Notice of Preliminary Results of Countervailing Duty Administrative Review: Certain Welded Carbon Steel Standard Pipe from Turkey, 17445-17451 [E6-5028]
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Federal Register / Vol. 71, No. 66 / Thursday, April 6, 2006 / Notices
Preliminary Results of Review
In accordance with 19 CFR
351.221(b)(4)(i), we calculated an
individual subsidy rate for Atar and
Corticella/Combattenti. Pasta Lensi had
no countervailable subsidies. For the
period January 1, 2004, through
December 31, 2004, we preliminarily
find the net subsidy rates for the
producers/exporters under review to be
those specified in the chart shown
below:
Net subsidy rate
Pasta Lensi S.r.l ........
Corticella Molini e
Pastifici S.p.a./
Pasta Combattenti
S.p.a.
Atar S.r.l ....................
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Producer/exporter
0.00 percent.
0.12 percent (de minimis).
0.20 percent (de minimis).
If the final results of this review
remain the same as these preliminary
results, because the countervailing duty
rates for all of the above-noted
companies are less than 0.5 percent and,
consequently are either zero or de
minimis, we will instruct CBP to
liquidate entries during the period
January 1, 2004, through December 31,
2004, without regard to countervailing
duties in accordance with 19 CFR
351.106(c)(1). The Department will
issue appropriate instructions directly
to CBP within 15 days of publication of
these final results of this review.
For all other companies that were not
reviewed (except Barilla G. e R. F.lli
S.p.A. and Gruppo Agricoltura Sana
S.r.l., which are excluded from the
order), the Department has directed CBP
to assess countervailing duties on all
entries between January 1, 2004, and
December 31, 2004, at the rates in effect
at the time of entry.
The Department also intends to
instruct CBP to collect cash deposits of
estimated countervailing duties. For the
companies noted above (except Pasta
Lensi) the cash deposit rate is zero
because each company’s rate is de
minimis. If the revocation in part
becomes final for Pasta Lensi,
suspension of liquidation will cease
and, consequently, no duties will be
collected.
For all non-reviewed firms (except
Barilla G. e R. F.lli S.p.A. and Gruppo
Agricoltura Sana S.r.l., which are
excluded from the order), we will
instruct CBP to collect cash deposits of
estimated countervailing duties at the
most recent company-specific or ‘‘all
others’’ rate applicable to the company.
These rates shall apply to all nonreviewed companies until a review of a
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company assigned these rates is
requested.
Public Comment
Pursuant to 19 CFR 351.224(b), the
Department will disclose to parties to
the proceeding any calculations
performed in connection with these
preliminary results within five days
after the date of the public
announcement of this notice.
Pursuant to 19 CFR 351.309(c)(ii),
interested parties may submit written
arguments in case briefs within 30 days
of the date of publication of this notice.
Rebuttal briefs, limited to issues raised
in case briefs, may be filed no later than
five days after the date of filing the case
briefs, in accordance with 19 CFR
351.309(d). Parties who submit briefs in
this proceeding should provide a
summary of the arguments not to exceed
five pages and a table of statutes,
regulations, and cases cited. Copies of
case briefs and rebuttal briefs must be
served on interested parties in
accordance with 19 CFR 351.303(f).
Interested parties may request a
hearing within 30 days after the date of
publication of this notice, pursuant to
19 CFR 351.310(c). Any hearing, if
requested, will be held two days after
the scheduled date for submission of
rebuttal briefs.
The Department will publish a notice
of the final results of this administrative
review within 120 days from the
publication of these preliminary results,
in accordance with section 751(a)(3) of
the Act.
We are issuing and publishing these
results in accordance with sections
751(a)(1) and 777(i)(1) of the Act and 19
CFR 351.221(b)(4).
Dated: March 31, 2006.
David M. Spooner,
Assistant Secretary for Import
Administration.
[FR Doc. E6–5031 Filed 4–5–06; 8:45 am]
BILLING CODE 3510–DS–P
DEPARTMENT OF COMMERCE
International Trade Administration
[C–489–502]
Notice of Preliminary Results of
Countervailing Duty Administrative
Review: Certain Welded Carbon Steel
Standard Pipe from Turkey
Import Administration,
International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce
(‘‘the Department’’) is conducting an
administrative review of the
countervailing duty (‘‘CVD’’) order on
AGENCY:
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17445
certain welded carbon steel standard
pipe from Turkey for the period January
1, 2004, through December 31, 2004. For
information on the net subsidy rate for
the reviewed company, see the
‘‘Preliminary Results of Review’’
section, infra. If the final results remain
the same as the preliminary results of
this review, we will instruct U.S.
Customs and Border Protection (‘‘CBP’’)
to assess countervailing duties as
detailed in the ‘‘Preliminary Results of
Review’’ section, infra. Interested
parties are invited to comment on these
preliminary results. (See the ‘‘Public
Comment’’ section, infra).
EFFECTIVE DATE: April 6, 2006.
FOR FURTHER INFORMATION CONTACT:
Kristen Johnson, AD/CVD Operations,
Office 3, Import Administration,
International Trade Administration,
U.S. Department of Commerce, Room
4014, 14th Street and Constitution
Avenue, NW., Washington, DC 20230;
telephone: (202) 482–4793.
SUPPLEMENTARY INFORMATION:
Background
On March 7, 1986, the Department
published in the Federal Register the
CVD order on certain welded carbon
steel pipe and tube products from
Turkey. See Countervailing Duty Order:
Certain Welded Carbon Steel Pipe and
Tube Products from Turkey, 51 FR 7984
(March 7, 1986) (‘‘Turkey Pipe Order’’).
On March 1, 2005, the Department
published a notice of opportunity to
request an administrative review of this
CVD order. See Antidumping or
Countervailing Duty Order, Finding, or
Suspended Investigation; Opportunity
to Request Administrative Review, 70
FR 9918 (March 1, 2005). On March 31,
2005, we received a timely request for
review from the Borusan Group
(‘‘Borusan’’), a Turkish producer and
exporter of subject merchandise. On
April 22, 2005, the Department initiated
an administrative review of the CVD
order on certain welded carbon steel
standard pipe from Turkey, covering the
period January 1, 2004, through
December 31, 2004. See Initiation of
Antidumping and Countervailing Duty
Administrative Reviews, 70 FR 20862
(April 22, 2005).
On June 13, 2005, the Department
issued a questionnaire to Borusan and
the Government of the Republic of
Turkey (‘‘GOT’’); we received their
questionnaire responses on August 22,
2005. On October 26, 2005, we issued
supplemental questionnaires to Borusan
and the GOT. We received the
supplemental questionnaire response
from Borusan on November 25, 2005,
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and from the GOT on November 28,
2005.
On November 7, 2005, the Department
published in the Federal Register an
extension of the deadline for the
preliminary results. See Certain Welded
Carbon Steel Standard Pipe from
Turkey: Extension of Time Limit for
Preliminary Results of Countervailing
Duty Administrative Review, 70 FR
67455 (November 7, 2005).
On February 15 through February 23,
2006, we conducted verification in
Ankara, Turkey, of the questionnaire
responses submitted by the GOT, and in
Istanbul, Turkey, of the questionnaire
responses submitted by Borusan.
In accordance with 19 CFR
351.213(b), this review covers only
those producers or exporters of the
subject merchandise for which a review
was specifically requested. The only
company subject to this review is
Borusan. During the period of review
(‘‘the POR’’), Borusan was comprised of
Borusan Birlesik Boru Fabrikalari A.S.
(‘‘BBBF’’), Mannesmann Boru Endustrisi
T.A.S. (‘‘MB’’), Borusan Mannesmann
Boru Sanayi ve Ticaret A.S. (‘‘BMB’’),
and Istikbal Ticaret T.A.S. (‘‘Istikbal’’).
This review covers fourteen programs.
Scope of the Order
The products covered by this order
are certain welded carbon steel pipe and
tube with an outside diameter of 0.375
inch or more, but not over 16 inches, of
any wall thickness (pipe and tube) from
Turkey. These products are currently
provided for under the Harmonized
Tariff Schedule of the United States
(‘‘HTSUS’’) as item numbers 7306.30.10,
7306.30.50, and 7306.90.10. Although
the HTSUS subheadings are provided
for convenience and customs purposes,
the written description of the
merchandise is dispositive.
Period of Review
The period for which we are
measuring subsidies is January 1, 2004,
through December 31, 2004.
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Company History
As noted above, Borusan is composed
of BBBF, MB, BMB, and Istikbal. During
the POR, BBBF produced the subject
merchandise, which was first sold to
Istikbal, an export sales company, and
then resold to an unaffiliated customer
in the United States. MB ceased
production of the subject merchandise
in November 2003, and a year later, was
merged into BBBF on November 30,
2004. BBBF was subsequently renamed
Borusan Mannesmann Boru Sanayi ve
Ticaret A.S. (i.e., BMB) on December 13,
2004, and continued to produce the
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subject merchandise and export the
merchandise through Istikbal.
Prior to the November 2004 merger,
BBBF and MB were affiliated through
their parent company, Borusan
Mannesmann Boru Yatirim Holding
A.S. (‘‘BMBYH’’). BMBYH, a holding
company, is majority–owned by
Borusan Holding A.S.1 Post merger and
company name change, BMB continued
to be owned by BMBYH. During the
POR, Istikbal was majority–owned by
Borusan Holding A.S.2
Subsidies Valuation Information
Benchmark Interest Rates
To determine whether government–
provided loans under review conferred
a benefit, the Department uses, where
possible, company–specific interest
rates for comparable commercial loans.
See 19 CFR 351.505(a). Borusan
provided the interest rates it paid on
short–term Turkish Lira (‘‘TL’’)denominated and foreign currency
(‘‘FX’’)-denominated commercial loans.
We preliminarily find that the
company–specific FX–denominated
short–term loans are comparable to the
export credit FX–denominated loans
against which Borusan paid interest
during the POR. However, Borusan’s
short–term TL–denominated
commercial loans, outstanding during
the POR, were revolving, open account
loans and not comparable to the
maturity of the export financing loans
that Borusan received from the Export
Credit Bank of Turkey (‘‘Export Bank’’).
