66 FR 50613, October 4, 2001 C-357-813 Investigation Public Document DAS III/Office VII:DM,TG,CH,HH September 26, 2001 MEMORANDUM TO: Faryar Shirzad Assistant Secretary for Import Administration FROM: Joseph A. Spetrini Deputy Assistant Secretary for AD/CVD Enforcement III SUBJECT: Issues and Decision Memorandum in the Final Affirmative Countervailing Duty Determination: Honey from Argentina Summary We have analyzed the comments submitted by interested parties in the final determination of the above-mentioned countervailing duty (CVD) investigation for calendar year 1999, the period of investigation (POI). Our analysis of all of the issues and programs is set forth below. In addition, we address below the comments submitted by the petitioners and respondents. We recommend that you approve the positions we have developed in this memorandum. Subsidies Valuation Information A. 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 Honey from Argentina: Preliminary Affirmative Countervailing Duty Determination and Alignment with Final Antidumping Determination on Honey from the People's Republic of China, 66 FR 14521 (Preliminary Determination), we explained our reasoning for conducting this investigation on an aggregate basis. See Preliminary Determination, 66 FR at 14522-23. We have received no comments from the parties regarding this issue. Therefore, for purposes of this final determination, for the reasons set forth in the Preliminary Determination, 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. B. Green Box Claims On November 22, 2000, the GOA submitted a letter claiming "green box" status for twenty-seven of the programs under investigation. Section 771(5B)(F) of the Act instructs the Secretary to 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. Paragraph 2 of Annex 2 of the Agriculture Agreement covers policies involving expenditures in relation to programs which provide services or benefits to the agriculture or rural community. According to section 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. The GOA's request made reference to the specific paragraph(s) of Annex 2 with which the particular programs were claimed to conform. The GOA subsequently reduced to three the number of programs for which it claims "green box" status: PROMEX Consortium for Honey Exportation (PROMEX); PROAPI; and, the Law 22,913 Emergency Aid program. The "green box" issues with respect to each of these programs are discussed in the relevant program-specific sections below. C. Allocation Period In the Preliminary Determination, we identified the allocation period in accordance with section 351.524(d)(2) of the Department's regulations which directs us to rely on 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. No parties provided information or argument about the AUL issue. Therefore, we are using the 10-year AUL as reported in the IRS tables to allocate any non-recurring subsidies under investigation. D. Benchmark Interest Rates and Discount 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; and denominated in Argentine pesos or in foreign currency. 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. Section 351.524(d)(3) of the Department's regulations directs us regarding the selection of a discount rate for the purposes of allocating non-recurring benefits over time. Since we are conducting this investigation on an aggregate basis under section 777A(e)(2)(B) of the Act, we are using as the discount rate the average cost of long-term fixed- rate loans in Argentina as reported by the GOA. See section 351.524(d)(3)(i)(B). E. Denominators In the Preliminary Determination, we explained in detail our methodology for estimating the value of total honey production in Argentina during the POI. 66 FR at 14524. While the GOA has provided additional information and argument related to the value of domestic production, we do not consider that information to provide the basis for changing the manner in which we valued the domestic production denominator. See Department's Position on Comment 2, below. We continue to use, as our denominator when calculating the subsidy from federal domestic programs, the total production value which we estimated using the production volume provided by the GOA prior to the Preliminary Determination. We have used the relevant provincial production value as our denominator when calculating the subsidy from domestic subsidies provided at the provincial level. 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. As we did in the Preliminary Determination, 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 province had no exports to the United States, we divided the benefits by the value of total Argentine honey production during the POI. II. Programs Determined to Confer Subsidies A. Federal Programs Argentine Internal Tax Reimbursement/Rebate Program (Reintegro) The Reintegro program entitles Argentine exporters to a rebate of many internal or domestic taxes levied during the production, distribution, and sales process on many exported products. The Reintegro program provides a cumulative tax rebate paid upon export, calculated as a percentage of the "free on board" (FOB) invoice price of an exported product. Exports of bulk and processed honey have been eligible for Reintegro since at least 1996. In the Preliminary Determination, we found that the Reintegro program is specific and provides a financial contribution. We found the Reintegro program to be specific because receipt of the Reintegro is contingent upon export performance. See section 771(5A)(B) of the Act. We found that the Reintegro program provides a financial contribution since the GOA makes a direct transfer of funds to exporters. See section 771(5)(D)(i) of the Act. In order to determine if the Reintegro program conferred a countervailable benefit, we would normally examine whether the amount remitted or rebated to Argentine honey exporters 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. See section 351.518(a) of the Department's regulations. If the amount rebated exceeds the amount of prior-stage cumulative indirect taxes paid on inputs that are consumed in the production of the exported honey, the excess amount is found to be the benefit. However, there is an exception to this rule under section 351.518(a)(4)(i- ii) of the Department's regulations. Section 351.518(a)(4)(i-ii) of the Department's regulations states that the Department will consider the entire amount of the tax rebate or remission to confer a benefit unless the Department finds that: (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 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 the Preliminary Determination, we found that the GOA did not demonstrate that it had 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. As such, we preliminarily determined that the requirements for non- countervailablity set forth in section 351.518(a)(4)(i) of the Department's regulations were not met. In Exhibit 9 of its January 2, 2001, questionnaire response, the GOA submitted a report entitled "Reintegros for Argentine Honey Exports," prepared at the request of the GOA in December 2000 by EcoLatina, a consulting firm (EcoLatina Report). The EcoLatina Report's goal was to determine the proportion of accumulated indirect tax incidence in the chain of value for bulk honey produced and distributed in Argentina in relation to bulk honey's FOB export value. In the Preliminary Determination, we found that the EcoLatina Report was not 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, we found that the requirements for non-countervailablity set forth in section 351.518(a)(4)(ii) of the Department's regulations were not met. Accordingly, because we found the GOA had not met the requirements for non-countervailablity set forth in section 351.518(a)(4)(i-ii), we found the entire amount of the Reintegro for bulk and processed honey to be countervailable. Because we found the entire Reintegro countervailable under section 351.518(a)(4)(i-ii), we did not address the Reintegro program's countervailablity under section 351.518(a)(2) of the Department's regulations. Since the Preliminary Determination, the GOA has provided additional information regarding the Reintegro Program. In addition, the Department conducted verification of the GOA's questionnaire responses regarding the Reintegro Program. The Department's findings at verification are detailed in the memorandum to file "Countervailing Duty Investigation of Honey from Argentina Verification Report for the Argentine Internal Tax Reimbursement/ Rebate Program (Reintegro)," dated August 23, 2001 (Reintegro Verification Report). Based on further analysis of the record evidence and the results of verification, we determine that the GOA was unable to demonstrate that it had a reasonable and effective system as set forth in section 351.518(a)(4)(i) of the Department's regulations. See the Department's Position on Comment 4 below. Moreover, a thorough analysis of the EcoLatina Report confirmed that the report: 1) was not based on a representative sample of Argentine beekeepers; 2) did not test the inputs and indirect tax incidence identified in the report against actual company experience; 3) overstated the costs on which it based its calculation of the indirect tax incidence for bulk honey, as well as the taxes paid on the listed inputs; and, 4) did not isolate indirect taxes. As such, the EcoLatina Report cannot be considered a reliable examination as required by section 351.518(a)(4)(ii) of the Department's regulations. Based on an analysis of the record evidence and the results of verification, the Department continues to find that the entire Reintegro for bulk and processed honey confers a countervailable benefit. See the Department's Position on Comment 5 below. 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 determine that Reintegro provided a countervailable subsidy of 4.16 percent ad valorem. As noted in the Preliminary Determination, in April 2000, the Reintegro rate for bulk honey increased to 5.4 percent while the rate for processed honey increased to 12 percent. These April 2000 changes in the Reintegro rates for bulk and processed honey constituted program-wide changes in accordance with sections 351.526(b)(1-2) of the Department's regulations. Therefore, consistent with section 351.526(c)(1) of the Department's Regulations, for the purposes of establishing the cash deposit rate of estimated countervailing duties we weight-averaged the Reintegro rates then 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 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, pursuant to Annex B to the BNA Circular No. 10715/I. This line of credit is offered by BNA for the financing of agricultural products for exports. All applicants must submit an irrevocable letter of credit opened to his/her order, or 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 with an extension of 90 days. During the POI, there were loans outstanding to honey exporters under this program. These lines of credit are specific within the meaning of section 771(5A)(B) of the Act because they are contingent upon export performance; there is a financial contribution through the provision of loans, under section 771(5)(D)(i) of the Act. There is a benefit to the extent that the interest rates on these loans are lower than the interest rates on comparable commercial loans. See section 771 (5)(E)(ii) 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 provided for honey exports to a country other than the United States; two of the loans were shown to have been provided for honey exports to the United States. The fifth loan was not tied to an export destination; however, it is included in our benefit calculation as discussed below. To determine the benefit for the two loans that were provided for honey exports to the United States, we applied our standard short-term loan methodology. We multiplied the difference between the actual interest rate and the benchmark interest rate by the loan principal amount and the number of days outstanding. As discussed in the "Benchmark Interest Rates and Discount Rates" section, above, we chose for our benchmark interest rate a rate that most closely resembles the terms of this program. We then divided the sum of the benefits by the value of honey exports to the United States during the POI. For the fifth loan, we determined the benefit in the same way we determined the two loans tied to U.S. exports. However, because the documentation reviewed at verification did not indicate the destination of the export shipment financed, we were unable to tie this loan to U.S. exports or exports to any other particular destination. See Memorandum to the File, Countervailing Duty Investigation: Honey from Argentina (C-357- 813): Verification Report for the Government of Argentina, dated August 29, 2001, (Verification Report) at 39. Therefore, we divided the benefit from this loan by the value of total exports of honey from Argentina to all destinations. See 19 CFR 351.525(b)(2),(4); Countervailing Duties: Final Rule, 63 FR 65348, 65400 (November 25, 1998) (Preamble). We then summed the resulting subsidy rates to determine the countervailable subsidy rate from the BNA Prefinancing of Exports Regime for the Agriculture Sector to be 0.042 percent ad valorem. 3. 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) 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. The program was established in 1995 with funds from the national treasury allocated for use by the provinces. The objective of the program was to address financial emergencies in the provinces. Although the program was administered at the national government level, it was established to address what was recognized as regional economic devastation in the provinces. The program discontinued granting new credits in the beginning of 1999. However, the program remains operational as long as the loans granted continue to be serviced. The program provided credit for the acquisition of capital goods, technology, working capital, training needs, and technical assistance. In our Preliminary Determination, we found this program de jure regionally-specific under section 771(5A)(D) of the Act. We also found that this program provided a financial contribution in the form of a transfer of funds, as defined by section 771(5)(D)(i) of the Act. See 66 FR at 14521. We found that a benefit had been conferred under section 771(5)(E) of the Act because there was 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. See 66 FR at 14521. Based on the results of verification, we continue to find this program countervailable on the same basis we found it countervailable in the Preliminary Determination. For the Preliminary Determination, in the absence of information showing principal and interest payments, we calculated the loan benefits based on the assumption that the total loan principal was outstanding during the POI. See 66 FR at 14528. At verification, we examined the loan files for the two loans which had been provided to honey producers. For one loan, we established that principal payments had been made and we have adjusted our benefit calculation accordingly. We have calculated the benefit for the loan by multiplying the principal outstanding during the POI by the difference between the loan interest rate and the benchmark interest rate. We chose for our benchmark interest rate a rate from information provided by the Central Bank of Argentina that most closely resembles the terms of this program. See "Benchmark Interest Rates and Discount Rates,"above. For the other loan, documentation examined at verification showed that no principal or interest payments had been made and that program officials had no expectation that the loan would be repaid. Therefore, for purposes of this final determination, we consider that this loan has been forgiven during the POI and we are treating this loan forgiveness as a grant in accordance with section 351.508(a) of the Department's regulations. We have determined the value of the loan forgiveness by accruing interest for each year from the year the loan was granted to the POI. To calculate the benefit, we have allocated the resulting grant amount over the AUL of 10 years. See section entitled "Allocation Period," above. We have used an appropriate discount rate, as discussed in the "Benchmark Interest Rates and Discount Rates" section, above. We then divided the two benefit amounts attributable to the POI by the value of honey produced in Argentina during the POI to calculate an ad valorem subsidy rate of 0.112 percent. B. Provincial Government Programs Buenos Aires Honey Program In 1996, the Province of Buenos Aires created the Buenos Aires (Bonaerense) Honey Development Program to increase provincial honey production, and improve production efficiency and quality. Through the program, the Banco de la Provincia de Buenos Aires (Banco Provincia), a bank owned by the government of 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 enroll in the Province's Registry of Honey Producers. In addition, the province provides technical assistance to beekeepers and honey producers. Line of Credit for Working Capital The Line of Credit for Working Capital enables beekeepers to finance their operating expenses. There are three elements of this line of credit for which beekeepers can apply. The first type of loan is for exploitation purposes. Beekeepers applying for this loan must have a minimum of fifteen beehives. This line 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, and principal and interest are payable at the end of the 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 goods to be acquired, not exceeding US$30 per beehive, and interest rates are variable. The second type provides pre-export financing at a lower interest rate. The third type of loan has a 180-day maturity, and interest rates are between 13 and 16 percent. Applicants for this type of loan are small producers, not exporters or "acopiadores" (middle men). In our Preliminary Determination, we found these loans to be de jure specific under section 771(5A)(D)(i) of the Act because they were limited to honey producers; we found the pre-export financing to confer an export subsidy because it was limited to exporters under section 771(5A)(B) of the Act. We found that a financial contribution was conferred in the transfer of funds through loans under section 771(5)(D)(i) of the Act. We determined the benefit by comparing 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 under section 771(5)(E)(ii) of the Act. See 66 FR at 14532. Based on the information in the record, including the results of verification, which show that the characteristics of these loans were developed to meet the needs of beekeepers/honey producers (Verification Report at 28-29), we continue to find these three lines of credit countervailable for the same reasons articulated in the Preliminary Determination. 