88-628

(Cite as: 53 FR 24340)

NOTICES

DEPARTMENT OF COMMERCE

[C-469-702]

Final Affirmative Countervailing Duty Determination; Certain Granite Products From Spain

Tuesday, June 28, 1988

*24340 AGENCY: Import Administration, International Trade Administration, Commerce.

ACTION: Notice.

SUMMARY: We determine that benefits which constitute subsidies within the meaning of the countervaliling duty law are being provided to manufacturers, producers or exporters in Spain of certain granite products as described in the "Scope of Investigation" section of this notice. The estimated net subsidy and duty deposit rates are specified in the "Suspension of Liquidation" section of this notice.

We have notified the U.S. International Trade Commission (ITC) of our determination. If the ITC determines that imports of certain granite products materially injure, or threaten material injury to, a U.S. industry, we will direct the U.S. material injury to, a U.S. industry, we will direct the U.S. Customs Service to resume suspension of liquidation of all entries of certain granite products from Spain that are entered or withdrawn from warehouse, for consumption, on or after the date of publication of our countervailing duty order and to require a duty deposit on entries of the subject merchandise in an amount equal to the appropriate duty deposit rate as described in the "Suspension of Liquidation" section of this notice.

EFFECTIVE DATE: June 28, 1988.

FOR FURTHER INFORMATION CONTACT:Loc Nguyen or Barbara Tillman, Office of Investigations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 377-0167 (Nguyen) or 377-2438 (Tillman).

SUPPLEMENTARY INFORMATION:

Final Determination

Based on our investigation, we determine that benefits which constitute subsidies within the meaning of section 701 of the Tariff Act of 1930, as amended (the Act), are being provided to manufacturers, producers or exporters in Spain of certain granite products. For purposes of this investigation, the following programs are found to confer subsidies:

- Certain types of short-term loans provided under the Privileged Circuit Export Credits Program.

- Regional Investment Incentives

--Grants under the Large Area of Industrial Expansion of Galicia Program (LAIEG)

--Preferential access to official credit under LAIEG

- Grants under Basque decree 153/1985.

- Rebates of interest on Long-term loans under Galician Decree 82/1984.

Case History

Since the publication of the preliminary determination (Preliminary Affirmative Countervailing Duty Determination: Certain Granite Products from Spain (52 FR 48737, December 24, 1987) (Certain Granite), the following events have occurred.

On December 30, 1987, petitioner requested an extension of the final determination to correspond with the antidumping final determination. On January 28, 1988, we published a notice agreeing to this extension (53 FR 2521, January 28, 1988). On March 10, 1988, respondents requested an extension of the antidumping determination from May 9, 1988, to June 21, 1988. On April 18, 1988, we published a notice agreeing to this extension (53 FR 12713, April 18, 1988).

Supplemental questionnaire responses were submitted by Ingemar, S.A. (Ingemar) and Ingemarga, S.A. (Ingemarga) on January 25, and February 10, 1988; Ingemarga also submitted a supplemental response on February 4, 1988. Artemarmol, S.A. (Artemarmol), Granitos Ibericos-Grayco, S.A. (GIG), and Santal, S.A. (Santal) submitted supplemental questionnaire responses on January 27, 1988. Ramilo, S.A. (Ramilo) submitted a supplemental questionnaire reponse of February 8, 1988. We conducted verification in Spain from February 8, to March 3, 1988, of the questionnaire responses of the government of Spain, Artemarmol, GIG, Ingemar, Ingemarga, Ramilo, and Santal.

Amended responses based on information reviewed at verification were submitted by Artemarmol, GIG, *24341 Ramilo, and Santal, on March 30 and June 13, 1988. Ingemar submitted amended responses on April 5, April 12, April 19, May 27, 1988. Ingemarga submitted amended responses on April 6 and May 27, 1988.

Although no public hearing was held, initial briefs were filed by petitioner and by all respondents except the government of Spain on May 16, 1988. Rebuttal briefs were filed on May 23, 1988, by petitioner and all respondents.

Scope of Investigation

The products covered by this investigation are certain granite products from Spain. Certain granite products are 3/8 inch (1 cm) to 2 1/2 inches (6.34 cm) in thickness and include the following: Rough sawed grante slabs; face- finished granite slabs; and finished dimensional granite including, but not limited to, building facing, flooring, wall and floor tiles, paving, and crypt fronts, Certain granite products do not include monumental stones, crushed granite, or curbing. Certain granite products are curently classified under TSUSA, item number 513.7400 and under HS item numbers 2516.12.00, 6802.23.00 and 6802.93.00.

Analysis of Programs

For purposes of this final determination, the period for which we are measuring subsidies ("the review period") is calendar year 1986, which corresponds to the fiscal year of all the respondent companies.

In our original questionnaire of August 27, 1987, we requested the government of Spain to identify all producers and exporters of the subject merchandise to the United States. On September 22, 1987, the government of Spain identified Artemarmol, GIG, Ingemar, Ingemarga, Santal, Granitos Espanoles, S.A. (GE), and Marmoles y Granitos de Espana, S.A. (M&G) as exporters of products under the Spanish basket tariff numbers which include the subject merchandise. Ramilo, along with several of the above-cited companies, was identified as an exporter under the basket tariff numbers in a September 18, 1987, telegram from our Embassy in Madrid. The Spanish government stated that it was very difficult to establish which companies actually export the subject merchandise to the United States, since the Spanish tariff classification includes all kinds of stone. Therefore, between September 22, 1987, and November 13, 1987, we had various discussions and correspondence with the Embassy of Spain attempting to identify actual exporters of the subject merchandise. On October 14, 1987, we received the government of Spain's response in which four companies, Artemarmol, GIG, Ingemar and Ingemarga, were identified as producers and exporters of the subject merchandise. On the same date, we also received responses from these four companies.

Upon reviewing the responses, the export statistics submitted by the government of Spain and the telegram from our Embassy in Madrid, we determined that there appeared to be four more companies exporting the subject merchandise: GE, M&G, Ramilo, and Santal, which had not responded. Thus, on November 13, 1987, we requested in our supplemental questionnaire that these four companies respond by November 27, 1987. On November 27 and December 1, 1987, respectively, we received responses from Ramilo and Santal. In our preliminary determination, we stated that, if GE and M&G had not responded by the date of the preliminary determination, we might have to use best information available to calculate a rate for them in accordance with section 776(b) of the Act. Since we received no responses from GE and M&G, we are using as best information available for these companies the sum of the highest individual company rates found under each program in this determination, which is 3.77 percent ad valorem.

In countervailing duty investigations, it is our practice to calculate a country-wide rate. In calculating the country-wide rate, we normally calculate an average rate for all companies based on the sum of the benefits under each program divided by the sum of relevant sales. In this case, however, we cannot include GE and M&G in the calculation of the country-wide rate because we have no information on the value of their exports of the subject merchandise to the United States. Therefore, these two companies are receiving a separate rate and have not been included in the calculation of the country-wide rate.

