-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[C-557-806]
Extruded Rubber Thread From Malaysia; 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.
SUMMARY: On May 13, 1997 the Department of Commerce (``the
Department'') published in the Federal Register its preliminary results
of administrative review of the countervailing duty order on Extruded
Rubber Thread from Malaysia for the period January 1, 1995 through
December 31, 1995 (62 FR 26289). The Department has now completed this
administrative review in accordance with section 751(a) of the Tariff
Act of 1930, as amended. For information on the net subsidy for each
reviewed company, and for all non-reviewed companies, please see the
Final Results of Review section of this notice.
EFFECTIVE DATE: September 18, 1997.
FOR FURTHER INFORMATION CONTACT:
Eric Greynolds, Kathleen Lockard or Richard Herring, Office of CVD/AD
Enforcement VI, 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
Pursuate to 19 C.F.R. Sec. 335.22(a), this review covers only those
producers or exporters of the subject merchandise for which a review
was specifically requested. Accordingly, this review covers Heveafil
Sdn. Bhd., Filmax Sdn, Bhd., Rubberflex Sdn. Bhd., Filati Lastex
Elastofibre Sdn. Bhd. (Filati), and Rudfil Sdn. Bhd. Heveafil and
Filmax are affiliated parties. (See Affiliated Parties section below).
This review also covers the period January 1, 1995 through December 31,
1995 and 13 programs.
Since the publication of the preliminary results on May 13, 1997
(62 FR 26289), the following events have occurred. We invited
interested parties to comment on the preliminary results. On June 12,
1997, case briefs were submitted by Heveafil, Filmax, Rubberflex,
Filati, and Rubfil which exported extruded rubber thread to the United
States during the review period.
Applicable Statute
Unless otherwise indicated, all citations to the statute are
references to the provisions of the Tariff Act of 1930, as amended by
the Uruguay Round Agreements Act (URAA) effective January 1, 1995 (the
Act). The Department is conducting this administrative review in
accordance with section 751(a) of the Act.
Scope of the Review
The product covered by this review is extruded rubber thread.
Extruded rubber thread is defined as vulcanized rubber thread obtained
by extrusion of stable or concentrated natural rubber latex of any
cross sectional shape, measuring from 0.18 mm, which is 0.007 inch or
140 gauge, to 1.42 mm, which is 0.056 inch or 18 gauge, in diameter.
Extruded rubber thread is currently classified under subheading
4007.00.00 of the Harmonized Tariff Schedule of the United States
(HTSUS). The HTSUS subheadings are provided for convenience and U.S.
Customs purposes. Our written description of the scope of this review
remains dispositive.
Affiliated Parties
Heveafil owns and controls Filmax and both companies produce
subject merchandise. Therefore, we determine them to be affiliated
companies under section 771(33) of the Act and, consistent with prior
reviews of this order, we have calculated a single rate applicable to
both of these companies. See Extruded Rubber Thread From Malaysia;
Final Results of Countervailing Duty Administrative Review (61 FR
55272; October 25, 1996) (Malaysian Rubber Thread 1994 Review). For
further information, see Memorandum to file from Judy Kornfeld
Regarding Status as Affiliated Parties dated March 28, 1997, on file in
the public file of the Central Records Unit, Room B-099 of the
Department of Commerce.
Analysis of Programs
Based upon the responses to our questionnaire, and written comments
from the interested parties we determine the following:
I. Programs Conferring Subsidies
A. Programs Previously Determined to Confer Subsidies
1. Export Credit Refinancing (ECR) Program. In the preliminary
results, we found that both pre- and post-shipment loans under this
program conferred countervailable subsidies on the subject merchandise.
Our review of the record and our analysis of the comments submitted by
the interested parties, summarized below, have not led us to change our
findings from the preliminary results. Accordingly, the net subsidies
for pre-shipment and post-shipment loans remain unchanged from the
preliminary results and are as follows:
Pre-Shipment Loans
------------------------------------------------------------------------
Rate
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Heveafil/Filmax............................................ 0.15
Rubberflex................................................. 0.30
Filati..................................................... 0.00
Rubfil..................................................... 0.03
------------------------------------------------------------------------
Post-Shipment Loans
------------------------------------------------------------------------
Rate
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Heveafil/Filmax............................................ 0.00
Rubberflex................................................. 0.00
Filati..................................................... 0.15
Rubfil..................................................... 0.00
------------------------------------------------------------------------
2. Pioneer status. In the preliminary results, we found that this
program conferred countervailable subsidies on the subject merchandise.
