Venezuela - General Subsidies Programs

Venezuela

SUBSIDY PROGRAMS: GENERAL
Last Reviewed December 31, 2000

Effective February 15, 2000, Import Administration began publishing "Decision Memos" to reduce the size of antidumping and countervailing duty Federal Register notices. In cases in which a decision memo was published, you will find a link to the memo listed below.

In addition, in the following programs, in instances below in which a proceeding was a Sunset Review, you will see the letters SR after the product name.

COUNTERVAILABLE SUBSIDY PROGRAMS

The subsidy programs listed below have been investigated by the Department and have been found to be "countervailable" in the cases listed and during the periods reviewed based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed below the subsidy program title for a full explanation of the Department's analysis in those cases.

Export Bond Program

Aluminum Redraw Rod (1990) 57 FR 22460 (5/28/92-prelim); 57 FR 41918 (9/14/92-final)
Aluminum Redraw Rod (1989) 56 FR 24173 (5/29/91-prelim); 56 FR 47458 (9/19/91-final)
Aluminum Redraw Rod (1988) 56 FR 14232 (1/8/91-prelim); 56 FR 14232 (4/8/91-final)
Aluminum Redraw Rod (1986) 52 FR 38115 (10/14/87-prelim); 53 FR 24766 (6/30/88-final)
Aluminum Sulfate (1988) 54 FR 27196 (6/28/89-prelim); 54 FR 43442 (10/25/89-final) not used
Ferrosilicon (1991) 57 FR 38483 (8/25/92-prelim); 58 FR 27540 (5/10/93-final)
Gray Portland Cement and Clinker (SR) (Expedited Review-no prelim); 65 FR 11554 (3/3/00-final); Final Decision Memo
Gray Portland Cement and Clinker (1990) 56 FR 41523 (8/21/91-prelim); Investigation Suspended 57 FR 9242 (3/17/92)
Non-Alloy Steel Pipe (1991) 57 FR 24471 (6/9/92-prelim); 57 FR 42965 (9/17/92-final)

The Fund for Financing Exports (FINEXPO) was established in 1973 to promote the export of non-traditional goods and services of Venezuelan origin. The export bond program is administered by FINEXPO. Under this program, exporters are remunerated for their exports by the Government of Venezuela in the form of export bonds which may be used to pay taxes or be sold for cash. Because this program is limited to exporters and does not operate to rebate any indirect taxes, this program confers an export subsidy.

Export Certificates for Credit Against Income Taxes

Carbon Steel Products (1984) 50 FR 11227 (3/20/85-prelim); Investigation Terminated 50 FR 29465 (7/19/85)
Steel Line Pipe (1984) 50 FR 46801 (11/13/85-prelim); Investigation Terminated 50 FR 48827 (11/17/85)
Steel Wire Rod (1984) 50 FR 28234 (7/11/85-prelim); Investigation Terminated 50 FR 32465 (8/12/85)

Under this program, a certain percentage of the value of an export shipment is paid by the government. Because this program is limited to exporters and does not operate to rebate any indirect taxes, we determined that this program confers an export subsidy.

Financing Company of Venezuela Loans (FIVCA)

Aluminum Redraw Rod (1986) 52 FR 38116 (10/14/87-prelim); 53 FR 24768 (6/30/88-final)
Aluminum Sulfate (1988) 54 FR 27196 (6/28/89-prelim); 54 FR 43442 (10/25/89-final) not used
Gray Portland Cement and Clinker (1990) 56 FR 41525 (8/21/91-prelim); Investigation Suspended 57 FR 9242 (3/17/92) not used
Non-Alloy Steel Pipe (1991) 57 FR 24471 (6/9/92-prelim); 57 FR 42966 (9/17/92-final) not used
Steel Line Pipe (1984) 50 FR 46801 (11/13/85-prelim); Investigation Terminated 50 FR 48827 (11/17/85)

FIVCA was established in 1976 as a financing subsidiary of the Industrial Bank of Venezuela. Its objective is to provide long-term financing to the Venezuelan industrial sector according to economic policies established by the Government of Venezuela.

