[Federal Register: March 13, 2001 (Volume 66, Number 49)]
[Notices]
[Page 14521-14540]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13mr01-32]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-357-813]
Honey from Argentina: Preliminary Affirmative Countervailing Duty
Determination and Alignment with Final Antidumping Duty Determination
on Honey from the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce
EFFECTIVE DATE: March 13, 2001.
FOR FURTHER INFORMATION CONTACT: Dana Mermelstein or Doug Campau,
Office of AD/CVD Enforcement VII, Import Administration, U.S.
Department of Commerce, Room 7866, 14th Street and Constitution Avenue,
NW., Washington, DC 20230; telephone (202) 482-1391 and (202) 482-1395
respectively.
Preliminary Determination
The Department of Commerce (the Department) preliminarily
determines that countervailable subsidies have been provided to
producers and/or exporters of honey from Argentina. For information on
the estimated countervailing duty rate, please see the
[[Page 14522]]
``Suspension of Liquidation'' section of this notice.
SUPPLEMENTARY INFORMATION:
Petitioners
The petition in this investigation was filed on behalf of the
American Honey Producers Association and the Sioux Honey Association
(the petitioners).
Case History
On September 29, 2000, the Department received a countervailing
duty petition filed in proper form on behalf of the American Honey
Producers Association and the Sioux Honey Association. The Department
initiated this countervailing duty investigation of honey from
Argentina on October 26, 2000. The notice of initiation was published
in the Federal Register on November 2, 2000. See Notice of Initiation
of Countervailing Duty Investigation: Honey from Argentina, 65 FR 65835
(Initiation Notice). Since the initiation, the following events have
occurred.
Due to the large number of producers and exporters of honey in
Argentina, and based on discussions with the Government of Argentine
(GOA) , the Department decided to solicit information from the GOA on
an aggregate or industry-wide basis in accordance with section
777A(e)(2)(B) of the Act, rather than from individual producers and
exporters. See Memorandum to the File, Countervailing Duty
Investigation of Honey From Argentina: Conducting the Investigation on
an Aggregate Basis, dated November 3, 2000, (Aggregation Memo). On
November 9, 2000, we issued a countervailing duty questionnaire to the
GOA. On November 22, 2000, the GOA submitted a letter claiming green
box status pursuant to the WTO Agreement on Agriculture for twenty-
seven of the programs under investigation (see ``Green Box Claims''
section below for a detailed discussion of these claims). On November
21 and 22, 2000, the Department conducted a questionnaire presentation
in Argentina. See Memorandum to the File, Honey from Argentina:
Countervailing Duty Questionnaire Presentation in Buenos Aires, dated
December 4, 2000.
On December 5, 2000, petitioners made a timely request pursuant to
19 CFR 351.205(e) for postponement of the preliminary determination in
accordance with section 703(c)(1) of the Tariff Act of 1930, as amended
(the Act). Pursuant to section 703(c)(1)(A) of the Act, on December 15,
2000, the Department postponed the preliminary determination to March
5, 2001 (65 FR 78474).
On December 22, 2000, the Department issued an additional
questionnaire addressing the GOA's green box claims. The Department
received questionnaire responses from the GOA on January 2 and January
18, 2001. The Department issued supplemental questionnaires to the GOA
on January 26 and January 31, 2001. The Department received the GOA's
supplemental responses on February 14 and 16, 2001.
Scope of Investigation
For purposes of this investigation, the products covered are
natural honey, artificial honey containing more than 50 percent natural
honeys by weight, preparations of natural honey containing more than 50
percent natural honeys by weight, and flavored honey. The subject
merchandise includes all grades and colors of honey whether in liquid,
creamed, combs, cut comb, or chunk form, and whether packaged for
retail or in bulk form.
The merchandise subject to this investigation is currently
classifiable under subheadings 0409.00.00, 1702.90, and 2106.90.99 of
the Harmonized Tariff Schedule of the United States (HTSUS). Although
the HTSUS subheadings are provided for convenience and U.S. Customs
Service (U.S. Customs) purposes, the Department's written description
of the merchandise under investigation is dispositive.
In the scope section of the Initiation Notice for this
investigation, the Department encouraged all parties to submit comments
regarding product coverage by November 9, 2000. The Department did not
receive any comments regarding scope.
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act (URAA). In addition, all citations to the
Department's regulations are to the regulations codified at 19 CFR part
351 (2000).
Injury Test
Because Argentina is a ``Subsidies Agreement Country'' within the
meaning of section 701(b) of the Act, the International Trade
Commission (ITC) is required to determine whether imports of the
subject merchandise from Argentina materially injure, or threaten
material injury to, a U.S. industry. On November 13, 2000, the ITC
published its preliminary determination that there is a reasonable
indication that an industry in the United States is being materially
injured, or threatened with material injury, by reason of imports from
Argentina of the subject merchandise (64 FR 41458). The views of the
Commission are contained in USITC Publication 3369 (November 2000),
Honey from Argentina and China; Investigations Nos. 701-TA-402 and 731-
TA-892-893 (Preliminary).
Alignment with Final Antidumping Duty Determination
On February 27, 2000, petitioners submitted a letter requesting
alignment of the final determination in this investigation with the
final determination of the antidumping duty investigation of honey from
the People's Republic of China. See Initiation of Antidumping Duty
Investigations: Honey From Argentina and the People's Republic of
China, 65 FR 65831 (November 2, 2000). In accordance with section
705(a)(1) of the Act, we are aligning the final determination in this
investigation with the final determination in the companion antidumping
investigation of honey from the People's Republic of China.
Period of Investigation
The period for which we are measuring subsidies (the period of
investigation or POI) is calendar year 1999.
Aggregation
Under section 777A(e)(2)(B) of the Act, the Department may
calculate a single country-wide rate applicable to all exporters if the
Department determines it is not practicable to determine individual
countervailable subsidy rates due to the large number of exporters or
producers involved in the investigation or review.
In the current countervailing duty investigation of honey from
Argentina, petitioners' allegations show that there are between 18,000
and 20,000 honey producers in Argentina (see p. 20 of the petition,
citing to the Argentine National Statistics Office, export statistics
for 1998). Further information provided by the GOA indicates that there
are approximately 25,000 honey producers in the country. (See
Aggregation Memo.) The GOA also expressed concern, in meetings with the
Department, about the difficulty of identifying individual producers,
and the producers' ability to provide information. Thus, due to the
extremely large number of honey producers subject to this investigation
and the complexities associated with identifying and investigating
individual producers, the Department determined that it
[[Page 14523]]
would not be practicable to investigate alleged countervailable
subsidies received by individual honey producers and exporters in
Argentina. In making this decision, it was our understanding that the
GOA would be in a position to provide the information on an aggregate
basis that would be necessary to conduct our subsidy analyses.
Accordingly, we are following the statutory provision that permits the
Department ``to determine a single countrywide subsidy rate to be
applied to all exporters and producers.'' See section 777A(e)(2)(B) of
the Act. See also Aggregation Memo.
Green Box Claims
In accordance with section 771(5B)(F) of the Act, the Secretary
will treat as non-countervailable domestic support measures that are
provided with respect to certain agricultural products listed in Annex
1 of the WTO Agreement on Agriculture (Agriculture Agreement), provided
such measures conform to the criteria of Annex 2 of the same agreement.
Furthermore, in accordance with section 351.522(a) of the Department's
regulations, the Department will determine that a particular domestic
support measure conforms fully to the green box criteria in the
Agriculture Agreement if it finds that the measure (1) is provided
through a publicly-funded program (including government revenue
foregone) not involving transfers from consumers; (2) does not have the
effect of providing price support to producers; and (3) meets the
relevant policy-specific criteria and conditions laid out in Annex 2 of
the Agriculture Agreement. According to Sec. 351.301(d)(6) of the
Department's regulations, a claim that a particular agricultural
support program should be accorded green-box status under section
771(5B)(F) of the Act must be made by the competent government with the
full participation of the government authority responsible for funding
and/or administering the program. Because the GOA, in consultations
prior to initiation of this investigation had indicated that most of
the alleged programs met the criteria for green box treatment, the
Department, in its initial questionnaire cover letter issued on
November 9, 2000, gave the GOA specific instructions for submitting
claims that programs meet the requirements of Annex 2. The Department
also addressed green box issues in its questionnaire presentation in
Argentina, on November 20 and 21, 2000.
As noted in the ``Case History'' section, on November 22, 2000, the
GOA submitted a letter claiming green box status for twenty-seven of
the programs under investigation. This letter made reference to the
specific paragraph(s) of Annex 2 with which the particular programs
were claimed to conform. The Department issued a questionnaire
addressing the GOA's claims on December 22. In its January 18, 2001
response, the GOA reduced to three the number of programs for which it
is claiming green box status. The three remaining programs for which
the GOA claims green box status are the PROMEX Consortium for Honey
Exportation (PROMEX), PROAPI, and the Law 22,913 Emergency Aid program.
The Department issued a supplemental green box questionnaire on January
31, 2001, and the GOA submitted its response on February 16, 2001. The
green box issues with respect to each of these programs are discussed
in the relevant program-specific sections below.
Use of Facts Available
Section 776(a)(2)(B) of the Act states the Department ``shall use
facts otherwise available in reaching the applicable determination'' if
an interested party ``fails to provide the information requested in a
timely manner and in the form required.'' For several programs
(discussed under the relevant programs below), the GOA did not provide
all of the information requested by the Department and needed for a
complete analysis. We must therefore resort to the facts otherwise
available in reaching the applicable determination for those programs.
Furthermore, section 776(b) of the Act provides that in selecting
from among the facts available, the Department may use an inference
that is adverse to the interests of a party if it determines that a
party has failed to cooperate to the best of its ability. In this
investigation, the Department requested that the GOA submit information
necessary to determine the potential countervailablity of the alleged
subsidy programs and to calculate potential subsidy rates applicable to
those programs. When the Department was making its decision to apply an
aggregate methodology to this case, the GOA indicated that it would be
in a position to provide the information on an aggregate basis that
would be necessary to conduct our subsidy analyses.
For most of the programs, the GOA submitted sufficient information
for the Department to conduct its analysis of the countervailablity of
such programs and to calculate a benefit from those programs. However,
for some of the programs, the GOA has not provided sufficient
information for the Department to analyze at least one or more of the
three elements that are necessary to determine whether a program is
countervailable: (1) Specificity; (2) financial contribution; and (3)
benefit. For these particular programs, and in light of the information
the GOA did provide, we preliminarily determine that the GOA had the
ability to provide the additional information, as requested. Therefore,
we determine that, in these few instances, it is appropriate for us to
make adverse inferences. See section 776(b) of the Act. The specific
information that is lacking is discussed under the relevant program
section below.
In selecting from the facts available, when the Department
determines that an adverse inference is warranted, the statute
indicates that the Department may rely upon information derived from
(1) the petition; (2) a final determination in a countervailing duty or
an antidumping investigation; (3) any previous administrative review,
new shipper review, expedited antidumping review, section 753 review,
or section 762 review; or (4) any other information placed on the
record. See 19 CFR 351.308(c). As adverse facts available in this
preliminary determination, we have relied upon information derived from
the GOA's questionnaire responses to supply missing information
regarding the specificity, financial contribution, and/or benefit for
certain programs. The Department's selection of the information used as
adverse facts available is discussed in more detail in the program-
specific sections below.
Subsidies Valuation Information
Allocation Period
Section 351.524(d)(2) of the Department's regulations states that
we will presume the allocation period for non-recurring subsidies to be
the average useful life (AUL) of renewable physical assets for the
industry concerned, as listed in the Internal Revenue Service's (IRS)
1977 Class Life Asset Depreciation Range System, as updated by the
Department of Treasury. The presumption will apply unless a party
claims and establishes that these tables do not reasonably reflect the
AUL of the renewable physical assets for the company or industry under
investigation, and the party can establish that the difference between
the company-specific or country-wide AUL for the industry under
investigation is significant.
No party requested, or submitted information which yielded, an
industry-
[[Page 14524]]
wide AUL different from the AUL listed in the IRS tables. We are
therefore using the 10-year AUL as reported in the IRS tables to
allocate any non-recurring subsidies under investigation.
Loan Benchmark Interest Rates
In selecting benchmark interest rates for use in calculating the
benefits conferred by the various loan programs under investigation, we
would normally look for the interest rate a borrower had received on a
comparable commercial loan. See 19 CFR 351.505(a)(3)(i). However, since
we are conducting this investigation on the aggregate level, and we are
not examining individual companies, we have sought information on the
national average interest rates for comparable commercial loans. See 19
CFR 351.505(a)(3)(ii). The GOA provided information compiled by the
Central Bank of Argentina showing the national average interest rates
for various types of financing: Fixed-rate and variable-rate;
denominated in Argentine pesos or in foreign currency; long-term or
short-term; and secured and unsecured. For each loan program found to
be countervailable, we have selected a benchmark from the information
provided depending upon the terms and characteristics of the particular
loan program.
As discussed in the individual loan program sections below, many of
the investigated loan programs require the borrower to provide a
guarantee and pay commissions and other administrative fees. When we
asked the GOA to provide information about fees normally charged on
loans by commercial banks, the GOA indicated that many such fees are
applied, but provided no indication of the rates or the values of such
fees. As such, we are not able to calculate effective interest rates,
which we would normally do by taking account of all such fees and
commissions on both the actual loans and the benchmark loans. Thus,
when calculating the benefits from countervailable loans, we have
compared the loans' nominal interest rates to nominal benchmark
interest rates.
