[Federal Register Volume 63, Number 105 (Tuesday, June 2, 1998)] [Rules and Regulations] [Pages 29945-29948] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 98-14737] ----------------------------------------------------------------------- OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE 15 CFR Part 2013 Developing and Least-Developed Country Designations under the Countervailing Duty Law AGENCY: Office of the United States Trade Representative. ACTION: Interim Final Rule and Request for Comments. ----------------------------------------------------------------------- SUMMARY: This rule designates a list of members of the World Trade Organization (``WTO'') that are eligible for special de minimis countervailable subsidy and negligible import volume standards under the countervailing duty law. DATES: This rule is effective June 2, 1998. Comments on the Interim Final Rule should be submitted by July 31, 1998. ADDRESSES: Comments may be submitted to William D. Hunter, Office of General Counsel, Office of the United States Trade Representative, 600 17th Street, NW, Washington, DC 20508. Attn: Eligible Country List. FOR FURTHER INFORMATION CONTACT: William D. Hunter, (202) 395-3582, [email protected]. SUPPLEMENTARY INFORMATION: General Background In the Uruguay Round Agreements Act (``URAA''), Pub. L. No. 103- 465, Congress amended the countervailing duty (``CVD'') law to conform to U.S. obligations under the Agreement on Subsidies and Countervailing Measures (``SCM Agreement'') administered by the WTO. Under the SCM Agreement, WTO members that have not yet reached the status of a developed country are entitled to special treatment for purposes of countervailing measures. Specifically, imports from such Members are subject to different standards for purposes of determining whether countervailable subsidies are de minimis and whether import volumes are negligible. Under section 771(36) of the Tariff Act of 1930, as amended (``the Act''), 19 [[Page 29946]] U.S.C. 1677(36), Congress delegated to the United States Trade Representative (``USTR'') the responsibility for designating those WTO members whose imports are subject to these special standards. In addition, section 771(36)(D) requires USTR to publish a list of such designations (hereinafter referred to as ``the list''), updated as necessary, in the Federal Register. The list that is set forth and described below implements the requirements of section 771(36)(D). Explanation of the List Introduction For purposes of countervailing measures, the SCM Agreement extends special and differential treatment to developing and least-developed members in the following manner:De Minimis Thresholds: Under Article 11.9, authorities must terminate a countervailing duty (``CVD'') investigation if the amount of the subsidy is de minimis, which normally is defined as less than 1 percent ad valorem. Under Article 27.10(a), however, for a developing member the de minimis standard is 2 percent or less. In addition, under Article 27.11, the de minimis standard is 3 percent or less for (a) a least-developed member; or (b) a developing member that has eliminated its export subsidies prior to the expiry of the 8-year phase-out period provided for in Article 27.4 Negligible Import Volumes: Under Article 11.9, authorities must terminate a CVD investigation if the volume of subsidized imports from a country is negligible. Under the CVD law, imports from an individual country normally are considered negligible if they are less than 3 percent of total imports of a product into the United States. Imports are not considered negligible if the aggregate volume of imports from all countries whose individual volumes are less than 3 percent exceeds 7 percent of all such merchandise. However, under Article 27.10(b), imports from a developing or least-developed member are considered negligible if the import volume is less than 4 percent of total imports, unless the aggregate volume of imports from countries whose individual volumes are less than 4 percent exceeds 9 percent. In the URAA, Congress incorporated these standards into the CVD law. Section 703(b)(4)(B)-(D) of the Act, 19 U.S.C. 1671b(b)(4)(B)(- (D), incorporates the de minimis standards, while section 771(24)(B), 19 U.S.C. 1677(24)(B), incorporates the negligible import standards. However, in the statute itself, Congress did not identify by name those WTO members eligible for such special treatment. Instead, section 267 of the URAA added section 771(36) to the Act, which delegates to USTR the responsibility