Where no company–specific
benchmark interest rates are available,
the Department’s regulations direct us to
use a national average interest rate as
the benchmark. See 19 CFR
351.505(a)(3)(ii). According to the GOT,
however, there is no official national
average short–term interest rate
available. See the March 31, 2006,
Memorandum to the File concerning the
Verification of the Questionnaire
Responses Submitted by the
Government of the Republic of Turkey
(‘‘GOT Verification Report’’) at 3.3
Therefore, we have calculated the
benchmark interest rate for short–term
TL–denominated loans based on short–
term interest rate data for 2004, as
reported by The Economist.
Specifically, from issues of The
Economist, we sourced a short–term
1 Mannesmannrohren-Werke A.G., a publicly
traded company in Germany, also has ownership in
BMBYH.
2 Borusan Holding A.S. is owned by the family of
Asim Kocabiyik, the company’s founder.
3 A public version of the verification report is
available on the public file in the Department’s
Central Records Unit (room B-099).
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interest rate for each quarter of 2004.4
We then simple averaged those
quarterly rates to calculate an annual
short–term interest rate for Turkey. See
the March 31, 2006, Memorandum to
the File concerning the Calculations for
the Preliminary Results of the Review of
the Countervailing Duty Order on
Certain Welded Carbon Steel Standard
Pipe from Turkey (‘‘Preliminary
Calculations’’). This methodology is
consistent with the Department’s
practice. See e.g., Certain Welded
Carbon Steel Pipes and Tubes from
Turkey; Final Results of Countervailing
Duty Administrative Review, 65 FR
49230 (August 11, 2000) (‘‘1998 Pipe
Final’’); and Carbon and Certain Alloy
Steel Wire Rod from Turkey; Final
Negative Countervailing Duty
Determination, 67 FR 55815 (August 30,
2002) (‘‘Wire Rod’’), and accompanying
Issues and Decision Memorandum, at 3–
4 (‘‘Wire Rod Memorandum’’).
Further, it is the Department’s
practice to normally compare effective
interest rates rather than nominal rates
in making the loan comparison. See
Countervailing Duties; Final Rule, 63 FR
65348, 65362 (November 25, 1998)
(‘‘Preamble’’). ‘‘Effective’’ interest rates
are intended to take account of the
actual cost of the loan, including the
amount of any fees, commissions,
compensating balances, government
charges, or penalties paid in addition to
the ‘‘nominal’’ interest rate.
The short–term TL interest rates
sourced from The Economist do not
include commissions or fees paid to
commercial banks, i.e., they are nominal
rates. See Wire Rod Memorandum at 4.
For Pre–Shipment Export Credits,
discussed infra, commercial banks,
through which the loans are extended,
can add a maximum 2.0 percent to the
interest rate for TL–denominated loan as
their commission. See GOT Verification
Report at 4. Therefore, for these
preliminary results, we compared the
benchmark TL interest rate, inclusive of
the 2.0 percent commission, to the
interest rate that Borusan was charged
on the Pre–Shipment Export Credit TL–
denominated loans to make the
comparison on an effective interest rate
basis.5 Where a company–specific
benchmark interest rate was used6 to
4 In each issue, The Economist reports short-term
interest date on a percentage per annum basis for
select countries.
5 Borusan also received TL-denominated export
credit loans under the Foreign Trade Companies
Short-Term Export Credit program and the PreExport Credit program (see infra). However, those
loans are extended directly by Turkey’s Export
Bank and, therefore, not subject to a intermediary
bank commission charge.
6 For these preliminary results, we used a
company-specific benchmark interest rate to
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determine whether government–
provided export loans under review
conferred a benefit, that comparison of
interest rates was also made on an
effective basis.
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Analysis of Programs
I. Programs Preliminarily Determined
To Be Countervailable
A. Deduction from Taxable Income
for Export Revenue
Addendum 4108 of Article 40 of the
Income Tax Law allows companies that
operate internationally to claim, directly
on their corporate income tax returns, a
tax deduction equal to 0.5 percent of the
foreign exchange revenue earned from
exports and other international
activities.7 The income tax deduction
for export earnings may either be taken
as a lump sum or be used to cover
certain undocumented expenses, which
were incurred through international
activities, that would otherwise be non–
deductible for tax purposes (e.g.,
expenses paid in cash, such as for
lodging, gasoline, and food).
Consistent with Wire Rod, we
preliminarily find that this tax
deduction is a countervailable subsidy.
See Wire Rod Memorandum at 4; see
also Certain Welded Carbon Steel Pipe
and Tube and Welded Carbon Steel Line
Pipe from Turkey; Final Results and
Partial Rescission of Countervailing
Duty Administrative Review, 63 FR
18885, 18886–87 (April 16, 1998)
(‘‘1996 Pipe Final’’). The deduction
provides a financial contribution within
the meaning of section 771(5)(D)(ii) of
the Tariff Act of 1930, as amended (‘‘the
Act’’) because it represents revenue
forgone by the GOT. The deduction
provides a benefit in the amount of the
tax savings to the company pursuant to
section 771(5)(E) of the Act. It is specific
under section 771(5A)(B) of the Act
because its receipt is contingent upon
export performance. In this review, no
new information or evidence of changed
circumstances has been submitted to
warrant reconsideration of the
Department’s prior findings.
During the POR, BBBF, MB, and
Istikbal filed separate corporate income
tax returns for tax year 2003. However,
only Istikbal utilized the deduction for
export earnings on its 2003 tax return.
BBBF and MB did not have direct
exports of merchandise during 2003
and, therefore, could not claim the
deduction for export earnings on their
respective 2003 tax returns.
conduct the loan comparison for loans denominated
in a foreign currency.
7 These actions include construction, repair,
installation, and transportation activities that occur
abroad.
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The Department typically treats a tax
deduction as a recurring benefit in
accordance with 19 CFR 351.524(c)(1).
To calculate the countervailable subsidy
rate for this program, we calculated the
tax savings realized by Istikbal in 2004,
as a result of the deduction for export
earnings. We then divided that benefit
by Borusan’s total export sales for 2004.
On this basis, we preliminarily
determine the net countervailable
subsidy for this program to be 0.09
percent ad valorem.
B. Pre–Shipment Export Credits
Turkey’s Export Bank provides short–
term pre–shipment export loans to
exporters through intermediary
commercial banks.8 This loan program
is designed to support export–related
firms. Loans are made to exporters who
commit to export within a specified
period of time. Generally, loans are
extended for a period of up to 180 days,
and cover up to 100 percent of the FOB
export value. These loans are
denominated in either TL or FX. The
interest rates charged on these pre–
shipment loans are set by the Export
Bank. In several previous
determinations, the Department found
this program to be countervailable
because receipt of the loans is
contingent upon export performance
and the interest rates paid on these
loans are less than the amount the
recipient would pay on comparable
commercial loans. See 1998 Pipe Final,
65 FR 49231; and Certain Pasta from
Turkey: Final Results of Countervailing
Duty Administrative Review, 66 FR
64398 (December 13, 2001) (‘‘1999 Pasta
from Turkey’’), and accompanying
Issues and Decision Memorandum, at 3–
4 (‘‘1999 Pasta Memorandum’’).
We also found that the pre–shipment
loan program is an untied export loan
program because the loans are not
specifically tied to a particular
destination at the time of approval and
the borrower only has to show that the
export commitment was satisfied (i.e.,
exports amounting to the FOB value of
the credit) during the credit period to
close out the loan with the bank. See
e.g., Wire Rod Memorandum at 5. In this
review, no new information or evidence
of changed circumstances has been
submitted to warrant reconsideration of
the Department’s prior findings. See
GOT Verification Report at 3.
During the POR, BBBF paid interest
against pre–shipment export loans
denominated in both TL and FX. MB
paid interest against pre–shipment TL–
denominated loans.
Pursuant to section 771(5)(E)(ii) of the
Act, a benefit shall be treated as
conferred ‘‘in the case of a loan, if there
is a difference between the amount the
recipient of the loan pays on the loan
and the amount the recipient would pay
on a comparable commercial loan that
the recipient could actually obtain on
the market.’’ To calculate the amount of
interest the recipient would pay on a
comparable TL–denominated
commercial loan, in absence of a
company–specific interest rate on
comparable TL–denominated
commercial loans, we have used, as the
benchmark rate, a simple average of the
2004 quarterly short–term interest rates
for Turkey as reported by The
Economist. See ‘‘Benchmark Interest
Rates’’ section, supra, for more
information. To calculate the amount of
interest the recipient would pay on a
comparable FX–denominated
commercial loan, we have used a
company–specific interest rate as the
benchmark rate. See Id.
Using these benchmark rates, we
continue to find the pre–shipment
export loans countervailable because the
interest rate charged is less than the rate
for comparable commercial loans that
the company could actually obtain on
the market. Therefore, the loans
constitute a financial contribution in the
form of a direct transfer of funds from
the GOT, under section 771(5)(D)(i) of
the Act. A benefit exists under section
771(5)(E)(ii) of the Act in the amount of
the difference between the payments of
interest that BBBF and MB made on
their loans during the POR and the
payments the each company would
have made on comparable commercial
loans. The program is also specific in
accordance with section 771(5A)(B) of
the Act because receipt of the loans is
contingent upon export performance.
To determine the benefit, we
calculated the countervailable subsidy
as the difference between the actual
interest paid on the pre–shipment loans
during the POR and the interest that
would have been paid using the
benchmark interest rates. We then
added the benefits and divided the sum
by Borusan’s total export sales for 2004.
On this basis, we preliminarily
determine the countervailable subsidy
under this program to be 0.07 percent ad
valorem.
C. Foreign Trade Companies Short–
Term Export Credits9
8 As discussed in the ‘‘Benchmark Interest Rates’’
section, supra, the intermediary bank can add a
commission fee rate to the loan program’s interest
rate, which is set by the Export Bank.
9 This program was previously known as ‘‘Export
Credit Through the Foreign Trade Corporate
Companies Rediscount Credit Facility’’ or ‘‘Foreign
Trade Corporate Companies Credit Facility.’’