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 (see "Benchmark Interest Rates and Discount Rates" section, above), and the number of days the loans were outstanding during the POI, and divided this amount by the value of honey exports from the province of Buenos Aires. We then determined the subsidy attributable to subject merchandise from this program by multiplying the calculated subsidy rate by the percentage that honey from the Province of Buenos Aires represents of total Argentine honey exports to the United States during the POI. For all other loans under this line of credit, we multiplied the balance outstanding during the POI by the difference between the interest rate and the benchmark (see "Benchmark Interest Rates and Discount Rates" section, above), and the number of days the loans were outstanding during the POI, and divided this amount by the value of honey production in Buenos Aires during the POI. We then determined the subsidy attributable to subject merchandise from this program by multiplying the calculated subsidy rate by the percentage that honey from Buenos Aires represents of total exports of honey to the United States. See section entitled "Denominators," above. We summed the subsidies from these lines of credit to determine and overall countervailing duty rate under this program of 0.003 percent ad valorem. 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 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 eligible to receive financing for the acquisition of capital goods including beehives, new nuclei, inert material, and extraction and processing material, among other goods. Financing for this line of credit carries a maximum repayment term of five years. Interest rates are variable and are based on LIBOR, plus a spread added 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. In the Preliminary Determination, we found this financing to be de jure specific under section 771(5A)(D)(i) of the Act because it is limited to honey producers, and to provide a financial contribution in the transfer of funds through loans under section 771(5)(D)(i) of the Act. We determined whether there was a benefit by comparing the interest rate charged on loans provided under this program to commercial interest rates and therefore found a benefit, in accordance with section 771(5)(E)(ii) of the Act. See 66 FR at 14532. Based on the information in the record, including the results of verification, which shows that this line of credit is specific to honey producers, we continue to find this line of credit countervailable for the same reasons articulated in the Preliminary Determination. Because these are long-term loans, we calculated the benefit 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 (see "Benchmark Interest Rates and Discount Rates" section, above) in accordance with section 351.505(a)(2)(iii) of the Department's regulations, and divided this amount by the value of honey production in the Province of Buenos Aires during the POI. We then determined the subsidy attributable to subject merchandise from this program by multiplying the calculated subsidy rate by the percentage that honey from the Province of Buenos Aires represents of total honey export to the United States during the POI. See section entitled "Denominators," above. On this basis, we find the countervailable subsidy to be 0.117 percent ad valorem. c. Technical Assistance At verification, we learned that in addition to the lines of credit available under the Buenos Aires Honey Program, the provincial Agriculture Ministry also provides technical assistance, training in the art of beekeeping, at no charge to honey producers. See Verification Report at 27. Buenos Aires officials were unable to quantify the value of such assistance provided during the POI, but they did indicate that there are ten technicians who provide this assistance. Based on information provided at verification, we find that this program is de jure specific under section 771(5A)(D)(i) of the Act because it is limited to honey producers. Furthermore, because this program provides services, in the form of technical assistance to honey producers, we find that there is a financial contribution under section 771(5)(D) of the Act. A benefit is conferred under section 771(5)(E)(iv) of the Act because services are being provided free of charge, which we determine constitutes less than adequate remuneration. We value the benefit, in the absence of more precise information, as the salaries of the ten technicians whose work is devoted to providing technical assistance to honey producers in Buenos Aires. We have used the average annual provincial government salary, as discussed at verification (see Id.), and multiplied that by ten to account for the ten technicians. We then divided that amount by the value of honey production in the Province of Buenos Aires during the POI. We then determined the subsidy attributable to subject merchandise from this program by multiplying the calculated subsidy rate by the percentage that honey from the Province of Buenos Aires represents of total honey exports to the world during the POI. See section entitled "Denominators," above. On this basis, we find the countervailable subsidy to be 0.045 percent ad valorem. 2. Province of Chaco Line of Credit Earmarked for the Honey Sector The Ministry of Production in the province of Chaco, through Provincial Law No. 4320, issued Decree No. 2076/96 in December 1996 to establish an emergency line of credit following a natural disaster that affected the agricultural production of the province. Through this decree, the Ministry allocated funds specifically to assist the 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 loan 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 and fees. In September 1999, an additional allocation of funds was made in accordance with Resolution No. 253/99, and offered under the same loan terms and conditions as described above. In our Preliminary Determination, we found that the program did not qualify as disaster relief under section 357.502(f) of the Department's regulations because the line of credit was created specifically to assist the beekeeping sector of the Province of Chaco. We further found this program countervailable because it is specific to the honey sector in accordance with section 771(5A)(D)(i) of the Act, and provides a financial contribution in the form of loans funded by the provincial government within the meaning of section 771(5)(D)(i) of the Act. We calculated the benefit using the standard loan methodology and found a benefit to exist within the meaning of section 771(5)(E)(ii) of the Act. In the absence of information indicating any repayments of principal, we assumed the entire loan balance remained outstanding. See 66 FR at 14533. Based on our verification of this program, we continue to find that it is countervailable. After the Preliminary Determination, the GOA provided, and we verified, information showing the actual outstanding loan balances. Thus, we have adjusted our calculations to take account of this information. As we did for our Preliminary Determination, see 66 FR at 14533, we have identified the benchmark rate as the interest rate for these loans which most closely resembles loans a honey producer could obtain on the market. See 19 CFR 351.505; Preamble, 63 FR 65348, 65363 (November 25, 1998). Because these are long-term loans, we calculated the benefit 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 (see "Benchmark Interest Rates and Discount Rates," above) in accordance with section 351.505(a)(2)(iii) of the Department's regulations, and divided this amount by the value of honey production in the Province of Chaco during the POI. We then determined the subsidy attributable to subject merchandise from this program by dividing the amount allocable to the POI by the total value of Argentine honey production during the POI. See section entitled "Denominators,"above. On this basis, we find the countervailable subsidy to be 0.027 percent ad valorem. 3. Province of San Luis Honey Development Program The San Luis Honey Development Program (Honey Program) was created in 1990 by the Ministry of Social Development of the province of San Luis. The Honey Program promotes honey production to supplement the income of disadvantaged people in underdeveloped areas in the province of San Luis. In our Preliminary Determination, we found that the Honey Program provided assistance in two forms: leasing agreements and credit lines. a. Leasing Agreements The leasing component of the program was carried out in two different stages each governed by a contract for the rental of hives. The first stage was implemented by forming groups of 10 people. Each group received 10 beehives per year for three years. In addition, each group was provided extraction equipment and training. Repayment for the extraction equipment and beehives was made to the Bank of San Luis. The repayment term for the beehives was 24 installments over eight years with a one-year grace period. In our Preliminary Determination, we determined that the leasing component of the Honey Program was de jure specific under section 771(5A)(D)(i) of the Act because it was only available to the honey industry in the Province of San Luis and that it provided a financial contribution under section 771(5)(D)(i) of the Act. See 66 FR at 14534. At verification, San Luis officials were unable to substantiate the amounts actually spent on the leasing agreements that were reported in the response. See Verification Report at 31-36. Instead, they provided alternative source documentation from the province's "Cuenta General Del Ejercicio" (General Accounts) for the years 1994 through 1999. San Luis officials also provided documentation showing that the repayment terms were 15 payments over five years, instead of 24 payments over eight years, and that the applicable interest rate was five percent. However, San Luis officials were unable to demonstrate that any program participants had repaid any principal or interest as dictated by the terms of the leasing agreements. See Id. Based on the results of verification, we find it appropriate to change our calculation of the benefit arising from the leasing component. For the years 1998 and 1999, San Luis officials were able to provide information from the General Accounts showing the actual expenditures for the provision of beekeeping equipment under this program. Because San Luis officials were unable to provide actual expenditures for beekeeping equipment for the years 1994 through 1997, we have calculated the amount of those expenditures in the following manner. We averaged the ratios of the 1998 and 1999 Honey Program beekeeping equipment expenditures to the total expenditures for the Honey Program in 1998 and 1999. We then multiplied this average ratio by the total expenditures for each year 1994 through 1997. In addition, the results of verification indicate that program participants have not paid any interest or repaid any principal on these leases. Because these leases essentially function as loans, and the results of verification indicate that there is no expectation by Provincial officials that the loans will be repaid in the future, see Id., we consider that these loans have been forgiven during the POI. See section 351.508(a) of the Department's Regulations. To value the loan forgiveness, we have taken each year's leasing amount, for the years 1994 through 1998, plus the accrued interest through 1999, when the loans were effectively forgiven. We have summed those amounts and added the leasing amount for 1999. We allocated this sum over the 10-year average useful life of assets (AUL) used in the honey industry. See "Benchmark Interest Rates and Discount Rates," and "Allocation Period" sections, above. We have divided the amount allocable to the POI by the total value of Argentine honey production during the POI. We therefore determine that the countervailable subsidy to be 0.020 percent ad valorem. b. CFI Lines of Credit In our Preliminary Determination, we found that the Federal Investment Board (CFI) Credit for Small Business Ventures program also made lines of credit available through the San Luis Honey Development Program. See discussion in "Credit for Small Business Ventures"section, below. In our Preliminary Determination, we found that these CFI lines of credit were de jure specific under section 771(5A)(D)(i) of the Act because these CFI lines of credit appeared to been offered as part of the San Luis Honey Development Program and thus, were available only to the honey industry in the Province of San Luis. See 66 FR at 14534, 14535. Based on the results of verification, we have determined that the San Luis Honey Development Program did not have any provisions for lines of credit. See Verification Report at 31. Although the CFI did make some loans through the Credit for Small Business Ventures Program to the honey sector in San Luis, this was done independently of the San Luis Honey Development Program. Moreover, there is no evidence that provincial government officials in San Luis make any decisions regarding CFI Credit for Small Business Ventures Program loans to any sector including honey. As such, for our final determination, we find that the CFI Credit for Small Business Ventures Program loans to the honey sector in San Luis are not part of the San Luis Honey Development Program. They are instead part of the CFI Credit for Small Business Ventures Program which is discussed in more detail in the "Programs Found Not to Confer Subsidies" section, below. Programs Determined Not to Confer Subsidies Federal Programs 1. BNA Line of Credit for Working Capital and Investment Purposes This line of credit is offered to businesses in all economic sectors in Argentina, and to agricultural and livestock producers associated with agricultural cooperatives. In the Preliminary Determination, we found that these lines of credit are not de jure specific or de facto specific under section 771(5A)(D)(iii) of the Act because these credit lines were used by a broad range of borrowers, both within and outside the agricultural sector, and there was no apparent concentration of lending to any group of borrowers. Thus, there was no basis for concluding that benefits under this program were specific to an enterprise, industry or group of enterprises or industries under section 771(5A) of the Act. As a result, we preliminarily determined 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. See 66 FR at 14535. Since our Preliminary Determination, the GOA has provided information showing that there were three loans granted to the honey industry under this line of credit that were outstanding during the POI. However, in this final determination, based on information provided since the Preliminary Determination and examined during verification, we determine that there is still no basis for finding either de facto or de jure specificity under section 771 (5A) of the Act. As a result, we find that the BNA Line of Credit for Working Capital and Investment Purposes is not countervailable. 2. Global Credit Program for Micro and Small Businesses The Global Credit Program was begun in 1992 when loan agreements were signed with the Inter-American Development Bank. 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 Global Credit Program provides services for all borrowers from micro industries from different sectors. Micro and small businesses that have sales of less than two hundred thousand pesos/dollars per year without VAT and employ fewer than 20 people were eligible to receive assistance under the Global Credit Program. In the Preliminary Determination, we found that this program was neither de jure nor de facto specific, based on the fact that these lines of credit were used by a broad range of borrowers and there was no apparent concentration of lending to any category of borrowers. See 66 FR at 14535. The information reviewed at verification confirmed the wide sectoral distribution of lending under this program. See Verification Report at 15, 16. Therefore, we find that the Global Credit Program is not countervailable. 3. Credit for Small Business Ventures The Federal Investment Board (CFI) administers the Credit for Small Business Ventures program. The CFI is an assembly of provincial representatives established by an agreement among Argentina's provinces, the municipality of Buenos Aires, and the National Territory of Tierra del Fuego, Antarctic, and the Islands of the South Atlantic. The CFI promotes the development of small business ventures through the financing of economically viable projects designed to increase productivity and 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 the acquisition of capital goods, working capital, and training. 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. In the Preliminary Determination, we found this program to be not countervailable because it was neither de jure or de facto specific to an enterprise or industry or group thereof. Under section 351.502(e) of the Department's regulations, a subsidy is not specific solely because it is limited to small firms. In addition, the GOA provided information which shows that small companies in many industries received CFI financing and which demonstrates that no industry is a predominant user of the program, or has received a disproportionately large share of the loans. See 66 FR at 14535. At verification, we reviewed source material which confirmed the information provided for the record. See Verification Report at 9. Therefore, for purposes of this final determination, we determine the CFI Credit for Small Business Ventures Program to be not countervailable. 4. National Income Tax Exemption Pursuant to Article 20(1) of Law 20,628 In our Preliminary Determination, we found that this program was not countervailable. There is no evidence on the record or arguments from the parties that would lead us to reconsider our determination. Therefore, we continue to find this program 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. The Secretary of Agriculture heads the implementation of the emergency assistance. Types of emergencies eligible for assistance under this program include extraordinary or unpredictable climatological, or physical disasters such as floods, earthquakes, and volcanos. Biological disasters such as disease or pests also renders farmers eligible to receive emergency assistance. We preliminarily determined that Law 22,913 is not countervailable in accordance with section 351.502(f) of the Department's regulations. See Preliminary Determination at 14536. According to section 351.502(f) of the Department's 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." At verification, we reviewed information that confirmed that the Emergency Aid is provided in a manner consistent with section 351.502(f) of the Department's regulations. Therefore, for purposes of this final determination, we find that assistance provided under Law 22,913 Emergency Aid/Emergency Agricultural and Livestock Law is not countervailable. The GOA claimed that Law 22,913 was entitled to "green box" treatment and was therefore not countervailable. However, because we determine that this program is not a countervailable subsidy under section 351.502(f) of the Department's regulations, we do not need to examine the GOA's "green box" claim. 