Certain Pasta From Italy: Preliminary Results of the 13th (2008) Countervailing Duty Administrative Review, 18806-18811 [2010-8410]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 75, Number 70 (Tuesday, April 13, 2010)]
[Notices]
[Pages 18806-18811]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-8410]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-475-819]


Certain Pasta From Italy: Preliminary Results of the 13th (2008) 
Countervailing Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

SUMMARY: The Department of Commerce (``Department'') is conducting an 
administrative review of the countervailing duty order on certain pasta 
from Italy for the period January 1, 2008, through December 31, 2008. 
We preliminarily find that Pastificio Lucio Garofalo S.p.A. 
(``Garofalo'') received countervailable subsidies and that F.lli De 
Cecco di Filippo Fara San Martino S.p.A. (``De Cecco Pastificio'')/
Molino e Pastificio De Cecco S.p.A. (``De Cecco Pescara''), members of 
the De Cecco group of companies, received de minimis countervailable 
subsidies. See the ``Preliminary Results of Review'' section, below. 
Interested parties are invited to comment on these preliminary results. 
See the ``Public Comment'' section of this notice.

DATES: Effective Date: April 13, 2010.

FOR FURTHER INFORMATION CONTACT: Andrew McAllister or Anna Flaaten, AD/
CVD Operations, Office 1, Import Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230; telephone: (202) 482-1174 and (202) 482-5156, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 24, 1996, the Department published a countervailing duty 
order on certain pasta (``pasta'' or ``subject merchandise'') from 
Italy. See Notice of Countervailing Duty Order and Amended Final 
Affirmative Countervailing Duty Determination: Certain Pasta From 
Italy, 61 FR 38544 (July 24, 1996). On July 1, 2009, the Department 
published a notice of ``Opportunity to Request Administrative Review'' 
of this countervailing duty order for calendar year 2008, the period of 
review (``POR''). See Antidumping or Countervailing Duty Order, 
Finding, or Suspended Investigation; Opportunity To Request 
Administrative Review, 74 FR 31406 (July 1, 2009). On July 2, 2009, we 
received such a request from De Cecco Pastificio. On July 31, 2009, we 
received additional review requests from De Matteis Agroalimentare 
S.p.A. (``De Matteis''); Agritalia S.r.L. (``Agritalia''); F. Divella 
S.p.A. (``Divella''); and Garofalo. In accordance with 19 CFR 
351.221(c)(1)(i), we published a notice of initiation of this review on 
August 25, 2009. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Request for Revocation in Part, 74 FR 42873 
(August 25, 2009).
    On October 9, 2009, the Department selected De Cecco Pastificio and 
Garofalo as mandatory respondents. See Memorandum to Susan H. Kuhbach, 
Senior Office Director, ``Certain Pasta from Italy: Thirteenth 
Countervailing Duty Administrative Review--Respondent Selection,'' 
dated October 9, 2009 which is on file in the Department's Central 
Records Unit (``CRU'') in Room 1117 of the main Department building.
    On November 10, 2009, we issued countervailing duty questionnaires 
to the Commission of the European Union (``EU''), the Government of 
Italy (``GOI''), De Cecco Pastificio and Garofalo. We received 
responses to our questionnaires in December 2009. We issued 
supplemental questionnaires to De Cecco Pastificio, Garofalo, and the 
GOI in January and March 2010, and we received responses to our 
supplemental questionnaires in February, March, and April 2010.
    As explained in the memorandum from the Deputy Assistant Secretary 
for Import Administration, the Department has exercised its discretion 
to toll deadlines for the duration of the closure of the Federal 
Government from February 5, through February 12, 2010. Thus, all 
deadlines in this segment of the proceeding have been extended by seven 
days. The revised deadline for the preliminary results of this review 
is now June 7, 2010. See Memorandum to the Record from Ronald 
Lorentzen, DAS for Import Administration, regarding ``Tolling of 
Administrative Deadlines As a Result of the Government Closure During 
the Recent Snowstorm,'' dated February 12, 2010.

Period of Review

    The POR for which we are measuring subsidies is January 1, 2008, 
through December 31, 2008.

