduct a full review.

In accordance with 751(c)(5)(C)(v) of the Act, the Department may

treat a review as extraordinarily complicated if it is a review of a

transition order (i.e., an order in effect on January 1, 1995).

Therefore, on June 21, 1999, the Department determined that the sunset

review of the countervailing duty order on IPA from Israel is

extraordinarily complicated, and extended the time limit for completion

of the final results of this review until not later than January 25,

2000, in accordance with section 751(c)(5)(B) of the Act.6

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\6\ See Industrial Phosphoric Acid from Israel (C-508-605) and

Industrial Phosphoric Acid from Belgium (A-423-602): Extension of

Time Limit for Final Results of Five-Year Reviews, 64 FR 34189 (June

25, 1999).

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Determination

In accordance with section 751(c)(1) of the Act, the Department is

conducting this review to determine whether termination of the

countervailing duty order would be likely to lead to continuation or

recurrence of a countervailable subsidy. Section 752(b) of the Act

provides that, in making this determination, the Department shall

consider the net countervailable subsidy determined in the

investigation and subsequent reviews, and whether any change in the

program which gave rise to the net countervailable subsidy has occurred

and is likely to affect that net countervailable subsidy. Pursuant to

section 752(b)(3) of the Act, the Department shall provide to the

International Trade Commission (``the Commission'') the net

countervailable subsidy likely to prevail if the order is revoked. In

addition, consistent with section 752(a)(6), the Department shall

provide to the Commission information concerning the nature of the

subsidy and whether it is a subsidy described in Article 3 or Article

6.1 of the 1994 WTO Agreement on Subsidies and Countervailing Measures

(``Subsidies Agreement'').

The Department's preliminary determinations concerning continuation

or recurrence of a countervailable subsidy, the net countervailable

subsidy likely to prevail if the order is revoked,

[[Page 51956]]

and nature of the subsidy are discussed below. In addition, parties'

comments with respect to each of these issues are addressed within the

respective sections.

Continuation or Recurrence of a Countervailable Subsidy

Drawing on the guidance provided in the legislative history

accompanying the Uruguay Round Agreements Act (``URAA''), specifically

the SAA, H.R. Doc. No. 103-316, vol. 1 (1994), the House Report, H.R.

Rep. No. 103-826, pt. 1 (1994), and the Senate Report, S. Rep. No. 103-

412 (1994), the Department issued its Sunset Policy Bulletin providing

guidance on methodological and analytical issues, including the basis

for likelihood determinations. The Department clarified that

determinations of likelihood will be made on an order-wide basis (see

section III.A.2 of the Sunset Policy Bulletin). Additionally, the

Department normally will determine that revocation of a countervailing

duty order is likely to lead to continuation or recurrence of a

countervailable subsidy where (a) a subsidy program continues, (b) a

subsidy program has been only temporarily suspended, or (c) a subsidy

program has been only partially terminated (see section III.A.3.a of

the Sunset Policy Bulletin). Exceptions to this policy are provided

where a company has a long record of not using a program (see section

III.A.3.b of the Sunset Policy Bulletin).

Interested Party Comments

The domestic interested parties assert that the history of the

order and the nature and extent of the subsidies show that revocation

of the countervailing duty order on IPA from Israel will result in the

continuation or recurrence of a countervailable subsidy. They assert

that, in the last ten years following the issuance of the order, Rotem

has continued to receive significant benefits under a variety of

countervailable subsidy programs (see March 31, 1999 Substantive

Response of domestic interested parties at 12). As noted earlier, in

the 1996 administrative review, the Infrastructure and Environmental

Grant programs were two new programs found to confer subsidies on

Israel producers of IPA.

The GOI and Rotem (Negev) do not argue that there is no likelihood

that revocation of the order will lead to continuation of a

countervailable subsidy. Rather, they argue that revocation of the

countervailing duty order will have no effect on the U.S. producers of

industrial phosphoric acid (see March 31, 1999 Substantive Response of

respondent interested parties at 3-5).

In their rebuttal comments the domestic interested parties argue

that the respondents failed to address the question of likelihood and,

therefore, the Department should conduct an expedited review on the

basis of facts available and find that revocation of the countervailing

duty order would result in continuation of a countervailable

subsidy.7

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\7\ See April 8, 1999 Industrial Phosphoric Acid from Israel;

Comments Submitted in Rebuttal to the Substantive Responses of the

Government of Israel and Rotem Amfert Negev Ltd. at 2.

