Floral Trade Council v. US

• Decision Date: 18 December 1997
• Docket Number: Slip Op. 97-176. Court No. 96-09-02281.
• Citation: 991 F.Supp. 655
• Parties: FLORAL TRADE COUNCIL, Plaintiff, v. The UNITED STATES, Defendant, and Government of Colombia, and Asociacion Colombiana de Exportadores de Flores, Defendant-Intervenors.
• Court: U.S. Court of International Trade

991 F.Supp. 655

FLORAL TRADE COUNCIL, Plaintiff, v. The UNITED STATES, Defendant and Government of Colombia, and Asociacion Colombiana de Exportadores de Flores, Defendant-Intervenors.

Slip Op. 97-176. Court No. 96-09-02281.

United States Court of International Trade.

December 18, 1997.

Stewart and Stewart (Terence P. Stewart, James R. Cannon, Jr., Amy S. Dwyer, and Mara M. Burr), for plaintiff.

Frank W. Hunger, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice (John K. Lapiana), for defendant.

Arnold & Porter (Michael T. Shor), for defendant-intervenors.

OPINION

RESTANI, Judge.

Floral Trade Council ("FTC") appeals from the final results of the consolidated calendar year 1994 administrative reviews of two suspended countervailing duty investigations covering (1) roses and other cut flowers from Colombia, and (2) miniature carnations from Colombia. A single Federal Register notice was published by the United States Department of Commerce, International Trade Administration ("ITA"). See Roses and Other Cut Flowers from Colombia; Miniature Carnations from Colombia, 61 Fed.Reg. 45,941, 45,941 (Dep't Commerce 1996) (final results of admin. rev.) hereinafter "Final Results". In the Final Results, ITA terminated both suspended investigations after concluding (i) that no countervailable benefits had been provided for a period of at least five years, and (ii) that it is likely that Colombian producers and exporters of flowers will not receive any net subsidy in the future. Id. ITA defends the Final Results. The Government of Colombia ("GOC") and Asociacion Colombiana de Exportadores de Flores ("Asocolflores"), an organization of Colombian flowers exporters and importers, and various of its members, have intervened in support of the Final Results.

While all past agency determinations related to this case are governed by the prior statute, the administrative review covering the period of review ("POR") from January 1, 1994 to December 31, 1994 was initiated after January 1, 1995 and is therefore governed by the statute as amended by the Uruguay Round Agreements Act.¹ Under the current statute, ITA is authorized to suspend a countervailing duty investigation if:

exporters who account for substantially all of the imports of the subject merchandise agree —

(1) to eliminate the countervailable subsidy completely or to offset completely the amount of the net countervailable subsidy, with respect to that merchandise exported directly or indirectly to the United States, within 6 months after the date on which the investigation is suspended....

19 U.S.C. § 1671c(b)(1) (1994).

ITA's regulations also provide for the termination of suspended investigations under certain circumstances. Specifically, ITA's regulations provide that it may terminate a suspended investigation if it concludes that:

(i) All producers and exporters covered at the time of revocation by the order or the suspension agreement have not applied for or received any net subsidy on the merchandise for a period of at least five consecutive years; and

(ii) It is not likely that those persons will in the future apply for or receive any net subsidy on the merchandise from those programs the Secretary has found countervailable in any proceeding involving the affected country or from other countervailable programs.

19 C.F.R. § 355.25(a)(2)(i)-(ii) (1995).

FACTS

A. Background

On August 6, 1982, U.S. producers of fresh cut flowers other than miniature carnations filed a petition seeking a countervailing duty investigation of Colombian producers and exporters of fresh cut flowers other than miniature carnations. See Roses and Other Cut Flowers from Colombia, 47 Fed.Reg. 50,314, 50,314 (Dep't Commerce 1982) (prelim.determ.). In a preliminary determination issued on November 5, 1982, ITA found that Colombian producers received countervailing benefits under one program — the Tax Reimbursement Certificate Program, an export reimbursement program, then known as the CAT program. Id. at 50,315.

On January 18, 1983, ITA entered into a suspension agreement with individual Colombian producers and exporters of roses and other fresh cut flowers, excluding miniature carnations, which producers and exporters comprised over 85% of total exports of subject flowers to the United States. Roses and Other Cut Flowers from Colombia, 48 Fed. Reg. 2158, 2161 (Dep't Commerce 1983) (suspension of investigation) hereinafter "Roses Agreement". The producers and exporters agreed not to "apply for or receive any benefits that the Department has determined or determines to be countervailable under the Tax Reimbursement Certificate Program (CAT) with respect to exports of the subject product entering the United States." Id. (¶ B.a). The exporters also agreed not to "apply for or receive benefits under any other program subsequently determined by the Department in this or any subsequent proceeding concerning other merchandise from Colombia to constitute bounties or grants under the Act." Id. (¶ B.b).

