[Federal Register Volume 60, Number 194 (Friday, October 6, 1995)]
[Notices]
[Pages 52374-52376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24930]
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DEPARTMENT OF COMMERCE
[C-549-802]
Ball Bearings and Parts Thereof From Thailand; Final Results of
Countervailing Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Countervailing Duty Administrative
Review.
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SUMMARY: On August 16, 1995, the Department of Commerce (the
Department) published in the Federal Register its preliminary results
of administrative review of the countervailing duty order on Ball
Bearings and Parts Thereof from Thailand for the period January 1, 1993
through December 31, 1993. We have completed this review and determine
the net subsidy to be 4.85 percent ad valorem for all companies. We
will instruct the U.S. Customs Service to assess countervailing duties
as indicated above.
EFFECTIVE DATE: October 6, 1995.
FOR FURTHER INFORMATION CONTACT: Robert Copyak or Kelly Parkhill,
Office of Countervailing Compliance, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230;
telephone: (202) 482-2786.
SUPPLEMENTARY INFORMATION:
Background
On August 16, 1995, the Department published in the Federal
Register (60 FR 42532) the preliminary results of its administrative
review of the countervailing duty order on Ball Bearings and Parts
Thereof from Thailand. The Department has now completed this
administrative review in accordance with section 751 of the Tariff Act
of 1930, as amended (the Act).
We invited interested parties to comment on the preliminary
results. On September 15, 1995, a case brief was submitted by Pelmec
Thai Ltd., NMB Thai Ltd., and NMB Hi-Tech Ltd. (three related
companies, hereinafter the Minebea Group), producers/exporters of the
subject merchandise during the review period (respondents). On
September 15, 1995, a case brief was submitted by the Torrington
Company (petitioner). On September 22, 1995, a rebuttal brief was
submitted by respondents. The review covers the period January 1, 1993
through December 31, 1993. The review involves the Minebea Group of
companies, which accounts for virtually all exports of subject
merchandise from Thailand, and nine programs.
Applicable Statute and Regulations
The Department is conducting this administrative review in
accordance with section 751(a) of the Tariff Act of 1930, as amended
(the Act). Unless otherwise indicated, all citations to the statute and
to the Department's regulations are in reference to the provisions as
they existed on December 31, 1994. However, references to the
Department's Countervailing Duties; Notice of Proposed Rulemaking and
Request for Public Comments, 54 FR 23366 (May 31, 1989) (Proposed
Regulations), are provided solely for further explanation of the
Department's countervailing duty practice. Although the Department has
withdrawn the particular rulemaking proceeding pursuant to which the
Proposed Regulations were issued, the subject matter of these
regulations is being considered in connection with an ongoing
rulemaking proceeding which, among other things, is intended to conform
the Department's regulations to the Uruguay Round Agreements Act. See
60 FR 80 (Jan. 3, 1995).
Scope of the Review
Imports covered by this review are ball bearings and parts thereof.
Such merchandise is described in detail in Appendix A to this notice.
The Harmonized Tariff Schedule (HTS) item numbers listed in Appendix A
are provided for convenience and Customs purposes. The written
description remains dispositive.
Calculation Methodology for Assessment and Cash Deposit Purposes
In the first administrative review, respondents claimed that the
F.O.B. value of the subject merchandise entering the United States is
greater than the F.O.B. price charged by the companies in Thailand (57
FR 26646; June 15, 1992). They explained that this discrepancy is due
to a mark-up charged by the parent company, located in a third country,
through which the merchandise is invoiced. However, the subject
merchandise is shipped directly from Thailand to the United States and
is not transshipped, combined with other merchandise, or repackaged
with other merchandise. In other words, for each shipment of subject
merchandise, there are two invoices and two corresponding F.O.B. export
prices: (1) the F.O.B. export price at which the subject merchandise
leaves Thailand, and on which subsidies from the Royal Thai Government
(RTG) are earned by the companies, and upon which the
[[Page 52375]]
subsidy rate is calculated; and (2) the F.O.B. export price which
includes the parent company mark-up, and which is listed on the invoice
accompanying the subject merchandise as it enters the United States,
and upon which the cash deposits are collected and the countervailing
duty is assessed. Respondents argued that the calculated ad valorem
rate should be adjusted by the ratio of the export value from Thailand
to the export value charged by the parent company to the U.S. customer
so that the amount of countervailing duties collected would reflect the
amount of subsidies bestowed. The Department agreed and made this
adjustment in the first and second administrative reviews (57 FR 26646;
June 15, 1992; and 58 FR 36392; July 7, 1993).