Government Loans Provided by the Industrial Bank of Venezuela (BIV)

Aluminum Redraw Rod (1988) 56 FR 679 (1/8/91-prelim); 56 FR 14232 (4/8/91-final)
Aluminum Redraw Rod (1986) 52 FR 38116 (10/14/87-prelim); 53 FR 24769 (6/30/88-final) not used
Aluminum Sulfate (1988) 54 FR 27196 (6/28/89-prelim); 54 FR 43442 (10/25/89-final) not used
Gray Portland Cement and Clinker (1990) 56 FR 41524 (8/21/91-prelim); Investigation Suspended 57 FR 9242 (3/17/92)
Steel Line Pipe (1984) 50 FR 46801 (11/13/85-prelim); Investigation Terminated 50 FR 48827 (11/17/85)

The Banco Industrial de Venezuela (BIV) offers both short- and long-term loans and loan guarantees to a broad array of industries under ordinary commercial terms and conditions.

Government Loans Provided by the Ministry of Finance (MOF)

Aluminum Redraw Rod (1986) 52 FR 38116 (10/14/87-prelim); 53 FR 24769 (6/30/88-final) not used
Aluminum Sulfate (1988) 54 FR 27196 (6/28/89-prelim); 54 FR 43442 (10/25/89-final) not used
Carbon Steel Products (1984) 50 FR 11227 (3/20/85-prelim); Investigation Terminated 50 FR 29465 (7/19/85)
Steel Wire Rod (1984) 50 FR 28234 (7/11/85-prelim); Investigation Terminated 50 FR 32465 (8/12/85)

No program description available.

Government Loans Provided by the Venezuelan Investment Fund (FIV)

No program description available.

Government Loans Through the Industrial Credit Fund (FONCREI)

Aluminum Redraw Rod (1986) 52 FR 38116 (10/14/87-prelim); 53 FR 24768 (6/30/88-final)
Gray Portland Cement and Clinker (1990) 56 FR 41524 (8/21/91-prelim); Investigation Suspended 57 FR 9242 (3/17/92)
Steel Line Pipe (1984) 50 FR 46801 (11/13/85-prelim); Investigation Terminated 50 FR 48827 (11/17/85)

FONCREI was established to make long-term credits available to the Venezuelan industrial sector. FONCREI does not loan to applicant companies directly; it does so through commercial banks and financing societies. The fund extends credit to industrial businesses of all types to finance the installation, expansion and relocation of equipment and manufacturing facilities. FONCREI also purchases at a discount credit documents issued in connection with the purchase and assembly of machinery and equipment.

Preferential Export Financing

Aluminum Redraw Rod (1986) 52 FR 38116 (10/14/87-prelim); 53 FR 24768 (6/30/88-final) not used
Aluminum Sulfate (1988) 54 FR 27195 (6/28/89-prelim); 54 FR 43442 (10/25/89-final) not used
Carbon Steel Products (1984) 50 FR 11227 (3/20/85-prelim); Investigation Terminated 50 FR 29465 (7/19/85) not used
Gray Portland Cement and Clinker (1990) 56 FR 41524 (8/21/91-prelim); Investigation Suspended 57 FR 9242 (3/17/92) not used
Non-Alloy Steel Pipe (1991) 57 FR 24471 (6/9/92-prelim); 57 FR 42966 (9/17/92-final) not used
Steel Line Pipe (1984) 50 FR 46801 (11/13/85-prelim); Investigation Terminated 50 FR 48827 (11/17/85)

The Export Financing Fund (FINEXPO) offers three different forms of financing to assist exporters. First, through a series of credit lines, importers in other countries may obtain financing for the purchase of goods in Venezuela. However, no credit lines may exist for the United States. Second, Venezuelan exporters may qualify for financing for working capital, technical services and other expenses. Third, importers may obtain financing from FINEXPO if they provide appropriate collateral.

Preferential Tax Incentives Under Decrees 1775 and 1776

Certain tax benefits are available to Venezuelan manufacturers under Decrees 1775 and 1776. Decree 1775 established tax credits for manufacturers of finished or intermediate goods based on their level of domestic value-added and was replaced by Decree 2707 on January 18, 1989.