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The Foreign Trade Company (‘‘FTC’’)
loan program was implemented to assist
large export trading companies with
their export financing needs. This
program is specifically designed to
benefit Foreign Trade Corporate
Companies (‘‘FTCC’’) and Sectoral
Foreign Trade Companies (‘‘SFTC’’).10
An FTCC is a company whose export
performance was at least U.S. $75
million in the previous year. For eligible
companies, the Export Bank will
provide short–term export credits based
on their past export performance. Under
this credit program, the Export Bank
extends short–term export credits
directly to exporters in TL and FX, up
to 100 percent of FOB export
commitment. The program’s interest
rates are set by the Export Bank and the
maturity of the loans is usually 180
days. To qualify for a FTC loan, in
addition to submitting the necessary
application documents, a company must
provide a bank letter of guarantee,
equivalent to the loan’s principal and
interest amount.
Istikbal acquired FTCC status in April
2003 and was the only Borusan
company to receive FTC credits. During
the POR, Istikbal paid interest against
FTC loans denominated in both TL and
FX.
Consistent with previous
determinations, we preliminarily find
that these loans confer a countervailable
subsidy within the meaning of section
771(5) of the Act. See e.g., Wire Rod
Memorandum at 6–7. The loans
constitute a financial contribution in the
form of a direct transfer of funds from
the GOT, under section 771(5)(D)(i) of
the Act. A benefit exists under section
771(5)(E)(ii) of the Act in the amount of
the difference between the payments of
interest that Istikbal made on its loans
during the POR and the payments the
company would have made on
comparable commercial loans. The
program is also specific in accordance
with section 771(5A)(B) of the Act
because receipt of the loans is
contingent upon export performance.
Further, like the pre–shipment loans,
the FTC loans are not tied to a particular
export destination. See GOT
Verification Report at 3. Therefore, we
have treated this program as an untied
export loan program which renders it
countervailable regardless of whether
the loans were used for exports to the
United States. See Wire Rod
Memorandum at 6–7.
Pursuant to 19 CFR 351.505(a)(1), we
have calculated the benefit as the
difference between the payments of
10 A grouping of small- and medium-sized
companies that operate together in a similar sector.
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interest that Istikbal made on its FTC
loans during the POR and the payments
the company would have made on
comparable commercial loans. In
accordance with section 771(6)(A) of the
Act, we subtracted from the benefit
amount the fees which Istikbal paid to
commercial banks for the required
letters of guarantee. We then divided the
resulting benefit by Borusan’s total
export value for 2004. On this basis, we
preliminarily find that the
countervailable subsidy for this program
is 0.09 percent ad valorem.11
D. Pre–Export Credits12
This program is similar to the FTC
credit program described above;
however, companies classified as either
FTC or SFTC are not eligible for pre–
export loans. Under the pre–export
credit program, a company’s past export
performance is considered in evaluating
a company’s eligibility and establishing
the company’s credit limit. Like FTC
loans, the Export Bank directly extends
to companies pre–export loans, which
are denominated in either TL or FX and
have a maturity of 180 days.13 To
quality for a pre–export loan, in
addition to submitting the necessary
application documents, a company must
provide a bank letter of guarantee,
equivalent to the loan’s principal and
interest amount. During the POR, BBBF
paid interest against pre–export loans
that were denominated in both TL and
FX.
Consistent with previous
determinations, we preliminarily find
that these loans confer a countervailable
subsidy within the meaning of section
771(5) of the Act. See e.g., Wire Rod
Memorandum at 7–8. The loans
constitute a financial contribution in the
form of a direct transfer of funds from
the GOT, under section 771(5)(D)(i) of
the Act. A benefit exists under section
771(5)(E)(ii) of the Act in the amount of
the difference between the payments of
interest that BBBF made on its loans
during the POR and the payments the
company would have made on
comparable commercial loans. The
program is also specific in accordance
with section 771(5A)(B) of the Act
because receipt of the loans is
contingent upon export performance.
Further, these loans are not tied to a
particular export destination. See GOT
Verification Report at 3. Therefore, we
have treated this program as an untied
export loan program which renders it
11 See ‘‘Benchmark Interest Rates,’’ supra,
(discussing the benchmark rates used in these
preliminary results).
12 This loan program was formerly known as
’’Past Performance Related Export Credits.‘‘
13 The Export Bank also sets the interest rates for
this export loan program.
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countervailable regardless of whether
the loans were used for exports to the
United States.
Pursuant to 19 CFR 351.505(a)(1), we
have calculated the benefit as the
difference between the payments of
interest that BBBF made on its pre–
export loans during the POR and the
payments the company would have
made on comparable commercial
loans.14 In accordance with section
771(6)(A) of the Act, we subtracted from
the benefit amount the fees which BBBF
paid to commercial banks for the
required letters of guarantee. We then
divided the resulting benefit by
Borusan’s total export value for 2004.
On this basis, we preliminarily find that
the countervailable subsidy for this
program is 0.02 percent ad valorem.
II. Program Preliminarily Determined To
Be Not Countervailable
A. Investment Allowance Under
Article 19 of Law 4842
In Wire Rod, the Department
investigated investment allowances
provided for under Investment Incentive
Certificates, which were granted under
the General Incentives Encouragement
Program (‘‘GIEP’’), and found certain
investment allowances to be
countervailable and others to be non–
countervailable.15
During the POR of the instant review,
investment allowances were no longer
provided for under the GIEP via an
Investment Incentive Certificate. With
Article 19 of Law 4842, published on
April 24, 2003, the obligation to have an
Investment Incentive Certificate to
benefit from an investment allowance
was abolished and the ability to claim
an investment allowance on a corporate
income tax return was made available to
all taxpayers at a uniform rate.16
Specifically, by the provisions of Article
19, taxpayers without regard to region or
sector, and without any requirement of
an Investment Incentive Certificate, are
eligible to claim an investment
14 See ‘‘Benchmark Interest Rates,’’ supra
(discussing the benchmark rates used in these
preliminary results).
15 Specifically, in Wire Rod, we determined that
because the criteria governing the minimum
investment allowance (i.e., 40 percent) were
identical to those of the GIEP itself, our analysis of
the minimum investment allowance was identical
to that for the GIEP, which we found to be noncountervailable. Therefore, because we found that
the GIEP is not countervailable, we also found that
the minimum investment allowance is not
countervailable. See Wire Rod Memorandum at 1416. Investment allowances greater than 40 percent
were found to be countervailable. See Id. at 8-11.
16 Expenses for investments covered by an
Investment Incentive Certificate continued to be
subject to the previous investment allowance rules
if the application for the certificate was made before
the effective date of Law 4842.
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allowance at the rate of 40 percent.
There is no special application or
approval process to claim and receive
the investment allowance. The amount
of the investment allowance is indicated
on a company’s tax return. The amount
of the deduction is 40 percent of the
costs of depreciable economic assets
that are purchased or produced for use
in the company’s operations. See GOT
Verification Report at 8.
BBBF and MB both took an Article 19
investment allowance deduction on
their respective 2003 tax returns that
were filed during the POR. We analyzed
whether this investment allowance is de
jure specific, within the meaning of
section 771(5A)(D) of the Act. As
discussed above, Article 19 of Law 4842
does not limit access to the investment
allowance deduction to an enterprise,
industry, group of industries, or region.
Eligibility for the investment allowance
is automatic as a company calculates the
40 percent deduction of its depreciable
economic assets and reports that
amount on its income tax return. A
company’s annual income tax return is
subject to a statutory tax audit. The
conditions under which a company can
enjoy the investment allowance are
delineated in the law and use of the
investment allowance is clearly
indicated in the income tax return and
tax audit report.
At verification, we confirmed BBBF’s
and MB’s usage of the investment
allowance provided for under Article
19, through an examination of each
company’s 2003 annual income tax
return and accompanied 2003 tax audit
report. See the March 31, 2006,
Memorandum to the File concerning the
Verification of the Questionnaire
Responses Submitted by the Borusan
Group (‘‘Borusan Verification Report’’)
at 11–12.17
Based on our analysis of Article 19 of
Law 4842 and the process by which
companies realize the investment
allowance, we preliminarily determine
that the investment allowance under
Article 19 of Law 4842 is not specific
under section 771(5A)(D) of the Act and,
therefore, is not countervailable.
B. Investment Allowance Under
Investment Incentive Certificate
In Wire Rod, the Department
determined that the threshold
requirement for eligibility of any GIEP
benefit is the receipt of an Investment
Incentive Certificate, which specifies
the benefit programs (e.g., investment
allowance and customs duty exemption)
a certificate holder can receive. The
Department further determined that
particular investment allowances
extended under the GIEP are
countervailable and others are non–
countervailable. See Wire Rod
Memorandum at 8–11 and 14–16.
During the POR, MB had an Investment
Incentive Certificate, received prior to
the effective date of Article 19 of Law
4842, that provided for a 40 percent
investment allowance, which the
company claimed on its 2003 income
tax return filed during the POR. MB was
eligible for a 40 percent investment
allowance because of its location in a
developed region.18
In Wire Rod, we determined that
because the criteria governing the
minimum investment allowance (i.e., 40
percent for a developed region) were
identical to those of the GIEP itself, our
analysis of the minimum investment
allowance was identical to that for the
GIEP, which we found to be non–
countervailable. Therefore, because we
found that the GIEP was not
countervailable, we also found the
minimum investment allowance to be
not countervailable. See Id. at 14–16. In
this review, no new information or
evidence of changed circumstances has
been submitted to warrant
reconsideration of the Department’s
prior findings.
III. Programs Preliminary Determined
To Not Confer Countervailable Benefits
A. Export Credit Insurance
Through this program, exporters can
obtain export credit insurance from
Turkey’s Export Bank. These are oneyear blanket insurance policies that
cover up to 90 percent of losses incurred
due to political risk (e.g., loss resulting
from a war) and commercial risk (e.g.,
the insolvency of the buyer). The
insurance provided under this program
is post–shipment insurance because the
Export Bank becomes liable only if the
loss occurs on or after the date of
shipment. Beginning in February 1997,
use of the export credit insurance
program became voluntary for
borrowers under the pre–shipment
export financing programs.
During the POR, Istikbal had in place
an export credit insurance program. We
verified that the company did not
submit an insurance claim or receive a
reimbursement under the program in
2004. We also verified with the Export
Bank that for 2002, 2003, and 2004, the
premiums paid for the export credit
insurance and other income generated
18 Companies
17 A public version of the verification report is
available on the public file in the Department’s
Central Records Unit (room B-099).
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19:52 Apr 05, 2006
Jkt 208001
located in a normal region received
a 60 percent allowance and those in a priority
region received a 100 percent allowance. The
different regions were determined by the GOT.