Based upon our analysis of the petition, the responses to our questionnaire, verification, and written comments from respondents and petitioner, we determine the following:

I. Programs Determined To Confer Subsidies

We determine that subsidies are being provided to manufacturers, producers or exporters in Spain of certain granite products under the following programs:

A. Certain Types of Short-Term Loans Under the Privileged Circuit Export Credits Program (PCECP)

We verified that exporters of certain granite products from Spain are benefitting from a system of short-term preferential loans mandated by the government of Spain for exporters. Under this system of "privileged-circuit export credits," at least four types of loans are alleged to be available to exporters of certain granite products: (1) Working capital loans, (2) pre- financing of exports, (3) short-term export credits or post-financing of exports, and (4) commercial service loans.

The government of Spain required all Spanish commercial banks to maintain a specific percentage of their lendable funds (the "investment coefficient") in privileged-circuit accounts. These funds were made available to exporters at below-market interest rates.

Under the terms of a Treasury Order dated April 14, 1982, the working-capital loan program for exporters was gradually phased out and terminated as of January 1, 1986. The other three types of export financing under the PCECP were terminated as of March 6, 1987, by Royal Decree 321/1987, issued on February 27, 1987.

While there was no direct outlay of government funds, the benefits conferred on the companies were the result of a government-mandated program to promote exports. We verified that the producers and exporters of certain granite products received three of the four types of PCECP loans: working- capital loans, pre-financing and post-financing export loans.

1. Working Capital Loans. Under the PCECP, firms were able to obtain working capital loans for one year, although we found at verification that some loans were paid off a few weeks late. The amount of loans for which a firm was eligible was based on a specified percentage of its previous year's exports. These loans were no longer available as of January 1, 1986, pursuant to a Treasury Order of April 14, 1982. We verified that GIG, Ingemar, and Ramilo had working capital loans outstanding during the review period.

As stated above, although no direct outlay of government funds was used to finance these loans, they were the result of a government-mandated program to promote exports. Because eligibility for this type of financing was contingent upon exports, we determine that it is countervailable to the extent that it was offered at preferential rates.

To determine whether these loans were made at preferential rates, we compared the interest rates charged on working-capital loans with the appropriate benchmark interest rate. Because the terms of these loans were a year, we determine that the most appropriate benchmark is the "one to three years" lending rate charged by *24342 Spanish private banks as published in the Boletin Estadistico of the Banco de Espana. This comparison shows that the interest rates on these export loans are below the benchmark. Accordingly, we determine this program to be countervailable.

To calculate the benefit, we followed the short-term loan methodology which has been applied in virtually all final countervailing duty determinations and which is described in more detail in the Subsidies Appendix attached to the notice of Cold-Rolled Carbon Steel Flat-Rolled Products from Argentina: Final Affirmative Countervailing Duty Determination and Countervailing Duty Order (49 FR 18006, April 26, 1984). We compared the amount of interest actually paid during the review period to the amount the companies would have had to pay had the loans been at the benchmark commercial rate. We verified that working- capital export loans were not tied to specific export transactions. Therefore, for the country-wide rate, we allocated the 1986 benefits of Ingemar and Ramilo over the total value of exports of those respondent companies whose overall estimated net subsidy rates are above de minimis (0.50 percent or above). The country-wide rate for this program is 0.23 percent ad valorem. The rate is 0.32 percent ad valorem for GE and M&G. The rate is 0.02 percent ad valorem for GIG and zero for Santal.

We verified that this program was terminated by a Treasury Order of April 14, 1982, effective January 1, 1986, and that the respondent companies made the last interest and principal payments on this type of loan before our preliminary determination. Therefore, we determine that the duty deposit rate is zero for this program.

2. Pre-financing of Exports. We verified that the maximum term of pre- financing export loans was up to seven months and that Artemarmol, Ingemar and Ramilo had pre-financing export loans on which interest was paid during the review period. Although no direct outlay of government funds was used to finance these loans, they, like the working-capital loans, were the result of a government-mandated program to promote exports. Because eligibility for this type of financing was contingent upon exports, we determine that it was countervailable to the extent that it was offered at preferential rates.

To determine whether these loans were made at preferential rates, we compared the interest rates charged on pre-financing export loans to the appropriate benchmark, which we determine is the "three-month" lending rate charged by Spanish private banks as published in the Boletin Estadistico of the Banco de Espana. This comparison shows that the interest rates on these export loans were below the benchmark. Accordingly, we determine this program to be countervailable.

To calculate the benefit arising from these loans, we compared the amount of interest actually paid during the review period to the amount the companies would have had to pay had the loans been at the benchmark commercial rate, in accordance with our short-term loan methodology. We verified that pre- financing export loans were tied to specific export transactions. We also verified that the loans were provided on shipments to the United States that included products other than the subject merchandise. Therefore, we allocated the 1986 benefits for Artemarmol, Ingemar and Ramilo over the value of exports of all products to the United States of all non-de minimis respondent companies to calculate an estimated net subsidy of 0.32 percent ad valorem. The estimated net subsidy for GE and M&G is 0.47 percent ad valorem. The rate is zero for GIG and Santal.

Even though this program was terminated by government decree as of March 6, 1987, we verified that interest and principal on loans given under this program were still outstanding after the date of our preliminary determination. Since benefits were still being provided under this program after our preliminary determination, (i.e., the date of our suspension of liquidation), we do not consider the termination a program-wide change for purposes of calculating a separate duty deposit rate in this investigation.

3. Post-Financing of Exports. We verified that Artemarmol received post- financing export loans of up to seven months during the review period. Because availability of this type of financing is contingent upon exports, we determine that it is countervailable to the extent that it is offered at preferential rates.

To determine whether these loans were made at preferential rates, we compared the interest rates charged on post-financing export loans during the review period to the appropriate benchmark, which we determine is the "three-month" lending rate charged by Spanish private banks as published in the Boletin Estadistico of the Banco de Espana. This comparison shows that the interest rates on these export loans are below the benchmark. Accordingly, we determine this program to be countervailable.

Therefore, we allocated Artemarmol's 1986 benefit over the value of exports of the subject merchandise to the United States of all non-de minimis respondent companies to calculate on 0.03 percent ad valorem. The estimated net subsidy for GE and M&G is 0.50 percent ad valorem. The rate is zero for GIG and Santal.

B. Regional Investment Incentives

Petitioner alleged that the granite industry in Spain may have benefitted from certain regional investment programs.

1. Grants under the Large Area of Industrial Expansion of Galicia Program (LAIEG)--Royal Decree 1409/1981. In 1981, the government of Spain established a program entitled "Large Area of Industrial Expansion" (LAIE) to award grants and loans to companies in certain areas of Spain. We verified that through Royal Decree 1409/1981 of June 19, 1981, the Government of Spain established the program entitled "Large Area of Industrial Expansion of Galicia" to award grants or loans for investment in new capital goods and/or for generation of employment to companies in the region of Galicia and to companies in other parts of Spain that plan to invest in Galicia.

Because this program is funded by the central government of Spain to benefit companies that do business in a specific region, we determine that this program confers a subsidy. GIG and Ingemarga received grants under this program.

