NOTICES DEPARTMENT OF COMMERCE [C-557-802] Final Negative Countervailing Duty Determination: Thermostatically Controlled Appliance Plugs and Internal Probe Thermostats Therefor From Malaysia Tuesday, December 13, 1988 *50059 AGENCY: Import Administration, International Trade Administration, Commerce. ACTION: Notice. SUMMARY: We determine that no benefits which constitute bounties or grants within the meaning of the countervailing duty law are being provided to manufacturers, producers, or exporters in Malaysia of thermostatically controlled appliance plugs and internal probe thermostats therefor (the subject merchandise), as described in the "Scope of Investigation" section of this notice. EFFECTIVE DATE: December 13, 1988. FOR FURTHER INFORMATION CONTACT: Vincent Kane or Roy Malmrose, Office of Countervailing Investigations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 377-2815 or 377-5414. SUPPLEMENTARY INFORMATION: Final Determination Based on our investigation, we determine that no benefits which constitute bounties or grants within the meaning of section 303 of the Tariff Act of 1930, as amended (the Act), are being provided to manufacturers, producers, or exporters in Malaysia of the subject merchandise. Case History Since the publication of the preliminary determination (Preliminary Negative Countervailing Duty Determination: Thermostatically Controlled Appliance Plugs and Internal Probe Thermostats Therefor from Canada (53 FR 27740, July 22, 1988)) the following events have occurred. On August 3, 1988, Power Electronics Sdn. Bhd. (Power Electronics), the respondent company in this investigation, submitted a revised version of its nonconfidential supplementary response. On August 22, 1988, we received a request from the petitioner, under section 705(a)(1) of the Act, to extend the date of the final determination to correspond with the date of the final determinations in the antidumping investigations of the same products from Canada, Hong Kong, Japan, Malaysia, and Taiwan. Pursuant to petitioner's request, we extended the date of the final determination to December 6, 1988, and published notice of the extension in the Federal Register (Extention of the Due Dates for the Final Countervailing Duty Determinations: Certain Thermostatically Controlled Appliance Plugs and Internal Probe Thermostats Therefor From Canada, Malaysia and Taiwan (53 FR 39493, October 7, 1988)). From September 12 to September 22, 1988, we conducted verification in Malaysia of the questionnaire responses of the Government of Malaysia and Power Electronics. Scope of Investigation The United States has developed a system of tariff classification based on the international harmonized system of customs nomenclature. On January 1, 1989, the U.S. tariff schedules will be fully converted to the Harmonized Tariff Schedule (HTS) and all the merchandise entered or withdrawn from warehouse for consumption on or after that date will be classified solely according to the appropriate HTS item number(s). Until that time, however, the Department will be providing both the appropriate Tariff Schedules of the United States Annotated (TSUSA) item number(s) and the appropriate HTS item number(s) with its product descriptions. As with the TSUSA, the HTS item numbers are provided for convenience and Customs purposes. The Department's written description of the products under investigation remains dispositive as to the scope of the product coverage. We are requesting petitioners to include the appropriate HTS item number(s) as well as the TSUSA item number(s) in all petitions filed with the Department through the end of this year. A reference copy of the HTS is available for consultation in the Central Records Unit, Room B-099, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. Additionally, all U.S. Customs offices have reference copies, and petitioners may contact the import specialist at their local Customs office to consult the schedule. The products covered by this investigation are thermostatically controlled appliance plugs and internal probe thermostats therefor. For purposes of this investigation, the term thermostatically controlled appliance plug refers to any device designed to connect an electrical outlet (typically a common wall receptacle) with a small cooking appliance of 2,000 watts or less (typically a griddle, deep fryer, fry pan, multicooker, and/or wok) and regulate the flow of electricity, and thus the temperature, therein; consisting of (1) a probe thermostat encased in a single housing set with a temperature control knob (typically a dial calibrated with various temperature settings), and (2) a cord set. The term internal probe thermostat refers to any device designed to automatically regulate the flow of electricity, and thus the temperature, in a small heating apparatus of 2,000 watts or less (typically small cooking appliances); consisting of a stainless steel tube (which connects to the heating apparatus) and other components used for thermostatic control. The products are currently provided for under TSUSA item numbers 711.7820 and 711.7840 and under HTS item numbers 9032.10.00, 9032.20.00, 9032.89.60, 9032.90.60, and 9033.00.00. Analysis of Programs For purposes of this final determination, the period for which we are measuring bounties or grants (the review period) is calendar year 1987, which corresponds to the fiscal year of the respondent company. Based upon our analysis of the petition, the responses to our questionnaries, and the verification, we determine the