for designating those WTO members subject to special de minimis and negligible import volume standards. In addition, section 771(36) requires USTR to publish in the Federal Register, and update as necessary, a list of those members designated by USTR as eligible for special treatment under the CVD law. The effect of these designations is limited to Title VII of the Act. Specifically, section 771(36)(E) of the Act provides that the fact that a WTO member is designated in the list as developing or least- developed has no effect on how that member may be classified with respect to any other law. Data Sources In making the designations set forth in the list, USTR relied on data on per capita gross national product (GNP) and certain social development indicators contained in the World Bank's Selected World Development Indicators, and on trade data contained in the International Monetary Fund's Direction of Trade Statistics. Designation of TWO Members Eligible for 3 Percent De Minimis Standard \1\ --------------------------------------------------------------------------- \1\ The discussions in this section and in the following section address the 2 and 3 percent de minimis standards only. However, a WTO member that is eligible for either the 2 or 3 percent de minimis standard also is eligible for the special negligible import standard under section 771(24)(B) of the Act. --------------------------------------------------------------------------- Section 771(36)(B) of the Act describes those WTO members eligible for a 3 percent de minimis standard by incorporating the standards contained in Annex VII to the SCM Agreement. Annex VII provides that the following categories of members are eligible for a 3 percent de minimis standard: WTO members designated as least-developed countries by the United Nations (Annex VII(a)); and A WTO member named in Annex VII(b), provided its per capita GNP has not reached $1,000 per annum. Applying Annex VII, the following WTO members are eligible for a 3 percent de minimis standard: Table 1 Column A WTO Members Included in Column B WTO Members Included In the UN's List of ``The 48 Least Annex VII(b) with per capita GNP of Developed Countries'' \1\ less than $1,000 \2\ ------------------------------------------------------------------------ Angola Maldives Bolivia $800 Bangladesh Mali Cameroon 650 Benin Mauritania Congo 680 Burkina Faso Mozambique Cote d'Ivoire 660 Burma Niger Egypt 790 Burundi Rwanda Ghana 390 Central African Sierra Leone Guyana 590 Republic Chad Solomon Islands India 340 Djibouti Tanzania Indonesia 980 Gambia Togo Kenya 280 Guinea Uganada Nicaragua 380 Guinea-Bisseau Zambia Nigeria 260 Haiti Dem. Rep. of the Pakistan 460 Congo Lesotho Senegal 600 Madagascar Sri Lanka 700 Malawi Zimbabwe 540 ------------------------------------------------------------------------ \1\ United Nations Statistical Yearbook: Forty-First Issue, pp. 869-870 (1996), referring to General Assembly Resolution 49/133. \2\ Selected World Development Indicators (1997), <http:// www.worldbank.org/html/iecdd/wdipdf.htm [[Page 29947]] In addition to those WTO members described in Annex VII to the SCM Agreement, under section 703(b)(4)(C)(ii) of the Act, if USTR notifies the Department of Commerce that a developing member has eliminated its export subsidies on an expedited basis, that member is eligible for the 3 percent de minimis standard. Under section 771(36)(C)(i), the list must identify any such members. Currently, no developing member of the WTO meets this criterion. Therefore, no such member is included in the list on the basis of that section. Designation of WTO Members Eligible for 2 Percent De Minimis Standard Introduction Based on section 771(36)(D) of the Act, in determining which WTO members should be considered as developing and, thus, eligible for the 2 percent de minimis standard, USTR has considered appropriate economic, trade and other factors, including the level of economic development of a country (based on a review of the country's per capita GNP) and a country's share of world trade. USTR developed the list of members eligible for the 2 percent de minimis standard based primarily on per capita GNP due to the availability of reliable indices, with share of world trade and other factors used as supplemental analytical tools in determining whether a particular member should be moved from one GNP-based classification to another. Per Capita GNP In developing its interim final list, USTR relied on the World Bank's dividing line separating ``high income'' countries from those with lower per capita GNPs.