Scope of the Order

    Imports covered by the order are shipments of certain non-egg dry 
pasta in packages of five pounds four ounces or less, whether or not 
enriched or fortified or containing milk or other optional ingredients 
such as chopped vegetables, vegetable purees, milk, gluten, diastasis, 
vitamins, coloring and flavorings, and up to two percent egg white. The 
pasta covered by the scope of the order is typically sold in the retail 
market, in fiberboard or cardboard cartons, or polyethylene or 
polypropylene bags of varying dimensions.
    Excluded from the scope of the order are refrigerated, frozen, or 
canned pastas, as well as all forms of egg pasta, with the exception of 
non-egg dry pasta containing up to two percent egg white. Also excluded 
are imports of organic pasta from Italy that are accompanied by the 
appropriate certificate issued by the Instituto Mediterraneo Di 
Certificazione, Bioagricoop S.r.l., QC&I International Services, 
Ecocert Italila, Consorzio per il Controllo dei Prodotti Biologici, 
Associazione Italiana per l'Agricoltura Biologica, or Codex S.r.l. In 
addition, based on publicly available information, the Department has 
determined that, as of August 4, 2004, imports of organic pasta from 
Italy that are accompanied by

[[Page 18807]]

the appropriate certificate issued by Bioagricert S.r.l. are also 
excluded from the order. See Memorandum from Eric B. Greynolds to 
Melissa G. Skinner, dated August 4, 2004, which is on file in the 
Department's CRU. In addition, based on publicly available information, 
the Department has determined that, as of March 13, 2003, imports of 
organic pasta from Italy that are accompanied by the appropriate 
certificate issued by Instituto per la Certificazione Etica e 
Ambientale are also excluded from the order. See Memorandum from Audrey 
Twyman to Susan Kuhbach, dated February 28, 2006, entitled 
``Recognition of Instituto per la Certificazione Etica e Ambientale 
(ICEA) as a Public Authority for Certifying Organic Pasta from Italy'' 
which is on file in the Department's CRU.
    The merchandise subject to review is currently classifiable under 
items 1901.90.90.95 and 1902.19.20 of the Harmonized Tariff Schedule of 
the United States (``HTSUS''). Although the HTSUS subheadings are 
provided for convenience and customs purposes, the written description 
of the merchandise subject to the order is dispositive.

Scope Rulings

    The Department has issued the following scope rulings to date:
    (1) On August 25, 1997, the Department issued a scope ruling 
finding that multicolored pasta, imported in kitchen display bottles of 
decorative glass that are sealed with cork or paraffin and bound with 
raffia, is excluded from the scope of the antidumping and 
countervailing duty orders. See Memorandum from Edward Easton to 
Richard Moreland, dated August 25, 1997, which is on file in the CRU.
    (2) On July 30, 1998, the Department issued a scope ruling finding 
that multipacks consisting of six one-pound packages of pasta that are 
shrink-wrapped into a single package are within the scope of the 
antidumping and countervailing duty orders. See Letter from Susan H. 
Kuhbach to Barbara P. Sidari, dated July 30, 1998, which is on file in 
the CRU.
    (3) On May 24, 1999, the Department issued a final scope ruling 
finding that, effective October 26, 1998, pasta in packages weighing or 
labeled up to (and including) five pounds four ounces is within the 
scope of the antidumping and countervailing duty orders. See Memorandum 
from John Brinkmann to Richard Moreland, dated May 24, 1999, which is 
on file in the CRU.
    (4) On April 27, 2000, the Department self-initiated an anti-
circumvention inquiry to determine whether Pastificio Fratelli Pagani 
S.p.A.'s importation of pasta in bulk and subsequent repackaging in the 
United States into packages of five pounds or less constitutes 
circumvention with respect to the antidumping and countervailing duty 
orders on pasta from Italy pursuant to section 781(a) of the Tariff Act 
of 1930, as amended (``the Act''), and 19 CFR 351.225(b). See Certain 
Pasta From Italy: Notice of Initiation of Anti-Circumvention Inquiry on 
the Antidumping and Countervailing Duty Orders, 65 FR 26179 (May 5, 
2000). On September 19, 2003, we published an affirmative finding of 
the anti-circumvention inquiry. See Anti-Circumvention Inquiry of the 
Antidumping and Countervailing Duty Orders on Certain Pasta from Italy: 
Affirmative Final Determinations of Circumvention of Antidumping and 
Countervailing Duty Orders, 68 FR 54888 (September 19, 2003).

Subsidies Valuation Information

Allocation Period

    Pursuant to 19 CFR 351.524(b), benefits from non-recurring 
subsidies are allocated over a period corresponding to the average 
useful life (``AUL'') of the renewable physical assets used to produce 
the subject merchandise. The Department's regulations create a 
rebuttable presumption that the AUL will be taken from the U.S. 
Internal Revenue Service's Class Life Asset Depreciation Range System 
(``IRS Tables''). See 19 CFR 351.524(d)(2). For pasta, the most recent 
IRS Tables prescribe an AUL of 12 years. None of the responding 
companies or other interested parties objected to this allocation 
period. Therefore, we have used a 12-year allocation period.