6. BICE Norm 007: Line of Credit Offered to Finance Industrial Investment Projects, and Projects to Restructure and/or Modernize the Argentine Industry 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. Financing is available for all economic sectors for up to 90 percent of the total value of the eligible projects, for either the acquisition of capital goods and new or second-hand productive goods, or investment projects. Credit under this program was available to projects requiring between US $100,000 and US $10 million for a period of up to 10 years, including a two-year grace period on principal. Interest rates were determined on a case-by-case basis. In our Preliminary Determination, we did not make a finding with respect to whether this program is countervailable because we did not have enough information on the record to do so. See 66 FR at 14539. In response to a supplemental questionnaire sent out after our Preliminary Determination, the GOA provided information showing that one loan to the honey industry was granted in 1997. We examined documents showing that the Norm 007 line of credit was made up of two parts, for the financing of capital goods and for new or second-hand productive goods, and for investment projects for all economic sectors. This line of credit has been used by a broad range of industries. At verification, we explored whether provision 2.3 of the Norm 007 regulations, which provides for the construction of warehouses for products for sale in foreign markets, renders Norm 007 financing specific to exports. We are satisfied with the information that was provided at verification that the receipt of loans under this line of credit is not contingent upon export performance or anticipated exportation. The Norm 007 regulations specify that virtually all types of economic activity are eligible for financing under this line of credit. Funding for the construction of warehouses, as described in provision 2.3, is one of many types of industrial investment projects that BICE Norm 007 line of credit finances. Nothing in the record supports a finding that the loan granted in 1997 to the honey industry was tied to export performance. We therefore find that the BICE Norm 007 is not countervailable because this line of credit is neither de jure nor de facto specific within the meaning of section 771(5A) of the Act. However, if a countervailing duty order is issued and administrative reviews are requested, we intend to examine whether the honey industry has received any loans under BICE Norm 007 for export-related purposes. PROAPI The GOA established PROAPI as a project for honey sector research, development, and technology transfer. 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. As explained at verification, this sponsorship amounted to inclusion of the PROAPI logo, as an imprimateur, in the materials prepared by the trade show participants, who were producing and selling propolis, not honey. According to the GOA, PROAPI is the only Argentine supplier of BeeVar, and of inspection and certification services for live beehive material. 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 Agriculture Agreement, provided such measures conform to the criteria of Annex 2 of the same agreement ("green box" subsidies). 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. Paragraph 2 of Annex 2 of the Agriculture Agreement covers policies involving expenditures in relation to programs which provide services or benefits to the agriculture or rural community. According to section 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. The GOA claimed that the entire PROAPI program was non-countervailable as a "green box" subsidy. Since the Preliminary Determination, we have received no additional information or arguments from the parties with respect to the provision of inspection and certification services and sales of BeeVar. Therefore for the reasons stated in the Preliminary Determination, see 66 FR at 14530- 31, we continue to find that the provision of inspection and certification services is entitled to "green box" treatment under section 771(5B)(F) of the Act and that the sales of BeeVar are not made for less than adequate remuneration. However, with respect to the third element of PROAPI, sales of fertilized queen bees, we stated in the Preliminary Determination, that it is not clear whether goods could be considered "benefit" as described in Paragraph 2 of Annex 2 of the Agriculture Agreement. Even if goods could be considered "benefits" under paragraph 2 of Annex 2 of the Agriculture 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, in our Preliminary Determination, we found that the provision of fertilized queen bees cannot meet the "green box" requirements set forth in Annex 2, and we 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. In accordance with section 351.511(a)(2)(i) of the Department's 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. In the Preliminary Determination, we found that PROAPI's sales of fertilized queen bees were made for less than adequate remuneration because, although the GOA had provided narrative information regarding market prices of fertilized queen bees, this information was undocumented and it showed that the average price at which fertilized queen bees are sold is higher than the prices charged by PROAPI. Since the Preliminary Determination, the GOA has provided documentation of this narrative information, including invoices showing the prices at which fertilized queen bees were sold. This information was discussed and examined at verification. See Verification Report at p. 27. The documentation shows that prices for fertilized queen bees ranged from 7.5 to 10 pesos during the POI. PROAPI's price for fertilized queen bees during the POI was 10 pesos. Therefore, we now determine that PROAPI's sales of fertilized queen bees were not made for less than adequate remuneration in accordance to section 771(5)(E)(iv) of the Act, and therefore this program is not countervailable. 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), imposes a turnover tax upon each transaction of commerce, industry, professional services, or any other business activity which occurs in the City of Buenos Aires. The GOA has stated 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 exempts export revenue from the local turnover tax. 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." In our Preliminary Determination, we found that information on the record of this review indicated that the turnover 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. See Preliminary Determination at 14534. As such, the Department preliminarily determined that, for purposes of this investigation, the Buenos Aires Gross Income Tax Exemption did not confer a countervailable benefit. We also noted that if we had found the Reintegro to be not countervailable, 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 as well as an exemption of these indirect taxes upon export. At verification, the GOA confirmed that section 116, subsection 12 of the Fiscal Code of municipality of Buenos Aires, exempted income obtained from exports from the turnover tax. Because we have found the entire amount of the Reintegro to be countervailable, we find that this exemption from an indirect tax does not confer a countervailable benefit. Programs Determined to be Not Used A. Federal Programs 1. BICE Norm 011: Financing of Production of Goods Destined for Export 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, and the interest rate ultimately charged to the borrower is determined by the Participating Agent. We preliminarily determined that this program was not used based on information supplied by the GOA indicating that the BICE did not grant any loans through this line of credit to honey producers or exporters that were outstanding during the POI. See Preliminary Determination at 14537. At verification, we confirmed that there were no loans outstanding to honey producers or exporters under this program during the POI. See Verification Report at 8. Therefore, for purposes of this final determination, we find that this program was not used. 2. BNA Line of Credit to the Agricultural Producers of the Patagonia (Regulation Annex to Circular BNA No. 10,111/1) 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. This line of credit offers long-term loans generally granted for investment purposes. We preliminarily determined that this program was not used during the POI based on information provided by the GOA. See Preliminary Determination at 14537. At verification, we confirmed that honey producers and exporters did not receive this financing. See Verification Report at 42. We therefore continue to find that this program was not used by honey producers and exporters during the POI. 3. BNA Financing for the Acquisition of Goods of Argentine Origin and Line of Credit for the Acquisition of Industrial and Agricultural Machinery, Silos and Transportation Vehicles In our Preliminary Determination, we found that the BNA Financing for the Acquisition of Goods of Argentine Origin and the Line of Credit for the Acquisition of Industrial and Agricultural Machinery, Silos and Transportation Vehicles were countervailable as import substitution subsidies under section 771(5A)(C) of the Act. See Preliminary Determination at 14527, 14528, 14530. In the Preliminary Determination, we estimated the value of loans provided under these lines of credit using facts available because the GOA did not provide any information on the loans provided to the honey sector. Subsequent to the Preliminary Determination, the GOA reported that these two programs were not used by honey producers or exporters during the POI. At verification, BNA officials explained the process they used to determine that there were no loans to honey producers during the POI, and we were able to test the reasonableness of the process. See Verification Report at 42, 43. Based on the results of verification, we find that there were no loans to the honey sector outstanding during the POI that were provided under the BNA Financing for the Acquisition of Goods of Argentine Origin or the Line of Credit for the Acquisition of Industrial and Agricultural Machinery, Silos and Transportation Vehicles. As a result, these programs were not used during the POI. 4. "Production Pole" Program for Honey Producers The GOA established the "Production Pole" program to provide assistance to small businesses pursuant to Decree 1304/94. The Production Pole program was created 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 the 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 which 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. In our Preliminary Determination, we found that the Castelli Honey Production Pole only received grants under this program during 1994. See 66 FR at 14537. 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 section 351.524(b)(2) of the Department's regulations, i.e., the grant amount is not greater than 0.5 percent of total sales in the year of receipt. Because this is a GOA program, 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 did not have that information on the record, we used as our denominator the value of Argentine honey production during 1999. See 66 FR at 14537, 14538. The grants under the "Production Pole" program were significantly less than 0.5 percent and therefore would have been expensed in the year of receipt, 1994. Therefore, we preliminarily determined that the Production Pole for Honey program was not used by producers or exporters of honey to the United States during the POI. See 66 FR 14537, 14538. At verification, we were unable to examine documents showing the termination of the Production Pole program. However, even if we find the benefits under the Castelli Honey Production Pole countervailable, the value of the grants under this "Production Pole" does not change from our Preliminary Determination. As a result, the grant amounts are significantly less than 0.5 percent of the value of total honey production during 1999 (as a proxy for 1994). See Preliminary Determination at 14537, 14538. Therefore, the "Production Poles" program was not used during the POI. 5. Enterprise Restructuring Program (PRE) 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 competitiveness. Companies receive direct support, information gathering (through a business information system 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. Assistance under this program is not limited to any sector or any geographic region. We found that this program was not used in our Preliminary Determination because no disbursements had been made before March 2000, see 66 FR at 14538. At verification, we confirmed that no funds were disbursed under this program during the POI. See Verification Report at 17. Therefore, we determine that this program was not used by honey producers or exporters during the POI. 6. 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 have direct administering authority over them. The SGRs consist 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. We found in our Preliminary Determination, see 66 FR at 14538, that this program was not used by honey producers or exporters during the POI. For purposes of this final determination, we continue to find that this program was not used during the POI. 7. Fundacion Export*Ar The GOA's Fundacion Export*Ar (Export*Ar) program was founded in 1993; its 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. All information services provided under Export*Ar are offered free of charge, but 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 exhibition space. Export*Ar pays the remainder of the costs. The GOA reported that, 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. A honey producer/exporter also participated in one Export*Ar-sponsored overseas trade show during the POI. This trade show was held in the United States. Based on verification, we find that the information services provided by Export*Ar constitute general export promotion activities, and, as such are not countervailable in accordance with section 351.514 of the Department's regulations. With regard to the financial assistance provided to honey producers/exporters during the POI to attend an overseas trade fair, we preliminarily determined that such financial assistance was not part of general export promotion activities, and was thus a countervailable export subsidy within the meaning of section 771(5) of the Act. See Preliminary Determination at 14527. This financial contribution provided a benefit equivalent to the amount of the grant, and the grant was specific within the meaning of section 771(5A)(B) of the Act because receipt of the grant was tied to the anticipated exportation of honey to the United States. See Preliminary Determination at 14527. In the April 30, 2001 supplemental questionnaire response, the GOA provided documentation supporting their claim that participants in trade fairs pay their own expenses. At verification, we examined this information. We found that a honey producer was among the eight businesses using the exhibition space which had been rented by Pro-Mendoza. Pro- Mendoza is the province of Mendoza's export promotion program. The total space used by Pro-Mendoza was 18 square meters. We verified that Pro- Mendoza paid for the space it used. Although the GOA had reported that all of the space used by Pro-Mendoza was used by the honey producer, the documentation showed that there was only one honey producer among the eight businesses using the space. Although the record does establish that Fundacion Export*Ar received payment from Pro-Mendoza, we do not have any information regarding the specifics of Pro-Mendoza's operations or related to whether Pro-Mendoza received payment from the eight participants. However, the total value of any potential benefit to the honey producer utilizing this space is so small that it would have no measurable impact on the overall subsidy rate (i.e., the rate is significantly less than 0.001 percent). See e.g. Live Swine From Canada, Final Results of Countervailing Duty Administrative Review, 63 FR 47255, 47236 (September 4, 1998) (Swine). Accordingly, we have not included the benefits from Fundacion Export*Ar in the calculated subsidy rate for 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. The only portion of Law No. 4430/98 which has thus far been implemented is Article 5.9, which was implemented in 1999 via Decree 491. This article 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. On March 24, 1999, CORFO, the agency which implements agricultural policy in Chubut, issued 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 beekeeping material; interest-free loans are provided for five-year terms, with principal repayments due annually. Given the stated repayment terms, the first repayments of principal on loans issued under this program were not due until June 2000. In accordance with 351.505(b) of the Department's regulations, 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. Because the repayment terms on long- term commercial loans would not likely differ significantly from repayment terms on these loans, and because the first payments on these loans were scheduled in June 2000, after the POI, we determine that no benefits were received from these loans during the POI. Therefore, for purposes of this final determination, we find this program to be not used 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. However, there were no exports to the United States of honey produced in the Province of Santiago del Estero. Therefore, for purposes of this final determination, we find this program not used by honey producers or exporters during the POI. 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, 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 information showing the total expenditures by the Province of Entre Rios for putting on these representations and exhibitions. These expenditures were so small that the total value of any potential benefit to honey producers in Entre Rios utilizing this space would have no measurable impact on the overall subsidy rate (i.e. the rate is less than 0.001 percent). See Swine, 63 FR at 47236. Accordingly, we have not included the benefits from the Entre Rios Honey Program in the calculated subsidy rate for the POI. Programs Determined to be Terminated Federal Programs 1. PROMEX Consortium for Honey Exportation The GOA's PROMEX export promotion program was created in 1990 with joint funding from the World Bank and the Inter-American Development Bank (IDB). PROMEX provided export promotion assistance to small and medium-sized businesses. PROMEX was terminated in 1998, and the last grant provided under this program was distributed in September 1997. We verified the termination of this program and found no evidence of a replacement program. See Verification Report at 23. 