Denominator Issues
The GOA has provided information for the POI relating to the total
volume of honey produced in Argentina, the volume and value of total
honey exports, and the volume and value of exports of honey to the
United States. They have also broken down, where possible, the export
volumes and values according to the province in which the honey was
produced. However, the GOA was unable to provide information relating
to total sales of honey during the POI. As a proxy for total sales
information, the GOA provided data showing the volume of honey
production by province during the POI. However, no data was provided
showing the value of production. We have estimated the value of the
total production reported by the GOA using the volume and value data
provided for exports to the United States. We divided the value of
Argentine honey exports to the United States by the volume of those
exports to calculate a per kilogram value in U.S. dollars. (We note
that, throughout the POI, the exchange rate was one U.S. dollar equal
to one Argentine peso.) We then multiplied this per kilogram value by
the provincial production data provided to arrive at the value of total
Argentine honey production during the POI. We have used this estimated
total production value as our denominator when calculating the subsidy
from federal domestic programs and we have used the relevant provincial
production value as our denominator when calculating the subsidy from
domestic subsidies provided at the provincial level; and, we have used
the total or provincial export values, as reported, as our denominators
when calculating the subsidy from programs we have determined to be
export subsidies.
To determine the final subsidy from each provincial program that is
attributable to exports of honey to the United States we applied the
following methodologies: (1) For provinces for which we have reported
export data, we weight-averaged the subsidies from each provincial
program by multiplying each subsidy by that province's share of total
honey exports, by value, to the United States during the POI; and (2)
for provincial domestic subsidy programs in provinces that do not have
reported exports of honey to the United States during the POI, but do
have reported honey production during the POI, and for which the GOA
did not specifically report that that province had no exports to the
United States, we divided the benefits by the value of total Argentine
honey production during the POI.
Based upon our analysis of the petition and responses to our
questionnaires, we preliminarily determine the following:
I. Programs Preliminarily Determined to be Countervailable
A. Federal Programs
1. Argentine Internal Tax Reimbursement /Rebate Program (Reintegro)
The Reintegro program entitles Argentine exporters of honey
produced in Argentina to a rebate of many internal or domestic taxes
that are levied during the production and distribution process in
Argentina on the finished export product. The Reintegro program
provides a cumulative tax rebate paid upon export, calculated as a
percentage of the FOB invoice price of exported product.
According to the questionnaire responses, the GOA established a
rebate system in 1971, which was known as the ``reembolso'' program. In
1986, Decree 1555/86 was promulgated to implement the reembolso program
in a manner consistent with the General Agreement on Tariffs and Trade.
In May 1991, the GOA issued Decree 1011/91, which renamed the reembolso
program as Reintegro and modified the legal structure of the program.
Under Decree 1011/91, Reintegro rebated indirect taxes only. Decree
1011/91 has been the relevant governing decree since 1991. The nature
and structure of the program have remained unchanged since then,
although the Ministry of Economics modifies Reintegro rebate levels
from time to time. Exports of bulk and processed honey have been
eligible for Reintegro since at least August 1996.
The Reintegro rate applicable to bulk honey was 4.1 percent from
February 1998 through April 2000. The Reintegro rate applicable to
processed honey was 8.1 percent from February 1998 until August 1999,
when it increased to 10 percent. In April 2000, the Reintegro rate for
bulk honey increased to 5.4 percent while the rate for processed honey
increased to 12 percent.
The Reintegro is specific under section 771(5A)(B) of the Act
because it is contingent upon export performance. The Reintegro confers
a financial contribution in the form of a direct transfer of funds from
the GOA to exporters of the subject merchandise. (See Section
771(5)(D)(i) of the Act.)
To determine whether a benefit exists for a tax rebate program, the
Department will normally examine whether the amount remitted or rebated
exceeds the amount of prior-stage cumulative indirect taxes paid on
inputs that are consumed in the production of the exported honey,
making normal allowances for waste, and if there is an excess, will
find it to be the benefit. (See Sec. 351.518(a) of the Department's
regulations.) However, there is an exception to this rule under
Sec. 351.518(a)(4)(i-ii) of the Department's regulations. Section
351.518(a)(4)(i-ii) states that the Department will consider the entire
amount of the tax rebate or remission to confer a benefit unless the
Department finds that:
[[Page 14525]]
(i) The government in question has in place and applies a system or
procedure to confirm which inputs are consumed in the production of the
exported products and in what amounts, and to confirm which indirect
taxes are imposed on these inputs, and the system or procedure is
reasonable, effective for the purposes intended, and is based on
generally accepted commercial practices in the country of export; or
(ii) If the government in question does not have a system or
procedure in place, if the system or procedure is not reasonable, or if
the system or procedure is instituted and considered reasonable, but is
found not to be applied or not to be applied effectively, the
government in question has carried out an examination of actual inputs
involved to confirm which inputs are consumed in the production of the
exported product, in what amounts and which indirect taxes are imposed
on the inputs.
In both our original and supplemental questionnaires, we asked the
GOA to describe the system or procedures that it had used to establish
the appropriate level of Reintegro for bulk and processed honey (i.e.,
how it had initially determined that honey exporters were entitled to a
rebate, and how it determined the level of rebate including the goods
consumed in production and the indirect tax incidence on those goods).
The GOA responded that for certain sectors (e.g., steel and textiles),
it monitors and evaluates which inputs are consumed in the production
of the exported products and in what amounts, and confirms which
indirect taxes are imposed on these inputs through the collection of
production and tax incidence information from representative producers.
However, the GOA reported that it does not have the resources necessary
to monitor the tax incidence of numerous representative honey
producers. Instead, the GOA stated that its approach to the honey
sector has been to gather information from the private sector, and the
agricultural and tax authorities. The GOA claimed that this information
is then corroborated through publicly-available sources and through
studies done by independent third parties.
The GOA explained that the Directory for Industrial Alimentation of
the Agricultural Secretariat (SAGyP) is in constant contact with
Provincial governments, honey producers, acopiadors (honey
intermediaries who collect and consolidate raw honey from multiple
producers for sale and export), and exporters. The GOA states that
their communications with members of the honey sector take the form of
phone calls, electronic mail, etc. The GOA submitted copies of written
communications between it and the honey sector dated July 2000. These
communications appear to be questionnaires to sample beekeeping costs,
and responses to those questionnaires, from the Corrientes and Rio
Cuarto zones.
In addition, the GOA submitted a study entitled ``Production,
Industrialization, and Commercialization of Honey,'' prepared by the
Federal Administration of Public Revenue (AFIP), and dated September
1997, which the GOA states is a ``study of the beekeeping sector.'' The
GOA stated that the objective of this study was to provide AFIP agents
with a guide to ``understanding the manner in which the taxpayers
comply with their obligation to pay taxes'' and ``new alternatives for
increasing the amount and efficiency of tax payments in the sector.''
The study's introduction is translated and describes the study as
follows. Chapter I deals with the macroeconomic aspects, production
system, and commercialization system of honey. Chapter II explains the
motive for creating an inspection strategy and examples of tax evasion.
Chapters I and II are not translated. Chapter III, which is partially
translated, describes the inspection strategy recommended by the study.
Thus, this study appears to deal primarily with improving the
efficiency of tax payments from the honey sector and increasing the tax
compliance from the honey sector with respect to direct taxes. As such,
it is not clear how this study is relevant to the establishment of the
appropriate levels of Reintegro applicable to bulk and processed honey.
In addition, the GOA did not explain how the guidelines listed in the
1997 AFIP study were, if ever, used to confirm the appropriate level of
Reintegro for bulk and processed honey.
The information and documentation submitted by the GOA does not
demonstrate that the government had, or has, in place a system or set
of procedures to confirm which inputs are consumed in the production of
the exported products and in what amounts, and to confirm which
indirect taxes are imposed on these inputs. While the GOA apparently
gathers various types of information from a number of sources about the
honey sector and its production processes and costs, it has provided no
evidence demonstrating that there was or is a system or set of
procedures in place that is followed to determine the specific inputs
consumed in production of honey and the indirect tax incidence on those
inputs. Moreover, the GOA did not explain, let alone substantiate, the
process through which it analyzed the general information collected on
the honey industry to determine the specific Reintegro rate for bulk
and processed honey exports. Therefore, we find that the requirements
for non-countervailablity set forth in Sec. 351.518(a)(4)(i) of the
regulations have not been met.
However, as outlined in Sec. 351.518(a)(4)(ii), even if the
government does not have a system or procedure in place, it may still
carry out ''. . . an examination of actual inputs involved to confirm
which inputs are consumed in the production of the exported product, in
what amounts, and which indirect taxes are imposed on the inputs.''
In the questionnaire response, the GOA submitted a report entitled
``Reintegros for Argentine Honey Exports,'' prepared by EcoLatina, an
independent third party, in December 2000. In commissioning the study,
the GOA requested that EcoLatina calculate the incidence of indirect
taxes on the average honey FOB price. The report presents information
on the cost structure and tax incidence of what are described as a
``representative'' producer, acopiador (distributor), and exporter.
However, the report does not address the cost structure and tax
incidence for processed honey. In response to supplemental questions,
the GOA stated that the cost structure and tax incidence data reported
in the study are not based on the cost structure and tax incidence of
specific producers, acopiadors, and exporters. Rather, the cost
structure and tax incidence were constructed for a ``typical''
producer, acopiador, and exporter based on certain characteristics
which the GOA relates to characteristics of the sector.
The GOA has stated that Argentine honey producers can be placed in
several different groups depending on the level of dedication and on
the number of hives. However, the GOA maintains that the main
distinction among groups is between industrial producers and all others
and that the characteristics of non-industrial producers are very
similar.
In its narrative, the GOA has described the representative producer
as a part-time producer who maintains 250 hives and has an alternative
source of income. The report classifies honey producers by level of
dedication to beekeeping and number of hives and indicates the percent
of honey produced by each level of producer. Based on the criteria of
the report, the ``representative
[[Page 14526]]
producer'' fits into the category described as having ``all personnel
dedicated to beekeeping'' and having between 200 and 499 hives in
production. This category accounts for only 24 percent of Argentine
honey production. By contrast, the report indicates that 49 percent of
Argentine honey is produced by producers described in the report as
``household beekeepers'' who have fewer than 49 hives. Moreover, the
report indicates that 24 percent of Argentine honey is produced by
producers described as having only a ``partial dedication to
beekeeping'' and between 50 and 199 hives. As such, it is unclear how
the producer level and the relative production level information
detailed in the report supports the GOA's narrative description of what
constitutes a representative Argentine honey producer. Thus, the
``representative producer'' which the GOA states is the ``basic
assumption'' of the report apparently bears little resemblance to the
household and partially-dedicated beekeepers which account for 71
percent of Argentine honey production.
We do not disagree that it would be an enormous burden for a
government to collect the necessary data from the thousands of honey
producers in Argentina or that the use of an alternative method for
collecting the necessary information automatically invalidates the
data. However, this report was not based on even a representative
sample of actual companies, nor were its identification of inputs and
indirect tax incidence (which had been collected from public sources)
tested against actual company information or experience. Moreover, as
noted in the report, tax incidence at the producer level accounts for
the vast majority of the claimed indirect tax incidence on exports of
Argentine bulk honey. As such, the report cannot be considered
representative of the honey industry in Argentina, and, as such, it
cannot meet the standard set forth in Sec. 351.518(a)(4)(ii) that an
examination of the ``actual'' inputs has been carried out.
Even if the report were to be considered an examination of the
``actual'' inputs involved, it does not demonstrate that the Reintegro
is based solely on the indirect tax incidence on the inputs consumed in
production. The report provided by the GOA includes a list of virtually
all of the costs associated with production, distribution, and export
of bulk honey and bases its calculation of indirect tax incidence on
this list. The list contains numerous items, such as spare parts,
transportation, and insurance, which cannot be considered to be
consumed in the production of bulk honey. In our supplemental
questionnaire, we asked the GOA to explain how it was determined that
each of the costs listed for the representative producer, acopiador,
and exporter could be considered to be inputs consumed in the
production of bulk honey. In its supplemental questionnaire response,
the GOA offered descriptions of eight general cost categories found at
the producer level. The GOA did not explain or substantiate how it was
determined that each of the costs listed for the representative
producer, acopiador, and exporter could be considered to be inputs
consumed in the production of bulk honey.
We also examined whether the listed taxes paid on the listed inputs
were accurately characterized as ``indirect taxes'' paid on inputs
consumed in the production of bulk honey. Some of the taxes in the
report were described as Real Estate Tax, Minimum Prospective Income
Tax, and Tax on Debt. In our supplemental questionnaire, we asked the
GOA to explain how it was determined that each of the taxes listed for
the representative producer, acopiador, and exporter in its report
could be considered to be indirect taxes paid to be inputs consumed in
the production of bulk honey. In its supplemental questionnaire
response, the GOA simply made the conclusory statements that its report
only considered indirect taxes and did not explain how it determined
that each of the taxes listed for the representative producer,
acopiador, and exporter in the report could be considered to be
indirect taxes paid on inputs consumed in the production of bulk honey.
Furthermore, the report did not list any additional inputs or
indirect taxes incurred in the production of processed honey.
Accordingly, based on our analysis of the report and other information
submitted by the GOA, the Department preliminarily determines, pursuant
to Sec. 351.518(a)(4)(ii) of the regulations, that the GOA has not
carried out a ``reasonable examination'' of actual inputs involved to
confirm which inputs are consumed in the production of exported bulk
and processed honey, in what amounts, and which indirect taxes are
imposed on those inputs. As such, the Department preliminarily
determines that the entire amount of the Reintegro for bulk and
processed honey confers a countervailable benefit.
