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(C-557-806)
Final Affirmative Countervailing Duty Determination and Countervailing Duty
Order; Extruded Rubber Thread From Malaysia
Tuesday, August 25, 1992
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AGENCY: Import Administration, International Trade Administration, Department of Commerce.
EFFECTIVE DATE: August 25, 1992.
FOR FURTHER INFORMATION CONTACT: Gary Bettger or Vincent Kane, Office of Countervailing Investigations, Import Administration, U.S. Department of Commerce, room B099, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone (202) 377-2239 or 377-2815, respectively.
FINAL DETERMINATION: Since the publication of the preliminary determination (56 FR 67276; December 30, 1991), the following events have occurred. On December 30, 1991, petitioner, the North American Rubber Thread Company, requested that the final determination in the countervailing duty investigation be aligned with the final determination in the antidumping duty investigation of extruded rubber thread from Malaysia. We published our notice to align these determinations on January 28, 1992 (57 FR 3163). At the request of respondents, on April 2, 1992, we published our notice postponing the final determination in the antidumping duty investigation (and, therefore, also the countervailing duty investigation) to August 17, 1992 (57 FR 11288).
We verified questionnaire responses in Malaysia between June 8 and June 16, 1992. On June 17, 1992, the International Trade Commission ("ITC") published notice of its decision to discontinue its injury investigation with respect to this countervailing duty investigation because the President terminated the duty free status under the Generalized System of Preferences ("GSP") of extruded rubber thread from Malaysia effective March 31, 1992. Finally, case briefs were filed on July 28 and July 30, 1992, and rebuttal briefs were filed on August 5, 1992.
Scope of Investigation
The product covered by this investigation is extruded rubber thread from Malaysia. 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
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Harmonized Tariff Schedule (HTS). Although the HTS subheadings are provided for convenience and customs purposes, our written description of the scope of this proceeding is dispositive.
Analysis of Programs
For purposes of this final determination, the period for which we are measuring bounties or grants (the period of investigation ("POI")) is calendar year 1990, which corresponds to the fiscal year of four of the five respondent companies. These findings are based upon our analysis of the petition, responses to our questionnaires, verification and written comments from respondents and petitioner.
In determining the benefits received under the various programs described below, we used the following calculation methodology. We first calculated a country-wide rate for each program. This rate comprised the ad valorem benefit received by each firm weighted by each firm's share of exports to the United States. The program rates were then summed to arrive at a country-wide rate for all programs.
Pursuant to 19 CFR 355.20(d), we compared the total ad valorem benefit received by each firm to the country-wide rate for all programs. The rate for Rubfil was significantly different from the country-wide rate. Therefore, this firm received an individual company rate. For the remaining four firms, we recalculated the country-wide rate, based solely on the benefits received by these four firms. We then assigned the recalculated overall country-wide rate to these four firms, and all other manufacturers, producers, and exporters, with the exception of Rubfil.
A. Programs Determined to Confer Bounties or Grants
We determine that bounties or grants are being provided to manufacturers, producers, or exporters in Malaysia of extruded rubber thread under the following programs:
1. Rubber Discount Program
The Rubber Discount Scheme was implemented in January 1985 in order: (1) To increase the domestic consumption of natural rubber, (2) to develop downstream rubber product applications in Malaysia, and (3) to reduce the cost of production in order to allow manufacturers to compete with manufacturers in other countries with access to low rubber latex prices. Under this program, the Government of Malaysia (GOM) provides a rebate of 20 Malaysian sen per kilogram on natural rubber latex purchased to manufacture products for export. Because this program is limited to exporters, we have determined that it is counteravailable.
The natural rubber latex is typically purchased through designated sellers (i.e., the Malaysian Rubber Development Corporation (MARDEC), the Federal Land Development Authority (FELDA), or the Rubber Industry Smallholder Development Authority (RISDA)). If rubber latex is purchased from non-designated sellers (i.e., small, local sellers), companies can still receive the discount; however, they must pay an endorsement fee to MARDEC to receive it. Subsequent to the purchase of the rubber, an "authorization letter" from the Malaysian Department of Treasury directs these suppliers to provide the discount in the form of a cash rebate.
A firm can precisely calculate the rubber discount rebate for each export transaction at the moment the transaction is made. Therefore, we have focused on rebates earned during the POI. (See, Final Affirmative Countervailing Duty Determination and Countervailing Duty Order: Certain Steel Wire Nails From New Zealand 52 FR 37196; October 5, 1987). We verified that all companies earned rubber discounts during the POI.
To calculate the benefit from this discount, we first deducted the amount of fees paid in order to qualify for receipt of the discounts, in accordance with section 771(6)(A) of the Act. Similarly, we reduced the discount amount to account for its delayed receipt. Because the GOM has mandated that companies may apply for the discount only every six months, we have assumed an average deferral of three months before the discount may be received. In accordance with section 771(6)(B) of the Act, we have allowed an offset for this deferral, basing the offset on the opportunity cost to the company, measured at the three-month fixed deposit rate.
We then divided the net discounts earned by each company in 1990 by that company's total exports, because the discounts apply to all exports. We then applied the calculation methodology for significantly different companies outlined above. On this basis, we determine the net bounties or grants from this program to be 2.78 percent ad valorem for all manufacturers, producers, and exporters in Malaysia of extruded rubber thread, except for Rubfil whose net bounty or grant is 3.16 percent.
2. Export Credit Refinancing (ECR) Program
The ECR program was established in order to promote: (1) Exports of manufactured goods and agricultural food products that have significant value- added and high local content, (2) greater domestic linkages in export industries, and (3) easy access to credit facilities. In order to accomplish this, the Bank Negara Malaysia, the central bank of Malaysia, provides order- based and pre- and post-shipment financing of exports through commercial banks for periods of up to 120 and 180 days, respectively, and certificate of performance (CP)-- based pre-shipment financing. Order-based financing is provided for specific sales to specific markets. CP-based financing is a line of credit based on the previous 12 months' export performance, and cannot be tied to specific sales in specific markets.
We verified that all five companies used the ECR program during the POI. We also verified that all of the pre-shipment financing received during the period was CP-based.
Because only exporters are eligible for ECR loans, we determine that the loans are counteravailable to the extent that they are provided at preferential rates. In order to determine whether these loans were provided at preferential rates, we compared the interest rate charged to a benchmark interest rate.