Attribution of Subsidies

    Pursuant to 19 CFR 351.525(b)(6), the Department will attribute 
subsidies received by certain companies to the combined sales of those 
companies.
    In the instant review, De Cecco Pastificio has responded on behalf 
of itself and three other members of the De Cecco group of companies: 
De Cecco Pescara, Centrale Elettrica F.lli De Cecco S.r.L. 
(``Centrale''), and Consorzio Elettrico Imprese De Cecco 
(``C.E.I.D.''). See De Cecco Pastificio's December 24, 2009 
questionnaire response (``De Cecco Pastificio's QR'') at 5.
    De Cecco Pastificio manufactures pasta for sale in Italy, to third-
country markets, and to the United States. Id. at 6. De Cecco Pescara 
manufactures pasta for sale to De Cecco Pastificio and to unaffiliated 
third parties in Italy. Id.; see also De Cecco Pastificio's February 
25, 2010 supplemental questionnaire response (``SQR'') at 1. De Cecco 
Pastificio and De Cecco Pescara are majority owned by members of the De 
Cecco family, either directly or indirectly and hence, cross-owned 
within the meaning of 19 CFR 351.525(b)(6)(vi). See De Cecco 
Pastificio's March 26, 2010 SQR; see also Business Proprietary 
Memorandum, ``Information Concerning Respondents' Attribution,'' dated 
April 7, 2010 (``Respondents' Attribution Memo''). Therefore, in 
accordance with 19 CFR 351.525(b)(6)(ii), we are attributing subsidies 
received by De Cecco Pastificio and De Cecco Pescara to the combined 
sales of both, excluding inter-company sales.
    Effective January 1, 1999, Molino F.lli De Cecco di Filippo S.p.A. 
(``De Cecco Molino''), another member of the De Cecco group on whose 
behalf De Cecco Pastificio responded in the fourth administrative 
review, was merged with De Cecco Pastificio and ceased to be a separate 
entity. See Certain Pasta From Italy: Final Results of the Fourth 
Countervailing Duty Administrative Review, 66 FR 64214 (December 12, 
2001), and accompanying Issues and Decision Memorandum. The Department 
will continue to consider countervailable any benefits received by De 
Cecco Molino in past administrative review periods and allocated over a 
period that extends into or beyond the current POR as benefits 
attributable to De Cecco Pastificio.
    Finally, De Cecco Pastificio has reported it purchased electricity 
from C.E.I.D. that was produced by Centrale. Centrale is majority owned 
by members of the De Cecco family. See De Cecco Pastificio's March 26, 
2010 SQR. C.E.I.D. is a consortium consisting of Centrale and De Cecco 
Pastificio. However, neither Centrale nor C.E.I.D. received any 
subsidies during the POR or AUL period. See De Cecco Pastificio's QR at 
5. Therefore, we do not need to reach the issue of whether cross-
ownership exists or whether subsidies to Centrale or C.E.I.D. would be 
attributable to the pasta sold by De Cecco Pastificio under 19 CFR 
351.525(b)(6).
    Garofalo has reported and we confirm that Garofalo has no 
affiliates for which cross-ownership exists. See Garofalo's December 
17, 2009 questionnaire response at 2-3; see also Respondents' 
Attribution Memo. Thus, we are attributing any subsidies received by 
Garofalo to Garofalo's sales only.

[[Page 18808]]

Benchmarks for Long-Term Loans and Discount Rates

    Pursuant to 19 CFR 351.505(a), the Department will use the actual 
cost of comparable borrowing by a company as a loan benchmark, when 
available. According to 19 CFR 351.505(a)(2), a comparable commercial 
loan is defined as one that, when compared to the government-provided 
loan in question, has similarities in the structure of the loan (e.g., 
fixed interest rate v. variable interest rate), the maturity of the 
loan (e.g., short-term v. long-term), and the currency in which the 
loan is denominated.
    Because no comparable commercial loans were taken out by the 
respondents in the years in which the GOI agreed to provide the 
subsidies, we used a national average interest rate for comparable 
commercial loans, pursuant to 19 CFR 351.505(a)(3)(ii). Consistent with 
past practice in this proceeding, for years prior to 1995, we used the 
Bank of Italy reference rate adjusted upward to reflect the mark-up an 
Italian commercial bank would charge a corporate customer. See, e.g., 
Certain Pasta From Italy: Preliminary Results and Partial Rescission of 
the Eighth Countervailing Duty Administrative Review, 70 FR 17971 
(April 8, 2005), unchanged in final results, Certain Pasta from Italy: 
Final Results of the Eighth Countervailing Duty Administrative Review, 
70 FR 37084 (June 28, 2005). For benefits received in 1995-2004, we 
used the Italian Bankers' Association (``ABI'') prime interest rate (as 
reported by the Bank of Italy), increased by the average spread charged 
by banks on loans to commercial customers plus an amount for bank 
charges. See Certain Pasta from Italy: Preliminary Results of the 12th 
(2007) Countervailing Duty Administrative Review, 74 FR 25489, 25491 
(May 28, 2009) (``12th (2007) Administrative Review Preliminary 
Results''), unchanged in final results, Certain Pasta from Italy: Final 
Results of the 12th (2007) Countervailing Duty Administrative Review, 
74 FR 47204 (September 15, 2009). The Bank of Italy ceased reporting 
this rate in 2004. See 12th (2007) Administrative Review Preliminary 
Results, 74 FR at 25491. Because the ABI prime rate was no longer 
reported after 2004, for 2005-2008, we have used the ``Bank Interest 
Rates on Euro Loans: Outstanding Amounts, Non-Financial Corporations, 
Loans With Original Maturity More Than Five Years'' published by the 
Bank of Italy and provided by the GOI in its December 21, 2009, 
questionnaire response at Exhibits 3-6. Id. We increased this rate by 
the mark-up and bank charges described above.
    For discount rates, no company for which we need such rates took 
out any loans in the years in which the GOI agreed to provide the 
subsidies in question. Therefore, pursuant to 19 CFR 
351.524(d)(3)(i)(B), we used the national average cost of long-term, 
fixed-rate loans to allocate non-recurring benefits over time.