In allocating subsidies, we prefer to use the weighted cost of capital as the discount rate; however, in this case, the government of Spain was unable to give us the national average rate of return on equity. Therefore, we were unable to *24343 calculate the weighted cost of capital for GIG and Ingemarga. Instead, we are using as a surrogate discount rate the national average commercial interest rate for loans of "over three years" for the year in which the grant was authorized. This rate is published by the Banco de Espana in its Boletin Estadistico.

In accordance with past practice, we first determined if the amounts received by Ingemar and GIG were more than 0.50 percent of the value of each company's total sales for the year in which the grant was disbursed. Since each of the grants exceeded 0.50 percent of sales, we allocated the grants over the average useful life of equipment in the granite industry, which is 15 years, as stated in the 1977 IRS Asset Class Life Depreciation Range System, to arrive at the benefit received during the review period. Use of the IRS tables is in accordance with past practice and is described in detail in the Subsidies Appendix. Because the overall subsidy rate for GIG is de minimis, we calculated the country-wide rate for this program by dividing Ingemar's benefit over total sales of all non-de minimis respondent companies to arrive at an estimated net subsidy of 0.39 percent ad valorem. The estimated net subsidy for GE and M&G is 2.07 percent ad valorem. The rate is 0.43 percent ad valorem for GIG and zero for Santal.

2. Preferential Access to Official Credit under LAIEG--Royal Decree 1409/1981. Ingemarga received long-term financing from official lines of credit through the LAIEG program, which was outstanding during the review period.

Because this program is provided by the central government of Spain to a specific region of Spain, we determine that this program is limited to a specific enterprise or industry, or group of enterprises or industries. To determine whether these loans are given at rates that are inconsistent with commercial considerations, we compared the interest rates to the appropriate benchmark.

For fixed rate long-term loans to creditworthy companies, we prefer to use a company-specific commercial loan rate whenever possible. However, in this case, we verified that Ingemarga did not receive comparable commercial long- term credit in the year in which it received the LAIEG loan. Therefore, we used as our benchmark the national average commercial interest rate for loans of "over three years" applying to the year in which the terms of the loan were agreed upon. This rate is published by the Banco de Espana in its Boletin Estadistico. Because the interest rate charged to Ingemarga is lower than the benchmark, we determine that the loan is inconsistent with commercial considerations.

To calculate the benefit, we followed our loan methodology for fixed rate long-term loans, which has been described in numerous previous cases. For the discount rate, we used the benchmark interest rate because we were unable to obtain the national average rate of return on equity which would have allowed us to calculate a weighted cost of capital.

For the country-wide rate, we allocated Ingemarga's 1986 benefit over total sales of all non-de minimis respondent companies to calculate an estimated net subsidy of 0.05 percent ad valorem. The estimated net subsidy for GE and M&G is 0.28 percent ad valorem. The rate is zero for GIG and Santal.

C. Grants under Basque Decree 153/1985

Decree 153, issued by the Basque regional government in 1985, established grants for commercial promotion activities, such as market studies, market survey studies, and establishment or expansion of commercial entities or divisions specializing in promotional activities. The amount of the grants can be up to 20 percent of investment costs in capital goods with a cap of 5,000,000 pesetas and up to 25 percent of operating costs during the initial period, with a cap of two years and 4,000,000 pesetas. Funding for the program is provided by the Basque regional government from its general revenue.

The decree states that grants are to be used for commercial promotion activities that will contribute to "the exportation of the productive sectors of the Basque country." We verified that Ingemar received a grant under this program and that the grant was for the purpose of establishing a subsidiary company in the United States to promote commercial activities in this country. Since this grant was provided to promote exports to the United States, we determine that it constitutes an export subsidy.

Ingemar received the grant under this program during the review period and the amount received was less than 0.50 percent of the value of its exports to the United States during the review period; therefore, we allocated the entire amount of this grant to the review period. We used exports to the United States for the 0.50 percent test because the grant was given specifically to establish commercial activities in the United States.

For the country-wide rate, we allocated the amount of the grant over the value of exports to the United States of all non-de minimis respondent companies to calculate an estimated net subsidy of 0.04 percent ad valorem. The estimated net subsidy for GE and M&G is 0.05 percent ad valorem. The rate is zero for GIG and Santal.

D. Rebates of Interest on Long-Term Loans under Galician Decree 82/1984

On May 24, 1984, the Galician government passed Decree 82 to assist small and medium-sized companies registered in Galicia or making investments in Galicia. This assistance is given in the form of interest rebates. An agreement was signed in the same year between the Galician government and the commercial banks in Galicia to carry out this program. Funding for the program is entirely from monies collected by the Galician government from lotteries, bonds and patrimonial transactions. The rebates are awarded by the Chancery of Labor, Industry and Tourism and are paid out by the Chancery of Economy and Finance.

In 1984 and 1985, rebates were given on loans taken out for working capital as well as for new investment. By 1986, rebates were no longer given for working capital loans. We verified that all industries in Galicia are eligible for and have received the basic benefits of five percent for 1984 and 1985 and three percent for 1986 under this program. Therefore, we determine that the basic rebate level is not limited to a specific enterprise or industry, or group of enterprises or industries and is not countervailable.

However, we also verified that additional percentage points are given to companies for sector preference and special zone preference. Special zone preference percentage points are given to any company located in special industrial areas or industrial parks or structurally deprived zones. Sector preference, we were told at verification, refers to any company producing products whose inputs are found in Galicia. Respondents did not inform us of these additional percentage points until verification. Since the additional percentage points for special zone preference are given only to companies located in specific areas designated by the Galician government, we determine that they confer a subsidy. As for the percentage points given for sector preference, we were not provided with any information or documentation to show how many sectors or industries received this additional sector preference; therefore, we determine that this additional benefit also confers a subsidy.

*24344 We verified that Ingemarga and Ramilo received additional percentage points of rebates during the review period.

To calculate the benefit arising from these rebates, we divided the total amount of rebates received in Ingemarga and Ramilo during the review period by the total percentage points received, then multiplied the result by the additional percentage points received by these companies. For the country- wide rate, we divided the benefits due to the additional percentage points of rebate received in 1986 by Ingemarga and Ramilo by the total 1986 sales of all non-de minimis respondent companies to arrive at an estimated net subsidy of 0.02 percent ad valorem. The estimated net subsidy for GE and M&G is 0.08 percent ad valorem. The rate is zero for GIG and Santal.

II. Programs Determined Not To Confer A Subsidy

We determine that subsidies are not being provided to manufacturers, producers or exporters in Spain of certain granite products under the following programs:

A. Exemption of Import Duties on Imported Tools and Equipment--Law 1/1960 and Decrees 2386/85 and 932/1986

As part of its entry into the European Economic Community (EEC), Spain was required under Articles 31 and 37 of the Ascension Treaty to bring its tariff system into conformity with EEC rates by the end of 1992, i.e. it will levy no duty on products imported from the EEC and will levy applicable EEC rates on imports from third countries.