In past cases involving Malaysia, we have used banker's acceptances as the most comparable source of short-term commercial financing. (See, Final Affirmative Countervailing Duty Determination and Countervailing Duty Order: Carbon Steel Wire Rod From Malaysia (53 FR 18303; April 22, 1988) (Wire Rod).) Since Wire Rod, however, our practice has been to select the predominant source of short-term financing in the country as our benchmark for short-term loans. (See Final Affirmative Countervailing Duty Determination, New Steel Rails, Except Light Rails, from Canada (54 FR 31991; August 3, 1989), Final Affirmative Countervailing Duty Determination, Steel Wire Rope from Thailand (56 FR 46299; September 11, 1991) and s 355.44(b)(3) of the Department's Proposed Substantive Countervailing Duty Regulations (54 FR 23366; May 31, 1989). Because banker's acceptances account for only a small portion of short- term financing in Malaysia, we have determined that it would no longer be appropriate to use these loans as a benchmark.
In Malaysia, term loans offered by commercial banks are the most predominant form of short-term financing, with overdraft loans being the second most predominant form. The average interest rates for these types of financing, however, are not individually
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available. Therefore, we have used as our benchmark for ECR loans the average commercial bank lending rate as an estimate of these predominant short-term lending rates because at least 80 percent of the loans made by commercial banks were either term loans or overdrafts.
Based on a comparison of the ECR rates and the benchmark rate, we find that ECR loans are provided at preferential rates and, therefore, are countervailable. To calculate the benefit from ECR loans on which interest was paid in 1990, we used our short-term loan methodology which has been applied consistently in previous determinations. (See Final Affirmative Countervailing Duty Determination and Countervailing Duty Order: Dutt-Weld Pipe Fittings from Thailand (55 FR 1695; January 18, 1990); Final Affirmative Countervailing Duty Determination and Countervailing Duty Order: Ceramic Tile from Mexico (53 FR 15290; April 28, 1988); see also Alhambra Foundry v. United States, 626 F. Supp. 402 (CIT, 1985).) This methodology is also described in more detail under s 355.44(b)(3) of the Department's Proposed Substantive Countervailing Duty Regulations (54 FR 23366; May 31, 1989).) Because the post-shipment ECR loans were shipment specific, we included in our calculations only those loans used to finance exports of extruded rubber thread to the United States. Because the CP-based, pre-shipment loans were not shipment-specific, we included all CP loans on which interest was paid during the POI.
We compared the amount of interest actually paid during the POI to the amount that would have been paid at the benchmark rate. We then divided each company's interest savings by that company's total exports, in the case of CP- based loans, or by its exports to the United States, in the case of post- shipment loans. We then applied the calculation methodology for significantly different companies outlined above.
On this basis, we determine the net bounties or grants from this program to be 1.86 percent ad valorem for all manufacturers, producers, and exporters in Malaysia of extruded rubber thread, except for Rubfil, whose net bounty or grant is 1.06 percent.
3. Electricity Discount Program for Exporters
The Electricity Discount Program provided a reduction in the electricity rates charged to qualifying companies. The program was originally implemented in 1985 as a discount for rubber-based manufacturers. That program, however, was terminated and replaced by a new Electricity Discount Program in 1989.
The program in effect during our investigation provided discounts to companies that produced a manufactured product covered by the Industrial Coordination Act of 1975, and which exported at least 50 percent of their production. The amount of the discount was calculated by computing 20 percent of the ratio of export to total sales and multiplying the resulting amount by the total electricity charge. We verified that Heveafil and Rubberflex received discounts under this program during the POI. Because this program is limited to exporters, we determine it to be countervailable.
To calculate the benefit from this program, we divided the total amount of discounts received by each company by that company's total exports, because the benefits are not shipment-specific. We then applied the calculation methodology for significantly different companies as outlined above. On this basis, we determine the net bounties or grants from this program to be 0.02 percent ad valorem for all manufacturers, producers, and exporters in Malaysia of extruded rubber thread, except for Rubfil, which has significantly different aggregate benefits. This firm did not receive electricity discounts during the POI.
We verified that this program was terminated on March 1, 1990. Consistent with our policy of taking into account measurable program-wide changes that occur before the preliminary determination, we will not include the net bounties or grants determined for this program in our calculation of the estimated countervailing duty cash deposit rate.
4. Abatement of Income Tax Based on the Ratio of Export Sales to Total Sales
The Investment Incentives Act of 1968 provided for an abatement of income tax based on the ratio of export sales to total sales. This law was repealed effective January 1, 1986, and replaced by the Promotion of Investments Act of 1986. Among other incentives, the new law also provides an abatement of income tax based on export performance. Specifically, a portion of income, equal to 50 percent of the ratio of export sales to total sales is exempt from income tax. This program 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. Because this program is limited to exporters, we determine it to be countervailable.
We verified that only Heveafil used this program during the POI. In addition to the export abatement, we verified that Heveafil used several other tax allowances available to offset taxable income during the POI. As discussed below, we have found certain of these allowances to be countervailable.
During the POI, the combination of countervailable and non-countervailable allowances substantially exceeded taxable income. Because we countervail only that portion of the available allowances actually used to offset taxable income in the POI, we had to determine which of the allowances were used and to what extent. Given the manner in which tax returns are prepared, it is not possible to document which of the allowances were actually used to offset taxable income. However, we have determined that it is reasonable to assume that a company would use the export abatement before any of the other allowances available in this case, because, unlike the other allowances, the export abatement could not be carried forward for use in future tax years.
To calculate the benefit, we determined the total income and development tax savings for Heveafil during the POI and divided them by the company's total exports, because these benefits applied to all exports. We verified that the applicable development tax rate for our POI was four percent, not three percent as reported in the response. We then applied the calculation methodology for significantly different companies as outlined above. On this basis, we determine the net bounties or grants for this program to be 0.75 percent ad valorem for all manufacturers, producers, and exporters in Malaysia of extruded rubber thread, except for Rubfil, which has significantly different aggregate benefits. This firm did not use the export tax abatement during the POI.
For Heveafil, the export abatement did not fully offset taxable income and, hence, other allowances were used. Therefore, it is necessary to decide which of the remaining countervailable and non-countervailable allowances were used for tax abatement purposes. In making this decision, we took into account that one purpose of the countervailing duty law is to encourage foreign governments not to provide distortive subsidies to their exporting industries, and that the law also requires that countervailing duties offset
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the full amount of the net subsidy. To ensure that these objectives are fulfilled in this investigation, and in the absence of evidence which would permit us to identify which allowances were in fact used, we have determined that it is appropriate to assume the remaining countervailable allowances were used before the non-countervailable allowances in computing net taxable income.