Analysis of Programs

I. Programs Preliminarily Determined To Be Countervailable

A. Industrial Development Grants Under Law 64/86
    Law 64/86 provided assistance to promote development in the 
Mezzogiorno (the south of Italy). Grants were awarded to companies 
constructing new plants or expanding or modernizing existing plants. 
Pasta companies were eligible for grants to expand existing plants but 
not to establish new plants because the market for pasta was deemed to 
be close to saturated. Grants were made only after a private credit 
institution chosen by the applicant made a positive assessment of the 
project.
    In 1992, the Italian Parliament abrogated Law 64/86 and replaced it 
with Law 488/92 (see section I.B., below). This decision became 
effective in 1993. However, companies whose projects had been approved 
prior to 1993 were authorized to continue receiving grants under Law 
64/86 after 1993. De Cecco Pastificio/De Cecco Pescara and Garofalo 
received grants under Law 64/86 that conferred a benefit during the 
POR.
    In the Pasta Investigation,\1\ the Department determined that these 
grants confer a
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    \1\ Final Affirmative Countervailing Duty Determination: Certain 
Pasta (``Pasta'') From Italy, 61 FR 30288 (June 14, 1996) (``Pasta 
Investigation'').
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    countervailable subsidy within the meaning of section 771(5) of the 
Act. They are a direct transfer of funds from the GOI bestowing a 
benefit in the amount of the grant. See Section 771(5)(D)(i) of the 
Act; see also 19 CFR 351.504(a). Also, these grants were found to be 
regionally specific within the meaning of section 771(5A)(D)(iv) of the 
Act.
    As stated in Live Swine from Canada,\2\ ``it is well-established 
that where the Department has determined that a program is * * * 
countervailable, it is the Department's policy not to re-examine the 
issue of that program's countervailability in subsequent reviews unless 
new information or evidence of changed circumstances is submitted which 
warrants reconsideration.'' Also, this policy is reflected in the 
Department's standard questionnaire used in countervailing duty 
administrative reviews which states that ``absent new information or 
evidence of changed circumstances, we do not intend to reexamine the 
countervailability of programs previously found to be 
countervailable.'' \3\
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    \2\ Live Swine from Canada; Final Results of Countervailing Duty 
Administrative Reviews, 61 FR 52408, 52420 (October 7, 1996) (``Live 
Swine from Canada'').
    \3\ See Department's November 10, 2009, letter to the Embassy of 
Italy, at enclosure.
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    In this review, neither the GOI nor respondent companies have 
provided new information that would warrant reconsideration of our 
determination that these grants are countervailable subsidies.
    In the Pasta Investigation, the Department treated the industrial 
development grants as non-recurring. No new information has been placed 
on the record of this review that would cause us to depart from this 
treatment. Therefore, we have followed the methodology described in 19 
CFR 351.524(b), which directs us to allocate over time those non-
recurring grants whose total authorized amount exceeds 0.5 percent of 
the recipient's sales in the year of authorization. Where the total 
amount authorized is less than 0.5 percent of the recipient's sales in 
the year of authorization, the benefit is countervailed in full 
(``expensed'') in the year of receipt. We determine that grants 
received by De Cecco Pastificio/De Cecco Pescara and Garofalo under Law 
64/86 exceeded 0.5 percent of their sales in the year in which the 
grants were approved.
    We used the grant methodology described in 19 CFR 351.524(d) to 
allocate the benefit from those grants. We divided the benefit of De 
Cecco Pastificio/De Cecco Pescara in the POR by their combined total 
sales in the POR and divided the benefit of Garofalo in the POR by its 
total sales in the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from the Law 64/86 industrial development grants to be 0.25 
percent ad valorem for De Cecco Pastificio/De Cecco Pescara and 0.25 
percent ad valorem for Garofalo. See Memorandum to the File, ``2008 
Preliminary Results Calculation Memorandum for F.lli De Cecco di 
Filippo Fara San Martino S.p.A./Molino e Pastificio De Cecco S.p.A.,'' 
dated April 7, 2010 (``De Cecco Pastificio/De Cecco Pescara Preliminary 
Calc Memo''); Memorandum to the File,