RD 2586, which went into effect on January 1, 1986, and which was clarified by RD 932 of May 9, 1986, is one of the first steps towards expediting the requirements of the Treaty. Based on the authority permitted under Law 1/1960, RD 2586 allows new equipment used in certain industries and sectors or in certain regions to be exempted automatically from duties if the products are not made in Spain and are imported from the EEC. These decrees specified that companies throughout Spain dealing in 22 sectors and industries, including aeronautics, electronics, computer science, mining, energy, pharmaceuticals, highway construction, farm products, vehicles and vehicle components, iron, steel, metal, textiles, chemicals, naval, and electrical household appliance industries received an automatic exemption of import duties in 1986 and 1987.

In addition, any company within the LAIE areas that does not deal in the 22 sectors specified in the decrees can also apply for duty exemption on new equipment, not made in Spain and imported from the EEC. However, since granite products subject to this investigation are classified in the mining sector, one of the 22 sectors that are automatically exempt from duties on imports not produced in Spain and imported from the EEC, the respondent companies do not receive import duty exemptions due to location in an LAIE.

We also verified that, under Law 1/1960, hundreds of other products in an appendix, first published in 1965 and occasionally updated, are exempted from import duties if the products are not manufactured in Spain and are imported from the EEC. The most recent version of the 1965 appendix, which specifically refers to Articles 31 and 37 of the Ascension Treaty, is 29 pages long and includes hundreds of products ranging from potatoes to medical equipment, hydraulic system pumps to typewriters, textile fibers to chrome, agricultural tractors to laser ray generators.

Since we verified that RD 2586/1985 and RD 932/1986 were established under the auspices of Law 1/1960 and did not set up a separate program and since the exemptions provided to producers of the subject merchandise under these decrees are not limited to a specific region or to a specific enterprise or industry, or group of enterprises or industries, we determine that this program is not countervailable.

B. Grants under Guipuzcoa Decree 41/1985

Decree 41/1985 of the provincial govenment of Guipuzcoa administers grants to small companies within the province of Guipuzcoa. The decree lists a wide range of sectors and industries that are eligible to receive assistance under this program including chemicals, agriculture, hotels, land transportation, technical investigations, services rendered to companies, and other manufacturing industries. We verified that 23 sectors and/or industries including fishing, smelting and iron works, mon-metal minerals, metallurgy, mechanical shops, electronics, machinery, food, textiles, paper, rubber and plastics, construction, repairs, transport, and services were approved for grants in 1985 and 1986. We verified that the funding for this program was authorized by the Province of Guipuzcoa and comes from the general budget of the province, which is made up to taxes collected by the province.

Since this program is available to companies throughout the province of Guipuzcoa and since funding for this program is authorized by the Guipuzcoa government and comes from the Guipuzcoa general revenues, we determine that ti is neither limited to a specific enterprise or industry, or group of enterprises or industries, nor is it limited to a specific region and, therefore, it is not countervailable.

C. Interest Rebates on Long-term Loans under Basque Government Program

Petitioner alleged that producers of the subject merchandise benefit from subsidies in the form of preferential loans, loan terms and loan guarantees. We verified that only one of the companies involved in this investigation received medium- or long-term loans on terms inconsistent with commercial considerations (See section I.B.2. above).

We found, however, that Ingemar received reimbursement of a part of the interest it paid on long-term loans under an agreement made between the Basque regional government and the banks in the Basque region. The agreement stated that the program is available to all industries in the Basque region. The Basque government also provided us with information indicating that over 2,000 companies in a broad range of industries, including food, chemicals, textiles, paper, electronics, construction, public works, transportation, wholesalers, retailers, and hotels have received interest rebates under this program.

Since that program is available to companies throughout the Basque region and since funding for this program is authorized by the Basque regional government and comes from the Basque general revenues, we determine that it is neither limited to a specific enterprise or industry, or group of enterprises or industries, nor is it limited to a specific region and, therefore, it is not countervailable.

D. Grants Under Galician Decree 107/1984

Decree 107/1984 is an umbrella decree that establishes an overall program of assistance. Under this decree, Galician ministries or chanceries issue ministerial orders creating assistance programs to sectors or industries under their authority. The funds for these programs come from the budgets of the relevant ministries. These ministerial budgets, in turn, are authorized by the Galician government and allocated from the Galician regional budget.

The mining sector budget comes under the auspices of the Chancery of Industry, Energy, and Commerce. On October 19, 1984, the Chancery issued an order providing assistance in the form of grants for fixed assets or *24345 investigative studies to mining companies or associates of mining companies in Galicia. We verified that all types of mining in Galicia have received grants under this ministerial order. We also verified that other sectors, industries, and groups such as agriculture, fisheries, tourism, trade associations, labor unions, and over 20 others have received grants under Decree 107/1984.

Since this umbrella program provides benefits to companies throughout the region of Galicia and since funding for this program is authorized by the Galician government and comes from the Galician general revenues, we determine that it is neither limited to a specific enterprise or industry, or group of enterprises or industries, nor is it limited to a specific region and, therefore, it is not countervailable.

E. Grants under Basque Decree 146/1985

We verified that Ingemar received a grant from the Basque regional government under Decree 146/1985 for the generation of employment. The goal of this program is to facilitate the generation of employment in the Basque country in order to resolve social needs, provide access to the job market, provide job training, create jobs and reduce unemployment. Funding for this program is authorized by the Basque government and comes from the Basque government's general budget. According to the decree, any company within the Basque region is eligible to receive grants under this program as long as it has a net increase in the size of its staff. We verified that a variety of sectors, industries, and groups throughout the Basque region including agriculture, fisheries, metals, chemicals, textiles, leather, banks and insurance companies, hotels and restaurants, construction, transportation, retailers, and schools have received grants under this program.

Because Decree 146/1985 is not limited to a specific area of the Basque region or to a specific enterprise or industry, or group of enterprises or industries, we determine that it is not countervailable.

III. Programs Determined Not To Be Used

We determine, based on verified information, that manufacturers, producers or exporters in Spain of certain granite products did not apply for, claim, or receive benefits during the review period for exports of granite to the United States under the following programs. These programs were described in Certain Granite, supra, unless otherwise noted:

A. Commercial Service Export Loans under the Privileged Circuit Export Credits Program

B. Warehouse Construction Loans

C. Loans and Loan Guarantees from the Instituto Nacional de Industria (INI)

D. Free or Inexpensive Land

E. Grants from the Regional Board of the Province of Alava

F. Zones for Urgent Reindustrialization (ZURs)

Petitioner alleged that the granite industry in Spain receives grants from the government of Spain under the ZUR program. The ZUR is part of the LAIE program. We verified that none of the companies under investigation have facilities that are located in a ZUR.

G. Royal Decree 180/1985

In October 1984, the Government of Spain, the Spanish business confederations and the Spanish General Workers' Union (UGT) ratified an economic and social agreement to generate employment. Royal Decree 180 formalized this agreement. There were three types of grants given under this program: (1) "Technical assistance"; which gave grants for market or viability studies; (2) "interest grants", which gave grants as partial payments of principal amounts of commercial loans taken out by enterprises to finance a project; and (3) "grants for fixed investments" which gave grants to companies for payment of fixed assets.