Our review of the record and our analysis of the comments submitted by
the interested parties, summarized below, have led us to modify our
findings from the preliminary results for this program for Rubberflex
(See Department's Position on Comment 7). Accordingly, the net
subsidies for this program have changed and are as follows:
------------------------------------------------------------------------
Rate
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Heveafil/Filmax............................................ 0.74
Rubberflex................................................. 0.00
Filati..................................................... 0.00
Rubfil..................................................... 0.00
------------------------------------------------------------------------
3. Industrial building allowance. In the preliminary results, we
found that this program conferred countervailable subsidies on the
subject merchandise. We did not receive any comments on this program
from the interested parties, and our review of the record has not led
us to change our findings from the preliminary results. Accordingly,
the net subsidies for this program remain unchanged from the
preliminary results and are as follows:
---- page 48986 ----
------------------------------------------------------------------------
Rate
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Heveafil/Filmax............................................ {1}
Rubberflex................................................. 0.00
Filati..................................................... 0.00
Rubfil..................................................... 0.00
------------------------------------------------------------------------
{1} Less than 0.005%.
4. Double deduction for export promotion expenses. In the
preliminary results, we found that this program conferred
countervailable subsidies on the subject merchandise. We did not
receive any comments on this program from the interested parties, and
our review of the record has not led us to change our findings from the
preliminary results. Accordingly, the net subsidies for this program
remain unchanged from the preliminary results as are as follows:
------------------------------------------------------------------------
Rate
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Heveafil/Filmax............................................ 0.01
Rubberflex................................................. 0.00
Filati..................................................... 0.00
Rubfil..................................................... 0.00
------------------------------------------------------------------------
II. Programs Found To Be Not Used
In the preliminary results, we examined the following programs and
determined that the producers and/or exporters of the subject
merchandise did not apply for or receive benefits under these programs
during the period of review:
- Investment Tax Allowance,
- Abatement of a Percentage of Net Taxable Income Based on
the F.O.B. Value of Export Sales,
- Abatement of Five Percent of Taxable Income Due to
Location in a Promoted Industrial Area,
- Abatement of Taxable Income of Five Percent of Adjusted
Income of Companies due to Capital Participation and Employment Policy
Adherence,
- Double Deduction of Export Credit Insurance Payment, and
- Preferential Financing for Bumiputras.
We did not received any comments on these programs from the
interested parties, and our review of the record has not led us to
change our findings from the preliminary results.
Analysis of Comments
Comment 1: The Department had no authority to issue a CVD order.
Respondents allege that the Department initiated the original
investigation pursuant to Section 303(a)(2) of the Act, and, therefore,
the Department can impose countervailing duties under this section only
if there is an injury determination by the International Trade
Commission (ITC). (The ITC discontinued its injury determination under
Section 303(a)(2) because the duty-free status of rubber thread from
Malaysia was terminated). Respondents contend that without an injury
determination, the Department had no authority to issue a
countervailing duty order and to require the payment of cash deposits.
Respondents further maintain that the Department cannot simply transfer
the jurisdiction for an investigation from Section 303(a)(2) to Section
303(a)(1) without issuing a public notice that it intends to proceed
with the investigation under a different statutory provision. See
Certain Textile Mill Products and Apparel from Turkey (50 FR 9817;
March 12, 1987); Certain Textile Mill Products and Apparel from the
Philippines (50 FR 1195; March 26, 1985) and Certain Textile Mill
Products and Apparel from Indonesia (50 FR 9861; March 12, 1985).
Further, because there was no initiation notice or a preliminary
determination under Section 303(a)(1), a final determination under that
section was not appropriate. If the Department wanted to proceed with
the investigation, it was required to reinitiate under the appropriate
provision.
