NOTICES

                        DEPARTMENT OF COMMERCE

                               [C-357-403]

  Oil Country Tubular Goods From Argentina--Preliminary Results of Countervailing
                         Duty; Administrative Review

                         Wednesday, October 9, 1991

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

 ACTION: Notice of preliminary results of countervailing duty administrative review.

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 SUMMARY: The Department of Commerce has conducted an administrative
 review of the countervailing duty order on oil country tubular goods from
 Argentina. We preliminarily determine the total bounty or grant to be 0.36 percent ad
 valorem for the period January 1, 1989 through December 31, 1989. In accordance with
 19 CFR 355.7, any rate less than 0.50 percent ad valorem is de minimis. We invite
 interested parties to comment on these preliminary results.

 EFFECTIVE DATE: October 9, 1991.

 FOR FURTHER INFORMATION CONTACT: Laurie Goldman or Barbara Tillman, Office of
 Countervailing Compliance, International Trade Administration, U.S. Department
 of Commerce, Washington, DC 20230; telephone: (202) 377-2786.

 SUPPLEMENTARY INFORMATION:

 Background

 On November 13, 1990, the Department of Commerce (the Department) published in the
 Federal Register a notice of "Opportunity to Request Administrative Review" (55 FR
 47370) of the countervailing duty order on oil country tubular goods from
 Argentina (49 FR 46564; November 27, 1984) for the period January 1, 1989 through
 December 31, 1989. On November 20, 1990, Lone Star Steel Company requested an
 administrative review covering the period January 1, 1989 through December 31, 1989.
 We initiated the review on December 17, 1990 (55 FR 51742). The Department has now
 conducted this review in accordance with section 751 of the Tariff Act of 1930, as
 amended (the Tariff Act).

 Scope of Review

 Imports covered by the review are shipments of Argentine oil country tubular goods
 (OCTG). These products include finished or unfinished oil country tubular goods, which
 are hollow steel products of circular cross section intended for use in the drilling of oil or
 gas, and oil well casing, tubing and drill pipe of carbon or alloy steel, whether welded or
 seamless, manufactured to either American Petroleum Institute (API) or proprietary
 specifications. During the review period this merchandise was classifiable under items
 7304.20.20, 7304.20.40, 7304.20.50, 7304.20.60, 7304.20.70, 7304.20.80,
 7304.39.00, 7304.51.50, 7304.59.60, 7304.59.80, 7304.90.70, 7305.20.40,
 7305.20.60, 7305.20.80, 7305.31.40, 7305.31.60, 7305.39.10, 7305.39.50,
 7305.90.10, 7305.90.50, 7306.20.20, 7306.20.30, 7306.20.40, 7306.20.60,
 7306.20.80, 7306.30.50, 7306.50.50, 7306.60.70 and 7306.90.10 of the Harmonized
 Tariff Schedule (HTS). The HTS item numbers are provided for convenience and Customs
 purposes. The written description remains dispositive of the scope of the order.
 The review covers the period January 1, 1989 through December 31, 1989 and eleven
 programs. The sole producer exporting OCTG to the United States during the review
 period was Siderca, S.A.

 Analysis of Programs

 (A) Rebate Upon Export of Indirect Taxes Paid (Reembolso) 

 The Reembolso is a tax rebate paid upon export and is calculated as a percentage of the
 f.o.b. invoice price of the exported merchandise. In the previous administrative review
 (Oil Country Tubular Goods from Argentina; Final Results of Countervailing Duty
 Administrative Review (56 FR 38116, August 12, 1991)) (OCTG 1987-1988), we
 determined that: (1) The Reembolso is intended to operate as a rebate of both indirect
 taxes and import duties; (2) the government conducted a study of indirect tax incidence
 on inputs that are physically incorporated into the exported product; and (3) the rebate
 schedules are periodically revised to reflect the amount of actual duties and indirect
 taxes paid.
 As explained in OCTG 1987-1988, on October 16, 1986, Decree 1555/86 modified the
 Reembolso program "to make the tax regime permanent and independent from other
 macroeconomic variables, responding exclusively to the concept of the refund of indirect
 taxes." The new decree set more precise and transparent guidelines to implement the
 refund of indirect taxes within the context of the new law. Rather than providing different
 rebate rates for each product or industry sector, the Reembolso program now has only
 three broad rebate levels. The rates are 10 percent for level I, 12.5 percent for level II,
 and 15 percent for level III. Based on the government's 1986 calculation of the tax
 incidence in the seamless steel tube industry, OCTG is classified in level II and received a
 12.5 percent rebate during the review period. However, the effective rate of Reembolso
 can be less than 12.5 percent because commissions paid on export sales are deducted
 from the f.o.b. value before the amount of the rebate is calculated.
 The Department has determined that the Reembolso does not confer a bounty or grant if
 the tax rebate does not exceed the total amount of allowable indirect taxes and import
 duties borne by inputs that are physically incorporated in the exported product, and
 indirect taxes levied at the final stage.
 In this review, we have taken into account all changes made to the 1986 tax incidence
 study that determined the level of rebate allowable to producers of OCTG. We found that
 indirect taxes on physically incorporated inputs and final stage indirect taxes on OCTG
 amounted to 24.22 percent during the review period. Because Siderca's effective rate of
 Reembolso did not exceed the 24.22 percent of allowable tax incidence, we preliminarily
 determine that there was no overrebate of indirect taxes for the review period and,
 therefore, no benefit from this program during the review period.