We verified that none of the companies under investigation benefitted from any RD 180 grants during the review period.

H. Galician Decree 151/1984

At verification, we found that grants and low interest loans under Galician Decree 151/1984 were given to companies in Galicia to stimulate employment. This program was in effect only during the last quarter of 1984 and calendar year 1985. We verified that none of the companies under investigation received loans or grants under this program prior to or during the review period.

IV. Programs Determined Not To Exist

We determine, based on verified information, that the following programs do not exist. These programs were described in Certain Granite:

1. Reduction in Imports Duties on Imported Tools and Equipment

We verified that the only program for reduction and/or exemption of import duties in Spain is the one discussed in Section II.A. above.

2. Reduction in Taxes

We found no indication that there was any program dealing with regional reduction of taxes.

Interested Party Comments

Comment 1: Petitioner argues that the Basque programs should not be treated as autonomous, but rather as programs funded from general government of Spain revenues for purposes of a specific regional development scheme. Even though the Basque government has a unique arrangement in which it collects all taxes within the Basque region and then, after a negotiation with the government of Spain, pays a certain amount of these revenues to the government of Spain for national services such as defense, petitioner argues that the verification report does not indicate what the other services include (social security, roads, telephones and telegraphs, etc.) nor does it indicate what amounts are historically paid to the government of Spain. Without this type of information, it is impossible, in petitioner's view, to know whether the central government is merely transferring funds to the Basque government.

Respondents argue that the Basque government is independent of the government of Spain and that it has express and sole authority to levy, manage, inspect and collect all taxes, with the exception of those which apply to customs and those collected as fiscal monopolies. Furthermore, the sum turned over to the government of Spain is calculated using a predetermined formula and is not an arbitrary amount. Respondents state that the tax collecting agreement between the government of Spain and the Basque government dates back to the late nineteenth century.

DOC Position: Whether taxes are collected by the central government, the regional government or the provincial government, the decision as to whether a program is countervailable because it is a regional program and, therefore, limited to a specific enterprise or industry, or group of enterprises or industries is based on which government authorizes or earmarks the usage of the funds for the program. There is no evidence that the tax collecting arrangement of the Basque region constitutes a direction of funds from or by the national government to the region. In this case, the funds are taxes collected by the Basque government and, except for the portion remitted to the central government, constitute the general revenues of the *24346 Basque region, expenditure of which are authorized by the Basque government.

In the case of the Basque region, taxes are collected by the three Basque provinces. Some of the funds are then paid by the provincial governments to the regional government, which, in turn, pays some of these funds to the central government of Spain. Each government authorizes and earmarks the use of its own budget or revenues.

For the other regions, the central government collects all taxes and gives each regional government a share. That share enters the regional government's general revenues. Whether the central government collects the tax revenue and passes some back to the regions or the regional government collects the taxes and passes a share of those revenues to the central government, the result is the same. As long as it is the regional or provincial government that earmarks the use of its general revenue for programs authorized by its legislature, the funding of a program cannot be determined to be from general central government funds and, therefore, the program cannot be construed as a regional subsidy.

Comment 2: Petitioner argues that any programs administered by the Galician government that are funded by national tax revenues must be considered as part of a regional development scheme and, as such, are countervailable. Petitioner argues that, even though some revenues, such as revenue from bonds, lotteries, etc., are collected by the regional government, the funds used by the Galician government to support its regional development are based on national revenues. Petitioner further points out that nothing indicates that the tax revenue allocation obtained by the Galician government from the Spanish government has a direct correlation to the amount of taxes collected in that region. Therefore, it is likely that national funds are distributed as the national government sees fit.

Respondents argue that the government of Spain has no control or discretion over the Galician budget, nor does it earmark any of the funds it transfers to Galicia; therefore, any program whose funds are earmarked by the Galician government from its own budget and whose benefits are "generally available" should be determined not countervailable.

DOC Position: The fact that the central government allocates a certain amount of national taxes collected to the general budget of a region or province and the fact that some of this money is then authorized and appropriated by the regional or provincial government to be used in programs established by its legislature does not make these programs regional. A program is determined to be regional and, therefore, limited only when its funding is specifically authorized by the central government to benefit only some regions within its jurisdiction as in the case of the LAIEG program. (See section I.B.)

We verified that the distribution of tax proceeds provided by the central government to the Galician government went into the general revenues of the province of Galicia and was not provided for specific programs. (See also DOC Position on Comment 1).

Comment 3: Petitioner argues that, in determining whether a program is limited to a specific industry or enterprise or group of industries or enterprises, the Court of International Trade (CIT) in Cabot v. United States, 620 F. Supp. 722 (CIT May 15, 1985) (Cabot) and PPG Industries, Inc. v. United States, Slip Op. 87-57 (USCIT 1987) (PPG Industries) requires the Department to review the actual availability and receipt of benefits under each program and determine whether, inter alia, "a group of industries" has benefitted as opposed to the society in general. Petitioner argues that the fact that there is a "variety" or "many" industries, whether it be 10 or 10 sectors or industries, does not mean that the benefits are not limited to a "specific group."

Respondents point out that in PPG Industries, the CIT held "that the mere fact that a program contains certain eligibility requirements for participation does not transform the program into one which has provided a countervailable benefit."

DOC Position: There is no conflict between the CIT's most recent pronouncements and our determination in this case. During this investigation, we have reviewed both the laws and regulations governing various Spanish programs as well as the actual availability and receipt of benefits under such programs. In each instance, we have made a factual determination whether benefits were conferred in such a manner as to be properly considered limited to a specific industry or group of industries.

Comment 4: Petitioner argues that, since the Banco de Espana (Bank of Spain) refused to cooperate in verifying commercial rates for loans, the Department should use the highest average commercial interest rate paid by the respondents and verified by the Department as the benchmark in this investigation.

DOC Position: During verification, the Bank of Spain refused to meet with us to discuss the interest rates for loans published in the Boletin Estadistico. In this case, we considered it important to discuss these rates to ensure that the statistical base used in developing the average rates does not include interest on non-commercial loans such as personal credit loans, mortgages, etc.

Since the Bank of Spain would not meet with us, we examined published information on interest rates from such independent sources of interest rate information as the Morgan Guarantee World Financial Markets and the International Monetary Fund. The short- and long-term interest rates from these sources are comparable to the average rates listed in the Boletin Estadistico. During verification, we found that the average commercial interest rates paid by the respondents are also within the range of the average rates published by the Bank of Spain. Therefore, we determine that the average Boletin Estadistico interest rates are the best information available in this case.

Comment 5: Petitioner argues that verification regarding the PCECP was incomplete due to the refusal by the Bank of Spain and the Banco Exterior to meet with the verification team. Since the date of when the last PCECP loan was cancelled was not verified, the Department should not consider the program terminated.

Respondents argue that the Department should find that the PCECP is terminated, or in the alternative, should impose a zero deposit rate for the PCECP program, since the PCECP program was completely phased out as of March 6, 1987.