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 section 351.526 of the Department's regulations. We note that the GOA submitted a "green box" claim for this program, but since we have determined that it has been terminated, we need not address this issue for purposes of this final determination. 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 Department's regulations. Provincial Program Formosa Honey Program/Undomesticated Bee Development Project In the Province of Formosa, the SubSecretary of Planning and Investment Projects administered the Undomesticated Bee Development Project. This program was funded by the Food and Agriculture Organization (FAO) and was established in 1990 to help rural low income families increase their standard of living by providing them with beekeeping activities. Based on our analysis of the information on the record, we find that the project stopped receiving funds in 1992, ceased operations in 1996, and that no funds were made available for this program after 1996. Accordingly, we find this program to be terminated in accordance with section 351.526(d) of the Department's regulations. VI. Programs Determined Not to Exist A. Federal Programs 1. BNA Warrant-Based Export Financing 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 credit is only granted for goods held physically in the warehouse, as long as they are commodities. Commodities are considered by the Central Bank as preferred guarantees. A warrant can be pledged as collateral for a financing transaction if the owner of the instrument endorses it to the lending institution. For transactions using warrants as a guarantee, a term of up to 180 days is allowed. Law 9643 indicates that warrant-based financing can be used as a form of export prefinancing. In our Preliminary Determination, we found that the BNA Warrant-Based Export Financing program is a de jure specific export subsidy pursuant to section 771(5A)(B) of the Act. See Preliminary Determination at 14529. At verification, we examined information showing that the warrant is a negotiable instrument and is used in the same manner. Banks generally consider a warrant to be a guarantee, like any other negotiable instrument. Therefore, the use of warrants is not a program but a financial instrument that the BNA and other banks in Argentina use as a source of guarantees. Furthermore, we find that the warrant is generally used in securing financing and is not solely an instrument for export financing. We therefore determine that the BNA Warrant-Based Export Financing Program does not exist. 2. Honey-Specific Line of Credit Program for the Pre-Financing of Development Expenses Associated with Export Sales We initiated on the Honey-Specific Line-of-Credit Program for the Pre- Financing of Development Expenses Associated with Export Sales. However, we have found that the Honey-Specific Line-of-Credit Program for the Pre- Financing of Development Expenses Associated with Export Sales is the same as one of the lines of credit available under the Buenos Aires Honey Program. See Preliminary Determination at 14539. See the discussion in the section on "Buenos Aires Honey Program" above. Therefore, we find that this program does not exist. B. Provincial Government Programs 1. La Pampa Lines of Credit We initiated on La Pampa Lines of Credit. However, we found La Pampa Lines of Credit are the same lines of credit as those offered under the Federal Investment Board's (CFI's) "Credit for Small Business Ventures" program. See Preliminary Determination at 14539. We have obtained no additional information which would lead us to alter this determination. Therefore, for purposes of this final determination, we find that this program does not exist. 2. Province of San Luis: Creditos de Confianza (Trust Credits) In our Preliminary Determination, we found that this program does not exist. See 66 FR at 14539. We have obtained no additional information which would lead us to alter this determination. Therefore, for purposes of this final determination, we find that this program does not exist. VII. Analysis of Comments Comment 1: Initiation Standard The Government of Argentina (GOA) argues that the petition which was filed on September 30, 2000, was deficient in that it did not address the provisions of Annex 2 of the Agriculture Agreement. The GOA maintains that consistency with Annex 2 is one of the basic elements which must be alleged in a petition for the imposition of countervailing duties on an agricultural product listed in Annex 1 of the Agriculture Agreement (honey is therein listed). Further, the Department's failure to require petitioners to address the provisions of Article 6 and Annex 2 is contradictory to the international obligations, outlined in Article 13 of the Agreement, to show "due restraint . . . in initiating any countervailing duty investigation" if the subsidies alleged comply with Article 6 of the Agreement. The GOA notes that the statute requires petitioners to allege the elements necessary for the imposition of countervailing duties, and that the allegation must be accompanied by information reasonably available to petitioners; the GOA argues that the petition fails on both counts. According to the GOA, the petition alleged the elements required in a countervailing duty investigation of a non-agricultural product, but failed to address the relevant exception for agricultural products provided in section 771(5B)(F) of the Act: "{d}omestic support measures that are provided with respect to the products listed in Annex 1 to the Agreement on Agriculture, and that the administering authority determines conform fully to the provisions of Annex 2 to that Agreement, shall be treated as non-countervailable." Because honey is listed in Annex 1, the GOA argues that petitioners had a burden to address this exception and allege that the subsidies provided to honey producers do not comply with the provisions of Annex 2. Further, petitioners' failure to meet this statutory obligation cannot be cured by the Department after initiation; the statute is clear that the obligations to allege the necessary elements and provide the information reasonably available lie solely with petitioner. The Department's obligation under the statute, the GOA maintains, is "to determine whether the petition alleges the elements necessary for the imposition of a duty." Section 771a(c)(1)(A) of the Act. The GOA contends that the statute does not permit the Department to overlook these requirements at the initiation stage in order to develop information; the requirements for initiation and preliminary determination are separate in the relevant WTO agreements and the U.S. statute and the Department must meet the requirements at every stage. Finally, the GOA argues, the United States has the additional obligation under the Agriculture Agreement to show due restraint in initiating countervailing duty investigations if the subsidies conform fully with the provisions of Article 6 of the Agreement. Petitioners argue that the "due restraint" requirement does not apply under the circumstances of this case. Petitioners cite to the Statement of Administrative Action which indicates the interpretation that the "due restraint" requirement "entail{s} a commitment to refrain from self- initiating CVD investigations with respect to products subject to Annex 2 domestic support measures during {the implementation} period." Uruguay Round Trade Agreements, Texts of Agreements, Implementing Bill, Statement of Administrative Action, and Required Supporting Statements, H.R. Doc. 103-316 at 938, 1994 (SAA). Thus, according to petitioners, this requirement only applies to investigations which are self-initiated by the Department and because the instant countervailing duty investigation was initiated based on a petition filed by the domestic industry, the "due restraint" requirement was not relevant to the Department's initiation. Further, petitioners note another reason that the "due restraint" provision is irrelevant to the Department's initiation is the fact that many of the subsidies in this case are export subsidies and petitioners interpret Article 13 as suggesting that this provision is limited to domestic subsidies. Petitioners note the statutory requirements that a petition allege "the elements necessary for the imposition of a countervailing duty . . . accompanied by information reasonably available to the petitioner supporting those allegations," (Section 771(b)(1) of the Act) and the absence of statutory requirements regarding the elements of Annex 2 of the Agriculture Agreement at the initiation stage. Petitioners argue that the categories of non-countervailable subsidies listed in Section 771(5B) of the Act, including the "green box" criteria, do not constitute a basic element of countervailability controlling the allegations in a petition and the Department's analysis at initiation. Rather, according to petitioners, the statute, at Section 771(5B)(A), states that the issue of whether the subsidies in question constitute non-countervailable subsidies must be determined in an investigation. Petitioners argue that whether a particular subsidy satisfies the criteria of Annex 2 is a substantive question that is reserved for an investigation, in which the Department gathers the information necessary to conduct the thorough analysis that "green box" claims require. This analysis, according to petitioners, is clearly distinguishable from the necessarily cursory analysis which the Department performs in the 20-day period prior to initiation, and which was appropriately and lawfully performed by the Department for the Preliminary Determination. Finally, petitioners contend that the GOA's arguments wrongly place the burden of making the "green box" showing on petitioners, a burden which petitioners believe the Department's regulations show belongs to the respondent government: "{a} claim that a particular subsidy or subsidy program should be accorded non-countervailable status under . . . section 771(5B)(F) of the Act ("green box" subsidies) must be made by the competent government with the full participation of the government authority responsible . . ." 19 CFR 351.301(d)(6). Given that petitions need only include "information reasonably available" to petitioners, petitioners argue that it would be illogical and unreasonable to require petitioners to make the detailed showing required by the "green box" provisions of Annex 2 on the basis of limited public information. Petitioners conclude that the GOA essentially argues for a new initiation standard for cases involving agricultural products, a standard which would require a complete Annex 2 analysis by petitioners and the Department prior to initiation. In petitioners' view, this is contrary to the statute and the Department's regulations which make clear that the Annex 2 "green box" criteria are separate and distinct exceptions to the basic elements of countervailablity and that these criteria must be addressed by the responding government rather than by petitioners and the Department at initiation. Department's Position: We agree, in part, with the petitioners. To the extent that the GOA raises arguments concerning the application of the Agriculture Agreement, these arguments are addressed by reference to the U.S. countervailing duty law, implemented by the Uruguay Round Agreements Act which is consistent with the United States' international obligations under the WTO. The Statement of Administrative Action ("SAA") sets forth the understanding of the United States with respect to what is meant by showing due restraint in initiating any countervailing duty procedures. "The Administration understands this requirement to entail a commitment to refrain from self-initiating CVD investigations with respect to products subject to Annex 2 domestic support measures during {the nine year period commencing in 1995}." SAA at 938. Because this was not a self-initiation, the due restraint provision of the Agriculture Agreement does not apply. The Department properly initiated this investigation under U.S. law. Under section 702(b)(1) of that Act, "{a} countervailing duty proceeding shall be initiated whenever an interested party . . . files a petition with the administrating authority, on behalf of an industry, which alleges the elements necessary for imposition of {countervailing duties}." The petition must be "accompanied by information reasonably available to the petitioner supporting those allegations." See Id. Under section 701(a) of the Act, the petitioner must allege that there is "a countervailable subsidy." Section 771(5)(A) of the Act defines a countervailable subsidy as a subsidy which is specific under section 771(5A) of the Act. A subsidy occurs when a government or public entity of a country provides a financial contribution, which provides any form of income or price support within the meaning of Article XVI of the GATT 1994, or makes a payment to a funding mechanism to provide a financial contribution, or entrusts or directs a private entity to make such a financial contribution, and this financial contribution confers a benefit. Section 771(B) of the Act. The petitioners addressed all of these elements in the petition. See, e.g., Memorandum to the File; Initiation of Countervailing Duty Investigation: Honey from Argentina (C-357-813), (public document on file in the Central Records Unit of the Department of Commerce, Room B-099 (CRU)). The GOA argues that the petition should have addressed whether the subsidies constituted "green box" subsidies under Annex 2 of the Agriculture Agreement. However, pursuant to the Department's regulations, whether a subsidy qualifies as a "green box" subsidy is not an issue to be addressed by the petition. Rather, section 351.301(d)(6) of the Department's regulations clearly states that it is the respondent government that must make "{a} claim that a particular subsidy should be accorded non-countervailable status . . . under section 771(5B)(F) of the Act . . . ." (1) This regulatory requirement reflects the fact that the responding government is the party in control of and which has access to the information necessary for a "green box" analysis. The government must make such a claim 40 days before the scheduled date for the preliminary determination in a countervailing duty investigation. 19 CFR 351.301(d)(6)(i). Therefore, this is not an issue that the petitioners are required to address in the petition, but one which the respondent government is properly required to address during an investigation. Indeed, as the investigation progressed, the relevance of the GOA's claims under of Annex 2 of the Agriculture Agreement diminished. While initially claiming that twenty-seven programs qualified for "green box" treatment in a November 22, 2000 letter, the GOA reduced that claim to only three programs in a January 18, 2001 response. With respect to the three remaining programs, PROMEX, PROAPI, and the Law 22,913 Emergency Aid Program, as discussed above in the relevant program-specific sections, we have found the Law 22,913 Emergency Aid Program to be not countervailable under a regulatory exception for disaster relief programs; we have found PROMEX to be terminated; and we have found that certain elements of the PROAPI program meet the "green box" criteria and are therefore not countervailable, and that one element of PROAPI is not countervailable because the goods provided under this program are not provided for less than adequate remuneration. Comment 2: Denominator The GOA argues that the Department should modify the figure used in the calculations for the denominator representing the value of total domestic honey production. This figure, the GOA maintains, was corrected during verification and verified. Department's Position: At verification, the GOA did provide additional information regarding the value of domestic honey production during the POI. See Verification Report at 1-2. However, the sources and assumptions on which this information was based were undocumented. The GOA is essentially arguing for a denominator which is built up by adding to the volume and value of exports a volume for domestic consumption based on the 1988 agricultural census. The GOA valued this volume of domestic consumption by reference to an average per kilo value. However, this value, which is more than double the per unit F.O.B. value of exported honey, and which the GOA explained resulted from the Ministry of Agriculture's semiannual survey of the most important honey packers, was supported only with anecdotal information which was either dated April 1999 or undated. Id. at 2. The GOA did not provide a document which showed the annual average price of honey. We have several concerns with respect to the information provided. First, the starting point for the GOA's exercise is not the production volume by province which the GOA provided in the questionnaire response (which was also not completely verifiable). Second, the source of the information regarding domestic honey consumption is more than ten years old, and thus, in our view, is not usable because it is so old. Third, the per-unit value which the GOA advocates using to value the "constructed" domestic production volume does not represent an annual average. Therefore, we do not believe it is appropriate to adjust the domestic production figures for use as our denominator when calculating the countervailable subsidy from domestic subsidy programs. Comment 3: Argentine Internal Tax Reimbursement/Rebate Program (Reintegro) Petitioners assert that unless the GOA satisfies at least one of the alternative tests laid out in sections 351.518(a)(4)(i-ii) of the Department's regulations, the Department must consider the entire amount of the rebate to confer a countervailable benefit. Petitioners maintain that the record evidence and verification demonstrate that the GOA does not have a reasonable system and has not performed a reasonable examination (the alternative tests contemplated in sections 351.518(a)(4)(i-ii) of the Department's regulations). As such, petitioners argue that the Department must continue to consider the entire Reintegro to confer a countervailable benefit. The GOA acknowledges that section 351.518(a)(4)(i-ii) of the Department's regulations instructs the Department to consider the entire amount of a tax rebate to confer a benefit