8 88-b21
NOTICES

                        DEPARTMENT OF COMMERCE

                               [C-557-803]

     Final Negative Countervailing Duty Determinations; Standard Pipe, Line Pipe,
      Light-walled Rectangular Tubing and Heavy-walled Rectangular Tubing From
                                 Malaysia

                         Monday, November 21, 1988

 *46904

 AGENCY: Import Administration, International Trade Administration,
 Commerce.

 ACTION: Notice.

 SUMMARY: We determine that de minimis countervailable benefits are being provided to
 manufacturers, producers, or exporters in Malaysia of standard pipe and light-walled
 rectangular tubing (LWRT), and that no benefits which constitute bounties or grants
 within the meaning of the countervailing duty law are being provided to
 manufacturers, producers, or exporters of heavy-walled rectangular tubing (HWRT). We
 also determine that no benefits within the meaning of the countervailing duty law are
 applicable to line pipe because we found no evidence to indicate that there are any
 producers or exporters in Malaysia which export line pipe to the United States. These
 products, which constitute four separate "classes or kinds" of merchandise, are fully
 described in the "Scope of Investigations" section of this notice.

 Since the estimated net bounties or grants on standard pipe, line pipe, LWRT and HWRT
 are either de minimis or zero, our determinations are negative. Since our preliminary
 determination with respect to standard pipe was affirmative, we will direct the U.S.
 Customs Service to discontinue suspension of liquidation of all entries of standard pipe
 from Malaysia that were entered, or withdrawn from warehouse, for consumption on or
 after September 8, 1988, and to refund all estimated countervailing duties deposited
 on these entries.

 EFFECTIVE DATE: November 21, 1988.

 FOR FURTHER INFORMATION CONTACT:Kay Halpern or Barbara Tillman, 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) 377-0192 or 377-2438.

 SUPPLEMENTARY INFORMATION:

 Final Determinations

 Based on our investigations, we determine that de minimis countervailable benefits are
 being provided to manufacturers, producers, or exporters in Malaysia of standard pipe
 and LWRT, and 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 HWRT. We also determine that no
 countervailable benefits are applicable to line pipe because we found no evidence to
 indicate that there are any producers or exporters in Malaysia which export line pipe to
 the United States.
 For purposes of the investigation of standard pipe, the following program is found to be
 countervailable:

 - Allowance of a Percentage of Net Taxable Income Based on the F.O.B. Value of Export
 Sales

 For purposes of the investigation of LWRT, the following program is found to be
 countervailable:

 - Export Credit Refinancing

 We determine the estimated net bounty or grant for standard pipe to be de minimis (0.30
 percent ad valorem) for all manufacturers, producers and exporters in Malaysia. We
 determine the estimated net bounty or grant for LWRT for all manufacturers, producers
 and exporters in Malaysia to be de minimis (0.002 percent ad valorem). We determine
 the estimated net bounty or grant for line pipe and HWRT for all manufacturers,
 producers and exporters in Malaysia to be zero.

 Case History

 Since the last Federal Register publication pertaining to these investigations [the Notice
 of Preliminary Determinations (53 FR 34801, September 8, 1988)], we conducted
 verification at the government and company offices in Malaysia from September 12
 through 23, 1988. Case briefs and rebuttal briefs were received on October 25, 1988 and
 October 27, 1988, respectively.

 Scope of Investigations

 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. 