5. Abatement of Five Percent of the Value of Indigenous Malaysian Materials Used in Exports
In addition to the Export Abatement discussed above, the Promotion of Investments Act of 1986 provided for an abatement of income tax in the amount of five percent of the ratio of export sales to total sales times the value of indigenous Malaysian materials used in the manufacture of exported products. This program is not available to companies still participating in programs under the repealed Investment Incentives Act of 1986, 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 natural rubber latex is included on the list of indigenous Malaysian materials qualifying for this abatement. Furthermore, we verified that Heveafil used this program during the POI.
Because this program is limited to exporters, we determine it to be countervailable. To calculate the benefit, we determined the total income and development tax savings from this program during the POI for Heveafil and divided them by the company's total exports, because these benefits applied to all exports. We then applied the calculation methodology for significantly different companies as outlined above. On this basis, we determine the net bounties or grants from this program to be 0.09 percent ad valorem for all manufacturers, producers, and exporters in Malaysia of extruded rubber thread, except for Rubfil, which has significantly different aggregate benefits. This firm did not use this abatement during the POI.
6. Industrial Building Allowance
Sections 63 through 66 of the Income Tax Act of 1967, as amended, allow an income tax deduction for a percentage of the value of constructed or purchased buildings used in manufacturing. In 1984, this allowance, which had been limited to manufacturing facilities, we extended to include buildings used as warehouses to store finished goods ready for export or imported inputs to be incorporated into exported goods. This program includes a ten percent initial and a two percent annual tax allowance (i.e., 12 percent in the first year and 2 percent thereafter). The program effectively reduces taxable income and can be carried forward to future tax years. We verified that rubber-based exporters are eligible for this program. We also verified that Heveafil used this program during the POI.
Because this program, as it applies to warehouses or other buildings used to store finished goods ready for export or imported inputs to be incorporated into exported goods, is limited to exporters, we determine it to be countervailable. To calculate the benefit, we determined the total income and development tax savings from this program during the POI for Heveafil and divided them by the company's total exports, because these benefits applied to all exports. We then applied the calculation methodology for significantly different companies as outlined above. On this basis, we determine the net bounties or grants from this program to be 0.0002 percent ad valorem for all manufacturers, producers, and exporters in Malaysia of extruded rubber thread, except for Rubfil, which has significantly different aggregate benefits. This firm did not use the industrial building allowance during the POI.
7. Double Deduction for Export Promotion Expenses
Section 41 of the Promotion of Investments Act of 1986 allows companies to deduct expenses related to the promotion of exports twice, once in calculating net income on the financial statement and again in calculating taxable income. We verified that Heveafil used this program during the POI.
Because this program is limited to exporters, we determine it to be countervailable. To calculate the benefit, we determined the total income and development tax savings from this program during the POI for Heveafil and divided them by the company's total exports, because these benefits applied to all exports. We then applied the calculation methodology for significantly different companies as outlined above.
On this basis, we determine the net bounties or grants from this program to be 0.03 percent ad valorem for all manufacturers, producers, and exporters in Malaysia of extruded rubber thread, except for Rubfil, which has significantly different aggregate benefits. This firm did not take a double deduction for export promotion expenses during the POI.
Pioneer status is a tax incentive offered to promote investment in the manufacturing, tourist, and agricultural sectors. Pioneer status was first introduced under the Pioneer Industries (Relief from Income Tax) Ordinance, 1958. This ordinance was replaced by the Investment Incentives Act (IIA) in 1968, which was subsequently replaced by the Promotion of Investment Act (PIA) of 1986. Under the IIA and the PIA, the Minister of International Trade and Industry may determine products or activities to be pioneer products or activities.
Companies petition for pioneer status for products or activities that have already been approved and listed as pioneer products. Once a company receives pioneer status, its profits from the designated product or activity are exempt from the corporate income tax, the development tax, and the dividend tax for a period of five years, with the possibility of an extension for and additional five years. The five-year extension was abolished effective October 1, 1991. Furthermore, the computation of capital allowances, which are normally deducted against the adjusted taxable income is postponed to the post-tax holiday period.
In evaluating a project for pioneer status, the Malaysian Industrial Development Authority (MIDA) will consider whether:
(1) The product is being produced on a commercial scale suitable to the economic requirement or development of the country,
(2) There are prospects for further development, and
(3) The product or activity meets the national and strategic requirements of Malaysia.
Specifically, MIDA officials consider twelve essential criteria to evaluate whether a particular company should receive pioneer status. We verified that two of these twelve criteria specifically address the export potential of the proposed product or activity. Nevertheless, companies that produce only for the domestic market may also receive pioneer status. Furthermore, some companies may be rejected even though their export potential is high. Under certain conditions, however, companies must agree to an export commitment (i.e., they must agree to export a certain percentage of their production) to receive pioneer status. Furthermore, an export requirement may sometimes be applied to certain
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industries after it is determined that the domestic market is saturated and will no longer support additional producers. While we verified that Rubberflex satisfied a few of the twelve criteria, it also had to abide by an export commitment.
We verified that Rubberflex was the only company that used pioneer status during the POI. Rubfil, Filmax, and Filati qualified for the program, but have not yet used it.
In Carbon Steel Wire Rod from Malaysia: Final Results of Administrative Review (56 FR 14927; April 12, 1991) (Wire Rod), the Department found that pioneer benefits had been approved for over 2,000 companies and almost as many products cutting across numerous industrial sectors during the period 1980- 1989. We concluded, therefore, based on this reason and others that no industry or group of industries used the program disproportionately and that the pioneer program was not countervailable. The Wire Rod determination, however, did not specifically address the case where companies were required to export a certain percentage of production to qualify for pioneer status.
After considering the implications of this criterion, the Department has decided to view the pioneer program as a two-faceted program. The first facet comprises those instances where one or more of the twelve criteria applies, including favorable prospects for export, but where the two export criteria do not carry preponderant weight. This facet of the program is what the Department found noncountervailable in Wire Rod.
In cases, however, where pioneer status is conferred on a company because it has been determined that the domestic market is saturated and will no longer support additional producers and because that company agrees to export a certain percentage of its production, the program conveys an export subsidy, regardless of the other "neutral" criteria the company is required to meet. This is because the company is clearly being approved due to the fact it will export and because receipt of benefits becomes contingent on export performance. Therefore, we have determined that this facet of the pioneer program bestows and export subsidy.