In prior reviews, we verified, on a transaction-specific basis, the
direct correlation between the invoice which reflects the F.O.B. price
on which the subsidies are earned and the invoice which reflects the
marked-up price that accompanies each shipment as it enters the United
States. Since the mark-up is not part of the export value upon which
the respondents earn bounties or grants, the Department has followed
the methodology adopted in the first and second administrative reviews,
and calculated the ad valorem subsidy rate as a percentage of the
original export value from Thailand, multiplied by the adjustment
ratio--the original export value from Thailand divided by the marked-up
value of the same goods entering the United States.
We did not calculate a separate rate for each company because NMB
Thai, Pelmec, and NMB Hi-Tech are wholly owned by one parent company,
and are therefore related. As a result of this relationship, we
continue to consider, as we did in the investigation and previous
reviews, the three companies as one corporate entity in our
calculations. We calculated the bounty or grant by first totaling the
benefits received by the three companies for each program used.
Dividing these sums by total Thai export value for the three companies,
we calculated the unadjusted bounty or grant for each program used. As
described above, we adjusted these rates by multiplying them by the
ratio of the original export price from Thailand to the marked-up price
of the same goods entering the United States. Finally, we summed the
adjusted bounty or grant for each program, to arrive at the total
country-wide bounty or grant.
Analysis of Programs
Based upon our analysis of responses to our questionnaire and
written comments from the interested parties, we determine the
following:
I. Programs Conferring Subsidies
In the preliminary results, we found the following programs to be
countervailable:
A. Investment Promotion Act (IPA) of 1977--Sections 31, 28, and 36(1)--
4.85 percent ad valorem
B. Electricity Discounts for Exporters--less than .005 percent ad
valorem
Our analysis of the comments submitted by the interested parties,
summarized below, has led us to change the result in our preliminary
results from 1.33 to 4.85 percent ad valorem.
II. Programs Found Not To Be Used
In the preliminary results, we found that the Minebea Group did not
apply for or receive benefits under the following programs during the
period of review:
A. Tax Certificates for Exporters
B. Export Packing Credits
C. Rediscount of Industrial Bills
D. Export Processing Zones
E. IPA--Sections 33 and 36(4)
F. Reduced Business Taxes for Producers of Intermediate Goods for
Export Industries
G. International Trade Promotion Fund
Our analysis of the comments submitted by the interested parties,
summarized below, has not led us to change our findings in the
preliminary results.
Analysis of Comments
Comment 1: Respondents argue that the Department should adjust the
calculations of the net subsidy and the deposit rate to account for the
RTG's liftings of export requirements for the Board of Investment
Certificates of Promotion (BOI licenses) issued under the IPA program
to the Minebea Group of companies NMB Thai and NMB Hi-Tech, and, with
one exception, the BOI licenses issued to Minebea Group company Pelmec
Thai. They request that the Department deduct the amount of the
benefits related to these liftings from the calculation of the net
subsidy for the review period and consider for cash deposit purposes
only the proportion of the production related to the one BOI license
issued to Pelmec Thai for which the RTG did not lift the export
requirements.
Petitioners argue that, since the amendments made in the BOI
licenses did not eliminate all export requirements or constitute a
program-wide change, the licensing benefits of the IPA program remain
countervailable. They also point out that the IPA program remains
countervailable because of regional eligibility requirements and export
requirements related to foreign-owned companies such as the Minebea
Group.