Short-Term FINEXPO Financing

Aluminum Redraw Rod (1990) 57 FR 22460 (5/28/92-prelim); 57 FR 41919 (9/14/92-final) not used
Aluminum Redraw Rod (1988) 56 FR 679 (1/8/91-prelim); 56 FR 14232 (4/8/91-final)
Aluminum Redraw Rod (1986) 52 FR 38113 (10/14/87-prelim); 53 FR 24766 (6/30/88-final)
Aluminum Sulfate (1988) 54 FR 27196 (6/28/89-prelim); 54 FR 43442 (10/25/89-final) not used
Ferrosilicon (1991) 57 FR 38484 (8/25/92-prelim); 58 FR 27540 (5/10/93-final) not used
Gray Portland Cement and Clinker (1990) 56 FR 41524 (8/21/91-prelim); Investigation Suspended 57 FR 9242 (3/17/92) not used
Non-Alloy Steel Pipe (1991) 57 FR 24471 (6/9/92-prelim); 57 FR 42966 (9/17/92-final) not used
Phthalic Anhydride (1992)(1993) 59 FR 3843 (1/27/94-prelim); 59 FR (8/10/94-final) not used
Steel Line Pipe (1984) 50 FR 46801 (11/13/85-prelim); Investigation Terminated 50 FR 48827 (11/17/85)

This program, FINEXPO, in conjunction with Venezuelan commercial banks, provides short-term loans to Venezuelan exporters. Export receivables, such as drafts under letters of credit, are used as collateral. FINEXPO provides up to 60 percent of the loan principal for these loans at five percent interest to the participating commercial bank. The commercial bank provides the remaining loan principal amount and is required to charge the exporter an average of the FINEXPO rate and its own commercial rate.

SUBSIDY PROGRAMS FOUND TO BE NOT COUNTERVAILABLE

The subsidy programs listed below have been investigated by the Department and have been found to be "not countervailable" in the cases listed and during the periods reviewed based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed under the subsidy program title for a full explanation of the Department's analysis in each case where the subsidy program has been examined.

Government of Venezuela's Restructure of Debt

Ferrosilicon (1991) 57 FR 38484 (8/25/92-prelim); 58 FR 27539 (5/10/93-final)

After several devaluations of the Bolivar in the 1980s, several companies experienced difficulties in meeting their foreign financial obligations. The Government of Venezuela consolidated and restructured the foreign loans of all these companies. Because the action of the Venezuelan government is not specific to a group of industries, the program is not countervailable.

Granting of Foreign Currency at Preferential Rates for Imports Under the Multiple Exchange Rate System

Aluminum Redraw Rod (1986) 52 FR 38114 (10/14/87-prelim); 53 FR 24763 (6/30/88-final)

The Government of Venezuela instituted the multiple exchange rate system to establish greater control over Venezuela's foreign currency reserves. Since the amount of foreign exchange available in any given year for imports into Venezuela is limited, a system of allocating it among Venezuelan companies has been devised. Each year, a series of negotiations takes place between the Ministry of Finance and the Venezuelan Chamber of Commerce in which all Venezuelan industries are represented. As a result of these negotiations, companies receive a foreign exchange budget to purchase imports at the official controlled rate. Because the allocation of foreign currency at preferential rates for imports is not limited to a specific enterprise or industry, we determined that this is not countervailable.

Import Duty Reductions

Aluminum Redraw Rod (1986) 52 FR 38116 (10/14/87-prelim); 53 FR 24768 (6/30/88-final)
Carbon Steel Products (1984) 50 FR 11227 (3/20/85-prelim); Investigation Terminated 50 FR 29465 (7/19/85)
Steel Line Pipe (1984) 50 FR 46801 (11/13/85-prelim); Investigation Terminated 50 FR 48827 (11/17/85)

The Government of Venezuela's sole program allowing import duty reductions is provided by Title IV of the Venezuelan Organic Customs Law. Duty reductions under this law are provided to a diverse range of industries and, according to the government, are granted whenever national production or supply is inadequate to meet the demand of a particular item. Since import duty reductions are not limited to a specific enterprise or industry, and do not offer financing in terms inconsistent with commercial considerations, we find that this program does not provide a countervailable benefit.