Because we find the entire amount of the Reintegro for bulk and
processed honey to be countervailable, we need not address the
Reintegro's countervailablity under Sec. 351.518(a)(2) of the
Department's regulations.
Because the Reintegro is calculated as a percentage of the FOB
value of the exports, the percentage rebated serves as the subsidy
rate. To calculate a single subsidy rate for subject merchandise, which
includes both bulk and processed honey, we weight-averaged the
Reintegro rates for bulk and processed honey by the FOB value of
exports to the United States of bulk and processed honey during the
POI. Thus, we preliminarily determine that Reintegro provided a
countervailable subsidy of 4.16 percent ad valorem.
In April 2000, the Reintegro rates for bulk and processed honey
changed. These changes affected all firms that export subject
merchandise and were effectuated by a change in the rebate schedule of
the existing decree. These changes constitute program-wide changes in
accordance with Sec. 351.526(b)(1-2) of the regulations. Therefore,
consistent with Sec. 351.526(c)(1), for the purposes of establishing
the cash deposit rate of estimated countervailing duties we have
weight-averaged the Reintegro rates currently in effect (5.4 percent
for bulk honey and 12 percent for processed honey) by the FOB value of
exports of bulk and processed honey to the United States during the
POI. The cash deposit rate applicable to this program is 5.48 percent
ad valorem.
2. BNA Pre-Financing of Exports Regime for the Agriculture Sector
According to the questionnaire responses, the Pre-Financing of
Exports Regime for the Agriculture Sector program was established by
the Banco de la Nacion de Argentina (BNA), a government-owned bank. In
our notice of initiation, we identified this program as Law 24,467
Short- and Long-term Export Financing based on petitioners' allegation
and supporting documentation which indicated that such assistance was
either being provided pursuant to Law 24,467, or that companies meeting
the criteria in Law 24,467 were eligible for such assistance. In its
questionnaire response, the Government of Argentina clarified that Law
24,467 is the Argentine law pertaining to small and medium-sized
companies (PYMES). The GOA explained that only a few programs are
explicitly provided for in Law 24,467 and that there have been
budgetary constraints in fulfilling the legislative intent of the law.
Therefore, ``. . . mechanisms which predated Law 24, 467 and which were
already in place have been used to show some progress toward the goal
of helping the small and
[[Page 14527]]
medium-sized companies in Argentina.'' (Questionnaire Response at 24).
As such, assistance has been provided through other programs to fulfill
the goal of Law 24,467 to assist small and medium-sized companies.
Therefore, for certain programs identified as Law 24,467 programs in
the notice of initiation, the GOA has identified the correct
legislative or authorizing authority for the program, and clarified the
title of the program. As reported in the questionnaire response, this
program, the BNA Pre-Financing of Exports Regime for the Agriculture
Sector, was established pursuant to Annex B to the BNA Circular No.
10715/I.
This line of credit is offered by BNA to final exporters, for the
financing of agricultural exports. In addition to fulfilling the
standard application process for seeking a loan before the BNA, the BNA
requires all applicants to submit an irrevocable letter of credit
opened to his/her order, or, in the alternative, a firm offer or firm
purchase order stating the terms and conditions of the export
transaction, or a confirmation obtained from the intervening broker.
This line of credit is offered in U.S. dollars, at a variable interest
rate tied to LIBOR plus a spread added by the BNA. The additional
spread is calculated based on the credit risk of the borrower, as
determined on a case-by-case basis by the BNA. Financing under this
line of credit is available for up to 80 percent of the FOB value of
the export goods. Financing can be granted for a maximum period of 180
days. During the POI, there were loans outstanding to honey exporters
under this program.
We preliminarily determine that these lines of credit are specific
within the meaning of section 771(5A)(B) of the Act because they are
contingent upon export performance. Furthermore, a financial
contribution is conferred in the transfer of funds through loans, under
section 771(5)(D) of the Act.
To determine whether there is a benefit, we compared the interest
rate charged on loans provided under this program to the commercial
interest rates for loans that most closely resemble loans under this
program. Based on this comparison, there is a difference in the amount
the recipient of the loan pays and the amount the recipient would pay
on a comparable commercial loan that the recipient could actually
obtain on the market. Thus, these lines of credit provide a benefit
under section 771(5)(E) of the Act.
The GOA reported that there were five loans granted under this
program to honey producers that were outstanding during the POI. Two of
the loans were shown to have been for honey exports to a country other
than the United States; two of the loans were shown to have been for
honey exports to the United States; and, for the fifth loan, the GOA
did not indicate the destination of the export shipment financed. Thus,
in addition to the two loans specifically identified as providing
financing for shipments to the United States, and because it appears
that BNA loan records must contain information on the destination of
the fifth loan, we have assumed adversely that the fifth loan also
provided financing for honey shipments to the United States. The GOA
reported all of the relevant loan information for these loans.
To calculate the benefit, we applied our standard short-term loan
methodology, multiplying the difference between the actual interest
rate and the benchmark interest rate by the loan principal amount and
the number of days outstanding. We then divided the sum of the benefits
from all loans by the value of honey exports to the United States
during the POI. We thus preliminarily determine the countervailable
subsidy for this program to be 0.044 percent ad valorem.
3. BNA Financing for the Acquisition of Goods of Argentine Origin
According to the questionnaire responses, the BNA established a
line of credit for financing the acquisition of goods of Argentine
origin for the agricultural sector. In our notice of initiation, this
program was identified as the Law 24,467 Line of Credit for the
Acquisition of New Capital Goods of Argentine Origin. However, the GOA
has reported that this program is a BNA program for Financing the
Acquisition of Goods of Argentine Origin. (See discussion of alleged
Law 24,467 programs under the ``BNA Pre-Financing of Exports Regime for
the Agricultural Sector'' above).
Under this program, the goods financed must be of Argentine origin,
or must have a maximum foreign component of 40 percent. The financing
is provided for up to five years, is limited to 80 percent of the
purchase price, excluding VAT, and cannot exceed US$500,000 per
borrower. The applicable interest rate is 11 percent. The BNA also
charges an administration of guarantees fee for all investment and
working capital loans offered for 90 days or more, which are secured
with a mortgage, warrant, assignment of credit, third party surety
bond, or a security interest in personal property.
A program that is contingent upon the use of domestic goods over
imported goods, ``alone, or as 1 of 2 or more conditions,'' is an
import substitution subsidy under section 771(5A)(C) of the Act.
Because the goods for which financing is requested under this program
must be of Argentine origin, or must have a maximum foreign component
of 40 percent, we preliminarily determine that under section 771(5A)(C)
of the Act, the BNA Line of Credit for the Acquisition of New Capital
Goods of Argentine Origin is specific as an import substitution
subsidy.
Loans under this program provide a financial contribution under
section 771(5)(D) of the Act in the form of a transfer of funds. To
determine whether there is a benefit, we compared the interest rate
charged on loans provided under this program to the commercial interest
rate for loans that most closely resemble loans under this program.
Based on this comparison, there is a difference in the amount the
recipient of the loan pays on the loan and the amount the recipient
would pay on a comparable commercial loan that the recipient could
actually obtain on the market. Thus, this line of credit provides a
benefit under section 771(5)(E) of the Act.
To calculate the benefit, we used the following methodology.
Because the GOA did not provide requested information regarding the
specific loans to honey producers granted under this program that were
outstanding during the POI, or information showing the aggregate value
of loans outstanding to the honey industry under this program during
the POI, we had to estimate, from other information on the record, the
amount of loans to the honey industry that were outstanding during the
POI under this program.
In the 1999 BNA annual report provided by the GOA, there is data
showing the balance of all BNA lending (regardless of program) to the
agricultural sector for the years ending December 31, 1998 and 1999.
Absent any other information on the record, we have used this
information to calculate a proxy for the loans provided to honey
producers under this program. First, we determined the ratio of the
value of honey production during the POI to the value of total
Argentine agricultural production during the POI, based on information
provided in the questionnaire responses. We have multiplied this ratio
by the average balance of total loans outstanding to the agriculture
sector during the POI (calculated by averaging the two year-end loan
balance amounts) to estimate the average outstanding loan balance for
all BNA lending to the honey sector.
[[Page 14528]]
Because this figure represents the total of all BNA lending to
honey producers and because there are multiple BNA loan programs under
investigation, we had to adjust this figure to derive the outstanding
loan balance during the POI for loans to the honey industry under this
program. First, because actual loan information was submitted for all
loans provided to honey under the ``BNA Pre-Financing of Exports Regime
for the Agriculture Sector,'' we subtracted that amount from the total
amount that we calculated for all BNA loans outstanding to honey during
the POI. The balance was then divided by the remaining number of BNA
loan programs under investigation in order to estimate the outstanding
loan balance from this particular BNA program.
Because these are long-term loans, the benefit is calculated by
multiplying the outstanding loan balance during the POI by the
difference between the interest rate charged under the program and the
benchmark interest rate in accordance with section 351.505(c) of the
regulations. We then divided this amount by the value of total honey
production in Argentina during the POI. We thus preliminarily determine
the countervailable subsidy from this program to be 0.173 percent ad
valorem.
4. Regional Productive Revitalization: National Program for the
Promotion and Development of Local Productive Initiative (Dinamizacion
Productiva Regional Nacional de Promocion y Fomenta de la Iniciativa
Productiva Local)
According to the questionnaire responses, the GOA established the
Regional Productive Revitalization: National Program for the Promotion
and Development of Local Productive Initiative (Regional Productive
Revitalization Program) to strengthen the economies of small and
medium-sized towns in the Argentine interior. In our notice of
initiation, we identified this program as Law 24,467 Program for the
Enhancement of Regional Production. (See discussion of alleged Law
24,467 programs under the ``BNA Pre-Financing of Exports Regime for the
Agricultural Sector'' above). As reported in the questionnaire
response, the Regional Productive Revitalization program was
established by the Ministry of the Interior to improve the quality of
life in small and medium-sized towns in the Argentine interior, and
increase employment and incomes in these areas through the
transformation and modernization of the local productive base.
Individual projects are not eligible for this line of credit; only
collective projects, involving three to five producers associated with
the development of the project, are eligible. Eligibility is also
contingent upon a two-year residency requirement in the area where the
project is to be developed. The associated producers must also provide
a guarantee covering 130 percent of the loan. The program provides
credit for the acquisition of capital goods, technology, working
capital, training needs, and technical assistance.
There are two levels of loans under this line of credit. The first
level provides loans for municipal projects based in a single
municipality for financing up to $200,000. The second level provides
credit for inter-municipal projects that are based in more than one
municipality. These projects are eligible for financing up to
$1,000,000. These loans are granted at 8.0 percent interest, for a
period of up to five years, with a grace period of up to 18 months.
Interest accrues and is payable after the expiration of the grace
period. There were loans to honey projects under this program
outstanding during the POI.
We preliminarily determine this program to be specific under
section 771(5A)(D) of the Act because the program is limited to only
certain regions of Argentina. Enterprises or industries located within
the provincial capitals are not eligible for use of this program. This
program is therefore de jure regionally specific. This program provides
a financial contribution in the form of a transfer of funds, as defined
by section 771(D)(i) of the Act. To determine whether there is a
benefit, we compared the interest rate charged on loans provided under
this program to the commercial interest rates for loans that most
closely resemble loans under this program. Because there is a
difference in the amount the recipient of the loan paid on the loan and
the amount the recipient would have paid on a comparable commercial
loan during the POI, this line of credit provided a benefit during the
POI under section 771(5)(E) of the Act.
The GOA reported that there were two loans outstanding to honey
producers during the POI. The GOA did not report the dates that these
loans were granted, or whether any interest or principal payments were
made prior to or during the POI. Thus, we have made certain assumptions
regarding the specifics of these loans in order to calculate the
benefit: we assume that the loans were granted on January 1, 1999 and
that during the POI, the loans are in the 18-month grace period on
principal and interest repayment and the entire loan principal is
outstanding during the POI. However, since interest is accruing during
the grace period and will be payable thereafter, we have calculated the
benefit by multiplying the principal outstanding during the POI by the
difference between the loan interest rate and the benchmark interest
rate. We then divided this benefit by the value of honey production in
Argentina during the POI. Thus we preliminarily determine the
countervailable subsidy from this program to be 0.055 percent ad
valorem.
5. BNA Warrant-Based Export Financing
In our notice of initiation, we identified this program as
Preferential Export Financing Based on Warrants based on petitioners'
allegation and the supporting documentation which indicated that
preferential financing was administered pursuant to Law 9643 and
contingent upon export performance.
According to the questionnaire responses, the warrant is a
financing instrument that was created by Law 9643/14 in 1914 to secure
commercial lending transactions. A warrant and a certificate of deposit
can be issued upon the storage of products in a certified warehouse,
under certain conditions. Both the certificate of deposit and the
warrant are negotiable instruments. The certificate of deposit is a
legal title to the stored goods. A warrant is a financing instrument
attached to the certificate of deposit, which may be used to secure
commercial financing. Once detached from the certificate of deposit,
the warrant can be pledged as collateral, thereby perfecting a security
interest in the stored goods. A warrant can be pledged as collateral
for a financing transaction if the owner of the instrument endorses it
to the lending institution.
