PPG Industries, Inc. v. US, Court No. 84-3-00411.

• Decision Date: 15 May 1987
• Docket Number: Court No. 84-3-00411.
• Citation: 662 F. Supp. 258
• Parties: PPG INDUSTRIES, INC., Plaintiff, v. UNITED STATES, Defendant, Vitro Flotado, S.A. and Vidrio Plano de Mexico, S.A., Defendants-Intervenors.
• Court: U.S. Court of International Trade

662 F. Supp. 258

PPG INDUSTRIES, INC., Plaintiff, v. UNITED STATES, Defendant Vitro Flotado, S.A. and Vidrio Plano de Mexico, S.A., Defendants-Intervenors.

Court No. 84-3-00411.

United States Court of International Trade.

May 15, 1987.

COPYRIGHT MATERIAL OMITTED

Stewart & Stewart (Eugene L. Stewart, Washington, D.C., on the motion), for plaintiff.

Richard K. Willard, Acting Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch; (A. David Lafer, Washington, D.C., on the motion), for defendant.

Brownstein, Zeidman & Schomer (Irwin P. Altschuler and David R. Amerine, Washington, D.C., on the motion), for defendants-intervenors.

MEMORANDUM OPINION

CARMAN, Judge:

Plaintiff moves pursuant to Rule 56.1 of the Rules of this Court for judgment upon the agency record challenging the suspension of a countervailing duty investigation of unprocessed float glass (float glass) from Mexico. Unprocessed Float Glass From Mexico; Suspension of Countervailing Duty Investigation, 49 Fed.Reg. 7264 (Feb. 28, 1984). Plaintiff also challenges certain determinations made by the International Trade Administration (ITA) pursuant to the final affirmative countervailing duty determination. Unprocessed Float Glass From Mexico; Countervailing Duty Determination, 49 Fed.Reg. 23097 (June 4, 1984).

For the reasons stated below, this Court holds the ITA's determination is supported by substantial evidence on the record and is otherwise in accordance with law.

FACTS

PPG Industries, Inc. (PPG), a domestic manufacturer of float glass petitioned the ITA on behalf of the United States float glass industry. PPG alleged that certain benefits constituting bounties or grants within the meaning of the Tariff Act of 1930 (Tariff Act) § 303, 19 U.S.C. § 1303 were being provided directly or indirectly to Mexican manufacturers, producers, or exporters of float glass exported to the United States.¹ Since Mexico was not "a country under the Agreement" within the meaning of § 1671(b),² § 1303 applied to the investigation. Because the product was dutiable, the United States International Trade Commission (ITC) was not required to determine whether imports of the product caused or threatened to cause material injury to a United States industry.

Upon finding sufficient grounds, the ITA initiated a countervailing duty investigation. It was preliminarily determined by the ITA that certain benefits which constituted bounties or grants within the meaning of the Tariff Act were being provided to manufacturers, producers, or exporters of float glass from Mexico. The preliminary determination found a net bounty or grant of 1.63% ad valorem. The Mexican program that was determined by the ITA to confer countervailable benefits was the Fund for the Promotion of Exports of Mexican Manufactured Products (FOMEX). The ITA directed the U.S. Customs Service to suspend liquidation and require a cash deposit or the posting of a bond on the entries in an amount equal to the estimated net bounties or grants. Unprocessed Float Glass From Mexico; Preliminary Affirmative Countervailing Duty Determination, 48 Fed.Reg. 56095 (Dec. 19, 1983).

In a notice containing the preliminary determination, the ITA terminated and rescinded the initiation of the investigation of preferential prices on natural gas used by the domestic industries and Certificates of Fiscal Promotion (CEPROFIs) granted for wage increases and for investment in new Mexican-made capital goods because the ITA had determined in prior investigations that these programs were not countervailable. The ITA also noted that no further information causing the ITA to review this decision was received.

On February 28, 1984, the ITA suspended the countervailing duty investigation. The basis for the suspension was an agreement between the ITA and the defendant-intervenors, Vitro Flotado, S.A. (Vitro or Vitro Flotado) and Vidrio Plano de Mexico, S.A. (Vidrio or Vidrio Plano), the only known manufacturers and exporters of float glass to the United States from Mexico. The intervenors renounced completely all benefits provided by the government of Mexico which the ITA found constituted bounties or grants on float glass. 49 Fed. Reg. 7264.

