[Federal Register Volume 64, Number 150 (Thursday, August 5, 1999)]
[Notices]
[Pages 42672-42675]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20224]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-535-001]
Final Results of Expedited Sunset Review: Cotton Shop Towels From
Pakistan
AGENCY: Import Administration, International Trade Administration, U.S.
Department of Commerce.
ACTION: Notice of final results of expedited sunset review: cotton shop
towels from Pakistan.
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SUMMARY: On January 4, 1999, the Department of Commerce (``the
Department'') initiated a sunset review of the countervailing duty
order on cotton shop towels from Pakistan pursuant to section 751(c) of
the Tariff Act of 1930, as amended (``the Act''). On the basis of a
notice of intent to participate and an adequate substantive response
filed on behalf of the domestic party, and inadequate response (in this
case, no response) from respondent interested parties, the Department
determined to conduct an expedited review. As a result of this review,
the Department finds that revocation of the countervailing duty order
would be likely to lead to continuation or recurrence of a
countervailing subsidy. The net countervailable subsidy and the nature
of the subsidy are identified in the Final Results of Review section to
this notice.
For Further Information Contact: Martha V. Douthit or Melissa G.
Skinner, Office of Policy for Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th St. &
Constitution Ave., NW., Washington, DC 20230; telephone (202) 482-3207
or (202) 482-1560, respectively.
Effective Date: August 5, 1999.
Statute and Regulations
This review was conducted pursuant to sections 751(c) and 752 of
the Act. The Department's procedures for the conduct of sunset reviews
are set forth in Procedures for Conducting Five-year (``Sunset'')
Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516
(March 20, 1998) (``Sunset Regulations''). Guidance on methodological
or analytical issues
[[Page 42673]]
relevant to the Department's conduct of sunset reviews is set forth in
the Department's Policy Bulletin 98:3--Policies Regarding the Conduct
of Five-year (``Sunset'') Reviews of Antidumping and Countervailing
Duty Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset
Policy Bulletin'').
Scope
The subject merchandise is cotton shop towels from Pakistan. This
merchandise is classifiable under item number 6307.10.20 of the
Harmonized Tariff Schedule (HTS). The HTS item number is provided for
convenience and customs purposes. The written description remains
dispositive.
History of the Order
On January 11, 1984, the Department issued a final affirmative
countervailing duty determination on cotton shop towels from
Pakistan.1 The Department found a country-wide estimated net
subsidy rate of 12.67 percent ad valorem based on seven programs: 7.5
percent under the compensatory rebate program, 3.8 percent under the
excise tax program, 0.11 percent under the sales tax rebate program,
0.37 percent under the customs duty rebate program, 0.013 percent under
the income tax reduction program, 0.08 percent under the export
financing program, and 0.8 percent under the export credit insurance
program. Receipt of benefits under each of these programs was
contingent upon exports. The Department also found that the import duty
rebate program was not used.2
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\1\ Cotton Shop Towels From Pakistan; Final Affirmative
Countervailing Duty Determination, 49 FR 1408, (January 11, 1984).
\2\ Id.
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On March 9, 1984, the Department issued a countervailing duty order
which confirmed the subsidy rates found in the original
investigation.3 Since the issuance of the order, the
Department has conducted eight administrative reviews covering the
eight programs investigated in the original investigation.4
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\3\ Cotton Shop Towels From Pakistan, Countervailing Duty Order,
49 FR 8974 (March 9, 1984).
\4\ Cotton Shop Towels From Pakistan; Final Results of
Administrative Review of Countervailing Duty Order, 51 FR 5219
(February 12, 1986); Cotton Shop Towels From Pakistan; Final Results
of Countervailing Duty Administrative Review, 54 FR 14671 (April 12,
1989); Cotton Shop Towels From Pakistan; Final Results of
Countervailing Duty Administrative Review, 56 FR 28740 (June 24,
1991); Cotton Shop Towels From Pakistan; Final Results of
Countervailing Duty Administrative Review, 57 FR 12475 (April 10,
1992); Cotton Shop Towels From Pakistan; Final Results of
Countervailing Duty Administrative Review, 58 FR 48038, (September
14, 1993); and Cotton Shop Towels From Pakistan; Final Results of
Countervailing Duty Administrative Reviews, 62 FR 24082 (May 2,
1997).