In addition, respondents argue that the Department's untimeliness
theory in previous reviews is misplaced. They state that the Department
has the power to modify its judgments or correct its errors and that
Ceramica Regiomontana v. United States, 64 F.3d 1579 (Fed. Cir. 1995)
(Ceramica 1995) confirmed the right to challenge the continuing
validity of an order during a review proceeding. Respondents also cite
to Gilmore Steel Corp. v. United States, 585 F. Supp. 670, 674 (CIT
1984) (Gilmore), to support their ``timeliness'' argument regarding the
Department's authority to correct errors, such as ``jurisdictional
defects.''
Department's Position: As the Department pointed out in the
previous views, respondents' challenge to the Department's authority to
issue the order is untimely. Challenges to the issuance of an order
must be filed within 30 days of the date the order is published. See 19
U.S.C. Sec. 1516a(a)(2). The countervailing duty order on extruded
rubber thread from Malaysia was published on August 25, 1992.
Respondents voluntarily withdrew a timely-filed complaint challenging
the order on these same grounds. Respondents' attempt to revive that
challenge in this proceeding is untimely.
Contrary to respondents' assertions, there was not requirement that
the Department reinitiate its investigation as a result of the decision
by the United States to terminate the duty-free status of Malaysian
rubber thread. Indeed, respondents' interpretation could create an
impermissible gap in statutory coverage, which Congress did not intend.
See Techsnabexport. Ltd. v. United States, 802 F. Supp. 469, 472 (CIT
1992). Nor do the administrative cases relied upon by respondents
support their position. In those cases, the Department published notice
that authority to continue the particular investigations was
transferred from section 303 of the Tariff Act of 1930 to title VII of
the Act.
In the course of administrative reviews conducted under this order,
respondents have misconstrued judicial precedent regarding the
correction of ``jurisdictional defects.'' Gilmore involved a challenge
to the termination of a pending investigation based upon information
obtained in the course of that investigation. In particular, the
petitioner contended that the Department lacked the authority to
rescind the investigation based upon insufficient industry support for
the petition after the 20-day initiation period had elapsed. 585
F.Supp. at 673. In upholding the Department's determination, the court
recognized that administrative officers have the authority to correct
errors, such as ``jurisdictional defects,'' at any time during the
proceeding. Id. At 674-75. The court did not state or imply that the
Department may reverse a decision to issue an antidumping duty order in
the context of an administrative review under section 751 of the Act.
Indeed, the case did not even involve an administrative review. The
court simply held that the administering authority may, in the context
of the original investigation, rescind an ongoing proceeding after the
expiration of the 20-day initiation period. In short, Gilmore says
nothing to excuse respondents' failure to timely challenge the issuance
of the order in this case.
Similarly, we disagree with respondents' reliance on Ceramica 1995.
Ceramica 1995 challenged the continued imposition of countervailing
duties following Mexico's change in status to a ``country under the
Agreement'' which entitled it to an injury test. Unlike respondents in
the instant review, Ceramica 1995 did not challenge the validity of the
original countervailing duty order, nor did the Federal Circuit
determine that the issuance of the order was invalid. Consequently,
Ceramica 1995 is an inappropriate basis to excuse respondents' failure
to timely challenge the issuance of the order.
---- page 48987 ----
Comment 2: Country-wide subsidy rate. Respondents argue that the
Department improperly assigned company-specific rates without first
determining whether the overall country-wide subsidy rate was above de
minimis. They contend that the Department acted contrary to its
established practice of applying its two-part test in measuring levels
of subsidization. According to respondents, the Department should first
calculate the net subsidy on a country-wide basis to determine whether
the country-wide rate was above de minimis, in accordance with Ceramica
Regiomontana, S.A. v. United States, 853 Supp. 431,439 (Ct. Intl. Trade
1994) (Ceramica 1994). If the country-wide benefit is de minimis, the
overall subsidy level would be zero. Only if the country-wide rate was
above de minimis would the Department proceed to the second step of its
test to determine if individual rates would apply. Respondents cite
Certain Iron Metal Castings from India, Preliminary Results of
Countervailing Duty Administrative Review (61 FR 25623; May 22, 1996);
Carbon Steel Butt-Weld Pipe Fitting from Thailand; Final Results of
Countervailing Administrative Review (61 FR 4959; Feb. 9, 1996);
Extruded Rubber Thread from Malaysia, Final Results of Countervailing
Duty Administrative Review (60 FR 51982, 51983; October 4, 1995), in
which the Department applied its two-step test.