To calculate the benefit, we determined the total income and development tax savings from this program during the POI for Rubberflex and divided them by the company's total exports, because these benefits applied to all exports. We then applied the calculation methodology for significantly different companies as outlined above. On this basis, we determine the net bounties or grants from this program to be 4.12 percent ad valorem for all manufacturers, producers, and exporters in Malaysia of extruded rubber thread, except for Rubfil, which has significantly different aggregate benefits and received no benefits under this program during the POI.
B. Program Determined Not To Be Countervailable
1. Research and Development Provided by the Malaysian Rubber Research and Development Board (MRRDB)
The MRRDB was established under the Laws of Malaysia Act 401 to oversee research, development and promotion in support of the Malaysian natural rubber industry. Its objective is to modernize the natural rubber industry through advanced agronomic techniques as well as to ensure that consumers worldwide are aware of the advantages of natural rubber. To support itself, the MRRDB collects a 3.85 sen/kg "cess" on natural rubber exported out of Malaysia.
The MRRDB operating units include the Rubber Research Institute of Malaysia (RRIM), the Malaysian Rubber Products Research Association (MRPRA), and the Malaysian Rubber Bureau (MRB). The RRIM typically conducts agronomic research, the MRPRA conducts consumer-oriented research, and the MRB provides technical advisory services and promotional activities worldwide. Research and development work that is of general interest to producers of rubber latex and rubber-based products (e.g., new rubber production or testing techniques) is regularly published and made available to all companies through these units. Companies can purchase reports containing such information through a booklet order form made available by the various units of MRRDB. Furthermore, the RRIM and the MRPRA each maintain for-profit consultancy units--RRIM has the Technical Advisory and Consultancy Unit (TACU) and the MRPRA has Rubber Consultants.
We verified that Rubberflex contracted with Rubber Consultants (United Kingdom branch) for testing services. At that time, Rubber Consultants maintained one of the few laboratories in the world capable of performing the test required by Rubberflex and there was no equipment available in Malaysia to perform the test. Additional tests were performed by RRIM in Malaysia later as part of the same original contract.
We verified that this service was billed on a cost-plus basis, where the "plus" refers to the profit made on an individual transaction. At that time, the only competing organization to bid on this project was the Rubber and Plastics Research Association (RAPRA), a private organization in the United Kingdom. Malaysian officials explained that RAPRA quoted the same price for the test. Furthermore, we verified that it is the stated practice of Rubber Consultants to conduct similar tests for other companies upon request at the same price.
Additionally, officials explained that Filati contracted with TACU to perform some tests during the POI. We found that TACU was started in 1990 as an arm of the RRIM to generate income and commercialize research. We verified that TACU used the maximum hourly salary of the most senior technician in order to set the price of these tests. There were no competitors in Malaysia performing the same tests; however, any customer would receive the same price.
Because there is no restriction on who may contract for testing and all users pay the same fees, we determine that this program is not countervailable. This decision is consistent with our recent determination in the Final Affirmative Countervailing Duty Determinations: Pure Magnesium and Alloy Magnesium from Canada (57 FR 30946; July 13, 1992).
C. Programs Determined to be not Used
1. Abatement of Five Percent of Taxable Income Due to Location in a Promoted Industrial Area.
2. Allowance of a Percentage of Net Taxable Income Based on the F.O.B. Value of Export Sales.
3. Double Deduction of Export Credit Insurance Payments.
5. Abatement of Taxable Income of Five Percent of Adjusted Income of Companies Due to Capital Participation and Employment Policy Adherence.
6. Preferential Financing for Bumiputras.
D. Programs Determined Not To Exist
2. Five- To Ten-Year Tax Holidays.
3. Electricity Discount for Rubber Based Manufacturers.
Comments
Comment 1: Respondents argue that the Department initiated this investigation under the authority of section 303(a)(2) of the Tariff Act of 1930, and, therefore, a final order can only go into effect pursuant to a finding of injury. Respondents argue that
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because the ITC has discontinued its injury investigation, the Department has no authority to issue a CVD order. Respondents further maintain that there is no authority under the statute to simply transfer, without notice, the jurisdiction for any investigation from section 303(a)(2) to section 303(a)(1). Respondents argue, however, that if the Department decides to make a final determination under section 303(a)(1), it must liquidate all duty-free entries prior to March 31, 1992, without regard to countervailing duties.
DOC Position: We disagree with respondents, in part. The Department initiated this investigation under section 303 of the Act, which gives the Department the authority to impose countervailing duties on merchandise from countries that are not signatories to the Agreement on the Interpretation and Application of articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade ("the GATT Subsidies Code"). That authority is contingent on an ITC injury determination only if the merchandise enters duty-free and the United States has an international obligation to provide an injury test with regard to such merchandise. Because Malaysia is no longer eligible for duty-free entry of the subject merchandise into the United States under the GSP, an injury determination is no longer required in order for the Department to issue a countervailing duty order in this case.
With respect to those entries occurring before March 31, 1992, the effective date of revocation of GSP status, the Department agrees with respondents that pursuant to section 303 of the Act, countervailing duties may not be levied on such duty-free entries in the absence of an injury determination. However, no duties will be levied under this order until, at the earliest, the first annual anniversary date of the issuance of the order. Therefore, we have determined that it is appropriate to continue to order the suspension of liquidation of such duty-free entries until we are able to determine how they should be properly treated.
Comment 2: Respondents argue that the Department has no authority to continue its critical circumstances investigation because: (1) The ITC has discontinued its injury investigation and (2) Malaysia has not acceded to the Subsidies Code. With regard to the first argument, respondents state that countervailing duties may be imposed on merchandise subject to suspension of liquidation under section 703(e)(2) for critical circumstances only if both the Department and the ITC make final affirmative critical circumstances findings.
Concerning their second argument, respondents suggest that the Department may issue an affirmative critical circumstances determination only if the alleged subsidies are found to be "inconsistent with the Agreement." In order for subsidies to be inconsistent with the Agreement, they must be granted contrary to the granting country's commitments under the Subsidies Code. Respondents argue that since Malaysia is not a signatory to the Subsidies Code and, therefore, has no commitments under the Code, the subsidies under investigation cannot be held to be inconsistent with that Code.