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Department's Determination

Although the Department found that the Exchange Rate Risk Insurance

Scheme was terminated and provides no current benefits,8 and

that the Long-Term Industrial Development Loans Program was not used

during the 1996 review period (64 FR 2879 (January 19, 1999)), the

Department did find evidence of programs that continued to confer

countervailable subsidies on Israeli producers of IPA. The programs

include the Encouragement of Capital Investments Law and the

Encouragement of Industrial Research and Development Grants. In

addition, the Department found new programs determined to confer

subsidies: the Infrastructure Grant Program and the Environmental Grant

Program. Therefore, it is reasonable to assume that these programs

continue to exist and are utilized. Pursuant to the SAA at 888, the

Department concludes that continuation of these programs are highly

probative of the likelihood of continuation or recurrence of

countervailable subsidies.9

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\8\ See Industrial Phosphoric Acid from Israel; Final Results of

Countervailing Duty Administrative Reviews, 61 FR 28841, 28844 (June

6, 1996).

\9\ See Industrial Phosphoric Acid from Israel; Final Results of

Countervailing Administrative Reviews, 64 FR 2879, 2881 (January 19,

1999).

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Net Countervailable Subsidy

In the Sunset Policy Bulletin, the Department stated that,

consistent with the SAA and House Report, the Department normally will

select a rate from the investigation as the net countervailable subsidy

likely to prevail if the order is revoked, because that is the only

calculated rate that reflects the behavior of exporters and foreign

governments without the discipline of an order or suspension agreement

in place. The Department noted that this rate may not be the most

appropriate rate if, for example, the rate was derived from subsidy

programs which were found in subsequent reviews to be terminated, there

has been a program-wide change, or the rate ignores a program found to

be countervailable in a subsequent administrative review.10

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\10\ See section III.B.3 of the Sunset Policy Bulletin.

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Interested Party Comments

The domestic interested parties assert that the Department should

use the net subsidy rates determined in the original investigation as

the rates likely to prevail if the countervailing duty order were

revoked. As noted above, the net subsidy rate determined in the

original investigation was 19.46 percent for Haifa, and 6.02 percent

for all other imports of IPA from Israel. The domestic interested

parties argue that the original duty deposit rate of 15.11 percent is

appropriate for Haifa in light of its lack of cooperation and the

Department's authority to use an adverse inference (see March 31

Substantive Response of domestic interested parties at 19). Further,

the domestic interested parties suggest that the Department could use

for Rotem the 12.11 percent rate from the 1990 review, since it

indicates that subsidies have been and can be made available to Israeli

producers (id.). However, the domestic interested parties argue that

the Department should not adopt for Rotem any rate lower than 5.89

percent, the rate determined by the Department in the administrative

review of the 1996 period (id.).

The respondent interested parties assert that the countervailing

duty rate that is likely to prevail is the current rate of 5.89 percent

or less. They note that, in the last several reviews, the Department

has determined that (1) Rotem has been the only exporter of the subject

merchandise to the United States and that (2) there is only one subsidy

program providing benefits to Rotem's production of the subject

merchandise: the Encouragement of Capital Investment Law (ECIL)

program, under which Rotem received infrastructure grants, some of

which have been found to benefit subject merchandise (see March 31,

1999 Substantive Response of respondent interested parties at 7). Of

the 5.89 percent subsidy found in the last review, 5.58 percent of that

amount was from ECIL grants (id.).

The respondent interested parties argue that ECIL grants are

domestic subsidies not contingent upon exports or exporting, and

therefore, do not provide an incentive to export (id.). Further, since

they are non-recurring grants, under the Department's grant

methodology, grants given in earlier years provide diminishing benefits

throughout the benefit stream, and

[[Page 51957]]

benefits afforded by these grants cannot increase if the countervailing

duty order is eliminated. Moreover, the respondent interested parties

argue that the subsidy from the grants has further diminished as a

result of a series of privatizations of Rotem (id.).

Respondent interested parties assert that higher subsidy findings

for Rotem's IPA were the result of the Department's finding that

another program, the Exchange Rate Risk Insurance Program provided

substantial export subsidies to Rotem. They argue that, since the

latter program has been terminated, it should not be considered in the

Department's determination of the countervailing duty rate that is

likely to prevail (see April 8, 1999 Substantive Response of respondent

interested parties). With respect to the Long-term Industrial

Development Loans, the respondent interested parties note that this

program provides no residual benefits (id. at 9). Further, the

respondent interested parties argue, the Encouragement of Research and

Development Grants, and Infrastructure and Environmental Grants were

found to provide very minimal subsidies (id.).

The respondent interested parties assert that if the Department

uses the rate from the original determination, the starting point

should be the deposit rate of 5.36 percent adjusted for terminated

programs. Likewise, with respect to Haifa Chemicals, Ltd., the

respondent interested parties argue that the original deposit rate of

15.11 percent for Haifa should be adjusted for terminated programs (id.

at 11).