\4\ This means that WTO members with per capita GNP's below $9,386 were treated as eligible for the 2 percent de minimis standard, subject to possible change based on other factors as discussed below. The advantages of this approach are that it (1) is straightforward to apply; (2) is based on a recognized GNP dividing line between developed and developing countries for purposes of the world's primary multilateral lending institution; and (3) conforms to the test for beneficiary developing country status set out in the U.S. Generalized System of Preferences statute, section 502(e) of the Trade Act of 1974. --------------------------------------------------------------------------- \2\ The most recent World Bank data set this dividing line at $9,386. --------------------------------------------------------------------------- Share of World Trade USTR considered whether any of the countries with per capita GNPs below $9,386 account for a significant share of world trade and, thus, should be treated as ineligible for the 2 percent de minimis standard. USTR considered a share of world trade of 2 percent or more to be ``significant'' for these purposes because the Administration committed in the Statement of Administration Action (``SAA'') approved by the Congress along with the URAA that Hong Kong, Korea, and Singapore would be ineligible for developing country treatment, and each of these countries accounts for a share of world trade in excess of 2 percent. There are no current WTO members with per capita GNPs close to $9,386 that account for a share of world trade above 2 percent. Accordingly, while USTR finds that share of world trade is a relevant factor to consider, at present this factor does not warrant any changes to the designations based on per capita GNP. Social Development Indicators Because the URAA and the SAA do not limit USTR to an analysis of per capita GNP and world trade shares, USTR also took into account the social development indicators of infant mortality rates, adult illiteracy rates, and life expectancy at birth, as reported in Selected World Development Indicators (1997). However, in the case of those WTO members with per capita GNPs below $9,386, these social development indicators do not provide a sufficient basis for finding such members to be ineligible for the 2 percent de minimis standard. Other Factors Section 771(36)(D) contemplates that USTR may consider additional factors. To that end, for purposes of this interim final list, USTR took into account membership in the European Union (``EU''). Membership in the EU indicates a relatively high level of economic development. In addition, under section 771(3) of the Act, the EU may be treated as a single country for purposes of the CVD law and, while not common, there have been CVD investigations against merchandise from the ``European Communities.'' Because the EU is indisputably ineligible for the 2 percent de minimis standard, it would be anomalous to treat an individual EU member as eligible for that standard. Accordingly, USTR has concluded that all EU members be designated as developed for CVD purposes. Thus, Greece is ineligible for the 2 percent de minimis standard, notwithstanding the fact that, based on the most recent World Bank data, Greece's per capita GNP is below $9,386. USTR also took into account OECD membership. The characterization of the OECD as a grouping of developed countries has been confirmed throughout its existence in a number of published OECD documents, and the OECD consistently has been viewed as, and acts itself in the capacity of, the principal organization developed economies worldwide. Thus, by joining the OECD, a country effectively has declared itself to be developed. Consistent with this self-designation, USTR has determined that an OECD member should not be eligible for the 2 percent de minimis standard. Furthermore, USTR has not included in this interim final list WTO members that in the past have been (or could have been) considered as nonmarket economy countries not subject to the CVD law. Because there are no pending CVD investigations involving any of these members, USTR has not designated such countries at this time. Immediate Effect and Request for Comments USTR has determined that there is good cause for the publication of this rule with an immediate effective date and without prior notice and comment. Publication of the rule implements treaty obligations of the United States under the Marrakesh Agreement Establishing the