Department's Position: Under the IPA program, benefits are
transmitted to IPA recipients through the recipients' BOI licenses. BOI
licenses pertain to a promoted activity and list the IPA benefits for
which the recipient is eligible, and the various conditions that must
be met in order to receive those benefits. Although the BOI has lifted
some of the export conditions for several of the Minebea Group's BOI
licenses, IPA licensing benefits were nonetheless tied to export
performance.
Because these liftings do not constitute a program-wide change, the
IPA program remains countervailable. The Minebea Group has several BOI
licenses pertaining to ball bearings. In January 1990, producers of
electronic parts (BOI category 4.6) became eligible to apply for the
lifting of export requirements for their BOI licenses. Since ball
bearings used in electronic products (electronic ball bearings) are
classified under BOI Category 4.6, the Minebea Group applied for the
lifting of export requirements for its BOI licenses pertaining to
electronic ball bearings. The BOI awarded such liftings for several of
the Minebea Group's BOI licenses. However, the lifting of the export
requirements for certain IPA benefits applicable to certain types of
ball bearings does not constitute a program-wide change with respect to
the class or kind of merchandise. Section 355.50 of the Proposed
Regulations states that the term ``program-wide change'' means a change
that is (1) not limited to an individual firm or firms and (2)
effectuated by an official act, such as the enactment of a statute,
regulation, or decree, or contained in the schedule of an existing
statute, regulation, or decree. Since the changes in export
requirements by the BOI were only for companies that had licenses for
BOI Category 4.6 products and they had to be requested and approved on
a license-by-license basis rather than applicable across the board, the
BOI's actions do not constitute a program-wide change.
Moreover, the IPA licensing benefits received by the Minebea Group
were tied to export performance. The IPA clearly states that the import
duty exemption benefits under Section 36(1) (which is contained in
licenses held by all three of the Minebea Group of companies) are
conditional upon export of the final product, and these conditions were
not lifted. With regard to benefits received under Section 31
[[Page 52376]]
(which exempts companies from payment of corporate income tax on
profits derived from promoted activities), export requirements were in
place during the tax year covered by the tax returns filed during the
POR. That the BOI retroactively lifted the export requirements of
certain licenses does not change the fact that the Minebea Group of
companies had to export the subject merchandises in order to claim
benefits under Section 31. A similar argument holds for benefits
received under Section 28.1 During the review period, the Minebea
Group were able to import fixed assets with licenses which contained
export requirements as a condition of receiving Section 28 benefits.
\1\ Prior to the review period, IPA Section 28 allowed companies
to import fixed assets free of import duties, the business tax and
the local tax. However, effective January 1, 1992, the RTG
eliminated both the business tax and the local tax and instituted a
value added tax (VAT) system. In the preliminary results of this
administrative review, the Department determined that the exemption
of the VAT on imports of fixed assets under Section 21(4) of the VAT
Act does not constitute a countervailable benefit to the companies
specified in Section 21(4). See Ball Bearings and Parts Thereof from
Thailand (60 FR 42532). Our analysis of the comments submitted by
the interested parties, summarized below, has not led us to change
this finding or our finding that the exemptions of import duties on
fixed assets under Section 28 continue to provide countervailable
benefits. However, as stated in the preliminary results, the
Department will continue to examine provisions of the VAT Act,
including Section 21(4), in future administrative reviews to
ascertain that no countervailable benefits are being provided to
manufacturers of subject merchandise.
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Not all of the BOI liftings were based upon BOI Category status.
The export requirements for one of the Minebea Group's BOI licenses
were lifted based on the fact that one of the Minebea Group's
subsidiaries had a long-standing export history. Thus, the continued
receipt of the benefits is contingent upon the fact that the company
had an export history. Had the company been unable to demonstrate a
history of export performance, there is no evidence that export
requirements could have been lifted under this decree. See Exhibit 23
of the public version of respondents' December 12, 1994 questionnaire
response.