In their rebuttal comments, the domestic interested parties

disagree with the respondent interested parties' argument that

Department should adjust the rates from the original investigation

downward by subtracting the amount of the subsidy arising from the now-

terminated Exchange Rate Risk Program.11 The domestic

interested parties argue that, if the Department were to exercise its

discretion to adjust the net original net subsidy rates, then, in the

interest of accuracy, the Department would also have to adjust for

every change to every program found to provide a subsidy in the

original investigation. Moreover, if the Department determines an

adjusted rate, then actions, such as grant and loan deferrals, could be

taken temporarily to lower that rate in order to have an impact on a

scheduled or pending review.12

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\11\ See April 8, 1999 Industrial Phosphoric Acid from Israel;

Comments Submitted in Rebuttal to the Substantive Responses of the

Government of Israel and Rotem Amfert Negev Ltd at 5.

\12\ Id. at 6.

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In their rebuttal comments, the respondent interested parties

reiterate that the Department should use the original deposit rate as

the starting point for determining the rate likely to prevail. They

argue that, in determining the rate for Haifa, the Department should

subtract from the original rate of 15.11 percent 8.87 percent

represented by the Exchange Rate Risk Insurance Scheme, a program that

has been terminated and provides no current benefits.13

Thus, the deposit rate should be 6.24 percent. Further, the respondent

interested parties argue that, on account of the termination of the

Exchange Rate Risk Insurance Scheme, the Department should also adjust

Rotem's original deposit rate. As such, 4.78 percent representing

ERIS's benefits should be deducted from the original margin of 5.36 for

all others, with a result of 0.58. However, respondent interested

parties acknowledge that this rate is untenable in light of the most

administrative review for the 1996 period, and that the Department

should provide to the Commission the rate of 5.89, the rate from this

review.14

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\13\ See April 8, 1999 Sunset Review of Countervailing Duty

Order on Industrial Phosphoric Acid from Israel; Comments on U.S.

Producers' Substantive Response at 4.

\14\ Id.

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Department's Determination

Consistent with the SAA and House Report, the Department normally

will select a rate from the investigation as the net countervailable

subsidy likely to prevail if the order is revoked, because that is the

only calculated rate that reflects the behavior of exporters and

foreign governments without the discipline of an order or suspension

agreement in place. In some instances, however, the rate from the

original investigation may not be the most appropriate rate if, for

example, the rate was derived from subsidy programs which were found in

subsequent reviews to be terminated, there has been a program-wide

change, or the rate ignores a program found to be countervailable in a

subsequent administrative review.15

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\15\ See section III.B.3 of the Sunset Policy Bulletin.

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As noted above, since the issuance of the order, the Department has

determined that the Exchange Rate Risk Insurance Scheme was terminated

(61 FR 28841, 28844 (June 6, 1996)). Furthermore, in the 1996 period of

review, the Department determined that two new programs, the

Infrastructure Grant Program and the Environmental Grant Program,

confer countervailable subsidies on Rotem.16 Therefore,

consistent with section III.B.3 of the Sunset Policy Bulletin, the

Department preliminarily determines that the rate from the original

investigation is not probative of the net countervailable subsidy rate

likely to prevail if the order were revoked.

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\16\ See Industrial Phosphoric Acid From Israel: Final Results

of Countervailing Duty Administrative Review, 64 FR 2879 (January

19, 1999).

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Sections III.B.3.a and III.B.3.c of the Sunset Policy Bulletin

provide that the Department may adjust the net countervailable subsidy

where the Department has conducted an administrative review of the

order and found that a program was terminated with no residual benefits

and no likelihood of reinstatement, or where the Department found a new

countervailable program. Additionally, section III.B.3.d of the Sunset

Policy Bulletin provides that where the Department has conducted an

administrative review of an order and determined to increase the net

countervailable subsidy rate for any reason, the Department may adjust

the net countervailable subsidy rate determined in the original

investigation to reflect the increase of the rate.

The Department agrees with respondent interested parties that the

deposit rates from the original investigation should be adjusted to

reflect that, after 1993, the Exchange Rate Risk Insurance Scheme was

terminated without residual benefits after 1993. Therefore, we are

subtracting the rate from the investigation for this program.

Additionally, the rates should be adjusted to reflect the

identification of two new countervailable programs: the Infrastructure

Grant Program and the and the Environmental Grant Program. Therefore,

we are adding the rates from these programs as first identified in the

1996 review (64 FR 2879).