WTO. Delay in the effective date of the rule may adversely affect the trade relations of the United States with countries subject to designation under this section. In addition, the absence of a rule designating countries under the URAA may prevent another Federal agency from being able to timely adjudicate one or more pending CVD proceedings on its docket. Due to these factors, and because prior notice and other public procedures with respect to this action are impracticable, USTR finds good cause under 5 U.S.C. 553 to make the rule effective upon publication in the Federal Register. Because this action is in the form of an interim final rule, comments are invited on the rule. Interested persons are invited to comment on this rule by submitting such written comments by July 31, 1998. Each person submitting a comment should include his or her name and address, and give reasons for any recommendations. After the comment period closes, USTR will publish in the Federal Register a final rule on this subject, together with a discussion of comments received and any amendments made to the interim rule as a result of the comments. To simplify the processing and consideration of comments, commenters [[Page 29948]] are encouraged to submit documents in electronic form accompanied by an original and two paper copies. All documents submitted in electronic form should be on DOS formatted 3.5'' diskettes, and should be prepared in either WordPerfect format or a format that the WordPerfect program can convert and import into WordPerfect. Regulatory Flexibility Act In accordance with the Regulatory Flexibility Act (5 U.S.C. 606(b)), USTR certifies that this regulation will not have a significant impact on a substantial number of small entities. Paperwork Reduction Act This rule contains no information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). Executive Order 12866 This rule has been and reviewed by the Office of Management and Budget in accordance with Executive Order 12866, Sec. 1(b), Principles of Regulation. Executive Order 12612 This notice does not contain federalism implications described in Executive Order 12612 warranting the preparation of a Federalism Assessment. Small Business Regulatory Enforcement Fairness Act of 1996 This rule is not a major rule as defined by Sec. 804 of the Small Business Regulatory Enforcement Act of 1996. This rule will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign- based companies in domestic and export markets. List of Subjects in 15 CFR Part 2013 Countervailing duties, Foreign trade, Imports Dated: May 29, 1998. Charlene Barshefsky. United States Trade Representative. For the reasons stated, a new Part 2013 is added to 15 CFR Chapter XX to read as follows: PART 2013 DEVELOPING AND LEAST--DEVELOPING COUNTRY DESIGNATIONS UNDER THE COUNTERVAILING DUTY LAW Authority: Section 267, Pub. L. 103-465; 108 Stat. 4915 (19 U.S.C. 1677(36)) Sec. 2013.1 Designations. In accordance with section 771(36) of the Tariff Act of 1930, as amended, 19 U.S.C. 1677(36), imports from members of the World Trade organization are subject to de minimis standards and negligible import standards as set forth in the following list: De Minimis=3%; Negligible Imports=4%; Section 771(36)(B): Angola Bangladesh Benin Bolivia Burkina Faso Burma Burundi Cameroon Cent. Afr. Rep. Chad Congo Cote d'Ivoire Dem. Rep. of the Congo Djibouti Egypt Gambia Ghana Guinea Guinea-Bissau Guyana Haiti India Indonesia Kenya Lesotho Madagascar Malawi Maldives Mali Mauritania Mozambique Nicaragua Niger Nigeria Pakistan Rwanda Senegal Sierra Leone Solomon Isl. Sri Lanka Tanzania Togo Uganda Zambia Zimbabwe De Minimus=2%; Negligible Imports=4%; Section 771(36)(A): Antigua & Barbuda Argentina Bahrain Barbados Belize Botswana Brazil Chile Colombia Costa Rica Dominica Dominican Republic Ecuador El Salvador Fiji Gabon Grenada Guatemala Honduras Jamaica Malaysia Malta Mauritius Morocco Namibia Panama Papua New Guinea Paraguay Peru Philippines South Africa St. Kitts & Nevis St. Lucia St. Vincent & Grenadines Slovenia Suriname Swaziland Thailand Tunisia Trinidad & Tobago Uruguay Venezuela De Minimis=1%; Negligible Imports=3%: Australia Austria Belgium Brunei Canada Cyprus Denmark European Communities Finland France Germany Greece Hong Kong Iceland Ireland Israel Italy Japan Korea Kuwait Liechtenstein Luxembourg Macao Mexico Netherlands New Zealand Norway Portugal Qatar Singapore Spain Sweden Switzerland Turkey United Arab Emirates United Kingdom [FR Doc. 98-14737 Filed 5-29-98; 2:48 pm] BILLING CODE 3190-01-M