Following a later countervailing duty investigation concerning certain textile mill products and apparel from Colombia, in which ITA found other Colombian government programs to constitute bounties or grants, ITA and Colombian exporters, on December 15, 1986, entered into a revised suspension agreement. Roses and Other Cut Flowers from Colombia, 51 Fed.Reg. 44,930, 44,932 (Dep't Commerce 1986) (final results of admin. rev. and revised suspension agmt.) hereinafter "Revised Roses Agreement".

The revised agreement provides in pertinent part the following. First, the signatories reaffirmed their agreement not to apply for or receive benefits under the CAT program, known now as the CERT program. Id. (¶ II.a).

Second, the producers agreed not to apply for or receive any short-term or long-term export loans provided by the Colombian Government Export Promotion Fund ("PROEXPO") "other than those offered on non-preferential terms at or above the most recent long-term short-term benchmark interest rate determined by the Department in this proceeding." Id. at 44,933 (¶¶ II.c & b). Unlike the CAT/CERT program and other programs included in the revised agreement which the signatories agreed to renounce entirely, the signatories did not agree to refuse Colombian government loans. Instead, the signatories agreed to have ITA periodically set benchmark interest rates, and to ensure that PROEXPO loans, when issued, were at rates at or above the benchmark rates then in effect.² Id. The initial benchmark interest rates were set at 22.5% for short-term loans and 21% for long-term loans. Revised Roses Agreement, 51 Fed. Reg. at 44,932. These rates were based not on commercial bank interest rates, but rather, constituted the average interest rates then available under non-targeted governmental financing programs for the Colombian agricultural sector as a whole. See id. at 44,931-32.

On June 17, 1986, at the request of the FTC, ITA initiated an independent countervailing duty investigation into miniature carnations from Colombia. Miniature Carnations from Colombia, 51 Fed.Reg. 21,960, 21,960 (Dep't Commerce 1986) (initiation). ITA issued a preliminary determination on October 27, 1986, finding subsidies in the amount of 1.09% ad valorem under the PROEXPO loan program and one other program. See Miniature Carnations from Colombia, 51 Fed.Reg. 37,934, 37,934 (Dep't Commerce 1986) (prel.determ.). No subsidies were found under the CERT program, as the GOC had set the rebate rate applicable to all flower exports to the United States to zero on October 29, 1985. Id. at 37,935.

On January 13, 1987, ITA entered into a suspension agreement with Colombian producers and exporters of miniature carnations from Colombia. See Miniature Carnations from Colombia, 52 Fed.Reg. 1353, 1354 (Dep't Commerce 1987) (suspension of invest.) hereinafter "Carnations Agreement". The terms of the Carnations Agreement were virtually identical to those of the Revised Roses Agreement. The only material difference relevant here is that the Carnations Agreement contains a cross-reference to the Revised Roses Agreement with respect to benchmark interest rates under the PROEXPO loan program. Id. at 1355. Specifically, the Carnations Agreement provides that signatories will not receive PROEXPO loans "other than those offered at non-preferential terms and at or above the most recent short-term long-term benchmark interest rate determined by the Department in this proceeding or the countervailing duty proceeding on roses and other cut flowers from Colombia." Id. (¶¶ II.B & C).

Pursuant to its regulations, ITA conducted annual reviews of the suspension agreements whenever requested to do so by an interested party and consistently found that the signatories complied with all obligations under both agreements.³ Furthermore, the only program covered by the suspension agreements that was not abolished for flower growers was the PROEXPO loan program.⁴ See, e.g., 1988-90 Carnations Review, 59 Fed.Reg. at 10,791. The GOC took various steps to further compliance.

For example, in December 1987, PROEXPO modified its loan program. Instead of providing loans at fixed rates of interest, PROEXPO begin issuing only variable rate loans tied to the market rate for 90-day certificates of deposit — the "DTF rate"⁵ — on the date a loan was issued. See Roses and Other Cut Flowers from Colombia, 54 Fed. Reg. 51,052, 51,052-03 (Dep't Commerce 1989) (prel.results); Miniature Carnations from Colombia, 54 Fed.Reg. 51,050, 51,050 (Dep't Commerce 1989) (prel.results).

In the administrative reviews covering 1987, FTC made no request that ITA modify its benchmark interest rates. See 1987 Carnations Review, 55 Fed.Reg. at 5042; 1986-87 Roses Review, 55 Fed.Reg. at 5043. During 1988, the benchmarks thus remained at 21% and 22.5% for long-term and short-term loans, respectively. The actual rates for PROEXPO loans to...