Finally, we agree with the interested parties that the

countervailable subsidy rate from the Encouragement of Capital

Investments Law Grants program has significantly increased since the

original investigation. Over the life of this order, there has been a

consistent pattern of increased usage of the grants provided under this

program. Because of the continued increase in usage of this program,

despite the existence of the order, we preliminarily determine that the

rate for this program from the original investigation should be

adjusted to reflect this increased usage of the program. Therefore, we

are adding to the original investigation rate the rate from this

program, as found in

[[Page 51958]]

the 1996 review (id.). As a result, the Department preliminarily

determines that the net countervailable subsidies that would be likely

to prevail in the event of revocation of the order are 10.93 percent

for Haifa and 5.97 percent for all others, including Rotem (see

September 21, 1999, Memorandum to File Regarding Calculation of the Net

Countervailable Subsidy).

Nature of the Subsidy

In the Sunset Policy Bulletin, the Department states that,

consistent with section 752(a)(6) of the Act, the Department will

provide to the Commission information concerning the nature of the

subsidy, and whether the subsidy is a subsidy described in Article 3 or

Article 6.1 of the Subsidies Agreement. The domestic and respondent

interested parties did not address this issue in their substantive

responses of March 31, 1999.

Because the receipt of benefit under the Bank of Israel Export

Loans program is contingent on exports, this program falls within the

definition of an export subsidy under Article 3.1(a) of the Subsidies

Agreement. The remaining programs, although not falling within the

definition of an export subsidy under Article 3.1(a) of the Subsidies

Agreement, could be found to be inconsistent with Article 6 if the net

countervailable subsidy exceeds five percent, as measured in accordance

with Annex IV of the Subsidies Agreement. The Department, however, has

no information with which to make such a calculation, nor do we believe

it appropriate to attempt such a calculation in the course of a sunset

review. Rather, we are providing the Commission with the following

program descriptions.

The Encouragement of Capital Investments Law (ECIL) Grants. In the

1987 original investigation, the Department found that Negev

Phosphates, Ltd. (``Negev'') and Haifa Chemicals, Ltd. received

countervailable subsidies from this program, the benefits of which

depend on the geographic location of the eligible enterprises. ECIL

Grants were found to confer subsidies in each subsequent administrative

review.

Long-Term Industrial Development (``LTID'') Loans. Funded by the

GOI, this program enabled approved enterprises in a number of diverse

industries to obtain LTID Loans. Like ECIL grants, these loans are

project-specific and the interest rates charged on these loans depend

on the Development Zone location of the borrower. The Department found

LTID Loans to confer subsidies in the administrative reviews for the

periods 1988 through 1993.

Exchange Rate Risk Insurance Scheme (``ERIS''). Operated by the

Israeli Foreign Trade Risk Insurance Corporation (``IFTRIC''), ERIS

insures exporters against losses which result when the rate of

inflation exceeds the rate of devaluation and the new Israeli shekel

value of an exporter's foreign currency receivable does not rise enough

to cover increases in local costs. The ERIS is optional and open to any

exporter willing to pay a premium to IFTRIC. The Department determined

that subsidies from this program were terminated in 1993.17

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\17\ See Industrial Phosphoric Acid from Israel; Final Results

of Countervailing Duty Administrative Reviews, 61 FR 28841, (June 6,

1996).

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Encouragement of Research and Development Law (``EIRD'') Grants.

Israeli manufacturers, producers or exporters of IPA may benefit from

research and development grants under this program. With the exception

of the 1988, 1989 and 1991 administrative reviews, the Department found

the EIRD Law Grants to be countervailable in each yearly review since

the issuance of the order.

Infrastructure Grant Program. In the administrative review of the

1996 period, the Department found that this program enables the GOI to

establish new industrial areas by partially reimbursing companies for

their costs of developing the infrastructure in certain geographical

zones.

Environmental Grant Program. Additionally, in the 1996

administrative review, the Department found that the GOI administers

this countervailable subsidy program to provide for companies financial

assistance for the adaptation of existing industrial facilities to new

environmental requirements.

Preliminary Results of Review

As a result of this review, the Department finds that revocation of

the countervailing duty order would be likely to lead to continuation

or recurrence of a countervailable subsidy at the rates listed below:

------------------------------------------------------------------------

Margin

Manufacturer/exporter (percent)

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Haifa, Ltd.................................................. 10.93

All Others.................................................. 5.97

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This five-year (``sunset'') review and notice are in accordance

with sections 751(c), 752, and 777(i)(1) of the Act.

Dated: September 21, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-25073 Filed 9-24-99; 8:45 am]

BILLING CODE 3510-DS-P