*46905

 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 these investigations constitute four separate "classes or kinds" of
 merchandise. The four separate "classes or kinds" are as follows:
 (1) Certain circular welded carbon steel pipes and tubes, 0.375 inch or more but not over
 16 inches in outside diameter, generally known in the industry as standard pipe. This is a
 general-purpose commodity used in such applications as plumbing pipe, sprinkler
 systems, and fence posts. Standard pipe may be supplied with an oil coating (black pipe)
 or may be galvanized, and is sold in plain, threaded, threaded and coupled, or beveled
 ends. These products are generally produced to American Society of Testing Materials
 (ASTM) specifications A-53, A-120, or A-135. Imports of these products are classified
 under TSUSA categories 610.3231, 610.3234, 610.3241, 610.3242, 610.3243, 610.3252,
 610.3254, 610.3256, 610.3258, and 610.4925, and are classified under HTS categories
 7306.30.1000, 7306.30.5025, 7306.30.5030, 7306.30.5040, 7306.30.5045,
 7306.30.5050, 7306.30.5060, 7306.30.5065, 7306.30.5070, and 7306.30.5075.
 (2) Certain welded carbon steel American Petroleum Institute (API) line pipe, 0.375 inch
 or more but not over 16 inches in outside diameter known in the industry as line pipe.
 Line pipe generally is produced to API specification 5L. Line pipe is used for the
 transportation of gas, oil, or water, generally in pipeline or utility distribution systems.
 API line pipe not over 16 inches in outside diameter is classified under TSUSA categories
 610.3208 and 610.3209, and is classified under HTS categories 7306.10.1010 and
 7306.10.1050.
 (3) Certain heavy-walled carbon steel rectangular tubing having a wall thickness of 0.156
 inch or greater, which is generally used for support members for construction or
 load-bearing purposes in construction, transportation, farm, and meterial-handling
 equipment. The product is generally produced to ASTM specification A-500, Grade B.
 Imports of heavy-walled rectangular tubing are classified under TSUSA category
 610.3955, and are classified under HTS category 7306.60.1000.
 (4) Certain light-walled carbon steel rectangular tubing having a wall thickness of less
 than 0.156 inch, which is generally employed in a variety of end uses other than the
 conveyance of liquid or gas, such as agricultural equipment frames and parts, and
 furniture parts. The product is generally produced to ASTM specification A-513 or
 A-500, Grade A. Imports of light-walled rectangular tubing are classified under TSUSA
 category 610.4928, and are classified under HTS category 7306.60.5000.

 Analysis of Programs

 We verified that all three respondent companies, Maruichi Malaysia Steel Tube Bhd.
 (Maruichi), Amalgamated Industrial Steel Bhd. (AIS) and Steel Pipe Industry of Malaysia
 (SPIM), produce and export standard pipe to the United States. We also verified that only
 AIS produces and exports LWRT and HWRT to the United States. Finally, we found no
 evidence at verification to indicate that there are any producers or exporters in Malaysia
 which exported line pipe to the United States during or after the review period.
 For purposes of these determinations, the period for which we are measuring bounties or
 grants ("the review period") is calendar year 1987, which corresponds to the most
 recently completed fiscal year of one of the respondent companies. The other two
 respondent companies each have different fiscal years which overlap this period. In
 accordance with our practice in such situations, we have chosen the most recently
 completed calendar year as our review period.
 Based upon our analysis of the petition, the responses to our questionnaries, verification,
 and written comments from petitioners and respondents, we determine the following:

 I. Programs Determined To Confer Bounties or Grants

 A. We determine that bounties or grants are being provided to manufacturers, producers
 or exporters in Malaysia of standard pipe under the following program:

 Allowance of a Percentage of Net Taxable Income Based on the F.O.B. Value of Export
 Sales

