Certain Pasta From Italy: Final Results of the Fourth Countervailing Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of final results of countervailing duty administrative review.

SUMMARY:

The Department of Commerce is issuing the final results of the fourth administrative review of the countervailing duty order on certain pasta from Italy for the period January 1 through December 31, 1999.

Based on information received since the preliminary results and our analysis of the comments received, the Department of Commerce, “the Department,” has revised the net subsidy rates for Agritalia S.r.L., Pastificio Antonio Pallante S.r.L. (“Pallante”), N. Puglisi & F. Industria Paste Alimentari S.p.A. (“Puglisi”), and Pastificio Riscossa F.lli Mastromauro S.r.L. (“Riscossa”). Therefore, the final results differ from the preliminary results. The final net subsidy rates for the reviewed companies are listed below in the section entitled “Final Results of Review.”

EFFECTIVE DATE:

December 12, 2001.

FOR FURTHER INFORMATION CONTACT:

Craig Matney, Sally Hastings, Andrew Covington, or Meg Weems, AD/CVD Enforcement, Group I, Office 1, Import Administration, U.S. Department of Commerce, Room 1780, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-1778, 482-3464, 482-3534, and 482-2613, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the provisions of the Tariff Act of 1930, as amended by the Uruguay Round Agreements Act (“URAA”), effective January 1, 1995 (“the Act”). In addition, unless otherwise indicated, all citations to the Department's regulations are to 19 CFR part 351 et seq. (2000).

Background

On July 24, 1996, the Department of Commerce (“the Department”) published in the Federal Register (61 FR 38544) the countervailing duty order on certain pasta from Italy.

In accordance with 19 CFR 351.213(b), this review of the order covers the following producers or exporters of the subject merchandise for which a review was specifically requested: Agritalia; F.lli De Cecco di Filippo Fara S. Martino S.p.A. (“De Cecco”); Delverde S.p.A. (“Delverde”); De Matteis Agroalimentare S.p.A. (“De Matteis”); Pallante; Pastificio Maltagliati S.p.A. (“Maltagliati”); P.A.M. S.r.L.—Prodotti Alimentari Meridionali (“PAM”) (PAM is also responding for Pastificio Liguori dal 1820, S.p.A.); Riscossa; Puglisi; and Rummo S.p.A. Molino e Pastificio (“Rummo”).

Based on withdrawals of the requests for reviews, we rescinded this administrative review for Arrighi S.p.A. Industrie Alimentari; Audisio Industrie Alimentari de Capitanata, S.p.A.; Commercio-Rappresentanze-Export S.r.L.; Indalco; Industria Alimentare Colavita, S.p.A.; Isola del Grano S.r.L.; Italpast S.p.A.; Italpasta S.r.L.; Labor S.r.L.; La Molisana Alimentari S.p.A.; Molino e Pastificio; Pastificio Campano, S.p.A.; Pastificio di Matino Gaetano & F.lli S.r.L.; Pastificio Fabianelli, S.p.A.; Pastificio F.lli Pagani; Pastificio Guido Ferrara; and, Tamma Industrie Alimentari di Capitanata, S.r.L. (See, Certain Pasta from Italy: Preliminary Results and Partial Rescission of Countervailing Duty Administrative Review, 66 FR 40987 (August 6, 2001) (“Preliminary Results”).)

Since the publication of the Preliminary Results the following events have occurred. Supplemental questionnaires were sent to Rummo on August 30, 2001; Puglisi on September 7, 2001; Delverde, Pallante, Riscossa and the Government of Italy (“GOI”) on September 27, 2001; and Agritalia on October 2, 2001. Responses were received from Rummo on September 21, 2001; Pallante, Riscossa, GOI and Agritalia on October 9, 2001; and Delverde on October 10, 2001.

Case briefs were submitted on October 22, 2001, by Agritalia, Delverde, DeMatteis, Pallante, Puglisi, and Riscossa. The Department did not conduct a hearing in this review because none was requested.

Scope of Review

Imports covered by this review are shipments of certain non-egg dry pasta in packages of five pounds (2.27 kilograms) or less, whether or not enriched or fortified or containing milk or other optional ingredients such as chopped vegetables, vegetable purees, milk, gluten, diastases, vitamins, coloring and flavorings, and up to two percent egg white. The pasta covered by this scope 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 this review 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 Istituto Mediterraneo Di Certificazione, Bioagricoop Scrl, QC&I International Services, Ecocert Italia, Consorzio per il Controllo dei Prodotti Biologici, Associazione Italiana per l'Agricoltura Biologica, or Codex S.r.L.

The merchandise subject to review is currently classifiable under item 1902.19.20 of the Harmonized Tariff Schedule of the United States (“HTSUS”). Although the HTSUS subheading is 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 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 countervailing duty order.(See August 25, 1997 memorandum from Edward Easton to Richard Moreland, which is on file in the Central Records Unit (“CRU”) in Room B-099 of the main Commerce building.)

(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 countervailing duty order. (See July 30, 1998 letter from Susan H. Kuhbach, Acting Deputy Assistant Secretary for Import Administration, to Barbara P. Sidari, Vice President, Joseph A. Sidari Company, Inc., which is on file in the CRU.)

(3) On October 26, 1998, the Department self-initiated a scope inquiry to determine whether a package weighing over five pounds as a result of allowable industry tolerances may be within the scope of the countervailing duty order. On May 24, 1999, we 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 countervailing duty order. (See May 24, 1999 memorandum from John Brinkmann to Richard Moreland, which is on file in the CRU.)

The following scope ruling is pending:

On April 27, 2000, the Department self-initiated an anti-circumvention inquiry to determine whether Pagani'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 Act and 19 CFR 351.225(b). See Certain Pasta from Italy: Notice of Initiation of Anti-circumvention Inquiry of the Antidumping and Countervailing Duty Orders, (May 5, 2000).