The GOA reported that the Argentine Small Business Association (the
SePYME) has no substantive responsibility or regulatory authority over
warrant-based financing and there is no specific warrant-based program
in Argentina. However, the GOA indicated that the BNA, like other
banks, offers warrant-based financing for a maximum term of 180 days.
Furthermore, Law 9643 specifically indicates that warrant-based
financing can be used as a form of export prefinancing. With no other
information on the record to examine BNA's Warrant-Based financing, we
preliminarily determine on the basis of facts available that the BNA
provides warrant-based financing for export purposes.
The BNA Warrant-Based Export Financing program is a de jure
specific export subsidy pursuant to section 771(5A)(B). These lines of
credit
[[Page 14529]]
provide a financial contribution within the meaning of section
771(5)(D)(i) of the Act because they are in the form of a transfer of
funds from the government.
To determine whether there is a benefit, we compared the interest
rate charged on loans provided under this program to the commercial
interest rates for loans that most closely resemble loans under this
program. Based on this comparison, there is a difference in the amount
the recipient of the loan pays on the loan and the amount the recipient
would pay on a comparable commercial loan that the recipient could
actually obtain on the market. Thus, this line of credit provides a
benefit under section 771(5)(E) of the Act.
To calculate the benefit, we used the following methodology.
Because the GOA did not provide information regarding the specific
loans to honey producers granted under this program that were
outstanding during the POI, or information showing the aggregate value
of loans outstanding to the honey industry under this program during
the POI, we had to derive, from other information on the record, the
amount of loans to the honey industry that were outstanding during the
POI under this program. Our methodology to derive the amount of loans
to the honey industry that were outstanding during the POI from this
BNA program is set forth in detail in the section on ``BNA Financing
for the Acquisition of Goods of Argentine Origin'' above. After
calculating the loans outstanding to the honey industry during the POI
under this BNA program, we multiplied that amount by the difference
between the benchmark and the program interest rate.
Because these are short-term loans, the product of the prior
calculation is multiplied by the number of days the loan is outstanding
divided by 365 days. We have assumed that these loans were outstanding
for 180 days, the maximum term available for warrant-based financing.
Because this program provides export financing, we then divided this
amount by the total value of honey exports during the POI. We thus
preliminarily determine the countervailable subsidy from this program
to be 0.153 percent ad valorem.
6. Fundacion Export*Ar
The GOA's Fundacion Export*Ar (Export*Ar) program was established
in 1995. Though it was originally funded through the United Nations
Development Program (UNDP), the Argentine Foreign Ministry was the
source of all funds provided during the POI. Export*Ar's objective is
the promotion of Argentine exports. To achieve this objective, the
program provides advice to small and medium-sized businesses, supplies
information on international markets and purchasers, and organizes
participation in trade missions, fairs, seminars and meetings.
According to the GOA, all information services provided under Export*Ar
are offered free of charge. Only participants in trade fairs must pay
for their participation. Such participants must pay all costs
associated with their participation, along with at least fifty percent
of the cost of their stand. Export*Ar will pay the remainder of the
stand cost.
According to the questionnaire responses, during the POI, general
export promotion information, in the form of profiles and studies of
potential markets, and reports on trade opportunities, was made
available to members of the honey industry by Export*Ar. The honey
sector also participated in one Export*Ar-sponsored overseas trade show
during the POI. This trade show was held in the United States.
Export*Ar provided a grant to the honey sector participant in that
trade show to help offset the cost of that participant's exhibit stand.
Under Sec. 351.514 of the regulations, general export promotion
activities undertaken by the government are not countervailable if the
activities consist of general informational activities that do not
promote particular products over others. See, e.g., Fresh Cut Flowers
from Mexico, 49 FR 15007 (1984). However, where such activities
provided financial assistance to a firm, the Department has found the
subject programs to be countervailable. See, e.g., Fresh Atlantic
Salmon from Chile, 63 FR 31437 (1998); and Fresh Atlantic Groundfish
from Canada, 51 FR 10041 (1986) (government funding of attendance at
trade fair which targeted the exports of specific product to the U.S.
market found to be countervailable); and Fresh Cut Flowers from Israel,
52 FR 3316 (1987) (government reimbursements of up to 50 percent of
actual expenses incurred by the firm for promotional activities found
to be countervailable).
Based on the information provided in the questionnaire responses,
we preliminarily determine that the information services provided by
Export*Ar on countries and markets and trade opportunities constitute
general export promotion activities, and, as such are not
countervailable in accordance with Sec. 351.514 of the regulations.
However, with regard to the financial assistance provided to honey
producers/exporters during the POI to attend an overseas trade fair, we
preliminarily determine that such financial assistance is not part of
general export promotion activities, and is thus, countervailable
within the meaning of section 771(5) of the Act. The financial
assistance that was provided during the POI covered the costs
associated with a stand at a trade fair in the United States. This
financial contribution provides a benefit equivalent to the amount of
the grant. The grants are also specific within the meaning of section
771(5A)(B) of the Act because their receipt is tied to the anticipated
exportation of honey to the United States.
To calculate the subsidy, we divided the amount of the grant
received during the POI by the value of honey exports to the United
States during the POI. We preliminarily determine the countervailable
subsidy for this program is 0.008 percent ad valorem.
7. Line of Credit for the Acquisition of Industrial and Agricultural
Machinery, Silos and Transportation Vehicles
According to the questionnaire responses, the BNA established a
line of credit for the Acquisition of Industrial and Agricultural
Machinery, Silos and Transportation Vehicles in 1996. In our notice of
initiation, we identified this program as Law 24,467 Additional Lines
of Credit to Foment the Purchase of Capital Goods of Argentine Origin.
As reported in the questionnaire response, the ``Acquisition of
Industrial and Agricultural Machinery, Silos and Transportation
Vehicles'' is not a Law 24,467 program, but rather a BNA program. (See
discussion of alleged Law 24,467 programs under the ``BNA Pre-Financing
of Exports Regime for the Agricultural Sector'' above).
Through this program, BNA aims to assist companies in the
industrial, commercial, services, transportation, and agricultural
sectors by providing financing for the purchase of capital goods of
Argentine origin or of goods that have a maximum foreign component of
40 percent. To receive financing, the BNA requires all applicants to
submit a pro-forma invoice indicating that the merchandise is of
Argentine origin or has a maximum foreign component of 40 percent. Loan
applications are evaluated by the standard criteria of creditworthiness
established by the Argentine Central Bank, set forth by Circular No.
2180.
Under this line of credit, financing is limited to up to 75 percent
of the purchase value, excluding the VAT, and must not exceed US
$500,000 per application. Interest rates under this line of credit vary
based on industry. Generally, the applicable interest rate for
agricultural loans is 14.5 percent. Approved loans under this line of
credit
[[Page 14530]]
are subject to an ``administration of guarantees'' fee, and a fee for
the evaluation of investment projects. Repayments for the agricultural
sector are amortized in equal installments, quarterly or biannually,
based on the seasonal activity of the borrower. The repayment period is
not to exceed five years.
We preliminarily determine that the Acquisition of Industrial and
Agricultural Machinery, Silos and Transportation Vehicles line of
credit is specific because it is an import substitution subsidy within
the meaning of section 771(5A)(C) of the Act. This line of credit also
provides a financial contribution under section 771(5)(D)(i) of the Act
because the loans are a transfer of funds from the GOA.
To determine whether there is a benefit, we compared the interest
rate charged on loans provided under this program to the commercial
interest rates for loans that most closely resemble loans under this
program. Based on this comparison, there is a difference in the amount
the recipient of the loan pays on the loan and the amount the recipient
would pay on a comparable commercial loan that the recipient could
actually obtain on the market. Thus, this line of credit provides a
benefit under section 771(5)(E)(ii) of the Act.
To calculate the benefit, we used the following methodology.
Because the GOA did not provide requested information regarding the
specific loans to honey producers granted under this program that were
outstanding during the POI, or information showing the aggregate value
of loans outstanding to the honey industry under this program during
the POI, we had to derive, from other information on the record, the
amount of loans to the honey industry that were outstanding during the
POI under this program. Our methodology to derive the amount of loans
to the honey industry that was outstanding during the POI from this BNA
program is set forth in detail in the section on ``BNA Financing for
the Acquisition of Goods of Argentine Origin'' above. After calculating
the loan balance outstanding to the honey industry during the POI under
this BNA program, we multiplied that amount by the difference between
the benchmark and the program interest rate. We then divided this
amount by the value of total honey production in Argentina during the
POI. We thus preliminarily determine the countervailable subsidy from
this program to be 0.027 percent ad valorem.
8. PROAPI
According to the questionnaire responses, the GOA established
PROAPI as a project for honey sector research, development and
technology transfer. In our notice of initiation, we identified this
program as ``PROMEX/PROAPI Development Plan for the Enhanced
Exportation of Honey'' based on petitioners' allegation and supporting
documentation indicating that the aforementioned assistance was being
provided under a program partially coordinated by PROMEX. According to
the GOA, PROMEX is a separate export promotion program. PROAPI is not
an export promotion program.
PROAPI was created by the National Institute for Agricultural and
Livestock Technology (INTA) in 1995, and was initially funded by both
INTA and the Argentine Technology Fund (FONTAR), an IDB-funded project.
FONTAR provided a loan to PROAPI through the BNA, while INTA supplied
an equivalent amount of in-kind services, equipment and overhead
expenses.
According to the GOA, PROAPI has been self-sustaining since 1998,
and now finances itself entirely through the sale of goods and services
produced from the project. These goods and services are reportedly sold
at market rates. Furthermore, according to the GOA, the terms of the
IDB/FONTAR loan initially funding PROAPI require that PROAPI achieve a
twelve percent rate of return, and that, because of this, PROAPI must
make returns on sales greater than its costs.
The goods provided to honey producers under PROAPI during the POI
were fertilized queen bees and a disease control product called
``BeeVar.'' The services provided during the POI were inspection and
certification services for live beehive materials and sponsorship for
trade fairs. However, when PROAPI sponsored trade fairs, it did so in
name only; PROAPI did not provide benefits to individual trade fair
participants or groups. According to the GOA, PROAPI is the only
Argentine supplier of BeeVar, and of inspection and certification
services for live beehive material.
On November 22, 2000, the GOA claimed green box status for the
PROAPI program. According to the GOA, PROAPI is a general services
program which qualifies for green box status under paragraphs 2(c),
(d), and (f) of Annex 2 of the Agriculture Agreement. In order to
determine whether the assistance provided under PROAPI qualifies for
green box status under section 771(5B)(F) of the Act, we examined
whether PROAPI met the criteria set forth in the Agriculture Agreement.
As noted in the ``Green Box Claims'' section above, according to
Sec. 351.522 of the regulations, the Department will determine that a
particular domestic support measure conforms fully to the green box
criteria in the Agriculture Agreement if it finds that the measure (1)
is provided through a publicly-funded program (including government
revenue foregone) not involving transfers from consumers; (2) does not
have the effect of providing price support to producers; and (3) meets
the relevant policy-specific criteria and conditions laid out in Annex
2.
With regard to the first criterion of Sec. 351.522, the GOA
indicated that all monies used to initially fund this program came
directly from public sources (i.e., INTA and FONTAR). As for the second
criterion of Sec. 351.522, the GOA claimed that PROAPI does not have
the effect of providing price support to producers, and is not tied in
any manner to international or domestic prices. According to the GOA,
producers must pay fees for all goods and services provided to them
under this program. As for the third criterion of Sec. 351.522, because
the GOA claimed green box status for this program under paragraphs 1
and 2 of Annex 2, the assistance provided under PROAPI must meet the
policy-specific conditions and criteria contained in those paragraphs.
According to paragraph 1 of Annex 2, domestic support measures for
which exemption from the reduction commitments is claimed must meet the
fundamental requirement that they have no, or at most minimal, trade-
distorting effects or effects on production. The support in question
must be provided through a publicly-funded government program not
involving transfers from consumers. Furthermore, the support in
question must not have the effect of providing price support to
producers. In this case, as noted above, the GOA has reported that
support under this program is provided through a publicly-funded
government program not involving transfers from consumers. The GOA also
reported that support provided under PROAPI is not tied in any manner
to production or prices, and, in conjunction with the fact that users
pay for the services provided under the program, could therefore not
have trade-distorting effects or effects on production. Finally, the
GOA has claimed that, since PROAPI is self-sustaining from fees paid by
users of the program's services, these users do not receive any price
support from the program.
According to paragraph 2 of Annex 2, government service programs
for which exemption from the reduction commitments is claimed shall not
[[Page 14531]]
involve direct payments to producers or processors. These general
service programs must meet both the general criteria in paragraph 1 of
Annex 2 and the relevant policy-specific conditions set forth in
paragraph 2. Although the GOA has argued that the entire PROAPI program
meets the requirements for green box treatment, there are different and
distinct types of assistance provided under PROAPI. Because there are
different types of assistance, we must examine each one to determine
whether it meets the green box requirements for domestic support
measures.
With regard to inspection and certification services, the GOA
reported that users pay for the inspection and certification services
and receive no direct payments under the PROAPI program. In addition,
the PROAPI inspection and certification services appear to conform to
the policy-specific conditions set out in paragraph 2(e) of Annex 2.
Although the GOA did not claim green box status under paragraph 2(e)
specifically, paragraph 2 states that general service programs include,
but are not restricted to, the services discussed in the illustrative
list of subparagraphs (a) through (g). As this is an illustrative list,
we may analyze the potential green box status of the support components
of a program by considering all of the policy-specific conditions
listed in paragraph 2. Thus, since the PROAPI inspection and
certification services appear to conform to the policy-specific
conditions set out in paragraph 2(e) of Annex 2, we preliminarily
determine that the inspection and certification services component of
PROAPI is entitled to green box status under section 771(5B)(F) of the
Act.