 Effective in 1984, section 29 of the Investment Incentives Act of 1968 was amended to
 allow for a flat deduction or allowance of five percent of export revenues (based on F.O.B.
 value) from taxable income. Due to the enactment of the Promotion of Investments Act of
 1986, this program, provided for under section 39 of the 1986 Act, currently applies only
 to trading companies and agricultural companies.
 However, Maruichi was able to claim the section 29 allowance on its tax return filed
 during the review period. This return was based on Maruichi's fiscal year completed in
 1986 (February 1, 1985--January 31, 1986). The Malaysian tax authorities allowed only
 those exports shipped through December 31, 1985, to be used for the allowance claim.
 Because only exporters are eligible for the program, we determine that it is
 countervailable.
 To calculate the benefit from this program, we divered Maruichi's tax savings from the
 program by the respondent companies' total exports during the review period in
 accordance with section 706(a)(2) of the Act, which requires us to calculate a
 country-wide rate for purposes of determining whether an investigation results in an
 affirmative or a negative determination. The country-wide rate includes all respondent
 companies because we verified that each company exports standard pipe to the United
 States. We divided the tax savings by the respondents' total exports because the program
 is not segregable by product or market. The resulting estimated net bounty or grant rate
 is 0.30 percent ad valorem.
 In the preliminary determination on standard pipe we had calculated a bounty or grant
 rate for the review period of 1.17 percent ad valorem. We obtaining this rate by dividing
 Maruichi's section 29 allowance tax savings by its total exports during the review period.
 We excluded from this calculation all respondent companies with de minimis rates. We
 now have determined that the more appropriate way of calculating the bounty or grant
 rate is to include companies with de minimis rates in our determination of the
 country-wide rate (see DOC Position on Comment 2).
 This rate is only applicable to standard pipe because Maruichi exported only standard
 pipe to the United States during the review period. The rate for this program appolicable
 to LWRT and HWRT is zero because AIS, the only respondent which exported these
 products to the United States during the review period, did not claim benefits under this
 program on its tax return filed during the review period.
 On January 1, 1986, the Government of Malaysia terminated the Allowance of a
 Percentage of Net Taxable Income Based on the F.O.B. Value of Export Sales, except with
 regard to trading and agricultural companies. This termination was implemented through
 the passage of the Promotion of Investments Act of 1986. The Government replaced the
 Allowance with a new program applicable to exports made on or after January 1, 1986.
 The new program, provided for under Section 36 of the 1986 

*46906

 Act, is the
 "Abatement of Taxable Income Based on the Ratio of Export Sales to Total Sales and
 Abatement of Five Percent of the Value of Indigenous Materials Used in Exports." It
 provides for an abatement of adjusted income for exports. The amount of adjusted
 income to be abated is: (1) A rate equivalent to 50 percent of the ratio of export sales to
 total sales; and (2) five percent of the value of indigenous Malaysian materials
 incorporated in the manufacture of exported products. This program is only applicable if
 there is adjusted income and cannot be carried forward if there is an adjusted loss. It is
 not available to companies still participating in programs under the repealed Investment
 Incentives Act of 1968, including pioneer status, or to companies granted pioneer status
 or an investment tax allowance under the Promotion of Investments Act of 1986.
 We verified that Maruichi and AIS claimed the first section of the Abatement on their tax
 returns filed in 1988. However, since these benefits were not claimed until after the
 review period, they do not affect our net bounty or grant determination. We must look at
 a finite period of time in making our determination as to whether countervailable benefits
 are above a de minimis rate. During the review period the countervailable tax benefits
 realized by the respondent companies were de minimis. Since the export tax allowance
 program was the only countervailable program used during the review period, we have
 no basis to issue an affirmative determination on standard pipe. Furthermore, we note
 that we can not at this time determine whether the benefits from the Abatement program
 would be above de minimis after the review period.
 In our preliminary determination on standard pipe we estimated a duty deposit rate for
 Maruichi for the Abatement program by dividing its 1988 tax savings by its 1987 sales.
 We used the 1987 sales as a surrogate for 1988 sales in order to estimate the eventual
 duty liability. However, as described above, for purposes of our final determination on
 standard pipe we have now determined that the countervailable benefits during the
 review period are de minimis, and that there is, therefore, no basis to issue a
 countervailing duty order on standard pipe. Accordingly, the issue as to the
 appropriate duty deposit rate is moot.

 B. We determine that bounties or grants are being provided to manufacturers, producers
 or exporters in Malaysia of LWRT under the following program:

 Export Credit Refinancing

 The Bank Negara Malaysia, the central bank of Malaysia, provides short-term export
 credit refinancing through commercial banks. The Export Credit Refinancing (ECR)
 programs, as revised in January 1986, provide pre- and post- shipment financing of
 exports for periods of up to 90 days. In December 1987, the maximum periods for
 financing under these programs were extended to 120 and 180 days, respectively.
 Currently, ECR offers order-based pre- and post- shipment financing and "certificate of
 performance" (CP) based pre-shipment financing. Order-based financing is provided on
 specific sales to specific markets. CP-based financing, which is a line of credit based on the
 previous 12 months' export performance, cannot be tied to specific sales in specific
 markets.
 We verified that AIS is the only respondent company which paid interest on an Export
 Credit Refinancing loan for exports to the United States during the review period. The
 company received an order-based ECR loan on one shipment of LWRT to the United
 States. Because only exporters are eligible for ECR loans, we determine that they are
 countervailable to the extent that they are provided at preferential rates.
 In order to determine whether the loan received by AIS was provided at a preferential
 rate, we compared the interest rate charged to our short-term loan benchmark interest
 rate. As a benchmark for short-term loans, it is our practice to use the most comparable,
 predominant commercial rate for short-term financing. For purposes of these
 determinations, we are using the 90-day Bankers' Acceptance (BA) rate as the most
 comparable and commonly used alternative source of short-term financing. This is the
 benchmark that we applied in Final Affirmative Countervailing Duty Determination:
 Carbon Steel Wire Rod from Malaysia (53 FR 13303, April 22, 1988) (Wire Rod), the last
 investigation in which this program was used. Based on this comparison, we find that the
 ECR loan was provided at a preferential rate and, therefore, is countervailable.
 To calculate the benefit from the ECR loan on which AIS paid interest in 1987, we followed
 the short-term methodology which has been applied consistently in our past
 determinations and is described in more detail in the Subsidies Appendix attached to the
 notice of Cold-Rolled Carbon Steel Flat- Rolled Products from Argentina: Final
 Affirmative Countervailing Duty Determination and Countervailing Duty Order
 (49 FR 18006, April 26, 1984).
 We compared the amount of interest actually paid during the review period to the amount
 that would have been paid at the benchmark rate. Because order- based ECR loans are
 shipment-specific, we included only that loan which financed exports of the products
 under investigation to the United States (in this case, LWRT). For this loan, we calculated
 the amount of interest that would have been paid using the BA benchmark and subtracted
 the amount of interest that was actually paid. We divided the result by AID's exports of
 LWRT to the United States during the review period. The result was a rate of 0.002
 percent Ad valorem. This rate is only applicable to LWRT because the loan received by
 AIS was for a shipment of this product.

 II. Program 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 standard pipe, line pipe, LWRT or HWRT under the
 following program:

 Accelerated Depreciation Allowance

 The Accelerated Depreciation Allowance (ADA) was introduced in the mid-1970s. Since
 then, it has gone through several revisions, the most recent being a change from allowing
 an 80 percent annual depreciation on approved assets (thus providing a 100 percent tax
 write-off for these assets in the first year, since the initial allowance is 20 percent), to
 reducing the annual allowance to 40 percent (thereby spreading the tax write-off over
 two years). This revision was implemented with respect to assets purchased after January
 1, 1986, according to Rules 1986 of the Income Tax Act of 1967. The allowance applies to
 plant and machinery.
 We verified that there are no restrictions as to which companies can claim the ADA. In
 addition, we found that there are no qualifying or application procedures associated with
 the claim and that the Government has no discretion to vary the level of the allowance
 (40 percent for all companies). Moreover, we found no distinctions within the
 manufacturing sector as to which companies have claimed the ADA. We thus determine
 that this program is not limited to a specific enterprise or industry or group of enterprises
 or industries and, therefore, is not counteravailable.

 *46907 

III. Programs Determined Not To Be Used

 Based on verified information, we determine that manufacturers, producers, or exporters
 in Malaysia of the pipe and tube products under investigation did not apply for, claim or
 receive benefits during the review period for exports of these products to the United
 States under the programs listed below. The program descriptions given below are based
 on verified information. Programs not described below are fully described in the notice of
 preliminary determinations in these investigations (53 FR 34801, September 8, 1988).