unless the Department finds that the government in question satisfies at least one of the alternative tests. The GOA also acknowledges that in the Preliminary Determination, the Department found that the GOA had not satisfied either test. However, the GOA contends that the Department's long-standing policy regarding benefits from indirect tax rebate schemes such as the Reintegro Program has been that only the excessive portion of an indirect tax rebate should be considered the benefit. As such, the GOA asserts that the Department "broke with past practice and misapplied the rules established by the WTO, which have been incorporated into U.S. law," by treating the entire amount of the Reintegro as a countervailable benefit. Department's Position: Section 351.518(a)(4)(i-ii) of the Department's regulations clearly instructs the Department to consider the entire amount of a tax rebate to confer a benefit unless the Department finds that the government in question satisfies at least one of the alternative tests. In the Preliminary Determination, we found that the GOA had not demonstrated that it: 1) had in place a reasonable and effective system/procedure as contemplated by section 351.518(a)(4)(i); or 2) conducted a reliable "examination," as contemplated in section 351.518(a)(4)(ii). See 66 FR at 14524. An analysis of the record evidence and the results of verification reaffirmed the Department's finding that the GOA does not have a reasonable system and has not performed a reasonable examination as contemplated by the relevant regulations. See Department's Position on Comments 4 and 6, below. As such, we will continue to treat the entire Reintegro for bulk and processed honey as a countervailable benefit. Comment 4: The System for Determining the Reintegro Petitioners argue that the Department's Preliminary Determination considered the record evidence provided by the GOA in support of its claim that it derived the Reintegro rebate from a systematic analysis of the inputs consumed in the production of honey and the indirect taxes imposed on those inputs. Petitioners contend that information provided since the Preliminary Determination and the results of verification confirm the Department's finding that "no systematic collection and analysis of information on the honey industry was ever undertaken to measure the industry's indirect tax incidence on its production inputs." Petitioners maintain that the Department examined the two components of the system identified by the GOA, the Agriculture Secretariat's data- gathering efforts and the 1997 AFIP Honey Report (AFIP Report) . Petitioners cite the Department's Preliminary Determination which states the following about the two components of the GOA's system/procedure: {w}hile 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 {the} 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. . . . 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. See 66 FR at 14525. Petitioners argue that the results of verification confirm that the manner in which the GOA collects and analyzes producer cost and tax data underscores the absence of any systematic approach to the Reintegro for honey. Petitioners contend that verification demonstrated that the GOA has no centralized control over data collection and is unable to confirm the extent to which the Agriculture Secretariat's questionnaires are actually distributed to producers and reflected in the GOA's database. Petitioners also contend that the GOA's "system" is deficient and demonstrates that it is unlikely that the GOA's honey producer database presents a complete and accurate picture of honey industry costs. According to petitioners, the "system" envisioned in section 351.518(a)(4)(i) of the Department's regulations implies an ongoing process that routinely analyzes and collects data, and provides results based on that data. Petitioners argue that the GOA's attempt to document its system is really an attempt to string together several functions by government agencies unrelated to the assignment of Reintegro rates. Petitioners argue that if the GOA had a system to collect and integrate data from the various sources, there would be some form of "written documentation relying on those sources, establishing the appropriate tax incidence, and recommending a particular Reintegro rate." Petitioners contend that the record contains no documentary evidence substantiating the Reintegro rates for honey. Petitioners also argue that the results of verification support the Department's preliminary finding that the AFIP Report was not relevant to the establishment or the confirmation of the appropriate levels of Reintegro applicable honey. Petitioners maintain that at verification, the GOA's honey expert "could not provide a specific answer for how the GOA used the AFIP Report to establish or revise the Reintegro rates for honey." The GOA disagrees with the Department's preliminary conclusion that it does not have in place a "system or procedure" within the meaning of section 351.518(a)(4)(i) of the Department's regulations and the WTO Agreement on Subsidies and Countervailing Measures. The GOA accepts that its system for honey is different from its systems for other sectors (e.g., textiles and steel). However, the GOA argues that its system for honey reflects the atomized nature of the Argentine honey sector and the GOA's lack of available resources to conduct audits of this dispersed sector. Rather, the GOA asserts that its system for honey, as verified by the Department, relies heavily on informal, but constant, contact with the honey sector in Argentina. The GOA concedes that, although the system does not rely heavily on written documentation or well-maintained records, it is a "system" based on actual information from the producers. Department's Position: Section 351.518(a)(4)(i)of the Department's regulations states that the government in question must have in place and apply a reasonable and effective system to confirm which inputs are consumed in the production of the exported product and in what amounts, and to confirm which indirect taxes are imposed on these inputs. In the Preliminary Determination, we found that the GOA had not demonstrated that it had a reasonable and effective system or procedure as contemplated by section 351.518(a)(4)(i) i)of the Department's regulations. The results of verification have confirmed that the GOA does not have a reasonable system as contemplated by the relevant regulation. Throughout the proceeding the GOA claimed that its system for the honey sector reflects the atomized nature of the Argentine honey sector and its lack of available resources for conducting audits of this dispersed sector. The GOA has also attempted to explain its inability to provide any documentation or working papers that link its system to the Reintegro rate with the claim that its contact with honey sector, though informal, is constant. The GOA was able to provide some documentation (e.g., questionnaires) which shows its efforts to obtain cost and production information from the honey sector. See the GOA's February 14, 2001, submission at exhibit 1. The GOA also provided a copy of the AFIP Report (see the GOA's May 22, 2001 submission) and implied that it was used to "corroborate the Reintegro rates applied to honey." See the GOA's April 30, 2001 submission at page 5. However, the GOA was unable to document any link whatsoever between the few documents it submitted, its "system," and the establishment of or the multiple revisions to the Reintegro rates for honey. See Reintegro Verification Report at 6. At verification, the GOA was unable to document how many honey producers responded to its questionnaires. More importantly, the GOA was unable to demonstrate how the AFIP Report was used to "corroborate the Reintegro rates applied to honey." Id. Indeed, one GOA official stated that "the AFIP study has been criticized by the honey sector and it was not necessarily the basis for the Reintegro rates for honey." Id. In addition, the GOA was unable to provide: 1) the data on which the GOA relied to establish the Reintegro rates for honey; 2) worksheets depicting how the Reintegro rates were calculated; or 3) how it determined, in April 2000, that 5.4 percent was the highest level of Reintegro for bulk honey "permissible under the international rules." See Id.; the GOA's February 14, 2001 submission at page 1. As such, the documentary evidence and the results of verification do not demonstrate that the GOA had, or has, in place a reasonable and effective system 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. Rather, while the record indicates that the GOA gathers information from several sources about the honey sector and its production processes and costs, there is no evidence demonstrating that there was, or is, a reasonable and effective system in place that is used to determine the specific inputs consumed in production of honey and the indirect tax incidence on those inputs. Moreover, the GOA was unable to 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 continue to find that the requirements for non- countervailablity set forth in section 351.518(a)(4)(i) of the Department's regulations have not been met. Comment 5: The Credibility of the EcoLatina Report Petitioners assert that the credibility of the EcoLatina report is suspect. Petitioners contend that since the report was undertaken in December 2000, it is a post-hoc analysis of the Reintegro undertaken in the specific context of this case and against the specific backdrop of the Department's regulations. Petitioners also contend that, even though the GOA could not demonstrate the parameters pursuant to which the EcoLatina Report was commissioned, the record demonstrates that EcoLatina did not operate independently of the GOA while preparing this study. On this basis, petitioners argue that the EcoLatina Report cannot be considered an independent and "reasonable" examination of bulk honey inputs and indirect taxes imposed on those inputs. The GOA argues that nothing in the SCM agreement or the Department's regulations address a timing requirement for when a responding government must conduct its examination. The GOA contends that the examination language was added to the SCM Agreement at the request of developing countries which were unable to maintain the monitoring systems or procedures described in section 351.518(a)(4)(i) of the Department's regulations. Moreover, the GOA argues that preparing an examination "only makes sense at a time other than in the normal course of the government's analysis of the program." Department's Position: We agree with the GOA. Section 351.518(a)(4)(ii) of the Department's regulations states that if the responding government does not have a reasonable and effective system, it may 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." As such, the fact that the EcoLatina Report was undertaken after the initiation of this investigation has no bearing on the credibility of the report. Also, the fact that the EcoLatina Report relied on information provided by the GOA is not, in and of itself, reason to doubt the credibility of the report. The reasoned analysis of data collected from a representative sample of honey producers would be acceptable, regardless of the source of the sample. However, the Department determines that the GOA was unable to demonstrate that the data it provided to EcoLatina was representative of the Argentine honey sector. See Department's Position on Comment 6, below. Moreover, even if it were representative, there was no nexus in the EcoLatina Report between the "sample" from which inputs and costs were derived and the actual indirect tax incidence on such inputs. As such, we determine that the entire Reintegro confers a countervailable benefit. Comment 6: The EcoLatina Report: Examination of Indirect Tax Incidence for the Argentine Honey Sector The GOA argues that the Department's reasons in the Preliminary Determination for rejecting the EcoLatina Report are unreasonable and do not justify countervailing the entire Reintegro for bulk and processed honey. The GOA states that the Department faulted the EcoLatina Report because it: 1) was not representative of the sector; 2) was not based on an examination of actual producer, acopiador, or exporter experience; and, 3) did not address processed honey. According to the GOA, the basic assumption of the EcoLatina Report (i.e., the "representative beekeeper" with 250 hives) is not the anomaly portrayed in the Department's Preliminary Determination and in the Reintegro Verification Report. Rather, the information on the record demonstrates that the concept of a representative producer with 250 hives is: 1) a normal assumption for those who study the Argentine beekeeping sector; and 2) well established from previous analyses of the honey sector. The GOA further argues that, since the concept of a representative producer with 250 hives is well-established, the Department's concerns that EcoLatina did not attempt to validate the "statistical representativeness" of the representative producer are misplaced. Specifically, the GOA cites to pages 19-26 of exhibit 2 and exhibit 12 of the Reintegro Verification Report, which the GOA claims support the concept of a representative producer with 250 hives. Moreover, the GOA maintains that considering the lack of resources available and the large number of dispersed producers, it is unreasonable for the Department to expect either the GOA or EcoLatina to revalidate the representative producer by collecting and reviewing the data of a statistically meaningful number of producers. The GOA states that there is no requirement in the international agreement or U.S. law requiring that a tax incidence study examine actual producers, acopiadors, or exporters. The GOA concedes that in previous cases, in which the Department has examined the Reintegro Program in Argentina, specific company information has been used as the basis for the tax incidence study. However, the GOA argues that the honey sector is very different from other sectors that have been the subject of countervailing duty investigations. Because the GOA does not have unlimited resources to sample the estimated 25,000 beekeepers, the Agriculture Secretariat's regular contact with honey sector: 1) is a reasonable source of information on the sector; and 2) data developed from Agriculture Secretariat's information was a reasonable basis for the EcoLatina Report. The GOA also maintains that there is no requirement in the international agreements, U.S. law, or Department practice that indirect tax studies examine all products within the scope of the Department's investigation. Rather, the GOA argues that the Department's past policy in Argentine cases has been to use a tax incidence study on the product that represents the majority of exports to the United States. The GOA claims that processed honey represents approximately 0.7 percent of subject merchandise shipped to the United States. As such, the GOA contends that the failure of the EcoLatina Report to address processed honey is not a basis for rejecting the examination. Petitioners argue that the fact that there are a large number of honey producers in Argentina does not alter the GOA's burden under section 351.518(a)(4)(ii) of the Department's regulations to prepare a reliable examination. Petitioners maintain that the Department concluded that the EcoLatina Report was not the "reasonable examination" envisioned in section 351.518(a)(4)(ii) of the Department's regulations because it: 1) was based on data for a producer category that accounted for only 24 percent of Argentine honey production; 2) did not test the inputs and indirect tax incidence identified in the report against actual company experience; 3) overstated the costs on which it based its calculation of the indirect tax incidence for bulk honey, as well as the taxes paid on the listed inputs; and 4) did not address the cost structure and tax incidence for processed honey. According to petitioners, the results of verification demonstrate that none of the above defects have been cured by the GOA. Rather, the results of verification have further highlighted why the EcoLatina Report is not a reasonable examination of honey inputs for purposes of assessing the Reintegro amount. As such, petitioners argue, the Department should affirm its Preliminary Determination that the GOA did not carry out a reliable examination of the inputs consumed in honey production, and, continue to countervail the entire amount of the Reintegro. According to petitioners, the methodology EcoLatina used to develop and validate the representative producer was faulty. EcoLatina simply accepted representative producer information provided by the GOA instead of collecting and analyzing relevant information from a statistically viable sample of Argentine honey producers. See Reintegro Verification Report at 7. In addition, EcoLatina did not consider producer characteristics such as price, cost, and hive yield when developing the representative producer. See Id. Petitioners argue that verification demonstrated that EcoLatina's tax incidence calculations were faulty. Petitioners contend that the taxes used in EcoLatina tax incidence calculation were not limited to indirect taxes assessed on inputs that are physically consumed in the production of bulk honey. See Id. Specifically, petitioners contend that EcoLatina's tax incidence calculation included direct taxes paid at the producer level. In addition, petitioners contend that the calculation also includes taxes paid by acopiadors and exporters, who, by definition, are not involved in the production process of bulk honey. For the above reasons, in the petitioners' view, the EcoLatina Report cannot be considered a reasonable examination as contemplated in section 351.518(a)(4)(ii) of the Department's regulations. Department's Position: We agree with petitioners, in part. In our Preliminary Determination, we found that, pursuant to section 351.518(a)(4)(ii) of the Department's regulations, the EcoLatina Report was not 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. The evidence on the record and results of verification confirm that the EcoLatina Report cannot be considered a reliable examination as contemplated by the relevant regulation. The "basic assumption" of the EcoLatina Report is that a producer with 250 hives is representative of the Argentine honey sector. The EcoLatina Report divides Argentina's 25,000 beekeepers into four categories depending on the level of dedication to beekeeping (i.e., full-time or part-time beekeepers) and on the number of hives. The report's representative producer with 250 hives fits into a category (200 to 499 hives) that accounts for 24 percent of Argentine beekeepers. See page 7 of exhibit 9 of the GOA's January 2, 2001, submission. At verification, we attempted to determine what