DOC Position: We verified at the government of Spain the de jure termination of the PCECP working capital loans as of January 1, 1986. We verified at the companies that the last PCECP working capital loans were paid off before our preliminary determination. Therefore, we are taking into account this termination and are imposing a zero cash deposit rate for the PCECP working capital loan. (See section I.A.)

As for the PCECP pre- and post-export loans, we verified at the government the de jure termination of these loans as of March 6, 1987. We noted at the company verifications, however, that some pre- and post-financing export loans were still outstanding as of the date of our preliminary determination, i.e., after the imposition of suspension of liquidation. Therefore, in this investigation, we did not take into account the termination of the PCECP program with regard to pre- and post-financing export loans. (See sections I.A.2 and I.A.3).

*24347 Comment 6: Respondents argue that the Department's calculation in the preliminary determination of net benefits received by Ingemar under the PCECP is erroneous because some loans were utilized to pre-finance exports of non-granite products.

DOC Position: We found at verification that many export shipments include both the subject merchandise and other products; therefore, in calculating the benefits under the PCECP for this final determination, we used as the denominator the total value of exports to the United States. (See section I.A.2).

Comment 7: Petitioner argues that Basque Decree 153/1985 is countervailable due to the explicit "export" orientation of the program. In addition, petitioner argues that the fact that a large number of applicants in 1985 and 1986 were denied benefits demonstrates that this program is not "generally available."

Respondents argue that this program should be found not countervailable because it benefits both domestic and export promotion. They argue that the term "exports" as used in the decree refers to products exported from the "autonomous community of the country", be it within Spanish territory or abroad. In support of their position, respondents cite Final Affirmative Countervailiang Duty Determination: Certain Fresh Atlantic Grounfish from Canada (51 FR 10041 (March 24, 1986); where the Department determined that the New Brunswick Marketing and Promotion Activities was not countervailable "because the services performed by the DCT are available to all industries, for both domestic and export promotion."

DOC Postion: The grant given to Ingemar under Decree 153/1985 was for the specific purpose of setting up an office to promote sales in the United States. Since this grant was tied specifically to export promotion, we find it to be an export subsidy. (See section I.C.)

Comment 8: Respondents argue that should the Department find that Decree 153/1985 is countervailable in 1986, it should find the program to be terminated and impose a zero deposit rate. They cite Final Affirmative Countervailing Duty Determination: Certain Fresh Cut Flowers from Israel (52 FR 3316, 3318, February 3, 1987), where the Department imposed a zero deposit rate for programs that were terminated prior to the preliminary determination.

DOC Position: The Basque government did not provide us with any documentation to show that Decree 153/1985 has been terminated; therefore, we are not adjusting the deposit rate for this program.

Comment 9: Petitioner contends that even though Basque Decree 146/1985 is not limited to a specific enterprise or industry, or group of enterprises or industries, it is supported by funds from the government of Spain, and, as such, is a regional development program.

Respondents argue that the Department should determine that this program is not countervailable because it is available to all companies in the Basque country that employed individuals in "hard-to-place" sectors of the work force.

DOC Position: We agree that Decree 146 is not limited to a specific enterprise or industry or group of enterprises or industries and, therefore, not countervailable. With regard to petitioner's contention that this program is supported by government of Spain funds and, as such, is a regional development program, see DOC Position on Comment 1.

Comment 10: Petitioner argues that grants given under Galician Decree 107/1985 are funded by national tax revenues disbursed to Galicia by the national government. Since the government of Spain has not given adequate information regarding regional budgets and development programs, there is no information on the record regarding the methods of allocating national tax revenues to the regional or local authorities and, therefore, there is no information regarding the criteria by which the national government funds regional programs. Thus, Decree 107/1984 should be determined a regional program and countervailable. Furthermore, petitioner argues that it is industry-specific because it is not given to all industries.

Respondents argue that assistance given under Decree 107/1984 should be found not countervailable, because it is an umbrella decree establishing an overall assistance program by the government of Galicia to all industries in Galicia.

DOC Position: We verified that benefits under Decree 107/1984 were given under various ministerial orders to all types of mining as well as to other industries throughout Galicia. We also verified that funding for the program came from the general budget of the Galician government and not from the government of Spain and that the government of Spain did not earmark any funds specifically for Decree 107/1984 when it allocated revenue to the Galician government.

The fact that benefits were given to the mining sector as a whole as well as to various other industries makes the program too broad to be considered specific. The fact that benefits were available to companies throughout Galicia, that funding came from the Galician general budget and not from the government of Spain budget, and that it was the Galician government which earmarked the funds and administered the program precludes it from being considered a regional subsidy.

Comment 11: Petitioner argues that even though Galician Decree 82/1984 is funded entirely by Galician revenues, it is drafted and administered on a selective basis that limits the companies eligible for its benefits. Only small- or medium-sized companies registered or investing in Galicia are eligible for benefits under this program. Furthermore, increased percentage points were available if the product is produced in Galicia and if the company locates the facility in a special industrial area or industrial park. Petitioner argues that, if nothing else, this latter incentive would qualify as a regional incentive which is countervailable under U.S. law.

Respondents argue that the Department should find Galician Decree 82/1984 to be not countervailable since it is funded by Galician government funds and is available to the vast majority of companies in Galicia.

DOC Position: We agree with respondents that the basic benefits given under this program are not limited to a specific industry or group of industries and, therefore, are not countervailable. However, the zone and sector preferences are limited and, therefore, countervailable. (See section I.D.).

Comment 12: Petitioner argues that under the LAIEG program, the entire grant should be found countervailable because this is a regional program funded by the government of Spain.

Respondents argue that the zone preference and sector preference grants given under the LAIE program are "generally available" and, therefore, not countervailable.

DOC Position: We agree with petitioner that benefits under the LAIE program as a whole are countervailable. (See section I.B.1).

Comment 13: Petitioner argues that due to the "inability to verify the operation or receipt of benefits under the LAIE program, the Department should use best information available and countervail any below-market-rate credits obtained by respondents who have qualified for general LAIE benefits." Petitioner further argues that the benchmark for determining the value *24348 of such credits should be the highest average commercial rate for the relevant commercial credits that are otherwise verified by the Department in this investigation.

Respondents argue that, as part of the LAIE program, access to official credit is "generally available" to any company eligible to benefit under the program and, therefore, is not countervailable.

DOC Position: The LAIE program is a central government program designed to give benefits to certain regions of Spain. Therefore, long-term loans given under the program on non-commercial terms are limited and countervailable. (See section I.B.2).

However, we do not agree with petitioner that all below-market-rate credits given to respondents who have qualified for general LAIE benefits should be treated as having been provided under the LAIE program. We verified at the companies that loan agreements given under the LAIE specifically mentioned the fact that they were given under this program. Furthermore, LAIE loans were reported in the company records as such.

As for petitioner's argument regarding the benchmark, see DOC Position on Comment 4.

Comment 14: Petitioner argues that the program dealing with import duty exemptions under RD 2586/1985 and 932/1986 should be found countervailable because the program offers selective duty exemptions for new equipment to be used in LAIE areas or by "industries that produce high technology capital goods." The fact that only certain sectors are listed as beneficiaries under this program serves as conclusive evidence that the program is limited to a specific group of enterprises or industries. Furthermore, petitioner argues that the fact that duty exemptions are available on a "discretionary basis" under other programs such as Law 1/1960 cannot be deemed sufficient evidence that the RD 2586 program is "generally available."