Furthermore, respondents argue that the Subsidies Code does not per se prohibit the use of subsidies by a developing country, like Malaysia. Consequently, even in the abstract, respondents contend that it is impermissible to conclude that Malaysia could maintain any type of subsidy which is inconsistent with the Subsidies Code.
DOC Position: We agree that, under section 303(b)(3) of the Act, in the case of merchandise that is not duty free, a critical circumstances finding is unnecessary. However, until we have decided how we will address the pre-March 31st entries, it is not as clear as to whether we should continue the critical circumstances investigation. Nonetheless, we disagree with respondents' argument that Malaysia's export subsidies cannot be considered inconsistent with the Subsidies Code because Malaysia is not a signatory to the Code. In essence, respondents interpret "inconsistent" to mean "a violation of" the Code. We interpret the inconsistency requirement to mean that a critical circumstances investigation is limited to those types of subsidies that are inconsistent with the Subsidies Code. It does not limit critical circumstances investigations to countries that are signatories to the Subsidies Code. Our interpretation is consistent with section 303, which establishes the Department's authority to impose countervailing duties on merchandise from countries that are not signatories to the Subsidies Code. Subsection (b) of section 303 expressly prohibits a critical circumstances determination only if the merchandise is not duty free. Respondents' proposition that there can never be a critical circumstances determination for a non-signatory effectively reads the distinction between duty-free and non-duty free merchandise out of the statute.
Although the statute would prevail in the event of an inconsistency, we find no inconsistency between the GATT and the retroactive assessment of duties in critical circumstances. We disagree with respondents' argument that article 5, paragraph 9 of the Subsidies Code, which permits the retroactive assessment of countervailing duties in critical circumstances, is limited to signatories to the Code. The fact that the Code recognizes the retroactive assessment of duties as a permissible countermeasure in no way restricts the imposition of those measures to signatories.
Finally, we are not persuaded by respondents' argument that Malaysia's export subsidies are not inconsistent with the Code provisions relating to developing countries. Article 14 of the Subsidies Code states that "the commitment of article 9 (to not grant export subsidies) shall not apply to developing country signatories, subject to the provisions of paragraphs 5 through 8 below." Subsidies Code, article 14(2) (emphasis added). Paragraphs 5 and 6 relate to commitments be developing countries to reduce or eliminate export subsidies. Thus, contrary to respondents' assertion, there is no blanket exemption from the prohibition on export subsidies for developing countries.
We, therefore, confirm our preliminary determination that critical circumstances exist with respect to Filmax, Rubberflex, and Filati. Under section 705(b)(4) of the Act, an injury determination by the ITC is a prerequisite to the retroactive application of duties to entries made within 90 days prior to the preliminary determination. As discussed above, no duties will be assessed under this order until, at the earliest, the first annual anniversary date of the issuance of the order. Therefore, we have determined that it is appropriate to continue suspension of liquidation of entries made within 90 days prior to the preliminary determination until the proper disposition of these entries can be determined.
Comment 3: Respondents argue that since petitioner does not have standing with regard to products it does not produce, the investigation should be terminated with respect to these products. Respondents argue that even though they made a timely request to the Department to exclude certain products not produced by petitioner, the Department has not taken action to determine whether the scope should be narrowed (i.e., sending questionnaires to petitioner). Consequently, the
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Department must rely on the information provided by respondents.
Specifically, respondents suggest that the U.S. producers do not produce, and may not have the technical capability to produce, several categories of rubber thread currently under investigation including talc finish, fine gauge and heat resistant, and most notably, food grade thread. With regard to food grade rubber thread, respondents provide information to support their argument that food grade rubber thread should be considered a separate like product under the five criteria used by the ITC (i.e., it has different physical characteristics, different end uses, is not interchangeable, is produced using a unique production process, elicits different customer perceptions, and constitutes a different market segment).
Petitioner points out that before the ITC, respondents argued at length that all rubber thread should be treated as one like product based on the five criteria.
DOC Position: We disagree with respondents. After reviewing the ITC's preliminary determination and respondents' submissions, the Department agrees with the ITC's like product determination.
Therefore, we determine that food grade rubber thread, and the other types of rubber thread mentioned by respondents do not constitute separate like products for purposes of this investigation, and that the petitioner properly has standing to file the petition on behalf of the industry producing the domestic like product.
Comment 4: Respondents argue that the Department should terminate its investigation with respect to the electricity discount program because petitioner failed under s 355.12(b)(7) of the Department's regulations to provide documentary evidence regarding such a program, a copy of any law or regulation, the identity of the authority under which the subsidy is granted, and an estimate of the value of any benefits to the exporters.
DOC Position: We disagree with respondents. The Department's regulations state that petitioner should provide, to the extent that it is reasonably available, the type of information outlined by respondents. For the reasons outlined in a November 5, 1991 Memorandum to Susan Kuhbach, the Department determined that petitioner had satisfied the regulatory requirements.
Comment 5: Respondents argue that petitioner did not provide new information to the Department regarding pioneer status; therefore, the Department should not have initiated an investigation of the Pioneer Program. Specifically, respondents note that in the original initiation memorandum, the Department stated that petitioner has provided no new evidence of changed circumstances with regard to this program, which had been found not countervailable in the Final Results of Administrative Review: Carbon Steel Wire Rod From Malaysia (56 FR 23303; June 22, 1991). Respondents also suggest that the information submitted by petitioner in its October 25, 1991 letter was already included in the original petition allegation, which was deemed inadequate by the Department.
DOC Position: We disagree with respondents. In its petition, petitioner simply quoted from a Malaysian government brochure which states that pioneer status is available to companies producing a promoted product. Petitioner said it had reason to believe that extruded rubber thread is a promoted product. In support of this allegation, petitioner cited the Final Affirmative Countervailing Duty Determination: Steel Wire Rod From Malaysia (53 FR 13304; April 22, 1988), where we found the program to be countervailable. However, in our initiation notice, we noted that in the Final Results of Countervailing Duty Administrative Review: Carbon Steel Wire Rod From Malaysia (56 FR 41649, August 22, 1991), the Department found the pioneer status program to be not countervailable because it was not limited to a specific industry or group of industries. Furthermore, we noted that petitioner had not provided any new evidence of changed circumstances with regard to the program.
In its October 25, 1991 letter to the Department, petitioner re-focused its allegation by highlighting information indicating that an 80 percent export "requirement" potentially had to be met before pioneer status was granted to producers/exporters in Malaysia. Petitioner stated that the Department had not fully investigated this requirement in the past. We agreed that this aspect of the program had not been fully considered before, and on November 5, 1991, we decided to include the pioneer program in our investigation.