methodology EcoLatina used to determine that a beekeeper with 250 hives was representative of the Argentine honey sector. EcoLatina stated that it attempted to develop a representative producer who, in terms of number of hives, yield per hive, and dedication to beekeeping was consistent with most Argentine beekeepers. However, the results of verification indicate the following. EcoLatina did not take into account hive yields when developing the representative producer. See Reintegro Verification Report at 8. In addition, EcoLatina specifically targeted its fieldwork at middle-tier beekeepers with between 50 and 500 hives. EcoLatina excluded all information from producers that fell outside these parameters, even though honey producers with fewer than 50 hives or more than 500 hives account for more than half of Argentina's beekeepers. See Id. at 9; page 7 of exhibit 9 of the GOA's January 2, 2001, submission. We asked EcoLatina and the GOA to provide documentation showing their analyses or calculations which demonstrate that a producer with 250 hives was representative of the 25,000 Argentine beekeepers. The GOA provided three documents which contain honey production information for a beekeeper with 250 hives. See exhibits 3 and 12 of the Reintegro Verification Report. In addition, the GOA showed us a copy of the 1988 agricultural census which showed that honey producers in Argentina had an average of 250 hives. GOA officials stated that their analysis showed that the average number of hives per beekeeper had not changed since 1988. In exhibit 12 of the Reintegro Verification Report, the GOA provided another report that showed yield, price, and income information for a producer with 250 hives. An examination of this document indicates that the producer with 250 hives was developed based on a sample of 25 beekeepers and does not describe this producer as "representative" of the Argentine honey sector. Moreover, this document provides similar information for two producers with 67 and 595 hives, respectively. As such, it is not clear how the document validates the GOA's assumption, included in the EcoLatina report, that the representative producer has 250 hives. We note that other information on the record also does not corroborate the GOA's contention that the average number of hives per beekeeper is 250 and that this number has remained the same since the 1988 agricultural census. For instance, a 1995 "Productos Apicolas" study states that there were 16,000 beekeepers who maintained 1.8 million hives (112.5 hives per beekeeper). See page 11of exhibit 3 of the Reintegro Verification Report. Moreover, the December 2000 EcoLatina Report states that 25,000 beekeepers maintained 2.8 million hives (112 hives per beekeeper). See page 6 of exhibit 9 of the GOA January 2, 2001 submission. Thus, the record shows that there was a more than 50 percent increase in both total hives and beekeepers in the Argentine honey sector between 1995 and 1999. Such information calls into question the representativeness of the EcoLatina Report's "basic assumption." As we stated in the Preliminary Determination, we do not disagree that it would be a burden for the GOA 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, the results of verification and the record evidence demonstrate that the basic assumption of the EcoLatina Report (a representative producer with 250 hives) was not representative of the Argentine honey sector. Rather, the record evidence fails to document any basis for the EcoLatina Report's representative producer with 250 hives other than: the average number of hives shown in the 1988 agricultural census; and the GOA's unsubstantiated claim that it has verified the average number of hives per producer. Given the tremendous growth in Argentine honey production since 1988, it seems unlikely that the average number of hives per producer has not changed since 1988. Indeed other record evidence shows that the average number of hives per producer was 112 in 1995 and 1999. Moreover, the fact that the Agriculture Secretariat claims that analysis of information it gathered from the Argentine honey sector corroborated the representativeness of the beekeeper with 250 hives indicates that it does not collect and analyze information from a representative sample of Argentine honey producers. Based on instructions from the GOA for doing its study, EcoLatina focused its limited fieldwork on beekeepers who fit this profile and disregarded any information from beekeepers who did not fit these parameters. As such, we cannot consider that the representative producer or the EcoLatina Report are representative of the honey sector in Argentina. Moreover, the identification of inputs and indirect tax incidence (which had been collected from public sources) were not tested against actual company information or experience. As noted in the EcoLatina Report itself, the 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 reliability of the EcoLatina Report could not be verified. Comment 7: The EcoLatina Report: Indirect Taxes The GOA contends that the WTO Subsidies Agreement and section 351.518(a)(4) of the Department's regulations set forth alternative tests for the non-countervailablity of indirect tax rebate schemes. The GOA argues that it satisfied at least one of the two alternative tests based on a reasonable interpretation of the WTO standards. The GOA also argues that the Department must enter into the details of the calculation prepared by EcoLatina to determine whether the rebates were "excessive." The GOA concedes that some of the taxes included in the EcoLatina Report may not meet the international standard for indirect taxes. The GOA also concedes that some of the inputs considered in the EcoLatina Report may not meet the consumed in production standard. However, the GOA argues that the Department normally conducts an analysis of the taxes and inputs depicted in studies and determines what portion, if any, of the rebates are excessive. The GOA states that the Department has conducted this type of input- specific and tax-specific analysis in all prior Argentine cases, even those for which it has not accepted the study serving as the basis for the reintegro level. Certain Apparel From Argentina; Final Results of Countervailing Duty Administrative Review, 54 FR 22466 (May 24, 1989) (Certain Apparel from Argentina). The GOA claims that, the Department's practice in prior cases has been to perform a calculation to determine which of the taxes were allowable, and to what extent. The GOA claims that the Preliminary Determination marked the first instance where the Department did not perform such an analysis. The GOA argues that an analysis of the tax and input information in this case shows that the level of indirect taxes exceeded the Reintegro. Moreover, the GOA argues that the Department's final determination must recognize that a country may rebate prior-stage cumulative indirect taxes, as well as indirect taxes on the sale of the product itself. The GOA claims that there is no doubt that the permissible rebate is not limited to the prior-stage cumulative indirect taxes imposed during the production process. The GOA claims that the Department has recognized in other Argentine investigations that the reintegro program is designed to rebate both prior-stage cumulative taxes and final stage taxes. The GOA states that in Certain Apparel from Argentina, the Department found that the prior-stage tax incidence was not fully justified by the study. The Department stated: In this review, the Government of Argentina did not provide sufficient information on the level of prior-stage taxes. Therefore, we have not accepted any prior-stage taxes. We have accepted the following final-stage taxes: the turnover tax, the insurance tax, the stamp tax, the bank debits tax, the municipal tax, and the foreign exchange tax. On this basis we determined the amount of the allowable tax rebate to be 4.27 percent ad valorem. The GOA contends that the above passage demonstrates that the Department's practice has been to perform a calculation to determine which of the taxes are allowable, and to what extent. The GOA maintains that the record establishes that indirect taxes are paid not only at the production stage, but also on the sale of honey to middlemen and to exporters. The GOA argues that there is no basis for disallowing the rebate of the indirect taxes on the honey as it is sold and distributed prior to export. Petitioners maintain that the statute and regulations distinguish between cumulative and non-cumulative taxes, and the allowable rebates. As such, petitioners maintain that the GOA's argument that cumulative indirect taxes rebated by Reintegro are permissible is misplaced. Petitioners contend that under sections 351.518(a)(4)(i-ii), the Department must continue to find the entire Reintegro to be a countervailable benefit. Department's Position: Record evidence, including the EcoLatina Report, shows that Argentine bulk honey exports to the United States go through a producer stage, acopiador (i.e., middleman) stage and exporter stage. As such, the producer stage and the acopiador stage are the two prior stages while the exporter stage is the final stage. In our questionnaires and at verification, we asked the GOA to demonstrate how it determined that the taxes identified at the producer stage in the EcoLatina Report's tax incidence calculation were indirect taxes which were assessed on inputs consumed in the production of bulk honey. At verification, the GOA conceded that the EcoLatina Report's tax incidence calculation included: taxes that were not indirect taxes and taxes on items that could not be considered to be inputs consumed in the production of bulk honey. These facts notwithstanding, the GOA now argues that the Department should conduct its own analysis of the production stage inputs and taxes depicted in the EcoLatina Report to determine the actual prior-stage cumulative indirect tax incidence on inputs consumed in the production of bulk honey. However, section 351.518(a)(4)(ii) of the Department's regulations states that the Department will consider the entire amount of the tax rebate or remission to confer a benefit unless the Department finds that the government in question has carried out a reliable examination to confirm which inputs are consumed in the production of the exported product and in what amounts. Furthermore, we must be able to examine which indirect taxes are imposed on the inputs. For this final determination, we have determined that the GOA has not undertaken a reliable examination as contemplated in section 351.518(a)(4)(ii). See Department's Position on Comment 6. As such we cannot use the EcoLatina Report as the basis of an analysis to determine the actual prior-stage cumulative indirect tax incidence on inputs consumed in the production of bulk honey We disagree with the GOA's argument that the Department must allow the rebate of the prior-stage indirect taxes on the sale of bulk honey as it moves through from the production and distribution chain. As noted above, the producer stage and the acopiador stage are considered prior stages. Section 351.518 of the Department's regulations, which addresses the rebate of indirect taxes assessed at prior stages, specifically limits allowable rebates on prior stage cumulative indirect taxes to indirect taxes assessed on inputs consumed in the production process. The EcoLatina Report's tax incidence calculation for the producer stage does not isolate the discrete turnover taxes at each stage and more importantly, we disagree that the specific expenses that the GOA is arguing to include in such a calculation would be allowed because many of the inputs are not consumed in production The GOA itself, does not have a system in place to clearly distinguish prior stage and final stage tax incidence for the purpose of the Reintegro. Furthermore, even if the Department were convinced that the information in the EcoLatina Report with respect to the exporter stage were reflective of actual exporter experience, it is not possible for the Department to quantify the final stage indirect tax incidence because it is not clear that the tax incidence reported for the exporter includes only indirect taxes. To the extent that the GOA raises arguments based on the WTO Agreements, U.S. law, as implemented through the URAA, is consistent with the WTO obligations of the United States. Comment 8: Buenos Aires Honey Program: Specificity of the Line of Credit for Working Capital The GOA maintains that the Department erred in finding that loans under the first element of the line of credit for working capital are de jure specific pursuant to section 771(5A)(D)(i) of the Act. The GOA argues that the Banco de la Provincia de Buenos Aires ("Banco Provincia") offers two main lines of credit: (i) a line of credit for working capital, and (ii) a line of credit for the acquisition of capital goods. The Line of Credit for Working Capital offered by the Banco Provincia is aimed at financing operating expenses and is made available to honey producers for two purposes: (i) to finance operating expenses; and/or (ii) to acquire inert material for the beehives. The GOA further contends that, through the Banco Provincia's Line of Credit for Working Capital, honey producers may obtain two different interest rates: (i) the general market interest rate offered by the Banco Provincia to all sectors, and (ii) the market interest rate applicable to the Banco's Provincia's line of credit for the pre-financing of exports. According to the GOA, the Line of Credit for Working Capital is not limited solely to honey producers but is offered to the public, as respondent contends was explained to the Department by officials of the Banco Provincia. The GOA further argues that the Line of Credit for Working Capital was established through a system created by both the Government of the Province of Buenos Aires and by the Banco Provincia. The system enabled beekeepers to have a working capital line of credit extended to them by the Banco Provincia. The GOA contends that the applicable interest rate is the same for every sector and terms and conditions of the loans are adjusted to the seasonal characteristics of each productive sector: the length of the loans is tied to the production cycle and the harvest season; the financing limits are determined in accordance with the characteristics of each particular productive sector; and, the repayment schedule is adjusted to the structure of cash flows of each particular sector. Consistent with the structure of cash flows of the beekeeping sector, the GOA states that the principal and interest accrued on the loans are repayable in full at maturity. Furthermore, the GOA maintains that other characteristics of this financing were also adjusted to the particularities of the beekeeping sector, using the value of the material to be acquired with the financing as a reference. The GOA concludes that loans offered under the Banco Provincia's Line of Credit for Working Capital are not limited to honey producers but are made available to the public. Accordingly, the GOA argues that these loans do not meet the specificity requirement set forth by 771(5A)(D)(i) of the Act, and therefore do not constitute a countervailable subsidy. Petitioners claim that the Department should affirm its preliminary finding concerning the countervailability and measurement of benefits from the Buenos Aires Honey Program. Specifically, petitioners argue that both the Line of Credit for Working Capital and the Line of Credit for the Acquisition of Capital Goods are de jure specific, a finding supported by the GOA's admission that the terms and conditions for both lines were "adjusted to the seasonal characteristics of the beekeeping sector." Petitioners conclude that while the Banco Provincia may make available lines of credit for working capital and for the acquisition of capital goods to other sectors, the Department is not investigating such financing but rather is examining the specific lines of credit that are available for beekeepers in the Province of Buenos Aires. Department's Position: As discussed in the Buenos Aires Honey Program section above, we continue to find that the Line of Credit for Working Capital is specific on the basis that it is limited to honey producers. The Banco Provincia is a provincial government-owned bank. The provincial government and the Banco Provincia have tailored a line of credit specifically for the honey industry. As such, this line of credit is specific. Comment 9: Buenos Aires Honey Program: Specificity of the Line of Credit for the Acquisition of Capital Goods The GOA maintains that financing under the Buenos Aires Honey Program Line of Credit for the Acquisition of Capital Goods is not de jure specific pursuant to section 771(5A)(D)(i) of the Act. The GOA argues that this line of credit was created just as the Line of Credit for Working Capital by both the Government of the Province of Buenos Aires and the Banco Provincia: Banco Provincia established a system in which a line of credit for the acquisition of capital goods could be extended to beekeepers. This line is available to all sectors, including honey, and is not limited to honey producers. The GOA asserts that the financing for the Line of Credit for the Acquisition of Capital Goods has three sources of funding (i) funds obtained from the BICE; (ii) the Banco Provincia's own funds; and (iii) funds obtained from foreign financial institutions. Funding through BICE was implemented pursuant to an agreement between the Banco Provincia and the BICE's use of funds is offered under the BICE Lines 006 and 006/1, and the results of verification support this. Banco Provincia Exhibit 2. See Verification Report at 29. The GOA states that the terms and conditions for the Line of Credit for the Acquisition of Capital Goods are similar to the terms and conditions of the Line of Credit for Working Capital, in that the loan characteristics are adjusted to the particular characteristics of each productive sector. The GOA refers to Banco Provincia's internal Circular "A" No. 13,854 (see Exhibit 39 of the January 2, 2001 response) which describes the terms and conditions for honey producers. The applicable interest rate is the same for every sector. The GOA concludes that the record shows that financing under the Line of Credit for the Acquisition of Capital Goods does not meet the specificity requirements set forth by 771(5A)(D)(i) of the Act, and thus, the Department should determine that financing under this line of credit does not constitute a countervailable subsidy. Petitioners argue that the Line of Credit for the Acquisition of Capital Goods is de jure specific because, as the GOA admits, this line of credit is specific to honey producers in that the terms and conditions for both lines were "adjusted to the seasonal characteristics