[[Page 18809]]

``2008 Preliminary Results Calculation Memorandum for Pastificio Lucio 
Garofalo S.p.A.,'' dated April 7, 2010 (``Garofalo Calc Memo'').
B. Industrial Development Grants Under Law 488/92
    In 1986, the EU initiated an investigation of the GOI's regional 
subsidy practices. As a result of this investigation, the GOI changed 
the regions eligible for regional subsidies to include depressed areas 
in central and northern Italy in addition to the Mezzogiorno. After 
this change, the areas eligible for regional subsidies are the same as 
those classified as Objective 1 (underdeveloped regions), Objective 2 
(declining industrial regions), or Objective 5(b) (declining 
agricultural regions) areas by the EU. The new policy was given 
legislative form in Law 488/92 under which Italian companies in the 
eligible sectors (manufacturing, mining, and certain business services) 
may apply for industrial development grants.
    Law 488/92 grants are made only after a preliminary examination by 
a bank authorized by the Ministry of Industry. On the basis of the 
findings of this preliminary examination, the Ministry of Industry 
ranks the companies applying for grants. The ranking is based on 
indicators such as the amount of capital the company will contribute 
from its own funds, the number of jobs created, regional priorities, 
etc. Grants are then made based on this ranking. De Cecco Pastificio/De 
Cecco Pescara and Garofalo received grants under Law 488/92 that 
conferred a benefit during the POR.
    In the Second Administrative Review,\4\ the Department determined 
that these grants confer a countervailable subsidy within the meaning 
of section 771(5) of the Act. They are a direct transfer of funds from 
the GOI bestowing a benefit in the amount of the grant. See Section 
771(5)(D)(i) of the Act; see also 19 CFR 351.504(a). Also, these grants 
were found to be regionally specific within the meaning of section 
771(5A)(D)(iv) of the Act. In the instant review, neither the GOI nor 
the respondent companies have provided new information which would 
warrant reconsideration of our determination that these grants are 
countervailable subsidies. See Live Swine from Canada, 61 FR at 52420.
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    \4\ See Certain Pasta From Italy: Preliminary Results of 
Countervailing Duty Administrative Review, 64 FR 17618, 17620 (April 
12, 1999) (``Second Administrative Review''), unchanged in final 
results, Certain Pasta From Italy: Final Results of the Second 
Countervailing Duty Administrative Review, 64 FR 44489 (August 16, 
1999).
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    In the Second Administrative Review, the Department treated the 
industrial development grants as non-recurring. No new information has 
been placed on the record of this review that would cause us to depart 
from this treatment. Therefore, we have followed the methodology 
described in 19 CFR 351.524(b) which directs us to allocate over time 
those non-recurring grants whose total authorized amount exceeds 0.5 
percent of the recipient's sales in the year of authorization. Where 
the total amount authorized is less than 0.5 percent of the recipient's 
sales in the year of authorization, the benefit is expensed in the year 
of receipt. We determine that grants received by De Cecco Pastificio/De 
Cecco Pescara and Garofalo under Law 488/92 exceeded 0.5 percent of its 
sales in the year in which the grants were approved.
    We used the grant methodology described in 19 CFR 351.524(d) to 
allocate the benefits over time. We divided the benefit received by De 
Cecco Pastificio/De Cecco Pescara in the POR by their combined total 
sales in the POR and divided the benefit received by Garofalo in the 
POR by its total sales in the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from the Law 488/92 industrial development grants to be 0.18 
percent ad valorem for De Cecco Pastificio/De Cecco Pescara and 0.37 
percent ad valorem for Garofalo. See De Cecco Pastificio/De Cecco 
Pescara Preliminary Calc Memo and Garofalo Preliminary Calc Memo.
C. Interest Contributions Under Law 488/92
    In the second administrative review of this order, the Department 
found that ``loans are not provided under Law 488/92.'' Second 
Administrative Review, 64 FR at 17620. However, the GOI provided 
documentation that a May 14, 2005 Law at Article 80 and implementing 
decree changed this practice to permit companies to obtain loans, in 
addition to grants, for initiatives in the areas eligible for such 
assistance under Law 488/92. See GOI's March 11, 2010 second 
supplemental questionnaire response. The preliminary examination of 
companies' loan applications by an authorized bank, the ranking by the 
Ministry of Economic Development, and the award of loans based on the 
ranking are similar to the process described for Law 488/92 grants (see 
section I.B., above). Id. In addition, the bank is responsible for 
assessing the company's credit. Id.
    Under this modification to Law 488/92, the loans must have a 
duration not exceeding 15 years and not less than six years. Id. The 
fixed-interest rates on these long-term loans were set at a rate of 
0.50 percent with the GOI covering the difference in interest amount 
between that rate and the market rate. Id. The modification to Law 488/
92 provides for maximum and minimum investment limits based upon the 
economic sector (i.e., industry, tourism, and trade). Id.
    We preliminarily determine that these interest contributions are 
countervailable subsidies within the meaning of section 771(5) of the 
Act. They are a direct transfer of funds from the GOI providing a 
benefit in the amount of the difference between the benchmark interest 
rate and the interest rate paid by the companies. See Section 
751(5)(E)(ii) of the Act. Also, these interest contributions are 
regionally specific within the meaning of section 771(5A)(D)(iv) of the 
Act because they are limited to companies located within regions which 
meet the criteria of Objective 1, Objective 2, and Objective 5(b) areas 
determined by the EU.
    In accordance with 19 CFR 351.505(c)(2) and 351.508(c)(2), we 
calculated the benefit for the POR by computing the difference between 
the amount of interest paid during the POR by De Cecco Pastificio/De 
Cecco Pescara on their Law 488/92 loan and the amount of interest De 
Cecco Pastificio/De Cecco Pescara would have paid at the benchmark 
interest rate. We divided the benefit received by De Cecco Pastificio/
De Cecco Pescara in the POR by their combined sales in the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from the Law 488/92 interest contributions to be 0.01 percent 
ad valorem for De Cecco Pastificio/De Cecco Pescara. See De Cecco 
Pastificio/De Cecco Pescara Preliminary Calc Memo.