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17449
by the program exceeded the insurance
claims paid to participating companies
and operating costs of the program. See
GOT Verification Report at 5. On this
basis, consistent with Wire Rod and
1999 Pasta Final, and in accordance
with 19 CFR 351.520(a)(1), we
preliminarily find that the export credit
insurance program did not confer
countervailable benefits during the POR.
See Wire Rod Memorandum at 18; and
1999 Pasta Memorandum at 7.
B. Inward Processing Certificate
Exemption
Under the Inward Processing
Certificate (‘‘IPC’’)19 program,
companies are exempt from paying
customs duties and value added taxes
(‘‘VAT’’) on raw material imports to be
used in the production of exported
goods. Companies may choose whether
to be exempted from the applicable
duties and taxes or have them refunded
upon export. Under the exemption
system, companies provide a letter of
guarantee that is returned to the
companies upon fulfillment of the
committed export.
To participate in this program, a
company must hold an IPC, which lists
the amount of raw materials to be
imported and the amount of product to
be exported. The input/output usage
rates listed on the IPC are set by the
GOT working in conjunction with
Turkey’s Exporter Associations, which
are quasi–governmental organizations
whose leadership are subject to GOT
approval. The input/output usage rates
vary by product and industry and are
determined using data from capacity
reports submitted by companies that
apply for IPCs. The input/output usage
rates are subject to periodic review and
verification by the GOT. In the case of
the pipe and tube industry, the input/
output usage rates were last modified in
June 2001. See Borusan Verification
Report at 12–13. The GOT uses the
input/output usage rates to ensure that
a company’s expected export quantities
are sufficient to cover the quantity of
inputs imported duty–free under the
program. An IPC specifies the maximum
quantity of inputs that can be imported
under the program. Further, under the
IPC program, the value of imported
inputs may not exceed the value of the
exported products.
Pursuant to 19 CFR 351.519(a)(1)(ii), a
benefit exists to the extent that the
exemption extends to inputs that are not
consumed in the production of the
exported product, making normal
19 The IPC program is governed by the following
GOT provisions: Customs Code No. 4458 (Articles
80, 108, 111, 115, and 121), IPC Council of
Ministers’ Decree No. 2005/8391, and Communique
of IPR No. Export 2005/1.
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sroberts on PROD1PC70 with NOTICES
allowances for waste, or if the
exemption covers charges other than
imported charges that are imposed on
the input. In regard to the VAT
exemption granted under this program,
pursuant to 19 CFR 351.517(a), in the
case of the exemption upon export of
indirect taxes, a benefit exists 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.
During the POR, Borusan used IPCs to
receive duty and VAT exemptions on
certain imported inputs used in the
production of steel pipes and tubes.
Borusan did not receive any duty or
VAT refunds under the program during
the POR. There is no indication that
Borusan used the imported inputs for
any other product besides those
exported or that the amount of
exempted inputs imported under the
program were excessive.
At verification, we learned that the
GOT sets the waste/usage rate for each
imported raw material.20 The usage
ratios are developed on an industry and
product basis. These rates are used to
determine the amount of each raw
material input required to produce a
given unit of exported product. In
setting the rates, the GOT relies on
company capacity reports and conducts
on–site inspections of production
facilities. The GOT periodically reviews
the waste/usage rates. A company may
request that a raw material ratio be
modified if there have been
improvements in productivity and
efficiency of the company’s facilities. At
verification, we confirmed, through
examination of the company’s
production records, that the waste rate
established by the GOT, in June 2001,
reflects Borusan’s actual production
experience. See Borusan Verification
Report at 12–14 and GOT Verification
Report at 10–11.
On this basis, we preliminarily
determine that the tax and duty
exemptions that Borusan received on
20 Specifically, the Undersecretariat for Foreign
Trade (‘‘UFT’’) works in conjunction with various
exporter associations (quasi-governmental
organizations comprised of industry officials) and
the Chamber of Industries (independent nongovernmental organization) to set the waste/loss
ratios. For example, the Chamber of Industries
issues the company-specific capacity reports, which
a company must submit to the UFT for
consideration of a certificate. To obtain a capacity
report, a company first establishes a production
plan and then requests an inspection of its
production facilities to confirm production
capability, efficiency, annual consumption and
production capacity, etc. Each capacity report has
an expiration date and an updated capacity report
is generated every three or four years.
VerDate Aug<31>2005
19:52 Apr 05, 2006
Jkt 208001
imported inputs under the IPC program
did not confer countervailable benefits
as Borusan consumed the imported
inputs in the production of the exported
product, making normal allowance for
waste. We further preliminarily find
that the VAT exemption did not confer
countervailable benefits on Borusan
because the exemption does not exceed
the amount levied with respect to the
production and distribution of like
products when sold for domestic
consumption.
During our verification meeting with
the GOT, we learned of a previously
unreported form of IPC, i.e., a D3
license, in which the GOT provides
exemptions and refunds on quantities of
imported inputs that are incorporated
into products sold on the domestic
market. Using records available at the
GOT’s UFT, we identified Borusan’s D3
licenses that were open during the POR.
See GOT Verification Report at 12.
During Borusan’s verification, we
examined each of the D3 licenses. We
confirmed that Borusan did not use the
licenses to import any raw materials
during the POR. We also confirmed that,
under the D3 certificates, Borusan was
exempt from paying import duties and
VAT by providing a bank letter of
guarantee. See Borusan Verification
Report at 13–14.
As the issuance of a D3 license is not
based on exportation, we preliminarily
find that this aspect of the IPC program
is not an export program but rather falls
under 19 CFR 351.510. Pursuant to 19
CFR 351.510(a)(1), in the case of a
program, other than an export program,
that provides for the full or partial
exemption or remission of an indirect
tax or an import charge, a benefit exists
to the extent that the taxes or import
charges paid by a firm are less than the
taxes the firm would have paid in the
absence of the program. Further, under
19 CFR 351.510(b)(1), the Department
normally will consider the benefit as
having been received at the time the
recipient firm otherwise would be
required to pay the indirect tax or
import charge. Because Borusan did not
import any goods under a D3 certificate
during the POR, we preliminarily
determine that this aspect of the IPC
program was not used. We will,
however, continue to examine the use of
D3 licenses under the IPC program in
future CVD proceedings involving
Turkish producers/exporters.
IV. Programs Preliminarily Determined
To Not Be Used
We examined the following programs
and preliminarily determine that
Borusan did not apply for or receive
PO 00000
Frm 00017
Fmt 4703
Sfmt 4703
benefits under these programs during
the POR:
A. VAT Support Program (Incentive
Premium on Domestically Obtained
Goods)21
B. Post–Shipment Export Loans
C. Pre–Shipment Rediscount Loans
D. Subsidized Turkish Lira Credit
Facilities
E. Subsidized Credit for Proportion of
Fixed Expenditures
F. Regional Subsidies.
Preliminary Results of Review
In accordance with 19 CFR
351.221(b)(4)(i), we have calculated a
subsidy rate for Borusan for calendar
year 2004. We preliminarily determine
that the total estimated net
countervailable subsidy rate is 0.27
percent ad valorem, which is de
minimis, pursuant to 19 CFR 351.106(c).
If the final results of this review
remain the same as these preliminary
results, the Department intends to
instruct CBP within 15 days of
publication of the final results of this
review, to liquidate without regard to
countervailing duties all shipments of
subject merchandise produced by
Borusan entered, or withdrawn from
warehouse, for consumption from
January 1, 2004, through December 31,
2004. The Department will also instruct
CBP not to collect cash deposits of
estimated countervailing duties on all
shipments of the subject merchandise
produced by Borusan, entered, or
withdrawn from warehouse, for
consumption on or after the date of
publication of the final results of this
review.
We will also instruct CBP to continue
to collect cash deposits for non–
reviewed companies at the most recent
company–specific or country–wide rate
applicable to the company. Accordingly,
the cash deposit rates that will be
applied to non–reviewed companies
covered by this order are those
established in the most recently
completed administrative proceeding
conducted under the URAA. If such a
review has not been conducted, the rate
established in the most recently
completed administrative proceeding
conducted pursuant to the statutory
provisions that were in effect prior to
the URAA amendments is applicable.
See Certain Welded Carbon Steel Pipe
and Tube Products from Turkey; Final
Results of Countervailing Duty
Administrative Review, 53 FR 9791
21 Although we found this program to be
terminated in Wire Rod, residual payments for
purchases made prior to the program’s termination
were permitted. See Wire Rod Memorandum at 11.
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Dated: March 31, 2006.
David M. Spooner,
Assistant Secretaryfor Import Administration.
[FR Doc. E6–5028 Filed 4–5–06; 8:45 am]
Public Comment
sroberts on PROD1PC70 with NOTICES
(March 25, 1988). These rates shall
apply to all non–reviewed companies
until a review of a company assigned
these rates is requested.
BILLING CODE 3510–DS–S
Pursuant to 19 CFR 351.224(b), the
Department will disclose to parties to
the proceeding any calculations
performed in connection with these
preliminary results within five days
after the date of the public
announcement of this notice. Pursuant
to 19 CFR 351.309, interested parties
may submit written comments in
response to these preliminary results.
Unless otherwise indicated by the
Department, case briefs must be
submitted within 30 days after the date
of publication of this notice. Rebuttal
briefs, limited to arguments raised in
case briefs, must be submitted no later
than five days after the time limit for
filing case briefs, unless otherwise
specified by the Department. Parties
who submit argument in this proceeding
are requested to submit with the
argument: (1) A statement of the issues,
and (2) a brief summary of the
argument. Parties submitting case and/
or rebuttal briefs are requested to
provide the Department copies of the
public version on disk. Case and
rebuttal briefs must be served on
interested parties in accordance with 19
CFR 351.303(f). Also, pursuant to 19
CFR 351.310, within 30 days of the date
of publication of this notice, interested
parties may request a public hearing on
arguments to be raised in the case and
rebuttal briefs. Unless the Secretary
specifies otherwise, the hearing, if
requested, will be held two days after
the date for submission of rebuttal
briefs, that is, 37 days after the date of
publication of these preliminary results.