 (B) Pre-financing of Exports under Circular RF-153 

 In 1989, OPRAC-1, under Circular RF-153, authorized pre-export short-term loans to
 exporters of the subject merchandise for up to 70 percent of the f.o.b. value of the
 exported merchandise. The loans are denominated in U.S. dollars but are disbursed in
 australes. The funds are provided by the Central Bank of Argentina and disbursed by
 private commercial banks. The interest on pre-export loans is payable at the end of each
 calendar quarter or when principal payments are made. Because only exporters are
 eligible to receive these loans, we preliminarily determine that these loans are
 countervailable to the extent that they are provided to exporters at preferential rates.
 To calculate the benefit, we compared the amount of interest paid on each loan during the
 review period with the amount that would have been paid on comparable short-term
 commercial loans available in Argentina during the review period. For 1989, we used as
 our benchmark the average of the 1989 quarterly interest rates offered by commercial
 banks in Argentina. Since the company could tie the loans to specific export shipments,
 we allocated the benefit over the company's total exports of the subject merchandise to
 the United States. On this basis, we preliminarily determine the benefit from this program
 to be 0.32 percent ad valorem during the period January 1, 1989 through December 31,
 1989.

 (C) Government Counterguarantees 

 Petitioners have alleged that a guarantee provided by the Banco Nacional de Desarollo
 (BANADE) and a counterguarantee provided by the Ministry of Finance on a 1986 loan by
 the Inter-American Development Bank (IADB) to Siderca are countervailable. While the
 Department does not consider 

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 loans provided by international lending
 institutions to be countervailable under U.S. countervailing duty law (see, e.q., Final
 Affirmative Countervailing Duty Determination and Countervailing Duty Order;
 Certain Fresh Cut Flowers from Ecuador (52 FR 1365, January 13, 1987) and Initiation of
 Countervailing Duty Investigation; Certain Textiles and Textile Products from the
 Philippines (49 FR 34381, August 30, 1984)), we do consider that government action
 taken in connection with such loans is within the purview of U.S. countervailing duty
 law. The government's guarantee of a loan from an international lending institution is an
 example of a government action that could be actionable under U.S. countervailing
 duty law. Our determination with respect to such government actions must be based on
 whether they are limited to a specific enterprise or industry, or group of enterprises or
 industries, in accordance with section 771(5)(A)(ii) of the Tariff Act of 1930, as amended
 (the Act), and whether they are on terms inconsistent with commercial considerations.
 In the original investigation (Final Affirmative Countervailing Duty Determination
 and Countervailing Duty Order; Oil Country Tubular Goods from Argentina (49 FR
 46564, November 27, 1984)), we determined that the BANADE program was not
 countervailable based on section 771(5)(A)(ii) of the Act. In the most recently completed
 administrative reviews covering calendar years 1987 and 1988, petitioners again alleged
 that the BANADE guarantee and the Ministry of Finance counterguarantee were
 countervailable. In the final results of those reviews (Oil Country Tubular Goods from
 Argentina; Final Results of Countervailing Duty Administrative Reviews (56 FR
 38116, August 12, 1991)), we stated that petitioners had not provided sufficient
 information for the Department to reconsider its previous determination with respect to
 guarantees.
 During the course of the present review, petitioners have again alleged, on the basis of
 additional information, that guarantees and counterguarantees have been provided on a
 specific basis in Argentina after the time period that was examined in the Department's
 final determination in the OCTG investigation. Petitioners' allegation and supporting
 information provided in this review in a timely manner, and were deemed sufficient to
 warrant a reexamination of the guarantee program.
 On July 26, 1991, we sent a questionaire to the Government of Argentina requesting
 information on the guarantee program. We asked questions concerning the eligibility
 requirements and use of the guarantee program. Based on the information provided in
 that response, we requested additional information on August 26, 1991, concerning the
 distribution of counterguarantees in each year between 1981 and 1986.
 With respect to the BANADE guarantee provided on Siderca's IADB loan, we preliminarily
 determine that it is not countervailable. Balancing the information contained in
 petitioner's allegation against the information provided by the Government of
 Argentina in its questionnaire responses, we cannot conclude that there is a basis for
 overturning our previous determination that BANADE guarantees are not
 countervailable.
 With respect to counterguarantees provided by the Ministry of Finance, the Government
 of Argentina provided no specific information in the questionnaire responses regarding
 the use or distribution of Ministry of Finance counterguarantees, citing the limited
 amount of time available to respond to the Department's questionnaire. The Government
 of Argentina, however, asserted that publicly available information showed that
 counterguarantees were not restricted to a specific enterprise, sector, or region. As
 examples of such evidence, the government cited to information indicating that, in 1986,
 the year of the IADB loan, the aggregate value of BANADE loans counterguaranteed by
 the Ministry of Finance significantly exceeded the aggregate value of BANADE loans
 without such counterguarantees, and that BANADE loans are widely distributed
 throughout Argentina. Based on this information, the Government of Argentina
 argued that the "only reasonable conclusion" is that counterguarantees are not specific. In
 addition, Siderca provided a letter from the Government of Argentina listing various
 industries that received counterguarantees from 1982 to 1988. However, Siderca's
 submission did not provide a quantifiable breakdown of the number of counterguarantees
 each industry received in each year.
 The Department has carefully evaluated the information and arguments submitted by the
 Government of Argentina and Siderca, but has concluded that there is insufficient
 information to determine that Ministry of Finance counterguarantees are not limited to a
 specific enterprise or industry, or group of enterprises or industries. In the absence of
 specific information on the use and distribution of the counterguarantees which would
 allow us to make a full and informed judgment as to their specificity, we preliminarily
 determine that the counterguarantee is limited to a specific enterprise or industry, or
 group of enterprises or industries. Because the counterguarantee is also provided at no
 charge to Siderca, we also determine that it is inconsistant with commercial
 considerations.
 Insofar as the effect of the counterguarantee provided by the Ministry of Finance was to
 reduce the fee for the BANADE guarantee, we calculated the benefit as the simple
 difference between the amount Siderca would have paid for the guarantee and the amount
 Siderca actually paid for the BANADE guarantee as a result of the counterguarantee
 provided by the Ministry of Finance. Because the counterguarantee provided a benefit for
 both domestic and export sales, we divided the benefit by Siderca's total sales of all
 products. Based on these calculations, we preliminarily determine the benefit to Siderca
 from the Government of Argentina's counterguarantee to be 0.04 percent ad valorem.