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During the administrative reviews covering April 1, 1984 through
December 31, 1984 and January through December 1985, the Department
determined that the compensatory rebate scheme had been repealed. In
addition, during these same reviews, the Department found that Pakistan
producers/exporters received countervailable benefits under the import
duty rebate program at a rate of zero percent in 1984 and 0.000028
percent in 1985.
In the final results of the administrative review of the period
January 1, 1993 through December 31, 1993, the Department, for the
first time, issued company-specific rates in addition to a country-wide
rate. Net subsidies of 11.50 percent and 11.54 percent were determined
for Eastern Textiles, Ltd., and Creation (Pvt.) Ltd., respectively.
This review covers all producers and exporters of cotton shop
towels from Pakistan.
Background
On January 4, 1999, the Department initiated a sunset review of the
countervailing duty order on cotton shop towels from Pakistan pursuant
to section 751(c) of the Act. On January 19, 1999, the Department
received a Notice of Intent to Participate from Milliken & Company
(``Milliken''), within the deadline specified in Sec. 351.218(d)(1)(i)
of the Sunset Regulations. Milliken claimed interested party status
under Sec. 771(9)(C) of the Act, as a domestic producer of cotton shop
towels. Milliken asserted that it was the petitioner in the original
countervailing duty investigation and has participated as a domestic
interested party since that time. On February 3, 1999, the Department
received Milliken's substantive response to the Department's notice of
initiation, within the 30-day deadline specified in the Sunset
Regulations in Sec. 351.218(d)(3)(i). We did not receive a response
from any respondent interested party, including the Government of
Pakistan. As a result, pursuant to section 751(c)(3)(B) of the Act and
our regulations (19 CFR 351.218(e)(1)(ii)(C)(2)), we determined to
conduct an expedited review.
The Department determined that the sunset review of the
countervailing duty order on cotton shop towels from Pakistan is
extraordinarily complicated. In accordance with section 751(c)(5)(C)(v)
of the Act, the Department may treat a review as extraordinarily
complicated if it is a review of a transition order (i.e., an order in
effect on January 1, 1995). (See section 751(c)(6)(C) of the Act.)
Therefore, on May 7, 1999, the Department extended the time limit for
completion of the final results of this review until not later than
August 2, 1999, in accordance with section 751(c)(5)(B) of the
Act.5
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\5\ See Steel Wire Rope from Japan, et. al.: Extension of Time
Limit for Final Results of Five-Year Reviews, 64 FR 24573 (May 7,
1999).
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Determination
In accordance with section 751(c)(1) of the Act, the Department
conducted this review to determine whether revocation of the
countervailing duty order would be likely to lead to continuation or
recurrence of a countervailable subsidy. Section 752(b) of the Act
provides that, in making this determination, the Department shall
consider the net countervailable subsidy determined in the
investigation and subsequent reviews, and whether any change in the
program which gave rise to the net countervailable subsidy has occurred
that is likely to affect that net countervailable subsidy. Pursuant to
section 752(b)(3) of the Act, the Department shall provide to the
International Trade Commission (``the ITC'') the net countervailable
subsidy likely to prevail if the order is revoked. In addition,
consistent with section 752(a)(6), the Department shall provide the ITC
information concerning the nature of the subsidy and whether the
subsidy is a subsidy described in Article 3 or Article 6.1 of the 1994
WTO Agreement on Subsidies and Countervailing Measures (``Subsidies
Agreement'').
The Department's determination concerning continuation or
recurrence of a countervailable subsidy, the net countervailable
subsidy likely to prevail if the order is revoked, and the nature of
the subsidy are discussed below. In addition, Milliken's comments with
respect to each of these issues are addressed within the respective
sections.
Continuation or Recurrence of a Countervailable Subsidy
Drawing on the guidance provided in the legislative history
accompanying the Uruguay Round Agreement Act (``URAA''), specifically
the Statement of Administrative Action (``the SAA''), H.R. Doc. No.