As explained in our preliminary results, effective April 1, 1993,
all types of ball bearings and parts thereof were reclassified under
industrial category 4.8, ``Manufacture of fabricated metal products,
including metal parts for automotive and electronic products.'' In
addition, new policies and criteria issued by the BOI stipulate that
tax and duty privileges for promoted projects approved after April 1,
1993 are contingent upon location of the promoted company in one of
three types of investment promotion zones. Therefore, promoted projects
approved after April 1, 1993 for products classified under category 4.8
must be located in industrial promotion zones 2 or 3. In addition,
export performance is a criterion for approval of promoted projects
involving companies which are wholly or significantly foreign-owned.
In conclusion, IPA licences conferred countervailable benefits
during the review period, and there has not been a program-wide change
which would warrant an adjustment of the cash deposit rate. The RTG's
liftings of certain export requirements for certain BOI licenses held
by the Minebea Group do not constitute the outright elimination of
export conditions with respect to the subject merchandise. Rather, IPA
benefits continue to be contingent upon export performance with respect
to ball bearings, the class or kind of merchandise subject to the
countervailing duty order. As discussed above, export requirements were
in place as a specific condition with respect to Section 36(1)
benefits, and export performance criteria continued to exist with
respect to the class or kind of merchandise for both Section 31 and
Section 28 benefits.
Comment 2: Petitioner alleges that, in the preliminary results,
there was a clerical error in the calculation of the mark-up
adjustment.
Department's Position: We agree. We used an incorrect figure in the
calculation. Using the correct mark-up ratio, we calculate the net
subsidy rate to be 4.85 percent ad valorem.
Final Results of Review
For the period January 1, 1992, through December 31, 1992, we
determine the net subsidy to be 4.85 percent ad valorem for all
companies.
The Department will instruct the U.S. Customs Service to assess the
following countervailing duties:
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Manufacturer/exporter Rate
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All Companies.................................................. 4.85
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The Department will instruct the U.S. Customs Service to collect a
cash deposit of estimated countervailing duties of 4.85 percent ad
valorem of the f.o.b. invoice price on all shipments of the subject
merchandise from all companies.
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 C.F.R. 355.34(d). Timely written notification
of return/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)) and 19 CFR 355.22.
Dated: September 29, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
Appendix A
Scope of The Review
The products covered by this review, ball bearings, mounted or
unmounted, and parts thereof, are described below.
Ball Bearings, Mounted or Unmounted, and Parts Thereof
These products include all antifriction bearings which employ
balls as the rolling element. During the review period, imports of
these products were classifiable under the following categories:
antifriction balls; ball bearings with integral shafts; ball
bearings (including radial ball bearings) and parts thereof; ball
bearing type pillow blocks and parts thereof; ball bearing type
flange, take-up, cartridge, and hanger units, and parts thereof; and
other bearings (except tapered roller bearings) and parts thereof.
Wheel hub units which employ balls as the rolling element are
subject to the review. Finished but unground or semiground balls are
not included in the scope of this review. Imports of these products
are currently classifiable under the following HTS item numbers:
8482.10.10, 8482.10.50, 8482.80.00, 8482.91.00, 8482.99.10,
8482.99.70, 8483.20.40, 8483.20.80, 8483.30.40, 8483.30.80,
8483.90.20, 8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50,
8708.99.50.
This review covers all of the subject bearings and parts thereof
outlined above with certain limitations. With regard to finished
parts (inner race, outer race, cage, rollers, balls, seals, shields,
etc.), all such parts are included in the scope of this review. For
unfinished parts (inner race, outer race, rollers, balls, etc.),
such parts are included if (1) they have been heat treated, or (2)
heat treatment is not required to be performed on the part. Thus,
the only unfinished parts that are not covered by this review are
those where the part will be subject to heat treatment after
importation.
[FR Doc. 95-24930 Filed 10-5-95; 8:45 am]
BILLING CODE 3510-DS-P