Representatives of parties to the
proceeding may request disclosure of
proprietary information under
administrative protective order no later
than 10 days after the representative’s
client or employer becomes a party to
the proceeding, but in no event later
than the date the case briefs, under 19
CFR 351.309(c)(ii), are due. See 19 CFR
351.305(b)(3). The Department will
publish the final results of this
administrative review, including the
results of its analysis of arguments made
in any case or rebuttal briefs.
This administrative review is issued
and published in accordance with
section 751(a)(1), 777(i)(1) of the Act,
and 19 CFR 351.221(b)(4).
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19:52 Apr 05, 2006
Jkt 208001
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
[I.D. 031406G]
Endangered Species; File No. 1527
National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Notice; issuance of permit.
AGENCY:
SUMMARY: Notice is hereby given that
John A. Musick, Ph.D., Virginia Institute
of Marine Science (VIMS), Gloucester
Point, VA 23062, has been issued a
permit to take loggerhead (Caretta
caretta), Kemp’s ridley (Lepidochelys
kempii), leatherback (Dermochelys
coriacea), green (Chelonia mydas), and
hawksbill (Eretmochelys imbricata) sea
turtles for purposes of scientific
research.
The permit and related
documents are available for review
upon written request or by appointment
in the following office(s):
Permits, Conservation and Education
Division, Office of Protected Resources,
NMFS, 1315 East-West Highway, Silver
Spring, MD 20910; phone (301)713–
2289; fax (301)427–2521; and
Northeast Regional Office, NMFS,
One Blackburn Drive, Gloucester, MA
01930-2298; phone (978)281-9328; fax
(978)281-9394.
FOR FURTHER INFORMATION CONTACT:
Patrick Opay or Kate Swails, (301)713–
2289.
SUPPLEMENTARY INFORMATION: On August
24, 2005, notice was published in the
Federal Register (70 FR 49577) that a
request for a scientific research permit
to take loggerhead, Kemp’s ridley, green,
leatherback, and hawksbill sea turtles
had been submitted by the applicant.
The requested permit has been issued
under the authority of the Endangered
Species Act of 1973, as amended (ESA;
16 U.S.C. 1531 et seq.) and the
regulations governing the taking,
importing, and exporting of endangered
and threatened species (50 CFR parts
222–226).
The research will take place in the
waters of the Chesapeake Bay, and the
local Virginia and Maryland tributaries
to the Bay. Researchers will capture up
to 100 loggerhead, 30 Kemp’s ridley, 10
ADDRESSES:
PO 00000
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17451
leatherback, 10 green, and 5 hawksbill
sea turtles each year over the course of
the permit. The turtles will be captured
by relocation trawlers as part of
dredging activities authorized under
separate permits, or incidentally
captured in pound net fisheries and
then turned over to the applicant.
Turtles will be measured, weighed,
blood sampled, flipper tagged, and PIT
tagged. A subset of these animals will
have satellite and/or radio/sonic
transmitters attached to their carapace.
Twenty loggerhead sea turtles will be
used in a whelk gear bycatch reduction
study. The research will identify sea
turtle’s relative abundance over time;
detect changes in size and age
composition; monitor and document
movement and migration patterns; and
study sea turtle interactions with whelk
pot gear. The permit is issued for 5
years.Issuance of this permit, as
required by the ESA, was based on a
finding that such permit (1) was applied
for in good faith, (2) will not operate to
the disadvantage of any endangered or
threatened species, and (3) is consistent
with the purposes and policies set forth
in section 2 of the ESA.
Dated: March 31, 2006.
Stephen L. Leathery,
Chief, Permits, Conservation and Education
Division, Office of Protected Resources,
National Marine Fisheries Service.
[FR Doc. E6–5025 Filed 4–5–06; 8:45 am]
BILLING CODE 3510–22–S
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
[I.D. 011306B]
Endangered Species; File No. 1552
National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Notice; issuance of permit.
AGENCY:
SUMMARY: Notice is hereby given that
NMFS, Southeast Fisheries Science
Center (SEFSC), 75 Virginia Beach
Drive, Miami, Florida 33149 has been
issued a permit to take green (Chelonia
mydas), loggerhead (Caretta caretta),
Kemp’s ridley (Lepidochelys kempii),
hawksbill (Eretmochelys imbricata),
leatherback (Dermochelys coriacea),
olive ridley (Lepidochelys olivacea), and
unidentified hardshell sea turtles for
purposes of scientific research.
ADDRESSES: The permit and related
documents are available for review
upon written request or by appointment
in the following offices:
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]]>Agencies
[Federal Register Volume 71, Number 66 (Thursday, April 6, 2006)]
[Notices]
[Pages 17445-17451]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-5028]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[C-489-502]
Notice of Preliminary Results of Countervailing Duty
Administrative Review: Certain Welded Carbon Steel Standard Pipe from
Turkey
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce (``the Department'') is conducting
an administrative review of the countervailing duty (``CVD'') order on
certain welded carbon steel standard pipe from Turkey for the period
January 1, 2004, through December 31, 2004. For information on the net
subsidy rate for the reviewed company, see the ``Preliminary Results of
Review'' section, infra. If the final results remain the same as the
preliminary results of this review, we will instruct U.S. Customs and
Border Protection (``CBP'') to assess countervailing duties as detailed
in the ``Preliminary Results of Review'' section, infra. Interested
parties are invited to comment on these preliminary results. (See the
``Public Comment'' section, infra).
EFFECTIVE DATE: April 6, 2006.
FOR FURTHER INFORMATION CONTACT: Kristen Johnson, AD/CVD Operations,
Office 3, Import Administration, International Trade Administration,
U.S. Department of Commerce, Room 4014, 14\th\ Street and Constitution
Avenue, NW., Washington, DC 20230; telephone: (202) 482-4793.
SUPPLEMENTARY INFORMATION:
Background
On March 7, 1986, the Department published in the Federal Register
the CVD order on certain welded carbon steel pipe and tube products
from Turkey. See Countervailing Duty Order: Certain Welded Carbon Steel
Pipe and Tube Products from Turkey, 51 FR 7984 (March 7, 1986)
(``Turkey Pipe Order''). On March 1, 2005, the Department published a
notice of opportunity to request an administrative review of this CVD
order. See Antidumping or Countervailing Duty Order, Finding, or
Suspended Investigation; Opportunity to Request Administrative Review,
70 FR 9918 (March 1, 2005). On March 31, 2005, we received a timely
request for review from the Borusan Group (``Borusan''), a Turkish
producer and exporter of subject merchandise. On April 22, 2005, the
Department initiated an administrative review of the CVD order on
certain welded carbon steel standard pipe from Turkey, covering the
period January 1, 2004, through December 31, 2004. See Initiation of
Antidumping and Countervailing Duty Administrative Reviews, 70 FR 20862
(April 22, 2005).
On June 13, 2005, the Department issued a questionnaire to Borusan
and the Government of the Republic of Turkey (``GOT''); we received
their questionnaire responses on August 22, 2005. On October 26, 2005,
we issued supplemental questionnaires to Borusan and the GOT. We
received the supplemental questionnaire response from Borusan on
November 25, 2005,
[[Page 17446]]
and from the GOT on November 28, 2005.
On November 7, 2005, the Department published in the Federal
Register an extension of the deadline for the preliminary results. See
Certain Welded Carbon Steel Standard Pipe from Turkey: Extension of
Time Limit for Preliminary Results of Countervailing Duty
Administrative Review, 70 FR 67455 (November 7, 2005).
On February 15 through February 23, 2006, we conducted verification
in Ankara, Turkey, of the questionnaire responses submitted by the GOT,
and in Istanbul, Turkey, of the questionnaire responses submitted by
Borusan.
In accordance with 19 CFR 351.213(b), this review covers only those
producers or exporters of the subject merchandise for which a review
was specifically requested. The only company subject to this review is
Borusan. During the period of review (``the POR''), Borusan was
comprised of Borusan Birlesik Boru Fabrikalari A.S. (``BBBF''),
Mannesmann Boru Endustrisi T.A.S. (``MB''), Borusan Mannesmann Boru
Sanayi ve Ticaret A.S. (``BMB''), and Istikbal Ticaret T.A.S.
(``Istikbal''). This review covers fourteen programs.
Scope of the Order
The products covered by this order are certain welded carbon steel
pipe and tube with an outside diameter of 0.375 inch or more, but not
over 16 inches, of any wall thickness (pipe and tube) from Turkey.
These products are currently provided for under the Harmonized Tariff
Schedule of the United States (``HTSUS'') as item numbers 7306.30.10,
7306.30.50, and 7306.90.10. Although the HTSUS subheadings are provided
for convenience and customs purposes, the written description of the
merchandise is dispositive.
Period of Review
The period for which we are measuring subsidies is January 1, 2004,
through December 31, 2004.
Company History
As noted above, Borusan is composed of BBBF, MB, BMB, and Istikbal.
During the POR, BBBF produced the subject merchandise, which was first
sold to Istikbal, an export sales company, and then resold to an
unaffiliated customer in the United States. MB ceased production of the
subject merchandise in November 2003, and a year later, was merged into
BBBF on November 30, 2004. BBBF was subsequently renamed Borusan
Mannesmann Boru Sanayi ve Ticaret A.S. (i.e., BMB) on December 13,
2004, and continued to produce the subject merchandise and export the
merchandise through Istikbal.
Prior to the November 2004 merger, BBBF and MB were affiliated
through their parent company, Borusan Mannesmann Boru Yatirim Holding
A.S. (``BMBYH''). BMBYH, a holding company, is majority-owned by
Borusan Holding A.S.\1\ Post merger and company name change, BMB
continued to be owned by BMBYH. During the POR, Istikbal was majority-
owned by Borusan Holding A.S.\2\
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\1\ Mannesmannrohren-Werke A.G., a publicly traded company in
Germany, also has ownership in BMBYH.
\2\ Borusan Holding A.S. is owned by the family of Asim
Kocabiyik, the company's founder.
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Subsidies Valuation Information
Benchmark Interest Rates
To determine whether government-provided loans under review
conferred a benefit, the Department uses, where possible, company-
specific interest rates for comparable commercial loans. See 19 CFR
351.505(a). Borusan provided the interest rates it paid on short-term
Turkish Lira (``TL'')-denominated and foreign currency (``FX'')-
denominated commercial loans. We preliminarily find that the company-
specific FX-denominated short-term loans are comparable to the export
credit FX-denominated loans against which Borusan paid interest during
the POR. However, Borusan's short-term TL-denominated commercial loans,
outstanding during the POR, were revolving, open account loans and not
comparable to the maturity of the export financing loans that Borusan
received from the Export Credit Bank of Turkey (``Export Bank'').
