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

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 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:

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 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