The second type of assistance provided under PROAPI involves the
sale of BeeVar, a disease control product, to honey producers. PROAPI
is the only supplier of this product in Argentina. The GOA submitted
proprietary information on the costs and sales prices charged by PROAPI
for the BeeVar provided during the POI. Paragraph 2 of Annex 2 states
that green box status may be granted to certain programs which ``. . .
provide services or benefits to agriculture or the rural community''
(emphasis added). It is not clear whether goods could be considered
``benefits'' for purposes of government services programs under the
Agreement. However, we need not reach that issue if we determine that
the assistance in question is otherwise non-countervailable based on
the statutory provisions.
With respect to the provision of goods, section 771(5)(E) of the
Act provides that a benefit is conferred where goods or services are
provided for less than adequate remuneration. In accordance with
Sec. 351.511(a)(2)(i) of the regulations, the adequacy of such
remuneration is determined in relation to prevailing market conditions
for the goods or services in the country which is subject to the
investigation. Prevailing market conditions include price, quantity,
availability, and other conditions of purchase. Under section
351.511(a)(2)(ii) of the regulations, if there is no usable market-
determined price with which to make the comparison, we will seek to
measure the adequacy of remuneration by comparing the government price
to a world market price where it is reasonable to conclude that such a
price would be available to purchasers in the country in question.
Pursuant to Sec. 351.511(a)(2)(iii) of the regulations, if there is no
world market price available to purchasers in the country in question,
the Secretary will normally measure the adequacy of remuneration by
assessing whether the government price is consistent with market
principles. Based on our analysis of the proprietary data provided by
the GOA, we preliminarily determine that the sales prices set by PROAPI
for BeeVar were consistent with market principles, and, as such, that
PROAPI received adequate remuneration for the sale of BeeVar. Because
we have determined that BeeVar is not provided for less than adequate
remuneration, and, this element of the PROAPI program is not
countervailable, we need not reach the issue of whether a good can be
considered a ``benefit'' under the Agreement.
The third type of assistance provided under PROAPI involves the
sale of fertilized queen bees. As discussed above with respect to
BeeVar, even if goods could be considered ``benefits'' under paragraph
2 of Annex 2 of the Agreement, such benefits must meet the policy-
specific conditions set forth in subparagraphs (a) through (g). Based
upon our review, nothing in any of these paragraphs should be construed
to cover the provision of a key component in the production of a
specific product. The provision of a good, such as fertilized queen
bees, involved in the production of honey, cannot be considered to be
research (subparagraph a), pest and disease control (subparagraph b),
training (subparagraph c), extension and advisory services
(subparagraph d), inspection services (subparagraph e), marketing and
promotion services (subparagraph f), or infrastructural services
(subparagraph g). Accordingly, we preliminarily determine that the
provision of fertilized queen bees cannot meet the green box
requirements set forth in Annex 2, and we have analyzed whether the
provision of queen bees is countervailable under the countervailing
duty statute.
The provision of fertilized queen bees under PROAPI is specific to
the honey industry pursuant to section 771(5A)(D)(iii) of the Act. The
provision of fertilized queen bees provides honey producers with a
financial contribution through the provision of goods and services
under section 771(5)(D)(iii) of the Act.
As noted above, section 771(5)(E) of the Act provides that in the
case of goods or services provided, a benefit is conferred where such
goods and services are provided for less than adequate remuneration.
The GOA did not provide information related to what factors affect
market prices for fertilized queen bees, and how such factors apply to
PROAPI's fertilized queen bees. However, the GOA did provide what are
described as market prices in Argentina for fertilized queen bees.
Since the average of the market prices reported by the GOA is higher
than the price charged by PROAPI for fertilized queen bees, we
preliminarily determine that the fertilized queen bees are sold by
PROAPI for less than adequate remuneration in accordance with section
771(5)(E)(iv) of the Act. We calculated the benefit by subtracting the
price PROAPI charged for its queen bees from the average market price.
We divided this amount by the value of honey production in Argentina
during the POI. We preliminarily determine the countervailable subsidy
for this component of the PROAPI program to be 0.004 percent ad
valorem.
B. Provincial Government Programs
1. Buenos Aires Honey Program
In 1996, the Province of Buenos Aires created the Buenos Aires
(Bonaerense) Honey Program. The purpose of this program is to increase
provincial honey production, and improve production efficiency and
quality within the province's honey sector. Through the program, the
Banco de la Provincia de Buenos Aires (Banco Provincia), a bank owned
by the Province of Buenos Aires, provides two types of credit lines to
honey producers in the province: the Line of Credit for Working
Capital; and the Line of Credit for the Acquisition of Capital Goods.
Eligibility for both credit lines requires honey producers to be
[[Page 14532]]
registered in the Province's Registry of Honey Producers.
a. Line of Credit for Working Capital. The Line of Credit for
Working Capital enables beekeepers to finance their operating expenses.
There are two elements of this line of credit. The first element offers
US$15.00 per active producing beehive with no limit on the number of
beehives. The term for repayment of the loan may not exceed nine months
from the date of the loan. The principal and accrued interest are
payable at the expiration of the repayment term. This line of credit
also allows pre-production cash advances for the purpose of acquiring
inert material for beehives. Financing in this case is limited to 50
percent of the value of the assets to be acquired, not exceeding US$30
per beehive. Repayment for cash advances must be made within 90 days of
the date of the disbursement. The interest rates applied to this
element are variable.
The second element of this line of credit provides that, if
applicants demonstrate that the honey is for exportation, they can
receive a lower interest rate. To receive the lower interest rate,
beekeepers must submit a commitment letter stating that the honey
obtained from the beehives for which financing is requested has been
sold for export, and a letter issued by the purchaser of the honey
indicating that it was acquired for export purposes. Loans under the
first element of this line of credit for working capital are de jure
specific under section 771(5A)(D)(i) of the Act because they are
limited to honey producers. Loans under the second element constitute
export subsidies under section 771(5A)(B) because receipt of the lower
interest rate is contingent upon exportation. For both elements of this
line of credit, a financial contribution is conferred in the transfer
of funds through loans, under section 771(5)(D)(i) of the Act.
To determine whether there is a benefit, we compared the interest
rate charged on loans provided under this program to the commercial
interest rates for loans that most closely resemble loans under this
program. Based on this comparison, there is a difference in the amount
the recipient of the loan pays on the loan and the amount the recipient
would pay on a comparable commercial loan that the recipient could
actually obtain on the market. Thus, this line of credit provides a
benefit under section 771(5)(E)(ii) of the Act.
To determine the benefit for those loans provided for exports, we
multiplied the loan balance outstanding during the POI by the
difference between the interest rate and the benchmark, and the number
of days outstanding during the POI. We divided this amount by the value
of honey exports from Buenos Aires. To determine the final subsidy that
is attributable to exports of honey to the United States from this
provincial program, we weight-averaged the subsidy from this program by
multiplying the subsidy by the Province of Buenos Aires' share of total
honey exports to the United States during the POI. We thus
preliminarily determine the countervailable subsidy from this line of
credit to be 0.002 percent ad valorem.
To determine the benefit from all other loans under the honey-
specific element of this line of credit, we multiplied the balance
outstanding during the POI by the difference between the interest rate
and the benchmark, and the number of days outstanding during the POI.
We divided this amount by the value of honey production in Buenos Aires
during the POI, and then weight-averaged this rate by multiplying it by
Buenos Aires' share of total exports of honey to the United States. We
thus preliminarily determine the countervailable subsidy from this line
of credit to be 0.012 percent ad valorem.
b. Line of Credit for the Acquisition of Capital Goods. The Line of
Credit for the Acquisition of Capital Goods under the Buenos Aires
Honey Program extends a line of credit for the acquisition of capital
goods to beekeepers in the Province of Buenos Aires. This line of
credit was implemented by the Banco Provincia through Circular ``A''
No. 13,854 in July 1997, pursuant to an agreement between the Banco
Provincia and Banco de Inversion y Comercio Exterior S.A. (BICE), and
utilizes funding provided through the BICE Norms 006 and 006/1. The
BICE is a GOA entity which functions as a ``second-tier'' bank, lending
money to other banks (both commercial and other government-owned or
controlled banks) for the purpose of implementing government lending
programs.
Beekeepers are able to finance the acquisition of capital goods and
are eligible to receive financing for the acquisition of beehives, new
nuclei, inert material, extraction and processing material, among other
goods. Applicants must provide a technical-economic proposal to the
Provincial Ministry of Agriculture, and must meet the standard
requirements of creditworthiness of the Banco Provincia. Financing for
this line of credit carries a maximum repayment term of five years.
Interest and principal payments are scheduled annually or semiannually
based on the seasonality of honey production. Interest rates are
variable and are calculated based upon LIBOR, plus a spread imposed by
the BICE and a spread added by the Banco Provincia. The spreads given
by both the BICE and Banco Provincia vary depending upon the repayment
schedule of the loan.
Because financing under this program is limited to honey producers,
it is de jure specific within the meaning of section 771(5A)(D)(i) of
the Act. Furthermore, a financial contribution is conferred in the
transfer of funds through loans, consistent under section 771(5)(D)(i)
of the Act. To determine whether there is a benefit, we compared the
interest rate charged on loans provided under this program to the
commercial interest rates for loans that most closely resemble loans
under this program. Based on this comparison, there is a difference in
the amount the recipient of the loan pays on the loan and the amount
the recipient would pay on a comparable commercial loan that the
recipient could actually obtain on the market. Thus, this line of
credit provides a benefit, under section 771(5)(E)(ii) of the Act.
To calculate the benefit, we have multiplied the outstanding loan
balance during the POI by the difference between the interest rate
charged under the program and the benchmark interest rate. We then
divided this amount by the value of honey production in Buenos Aires
during the POI. To determine the final subsidy that is attributable to
exports of honey to the United States from this provincial program, we
weight-averaged the subsidy from this program by multiplying the
subsidy by the Province of Buenos Aires' share of total honey export to
the United States during the POI. We thus preliminarily determine the
countervailable subsidy from this line of credit to be 0.117 percent ad
valorem.
2. Entre Rios Honey Program: Law No. 7435/84
The Entre Rios Honey Program is a provincial honey development
program originally established in 1984. As detailed in Law No. 7435/84,
the program was designed to provide a wide range of services and
support for promoting honey production in the province. However,
according to the GOA, the only function performed by the Government of
Entre Rios (GER) pursuant to Law No. 7435/84 is that it puts on
presentations and exhibitions related to beekeeping activities
throughout the province. The GOA provided a list of all such
presentations
[[Page 14533]]
and exhibitions put on during the POI, along with an estimate of the
average costs and expenses incurred by the GER in preparation of these
events. According to the GOA, such events are open to the public, free
of charge. There are no records of attendance at these events.
The Entre Rios Honey Program is de jure specific pursuant to
section 771(5A)(D)(iii) of the Act because it is expressly limited in
the law to the honey industry. It provides honey producers with a
financial contribution through the provision of services under section
771(5)(D)(iii) of the Act.
Section 771(5)(E) of the Act provides that in the case of goods or
services, a benefit is conferred where such goods and services are
provided for less than adequate remuneration. The adequacy of such
remuneration is determined in relation to prevailing market conditions
for the goods or services in the country which is subject to the
investigation. Prevailing market conditions include price, quantity,
availability, and other conditions of purchase. We preliminarily
determine that the provision of services under the Entre Rios Honey
Program conferred a benefit to honey producers during the POI under
section 771(5)(E)(iv) of the Act because all services were provided
free of charge.
Because these exhibitions and presentations were provided free of
charge, and because there are no other providers of similar services,
there is no basis on which we can measure the benefit from the free
provision of these services using a market-determined price. Therefore,
for purposes of this preliminary determination, we are using the total
of the costs incurred by the GER in preparation of the aforementioned
exhibitions and presentations during the POI to determine the benefit.
To calculate the subsidy, we divided the costs incurred during the
POI by the total value of honey production in Entre Rios during the
POI. To determine the final subsidy that is attributable to exports of
honey to the United States from this provincial program, we weight-
averaged the subsidy from this program by multiplying the subsidy by
the Province of Entre Rios's share of total honey exports to the United
States during the POI. We thus preliminarily determine the
countervailable subsidy from this line of credit to be less than 0.001
percent ad valorem.
3. Province of Chaco Line of Credit Earmarked for the Honey Sector
According to the questionnaire responses, the Ministry of
Production in the province of Chaco, through Provincial Law No. 4320,
issued Decree No. 2076/96 in December 1996, establishing an emergency
line of credit following a natural disaster that affected the
agricultural production of the province. Through this decree, the
Ministry allocated a total of 830,000 pesos specifically to assist the
affected beekeeping sector. Financing is provided by the Nuevo Banco
del Chaco S.A. (Chaco Bank), acting as an agent of the Government of
Chaco Province. Terms and conditions for this line of credit are in
accordance with Resolution No. 196/96. To be eligible for this line of
credit, beekeepers must have no outstanding debt with the Provincial
Government. Each producer can receive a maximum of 10,000 pesos and the
principal is repayable in four equal annual installments following a
two-year grace period (interest is payable during the grace period).