According to respondents, as a precondition to imposing
countervailing duties, the statute requires subsidization to occur with
respect to imports of the subject merchandise on an overall or
aggregated basis. In addition, respondents contend that the URAA
altered the assessment provision but not the requirement to determine
whether subsidies were being provided on a country-wide basis.
Department's Position: There is no legal basis to support
respondent's argument. Pursuant to the URAA, there is no longer a
preference for calculating a single country-side subsidy rate in
countervailing duty proceedings. The URAA replaced the former practice
of calculating subsidies on a country-wide basis in favor of individual
rates for investigated or reviewed companies. The procedures for
countervailing duty cases are now essentially the same as those in
antidumping case, except as provided for in section 777A(a)(2)(B) of
the Act. Section 777A(e) requires the calculation of an individual
countervailable subsidy rate for each known producer/exporter of the
subject merchandise, except where it is not practicable to determine
individual countervailable subsidy rates because of the larger number
of exporters or producers involved in the investigation or review. This
exception was inapplicable in this review as there were only five
producers/exporters for which a review was requested.
As a result, the judicial and administrative precedents relied upon
by respondents are inappropriate as they refer to the requirements as
they existed prior to effective date of the URAA. All of the reviews
cited by respondents were requested and initiated prior to January 1,
1995, the effective date of the URAA. More pertinent citations would be
to reviews conducted under the URAA. See, e.g., Certain Iron-Metal
Castings From India; Final Results of Countervailing Duty
Administrative Review (1994 Castings Review) (62 FR 32297; June 13,
1997), since that review was initiated pursuant to requests for
administrative reviews filed after January 1, 1995.
Comment 3: Financial contribution. Respondents argue that the
Department cannot countervail benefits under the ECR loan program or
the Pioneer Industries program because neither involves a financial
contribution by the Government of Malaysia (GOM). The WTO Subsidies
Agreement defined the term ``subsidy'' as one involving a ``financial
contribution,'' therefore adding a new requirement to the pre-existing
notion of a subsidy. Accordingly, a program cannot be a countervailable
subsidy unless it involves a ``financial contribution.'' In the case of
the ECR loans, they argue that there cannot be any financial
contribution because the funds that the GOM lends to exporters generate
a profit. In the case of the Pioneer Industries program, they argue
that because the only company claiming the tax exemption would have
paid the same amount of taxes without the exemption, the GOM did not
forgo or fail to collect any revenues as a result of the program.
Respondents believe that the Department's preliminary determination
overlooks this new requirement.
Department's Position: We disagree with respondents that the
Department overlooked the requirement of a financial contribution.
Under section 771(5)(D) (i) and (ii) of the Act, a financial
contribution is defined as ``the direct transfer of funds, such as
grants, loans, and equity infusions, or the potential direct transfer
of funds or liabilities, such as loan guarantees,'' or ``foregoing or
not collecting revenue that is otherwise due, such as granting tax
credits or deductions from taxable income.'' The ECR Loan and Pioneer
Industries tax programs clearly fall within these definitions. We also
note that under Article 1.1(a)(1) (i) and (ii) of the Subsidies
Agreement, a financial contribution is defined as ``where government
practice involves a direct transfer of funds (e.g., grants, loans, and
equity infusions), potential direct transfers of funds of liabilities
(e.g., loan guarantees)'' or ``government revenue that is otherwise
due, is foregone or not collected (e.g., fiscal incentives such as tax
credits).''
Respondents mistakenly focus on the ``financial contribution''
concept in terms of the cost to the Malaysian government. As explained
in the previous reviews, the Department has a longstanding practice of
valuing the benefit to the recipient rather than the cost to the
government for the purpose of calculating countervailing duty rates.
This practice is now reflected in section 771(5)(E) of the Act, which
states that the subsidy benefit ``shall normally be treated as
conferred where there is a benefit to the recipient.'' In addition,
Article 14 of the Subsidies Agreement defines the method for
calculating the amount of a subsidy in terms of the benefit to the
recipient.