II. Programs Preliminarily Determined To Be Countervailable for Which 
There Is No Measurable Benefit

A. Social Security Reductions and Exemptions--Sgravi
    Italian law allows companies, particularly those located in the 
Mezzogiorno, to use a variety of exemptions from and reductions of 
payroll contributions that employers make to the Italian social 
security system for health care benefits, pensions, etc. These social 
security reductions and exemptions, also known as sgravi benefits, are 
regulated by a complex set of laws and regulations,

[[Page 18810]]

and are sometimes linked to conditions such as creating more jobs. We 
have found in past segments of this proceeding that benefits under some 
of these laws (e.g., Law 1089) are available only to companies located 
in the Mezzogiorno and other disadvantaged regions. See Pasta 
Investigation, 61 FR at 30293. Certain other laws (e.g., Laws 407/90) 
provide benefits to companies all over Italy, but the level of benefits 
is higher for companies in the Mezzogiorno and other disadvantaged 
regions than for companies in other parts of the country. Id. at 30294. 
Still, other laws provide benefits that are not linked to any region.
    In the Pasta Investigation and subsequent reviews, the Department 
determined that certain types of social security reductions and 
exemptions confer countervailable subsidies within the meaning of 
section 771(5) of the Act. They represent revenue foregone by the GOI 
bestowing a benefit in the amount of the savings received by the 
companies. See Section 771(5)(D)(ii) of the Act. Also, they were found 
to be regionally specific within the meaning of section 771(5A)(D)(iv) 
of the Act because they were limited to companies in the Mezzogiorno or 
because the higher levels of benefits were limited to companies in the 
Mezzogiorno.
    In the instant review, no party in this proceeding challenged our 
past determinations in the Pasta Investigation and subsequent reviews 
that sgravi benefits, generally, were countervailable for companies 
located within the Mezzogiorno. See Live Swine from Canada, 61 FR at 
52420. Sgravi benefits were provided during the POR under Law 407/90.
(1) Law 407/90
    Law 407/90 grants an exemption from social security taxes for three 
years when a company hires a worker who (1) has received wage 
supplementation for a period of at least two years, or (2) has been 
previously unemployed for a period of two years. A 100-percent 
exemption is allowed for companies in the Mezzogiorno, while companies 
located in the rest of Italy receive a 50-percent reduction.
    In the Pasta Investigation, we determined Law 407/90 confers a 
countervailable subsidy within the meaning of section 771(5) of the 
Act. See Pasta Investigation, 61 FR at 30294. The reduction or 
exemption of taxes is revenue foregone that is otherwise due and is, 
therefore, a financial contribution within the meaning of section 
771(5)(D)(ii) of the Act. The benefit is the difference in the amount 
of the tax savings between companies located in the Mezzogiorno and 
companies located in the rest of Italy, in accordance with 19 CFR 
351.509(a). Additionally, the program is regionally specific within the 
meaning of section 771(5A)(D)(iv) of the Act because higher levels of 
benefits are limited to companies in the Mezzogiorno.
    In accordance with 19 CFR 351.524(c), and consistent with our 
methodology in the Pasta Investigation and in subsequent administrative 
reviews, we have treated social security reductions and exemptions as 
recurring benefits. To calculate the countervailable subsidy for 
Garofalo, we divided the difference during the POR between the savings 
for the respondent company located in the Mezzogiorno and the savings a 
company located in the rest of Italy would have received. This amount 
was divided by Garofalo's total sales in the POR.
    On this basis, we preliminarily determine the countervailable 
subsidy from Law 407/90 to be 0.00 percent ad valorem for Garofalo. See 
Garofalo Preliminary Calc Memo.