of the beekeeping sector." Petitioners conclude that while the Banco Provincia may make available lines of credit for working capital and for the acquisition of capital goods to other sectors, the Department is not investigating such lines but rather is examining the specific lines that are available for beekeepers in the Province of Buenos Aires. Department's Position: As discussed in the Buenos Aires Honey Program section above, we determine that the Line of Credit for the Acquisition of Capital Goods is de jure specific on the basis that its availability is limited to honey producers. The provincial government and the Banco Provincia have tailored a line of credit specifically for the honey industry. As such, this line of credit is specific. Comment 10: Buenos Aires Honey Program: Benchmark Rate The GOA maintains that the Department improperly used the annual average interest rate for personal loans during 1999 as the benchmark interest rate for calculating the loan benefits under the Buenos Aires Honey Program Line of Credit for Working Capital. In doing so, the GOA argues that the Department did not follow the Department's regulations pursuant to section 771(5)(E)(ii) of the Act, which directs the Department to compare the amount the recipient pays on the loan to the amount the recipient would pay on a comparable commercial loan which the recipient could obtain on the market. The GOA contends that the Department's regulations define what a "comparable" loan is, placing the primary emphasis on similarities in the structure, the maturity, and the currency in which the loans are denominated. Furthermore, the GOA argues, the Department's regulations specify that the Department should use as a benchmark an interest rate for a loan which the firm "could actually obtain on the market." As such, the Department must rely on the actual experience of a firm for acquiring comparable commercial loans and in this case, the Department must use a national average interest rate for comparable commercial loans. The GOA argues that the record clearly demonstrates that the investigated lines of credit offered by government-owned banks are of the same structure and characteristics of any other commercial loan in the market. Furthermore, according to the GOA, the record demonstrates that the applicable interest rates provided by the Banco Provincia are close to the national average interest rates published by the Argentine Central Bank for each type of loan. The GOA maintains that the Department's utilization of the national average interest rate for personal loans as the benchmark rate assumes: (i) the Line of Credit for Working Capital is comparable to personal loans; (ii) the only credit available to the honey sector for working capital is through a personal loan; and, (iii) such a presumption implies that all small and medium-sized beekeepers are not creditworthy. The GOA contends that commercial loans do not have the same characteristics, structure, maturity, or purpose as personal loans. The GOA concludes that, since the Department decided to conduct the investigation on an aggregate basis, the Department should compare the interest rates charged by the Banco Provincia on its loans for working capital with the average annual interest rates charged by other commercial banks for working capital financing loans. The correct interest rate to use as a benchmark, according to respondent, is the national average interest rate published by the Central Bank of Argentina under the column "Documentos a sola firma," and "De 90 y mas dias de plazo." Petitioners contend that the GOA has: (1) failed to identify which commercial loans should be used as the benchmark, and (2) has overlooked the important point that personal loans are one of the few types of financing that are actually extended to honey producers. In accordance with section 351.505(a) of the Department's regulations, the benchmark lending rate used to measure the benefit from government-provided loans to small and medium-sized honey producers must reflect the type of financing these producers could actually obtain on the Argentine market. As such, petitioners assert that, given the nature of honey producers, the interest rate on personal loans is the most appropriate benchmark. According to petitioners, personal loans are the only type of financing available to small-scale honey producers to cover their working capital expenses. Petitioners contend that information acquired at verification supports their argument. Specifically, petitioners cite the explanation given by CFI officials that "beekeeping projects under the San Luis program, however, are small, only 30 hives, and are therefore not profitable enough to finance." Verification Report at 13. Petitioners state that the GOA has failed to support its claim that the lines of credit offered by government- owned banks are of the same structure and characteristics of any commercial loans in the market. Petitioners state that in accordance with section 351.505(2)(ii) of the Department's regulations, the Department "does not consider a loan provided under a government program, or a loan provided by a government- owned special purpose bank, to be a commercial loan for purposes of selecting a loan to compare with a government-provided loan." Thus, in order to measure the benefit for small and medium-sized honey producers, the Department should use in its final determination the benchmark lending rate that reflects the interest rate charged on personal loans because this is the only alternative that honey producers in Argentina have for loans which they could actually obtain on the Argentine market. Department's Position: We have reconsidered our choice of benchmark interest rate for purposes of calculating the benefit from the Line of Credit for Working Capital. The loans under the Line of Credit for Working Capital are offered to companies to finance their short-term credit needs. "Working Capital" loans would not be offered to individuals. Therefore, we do not consider the interest rate on personal loans to be an appropriate benchmark. We disagree with the GOA that the "documentos a sola firma" rate provides the appropriate benchmark. The preamble to section 351.505 of the Department's regulations guides our choice of a benchmark. See 66 FR at 65362, 65363, 65364. We have identified a benchmark for a comparable commercial loan which has the same characteristics (e.g., fixed interest rate versus variable interest rate, short-term versus long-term, currency). See "Benchmark Interest Rates and Discount Rates" section, above. Comment 11: Chaco Line of Credit Earmarked for the Honey Sector The GOA maintains that the Department improperly calculated the benefit provided through this line of credit pursuant to Section 771(5)(E)(ii) of the Act. The GOA asserts that the Department, in its Preliminary Determination, countervailed the entire principal disbursed for Decree 2076/96 and Resolution 253/99 and did not account for the amounts collected on such loans. The GOA argues that the Department should consider the information provided after the Preliminary Determination in which the GOA demonstrated that a significant portion of the amounts disbursed pursuant to Resolution 253/99 were loans provided after the POI. Thus, for purposes of calculating the benefit from these loans, the Department should use the corrected information provided at verification showing the outstanding balances as of December 31, 1999, for all loans disbursed during 1997-1999 pursuant to Decree 2076/96 and Resolution 253/99. The GOA notes that the Verification Report incorrectly reports that loans were disbursed with an interest rate of 7.52 percent during 1999, which respondent argues was the rate paid by the Province of Chaco pursuant to Provincial Law 4331. The GOA also urges the Department to take note of the actual interest rates applied to these loans. Petitioners did not address this issue. Department's Position: As discussed in the Province of Chaco Line of Credit Earmarked for the Honey Sector section above, we have amended our calculations with respect to this loan program. First, the GOA provided and we were able to verify, the outstanding balances as of December 31, 1999, for all loans disbursed during 1997-1999 pursuant to Decree 2076/96 and Resolution 253/99. Therefore, we have used these balances in our calculations. Second, as the interest rate applied to these loans, we have used the interest rate actually charged to honey producers. Comment 12: San Luis Honey Development Program: Countervailability of the Leasing Component The GOA argues that the San Luis Honey Development Program's leasing component was designed as a social development program to assist some of the poorer residents in the province. The GOA contends that the Department's decision to countervail a social development program to help indigent people is unreasonable. The GOA maintains that the Honey Program did not assist pre-existing honey producers, but rather, provided basic beekeeping tools and training to people with no previous beekeeping experience. The GOA further argues that official records show that, in 1999, San Luis produced only 700 tons of honey and did not make any exports to the United States. The GOA contends that this level of production was not sufficient to create a commercial market, and supports the assertion that San Luis made no exports to the United States. Rather, the GOA argues that the small volume of honey produced in San Luis was only sufficient for personal consumption and limited sales in the local market. Petitioners argue that the decision to countervail the San Luis Honey Development Program is correct within the meaning of the statute because this program provides a financial contribution which results in a benefit and it is specific to honey producers. Further, petitioners argue that the law does not have any special exceptions for a social welfare program. Moreover, petitioners maintain that the Department has previously countervailed programs that are of a social development or welfare purpose. See, e.g., Final Affirmative Countervailing Duty Determination: Certain Stainless Steel Wire Rod from Italy, 63 FR at 40485 (July 29, 1998) and Final Affirmative Countervailing Duty Determination: Certain Pasta from Italy, 61 Fed. Reg. 30,294 (June 14, 1996) (countervailing European Social Fund program designed to improve employment opportunities and raise the standard of living in certain depressed regions). Department's Position: Neither the statute nor the Department's practice make any special exceptions from countervailing duties for social development or welfare programs. The record evidence demonstrates that the Honey Program provides a financial contribution which results in a benefit specific to honey producers pursuant to section 771(5A) of the Act. Therefore, the program meets all three components of the countervailablity test. As such, we continue to find the leasing agreement component of the San Luis Honey Development Program to be countervailable. The GOA provided detailed honey production and export statistics which reported data on a province by province basis. See the GOA's January 1, 2001 submission. The 1999 production statistics identified fifteen provinces that accounted for 100 percent of Argentina's reported honey production, and that San Luis produced 700 tons of honey in 1999. The 1999 export statistics identified seven provinces with exports to United States. However, these seven provinces accounted for only 81 percent of Argentina's reported honey exports to the United States. We note that nearly 20 percent of Argentina's exports to the United States during the POI are from provinces "not identified." At verification, GOA officials were unable to identify the provinces that accounted for these remaining exports to the United States. See Verification Report at 2. Therefore, based on the results of verification, we are unable to confirm that San Luis did not make any exports to the United States in 1999. As facts otherwise available, in accordance with section 776(a)(1) of the Act, and since the GOA's production and export statistics show that the volume of Argentina's 1999 exports to the United States exceeded its 1999 production, in our view, it is reasonable to assume that honey produced in San Luis was part of the unidentified exports to the United States. Comment 13: San Luis Honey Development Program: Leasing Component Calculations The GOA argues that if the Department continues to countervail this program, it must change the benefit calculation based on revised information provided at verification. The GOA claims that based on the results of verification, the Department must use the honey program spending amounts detailed in the 1994-1999 General Accounts in its benefit calculation. The GOA concedes that at verification, San Luis officials were unable to substantiate the amounts spent on the leasing agreement that were reported in the response. See Verification Report at 31-36. The GOA argues that the Department should use disbursement figures from the province's General Accounts for the years 1994 through 1999, even though, the GOA claims, the spending amounts detailed in the 1994-1997 General Accounts include spending not related to honey. Notwithstanding, the GOA contends that the General Accounts are official documents and more reliable than the information provided in their response. Conversely, the GOA argues that the Honey Program spending amounts for 1998 and 1999 include salary and overhead expenses incurred by the Province. The GOA contends that the actual amounts spent for beekeeping equipment were indicated in documents provided at verification. See Verification Report at 31-36 and San Luis Exhibits 4 and 10. The GOA argues that the Department should use only the amounts spent on beekeeping material in its benefit calculation for the years 1998 and 1999. The GOA also argues that the Department should revise its benefit calculation to reflect a five-year repayment period. The GOA contends that the record evidence demonstrates that the leasing agreement terms were changed to: 1) 15 equal payments over five years, with a one-year grace period in 1993; and 2) the grace period was eliminated in 1996. See Verification Report at 31-36. In addition, the GOA argues that the Department should also include in its calculations a five percent interest payment over the value of the beekeeping materials provided plus the cost of transportation and delivery. The GOA states that the 1996 amendments to the leasing agreement set forth an annual interest payment equal to five percent of the value of the beekeeping materials provided and the cost of transportation and delivery. Petitioners argue that if the Department accepts the General Accounts data, the Department's benefit calculation should be revised to include relevant expenses such as salaries and overhead, as well a profit margin. Petitioners contend that if program participants had purchased the beekeeping materials from a private company, they would have paid a higher cost which would have included labor and overhead. Petitioners state that the Department should create a commercial benchmark that estimates the cost that the beekeepers would have paid to purchase the production materials from a commercial entity. Petitioners argue that this benchmark should include cost of labor, overhead, and a reasonable amount for profit. Moreover, petitioners contend that the Department should increase each figure by 18.06 percent to account for the profit that would have been charged to the beekeepers by a private firm based on cost information which was used in the companion antidumping case. See Memorandum to Neal M. Halper Regarding Cost of Production and Constructed Value Adjustments for the Preliminary Determination in Antidumping Duty Investigation of Honey from Argentina, dated May 4, 2001. Petitioners also maintain that, at verification, San Luis officials were unable to document that any amounts, including principal or interest, were repaid by program participants. As such, petitioners argue that the Department's benefit calculation should not reflect any payments of principal or interest. Department's Position: We agree with the GOA and petitioners, in part. As the GOA noted, at verification, San Luis officials provided revised honey program spending amounts based on their 1994-1999 General Accounts. We agree with the GOA's claim that the General Accounts spending data are more reliable than the information provided in their response. As discussed in the San Luis Honey Development Program section above, we have used these spending figures in our benefit calculation. As discussed in the San Luis Honey Development Program section, we agree with petitioners that the record does not demonstrate that there were any repayments of principal or interest from the program participants or that any such payments could reasonably be expected. See Verification Report at 31-36. As such, we are treating the leasing component as loans that have been forgiven and have calculated the benefit in accordance with section 351.508(a) of the Department's regulations. We have not made the petitioner's recommended adjustment for profit and overhead. In considering that leases operate, in effect, like loans, any calculation we do to determine the benefit has to relate to the nature of the benefit. Comment 14: CFI Credit for Small Business Ventures Program Loans to the Honey Sector and De Jure Specificity The GOA contends that the San Luis Honey Development Program and the CFI Credit for Small Business Ventures Program are entirely different programs and that there is no link between the two. The GOA contends that the only form of assistance provided through the San Luis Honey Development Program is the leasing of beekeeping equipment. The GOA maintains that the San Luis Honey Development Program does not provide any financing through the CFI Credit for Small Business Ventures Program or any other line of credit. The GOA claims that the record evidence demonstrates that the San Luis Honey Development Program is a social development program and the CFI Credit for Small Business Ventures Program is a program which promotes the development of small business ventures in all economic sectors nationwide, including beekeeping. The GOA argues that the two programs are independent of one another and they target mutually exclusive groups. The San Luis Honey Development Program assists the unemployed and underemployed of the province. Applicants who qualify for CFI financing are creditworthy owners of profitable enterprises or projects engaged in a variety of economic sectors in Argentina. As such, the GOA contends that while the CFI provided loans to profitable honey producers in the Province of San Luis, the CFI would never make loans to the individuals who participated in the San Luis