In the case of ECR loans, the funds that the GOM lends to the
exporters are lent on a short-term basis at an interest rate below the
amount the exporters would have paid on a comparable commercial loan.
In the case of the Pioneer Industries program, a company that has
received pioneer status is allowed not to pay taxes otherwise due to
the government. (Also, see Department's Position on Comment 7.)
Therefore, under both programs, financial contributions are provided to
the recipients (the respondents) and the Department properly treated
those benefits as countervailable subsidies.
Comment 4: Short-term loan benchmark. Respondents contend that the
benefit from the ECR program was overstated because the Department's
benchmark for the ECR pre-shipment loans incorrectly excluded Banker's
Acceptances (``BA's'') from the calculated benchmark interest rate and
incorrectly included rates on overdrafts in calculating the benchmark.
Department's Position: We disagree with respondents. While the BA
rates are an acceptable benchmark for post-shipment loans, pre-shipment
financing used by the respondents is based on a line of credit, much
like a general short-term loan in the Malaysian market. As such, we
used the average of the commercial bank lending rates charged to each
company during the POR for revolving lines of credit and overdrafts
---- page 48988 ----
as the benchmark. ECR post-shipment loans and BAs are short-term
borrowing instruments used to finance specified export shipments,
unlike ECR pre-shipment loans that provide a more general line of
credit.
Comment 5: Pre-shipment ECR loans do not benefit U.S. exports.
Respondents argue that the Department overstated the net subsidy for
the review period and for duty deposit purposes because in calculating
eligibility for the pre-shipment export financing, the Department
failed to take account of the exclusion by Heveafil and Filmax of U.S.
exports in obtaining export financing. In addition, respondents claim
that the two companies did not use funds from exports to the United
States to repay any of the pre-shipment loans. They claim that in a
similar situation, the Department concluded that exports to the United
States did not receive benefits from short-term financing. See
Suspension of Countervailing Duty Investigation; Certain Forged Steel
Crankshafts from Brazil (52 FR 28177, 28179; July 28, 1987)
(Crankshafts from Brazil). Although in the first administrative review,
the Department rejected this method of eliminating the effect of a
subsidy, respondents maintain that Heveafil and Filmax received no
benefit with regard to U.S. shipments. Respondents further assert that
the Department found a subsidy in this case, in part, because there was
no strict segregation of U.S. exports and the materials used in their
manufacture from materials and exports to other markets financed with
ECR loans. However, according to the respondents, the Department was
presented with exactly the same issue in Crankshafts from Brazil and in
that case the Department did not require that the exporters segregate
raw materials purchased with export financing.
Department's Position: The GOM provides ECR financing based on
export performance. The explicit purpose of this program is to promote
the export of manufactured and approved agricultural products. Two
types of ECR financing are available: pre-shipment and post-shipment
financing. There is no evidence that the GOM limits these ECR loans to
increase exports only to markets other than the United States, nor is
there evidence of a provision that prevents exporters from receiving
ECR loans for exports to the United States.
During the review period, both Heveafil and Filmax applied for and
used pre-shipment financing based on certificates of performance (CP).
Pre-shipment financing based on CPs is a line of credit based on
previous exports and, when received, cannot be tied to specific sales
in specific markets. Where a benefit is not tied to a particular
product or market, it is the Department's practice to allocate the
benefit to all products exported by a firm where the benefit is
received pursuant to an export program. See e.g., 1994 Castings Review.
Because pre-shipment loans were not shipment-specific, we included all
loans in calculating the subsidy rate.
By excluding exports to the United States from their application
for ECR pre-shipment export financing, the companies merely reduced the
amount of financing they received. Reducing the pool of funds available
for total export financing does not eliminate financing to any
particular product. Tying occurs in the provision of the subsidy,
usually through government mandate requirements or in certain limited
situations where the application for the subsidy can be isolated to
specific shipments, e.g., post-shipment loans provided on a shipment-
by-shipment basis where the company can demonstrate through source
documentation that it did not apply for or receive loans on shipments
to the United States. See e.g., 1994 Castings Review. Hence, the
companies did not eliminate ECR pre-shipment financing for U.S.
exports.