 A. Export Tax Incentives

 1. Abatement of Five Percent of the Value of Indigenous Materials Used in Exports.
 Section 36 of the Promotion of Investments Act of 1986 provides for an abatement of
 adjusted income for exports. The amount of adjusted income to be abated is: (1) A rate
 equivalent to 50 percent of the ratio of export sales to total sales; and (2) five percent of
 the value of indigenous Malaysian materials incorporated in the manufacture of exported
 products. Maruichi made a claim under the first section of this program on its tax return
 filed in 1988 (see section I. of the notice), but did not make a claim under the second. This
 program is not available to companies still participating in programs under the repeal
 Investment Incentives Act of 1968, including pioneer status, or to companies granted
 pioneer status of an investment tax allowance under the Promotion of Investments Act of
 1986.

 2. Allowance of Taxable Income of Five Percent for Trading Companies Exporting
 Malaysian-made Products. Under section 39 of the Promotion of Investments Act of
 1986, an allowance of five percent of the F.O.B. value of export revenues is available to
 trading companies and agricultural companies exporting Malaysian- made products. This
 program, like the abatement based on indigenous materials used in exports, is not
 available to companies still participating in programs under the repealed Investment
 Incentives Act of 1968, including pioneer status, or to companies granted pioneer status
 or an investment tax allowance under the Promotion of Investments Act of 1986.
 3. Double Deduction for Export Credit Insurance Payments.
 4. Double Deduction for Export Promotion Expenses.
 5. Industrial Building Allowance.

 B. Other Export Incentive

 Export Insurance Program.

 C. Other Tax Incentives

 1. Pioneer Status Under the Investment Incentives Act of 1968. Pioneer status under this
 Act, as amended, is available to companies producing a product (1) with favorable
 prospects for further development, including development for export, or (2) currently
 being produced in insufficient quantities to meet the development needs of Malaysia,
 including export. Benefits granted under pioneer status include exemptions on the
 portion of income derived from sales of the pioneer product from the following: (1) The
 40 percent corporate income tax; (2) the five percent development tax; and (3) the three
 percent excess profits tax. Pioneer status benefits are available for a period of up to five
 years and may be extended for up to an additional three years. This program is not
 available to companies granted pioneer status for the same product under the Promotion
 of Investments Act of 1986. It is also not available to companies which received an
 investment tax credit under the Investment Incentives Act of 1968 or which received an
 investment tax allowance under the 1986 Act.
 We verified that all three respondent companies received pioneer status in the 1970s and
 that they completely utilized any residual benefits remaining from this program before
 the review period.
 
2. Pioneer Status Under the Promotion of Investments Act of 1986. As stated above, the
 Promotion of Investments Act of 1986 replaced the Investment Incentives Act of 1968.
 Companies which received pioneer status under the 1968 Act may not receive it again
 under the 1986 Act for the same product. They may, however, receive it again under the
 1986 Act for a different product. In addition, pioneer status under the 1986 Act is not
 available to companies which received an investment tax credit under the 1968 Act or
 which received an investment tax allowance under the 1986 Act.
 The primary changes in the pioneer status program under the new law are as follows: (1)
 The initial grant of pioneer status is five years for all companies, regardless of their level
 of investment; (2) the product must be on the "promoted product" or "promoted
 activities" list; (3) specific one-year extensions for location, priority products, and
 Malaysian content have been eliminated; (4) extensions are now granted for five years if
 the product is on the "promoted product" list for extensions and the company meets
 certain investment, employment, or development criteria; and (5) pioneer status may
 also be provided to non-corporate entities such as cooperative societies, associations,
 etc. We verified that none of the respondent companies have been approved for pioneer
 status under the 1986 Act.
 
3. Investment Tax Allowance.
 4. Reinvestment Allowance.

 D. Medium- and Long-term Government Financing

 E. Reduction in the Cost of State Land for New Industry

 F. Preferential Financing for Bumiputeras

 Interested Party Comments

 Comment 1

 Petitioners argue that we should use a weighted-average rate for overdrafts and Bankers
 Acceptances (BAs) combined as the benchmark for calculating benefits from ECR
 financing. They allow that BA financing is "comparable" to ECR financing but contend that
 the BA rate alone should not be used because BAs are not the "predominant" form of
 short-term financing in Malaysia. In support of their contention, they cite Final
 Affiramtive Countervailing Duty Determination: Carbon Steel Wire Rod From
 Malaysia (53 FR 13303, April 18, 1988) (Wire Rod), where the Department used "the most
 comparable, predominant commercial rate for short-term financing" as the benchmark
 for the ECR loan program.
 Respondents claim that BA financing is the commercial equivalent of ECR financing and,
 therefore, the BA rate is the most appropriate benchmark for calculating benefits from
 ECR financing.