Comment 6: Respondents contend that the Department has no authority to countervail the pioneer status and electricity discount programs because allegations concerning these programs were untimely filed. Respondents argue that the allegations were made 12 days late under the regulations which require new subsidy allegations to be filed no less than 40 days from the date of the "scheduled" preliminary determination. Respondents maintain that the allegations made on October 25, 1991, were only 28 days before the originally "scheduled" date for the Department's preliminary determination, November 22, 1991. Furthermore, respondents state that no valid 10-day extension was given to the petitioner in order to submit additional allegations. Finally, even if such an extension were given, petitioner filed its additional subsidy allegations two days past the maximum 10-day extension period.
DOC Position: We disagree with respondents. In an October 15, 1991 memorandum to the file, the Department indicated that a 10-day extension had been given to petitioner in order to file additional allegations. Further, on November 4, 1991, the Department extended the preliminary determination until December 13, 1991 (based on petitioner's October 25, 1991 request). Therefore, the additional allegations submitted to the Department on October 25th were filed more than 40 days prior to the newly scheduled preliminary determination.
Comment 7: Respondents argue that the Department erred by initiating investigations with respect to programs alleged by an unnamed affiant. Respondents maintain that the Department should not have relied on the unsupported allegations of such an individual. Additionally, the Department erred by not publicly disclosing the name of the affiant, thereby undermining respondents' ability to explain or clarify the relevant allegations.
DOC Position: In a December 16, 1991 letter to counsel to respondents, the Department stated that according to s 355.4(a)(8) of the Department's regulations, the names of particular persons from whom proprietary information was obtained would be considered as proprietary information in this countervailing duty proceeding. Furthermore, it has been the Department's practice to accept statements/affidavits from individuals with first-hand knowledge of the facts. Therefore, we have not required that petitioner make public the name and position of the affiant.
Comment 8: Respondents argue that it would be inconsistent with past practice for the Department not to use in its final determination updated information filed on May 22, 1992 (two weeks prior to verification) which outlined company use of programs for calendar year 1991. Furthermore, they note that the Department specifically refused to verify the 1991 information and, therefore, the Department prejudged the
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issue of whether such information should be used.
Petitioner argues that the Department should not use 1991 calendar year data because by submitting the new data only two weeks before verification, respondents did not provide sufficient time for analysis by petitioner and others. Furthermore, petitioner states that it agreed to delay the final countervailing duty determination so that the Department could verify both the countervailing and antidumping duty responses at the same time. That delay should not be used to allow respondents to submit entirely new responses.
DOC Position: We disagree with respondents. A 1990 period of investigation was established in the questionnaire sent to the GOM on October 1, 1991. The preliminary determination was based on information provided by respondents in response to this questionnaire. It is not the Department's practice to change the period of investigation after a preliminary determination has been made. To do so would seriously limit the value of the preliminary determination because parties would have an entirely new set of data and issues to comment on.
In effect, the 1991 information submitted by respondent amounts to a new, unsolicited questionnaire response. According to s 355.31(b)(2) of the Department's regulations "in no event" will the Secretary consider unsolicited questionnaire responses submitted after the date of publication of the Secretary's preliminary determination. As such, we have returned the response, with a letter detailing the reasons for the return, to respondents.
Comment 9: Respondents argue that the abolition of the rubber discount scheme satisfies the criteria of the program-wide change doctrine. Respondents maintain that the GOM announced on December 14, 1990, that the program would end January 1, 1991. Respondents note that this announcement took place over one year prior to our preliminary determination. They maintain that the fact that the rubber discount program was extended until December 31, 1991, is not relevant. As such, they argue that the Department should reduce the deposit rate for the rubber discount program to zero. Additionally, they state that in order to have this change accounted for, they need not avail themselves of a suspension agreement in this case, as petitioner suggests below. Finally, if the Department does not take into account the program's termination, respondents argue that the Department should at least use the 1991 information as the basis for any deposit rate.
Petitioner argues that any speculative current or future changes in the rubber discount scheme should be ignored--only program-wide changes which occur before the preliminary determination should be considered. Furthermore, termination of a subsidy must be implemented before the preliminary determination in an investigation in order to be considered in the final determination. Additionally, petitioner suggests that the Department should not allow respondents to cite the delay in the date for the beginning of the verification as the basis for permitting consideration of events following the preliminary determination. Finally, petitioner states that the U.S. Court of International Trade held in its review of the Department's 1982 final determination regarding South African steel that termination of subsidy programs during an investigation can only be considered in the context of a suspension agreement.
DOC Position: We verified that the rubber discount program was in fact extended past the originally scheduled termination date until December 31, 1991. Therefore, the actual program-wide change took effect after the publication of our preliminary affirmative countervailing duty determination. The Department's practice is to adjust for program-wide changes that take place after the POI but before the preliminary determination (e.g., see Textile Mill Products and Apparel From Peru (50 FR 9371; March 12, 1985). However, we did verify that the program was terminated effective January 1, 1992. Such termination can be accounted for in an administrative review, if one is requested.
Because we have determined not to make an adjustment for this program-wide change, petitioner's argument that a program-wide change can only be recognized in the context of a suspension agreement is moot. We note, however, that the case relied upon by petitioner was vacated. See United States Steel Corp. versus United States, 7 CIT 117 (1984).
Comment 10: Respondents contend that the Department improperly calculated the amount of the benefit received under the ECR program in its preliminary determination. Respondents argue that the Department must use the "cost of funds" to the GOM as the benchmark because item "k" of the Illustrative List of Export Subsidies annexed to the Subsidies Code so requires, and the appropriate "cost of funds" is the 90-day rate for government bonds. Respondents assert that if the Department does not use the 90-day bond rate, it should use the bankers acceptance rate because the bankers acceptances are identical to ECR financing in terms of risk, maturity and purpose.
Petitioner argues that the Department should not use the government's cost of borrowing, but rather the weighted-average, short-term commercial interest rate in Malaysia. Petitioner suggests that such a benchmark is consistent with the Department's Subsidies Appendix to its 1982 Countervailing Duty Determination on Cold Rolled Steel from Argentina. Additionally, that approach avoids burdensome speculations as to the particular interest rate a company would pay on short-term loans and recognizes that a typical company does not borrow from just one source.