Although the ITA and defendant-intervenors had previously entered into a suspension agreement, the ITA had continued the investigation pursuant to 19 U.S.C. § 1671c(g) at the behest of the plaintiff. On June 4, 1984, the ITA published a final countervailing duty determination for float glass from Mexico. It determined certain benefits which constituted bounties or grants within the meaning of § 1303 were being provided to manufacturers, producers, or exporters in Mexico of float glass. The net bounty or grant was found to be 2.54% ad valorem. The ITA indicated the suspension agreement would remain in force and no countervailing duty order would issue unless there was a violation of the agreement or the ITA determined it no longer met the requirements of sections 704(b) and (d) as provided in section 704(i) of the Tariff Act. See 49 Fed.Reg. 23097.

In the final affirmative duty determination the ITA found that the Fund for the Promotion of Exports of Mexican Manufactured Products (FOMEX) conferred an ad valorem benefit of 1.52%. FOMEX is a trust established by the government of Mexico to promote the manufacture and sale of exported products. The ITA also determined that CEPROFIs conferred an ad valorem benefit of 1.02%. CEPROFIs were tax credits used to promote National Development Plan (NDP) goals which include increased employment, encouragement of regional decentralization, and industrial development, in particular, of small and medium sized firms.

The ITA also determined that the Trust Fund for Coverage of Risks (FICORCA) did not confer a countervailable bounty or grant.³ The ITA also determined that the program for the Certificado de Devolucion de Impuesto (CEDI) was suspended. The agency indicated that if the program were subsequently reactivated, the Department would review its applicability in an administrative review under section 751 of the Tariff Act.

BACKGROUND

This case concerns the ITA's interpretation of § 1303 in the context of certain alleged countervailable benefits provided by the Mexican government to its float glass industry. Section 1303 provides in pertinent part:

(a)(1) Except in the case of an article or merchandise which is the product of a country under the Agreement (within the meaning of section 1671(b) of this title), whenever any country, dependency, colony, province, or other political subdivision of government, person, partnership, association, cartel, or corporation, shall pay or bestow, directly or indirectly, any bounty or grant upon the manufacture or production or export of any article or merchandise manufactured or produced in such country, dependency, colony, province, or other political subdivision of government, then upon the importation of such article or merchandise into the United States, whether the same shall be imported directly from the country of production or otherwise, and whether such article or merchandise is imported in the same condition as when exported from the country of production or has been changed in condition by remanufacture or otherwise, there shall be levied and paid, in all such cases, in addition to any duties otherwise imposed, a duty equal to the net amount of such bounty or grant, however the same be paid or bestowed.

19 U.S.C. § 1303. By its terms, section 1303 applies only in the case of a product from a country which is not a "country under the Agreement" within the meaning of 19 U.S.C. § 1671(b). In general, § 1303 applies to a country that is not obliged to comply with the Agreement on Subsidies and Countervailing Measures. Since Mexico was not a "country under the Agreement" at the time of the investigation, section 1303 is applicable in this review.

Section 1671 provides the basic framework for levying countervailing duties on merchandise when there is a "country under the Agreement:"

(a) General rule. — If —

(1) the administering authority determines that —

(A) a country under the Agreement, or

(B) a person who is a citizen or national of such a country, or a corporation, association, or other organization organized in such a country,

is providing, directly or indirectly, a subsidy with respect to the manufacture, production, or exportation of a class or kind of merchandise imported, or sold (or likely to be sold) for importation, into the United States, and

(2) the Commission determines that —

(A) an industry in the United States —

(i) is materially injured, or

(ii) is threatened with material injury, or

(B) the establishment of an industry in the United States is materially retarded,

by reason of imports of that merchandise or by reason of sales (or the likelihood of sales) of that merchandise for importation,

then there shall be imposed upon such merchandise a countervailing duty, in addition to any other duty imposed, equal to the amount of the net subsidy. For purposes of this subsection and section 1675d(b)(1) of this title, a reference to the sale of merchandise includes the entering into of any leasing arrangement regarding the merchandise that is equivalent to the sale of the merchandise.

19 U.S.C. § 1671(a). While the term "bounty or grant" as used in § 1303 has not been statutorily defined, Congress ascribed the following meaning to the term "Subsidy" in § 1671:

(5) Subsidy. — The term "subsidy" has the same meaning as the term "bounty or grant" as that term is used in section 1303 of this title, and includes, but is not limited to, the following:

(A) Any export subsidy described in Annex A to the Agreement (relating to illustrative list of export subsidies).

(B) The following domestic subsidies, if provided or required by government action to a specific enterprise or industry, or group of enterprises or industries, whether publicly or privately owned, and whether paid or

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