Funding is utilized for the purpose of acquiring capital goods for
beekeeping activity. The interest rate is 12 percent plus applicable
taxes. Qualified candidates for this line of credit are also subject to
a 1.5 percent bank commission over the principal and a 2 percent
commission to cover administrative expenses related to the loan.
Additionally, in September 1999, 450,000 pesos was allocated under this
program in accordance with Resolution No. 253/99, and offered under the
same loan terms and conditions as described above.
Because this line of credit was created specifically to assist the
beekeeping sector of the Province of Chaco, we preliminarily determine
that it does not meet the provision of the regulations under which
disaster relief is not countervailable. See 19 CFR 351.502(f). Because
it is only available to beekeepers, we preliminarily determine that it
is de jure specific in accordance to section 771(5A)(D)(i) of the Act.
This line of credit provides a financial contribution because it is a
transfer of funds in the form of loans within the meaning of section
771(5)(D)(i) of the Act. To determine whether there is a benefit, we
compared the interest rate charged on loans provided under this program
to the commercial interest rates for loans that most closely resemble
loans under this program. Because these are long-term loans, we
selected from information provided by the GOA a long-term benchmark
from 1996 to apply to the 1996 tranche and a long-term benchmark from
1999 to apply to the 1999 tranche. Based on this comparison, there is a
difference in the amount the recipient of the loan pays on the loan and
the amount the recipient would have paid on a comparable commercial
loan that the recipient could have actually obtained on the market.
Thus, this line of credit is providing a benefit, under section
771(5)(E)(ii) of the Act.
For the loans granted pursuant to both the 1996 and 1999 Decrees,
the GOA provided information about actual loans granted but did not
indicate the actual principal outstanding during the POI. Thus, we are
assuming that the entire principal was outstanding during the POI.
We determined the difference between the program interest rate and
the benchmark interest rate and multiplied the differential by the loan
principal outstanding during 1999. We have added the benefits from both
tranches of loans and divided that amount by total Argentine honey
production during the POI. (See ``Denominator Issues'' section above.)
We thus preliminarily determine the countervailable subsidy from this
line of credit to be 0.029 percent ad valorem.
4. Province of San Luis Honey Development Program
The San Luis Honey Development Program was created in 1990 by the
Ministry of Social Development of the Province of San Luis. The purpose
of the program is to promote honey production in underdeveloped
geographic areas and to provide training to the citizens of San Luis on
beekeeping activity. Eligibility for this program targets unemployed
and under-employed people with little income, and with no access to
credit. The program provides assistance in two forms: leasing
agreements, and financing through several types of credit lines.
a. Leasing Agreements. When the leasing agreement program was
created, it was carried out in two different stages each governed by a
contract for rental of hives. The first stage was implemented by
forming 10 groups of 10 people, all of whom received training. Each
group received 10 beehives and colonies for five years. In addition,
each group received equipment for the extraction of the honey produced.
Repayment for the extraction equipment and beehives was made to the
Bank of San Luis. The repayment terms for the beehives included 24
installments over a period of eight years, with a one-year grace
period. Repayment terms for the extraction equipment involved two
consecutive equal annual installments. The second stage of the program
involved forming groups of 10 to 15 people, each of which received 150
beehives and 50 colonies. The
[[Page 14534]]
repayment terms for this element of the program required 15 quarterly
payments over the course of five years, with a one-year grace period.
Because this program is only available to the honey industry in the
Province of San Luis, we preliminarily determine that under section
771(5A)(D)(i) of the Act, the leasing agreement section of the San Luis
Honey Development Program is de jure specific. While the participants
in this program are required to repay the cost of the materials
provided to them, there is no interest component involved. Although the
activity under this program is described as leasing, it appears that
companies simply receive the goods directly from the supplier and pay
for them over time rather than borrowing money from a third party.
However, they paid no interest even though they are allowed to pay for
the goods over five years. Thus, this program essentially operates as
an interest-free loan. As such, this program provides a financial
contribution within the meaning of section 771(5)(D)(i) of the Act and
it provides a benefit within the meaning of section 771(5)(E)(ii)
because no interest is charged. The GOA did not provide any information
on the value of the materials provided under the leasing agreement but
did report the funding allocated for this program for each year since
its inception in 1994. Thus, we are assuming that the total funding
allocated was actually used. We calculated the benefit by treating each
annual funding allocation as an interest-free loan. We estimated the
loan balance outstanding during the POI by assuming equal annual
principal payments, accounting for the grace period on principal
repayment, and subtracting them from the total loan principal for each
year the loan was outstanding. We selected as our benchmark a long-term
interest rate for each of the years funding was allocated. Since the
loans are interest-free, we multiplied the outstanding principal by the
benchmark.
We summed the benefits provided by each year's loan, and divided
that amount by the value of total Argentine honey production during the
POI. (See ``Denominator Issues'' section above.) We thus preliminarily
determine the countervailable subsidy from this line of credit to be
0.389 percent ad valorem.
b. CFI Lines of Credit Provided Through the Banco de San Luis. In
addition to the leasing agreements provided under the San Luis Honey
Development Program, there are multiple lines of credit made available
through the Banco de San Luis within the framework of the Federal
Investment Board (Consejo de Inversiones; CFI) Credit for Small
Business Ventures program. (See discussion of ``Credit for Small
Business Ventures'' below). The CFI established four lines of credit
available to the beekeepers of the province, identified as Lines 600,
700, 900, and 950. Because these CFI lines of credit are made available
only to the honey industry in the Province of San Luis, we
preliminarily determine that under section 771(5A)(D)(i) of the Act,
these CFI lines of credit are de jure specific. These lines of credit
provide a financial contribution because they are transfers of funds
from the GOA in the form of loans within the meaning of section
771(5)(D)(i) of the Act. To determine whether there is a benefit, we
compared the interest rate charged on loans under each line of credit
to a benchmark interest rate. Based on this comparison, there is a
difference in the amount the recipient pays on the loan and the amount
the recipient would pay on a comparable commercial loan that the
recipient could actually obtain on the market. Thus, these lines of
credit provide a benefit under section 771(5)(E)(ii) of the Act. The
specifics of the four lines of credit are discussed below.
Funding under Lines of Credit 600 and 700 was available with a nine
percent interest rate and with a repayment term of either two and a
half years or four and a half years depending on the purpose of the
loan. These two lines of credit were terminated in 1994 and 1995,
respectively. The GOA has provided information for each loan granted
under these two credit lines. However, the GOA did not provide any
information, in response to our requests, about the principal balance
outstanding during the POI. Thus, we have assumed that all loans were
for a four and a half year term and made in 1995, and thus, principal
remains outstanding during the POI. We estimated the loan balance
outstanding during the POI by assuming equal annual principal payments,
accounting for the grace period on principal repayment, and subtracting
them from the total loan principal for each year the loan was
outstanding. We selected as our benchmark a long-term interest rate for
each of the years funding was allocated. Since the loans are long-term,
we multiplied the outstanding principal by the difference between the
benchmark and the loan interest rate to determine the benefit during
the POI from Lines of Credit 600 and 700.
CFI Line of Credit 900 is another line of credit that is extended
to the beekeepers in the Province of San Luis. Funding under this line
of credit is also available with a nine percent interest rate and with
a repayment term of either two and a half years or four and a half
years depending on the purpose of the loan. This line of credit was
terminated in 1997. However, documentation provided by the GOA
demonstrates that loan balances for this line of credit were still
outstanding during the POI.
CFI line of credit 950 has not been terminated and credit is still
being extended to beekeepers within the Province. There are two
elements to this line of credit. Under the first element, beekeepers
with a minimum of 50 active beehives are eligible to receive funding.
This line of credit provides loans for (1) the acquisition of beehives;
(2) the construction of extraction chambers; (3) the construction of
separation chambers; and, (4) the construction of plants for the
production of material used for honey production. The maximum financing
available depends upon the number of beehives per applicant. A
beekeeper with 50 to 100 hives, can receive up to $5,000; a beekeeper
with more than 100 beehives can receive up to $25,000. The repayment
term for this line of credit is four and half years, with an 18-month
grace period for the repayment of principal. The interest rate is 10
percent and the loan requires a guarantee in the form of a security
interest or mortgage equal to 130 percent of the value of the acquired
property. The total funding allocated for this line of credit is
$500,000.
The second element of Line of Credit 950 is designed both for
active beekeepers, and for individuals with beekeeping experience who
are willing to start up a beekeeping business. The amount of financing
provided depends upon the purpose of the loan. Loans are provided up to
$25,000 for the acquisition of capital goods; up to $10,000 for working
capital; and up to $2,000 for training. Repayment terms for this line
of credit vary depending upon the purpose of the loan and the loans
require a guarantee in the form of a security interest or mortgage
equal to 130 percent of the value of the acquired property. The
applicable interest rate is 9 percent. The total funding (both CFI and
provincial funding) allocated under this line of credit total
$1,000,000.
The GOA reported that all loans provided under lines 900 and 950
were included in the loan information reported under the ``Credit for
Small Business Ventures'' (CFI) program (See, ``Programs Preliminarily
Determined to be Not Countervailable'' section below). Therefore, to
determine the benefit from Lines of Credit 900 and 950, we have
extracted from the CFI list those loans that were listed as being
provided to San Luis. While the loan information
[[Page 14535]]
specifies the original amounts of all of the loans which were granted
to San Luis that were outstanding during the POI, the data provided did
not indicate the actual loan balances outstanding during the POI for
the San Luis loans. Thus, as facts available, we are assuming that the
entire loan balance was outstanding during the POI. However, all loans
granted under line 950 were granted in 1999 and are therefore still in
the grace period for repayment of both interest and principal. In
accordance with Sec. 351.505(b), benefits resulting from
countervailable loans are considered to have been received in the year
in which the firm otherwise would have had to make a payment on the
comparable commercial loan. Since the repayment terms on long-term
commercial loans would not likely differ significantly from repayment
terms on these loans, and since the first payments of interest and
principal would occur after the POI, we preliminarily determine that no
benefits were received during the POI from the loans provided under
line 950 during the POI. To calculate the benefit from line 900 loans,
we multiplied the difference between the interest rate under the line
of credit and the benchmark interest rate by the outstanding loan
balance.
To determine the subsidy from these various lines of credit, we
summed the benefits calculated for Lines of Credit 600, 700, and 900
and divided that sum by the value of total Argentine honey production
during the POI. (See ``Denominator Issues'' section above.) We thus
preliminarily determine the countervailable subsidy from these lines of
credit to be 0.055 percent ad valorem.
II. Programs Preliminarily Determined to be Not Countervailable
A. Federal Programs
1. BNA Line of Credit for Working Capital and Investment Purposes
According to the questionnaire responses, the BNA offers a line of
credit to businesses for working capital and investment purposes. In
our notice of initiation, we identified this program as Law 24,467
Preferential Lines of Credit for Working Capital Purposes. As reported
in the questionnaire response, the BNA Line of Credit for Working
Capital and Investment Purposes was established under BNA's own
authority. (See discussion of alleged Law 24,467 programs under the
``BNA Pre-Financing of Exports Regime for the Agricultural Sector''
above).
This line of credit is offered to businesses in all economic
sectors in Argentina, and to agricultural and livestock producers
associated with agricultural cooperatives. The actual interest rate
varies according to the transaction, and the maximum length of the loan
is five years.
We preliminarily determine that these lines of credit are not de
jure specific within the meaning of section 771(5A) of the Act. Thus,
we analyzed whether the actual use of these lines of credit gives rise
to de facto specificity under section 771(5A)(D)(iii) of the Act.
However, based on the information provided in the questionnaire
responses, these credit lines were used by a broad range of borrowers,
both within and outside the agricultural sector, and there is no
apparent concentration of lending to any group of borrowers. Thus,
there is no basis for concluding that benefits under this program are
de facto specific to an enterprise, industry or group of enterprises or
industries under section 771(5A) of the Act. As a result, we
preliminarily determine that the lines of credit offered under the BNA
Line of Credit for Working Capital and Investment Purposes are not
countervailable subsidies under section 771(5) of the Act.
2. Global Credit Program for Micro and Small Businesses
According to the questionnaire responses, the GOA established the
Global Credit Program for Micro and Small Businesses to provide
assistance to small businesses. In our notice of initiation, we
identified this program as Law 24,467 Global Credit Program. As
reported in the questionnaire response, the Global Credit Program for
Micro and Small Businesses was established pursuant to an GOA/IDB
agreement. (See discussion of alleged Law 24,467 programs under the
``BNA Pre-Financing of Exports Regime for the Agricultural Sector''
above).
The Global Credit Program for Micro and Small Businesses is
administered by the Ministerio de Economia y Obras y Servicios Publicos
(The Ministry of Economy and Public Services or MECON) through the
Secretaria de la Pequena y Mediana Empresa (the Argentine Small
Business Administration or the SEPyME). The SEPyME was established in
1992 to serve new and existing micro-and small businesses involved in
primary or industrial production, or services. The goals of the program
are to increase the access of micro-and small businesses to credit and
technical assistance in an attempt to raise employment and income
levels through increased productivity, and to develop and strengthen
the technical support groups that supply training, technical assistance
and other services to micro-and small businesses.
The GOA reported that the Global Credit Program for Micro and Small
Businesses is funded entirely by the IDB and is administered by the
Argentine Ministry of Economy. However, information provided in the
GOA's exhibits suggests that this program is only partially funded by
the IDB, with the balance of funding provided by the GOA. While
eligibility for this program is limited to small and micro-enterprise
companies involved in primary or industrial production, trade or the
service sector in Argentina, in accordance with section 351.502(e) of
the Department's regulations, a subsidy is not specific solely because
the subsidy is limited to small firms or small and medium-sized firms.