Where no company-specific benchmark interest rates are available,
the Department's regulations direct us to use a national average
interest rate as the benchmark. See 19 CFR 351.505(a)(3)(ii). According
to the GOT, however, there is no official national average short-term
interest rate available. See the March 31, 2006, Memorandum to the File
concerning the Verification of the Questionnaire Responses Submitted by
the Government of the Republic of Turkey (``GOT Verification Report'')
at 3.\3\ Therefore, we have calculated the benchmark interest rate for
short-term TL-denominated loans based on short-term interest rate data
for 2004, as reported by The Economist. Specifically, from issues of
The Economist, we sourced a short-term interest rate for each quarter
of 2004.\4\ We then simple averaged those quarterly rates to calculate
an annual short-term interest rate for Turkey. See the March 31, 2006,
Memorandum to the File concerning the Calculations for the Preliminary
Results of the Review of the Countervailing Duty Order on Certain
Welded Carbon Steel Standard Pipe from Turkey (``Preliminary
Calculations''). This methodology is consistent with the Department's
practice. See e.g., Certain Welded Carbon Steel Pipes and Tubes from
Turkey; Final Results of Countervailing Duty Administrative Review, 65
FR 49230 (August 11, 2000) (``1998 Pipe Final''); and Carbon and
Certain Alloy Steel Wire Rod from Turkey; Final Negative Countervailing
Duty Determination, 67 FR 55815 (August 30, 2002) (``Wire Rod''), and
accompanying Issues and Decision Memorandum, at 3-4 (``Wire Rod
Memorandum'').
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\3\ A public version of the verification report is available on
the public file in the Department's Central Records Unit (room B-
099).
\4\ In each issue, The Economist reports short-term interest
date on a percentage per annum basis for select countries.
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Further, it is the Department's practice to normally compare
effective interest rates rather than nominal rates in making the loan
comparison. See Countervailing Duties; Final Rule, 63 FR 65348, 65362
(November 25, 1998) (``Preamble''). ``Effective'' interest rates are
intended to take account of the actual cost of the loan, including the
amount of any fees, commissions, compensating balances, government
charges, or penalties paid in addition to the ``nominal'' interest
rate.
The short-term TL interest rates sourced from The Economist do not
include commissions or fees paid to commercial banks, i.e., they are
nominal rates. See Wire Rod Memorandum at 4. For Pre-Shipment Export
Credits, discussed infra, commercial banks, through which the loans are
extended, can add a maximum 2.0 percent to the interest rate for TL-
denominated loan as their commission. See GOT Verification Report at 4.
Therefore, for these preliminary results, we compared the benchmark TL
interest rate, inclusive of the 2.0 percent commission, to the interest
rate that Borusan was charged on the Pre-Shipment Export Credit TL-
denominated loans to make the comparison on an effective interest rate
basis.\5\ Where a company-specific benchmark interest rate was used\6\
to
[[Page 17447]]
determine whether government-provided export loans under review
conferred a benefit, that comparison of interest rates was also made on
an effective basis.
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\5\ Borusan also received TL-denominated export credit loans
under the Foreign Trade Companies Short-Term Export Credit program
and the Pre-Export Credit program (see infra). However, those loans
are extended directly by Turkey's Export Bank and, therefore, not
subject to a intermediary bank commission charge.
\6\ For these preliminary results, we used a company-specific
benchmark interest rate to conduct the loan comparison for loans
denominated in a foreign currency.
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Analysis of Programs
I. Programs Preliminarily Determined To Be Countervailable
A. Deduction from Taxable Income for Export Revenue
Addendum 4108 of Article 40 of the Income Tax Law allows companies
that operate internationally to claim, directly on their corporate
income tax returns, a tax deduction equal to 0.5 percent of the foreign
exchange revenue earned from exports and other international
activities.\7\ The income tax deduction for export earnings may either
be taken as a lump sum or be used to cover certain undocumented
expenses, which were incurred through international activities, that
would otherwise be non-deductible for tax purposes (e.g., expenses paid
in cash, such as for lodging, gasoline, and food).
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\7\ These actions include construction, repair, installation,
and transportation activities that occur abroad.
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Consistent with Wire Rod, we preliminarily find that this tax
deduction is a countervailable subsidy. See Wire Rod Memorandum at 4;
see also Certain Welded Carbon Steel Pipe and Tube and Welded Carbon
Steel Line Pipe from Turkey; Final Results and Partial Rescission of
Countervailing Duty Administrative Review, 63 FR 18885, 18886-87 (April
16, 1998) (``1996 Pipe Final''). The deduction provides a financial
contribution within the meaning of section 771(5)(D)(ii) of the Tariff
Act of 1930, as amended (``the Act'') because it represents revenue
forgone by the GOT. The deduction provides a benefit in the amount of
the tax savings to the company pursuant to section 771(5)(E) of the
Act. It is specific under section 771(5A)(B) of the Act because its
receipt is contingent upon export performance. In this review, no new
information or evidence of changed circumstances has been submitted to
warrant reconsideration of the Department's prior findings.
During the POR, BBBF, MB, and Istikbal filed separate corporate
income tax returns for tax year 2003. However, only Istikbal utilized
the deduction for export earnings on its 2003 tax return. BBBF and MB
did not have direct exports of merchandise during 2003 and, therefore,
could not claim the deduction for export earnings on their respective
2003 tax returns.
The Department typically treats a tax deduction as a recurring
benefit in accordance with 19 CFR 351.524(c)(1). To calculate the
countervailable subsidy rate for this program, we calculated the tax
savings realized by Istikbal in 2004, as a result of the deduction for
export earnings. We then divided that benefit by Borusan's total export
sales for 2004. On this basis, we preliminarily determine the net
countervailable subsidy for this program to be 0.09 percent ad valorem.
B. Pre-Shipment Export Credits
Turkey's Export Bank provides short-term pre-shipment export loans
to exporters through intermediary commercial banks.\8\ This loan
program is designed to support export-related firms. Loans are made to
exporters who commit to export within a specified period of time.
Generally, loans are extended for a period of up to 180 days, and cover
up to 100 percent of the FOB export value. These loans are denominated
in either TL or FX. The interest rates charged on these pre-shipment
loans are set by the Export Bank. In several previous determinations,
the Department found this program to be countervailable because receipt
of the loans is contingent upon export performance and the interest
rates paid on these loans are less than the amount the recipient would
pay on comparable commercial loans. See 1998 Pipe Final, 65 FR 49231;
and Certain Pasta from Turkey: Final Results of Countervailing Duty
Administrative Review, 66 FR 64398 (December 13, 2001) (``1999 Pasta
from Turkey''), and accompanying Issues and Decision Memorandum, at 3-4
(``1999 Pasta Memorandum'').
---------------------------------------------------------------------------
\8\ As discussed in the ``Benchmark Interest Rates'' section,
supra, the intermediary bank can add a commission fee rate to the
loan program's interest rate, which is set by the Export Bank.
---------------------------------------------------------------------------
We also found that the pre-shipment loan program is an untied
export loan program because the loans are not specifically tied to a
particular destination at the time of approval and the borrower only
has to show that the export commitment was satisfied (i.e., exports
amounting to the FOB value of the credit) during the credit period to
close out the loan with the bank. See e.g., Wire Rod Memorandum at 5.
In this review, no new information or evidence of changed circumstances
has been submitted to warrant reconsideration of the Department's prior
findings. See GOT Verification Report at 3.
During the POR, BBBF paid interest against pre-shipment export
loans denominated in both TL and FX. MB paid interest against pre-
shipment TL-denominated loans.
Pursuant to section 771(5)(E)(ii) of the Act, a benefit shall be
treated as conferred ``in the case of a loan, if there is a difference
between the amount the recipient of the loan pays on the loan and the
amount the recipient would pay on a comparable commercial loan that the
recipient could actually obtain on the market.'' To calculate the
amount of interest the recipient would pay on a comparable TL-
denominated commercial loan, in absence of a company-specific interest
rate on comparable TL-denominated commercial loans, we have used, as
the benchmark rate, a simple average of the 2004 quarterly short-term
interest rates for Turkey as reported by The Economist. See ``Benchmark
Interest Rates'' section, supra, for more information. To calculate the
amount of interest the recipient would pay on a comparable FX-
denominated commercial loan, we have used a company-specific interest
rate as the benchmark rate. See Id.
Using these benchmark rates, we continue to find the pre-shipment
export loans countervailable because the interest rate charged is less
than the rate for comparable commercial loans that the company could
actually obtain on the market. Therefore, the loans constitute a
financial contribution in the form of a direct transfer of funds from
the GOT, under section 771(5)(D)(i) of the Act. A benefit exists under
section 771(5)(E)(ii) of the Act in the amount of the difference
between the payments of interest that BBBF and MB made on their loans
during the POR and the payments the each company would have made on
comparable commercial loans. The program is also specific in accordance
with section 771(5A)(B) of the Act because receipt of the loans is
contingent upon export performance.
To determine the benefit, we calculated the countervailable subsidy
as the difference between the actual interest paid on the pre-shipment
loans during the POR and the interest that would have been paid using
the benchmark interest rates. We then added the benefits and divided
the sum by Borusan's total export sales for 2004. On this basis, we
preliminarily determine the countervailable subsidy under this program
to be 0.07 percent ad valorem.
C. Foreign Trade Companies Short-Term Export Credits\9\
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\9\ This program was previously known as ``Export Credit Through
the Foreign Trade Corporate Companies Rediscount Credit Facility''
or ``Foreign Trade Corporate Companies Credit Facility.''
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[[Page 17448]]
The Foreign Trade Company (``FTC'') loan program was implemented to
assist large export trading companies with their export financing
needs. This program is specifically designed to benefit Foreign Trade
Corporate Companies (``FTCC'') and Sectoral Foreign Trade Companies
(``SFTC'').\10\ An FTCC is a company whose export performance was at
least U.S. $75 million in the previous year. For eligible companies,
the Export Bank will provide short-term export credits based on their
past export performance. Under this credit program, the Export Bank
extends short-term export credits directly to exporters in TL and FX,
up to 100 percent of FOB export commitment. The program's interest
rates are set by the Export Bank and the maturity of the loans is
usually 180 days. To qualify for a FTC loan, in addition to submitting
the necessary application documents, a company must provide a bank
letter of guarantee, equivalent to the loan's principal and interest
amount.