We disagree with respondents that, in similar circumstances, the
Department has concluded that the exclusion of U.S. exports from
applications in the manner described by respondents eliminates any
countervailable subsidy that would otherwise be present. As stated in
the last review of this order, Extruded Rubber Thread From Malaysia;
Final Results of Countervailing Duty Administrative Review (61 FR
55272; October 25, 1996), respondents' reliance on the Crankshafts from
Brazil suspension agreement is misplaced. Suspension agreements are
unusual, negotiated arrangements in which parties to a proceeding agree
to renounce countervailable subsidies. As such, unlike final
determinations, they do not serve as administrative precedent.
Moreover, the Crankshafts from Brazil suspension agreement is
consistent with our allocation practice.
Comment 6: Pioneer Program is neither specific nor contingent upon
export performance. Respondents argue that the Department previously
found the Pioneer Status Program not countervailable because it was
found to be not specific. See Carbon Steel Wire Rod from Malaysia:
Final Results of Countervailing Duty Administrative Review; 56 FR 14927
(April 12, 1991) (Wire Rod). Respondents assert that it is not
countervailable because tax benefits under this program are not limited
to any sector or region of the Malaysian economy, nor is the program
exclusively available to exporting companies. They contend that the
Department confirmed, in the first administrative review, both the de
jure and de facto availability of this program to the entire Malaysian
economy, and that the pioneer status tax benefits are not targeted to
specific industries or companies in a discriminatory manner. Further,
the Department verified in the original investigation that the internal
guidelines used to grant pioneers status are characterized by neutral
criteria unrelated to exports, location or any other factors that could
require a determination that the program is countervailable.
Respondents further argue that the Department verified in the first
administrative review that the GOM does not require export commitments,
or view them as preponderant, in evaluating applications; that export
potential is merely one of 12 factors considered in granting status;
and that a product will not be accepted based on export potential
alone. Further, respondents argue that the Department verified in the
first administrative review that the GOM commonly approves companies
that do not make export commitments, as well as some that do make them.
Therefore, export performance is not viewed as a preponderant
factor, but as one of many neutral criteria.
Department's Position: We addressed this identical argument in the
previous review of this order. In Wire Rod, we concluded that benefits
were not used by a specific industry or group of industries and that no
industry or group of industries used the program disproportionately;
accordingly, we found the program not to be countervailable. That
determination, however, did not specifically address situations where
companies had a specific export condition attached to their pioneer
status approval. In the Wire Rod investigation, although petitioners
raised the issue of an export requirement with respect to pioneer
status, the export requirement was not at issue with the companies
investigated in Wire Rod.
In this case, recipients of the tax benefits conferred by Pioneer
Status can be divided into two categories: industries and activities
that will find market opportunities in Malaysia and elsewhere, and
those that face a saturated domestic market. At verification of the
first administrative review, we established that an export requirement
may sometimes be applied
---- page 48989 ----
to certain industries after it is determined that the domestic market
will no longer support additional producers. The extruded rubber thread
industry is among these industries.
The combination of the necessary export orientation of the industry
due to lack of domestic market opportunities and the explicit export
condition attached to pioneer status approval in the rubber thread
industry leads us to conclude that the Pioneer Status program
constitutes an export subsidy to the rubber thread industry. Whether or
not the commitment was voluntary, as respondents suggest, the company
has obligated itself to export a very large portion of its production,
and that commitment was a condition for approval of benefits. Thus, the
Department upholds its decision to countervail this program as an
export subsidy.
Comment 7: Overstatement of Pioneer Program. Respondents argue that
the Department overstated the benefit from the Pioneer program because
it failed to deduct the normal capital allowances that would have been
allowed if the program had not been used. Further, they claim, the
Department incorrectly allocated pioneer status tax benefits over only
export sales even though pioneer status tax benefits are also
applicable to profits on domestic sales. According to the respondents,
this is inconsistent with the Department's practice to allocate
benefits over total sales to which they are ``tied.''
Respondents also argue that the Department countervailed
Rubberflex's pioneer benefit in the 1993 review, and must avoid
countervailing the same benefit in the 1995 review.
Department's Position: The Department disagrees with the
respondents' allegation that it overstated the benefit from the Pioneer
Program because of capital allowances. When a company receives pioneer
status, it is allowed to accumulate the normal capital allowances for
use in future years. Heveafil/Filmax did not pay income taxes during
the period of review because of its pioneer status. Therefore, the
income tax exemption under the Pioneer Program has conferred a benefit
upon the company because it used its pioneer status to offset income.