Preferential Tax Incentives

Aluminum Redraw Rod (1990) 57 FR 22460 (5/28/92-prelim); 57 FR 41918 (9/14/92-final)
Aluminum Redraw Rod (1988) 56 FR 679 (1/8/91-prelim); 56 FR 14232 (4/8/91-final)
Aluminum Redraw Rod (1986) 52 FR 38113 (10/14/87-prelim); 53 FR 24763 (6/30/88-final) not used
Carbon Steel Products (1984) 50 FR 11227 (3/20/85-prelim); Investigation Terminated 50 FR 29465 (7/19/85) not used

Decree 2707 was established on January 18,1989, to provide tax credits in the amount of 10 percent of any new capital investment for all industries within agricultural and industrial sectors, as well as the transportation, hotel, and electricity industries. Because this tax program is not limited to specific enterprise or industry, it is not countervailable.

SUBSIDY PROGRAMS THAT HAVE BEEN TERMINATED

The subsidy programs listed below have been investigated by the Department and have been found to have been terminated based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed below the subsidy program title for a full explanation of the Department's analysis in each of these cases.

Basic Ingredient Export Program (PIBE)

Aluminum Redraw Rod (1988) 56 FR 679 (1/8/91-prelim); 56 FR 14232 (4/8/91-final)
Aluminum Redraw Rod (1986) 52 FR 38113 (10/14/87-prelim); 53 FR 24763 (6/30/88-final) not used

No program description available.

Corporacion Venezolana de Fomento (CVF)

Gray Portland Cement and Clinker (SR) (Expedited Review-no prelim); 65 FR 11554 (3/3/00-final); Final Decision Memo
Gray Portland Cement and Clinker (1990) 56 FR 41523 (8/21/91-prelim); Investigation Suspended 57 FR 9242 (3/17/92)

The CVF was created to improve the national industrial base, including the development and improvement of industrial and resource-based enterprises. It was authorized to provide loans and loan guarantees and to invest in shares or other obligations of private companies. CVF operated through a Board of Directors, coordinating with the Minister of Development and the President's Central Office for Coordinating Planning. CVF was dissolved in 1990 and its outstanding assets and liabilities were transferred to the Fondo de Inversiones de Venezuela (FIV).

Multiple Exchange Rates

Aluminum Redraw Rod (1988) 56 FR 679 (1/8/91-prelim); 56 FR 14232 (4/8/91-final)
Aluminum Redraw Rod (1986) 52 FR 38114 (10/14/87-prelim); 53 FR 24763 (6/30/88-final)
Aluminum Sulfate (1988) 54 FR 27195 (6/28/89-prelim); 54 FR 43440 (10/25/89-final) not used
Carbon Steel Products (1984) 50 FR 11227 (3/20/85-prelim); Investigation Terminated 50 FR 29465 (7/19/85)
Steel Line Pipe (1984) 50 FR 46801 (11/13/85-prelim); Investigation Terminated 50 FR 48827 (11/17/85)
Steel Wire Rod (1984) 50 FR 28234 (7/11/85-prelim); Investigation Terminated 50 FR 32465 (8/12/85)

The Central Bank of Venezuela (CBV) and the Ministry of Finance (MOF) signed an Exchange agreement on February 28, 1983, establishing a four-tiered exchange rate system. The first exchange rate was a fixed rate of 4.30 Bs. (Bolivares) to the dollar. This rate was applied to the sale of foreign exchange by the CBV for payments on foreign-sourced private and public debt, the importation of essential goods and services, and the sale of foreign exchange from the state-owned oil industries (PDVSA), iron ore (FERROMINERA), and the Venezuelan Investment Fund. The second rate was also a fixed rate at Bs 6.000 to the dollar. This rate was applied to the sale of foreign exchange obtained from the export of goods and services from state-owned enterprises other than PDVSA and FERROMINERA, and foreign exchange received from exports by the private sector when offered to the CBV. The two other rates that were established were a foreign exchange free market rate for all other exchange operations, and a "free but official" rate for the purchase and sale of dollars by the CBV in the free market. Because receipt of the higher exchange rate is contingent upon selling dollars earned from export sales, the multiple exchange rate confers an export subsidy.