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\10\ A grouping of small- and medium-sized companies that
operate together in a similar sector.
---------------------------------------------------------------------------
Istikbal acquired FTCC status in April 2003 and was the only
Borusan company to receive FTC credits. During the POR, Istikbal paid
interest against FTC loans denominated in both TL and FX.
Consistent with previous determinations, we preliminarily find that
these loans confer a countervailable subsidy within the meaning of
section 771(5) of the Act. See e.g., Wire Rod Memorandum at 6-7. The
loans constitute a financial contribution in the form of a direct
transfer of funds from the GOT, under section 771(5)(D)(i) of the Act.
A benefit exists under section 771(5)(E)(ii) of the Act in the amount
of the difference between the payments of interest that Istikbal made
on its loans during the POR and the payments the company would have
made on comparable commercial loans. The program is also specific in
accordance with section 771(5A)(B) of the Act because receipt of the
loans is contingent upon export performance.
Further, like the pre-shipment loans, the FTC loans are not tied to
a particular export destination. See GOT Verification Report at 3.
Therefore, we have treated this program as an untied export loan
program which renders it countervailable regardless of whether the
loans were used for exports to the United States. See Wire Rod
Memorandum at 6-7.
Pursuant to 19 CFR 351.505(a)(1), we have calculated the benefit as
the difference between the payments of interest that Istikbal made on
its FTC loans during the POR and the payments the company would have
made on comparable commercial loans. In accordance with section
771(6)(A) of the Act, we subtracted from the benefit amount the fees
which Istikbal paid to commercial banks for the required letters of
guarantee. We then divided the resulting benefit by Borusan's total
export value for 2004. On this basis, we preliminarily find that the
countervailable subsidy for this program is 0.09 percent ad
valorem.\11\
---------------------------------------------------------------------------
\11\ See ``Benchmark Interest Rates,'' supra, (discussing the
benchmark rates used in these preliminary results).
---------------------------------------------------------------------------
D. Pre-Export Credits\12\
---------------------------------------------------------------------------
\12\ This loan program was formerly known as ''Past Performance
Related Export Credits.``
---------------------------------------------------------------------------
This program is similar to the FTC credit program described above;
however, companies classified as either FTC or SFTC are not eligible
for pre-export loans. Under the pre-export credit program, a company's
past export performance is considered in evaluating a company's
eligibility and establishing the company's credit limit. Like FTC
loans, the Export Bank directly extends to companies pre-export loans,
which are denominated in either TL or FX and have a maturity of 180
days.\13\ To quality for a pre-export loan, in addition to submitting
the necessary application documents, a company must provide a bank
letter of guarantee, equivalent to the loan's principal and interest
amount. During the POR, BBBF paid interest against pre-export loans
that were denominated in both TL and FX.
---------------------------------------------------------------------------
\13\ The Export Bank also sets the interest rates for this
export loan program.
---------------------------------------------------------------------------
Consistent with previous determinations, we preliminarily find that
these loans confer a countervailable subsidy within the meaning of
section 771(5) of the Act. See e.g., Wire Rod Memorandum at 7-8. The
loans constitute a financial contribution in the form of a direct
transfer of funds from the GOT, under section 771(5)(D)(i) of the Act.
A benefit exists under section 771(5)(E)(ii) of the Act in the amount
of the difference between the payments of interest that BBBF made on
its loans during the POR and the payments the company would have made
on comparable commercial loans. The program is also specific in
accordance with section 771(5A)(B) of the Act because receipt of the
loans is contingent upon export performance.
Further, these loans are not tied to a particular export
destination. See GOT Verification Report at 3. Therefore, we have
treated this program as an untied export loan program which renders it
countervailable regardless of whether the loans were used for exports
to the United States.
Pursuant to 19 CFR 351.505(a)(1), we have calculated the benefit as
the difference between the payments of interest that BBBF made on its
pre-export loans during the POR and the payments the company would have
made on comparable commercial loans.\14\ In accordance with section
771(6)(A) of the Act, we subtracted from the benefit amount the fees
which BBBF paid to commercial banks for the required letters of
guarantee. We then divided the resulting benefit by Borusan's total
export value for 2004. On this basis, we preliminarily find that the
countervailable subsidy for this program is 0.02 percent ad valorem.
---------------------------------------------------------------------------
\14\ See ``Benchmark Interest Rates,'' supra (discussing the
benchmark rates used in these preliminary results).
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II. Program Preliminarily Determined To Be Not Countervailable
A. Investment Allowance Under Article 19 of Law 4842
In Wire Rod, the Department investigated investment allowances
provided for under Investment Incentive Certificates, which were
granted under the General Incentives Encouragement Program (``GIEP''),
and found certain investment allowances to be countervailable and
others to be non-countervailable.\15\
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\15\ Specifically, in Wire Rod, we determined that because the
criteria governing the minimum investment allowance (i.e., 40
percent) were identical to those of the GIEP itself, our analysis of
the minimum investment allowance was identical to that for the GIEP,
which we found to be non-countervailable. Therefore, because we
found that the GIEP is not countervailable, we also found that the
minimum investment allowance is not countervailable. See Wire Rod
Memorandum at 14-16. Investment allowances greater than 40 percent
were found to be countervailable. See Id. at 8-11.
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During the POR of the instant review, investment allowances were no
longer provided for under the GIEP via an Investment Incentive
Certificate. With Article 19 of Law 4842, published on April 24, 2003,
the obligation to have an Investment Incentive Certificate to benefit
from an investment allowance was abolished and the ability to claim an
investment allowance on a corporate income tax return was made
available to all taxpayers at a uniform rate.\16\ Specifically, by the
provisions of Article 19, taxpayers without regard to region or sector,
and without any requirement of an Investment Incentive Certificate, are
eligible to claim an investment
[[Page 17449]]
allowance at the rate of 40 percent. There is no special application or
approval process to claim and receive the investment allowance. The
amount of the investment allowance is indicated on a company's tax
return. The amount of the deduction is 40 percent of the costs of
depreciable economic assets that are purchased or produced for use in
the company's operations. See GOT Verification Report at 8.
---------------------------------------------------------------------------
\16\ Expenses for investments covered by an Investment Incentive
Certificate continued to be subject to the previous investment
allowance rules if the application for the certificate was made
before the effective date of Law 4842.
---------------------------------------------------------------------------
BBBF and MB both took an Article 19 investment allowance deduction
on their respective 2003 tax returns that were filed during the POR. We
analyzed whether this investment allowance is de jure specific, within
the meaning of section 771(5A)(D) of the Act. As discussed above,
Article 19 of Law 4842 does not limit access to the investment
allowance deduction to an enterprise, industry, group of industries, or
region. Eligibility for the investment allowance is automatic as a
company calculates the 40 percent deduction of its depreciable economic
assets and reports that amount on its income tax return. A company's
annual income tax return is subject to a statutory tax audit. The
conditions under which a company can enjoy the investment allowance are
delineated in the law and use of the investment allowance is clearly
indicated in the income tax return and tax audit report.
At verification, we confirmed BBBF's and MB's usage of the
investment allowance provided for under Article 19, through an
examination of each company's 2003 annual income tax return and
accompanied 2003 tax audit report. See the March 31, 2006, Memorandum
to the File concerning the Verification of the Questionnaire Responses
Submitted by the Borusan Group (``Borusan Verification Report'') at 11-
12.\17\
---------------------------------------------------------------------------
\17\ A public version of the verification report is available on
the public file in the Department's Central Records Unit (room B-
099).
---------------------------------------------------------------------------
Based on our analysis of Article 19 of Law 4842 and the process by
which companies realize the investment allowance, we preliminarily
determine that the investment allowance under Article 19 of Law 4842 is
not specific under section 771(5A)(D) of the Act and, therefore, is not
countervailable.
B. Investment Allowance Under Investment Incentive Certificate
In Wire Rod, the Department determined that the threshold
requirement for eligibility of any GIEP benefit is the receipt of an
Investment Incentive Certificate, which specifies the benefit programs
(e.g., investment allowance and customs duty exemption) a certificate
holder can receive. The Department further determined that particular
investment allowances extended under the GIEP are countervailable and
others are non-countervailable. See Wire Rod Memorandum at 8-11 and 14-
16. During the POR, MB had an Investment Incentive Certificate,
received prior to the effective date of Article 19 of Law 4842, that
provided for a 40 percent investment allowance, which the company
claimed on its 2003 income tax return filed during the POR. MB was
eligible for a 40 percent investment allowance because of its location
in a developed region.\18\
---------------------------------------------------------------------------
\18\ Companies located in a normal region received a 60 percent
allowance and those in a priority region received a 100 percent
allowance. The different regions were determined by the GOT.
---------------------------------------------------------------------------
In Wire Rod, we determined that because the criteria governing the
minimum investment allowance (i.e., 40 percent for a developed region)
were identical to those of the GIEP itself, our analysis of the minimum
investment allowance was identical to that for the GIEP, which we found
to be non-countervailable. Therefore, because we found that the GIEP
was not countervailable, we also found the minimum investment allowance
to be not countervailable. See Id. at 14-16. In this review, no new
information or evidence of changed circumstances has been submitted to
warrant reconsideration of the Department's prior findings.
III. Programs Preliminary Determined To Not Confer Countervailable
Benefits
A. Export Credit Insurance
Through this program, exporters can obtain export credit insurance
from Turkey's Export Bank. These are one-year blanket insurance
policies that cover up to 90 percent of losses incurred due to
political risk (e.g., loss resulting from a war) and commercial risk
(e.g., the insolvency of the buyer). The insurance provided under this
program is post-shipment insurance because the Export Bank becomes
liable only if the loss occurs on or after the date of shipment.
Beginning in February 1997, use of the export credit insurance program
became voluntary for borrowers under the pre-shipment export financing
programs.