Period of Review

The period of review (“POR”) for which we are measuring subsidies is from January 1 through December 31, 1999.

Analysis of Comments Received

All issues raised in the case briefs by parties to this administrative review are addressed in the December 4, 2001 Issues and Decision Memorandum (“Decision Memorandum”) from Richard W. Moreland, Deputy Assistant Secretary, Import Administration, to Bernard Carreau, Acting Assistant Secretary for Import Administration, which is hereby adopted by this notice. Attached to this notice as Appendix I is a list of the issues which parties have raised and to which we have responded in the Decision Memorandum. Parties can find a complete discussion of all issues raised in this review and the corresponding recommendations in this public memorandum which is on file in the CRU, Room B-099 of the Department. In addition, a complete version of the Decision Memorandum can be accessed directly on the Internet at http://ia.ita.doc.gov/frn/ under the heading “Italy.” The paper copy and electronic version of the Decision Memorandum are identical in content.

Changes Since the Preliminary Results

Based on information received subsequent to the Preliminary Results and our analysis of comments submitted in the case briefs, we have made changes in our calculation of the net subsidies for Agritalia, Pallante, Puglisi and Riscossa. These changes are discussed in the relevant sections of the Decision Memorandum.

Final Results of Review

In accordance with 19 CFR 351.221(b)(4)(i), we calculated an individual subsidy rate for each producer/exporter subject to this administrative review. For the period January 1 through December 31, 1999, we determine the net subsidy rates for producers/exporters under review to be those specified in the chart shown below.

We will instruct the Customs Service (“Customs”) to assess countervailing duties as indicated above. The Department will also instruct Customs to collect cash deposits of estimated countervailing duties in the percentage detailed above of the f.o.b. invoice prices on all shipments of the subject merchandise from the producers/exporters under review, entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this administrative review.

The cash deposit rates for all companies not covered by this review are not changed by the results of this review. Thus, we will instruct Customs to continue to collect cash deposits for non-reviewed companies, except Barilla G. e R. F.lli S.p.A. (“Barilla”) and Gruppo Agricoltura Sana S.r.L. (“Gruppo”) (which were excluded from the order during the investigation), at the most recent rate applicable to the company. These rates shall apply to all non-reviewed companies until a review of the companies assigned these rates is completed. In addition, for the period January 1 through December 31, 1999, the assessment rates applicable to all non-reviewed companies covered by these orders are the cash deposit rates in effect at the time of entry. This notice serves as a reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.301. Timely written notification of return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

This administrative review and notice are in accordance with section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)).

Appendix I—Issues Discussed in the Decision Memorandum

I. Subsidies Valuation Methodology

1. Change in Ownership

2. Benchmarks for Long-term Loans and Discount Rates

3. Allocation Period

4. Attribution

5. Sales Values

II. Analysis of programs

A. Programs Previously Determined to Confer Subsidies

1. Law 64/86 Industrial Development Grants

2. Law 488/92 Industrial Development Grants

3. Law 183/76 Industrial Development Grants

4. Industrial Development Loans Under Law 64/86

5. Law 341/95 Interest Contributions on Debt Consolidation Loans

6. Law 598/94 Interest Subsidies

7. Social Security Reductions and Exemptions—Sgravi

8. IRAP Exemptions

9. Law 236/93 Training Grants

10. Law 304/90 Export Marketing Grants

11. European Regional Development Fund

12. Export Restitution Payments

13. Duty-free Import Rights

B. Programs Determined Not To Confer Countervailable Subsidies in the POR

1. IRPEG Exemptions

2. Remission of Taxes on Export Credit Insurance Under Article 33 of Law 227/77

3. ADAPT

4. Law 1329/65 Interest Contributions (Sabatini Law)

5. European Social Fund

C. Programs Determined to Be Not Used

1. Law 64/86 VAT Reductions

2. Export Credits under Law 227/77

3. Capital Grants under Law 675/77

4. Retraining Grants under Law 675/77

5. Interest Contributions on Bank Loans under Law 675/77

6. Interest Grants Financed by IRI Bonds

7. Preferential Financing for Export Promotion under Law 394/81

8. Urban Redevelopment under Law 181

9. Grant Received Pursuant to the Community Initiative Concerning the Preparation of Enterprises for the Single Market (“PRISMA”)

10. European Agricultural Guidance and Guarantee Fund (“EAGGF”)

III. Analysis of Comments

Comment 1: Sale of duty-free import rights (Agritalia)

Comment 2: Application of the Department's change in ownership methodology to Delverde (Delverde)

Comment 3: Presumption that subsidies continue after a change in ownership (Delverde)

Comment 4: Privatization and the U.K. Lead Bar Panel (Delverde)

Comment 5: Sale of shares vs. assets (Delverde)

Comment 6: Continuity of business operations (Delverde)

Comment 7: Sgravi repayment (Delverde)

Comment 8: Selection of 1999 sales values (Pallante)

Comment 9: Law 64/86 industrial development grants and loans (Pallante)

Comment 10: Sales by CE.S.A.P (Puglisi)

Comment 11: Failure to use company-specific discount rate for 1993 industrial development grant under Law 64/86 (Puglisi)

Comment 12: Failure to use company-specific interest rates for industrial development loans under Law 64/86 (Puglisi and DeMatteis)

Comment 13: Deduction of loan guarantee payments (Puglisi)

Comment 14: Deduction of interest payments on Law 64/86 industrial development grant advances (Puglisi)

Comment 15: Use of FOB sales values (Riscossa)

Comment 16: Attribution of benefits to pasta sales vs. sales of all product (Riscossa)