 DOC Position

 In calculating benefits from short-term loans, the Department uses the most appropriate
 national average commercial method of short-term financing (see, for example, the
 Subsidies Appendix). In Wire Rod, the BA rate was used as the benchmark for calculating
 benefits from ECR loans because BA financing was found to be the predominant
 alternative to ECR financing. In the current investigation we verified at the Bank Negara,
 Malaysia's central bank, and at a commercial bank that BA financing is the predominant
 alternative to ECR financing. Therefore, we consider the BA rate the most appropriate
 rate to use as our benchmark.

 Comment 2

 Petitioners argue that the Department should obtain a final bounty or grant rate for
 standard pipe by calculating an individual rate for Maruichi, as it did in 

*46908

 the
 preliminary determination. They cite section 607 of the Act (19 U.S.C. 1671e(a)(2)),
 which allows the Department to calculate separate rates for different companies if there is
 a "significant differential between companies receiving subsidy benefits." They further
 contend that it has been the Department's practice to find a significant differential
 between companies when one received de minimis benefits and another received benefits
 that are above de minimis. In support of their argument, they cite Final Affirmative
 Countervailing Duty Determination: Certain Stainless Steel Hollow Products from
 Sweden (52 Fr 5794, February 1987), among other cases, in which significant differentials
 were found and only the sales of non-de minimis companies were used in calculating the
 subsidy rate.
 Respondents claim that the Department should calculate a final rate for standard pipe by
 allocating Maruichi's tax benefits received during the review period over all respondent
 companies' sales. They cite Ceramica Regiomontana, S.A. v. United States (7 ITRD 2512,
 CIT 1986), in which the Court of International Trade ruled that "Congress has endorsed a
 legislative presumption in favor of a country-wide rate." They also refer to the
 Department's proposed regulations, which interpret the term "significant differential" to
 allow for company-specific rates only if there is "a difference of the greater of at least 10
 percentage points, or 25 percent, from the weighted-average net subsidy calculated on a
 country-wide basis."

 DOC Position

 Section 706(a)(2) of the Act creates a presumption in favor of country-wide rates. This
 presumption is overcome if the Department determines there is a significant differential
 between companies receiving subsidy benefits. In this regard, Congress directed the
 Department to develop a "reasonable" standard for determining what is a significant
 differential. See H.R. Conf. Rep. No. 1156, 98th Cong., 2d Sess. 180 (1984).
 Section 355.20(d)(3) of our proposed countervailing duty regulations (50 FR 24217,
 24225 (1985)) defines a significant differential as "a difference of the greater of at least 10
 percentage points, or 25 percent, from the weighted- average net subsidy calculated on a
 country-wide basis." It is also our practice, as the cases cited by petitioners suggest, to
 define a significant differential as the difference between a net subsidy of zero (or de
 minimis) and any rate greater than de minimis. However, before we will consider the
 question of a significant differential, we must first test the presumption in favor of
 country-wide rates. Thus, the initial step in the Department's calculation of the net
 subsidy is to determine the country-wide average rate. In the past, we have excluded
 companies with de minimis rates in determining the country-wide rate. We now
 determine that the more appropriate basis to calculate the country-wide rate is to include
 all companies regardless of the level of benefits for each company.
 If the country-wide average is de minimis, our determination in an investigation will be
 negative. If the country-wide average is above de minimis, we then compare individual
 company rates with the country-wide average rate to determine whether significant
 differentials exist. Because we also consider individual rates of zero and de minimis to
 constitute a "significant differential," we remove all zero and de minimis companies (as
 well as other companies with significantly different rates) from the calculation of the
 country-wide average rate. As soon as at least one company is removed from the
 country-wide rate average, we no longer use the country-wide rate for duty deposit
 purposes. Rather, we assign individual company-specific rates to those companies that
 are "significantly different" (including zero rate and de minimis companies); the remaining
 companies form the basis of the "all other" rate. An "all other" rate is different from a
 country-wide rate because an "all other" rate is not based on all companies. There are
 three exceptions to this general practice: (1) An investigation does not cover virtually all
 exports of the merchandise to the United States; (2) we have no company- specific export
 data, only aggregate export data from a government; and (3) we use generally recognized
 sampling techniques.
 Since none of these three exceptions apply to these investigations and since the
 country-wide rates for our investigations of standard pipe and LWRT are de minimis, we
 did not reach the question of whether there is a significant differential between the
 companies receiving countervailable benefits. Therefore, our determinations in these
 investigations are negative.