During the POR, Istikbal had in place an export credit insurance
program. We verified that the company did not submit an insurance claim
or receive a reimbursement under the program in 2004. We also verified
with the Export Bank that for 2002, 2003, and 2004, the premiums paid
for the export credit insurance and other income generated by the
program exceeded the insurance claims paid to participating companies
and operating costs of the program. See GOT Verification Report at 5.
On this basis, consistent with Wire Rod and 1999 Pasta Final, and in
accordance with 19 CFR 351.520(a)(1), we preliminarily find that the
export credit insurance program did not confer countervailable benefits
during the POR. See Wire Rod Memorandum at 18; and 1999 Pasta
Memorandum at 7.
B. Inward Processing Certificate Exemption
Under the Inward Processing Certificate (``IPC'')\19\ program,
companies are exempt from paying customs duties and value added taxes
(``VAT'') on raw material imports to be used in the production of
exported goods. Companies may choose whether to be exempted from the
applicable duties and taxes or have them refunded upon export. Under
the exemption system, companies provide a letter of guarantee that is
returned to the companies upon fulfillment of the committed export.
---------------------------------------------------------------------------
\19\ The IPC program is governed by the following GOT
provisions: Customs Code No. 4458 (Articles 80, 108, 111, 115, and
121), IPC Council of Ministers' Decree No. 2005/8391, and Communique
of IPR No. Export 2005/1.
---------------------------------------------------------------------------
To participate in this program, a company must hold an IPC, which
lists the amount of raw materials to be imported and the amount of
product to be exported. The input/output usage rates listed on the IPC
are set by the GOT working in conjunction with Turkey's Exporter
Associations, which are quasi-governmental organizations whose
leadership are subject to GOT approval. The input/output usage rates
vary by product and industry and are determined using data from
capacity reports submitted by companies that apply for IPCs. The input/
output usage rates are subject to periodic review and verification by
the GOT. In the case of the pipe and tube industry, the input/output
usage rates were last modified in June 2001. See Borusan Verification
Report at 12-13. The GOT uses the input/output usage rates to ensure
that a company's expected export quantities are sufficient to cover the
quantity of inputs imported duty-free under the program. An IPC
specifies the maximum quantity of inputs that can be imported under the
program. Further, under the IPC program, the value of imported inputs
may not exceed the value of the exported products.
Pursuant to 19 CFR 351.519(a)(1)(ii), a benefit exists to the
extent that the exemption extends to inputs that are not consumed in
the production of the exported product, making normal
[[Page 17450]]
allowances for waste, or if the exemption covers charges other than
imported charges that are imposed on the input. In regard to the VAT
exemption granted under this program, pursuant to 19 CFR 351.517(a), in
the case of the exemption upon export of indirect taxes, a benefit
exists 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.
During the POR, Borusan used IPCs to receive duty and VAT
exemptions on certain imported inputs used in the production of steel
pipes and tubes. Borusan did not receive any duty or VAT refunds under
the program during the POR. There is no indication that Borusan used
the imported inputs for any other product besides those exported or
that the amount of exempted inputs imported under the program were
excessive.
At verification, we learned that the GOT sets the waste/usage rate
for each imported raw material.\20\ The usage ratios are developed on
an industry and product basis. These rates are used to determine the
amount of each raw material input required to produce a given unit of
exported product. In setting the rates, the GOT relies on company
capacity reports and conducts on-site inspections of production
facilities. The GOT periodically reviews the waste/usage rates. A
company may request that a raw material ratio be modified if there have
been improvements in productivity and efficiency of the company's
facilities. At verification, we confirmed, through examination of the
company's production records, that the waste rate established by the
GOT, in June 2001, reflects Borusan's actual production experience. See
Borusan Verification Report at 12-14 and GOT Verification Report at 10-
11.
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\20\ Specifically, the Undersecretariat for Foreign Trade
(``UFT'') works in conjunction with various exporter associations
(quasi-governmental organizations comprised of industry officials)
and the Chamber of Industries (independent non-governmental
organization) to set the waste/loss ratios. For example, the Chamber
of Industries issues the company-specific capacity reports, which a
company must submit to the UFT for consideration of a certificate.
To obtain a capacity report, a company first establishes a
production plan and then requests an inspection of its production
facilities to confirm production capability, efficiency, annual
consumption and production capacity, etc. Each capacity report has
an expiration date and an updated capacity report is generated every
three or four years.
---------------------------------------------------------------------------
On this basis, we preliminarily determine that the tax and duty
exemptions that Borusan received on imported inputs under the IPC
program did not confer countervailable benefits as Borusan consumed the
imported inputs in the production of the exported product, making
normal allowance for waste. We further preliminarily find that the VAT
exemption did not confer countervailable benefits on Borusan because
the exemption does not exceed the amount levied with respect to the
production and distribution of like products when sold for domestic
consumption.
During our verification meeting with the GOT, we learned of a
previously unreported form of IPC, i.e., a D3 license, in which the GOT
provides exemptions and refunds on quantities of imported inputs that
are incorporated into products sold on the domestic market. Using
records available at the GOT's UFT, we identified Borusan's D3 licenses
that were open during the POR. See GOT Verification Report at 12.
During Borusan's verification, we examined each of the D3 licenses. We
confirmed that Borusan did not use the licenses to import any raw
materials during the POR. We also confirmed that, under the D3
certificates, Borusan was exempt from paying import duties and VAT by
providing a bank letter of guarantee. See Borusan Verification Report
at 13-14.
As the issuance of a D3 license is not based on exportation, we
preliminarily find that this aspect of the IPC program is not an export
program but rather falls under 19 CFR 351.510. Pursuant to 19 CFR
351.510(a)(1), in the case of a program, other than an export program,
that provides for the full or partial exemption or remission of an
indirect tax or an import charge, a benefit exists to the extent that
the taxes or import charges paid by a firm are less than the taxes the
firm would have paid in the absence of the program. Further, under 19
CFR 351.510(b)(1), the Department normally will consider the benefit as
having been received at the time the recipient firm otherwise would be
required to pay the indirect tax or import charge. Because Borusan did
not import any goods under a D3 certificate during the POR, we
preliminarily determine that this aspect of the IPC program was not
used. We will, however, continue to examine the use of D3 licenses
under the IPC program in future CVD proceedings involving Turkish
producers/exporters.
IV. Programs Preliminarily Determined To Not Be Used
We examined the following programs and preliminarily determine that
Borusan did not apply for or receive benefits under these programs
during the POR:
A. VAT Support Program (Incentive Premium on Domestically Obtained
Goods)\21\
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\21\ Although we found this program to be terminated in Wire
Rod, residual payments for purchases made prior to the program's
termination were permitted. See Wire Rod Memorandum at 11.
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B. Post-Shipment Export Loans
C. Pre-Shipment Rediscount Loans
D. Subsidized Turkish Lira Credit Facilities
E. Subsidized Credit for Proportion of Fixed Expenditures
F. Regional Subsidies.
Preliminary Results of Review
In accordance with 19 CFR 351.221(b)(4)(i), we have calculated a
subsidy rate for Borusan for calendar year 2004. We preliminarily
determine that the total estimated net countervailable subsidy rate is
0.27 percent ad valorem, which is de minimis, pursuant to 19 CFR
351.106(c).
If the final results of this review remain the same as these
preliminary results, the Department intends to instruct CBP within 15
days of publication of the final results of this review, to liquidate
without regard to countervailing duties all shipments of subject
merchandise produced by Borusan entered, or withdrawn from warehouse,
for consumption from January 1, 2004, through December 31, 2004. The
Department will also instruct CBP not to collect cash deposits of
estimated countervailing duties on all shipments of the subject
merchandise produced by Borusan, entered, or withdrawn from warehouse,
for consumption on or after the date of publication of the final
results of this review.
We will also instruct CBP to continue to collect cash deposits for
non-reviewed companies at the most recent company-specific or country-
wide rate applicable to the company. Accordingly, the cash deposit
rates that will be applied to non-reviewed companies covered by this
order are those established in the most recently completed
administrative proceeding conducted under the URAA. If such a review
has not been conducted, the rate established in the most recently
completed administrative proceeding conducted pursuant to the statutory
provisions that were in effect prior to the URAA amendments is
applicable. See Certain Welded Carbon Steel Pipe and Tube Products from
Turkey; Final Results of Countervailing Duty Administrative Review, 53
FR 9791
[[Page 17451]]
(March 25, 1988). These rates shall apply to all non-reviewed companies
until a review of a company assigned these rates is requested.
Public Comment
Pursuant to 19 CFR 351.224(b), the Department will disclose to
parties to the proceeding any calculations performed in connection with
these preliminary results within five days after the date of the public
announcement of this notice. Pursuant to 19 CFR 351.309, interested
parties may submit written comments in response to these preliminary
results. Unless otherwise indicated by the Department, case briefs must
be submitted within 30 days after the date of publication of this
notice. Rebuttal briefs, limited to arguments raised in case briefs,
must be submitted no later than five days after the time limit for
filing case briefs, unless otherwise specified by the Department.
Parties who submit argument in this proceeding are requested to submit
with the argument: (1) A statement of the issues, and (2) a brief
summary of the argument. Parties submitting case and/or rebuttal briefs
are requested to provide the Department copies of the public version on
disk. Case and rebuttal briefs must be served on interested parties in
accordance with 19 CFR 351.303(f). Also, pursuant to 19 CFR 351.310,
within 30 days of the date of publication of this notice, interested
parties may request a public hearing on arguments to be raised in the
case and rebuttal briefs. Unless the Secretary specifies otherwise, the
hearing, if requested, will be held two days after the date for
submission of rebuttal briefs, that is, 37 days after the date of
publication of these preliminary results.
Representatives of parties to the proceeding may request disclosure
of proprietary information under administrative protective order no
later than 10 days after the representative's client or employer
becomes a party to the proceeding, but in no event later than the date
the case briefs, under 19 CFR 351.309(c)(ii), are due. See 19 CFR
351.305(b)(3). The Department will publish the final results of this
administrative review, including the results of its analysis of
arguments made in any case or rebuttal briefs.
This administrative review is issued and published in accordance
with section 751(a)(1), 777(i)(1) of the Act, and 19 CFR 351.221(b)(4).
Dated: March 31, 2006.
David M. Spooner,
Assistant Secretaryfor Import Administration.
[FR Doc. E6-5028 Filed 4-5-06; 8:45 am]
BILLING CODE 3510-DS-S