Respondents argue that the Department correctly concluded in the preliminary determination that this program is not countervailable because RD 2586/1985 (succeeded by 932/1986), together with Law 1/1960, establishes the framework for the entire tariff system in Spain and a program whereby any company in Spain can obtain importation of duty-free goods from the EEC that are not manufactured in Spain. Furthermore, respondents argue that when Spain joined the EEC in 1986, it accepted the obligation of bringing its tariff system into conformity with that of the communities by 1992. This means that by 1992, no duty will be levied on any product traded among the member nations of the EEC. Consistent with this obligation, Spain implemented RD 2586/1985 and 932/1986. These decrees provide for the immediate duty-free entry of certain products imported from the EEC. These two decrees constitute the first step in realizing the goal of complete duty-free trade among Spain and other members of the EEC.

DOC Position: We have determined that benefits given under RD 2586/1985 and 932/1986 are not countervailable because they are not limited to a specific enterprise or industry, or group of enterprises or industries. We verified that hundreds of products have received automatic duty exemptions and that companies throughout Spain are exempted. (See section II.A.).

Comment 15: Petitioner points out that the verification report indicates that the Basque interest rebate program is available only to small- and medium-sized companies and that the agricultural, energy and hydro-power sectors were excluded from this program. In addition, petitioner notes that the program is further limited by providing interest rebates only if the small- or medium-sized company uses the loan to purchase new capital assets. Petitioner further states that although there may be many recipients and relatively few rejections, there were clearly many who did not even apply becuase they were ineligible. Petitioner contends, therefore, that it is evident from the record that the interest rebate program is limited in its availability and, therefore, countervailable.

Respondents argue that the Department should confirm its finding that this program is not countervailable because it did not benefit a specific enterprise or industry, or group of enterprises or industries.

DOC Position: We have determined that the Basque rebate program is not countervailable. The fact that all sectors and industries except agriculture, energy and hydro-power have received rebates under this program makes it too broadly used to be considered limited in its availability. Furthermore, the fact that it is available only to small- and medium-sized companies does not limit it to a specific enterprise or industry, or group of enterprises or industries (See Final Affirmative Countervailing Duty Determination and Countervailing Duty Order: Certain Textile Mill Products from Mexico (50 FR 10824, March 18, 1985). Reasonable eligibility requirements, such as these, do not necessarily make a program industry-specific. (See section II.C.).

Comment 16: Petitioner argues that the verification report supplies information that demonstrates clear discrimination in the application of the program under Guipuzcoa Decree 41/1985. Petitioner points out that benefits under this program are available only to small- and medium-sized companies and that these companies must show that the money will be used to develop new product designs, technologies and/or foreign markets. This latter aspect demonstrates the export-oriented feature of the program.

Respondents argue that, in its preliminary determination, the Department rightly concluded that Basque Decree 149/1985 and Guipuzcoa Decree 41/1985 are linked and that the program established by these decrees is not countervailable. Respondents further argue that, even were Guipuzcoa Decree 41/1985 to be considered separately, it should be determined to be not countervailable, since the program is "generally available" to companies in Guipuzcoa and funded by monies collected in Guipuzcoa by Guipuzcoan authorities, as evidenced in the verification report.

DOC Position: We agree with respondents that benefits under Decree 41/1985 are not countervailable. We verified that the program is not limited to an industry or group of industries and that the program is funded by monies from Guipuzcoan general revenues.

We disagree with petitioner's argument that the program is discriminatory in nature. We verified that small- and medium-sized companies, whether they are exporters or not, can and have received benefits under this program. Furthermore, we found no specific export conditions attached to the grants received by the respondent companies. (See section II.B.)

Comment 17: Petitioner argues that, although administered by the Galician government, Decree 151/1984 was funded by national tax revenues; therefore, it constitutes a regional development program.

Respondents argue that grants received under Decree 151/1984 are not countervailable because the program was funded solely by revenues raised by the Galician government and because the program was generally available to all companies in Galicia.

DOC Position: This program was not used by the companies under investigation during the review period, so the issue is moot. (See section III.H.).

Comment 18: Petitioner argues that there are significant discrepancies between the government of Spain's export figures and those reported by the companies and that respondent *24349 companies failed to subtract currency exchange losses, sales cancellations, service charges, resale of unfinished block, and/ or credits from the gross sales figures; therefore, the Department should make every possible deduction from the sales and export values.

DOC Position: During verification, we took into account all sales cancellations, service charges and/or credits from the gross sales before arriving at the sales figures. For some companies, currency exchange losses/gains with respect to sales were also taken into account. For others, the companies' records did not segregate the exchange losses/gains on sales, so we did not take them into account; however, the exchange losses/gains are so small that they would have had no effect on the calculation of the benefits.

Comment 19: Petitioner argues that the Department should find that any and all export financing obtained by the respondents below the average commercial market rate was given under the PCECP program and, as such, is countervailable. Petitioner states that, according to one company, loan agreements did not necessarily have to specify the fact that the loans were made under the auspices of the PCECP program.

DOC Position: We disagree. Even though the loan agreements between the banks and some of the companies do not specify that they were made under the auspices of the PCECP program, we were able to distinguish which ones were PCECP loans through the interest rates charged, the length of the loans, and the stated purposes of the loans as identified in the loan agreements. These factors are different for PCECP loans as opposed to other types of loans. Therefore, we are not countervailing loans other than those described in section I.A.

Comment 20: Petitioner argues that respondents benefitted from RD 942/1964 warehouse construction loans during the review period because the program, as part of the PCECP system, was not terminated until March 1987. Because the government of Spain proferred no documentation on the beneficiaries under the program, petitioner argues that insufficient verification requires the Department to use best information available regarding the benefits available and used under the program.

DOC Position: We disagree. Although we were unable to verify at the government the usage of this program, we verified at the companies under investigation that they did not have any such loans on which principal or interest was outstanding during the review period.

Comment 21: Petitioner argues that loans obtained at non-commercial rates from the Banco Exterior during the review period are countervailable because the bank is a government-owned entity, the function of which is to promote exports, and because "interest rates for export-oriented loans (not necessarily based on PCECP) issued by the bank were preferential and lower than normal commercial rates."

DOC Position: We disagree. Government ownership or control of a bank does not necessarily lead to the conclusion that the bank is operating in other than a commercial fashion, nor does it mean that all funds provided are part of a countervailable program. The fact that the Banco Exterior is government-owned does not automatically make all its loans preferential and countervailable. In fact, we found that interest rates charged by the Banco Exterior to the respondent companies were both above and below the average commercial rates. Furthermore, we found no indication at verification that there was any other government-sponsored short-term loan program to promote exports except the PCECP.