III. Programs Preliminarily Determined To Not Be Used

    We examined the following programs and preliminarily determine that 
the producers and/or exporters of the subject merchandise under review 
did not apply for or receive benefits under these programs during the 
POR:
    A. Industrial Development Loans under Law 64/86.
    B. Grant Received Pursuant to the Community Initiative Concerning 
the Preparation of Enterprises for the Single Market (``PRISMA'').
    C. European Regional Development Fund (``ERDF'') Programma 
Operativo Plurifondo (``P.O.P.'') Grant.
    D. European Regional Development Fund (``ERDF'') Programma 
Operativo Multiregionale (``P.O.M.'') Grant.
    E. Certain Social Security Reductions and Exemptions--Sgravi 
(including Law 223/91, Article 8, Paragraph 4 and Article 25, Paragraph 
9; and Law 196/97).
    F. Law 236/93 Training Grants.
    G. Law 1329/65 Interest Contributions (``Sabatini Law'') (Formerly 
Lump-Sum Interest Payment under the Sabatini Law for Companies in 
Southern Italy).
    H. Development Grants under Law 30 of 1984.
    I. Law 908/55 Fondo di Rotazione Iniziative Economiche (Revolving 
Fund for Economic Initiatives) Loans.
    J. Law 317/91 Benefits for Innovative Investments.
    K. Brescia Chamber of Commerce Training Grants.
    L. Ministerial Decree 87/02.
    M. Law 10/91 Grants to Fund Energy Conservation.
    N. Export Restitution Payments.
    O. Export Credits under Law 227/77.
    P. Capital Grants under Law 675/77.
    Q. Retraining Grants under Law 675/77.
    R. Interest Contributions on Bank Loans under Law 675/77.
    S. Preferential Financing for Export Promotion under Law 394/81.
    T. Urban Redevelopment under Law 181.
    U. Industrial Development Grants under Law 183/76.
    V. Interest Subsidies under Law 598/94.
    W. Duty-Free Import Rights.
    X. European Social Fund Grants.
    Y. Law 113/86 Training Grants.
    Z. European Agricultural Guidance and Guarantee Fund.
    AA. Law 341/95 Interest Contributions on Debt Consolidation Loans 
(Formerly Debt Consolidation Law 341/95).
    BB. Interest Grants Financed by IRI Bonds.
    CC. Article 44 of Law 448/01.
    DD. Law 289/02.
    (1) Article 62--Investments in Disadvantaged Areas.
    (2) Article 63--Increase in Employment.
    EE. Law 662/96--Patti Territoriali.
    FF. Law 662/96--Contratto di Programma.

IV. Preliminarily Terminated Programs

A. Social Security Reductions and Exemptions--Sgravi
(1) Law 196/97
    Law 196/97 provides exemptions, for an additional 12-month period, 
for employers in the Mezzogiorno that hire employees under ``skilling'' 
contracts on a long-term (or permanent) basis. See 12th (2007) 
Administrative Review Preliminary Results, 74 FR at 25492. Skilling 
contracts, as provided for under Law 863/84, occur when a company hires 
a worker under a non-renewable contract with a term of 24 months or 
less and the contract includes an educational or training component. 
Id. In the preliminary results of the 2007 administrative review, we 
determined that the last possible date to request exemptions under Law 
196/97 was October 31, 2006. Id. at 25493. Moreover, because the 
exemption granted under Law 196/97 only lasts for 12 months, benefits 
were set to expire by October 31, 2007. Id. Because benefits expired 
during the 2007 POR, we preliminarily determined in the 2007 
administrative review that Law 196/97 was terminated during that POR

[[Page 18811]]

and there would be no subsidy benefits from this program after the 2007 
POR. Id. Further, there was no indication of any substitute or 
replacement program. Id.
    There are no facts on the record in the instant review that warrant 
reconsideration of our prior finding from the preliminary results of 
the 2007 administrative review that any benefits previously available 
under Law 196/97 terminated as of October 31, 2007. Thus, we 
preliminarily determine that Law 196/97 has been terminated.