following: I. Programs Determined Not to Confer a Bounty or Grant We determine that bounties or grants are not being provided to manufacturers, producers or exporters in Malaysia of the subject merchandise under the following programs: *50060 A. Agreement with the Islamic Development Bank The Islamic Development Bank (IDB) is a multilateral development bank subscribed to by 44 Islamic nations. It is located in Jeddah, Saudi Arabia. The Industrial Development Bank of Malaysia, generally referred to as Bank Kemajuan, is a development bank owned by the Government of Malaysia through the Ministry of Finance. Bank Kemajuan offers a foreign trade financing facility enabling importers to get short-term financing from the IDB. At verification we found that Power Electronics had a foreign trade financing facility agreement with Bank Kemajuan and the IDB. Power Electronics, Bank Kemajuan and the IDB entered a tripartite agreement under which the IDB agreed to open letters of credit in favor of Power Electronics' foreign component suppliers. The agreement stipulated that the IDB purchase a quantity of goods and resell them at a mark-up to Power Electronics against the security of a guarantee from Bank Kemajuan. The agreement with the IDB is not countervailable. Section 303 of the Act (19 U.S.C. 1303) states that "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 . . . there shall be levied and paid, in all such cases, in addition to any duties otherwise imposed, a duty equal to the next amount of such bounty or grant, however the same be paid or bestowed." Since the merchandise under investigation is produced in Malaysia and the agreement with Power Electronics is from an international development institution which is located outside of Malaysia, we determine that the agreement is not countervailable. See, for example, the Final Affirmative Countervailing Duty Determination: Fuel Ethanol from Brazil, (51 FR 3361, January 27, 1986) and Initiation of Countervailing Duty Investigation: Certain Textiles and Textile Products from the Philippines, (49 FR 34381, August 30, 1984). B. Guarantee Agreement with Bank Kemajuan Bank Kemajuan is required to guarantee all transactions between the IDB and Malaysian enterprises. Bank Kemajuan agreed to guarantee Power Electronics' liabilities to the IDB under the foreign trading financing facility agreement in return for a corporate guaranteed from Power Electronics' parent company and an annual guarantee fee of one percent. We confirmed that Power Electronics paid its guarantee fee at one percent per annum according to schedule. We examined whether the guarantee received by Power Electronics was provided on terms inconsistent with commercial considerations by comparing the guarantee fee paid by Power Electronics with the commercial fee for a one-year loan guarantee. We verified that the commercial fee for a one-year loan guarantee is between one and 1.25 percent, depending on the client, or about one percent if the client is guaranteed by a parent company. Since Power Electronics paid a guarantee fee of one percent after its parent company pledged a corporate guarantee, we determine that the guarantee provided Power Electronics by Bank Kemajuan is not on terms inconsistent with commercial considerations and is not countervailable. Given this conclusion, we need not consider whether this program is provided to a specific enterprise or industry, or group of enterprises or industries. II. Programs Determined Not to Be Used Based on verified information, we determine that manufacturers, producers, or exporters in Malaysia of the subject merchandise did not apply for, claim or receive benefits during the review period for exports of the subject merchandise to the United States under the programs listed below. These programs were described in the preliminary determination in this investigation. A. Export Tax Incentives 1. Abatement of Taxable Income Based on the Ratio of Export Sales to Total Sales and an Abatement of Five Percent of the Value of Indigenous Materials Used in Exports 2. Allowance of Taxable Income of Five Percent for Trading Companies Exporting Malaysian-made Products 3. Double Deduction for Export Credit Insurance Payments 4. Double Deduction for Export Promotion Expenses 5. Allowance of a Percentage of Net Taxable Income Based on the F.O.B. Value of Export Sales 6. Industrial Building Allowance B. Other Export Incentives 1. Export Credit Refinancing 2. Export Insurance Program C. Other Tax Incentives 1. Pioneer Status Under the Investment Incentives Act of 1968 2. Pioneer Status Under the Promotion of Investments Act of 1986 3. Investment Tax Allowance 5. Reinvestment Allowance D. Medium-and Long-term Government Financing E. Reduction in the Cost of State Land for New Industry F. Preferential Financing for Bumiputras Verification We verified the information used in making our final determination in accordance with section 776(b) of the Act. We used standard verification procedures including meeting with government and company officials and examining relevant accounting records and original source documents of the respondents. Our verification results are outlined in detail in the public versions of the verification report which are on file in the Central Record Unit (Room B-099) of the Main Commerce Building. This determination is published pursuant to section 705(d) of the Act [19 U.S.C. 1671d(d)]. Jan W. Mares, Assistant Secretary for Import Administration. [FR Doc. 88-28664 Filed 12-12-88; 8:45 am] BILLING CODE 3510-DS-M