DOC Position: The Illustrative List identifies common forms of subsidies but does not necessarily instruct the Department how to value them. Nor does the Illustrative List limit the United States in applying its own national CVD law to determine the countervailability of benefits bestowed on merchandise exported from Malaysia. The Department has a long-standing practice of valuing benefits to the recipient, rather than the cost to a government. This decision is consistent with Ceramic Tile From Mexico: Final Results of Countervailing Duty Administrative Review (57 FR 24247; June 8, 1992).
The Department's proposed substantive regulations require the use of the rate for the most predominant form of short-term financing in the country under investigation as the benchmark for short-term loans. Furthermore, the regulations stipulate that the source of short-term financing selected as a benchmark should normally constitute 50 percent or more of the short-term financing in the country.
In Malaysia, short-term commercial term and overdraft loans are the two most predominant forms of short-term financing. Because the average interest rates for these two types of financing are not available individually, in the preliminary determination we used as our benchmark the average commercial lending rate, since approximately 80 percent of this financing is accounted for by these two predominant forms of short-term financing. We note that even if the remaining portion of the average commercial lending rate includes some long-term financing, we found at verification that the only difference between short- and long-term interest
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rates was a risk premium which is typically quite small.
In past Malaysian cases, we have selected bankers acceptances as the most comparable and commonly used alternative source of short-term financing. However, in this investigation, we verified that bankers acceptances are essentially different from other forms of short-term financing because they are based on short-term receivables or payables arising from trade in goods. However, bankers acceptances constitute an extremely small percentage of short- term financing in Malaysia. Therefore, we have determined that it is appropriate to continue to use the average commercial bank lending rate. An average including these two rates is in accord with s 355.44(b)(3)(i) of our proposed substantive regulations.
Comment 11: Petitioner asserts that given the significant number of errors in the reporting of pre-shipment export financing, the questionnaires should be considered unreliable with regard to such loans. Respondents suggest that this claim is unjustified in that respondents provided information with respect to hundreds of complex financial transactions; furthermore, discrepancies were rectified.
DOC Position: We agree with respondents. The number of errors relative to the number of transactions verified is minimal, and all discrepancies were later rectified at the government or company verifications.
Comment 12: Respondents argue that the Department was in error by assuming that Heveafil would use the export abatement before any of the other allowances available, merely because the export abatement could not be carried forward. Instead, respondents suggest that the Department must take into account the non-countervailable deductions. If those non-countervailable deductions equal the tax liability, then there is no benefit in the year in question.
DOC Position: We disagree with respondents. Essentially, they have asked us to assume that the non-countervailable allowances are used first, despite the fact that the non-countervailable allowances can be carried forward while the export allowance cannot be carried forward. Given this distinction, it is more reasonable to assume that the export abatement is used first. Therefore, we have treated the export abatement as fully countervailable in the tax year under investigation.
Comment 13: Respondents argue that the Department assumed that the entire deduction for all other export tax programs resulted in cash savings in the year under investigation. They argue that these programs are unlike the export abatement in that they can be carried forward.
DOC Position: The companies under investigation earned several types of allowances (in addition to the export allowance discussed above) which may be used to offset taxable income. Certain of these allowances are not countervailable, such as the depreciation allowance, whereas others, such as the industrial building allowance, are.
Each year, the company calculates the total value of allowances to which it is entitled. It then draws from this total the amount needed to eliminate any tax liability in that year. If anything remains in the pool, it can be carried forward to offset taxable income in future years.
The specific allowances drawn from the pool in any given year are not identified on the tax form. Therefore, it was necessary to develop a methodology for estimating the portion of the allowance used in a given year that is attributable to countervailable programs, and the portion that is attributable to non-countervailing programs in order to calculate the net bounties or grants.
In our preliminary determination, we assumed that the countervailable programs would be used first. Our rationale, as stated in the notice, was to take into account the fact that a central purpose of the countervailing duty law is to encourage foreign governments not to provide distortive subsidies to their exporting industries. In this investigation, this purpose can best be served by selecting the remaining countervailable allowances before selecting any of the non-countervailable allowances available to the companies.
In addition, if we treat only a portion of the countervailable allowances as having been used, some of the amount carried forward for future use would also be countervailable when used. This means that we would have to track carry forwards and trace from year to year what portion of the allowances carried forward is countervailable. To avoid an unadministrable system of tracking and tracing, we have treated the countervailable portions as having been used in the year under investigation.
Comment 14: Respondents argue that the Pioneer Program is not countervailable since it is generally available and is not limited to companies that export. They contend that at verification, the Department was able to confirm both the de jure and de facto availability of this program throughout the entire Malaysian economy. Additionally, respondents assert that the Department verified that the internal guidelines used to grant pioneer 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 assert that the Department's preliminary determination that the pioneer program is a two-faceted program (i.e., some applicants receive benefits because of export requirements whereas others meet broader criteria) is wrong. Even assuming, however, that it is a two-faceted program, respondents argue that there is no benefit for the alleged export requirement. The Department has verified that there is no separate or additional tax benefit that is provided to Rubberflex as an exporter. In other cases where a program includes multiple facets, the Department calculates the benefit on only those facets that are not generally available.
Respondents point to the fact that the pioneer program was found not countervailable in past cases and maintain that the Department fully understood that the commitment to export is only one of multiple factors considered in granting pioneer status. Respondents note that, according to the Department's proposed regulations, a program is not countervailable if an export criterion is merely one of many eligibility criteria. Finally, respondents state that the Department verified that of the twelve criteria used to assess pioneer applications, a project need not necessarily meet all of the criteria. Further, with regard to the export commitment made by Rubberflex, respondents suggest that it was made as part of the company's manufacturing license approval, and was consequently incorporated into the later pioneer application. In fact, in Rubberflex's case, the absence of any appreciable domestic market in itself required Rubberflex to concentrate on export markets. Consequently, the voluntary export undertaking was immaterial and had no economic effect.
Petitioner argues that Rubberflex must export a large percentage of its output to qualify for pioneer status. Therefore, pioneer status constitutes a countervailable export subsidy. Furthermore, petitioner argues that the Department should not attempt to determine the intent of the decision makers with regard to respondents' claim that a particular export condition that was imposed to obtain pioneer status was not really a condition. Respondents assert that the Department
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does, in fact, look at the issue of intent when considering specificity. According to respondents, the sole purpose of examining the government's internal judgments is to determine the government's intent and purpose in approving or rejecting applications.