V. Previously Terminated Programs

    A. Regional Tax Exemptions under IRAP.
    B. VAT Reductions under Laws 64/86 and 675/55.
    C. Corporate Income Tax (``IRPEG'').
    D. Remission of Taxes on Export Credit Insurance under Article 33 
of Law 227/77.
    E. Export Marketing Grants under Law 304/90.
    F. Tremonti Law 383/01.
    G. Social Security Reductions and Exemptions--Sgravi.
    (1) Article 44 of Law 448/01.
    (2) Law 337/90.
    (3) Law 863/84.

Preliminary Results of Review

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated 
individual subsidy rates for the mandatory respondents, De Cecco 
Pastificio/De Cecco Pescara and Garofalo.
    For the non-selected respondents, we have followed the Department's 
policy for antidumping duty and countervailing duty investigations, and 
antidumping duty administrative reviews which is to base the margin on 
an average of the margins calculated for those companies selected for 
individual review, excluding de minimis rates or rates based entirely 
on adverse facts available (``AFA''). See Notice of Final Determination 
of Sales at Less Than Fair Value: Light-Walled Rectangular Pipe and 
Tube from Mexico, 73 FR 35649, 35651 (June 24, 2008); see also Certain 
Frozen Warmwater Shrimp From India: Final Results and Partial 
Rescission of Antidumping Duty Administrative Review, 73 FR 40492, 
40495-98 (July 15, 2008), and Lightweight Thermal Paper From the 
People's Republic of China: Final Affirmative Countervailing Duty 
Determination, 73 FR 57323, 57325-26 (October 2, 2008). Therefore, we 
preliminarily determine to assign to the non-selected respondents in 
this review the rate calculated for Garofalo, which is the only rate in 
this review that is neither de minimis nor based entirely on AFA.
    For the period January 1, 2008, through December 31, 2008, we 
preliminarily find the net subsidy rate for the producers/exporters 
under review to be that specified in the chart below:

------------------------------------------------------------------------
            Producer/Exporter               Net subsidy rate  (percent)
------------------------------------------------------------------------
F.lli De Cecco di Filippo Fara San         0.44
 Martino S.p.A./Molino e Pastificio De     (de minimis)
 Cecco S.p.A.
Pastificio Lucio Garofalo S.p.A..........  0.62
De Matteis Agroalimentare S.p.A..........  0.62
Agritalia S.r.L..........................  0.62
F. Divella S.p.A.........................  0.62
All-Others Rate..........................  3.85
------------------------------------------------------------------------

Assessment Rates

    If these preliminary results are adopted in our final results of 
this review, because the countervailing duty rate for De Cecco 
Pastificio/De Cecco Pescara is less than 0.5 percent and, thus, de 
minimis, the Department will instruct U.S. Customs and Border 
Protection (``CBP'') to liquidate shipments of certain pasta by De 
Cecco Pastificio/De Cecco Pescara from January 1, 2008, through 
December 31, 2008, without regard to countervailing duties. For all 
entries by Garofalo, De Matteis, Agritalia, and Divella, we will 
instruct CBP to assess countervailing duties on all shipments at the 
net subsidy rates listed above.
    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, and Pasta Lensi S.r.l. which was revoked from the 
order), the Department has directed CBP to assess countervailing duties 
on all entries between January 1, 2008, and December 31, 2008, at the 
rates in effect at the time of entry.
    The Department intends to issue appropriate assessment instructions 
directly to CBP 15 days after publication of the final results of this 
review.

Cash Deposit Instructions

    The Department also intends to instruct CBP to collect cash 
deposits of estimated countervailing duties in the amounts shown above 
with the exception of De Cecco Pastificio/De Cecco Pescara. For De 
Cecco Pastificio/De Cecco Pescara, no cash deposits of estimated duties 
will be required because their rate is de minimis. 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, and Pasta Lensi S.r.l. which 
was revoked 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 non-reviewed companies until a review of a company 
assigned these rates is requested. These cash deposit requirements, 
when imposed, shall remain in effect until further notice.

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 case briefs or rebuttal briefs in this proceeding are 
requested to submit with each argument: (1) A statement of the issue, 
and (2) a brief summary of the argument with an electronic version 
included. 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 42 days after the publication of 
this notice, or the first workday thereafter.
    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: April 7, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-8410 Filed 4-12-10; 8:45 am]
BILLING CODE 3510-DS-P