103-316, vol. 1 (1994), the House Report, H.R. Rep. No.103-826, pt.1
(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the
[[Page 42674]]
Department issued its Sunset Policy Bulletin providing guidance on
methodological and analytical issues, including the basis for
likelihood determinations. The Department clarified that determinations
of likelihood will be made on an order-wide basis (see section III.A.2
of the Sunset Policy Bulletin). Additionally, the Department normally
will determine that revocation of a countervailing duty order is likely
to lead to continuation or recurrence of a countervailable subsidy when
(a) a subsidy program continues, (b) a subsidy program has been only
temporarily suspended, or (c) a subsidy program has been only partially
terminated (see section III.A.3.a of the Sunset Policy Bulletin).
Exceptions to this policy are provided when a company has a long record
of not using a program (see section III.A.3.b of the Sunset Policy
Bulletin).
In addition to considering the guidance on likelihood cited above,
section 751(c)(4)(B) of the Act provides that the Department shall
determine that revocation of an order is likely to lead to continuation
or recurrence of a countervailable subsidy when a respondent interested
party waives its participation in the sunset review. Pursuant to the
SAA, at 881, in a review of a countervailing duty order, when the
foreign government has waived participation, the Department shall
conclude that revocation of the order would be likely to lead to a
continuation or recurrence of a countervailable subsidy for all
respondent interested parties.6 In the instant review, the
Department did not receive a response from the foreign government or
from any other respondent interested party. Pursuant to
Sec. 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes a
waiver of participation.
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\6\ See 19 CFR 351.218(d)(2)(iv).
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In its substantive response, Milliken asserted that revocation of
the countervailing duty order on cotton shop towels from Pakistan would
likely result in the recurrence of countervailable subsidies. Milliken
asserted that in the original investigation and in the subsequent
administrative reviews, the Department found several programs to confer
countervailable subsidies. Further, Milliken asserted that the
Government of Pakistan's recent withdrawal of its administrative review
request strongly suggests that there has been no change in the programs
giving rise to countervailing subsidies.7 In its substantive
response, Milliken asserted that, with the exception of the
compensatory rebate program, to the best of its knowledge, there is no
evidence that the programs giving rise to the subsidies have been
suspended or terminated, or that the respondent exporters have
renounced the countervailable subsidies under these
programs.8
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\7\ See Milliken Substantive Response (February 3, 1999) at 4,
and Cotton Shop Towels From Pakistan; Termination of Countervailing
Duty Administrative Review, 62 FR 34046 (June 24, 1997).
\8\ See Milliken Substantive Response (February 3, 1999) at 6.
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In conclusion, Milliken argued that, based on the history of this
case, the Department must determine that revocation of the
countervailing duty order would likely lead to the recurrence of
subsidized imports of cotton shop towels from Pakistan.
The Sunset Policy Bulletin, at section III.A.3, states that,
consistent with the SAA at 888, continuation of a program will be
probative of the likelihood of continuation or recurrence of
countervailable subsidies. Temporary suspension or partial termination
of a subsidy program also will be probative of continuation or
recurrence of countervailable subsidies, absent significant evidence to
the contrary. Additionally, the Sunset Policy Bulletin provides that,
when a program has been officially terminated by the foreign
government, this will be probative of the fact that the program will
not continue or recur if the order is revoked (see Sunset Policy
Bulletin at section III.A.5).
We agree with Milliken that Pakistan producers/exporters continue
to benefit from several countervailable subsidy programs. The
Department, in the most recent administrative review, determined that
producers/exporters received countervailable benefits under the export
financing program, the excise tax, sales tax, and customs duty rebate
programs, and the income tax reduction program. The Department also
listed two programs found not to be used that had previously been found
countervailable.
As stated above, the continued use of a program is highly probative
of the likelihood of continuation or recurrence of countervailable
subsidies if the order were revoked. Additionally, the presence of
programs that have not been used, but that also have not been
terminated, is also probative of the likelihood of continuation or
recurrence of a countervailable subsidy. Therefore, because there are
countervailable programs that are currently being used and others that
remain in existence, the foreign government and other respondent
interested parties waived their right to participate in this review
before the Department, and absent argument and evidence to the
contrary, the Department determines that it is likely that a
countervailable subsidy will continue if the order is revoked.