DOC Position: In our examination of the Pioneer Program as a domestic subsidy in Carbon Steel Wire Rod From Malaysia: Final Results of Administrative Review (56 FR 14927; April 12, 1991), we concluded that no industry or group of industries used the program disproportionately and found the program not to be countervailable. This 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, petitioner raised the issue of an export requirement. Thus, the requirement per se is not new, but it was not at issue with the companies investigated at the time.
We continue to view the "domestic" side of the Pioneer Program to be not countervailable. As respondents have pointed out, where export capabilities are one among many criteria considered in granting assistance, we do not automatically view the program as countervailable.
However, in this instance, 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, we established that an export requirement may sometimes be applied 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, lead us to conclude that the "export" side of the Pioneer Program confers an export subsidy. 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 appears to have been an important condition for approval of benefits.
This finding is consistent with the Final Affirmative Countervailing Duty Determination and Partial Countervailing Duty Order: Ball Bearings and Parts Thereof From Thailand, (54 FR 19130; May 3, 1989). In that case, we examined tax exemptions under the Investment Promotion Act and found that the Board of Investment (BOI) in granting these exemptions considered various criteria, including demand in the Thai and overseas markets. This same program had also been found to be not countervailable when it operated as a domestic program. However, in certain product sectors, including the sector producing bearings, the BOI determined that exemptions would not be granted unless applicants exported all or almost all of production. In view of this requirement, we determined that the exemptions granted for bearings were countervailable.
Finally, with respect to respondents' argument that even if the Pioneer Program can be viewed as two-faceted, "exporters" receive no greater benefits than other recipients, we disagree that the generally available level of benefits limits the amount of the subsidy to exporters. The appropriate reference point is what the recipient would have received had the export benefit not been awarded. In this instance, because of the saturation of the domestic market with respect to extruded rubber thread, the companies would not have received any benefits.
Comment 15: Respondents argue that the Department's calculation of Rubberflex's Pioneer benefits fails to deduct normal capital allowances that would have been allowed if the program had not been used. Furthermore, respondents suggest that the Department incorrectly allocated Pioneer benefits over only export sales even though pioneer tax benefits are also applicable to profits on domestic sales.
DOC Position: We have not overstated the benefit from the Pioneer Program. When a company receives Pioneer status, it is allowed to stockpile normal capital allowances for use in future years. Therefore, these allowances should not be used to offset current benefits. Moreover, export sales should form the denominator because receipt of benefits is contingent upon exportation. See, s 355.47(a)(2) of the Department's proposed regulations.
Comment 16: Respondents argue that the Department's calculation of the all others rate must be amended to conform to the method established in the recent court case, Ceramica Regiomontana, S.A. et al v. United States, which held that the countervailing duty statute requires the Department to include all investigated firms' rates in calculating the all others rate.
DOC Position: Pursuant to 19 CFR 355.20(d), we compared the total ad valorem benefit received by each firm to the country-wide rate for all programs. The rate for one of the companies, Rubfil, was significantly different from the country-wide rate. Therefore, this firm received an individual company rate. For the remaining four firms, we recalculated the country-wide rate, based solely on the benefits received by these four firms. We then assigned the recalculated overall country-wide rate to these four firms, and all other manufacturers, producers, and exporters, with the exception of Rubfil.
The Department is not following Ceramica Regiomontana with respect to this issue because we disagree with that decision and acquiescence would deprive the Department of its right to appeal this issue in this proceeding.
Verification
In accordance with section 776(b) of the Act, we verified the information used in making our final determination. We followed standard verification procedures, including meeting with government and company officials, inspecting relevant accounting records, and examination of original source documents. Our verification results are outlined in detail 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.
Critical Circumstances
Petitioner alleges that "critical circumstances" exist with respect to imports of extruded rubber thread from Malaysia. Section 703(e)(1) of the Act provides that critical circumstances exist if there is a reasonable basis to believe or suspect that (A) the alleged subsidy is inconsistent with the Agreement, and (B) there have been massive imports of the class or kind of merchandise which is the subject of the investigation over a relatively short period.
In our final determination we found that the GOM confers export subsidies on the manufacture, production, or exportation of extruded rubber thread. These subsidies are inconsistent with the Subsidies Code.
In determining whether there is a reasonable basis to believe or suspect that there have been massive imports over a relatively short period, we considered: (1) The volume and value of the imports, and (2) seasonal trends. In making this determination, our performance is to examine company-specific shipment data on exports to the United States of the subject merchandise.
Based on our analysis of the monthly shipment data for each respondent
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company, we have found that imports from three of the five companies have been massive over a relatively short period of time. Therefore, we find that the requirements of section 703(e)(1) are met for the following companies exporting extruded rubber thread to the United States:
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Company Critical circumstances
-----------------------------------
Heveafil .... No.
Filmax ...... Yes.
Rubberflex .. Yes.
Filati ...... Yes.
Rubfil ...... No.
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Suspension of Liquidation
In accordance with our affirmative preliminary determination, we instructed the U.S. Customs Service to suspend liquidation of all entries of extruded rubber thread from Malaysia which were entered, or withdrawn from warehouse, for consumption, on or after December 30, 1991, the date of publication of our preliminary determination in the Federal Register. Because of our preliminary determination that critical circumstances exist, we also directed Customs to suspend liquidation on any unliquidated entries from Filmax, Rubberflex and Filati within the 90-day period prior to our preliminary countervailing duty determination.
We instructed the U.S. Customs Service to discontinue the suspension of liquidation on the subject merchandise entered on or after April 28, 1992, pursuant to U.S. obligations under the Subsidies Code, but to continue the suspension of liquidation of all entries, or withdrawals from warehouse, for consumption of the subject merchandise entered prior to April 27, 1992.
Due to the withdrawal of GSP status for this product, no final determination of injury is required for entries after March 31, 1992. Therefore, we are directing the Customs Service to reinstate the suspension of liquidation and to require the deposit of estimated countervailing duties in the following amounts:
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Manufacturer/exporter Percent [FN1]
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Rubfil Sdn. Bhd ................................ 4.21
All other manufacturers or exporters ........... 9.63
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1 Net Ad Valorem Bounty or Grant (Percent).
This notice serves as the only reminder to parties subject to APO of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 355.34(d). Failure to comply is a violation of the APO. This determination is published pursuant to section 705(d) of the Act (19 U.S.C. 1671(d)) and 19 CFR 355.20.
Dated: August 17, 1992.
Alan M. Dunn,
Assistant Secretary for Import Administration.