Honey Development Program. Petitioners argue that the Department should not only affirm its decision regarding CFI's Credit for Small Business Ventures program for loans to the honey sector in San Luis, but also find all loans to the honey sector under the various CFI programs to be specific and countervailable. Petitioners contend that the results of verification established that there is little or no difference between CFI's Credit for Small Business Ventures Program loans to honey producers in San Luis and the other CFI lines of credit. As such, petitioners argue that the Department should also treat all CFI financing as de facto specific and calculate a benefit. Department's Position: We agree with the GOA. Based on the results of verification, we find that while the San Luis Honey Development Program provided beekeeping equipment through leases, it did not provide loans. Based on verification, we are satisfied that the Province of San Luis did not provide any loans nor did it have responsibility for or control of CFI funds which were lent to small enterprises throughout Argentina, including beekeepers. As such, for this final determination, we find that CFI Credit for Small Business Ventures Program loans are not specific to the honey sector under section 771(5A)(D)(i) of the Act and that there are no lines of credit provided through or under the San Luis Honey Development Program. Comment 15: CFI Financing: De Jure/De Facto Specificity Petitioners argue that because the Department found countervailable certain CFI loans provided through second tier-banks in San Luis as part of the San Luis Honey Development Program, the Department should countervail all other CFI loans to honey producers. According to petitioners, information examined at verification suggests that the allegedly non-countervailable component of CFI also was channeled through provincial banks. Such provincial governments have the discretion to target CFI funds to certain sectors, including the honey sector. Such targeting, petitioners argue, renders CFI financing de facto specific to honey producers/exporters. Petitioners therefore urge the Department to countervail all CFI loans to honey producers or exporters. The GOA argues that the CFI Credit for Small Business Ventures Program does not meet any of the specificity criteria set forth by section 771(5A) of the Act, and thus cannot be considered a countervailable subsidy pursuant to section 771(5A) of the Act. The GOA argues that petitioners' request to countervail CFI financing is not supported by information on the record and therefore, the Department must confirm its Preliminary Determination that CFI Credit for Small Business Ventures Program is not specific. The GOA further notes that CFI financing provides assistance to small and medium-sized businesses (SMEs) in all economic sectors and is aimed at promoting the development of small (micro) business ventures or small undertakings across the country. The GOA maintains that the CFI regulations indicate the availability of CFI financing for all micro and small businesses, and there is clear evidence on the record to demonstrate that none of the de facto specificity requirements set forth in section 771 (5A)(D)(iii) of the Act apply. The GOA notes, in addition, that the information on the record, which the Department verified, demonstrates that financing to all economic sectors has been consistent since the inception of the program. According to the GOA, information provided at verification reflects that no one activity financed was a predominant benefactor and further demonstrates that the loans are widely dispersed throughout the economy. Further, information on the record shows that CFI financing has neither a specific program to target any one industry nor a designated line of credit for a particular sector within a province. The GOA maintains that the information on the record also shows that the government does not play a role in determining who will receive CFI financing and that it does not participate in the evaluation of loan applications or other lending decisions. In addition, the GOA argues that the record shows that neither the provinces nor the provincial banks have discretion or control over the funds that are disbursed by the CFI. Department's Position: As discussed above in the section Credit for Small Business Ventures, we are affirming our Preliminary Determination that CFI financing is not provided on either a de jure or de facto basis to a specific enterprise or industry or group thereof, and is, therefore, not countervailable. Furthermore, evidence on the record demonstrates that neither the provinces nor the provincial banks have discretion or control over how CFI funds are disbursed. Comment 16: CFI Credit for Small Business Ventures in the Province of San Luis: Link between Programs The GOA argues that the Department erred in finding that CFI lines of credit are made available only to the honey industry in the Province of San Luis. The GOA claims that the information on the record shows that the CFI Credit for Small Business Ventures Program is a non-countervailable nationwide program and it is not a provincial program. Specifically, the record evidence shows that CFI financing is made available to a variety of economic activities in the Province of San Luis, including the beekeeping sector. As such, according to the GOA, there are no particular lines of credit targeted to a specific sector or province including the Province of San Luis. Furthermore, the GOA asserts that there is no link between the San Luis Honey Development Program and the CFI Credit for Small Business Ventures Program. On the one hand, according to the GOA, the San Luis program is a social development program aimed to provide assistance to unemployed and underemployed people with little or no income and with no access to credit. The CFI Credit for Small Business Ventures Program, on the other hand, aims to promote the development of small business ventures in all economic sectors nationwide, including the beekeeping sector. Therefore, the GOA argues, they are two different programs. Further, the GOA asserts that CFI loans have never been available to the uncreditworthy beekeeping sector targeted by the San Luis Honey Development Program; the CFI provides financing to profitable projects from existing beekeepers in the Province of San Luis but not to participants in the San Luis Honey Development Program. The GOA argues that the Department must determine that loans provided to honey producers in the Province of San Luis under the CFI Credit for Small Business Ventures Program are not de jure or de facto specific subsidies and are therefore, not countervailable in accordance with section 771(5A)(A) of the Act. Petitioners argue that because the Department found countervailable certain CFI loans provided through second tier-banks in San Luis as part of the San Luis Honey Development Program, the Department should countervail all other CFI loans to honey producers. Department's Position: As discussed in the Credit for Small Business Ventures Program section above, evidence on the record demonstrates that CFI loans are not limited to any specific sector or industry, or region within a specific province and are therefore not specific countervailable under section 771(5A)(D) of the Act. As further discussed in the section, San Luis Honey Development Program, we have found no link between the provincial program and the CFI program. Therefore, we are not countervailing the loans provided to honey producers or exporters in the Province of San Luis or any other province. Comments 17: Countervailability of BICE Norm 007 The GOA argues that the BICE does not provide any loans to the honey sector because it is a second-tier bank, and therefore operates as a source of funding for other first-tier commercial banks. The GOA argues that the BICE's only clients are first-tier commercial banks and not the public, and, as such, BICE loans do not provide a financial contribution to the honey sector pursuant to section 771(5)(D) of the Act. The GOA further argues that the Department incorrectly stated in its Preliminary Determination that the BICE Line 007 is export-related, and that there is no reference to improving export capacity as a requirement for receiving financing under this line of credit. The GOA argues that this line of credit provides financing for private sector projects in the productive sectors of the economy, and that there is no indication that improving export capacity is a requirement for receiving financing under this line of credit. The GOA notes that the BICE does not require the Line 007 applicants to inform the BICE of the purpose for which financing under this line of credit is used. The GOA further argues that the BICE Line 007 is not a domestic subsidy pursuant to section 771(5A)(D)(i) of the Act because this line is aimed at a wide variety of industrial projects in general. The GOA further argues that this is not an import substitution subsidy as defined by section 771(5A)(C) of the Act, and therefore there is no basis for determining that this line of credit is specific. The petitioners did not address this issue. Department's Position: We agree with the GOA. At verification, we found that the BICE Norm 007 line of credit was used by a broad range of borrowers and was not contingent upon export performance. See BICE Norm 007 section, above. We therefore find that this program is not countervailable. See section 771(5) of the Act. Comment 18: PROAPI'S Sales of Fertilized Queen Bees: Adequacy of Remuneration The GOA repeats its argument that the investigation of the PROAPI program is contrary to U.S. law and in violation of the United States' WTO obligations. Notwithstanding the allegedly improper initiation of an investigation on the PROAPI Program, which was notified to the WTO by the Government of Argentina, the GOA argues that the fertilized queen bees sold by PROAPI were sold for adequate remuneration. Since the Preliminary Determination, the GOA has provided additional information regarding market prices for sales of fertilized queen bees, and according to the GOA, this information was verified by the Department's examination of invoices from Argentine firms which sell fertilized queen bees. The petitioners did not address this issue. Department's Position: For the reasons stated in the Department's Position on Comment 1, above, we determine that the Department's initiation of its investigation of the PROAPI program was lawful. As indicated in the PROAPI section above, we have examined and verified additional information provided by the GOA since the Preliminary Determination regarding the prices at which fertilized queen bees are sold in Argentina and we have determined that PROAPI's sales of fertilized queen bees are made for prices which reflect adequate remuneration. Comment 19: Use of BNA Loan Programs The GOA notes that the Department found in its Preliminary Determination that all BNA financing facilities were countervailable based on facts available because the GOA did not provide requested information regarding the specific loans to honey producers that were outstanding during the POI or the aggregate value of loans outstanding to the honey industry during the POI. The GOA also notes that since the Preliminary Determination, the GOA has provided to the Department information that shows that no loans were provided to the honey sector during the POI under the BNA Financing for the Acquisition of Goods of Argentine Origin and the Line of Credit for the Acquisition of Industrial and Agricultural Machinery, Silos and Transportation Vehicles line of credit, and that the Department verified this information. As a result, the GOA argues that because these programs provided no financial contribution to the honey sector during the POI they are not countervailable. Petitioners argue that the Department's verification report does not clearly establish that there were no loans to honey producers under this program. Petitioners maintain that at verification, the Department found that only certain BNA regional offices and branches reported no loans to honey. Petitioners further argue that the logical implication from this is that there were other BNA regional offices and/or branches that provided loans to honey producers under the BNA lines of credit. Petitioners therefore argue that the Department should continue to treat this program as countervailable in the final determination. Department's Position: We agree with the GOA. Since the Preliminary Determination, the GOA provided information showing that there were no loans to honey producers or exporters under the BNA Financing for the Acquisition of Goods of Argentine Origin and the Line of Credit for the Acquisition of Industrial and Agricultural Machinery, Silos and Transportation Vehicles lines of credit. At verification, the Department discussed at length with BNA officials the process that was used to ensure that all loans to honey producers were identified and reported. All area managers (thirty-eight in total) responded to the BNA headquarters in Buenos Aires that a complete check had been undertaken at all of their branches. See Verification Report at 42, 43. At verification, the Department tested these responses and found them to be accurate. Section 351.307(b)(3) of the Department's regulations state that "{i}f the Secretary decides that, because of the large number of exporters or producers. . . , it is impracticable to verify relevant factual information for each person, the Secretary may select and verify a sample." In the instant case, there are more than 600 branches of the BNA throughout the country, including regional offices and local branches. It would have been impracticable for Department officials to conduct verification at all BNA offices. Petitioners argue that the logical implication from the record is that, although the Department verified that a sample of the BNA branches accurately reported no loans to honey producers, the other branches could have provided such loans. However, we are satisfied that the BNA developed a reasonable procedure for identifying whether any loans had been provided by any of its branch offices throughout Argentina to honey producers under the various lines of credit. The Department tested the reasonableness and accuracy of the procedure used by the BNA at several branches during verification and found no loans to honey producers. The Department therefore agrees that the GOA has established that there were no loans to honey producers under the BNA Financing for the Acquisition of Goods of Argentine Origin and the Line of Credit for the Acquisition of Industrial and Agricultural Machinery, Silos and Transportation Vehicles lines of credit. Comment 20: Countervailability of Fundacion Export*Ar Program The GOA asserts that the Department incorrectly found in its Preliminary Determination that a grant was conferred under the Fundacion Export*Ar program to a honey producer for participation in a trade fair in the United States. The GOA argues that information provided since the Preliminary Determination and at verification shows that the space used by the honey producer at the trade fair in the United States was only a small part of the total space used and paid for by the participant. The GOA further asserts that because the Department verified that Fundacion Export*Ar provided no benefits to the honey sector during the POI, the Department should change its affirmative finding of countervailability from the Preliminary Determination to a negative finding. Petitioners did not address this issue. Department's Position: As indicated in the Fundacion Export*Ar section above, we have taken note of information provided by the GOA and verified since the Preliminary Determination, however, we find no benefits were provided during the POI. Should a countervailing duty order be issued in this case, we will continue to examine whether countervailable benefits are being provided under the Fundacion Export*Ar program. Comment 21: Warrant-Based Financing The GOA argues that the warrant-based financing system in Argentina does not meet the standard of an export subsidy because warrant-based financing is not specific to exporters. The GOA further contends that the warrant, created by Law 9643/14, is a standard financing instrument used to secure any type of commercial loan and that nothing in the law indicates that warrant-based financing is either export related or contingent upon export performance. The GOA adds that Law 9643 simply regulates two standard negotiable instruments, i.e. the "Certificate of Deposit" and the "Warrant." The GOA further argues that the Department erred in concluding that warrant based financing is a de jure specific export subsidy, and therefore does not meet the specificity requirements as set out in section 771(5A)(B) of the Act. Petitioners argue that warrant-based financing provided through the BNA represents a de jure specific export subsidy because Law 9643 "specifically indicates that warrant-based financing can be used as a form of export prefinancing." As a result, petitioners contend that warrant- based financing is a de jure specific export subsidy and, therefore, the Department should continue to treat it as an export subsidy as in its Preliminary Determination. Department's Position: We agree with the GOA. The warrant is a standard financing instrument used in Argentina, and as such, it is not an "export pre-financing" program, and it does not provide countervailable subsidies under section 771(5) of the Act. VIII. Total Ad Valorem Subsidy Rate We have revised the net subsidy rate that was calculated in the Preliminary Determination. In accordance with section 777A(e)(2)(B) of the Act, we have calculated an aggregate or industry-wide rate for all of the producers/exporters of honey under investigation. We have determined that the total estimated countervailable subsidy rate is 4.53 percent ad valorem. However, due to a program-wide change, we have established a cash deposit rate of 5.85 percent ad valorem in accordance with section 351.526 of the Department's regulations. IX. Recommendation: Based on our analysis of the comments received, we recommend adopting all of the above positions. If these recommendations are accepted, we will publish the final results of the determination in the Federal Register. __________ __________ Agree Disagree ______________________ Faryar Shirzad Assistant Secretary for Import Administration ______________________ Date ________________________________________________________________________ footnote: 1. Petitioners argue that section 771(5B)(A) of the Act clearly states that whether a subsidy is non-countervailable is to be addressed during an investigation. However, section 771(5B)(A) applies only to so-called "green light" subsidies, not "green box" subsidies.