As such, we preliminarily determine that this program is not de jure
specific. We analyzed whether the actual use of these lines of credit
gives rise to de facto specificity under section 771(5A)(D)(iii) of the
Act. Based on information submitted in the questionnaire responses,
these credit lines were used by a broad range of borrowers and there is
no apparent concentration of lending to any category of borrowers.
Thus, there is no basis for concluding that benefits under this program
are de facto specific to an enterprise, industry or group of
enterprises or industries within the meaning of section 771(5A)(D)(iii)
of the Act. As a result, we preliminarily determine that the lines of
credit offered under the Global Credit Program for Micro and Small
Businesses are not countervailable subsidies within the meaning of
section 771(5) of the Act.
3. Credit for Small Business Ventures
According to the questionnaire responses, the GOA established the
Credit for Small Business Ventures program to provide assistance to
small businesses. In our notice of initiation, this program was
identified as Law 24,467 Credit for Small Business Establishments. As
reported in the questionnaire response, the Credit for Small Business
Ventures program was established pursuant to Annex B to Circular BNA
No. 10,111/1. (See discussion of alleged Law 24,467 programs under the
``BNA Pre-Financing of Exports Regime for the Agricultural Sector''
above).
The Federal Investment Board (CFI) administers the Credit for Small
Business Ventures (Creditos para Microemprendimentos) program. The CFI
is a government agency created through an agreement between Argentina's
provinces, the municipality
[[Page 14536]]
of Buenos Aires, and the National Territory of Tierra del Fuego,
Antarctic, and the Islands of the South Atlantic. The CFI program has
as its objective promoting the development of small business ventures
through the financing of economically viable projects designed to
increase productivity, increase employment, and improve income
distribution. Eligibility for this program is limited to applicants
whose net worth does not exceed US$200,000 and who are planning
economically viable projects designed to increase production and
generally improve the welfare of the population. The CFI can finance up
to 100 percent of the investment for acquisition of capital goods,
working capital, and training. For capital goods, the CFI will
authorize financing up to US$50,000, up to US$20,000 for working
capital, and up to US$4,000 for training. The CFI will not authorize a
combined sum for all three categories exceeding US$50,000. The
repayment term for capital goods financing is up to four and one half
years and the repayment term for working capital financing is up to two
and one half years.
This financing is limited to small businesses, but under
Sec. 351.502(e) of the regulations, the Department will not regard a
subsidy as being specifically provided solely because it is limited to
small firms. However, even though this program cannot be considered de
jure specific, we must analyze whether these lines of credit are de
facto specific under section 771(5A)(D)(iii) of the Act. The GOA
provided a list showing the distribution, by industry, of all lending
provided under this program from 1992 through 1999. A number of
agricultural industries, as well as numerous non-agricultural
industries received CFI loans. Moreover, based on the information
provided, no industry appears to be a predominant user of the program,
or to have received a disproportionately large share of the subsidy.
However, as discussed above in the section on the ``San Luis Honey
Development Program,'' based on the information provided, it appears
that some CFI funds are funneled through provincial authorities,
including government-owned provincial banks. Where the information
provided in the response indicated that CFI funds were allotted to
provinces or provincial banks, and either the CFI designated that a
line of credit was to be provided to a specific industry within the
province, or the province decided how to expend those funds within the
province, we have conducted a separate analysis of whether such loans--
funded by the CFI, but for which recipients within the province are
expressly designated by either the CFI or the province--are specific
(See, ``San Luis Honey Development Program'' above). Except for those
CFI loans for which the lending decision appears to be controlled by a
provincial government or for which the CFI appears to have designated a
specific group of recipients within the province, we preliminarily
determine that CFI loans are not provided on either a de jure or de
facto basis to a specific enterprise or industry or group thereof, and
are, therefore, not countervailable.
4. National Income Tax Exemption Pursuant to Article 20(1) of Law
20,628
Based on our review of the questionnaire responses on this program,
we preliminarily determine that this income tax program is the same
program which was found not countervailable in Carbon Steel Wire Rod
from Argentina; Suspension of Investigation, 47 FR 42393. As such, we
preliminarily determine that this program is not countervailable.
5. Law 22,913 Emergency Aid/Emergency Agricultural and Livestock Law
In 1983, Law 22,913 established an agricultural disaster relief
program administered by the National Commission on Agricultural
Emergencies (CNEA). The purpose of the program is to provide financial,
tax and transportation relief to areas designated to be in a state of
emergency or state of disaster. When there is a natural or weather-
related disaster, provincial authorities can declare a state of
emergency or state of disaster and present information related to the
emergency or disaster to the CNEA. After reviewing the information, the
CNEA makes a recommendation to the Ministry of Economy regarding
whether to issue a national decree. Article 5(a) of Law 22,913, states
that the CNEA can declare an agricultural emergency or disaster when
``weather related, telluric, biological or physical factors . . .
unforeseeable or inevitable'' seriously impedes the agricultural
production or the capacity to produce in a region.
Any agricultural and livestock producer is eligible for emergency
aid when its province is certified as an emergency or a disaster area.
Producers who experience a loss of at least 50 percent of production
capacity are eligible to receive benefits for emergency relief.
Producers with a minimum loss of 80 percent receive disaster relief.
Assistance under this program is provided in the form of loans at
preferential rates and tax benefits. Beneficiaries can receive a
deferral of taxes owed, an exemption from taxes owed, and deductions
from earnings from forced sales. According to the GOA, the most common
form of tax relief given is tax deferrals. In addition, an affected
agricultural producer who receives a certificate from the provincial
authority after an emergency has been formally declared can receive
loans at preferential rates from the BNA.
We preliminarily determine that Law 22,913 is not a countervailable
subsidy in accordance with Department's regulations. According to
section 531.502(f) of the regulations, the Department will not find
disaster relief countervailable when ``such relief constitutes general
assistance available to anyone in the area affected by the disaster.''
The GOA has provided information that its emergency/disaster aid is
provided in this manner. The GOA claimed that Law 22,913 was entitled
to green box treatment and was therefore not countervailable. However,
because we preliminarily determine that this program is not a
countervailable subsidy under section 351.502(f), we do not need to
examine the GOA's green box claim.
B. Provincial Government Program
Exemption from Municipal Gross Income Tax Contingent on Export Activity
Pursuant to Article 116(12) of Law 150 (Buenos Aires Gross Income Tax
Exemption)
Article 109 of Law 150 (the Buenos Aires Tax Code), provides that a
levy on gross income will be imposed upon each transaction of commerce,
industry, professional services, or any other business activity which
occurs in the City of Buenos Aires. The GOA reported that the gross
income tax is an indirect tax levied on each transaction which
constitutes the taxpayer's revenue stream. The GOA states that the
gross income tax on sales of bulk and processed honey occurring within
the City of Buenos Aires is 1.5 percent.
Article 116(12) of the Buenos Aires Tax Code provides that revenue
obtained from exports is exempt from the application of the local gross
income tax. The City of Buenos Aires exempted export revenues from this
indirect tax in order to prevent the tax from increasing the export
price of Argentine products. The GOA states that ``rather than require
payment and then pay a rebate,'' the exemption ``arises automatically
upon completion of the tax forms by the exporter, who simply applies
zero tax rate to revenues obtained from all export transactions.'' The
GOA contends that
[[Page 14537]]
the exporter must provide copies of documentation related to the export
sales e.g., commercial invoice, bill of lading, etc., in order to
enable the local tax authorities to verify that a specific transaction
is entitled to an exemption.
Section 351.517(a) of the Department's regulations states that in
the case of an exemption upon export of indirect taxes, a benefit
exists only to the extent that the Department determines that the
amount exempted ``exceeds the amount levied with respect to the
production and distribution of like products when sold for domestic
consumption.'' Information on the record of this review indicates that
gross income tax is an indirect tax levied on business transactions for
export and that the amount exempted by the Buenos Aires Gross Income
Tax Exemption does not exceed the amount levied with respect to the
production and distribution of like products when sold for domestic
consumption. Therefore, the Department preliminarily determines that,
for purposes of this investigation, the Buenos Aires Gross Income Tax
Exemption does not confer a countervailable benefit. We note that if we
had found the Reintegro to be not countervailable (see section on
``Reintegro'' in ``Programs Preliminarily Determined to be
Countervailable,'' above), this exemption from a final stage indirect
tax would need to be reexamined to ensure that exporters in the city of
Buenos Aires were not receiving both a rebate of these same indirect
taxes under the Reintegro program (which includes a rebate of both
prior stage and final stage indirect taxes upon export) as well as an
exemption of these indirect taxes upon export.
III. Programs Preliminarily Determined to be Not Used
A. Federal Programs
3. BICE Norm 011: Financing of Production of Goods Destined for Export
According to the questionnaire responses, the GOA established the
BICE Norm 011 program to provide assistance to small businesses. In our
notice of initiation, we identified this program as Law 24,467 Short-
Term Financing, Including Pre-Financing of Export Sales. As reported in
the questionnaire response, this type of financing is provided by the
BICE. (See discussion of alleged Law 24,467 programs under the ``BNA
Pre-Financing of Exports Regime for the Agricultural Sector'' above).
Through Norm 011, the BICE offers a line of credit which finances
the production of goods destined for export as well as the
transformation, modernization, repair or assembly of goods imported
under the temporary import regime. As a second-tier bank, the BICE
offers this credit line to the ``Participating Agents'' (the first-tier
banks) which the BICE considers eligible to participate. BICE
determines the interest rate that it will charge to the Participating
Agent. The interest rate ultimately charged to the borrower will be
determined by the participating agent. Financing is available for up to
90 percent of the FOB value of either the exported goods, or the value
of goods imported under the temporary import regime. Generally this
line of credit is limited to projects that require a minimum investment
of $20,000 and a maximum of $5 million. However, the BICE may consider
financing requests for amounts outside of this.
The GOA reported that the BICE did not grant any loans through this
line of credit to honey producers or exporters that were outstanding
during the POI. Therefore, we preliminarily determine that this program
is not used.
2. BNA Line of Credit to the Agricultural Producers of the Patagonia
(Regulation Annex to Circular BNA No. 10,111/1)
According to the questionnaire responses, the GOA established the
BNA Line of Credit to the Agricultural Producers of the Patagonia to
provide assistance to agricultural producers in the Patagonian region
of Argentina. In our notice of initiation, we identified this program
as Law 24,467 Preferential Line of Credit to Increase Agricultural and
Agro-Industrial Production in the Southern Argentine Provinces. As
reported in the questionnaire response, the BNA Line of Credit to the
Agricultural Producers of the Patagonia was established pursuant to
Regulation Annex to Circular BNA No. 10,111/1. (See discussion of
alleged Law 24,467 programs under the ``BNA Pre-Financing of Exports
Regime for the Agricultural Sector'' above).
The BNA offers a line of credit to the agricultural producers in
the Patagonian region (the provinces of Rio Negro, Neuquen, Chubut,
Santa Cruz, Tierra del Fuego, Antarctica, and the islands of the South
Atlantic) to promote and finance investments oriented to diversifying
production activities in eligible provinces. This line of credit is
limited to those producers who had previously obtained loans pursuant
to the credit line ``Supervised Loans for the Agricultural and Agro-
Industrial Production'' that was implemented by the Board of Directors
of the BNA in May 1992. These producers are eligible to benefit from
the new BNA line of credit as long as they have not refinanced their
prior loans, and have fulfilled their investment plans and obligations
pursuant to their prior loan agreements. According to the questionnaire
responses, honey producers and exporters are not among those eligible
to receive this financing. As a result, we preliminarily determine this
program to be not used during the POI.
3. ``Production Pole'' Program for Honey Producers
According to the questionnaire responses, the GOA established the
``Production Poles'' program to provide assistance to small businesses
pursuant to Decree 1304/94. The Production Poles program was created in
order to integrate different producers and manufacturers of each of the
production sectors in the Argentine provinces. The program attempts to
stimulate business initiatives with the ultimate purpose of enhancing
the quality of the regional producers and increasing their products'
marketability. Businesses interested in participating in a production
pole enter into an agreement with the National and Provincial
Government and the respective municipality. The administering authority
provides technical advice, grants for capital goods and working
capital.
According to the GOA, there is one production pole that benefitted
the honey sector and it was established prior to the enactment of
Decree 1304/94. However, pursuant to section 5 of Decree 1304/94,
certain groups that had entered into agreements similar to those under
the Production Pole program are eligible for benefits under Decree
1304/94. A preexisting honey production pole in the municipality of
Castelli, Chaco Province (Castelli Honey Production Pole), is one of
the groups that qualified under section 5 of Decree 1304/94.
The GOA has stated that the Castelli Honey Production Pole only
received grants under this program during 1994. These were grants for
working capital and grants for the acquisition of capital equipment.
Such grants are treated as non-recurring and are allocated over time,
provided they do not meet the exception outlined in Sec. 351.524(b)(2)
of the regulations, i.e., the grant amount is not greater than 0.5
percent of total sales in the year of receipt. Because this program is
federally-administered, the appropriate denominator for conducting the
0.5 percent test is the value of Argentine production (as a proxy for
sales) in the year the grants were approved. Since we do not have that
information on the record, we used as
[[Page 14538]]
our denominator the value of Argentine honey production during 1999.