Net Countervailable Subsidy
In the Sunset Policy Bulletin, the Department stated that,
consistent with the SAA and House Report, the Department normally will
select a rate from the investigation, because that is the only
calculated rate that reflects the behavior of exporters and foreign
governments without the discipline of an order or suspension agreement
in place. The Department went on to clarify that this rate may not be
the most appropriate rate if, for example, the rate was derived (in
whole or in part) from subsidy programs which were found in subsequent
reviews to be terminated, there has been a program-wide change, or the
rate ignores a program found to be countervailable in a subsequent
administrative review. Additionally, when the Department determined
company-specific countervailing duty rates in the original
investigation, the Department normally will report to the Commission
those company-specific rates from the original investigation, or where
no company-specific rate was determined for a company, the Department
normally will provide to the Commission the country-wide or ``all
others'' rate. (See Sunset Policy Bulletin at section III.B.2.)
Milliken suggested that the Department select the original subsidy
rate of 12.67 percent as the net countervailable subsidy rate likely to
prevail if the order is revoked. Milliken argued that, should the
Department decide that adjustments to the original subsidy rate are
warranted, the Department should provide the Commission the rates from
the final results of the most recent administrative review: Eastern
Textiles, Ltd., 11.50 percent ad valorem, and Creation (Pvt), Ltd.,
11.54 percent ad valorem, and for all other producers/exporters of
cotton shop towels from Pakistan, 8.49 percent ad valorem; the rates
from the final results of the most recent administrative review (see
Milliken's February 3, 1999, Substantive Response, at 9.)
We disagree with Milliken's arguments that we use either the
unadjusted rate from the original investigation or the rates from the
most recent administrative review. As stated above, the Department
normally will select the rate from the investigation, because that is
the only calculated rate that reflects the behavior of exporters and
foreign governments without the
[[Page 42675]]
discipline of the order in place. However, the Sunset Policy Bulletin
(in section III.B.3.) also provides that adjustments may be made to the
original net countervailable subsidy when programs have been terminated
or when new programs have been added.
As Milliken noted in its substantive response, the compensatory
rebate scheme was found to have been terminated. Additionally, over the
life of this order, the Department found that producers/exporters
received countervailable benefits under the import duty rebate
program--a program found not used in the original investigation.
As a result of changes in programs since the imposition of the
order, the Department determines that using the net countervailable
subsidy rate as determined in the original investigation is no longer
appropriate. Rather, we have adjusted the net countervailable subsidy
from the original investigation by adding in the rate from the import
duty rebate program (first used in the review covering April 1984
through December 1984) and subtracting out the subsidy from the
compensatory rebate scheme which was terminated on May 29, 1986. (See
calculation memo.)
Nature of the Subsidy
In the Sunset Policy Bulletin, the Department stated that,
consistent with section 752(a)(6) of the Act, the Department will
provide information to the Commission concerning the nature of the
subsidy and whether the subsidy is a subsidy described in Article 3 or
Article 6.1 of the Subsidies Agreement. In this case, Milliken did not
address this issue.
Because receipt of benefits under each of the countervailable
programs is contingent upon exports, these programs fall within the
definition of an export subsidy under Article 3.1(a) of the Subsidies
Agreement. Each of the countervailable programs is described below.
Customs Duty Rebate
The government provides a 2% customs duty rebate on exported goods.
The program, is in effect, a duty drawback. The government pays this
rebate on items not physically incorporated into the exported product.
Rebates On Exportation
The government of Pakistan provides exporters of shop towels with
cash rebates which are calculated as a percentage of the f.o.b. value
of the exported product.
Income Tax Reduction
The government of Pakistan provides a 55% reduction of taxes
attributable to income generated by products made for export.
Preferential Export Financing
The government permits short-term export financing to be provided
to exporters at rates considerably lower than those otherwise charged
on short-term loans in Pakistan.
Excise Tax and Sales Tax Rebate
The government of Pakistan provides an excise tax rebate and sales
tax rebate on exports of shop towels.
Final Results of Review
As a result of this review, the Department finds that revocation of
the countervailing duty order would be likely to lead to continuation
or recurrence of a countervailable subsidy at the rate listed below.
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Margin
Manufacturers/exporters (percent)
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All manufacturers/exporters................................ 5.17
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This notice serves as the only reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with Sec. 351.305 of the Department's regulation (19
CFR 351.305).
Timely 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 five-year (``sunset'') review and notice are in accordance
with sections 751(c), 752, and 777(i)(1) of the Act.
Dated: July 30, 1999.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-20224 Filed 8-4-99; 8:45 am]
BILLING CODE 3510-DS-P