Special Permissive Regulations for Exporters (REFS)

Steel Wire Rod (1996) 62 FR 41943 (8/4/97-prelim); Suspended 62 FR 54966 (10/22/97); 62 FR 55023 (10/22/97-final)

The Government of Venezuela terminated the REFS program with the enactment of Decree 1,292, which established the free convertibility of currency in Venezuela, and removed the exchange control regulations in the place. With the establishment of the free convertibility of currency, it has been determined that there are no residual benefits from the REFS program.

The REFS program was enacted September 9, 1994, to enable companies and individuals to access foreign currency more easily. Prior to 1994, companies and individuals were not allowed to maintain foreign currency accounts. Rather, they had to make specific requests for access to foreign currency from the Office of Technical Exchange Administration (OTAC, Officina Technica de Administration de Combina). In 1994, Venezuela endured a banking crisis. In response to this crisis, the Government of Venezuela halted all exchange of bolivars for foreign currency, leaving companies and individuals with virtually no access to foreign currency. During July and August 1994, companies in Venezuela were unable to service foreign currency-denominated debt. In response to this situation, the government initiated the REFS program. The REFS program allowed companies and individuals to use directly their foreign currency receipts. Under the program, a company could maintain a foreign account with which it could directly service its foreign currency debts or directly pay for imported inputs.

SUBSIDY PROGRAMS THAT HAVE NOT BEEN USED

When potential subsidy programs are investigated and found not to be used by the companies being investigated, the Department makes no determination as to their countervailability. If you click on the cases listed under the subsidy program title, you will be linked to each case in which the subsidy program was referenced.

Excessive Tariff Drawbacks

Non-Alloy Steel Pipe (1991) 57 FR 24471 (6/9/92-prelim); 57 FR 42966 (9/17/92-final) not used
Phthalic Anhydride (1992/93) 59 FR 3843 (1/27/94-prelim); 59 FR (8/10/94-final) not used

No program description available.

Government of Venezuela Grants

Ferrosilicon (1991) 57 FR 38483 (8/25/92-prelim); 58 FR 27540 (5/10/93-final) not used

No program description available.

Partial Duty Drawback Program

Aluminum Redraw Rod (1990) 57 FR 22460 (5/28/92-prelim); 57 FR 41918 (9/14/92-final) not used

Under Decree 1595 of May 16, 1991, the partial duty drawback mechanism was established. In contrast to conventional duty drawback schemes, partial duty drawback is a simplified or indirect system whereby the exporter may obtain five percent f.o.b. value of the exported merchandise, regardless of whether the exported merchandise contains imported intermediary inputs. In order to receive the five percent partial duty drawback, exporters provide documentation confirming the value and destination of the export shipment. All exporters of manufactured goods are eligible for partial duty drawback except exporters in industries with exports of more than 60 million dollars in the previous year.

Preferential Long-Term Export Loans

Phthalic Anhydride (1992/93) 59 FR 3843 (1/27/94-prelim); 59 FR 40870 (8/10/94-final) not used

No program description available.

Preferential Short-Term Export Loans

Phthalic Anhydride (1992/93) 59 FR 3843 (1/27/94-prelim); 59 FR 40870 (8/10/94-final) not used

No program description available.

Preferential Tax Exemptions Under the 1966 Income Tax Law

Phthalic Anhydride (1992/93) 59 FR 3843 (1/27/94-prelim); 59 FR 40870 (8/10/94-final) not used

Under this program, the Government of Venezuela does not provide benefits which constitute bounties or grants within the meaning of the countervailing duty law to manufacturers, producers or exporters.

Preferential Tax Incentives Under Decree 1477

Carbon Steel Products (1984) 50 FR 11227 (3/20/85-prelim); Investigation Terminated 50 FR 29465 (7/19/85) not used
Steel Wire Rod (1996) 62 FR 41943 (8/4/97-prelim); Suspended 62 FR 54966 (10/22/97); 62 FR 55023 (10/22/97-final) not used

Decree 1477 provides partial or total income tax exemptions and other tax credits to companies in disadvantaged regions, including Bolivar. It has been verified that SIDOR never applied for or received benefits under this program. Therefore, we determine that this program was not used by SIDOR during the period of investigation.