The grants under the ``Production Poles'' program are significantly
less than 0.5 percent and therefore would be expensed in the year of
receipt, 1994. Therefore, we preliminarily determine that the
Production Pole for Honey program was not used by producers or
exporters of honey to the United States during the POI.
4. Enterprise Restructuring Program (PRE)
According to the questionnaire responses, the GOA established the
Enterprise Restructuring Program (PRE) to provide assistance to small
and medium-sized businesses. In our notice of initiation, we identified
this program as Law 24,467 Enterprise Restructuring Program (PRE). As
reported in the questionnaire response, the Enterprise Restructuring
Program was established by the GOA with IDB funds. (See discussion of
alleged Law 24,467 programs under the ``BNA Pre-Financing of Exports
Regime for the Agricultural Sector'' above).
The Secretary for Small and Medium-Sized Enterprises administers
the PRE which was established in 1997 by the Government of Argentina.
The purpose of the program is to assist small and medium-sized
businesses in increasing administrative and technical capacity with the
aim of increasing competitiveness. Companies receive direct support,
information gathering (through a business information system (BIS) made
available nationwide), and business re-orientation support. The PRE
program also makes management consultants available to small and
medium-sized businesses.
The PRE is available to any Argentine small and medium-sized
enterprise that meets PRE qualifications, possesses a tax
identification number, and whose imported products do not represent
more than 25 percent of its sales. Grants, or non-disbursed
contributions, under this program are not limited to any sector or any
geographic region. Although funding is still provided by the IDB, the
PRE relies upon contributions from the national budgetary process and
the private sector to cover its overhead costs. The size of PRE grants
vary based upon need as assessed by each consultant.
According to the GOA, the honey sector has preliminarily been
approved for 12 projects under the PRE. A listing of all approved
grants has been provided by the GOA. Only one honey project has
received a grant from the PRE, and the GOA reported that no
disbursements were made before March 2000. Because no disbursements
were made under the PRE program until after the POI, we preliminarily
determine that this program was not used by honey producers or
exporters during the POI.
5. Government Backed Loan Guarantees (SGR)
Under Law 24,467, the GOA established the Reciprocal Guarantee
Company (SGR). The SGR is essentially a new type of legal entity under
Argentine corporate law which can be formed for the specific purpose of
reducing the credit risks confronting small and medium-sized
businesses. While several GOA agencies have regulatory authority over
the SGRs, none of them has direct administrative authority over them.
The SGRs are private companies consisting of small and medium-sized
enterprises and large companies and banks that join together for the
purpose of minimizing the credit risks facing the small and medium-
sized companies who are part of the SGR. The purpose of the SGR is to
issue certificates of guarantee to the small and medium-sized business
members of the SGR so that those companies have greater access to
sources of financing. There have been only five SGRs organized under
Law 24,467, none of which involve honey producers or exporters.
Accordingly, we preliminarily determine that this program was not used
during the POI.
B. Provincial Government Programs
1. Province of Chubut Honey Program under Law No. 4430/98
Law No. 4430/98 was promulgated in 1998 to provide support to the
provincial honey industry, instructing executive government agencies to
implement programs to develop honey production, standardization,
processing, industrialization, marketing, use of products and
byproducts, and to support and encourage research, experimentation and
training geared toward the development and use of apiarian byproducts.
According to the questionnaire responses, Law No. 4430/98 has not yet
been wholly implemented. The only portion of Law No. 4430/98 which has
been implemented is Article 5.9, which authorizes measures necessary
for the opening of lines of credit in official government and private
regional banks, with promotional interest rates and loan structures in
alignment with the goals of commercial and industrial honey production.
Article 5.9 was implemented in 1999 via Decree 491. On March 24, 1999,
and in accordance with the stated purposes of Law No. 4430/98, CORFO,
the agency responsible for implementation of agricultural policy in
Chubut, implemented Resolution 057/99, creating the Honey Activity
Development Program to provide the credit lines approved under Decree
491. This program provides lines of credit for the acquisition of
beehives, nuclei, work clothing, beekeeping material and equipment, and
the purchasing of queen bees. Under this program, interest-free loans
are provided for five-year terms, with repayments due annually and
consecutively. The maximum loan amount authorized is 2,000 pesos.
According to the questionnaire responses, the first repayments of
principal on loans issued under this program were not due until June
2000. In accordance with Sec. 351.505(b), benefits resulting from
countervailable loans are considered to have been received in the year
in which the firm otherwise would have had to make a payment on the
comparable commercial loan. Since the repayment terms on long-term
commercial loans would not likely differ significantly from repayment
terms on these loans, and since the first payments occurred in June
2000, after the POI, we preliminarily determine that no benefits were
received from these loans during the POI.
2. Province of Santiago del Estero: Creditos de Confianza (Trust
Credits)
In 1997, the Government of Santiago del Estero authorized the Trust
Credits program. The program was administered by the Government of
Santiago del Estero through the private sector entity Grupo Taxco S.A.
The line of credit provided under this program is designed for low-
income honey producers. A producer's beehives and profits earned from
honey production comprise the collateral for the loans.
According to the GOA, none of the honey produced in Santiago del
Estero was exported to the United States during the POI. Therefore, we
preliminarily determine that this program did not benefit honey exports
for the United States during the POI.
IV. Programs Preliminarily Determined to be Terminated
A. Federal Programs
1. PROMEX Consortium for Honey Exportation
The GOA's PROMEX export promotion program was created in 1990
through joint funding from the World Bank and the IDB. PROMEX provided
export promotion assistance to small and medium-sized businesses.
[[Page 14539]]
According to the GOA, PROMEX was terminated in 1998, and the last grant
provided under this program was distributed on September 15, 1997.
Export promotion assistance is normally treated as a recurring
benefit. Since the last grant under this program was distributed in
1997, there are no residual benefits after the date of the grant
distribution. Therefore, the termination of this program constitutes a
program-wide change in accordance with Sec. 351.526. We note that the
GOA submitted a green box claim for this program, but since we have
determined that it has been terminated, we do not address this issue.
2. Regional Promotional Scheme-Reimbursement ``Patagonico'': Exemption
of Import Duties on Capital Goods
The GOA administered a regional promotion regime for provinces in
the Patagonian region, including Rio Negro, Neuquen, Chubut, Santa
Cruz, the National Territory of Tierra del Fuego, the Antarctic, the
Falkland Islands, and part of the Patagonian region located in the
Province of Buenos Aires. The program, implemented via Decree 2332/83,
provided exemptions or deductions from import duties on capital goods
utilized in certain industrial activities. The program was terminated
as of December 31, 1983.
Even assuming that benefits provided under this program were non-
recurring and should be allocated over the honey industry's 10-year
AUL, there would be no benefits from this program allocable to the POI.
Therefore, we determine that this program has been terminated in
accordance with section 351.526 of the regulations.
V. Programs Preliminarily Determined Not to Exist
A. Federal Program
Honey-Specific Line-of-Credit Program for the Pre-Financing of
Development Expenses Associated with Export Sales
The Honey-Specific Line-of-Credit Program for the Pre-Financing of
Development Expenses Associated with Export Sales is, according to the
questionnaire responses, the same as one of the lines of credit
available under the Buenos Aires Honey Program. See the discussion of
the section on ``Buenos Aires Honey Program'' above.
B. Provincial Government Programs
1. La Pampa Lines of Credit
In our notice of initiation, we identified a program as La Pampa
Lines of Credit. According to the questionnaire responses, the La Pampa
Lines of Credit are the same lines of credit offered under the Federal
Investment Board's (CFI's) ``Credit for Small Business Ventures''
program, discussed above.
2. Province of San Luis: Creditos de Confianza (Trust Credits)
According to the questionnaire responses, the Province of San Luis:
Creditos de Confianza (Trust Credits) does not exist.
VI. Program For Which Additional Information Is Needed
Federal Program
BICE Norm 007: Line of Credit Offered to Finance Industrial Investment
Projects, and Projects to Restructure and/or Modernize the Argentine
Industry
According to the questionnaire responses, the GOA established the
BICE Norm 007 program to provide assistance to small businesses. In our
notice of initiation, we identified this program as Law 24,467
Investment-Expenditure Credits for Exports. As reported in the
questionnaire response, the BICE Norm 007 program was established by
the BICE. (See discussion of alleged Law 24,467 programs under the
``BNA Pre-Financing of Exports Regime for the Agricultural Sector''
above).
As noted above, BICE is a GOA entity which functions as a ``second-
tier'' bank, lending money to other banks (both commercial and other
government-owned or controlled banks) for the purpose of implementing
government lending programs. The commercial banks then offer the credit
to the borrower with substantially the same terms and conditions set
forth in the regulations of the particular BICE line of credit, plus an
additional spread for their services. These first-tier banks, or
intervening financial entities (IFEs), are authorized by the Central
Bank of Argentina as eligible to participate in BICE programs. For each
loan application, the IFE will analyze the technical, economic and
financial feasibility of the transactions and make the decision whether
to assume the credit risk and make the loan to the ultimate borrower.
If the IFE decides to extend the loan, the IFE presents the application
to the BICE with all supporting documentation, and BICE will decide
whether the transaction is eligible.
Through Norm 007, the BICE offers a line of credit to finance
industrial investment projects, directed to both the production sector
and the services sector. Under this line of credit, financing is
available for up to 90 percent of the total value of the eligible
projects. A list of eligible projects is provided in section 2 of the
BICE Norm 007; these projects include investment projects in the
agricultural sector, involving the incorporation of machinery,
equipment, and investment goods, and associated working capital.
Generally, credit under this program is limited to projects that
require a minimum investment of US $100,000, and a maximum investment
of US $10 million. The financing is granted for a period of no more
than 10 years, including a two-year grace period for the repayment of
the principal, and interest rates are determined on a case-by-case
basis.
In our notice of initiation, we identified this program as one
providing export financing based on petitioner's allegation and the
supporting documentation, which indicated that this financing was being
provided to improve export capacity. The GOA has indicated that one of
the first-tier banks which received funding through Norm 007, the BNA,
used the funding to establish an export-related financing facility, as
documented in the petition. The GOA has also indicated that BNA
terminated this facility in 1997, and further, that no honey producers
received such financing when the program was active.
However, the information related to the BNA export financing
facility highlights the necessity of examining whether other first-tier
banks have similarly established export financing facilities with Norm
007 funds. For purposes of this preliminary determination, we are not
making a finding with respect to this program. We will seek additional
information from the GOA prior to our verification and final
determination.
Verification
In accordance with section 782(i)(1) of the Act, we will verify the
information submitted by respondents prior to making our final
determination.
Suspension of Liquidation
In accordance with sections 703(d)(1)(A)(ii) and 777A(e)(2)(B) of
the Act, we calculated a single, country-wide rate for Argentina,
applicable to all exporters and producers. The total estimated
countervailable subsidy rate is 5.23 percent ad valorem. Because of a
program-wide change, discussed above in the Reintegro section, we have
calculated a cash deposit rate of estimated countervailing duties of
6.55 percent ad valorem.
[[Page 14540]]
In accordance with section 703(d)(1)(A)(ii) of the Act, we are
directing the U.S. Customs Service to suspend liquidation of all
entries of honey from Argentina, which are entered or withdrawn from
warehouse, for consumption on or after the date of the publication of
this notice in the Federal Register, and to require a cash deposit or
bond for such entries of the merchandise in the amount listed above.
This suspension of liquidation will remain in effect until further
notice.
ITC Notification
In accordance with section 703(f) of the Act, we will notify the
ITC of our determination. In addition, we are making available to the
ITC all non-privileged and non-proprietary 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 our final determination is affirmative, the ITC will make its
final determination within 45 days after the Department makes its final
determination.
Public Comment
In accordance with 19 CFR 351.310, we will hold a public hearing,
if requested, to afford interested parties an opportunity to comment on
this preliminary determination. The hearing is tentatively scheduled to
be held 57 days from the date of publication of the preliminary
determination at the U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230. Individuals who wish to
request a hearing must submit a written request within 30 days of the
publication of this notice in the Federal Register to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, 14th Street and Constitution Avenue, NW., Washington, DC 20230.
Parties should confirm by telephone the time, date, and place of the
hearing 48 hours before the scheduled time.
Requests for a public hearing should contain: (1) The party's name,
address, and telephone number; (2) the number of participants; and, (3)
to the extent practicable, an identification of the arguments to be
raised at the hearing. In addition, unless otherwise informed by the
Department, six copies of the business proprietary version and six
copies of the non-proprietary version of the case briefs must be
submitted to the Assistant Secretary no later than 50 days from the
date of publication of the preliminary determination. As part of the
case brief, parties are encouraged to provide a summary of the
arguments not to exceed five pages and a table of statutes,
regulations, and cases cited. Six copies of the business proprietary
version and six copies of the non-proprietary version of the rebuttal
briefs must be submitted to the Assistant Secretary no later than 5
days from the date of filing of the case briefs. An interested party
may make an affirmative presentation only on arguments included in that
party's case or rebuttal briefs. Written arguments should be submitted
in accordance with 19 CFR 351.309 and will be considered if received
within the time limits specified above.
This determination is published pursuant to sections 703(f) and
777(i) of the Act. Effective January 20, 2001, Bernard T. Carreau is
fulfilling the duties of the Assistant Secretary for Import
Administration.
Dated: March 5, 2001.
Bernard T. Carreau,
Deputy Assistant Secretary, Import Administration.
[FR Doc. 01-6223 Filed 3-12-01; 8:45 am]
BILLING CODE 3510-DS-P