 Other Programs

 We examined the following programs and preliminarily determine that OCTG exporters
 did not use them during the review period:
 - Post-export financing under OPRAC 1-9.
 - Tax deductions under Decree 173.
 - Stamp tax exemption under Decree 186.
 - RF-21 loans and short-term loans under Communique 1205.
 - Income tax and capital tax exemptions. 
 - Capital grants.
 - Government trade promotion programs.
 - Incentives for exports leaving from Southern Ports.

 Preliminary Results of Review

 As a result of our review, we preliminarily determine the total bounty or grant to be 0.36
 percent ad valorem for the period January 1, 1989 through December 31, 1989. In
 accordance with 19 CFR 355.7, any rate less than 0.50 percent ad valorem is de minimis.
 The Department intends to instruct the Customs Service to liquidate, without regard to
 countervailing duties, all shipments of this merchandise exported on or after January
 1, 1989 and on or before December 31, 1989.
 Further, the Department intends to instruct the Customs Service to waive 

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 cash
 deposits of estimated countervailing duties, as provided by section 751(a)(1) of the
 Tariff Act on all shipments of this merchandise entered, or withdrawn from warehouse,
 for consumption on or after the date of publication of the final results of this review.
 Parties to the proceeding may request disclosure of the calculation methodology and
 interested parties may request a hearing not later than 10 days after the date of
 publication of this notice. Interested parties may submit written arguments in case briefs
 on these preliminary results within 30 days of the date of publication. Rebuttal briefs,
 limited to arguments raised in case briefs, may be submitted seven days after the time
 limit for filing the case brief. Any hearing, if requested, will be held seven days after the
 scheduled date for submission of rebuttal briefs. Copies of case briefs and rebuttal briefs
 must be served on interested parties in accordance with 19 CFR 355.38(e).
 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 section 355.38(e) are due. The Department will
 publish the final results of this administrative review including the results of its analysis of
 issues raised in any case or rebuttal brief.
 This administrative review and notice are in accordance with section 751(a)(1) of the
 Tariff Act of 1930 (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.
 Dated: October 3, 1991.

 Marjorie A. Chorlins,

 Acting Assistant Secretary for Import Administration.

 [FR Doc. 91-24332 Filed 10-8-91; 8:45 am]

 BILLING CODE 3510-DS-M