Venexport Financing

Non-Alloy Steel Pipe (1991) 57 FR 24471 (6/9/92-prelim); 57 FR 42966 (9/17/92-final) not used

No program description available.

SUBSIDY PROGRAMS DETERMINED NOT TO EXIST

The following subsidy programs were alleged by the petitioning industries and were investigated by the Department. However, during the investigation we found no evidence that such programs actually existed. If you click on the cases listed under the subsidy program title, you will be linked to each case in which the subsidy program was referenced. It is possible that, while the program named did not exist, a similar program having a different name actually was investigated. If this is the case, you will find that program listed elsewhere in this library.

Assumption of Foreign Currency Debt

Aluminum Redraw Rod (1986) 52 FR 38117 (10/14/87-prelim); 53 FR 24769 (6/30/88-final)
Carbon Steel Products (1984) 50 FR 11227 (3/20/85-prelim); Investigation Terminated 50 FR 29465 (7/19/85)
Ferrosilicon (1991) 57 FR 38482 (8/25/92-prelim); 58 FR 27539 (5/10/93-final)

We found that no agency of the Venezuelan Government has assumed the responsibility for the payment of foreign currency debts of any private sector Venezuelan company and no statutory provisions exist authorizing any government agency to take such action.

Loan Guarantees

Aluminum Redraw Rod (1990) 57 FR 22459 (5/28/92-prelim); 57 FR 41918 (9/14/92-final)
Aluminum Redraw Rod (1988) 56 FR 679 (1/8/91-prelim); 56 FR 14232 (4/8/91-final)
Aluminum Redraw Rod (1986) 52 FR 38117 (10/14/87-prelim); 53 FR 24769 (6/30/88-final) not used
Aluminum Sulfate (1988) 54 FR 27195 (6/28/89-prelim); 54 FR 43442 (10/25/89-final) not used
Carbon Steel Products (1984) 50 FR 11227 (3/20/85-prelim); Investigation Terminated 50 FR 29465 (7/19/85)

We found that the Government of Venezuela does not offer loan guarantees to private companies either directly or through any governmental agency inconsistent with commercial considerations.

Provision of Preferential Pricing on Raw Materials for Export

Non-Alloy Steel Pipe (1991) 57 FR 24471 (6/9/92-prelim); 57 FR 42966 (9/17/92-final)

No program description available.

Sales Tax Exemptions

Aluminum Redraw Rod (1986) 52 FR 38117 (10/14/87-prelim); 53 FR 24769 (6/30/88-final) not used
Aluminum Sulfate (1988) 54 FR 27196 (6/28/89-prelim); 54 FR 43442 (10/25/89-final)
Carbon Steel Products (1984) 50 FR 11227 (3/20/85-prelim); Investigation Terminated 50 FR 29465 (7/19/85)
Ferrosilicon (1991) 57 FR 38483 (8/25/92-prelim); 58 FR 27540 (5/10/93-final) not used
Steel Line Pipe (1984) 50 FR 46801 (11/13/85-prelim); Investigation Terminated 50 FR 48827 (11/17/85)
Steel Wire Rod (1984) 50 FR 28234 (7/11/85-prelim); Investigation Terminated 50 FR 32465 (8/12/85)

We found that the Government of Venezuela does not provide sales tax exemptions to specific enterprises or industries in Venezuela through various regional authorities.

Tax Contributions to Cover Debt Service Costs

Aluminum Redraw Rod (1986) 52 FR 38116 (10/14/87-prelim); 53 FR 24769 (6/30/88-final)
Carbon Steel Products (1984) 50 FR 11227 (3/20/85-prelim); Investigation Terminated 50 FR 29465 (7/19/85)
Steel Wire Rod (1984) 50 FR 28234 (7/11/85-prelim); Investigation Terminated 50 FR 32465 (8/12/85)

We found that the Government of Venezuela does not have programs which provide tax contributions or other forms of assistance to help specific producers or exporters meet their debt financing obligations.