 Comment 3 

 Respondents argue that the tax benefits received by Maruichi and AIS on their returns
 filed in 1988 should not be considered in making our final determination for standard pipe
 because these returns were filed after the review period. They contend that the
 Department's policy has been to treat benefits from income tax programs as accruing in
 the year in which the tax return claiming the benefits is filed.

 DOC Position 

 The Department's practice for tax programs is to calculate benefits based on when the
 respondent companies realize or know the extent of their tax savings. Generally, as here,
 the amount of tax savings is not known until the tax return is filed. As noted in section
 I.A. of the notice, the countervailable tax benefits realized by the respondent companies
 during the review period were de minimis. Since the export tax allowance program was
 the only countervailable program used during the review period, we have no basis to
 issue an affirmative determination on standard pipe. While post-review period
 information can be used to determine whether there has been a program-wide change for
 purposes of calculating a duty deposit rate in an affirmative determination, such
 information cannot be used as the basis for obtaining an affirmative determination.
 Therefore, since the estimated net bounty or grant rate for the review period is negative
 for standard pipe, there is no reason to calculate a separate duty deposit rate based on
 post-review period information.

 Comment 4 

 Respondents claim that the tax allowance benefit received by Maruichi was not generated
 by U.S. sales since the fiscal year covered by Maruichi's 1987 return was February 1,
 1985--January 31, 1986, and Maruichi began exporting to the United States in the last
 quarter of 1987.

 DOC Position 

 Since our determination for standard pipe is negative, the issue is moot. In calculating the
 benefit bestowed by a tax program, it is our practice to apply the tax savings from the
 return filed during the review period to review period sales, regardless of the fiscal year
 covered by the tax return.

 Verification

 We verified the information used in making our final determinations in accordance with
 section 776(b) of the Act. We used standard verification 

*46909

 procedures including
 meetings with government and company officials and examination of relevant accounting
 records and original source documents of the respondents. Our verification results are
 outlined in the public versions of the verification reports which are on file in the Central
 Records Unit (Room B-099) of the Main Commerce Building.

 Suspension of Liquidation Discontinued

 The estimated net bounty or grant rate for standard pipe is 0.30 percent ad valorem. The
 estimated net bounty or grant rate for LWRT is 0.002 percent ad valorem. Under section
 355.8 of our regulations, an aggregate net subsidy of less than 0.5 percent ad valorem is
 considered de minimis.
 The estimated net bounty or grant rate for HWRT is zero because no bounties or grants
 were conferred on the export of this product to the United States during the review
 period. The estimated net bounty or grant rate for line pipe is zero because we verified
 that there were no exports of this product from Malaysia to the United States during the
 review period.
 For the above reasons, we are directing the U.S. Customs Service to discontinue
 suspension of liquidation of all entries of standard pipe from Malaysia that we entered, or
 withdrawn from warehouse, for consumption on or after September 8, 1988, and to
 refund all estimated countervailing duties deposited on these entries. Since the
 determinations on line pipe, HWRT and LWRT are also negative, no suspension of
 liquidation will be required for these products.
 These determinations are 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. 88-26869 Filed 11-18-88; 8:45 am]

 BILLING CODE 3510-DS-M