Because Heveafil/Filmax is also able to accumulate capital allowances
which can be used to offset taxable income in the future, after its
pioneer status expires, there is no basis for adjusting the benefit
from the income tax exemption for these allowances. Moreover, export
sales should form the denominator because receipt of pioneer status tax
benefits is contingent upon exportation. Accordingly, we have not
overstated the benefit from the Pioneer Program. See e.g., Final
Affirmative Countervailing Duty Determination: Certain Agricultural
Tillage Tools From Brazil (50 FR 34525; August 26, 1985) and 1994
Castings Review.
We agree with the respondents' claim that there is no
countervailable subsidy to Rubberflex under the Pioneer Program in the
instant review. In the 1993 review, the Department used the estimated
tax return submitted by Rubberflex to calculate the countervailing duty
rate for the Pioneer Program. For the 1995 preliminary review, the year
in which Rubberflex for this program. Because we have previously
countervailed the benefit from that tax return in our 1993
administrative review of this order, we have not countervailed it again
in this review. Therefore, the new ad valorem rate for Rubberflex for
this program is 0.00% (See Section I(A)(2) above).
Final Results of Review
In accordance with 19 CFR Sec. 355.22(c)(4)(ii), we calculated an
individual subsidy rate for each producer/exporter subject to this
administrative review. For the period January 1, 1995 through December
31, 1995, we determine the net subsidy for the following companies to
be:
------------------------------------------------------------------------
Rate
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Heveafil/Filmax............................................ 0.90
Rubberflex................................................. 0.30
Filati..................................................... 0.15
Rubfil..................................................... 0.03
------------------------------------------------------------------------
The Department will instruct Customs to collect cash deposits of
estimated countervailing duties in the percentages detailed above of
the f.o.b. invoice price on all shipments from reviewed companies,
entered, or withdrawn from warehouse, for consumption on or after the
date of publication of the final results of this review. As provided
for in 19 C.F.R. Sec. 355.7, any rate less than 0.5 percent ad valorem
in an administrative review is de minimis. Accordingly, for those
producers/exporters, no cash deposits will be required.
We will instruct Customs to continue to collect cash deposits for
non-reviewed companies at the most recent company-specific or country-
wide rate applicable to the company. Accordingly, the cash deposit
rates that will be applied to non-reviewed companies covered by this
order are those established in the most recently completed
administrative proceeding, conducted pursuant to the statutory
provisions that were in effect prior to the URAA amendments. (See
Extruded Rubber Thread From Malaysia: Final Results of Countervailing
Duty Administrative Review, 60 FR 51982 (October 4, 1995). These rates
shall apply to all non-reviewed companies until a review of a company
assigned these rates is requested. In addition, for the period January
1, 1995 through December 31, 1995, the assessment rates that will be
applicable to all non-reviewed companies covered by this order are the
cash deposit rates in effect at the time of entry.
This countervailing duty order was determined to be subject to
section 753 of the Act (as amended by the Uruguay Round Agreements Act
of 1994). Countervailing Duty Order: Opportunity to Request a Section
753 Injury Investigation, 60 FR 27,963 (May 26, 1995), amended 60 FR
32,942 (June 26, 1995). In accordance with section 753(a), domestic
interested parties have requested an injury investigation with respect
to this order with the International Trade Commission (ITC). Pursuant
to section 753(a)(4), liquidation of entries of subject merchandise
made on or after January 1, 1995, the date Malaysia joined the World
Trade Organization, is suspended until the ITC issues a final injury
determination. We will not issue assessment instructions for any
entries made after January 1, 1995; however, as discussed above, we
will instruct Customs to collect cash deposits in accordance with the
final results of this administrative review.
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. Sec. 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)).
Dated: September 10, 1997.
Jeffrey P. Bialos,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-24845 Filed 9-17-97; 8:45 am]
BILLING CODE 3510-DS-M
The Contents entry for this article reads as follows:
International Trade Administration
NOTICES
Countervailing duties:
Extruded rubber thread from--
Malaysia, 48985