Comment 22: Petitioner argues that the Department should use the best information available to determine that the tax deductions taken under Law 46/1985 and RD 1667/1986 discovered at verification are limited to a specific group of enterprises or industries, because no copies of the law or decree were made available by the government of Spain or the respondents and because these programs were not properly verified.

DOC Position: Neither of these programs was alleged by petitioner. We found use of these tax deductions by several companies during verification. We requested and have been provided with copies of Law 46/1985 and RD 1667/1986. The laws indicate that these are general tax provisions which apply to all taxpayers, including public organizations and individuals as well as private companies, just as the companies stated at verification. Section 775 of the Act states that, "If, in the course of an investigation under this title, the administering authority discovers a practice which appears to be a subsidy, but was not included in the matters alleged in a countervailing duty petition, then the administering authority shall include the practice in the investigation if it appears to be a subsidy with respect to the merchandise which is the subject of the investigation." Since there is no indication that these two tax provisions appear to be subsidies, we are not considering them in this final determination.

Comment 23: Petitioner argues that the tax deduction received by one of the respondents for over-payment of pre-IVA (value-added) taxes should be treated as a government grant and, therefore, countervailable since nothing was submitted to explain the over-payment of pre-IVA taxes nor why that amount should enjoy a special deduction under the new IVA instituted in 1986. Petitioner argues that the Department should not accept such a deduction without further corroboration from the government of Spain regarding the tax consequences of the conversion from the old tax system to the new IVA system.

DOC Position: We verified that the company did not receive benefits from this tax deduction during the review period, therefore, we are not considering it in this investigation.

Comment 24: In its May 16 brief, petitioner states that a commercial office operating in the United States under the auspices of the government of Spain's National Institute for Fostering Exports had been promoting sales of Spanish wine as late as 1985. Petitioner argues that, since the office is still in operation, it is reasonable to assume that other sectors of the Spanish export market were also being supported including the granite industry. Petitioner requests that the Department consider the existence and activities of this office and assign a value to its services that benefited the Spanish granite export industry in 1986. Petitioner argues that a "justifiable benchmark would be the total advertising costs of the largest Spanish exporter of the year."

In the same brief, petitioner states that the non-confidential version of the antidumping verification report reported that one of the respondents received free inland freight from the shipping companies. Petitioner argues and requests that this practice be reviewed with other Spanish companies to determine the extent of this subsidization.

Also in its May 16 brief, petitioner alleges that one of the respondent companies in the United States is supported by an arrangement between McDonnell Douglas Aircraft Company and the government of Spain. Petitioner argues that this service is "clearly government supported and should be countervailed." Petitioner suggests that an appropriate rate would be the costs attributable to a full-time agent (including commissions) in the United *24350 States. Petitioner also cites the non-confidential antidumping verification report to support this allegation.

DOC Position: These are untimely allegations, raised after our preliminary determination and verification and thus too late for the Department to investigate and verify, as required by sections 355.34 and 355.39 of our Regulations; therefore, we will not consider them in this investigation.

Comment 25: Petitioner contends that the questionnaire responses were general and, therefore, inadequate and that the bulk of the information regarding the programs was given only at verification. Petitioner argues that "these tactics mock the investigative process contemplated by Congress in which petitioner and the Department should be able to review data and issues in a timely manner." Petitioner urges the Department to make its determination using inferences adverse to the non-responding part, i.e. the respondents.

DOC Position: We disagree. The respondents provided us with adequate information to make the preliminary determination. At verification, we were provided with back-up documentation to verify the information given in the responses as well as additional information and documentation to clarify some questions we had on certain programs. This additional information was submitted in supplemental responses at our request. We do not consider the additional information obtained at verification to be sufficiently significant to justify disregarding the responses and using best information available.

Comment 26: Petitioner argues that the OECD loan program should also be treated as a government-supported, export-financing scheme that benefits Spanish exporters by making financing available at preferential rates. Therefore, since the OECD program "replaced" the PCECP and there is a lack of verified information regarding several aspects of the PCECP and OECD programs, the Department should use best information available and treat as countervailable all forms of financing provided to Spanish granite producers at below the highest average commercial market rate verified by the Department.

DOC Position: We verified that none of the companies under investigation received loans under the OECD program.

Verification

In accordance with section 776(a) of the Act, except where noted in this determination, we verified the information used in making our final determination. We followed the standard verification procedures including meeting with government and company officials, examination of relevant accounting records, and examination of original source documents of the respondents. Our verification results are outlined in detail in the public versions of the verification reports which are on file in the Central Records Unit (Room B-099) of the Main Commerce Building.

Suspension of Liquidation

In accordance with our preliminary affirmative countervailing duty determination, published on December 24, 1987, we directed the U.S. Customs Service to suspend liquidation on the products under investigation and to require a cash deposit or bond equal to the duty deposit rate. This final countervailing duty determination was extended to coincide with the companion final antidumping determination, pursuant to section 606 of the Trade and Tariff Act of 1984 (section 705(a)(1) of the Act). Under Article 5, paragraph 3 of the Agreement of Interpretation and Application of Articles VI, XVI, and XXIII of the General Agreement on Tariffs and Trade (the Subsidies Code), provisional measures cannot be imposed for more than 120 days without final affirmative determinations of subsidy and injury. Therefore, on April 19, 1988, we instructed the U.S. Customs Service to discontinue the suspension of liquidation on the subject merchandise entered on or after April 22, 1988, but to continue the suspension of liquidation of all entries or withdrawals from warehouse, for consumption, of the subject merchandise entered between December 24, 1987, and April 22, 1988. We will reinstate suspension of liquidation under section 703(d) of the Act, if the ITC issues a final affirmative injury determination, and require duty deposits on all entries of the subject merchandise except entries from Granitos Ibericos-Grayco, S.A., and Santal, S.A. in the amounts indicated below:

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

��Manufacturer/producer/exporter��Estimated�net��Duty�deposit

��subsidy��rate

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Granitos�Espanoles,�S.A.................................�3.77��3.54

Marmoles�y�Granitos�de�Espana,�S.A......................�3.77��3.54

All�others�.............................................�1.08��0.85

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

Granitos Ibericos-Grayco, S.A., and Santal, S.A., are excluded from this determination because their duty deposit rates are de minimis (less than 0.50 percent ad valorem) and zero respectively. Therefore, their entries will not be subject to the suspension of liquidation.

ITC Notification

In accordance with section 705(d) of the Act, we will notify the ITC of our determination. In addition, we are making available to the ITC all nonprivileged and nonproprietary information relating to this investigation. We will allow the ITC access to all privileged and business proprietary information in our files, provided the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order, without the written consent of the Assistant Secretary for Import Administration.

If the ITC determines that material injury, or the threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or cancelled. If, however, the ITC determines that such injury does exist, we will issue a countervailing duty order, directing Customs officers to assess countervailing duties on all entries of certain granite from Spain entered, or withdrawn from warehouse, for consumption, as described in the "Suspension of Liquidation" section of this notice.

This determination is published pursuant to section 705(d) of the Act (19 U.S.C. 1671d(d)).

June 21, 1988.

Jan W. Mares,

Assistant Secretary for Import Administration.

BILLING CODE 3510-DS-M