NOTICES
DEPARTMENT OF LABOR
[C-559-001]
Certain Refrigeration Compressors From the Republic of Singapore:
Suspension
of Countervailing Duty Investigation
Monday, November 7, 1983
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AGENCY: International Trade Administration,
Commerce.
ACTION: Notice of Suspension of Countervailing Duty
Investigation.
SUMMARY: The Department of Commerce has decided to suspend the
countervailing duty investigation involving certain refrigeration
compressors from the Republic of Singapore. The basis for the
suspension is an agreement to offset or eliminate completely all
benefits provided by the government of the Republic of Singapore
which we find to constitute bounties or grants on refrigeration
compressors exported to the United States.
EFFECTIVE DATE: November 7, 1983
FOR FURTHER INFORMATION CONTACT:Melissa G. Skinner. Office of
Investigations, or Laura Kneale, Office of Compliance, Import
Administration, Intermational Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue,
N.W., Washington, D.C. 20230, telephone: (202) 377-3530 or (202)
377- 1167
SUPPLEMENTARY INFORMATION:
Case History
On May 26, 1983, we received a petition in proper form from
Tecumseh Products Company, a manufacturer of smaller hermetic
refrigeration compressors, on behalf of the U.S. industry producing
certain refrigeration compressors. The petitioner alleged that certain
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, directly or indirectly, to the manufacturers, producers, or
exporters in Singapore of certain refrigeration compressors.
Since Singapore is not a "country under the Agreement" within the
meaning of section 701(b) of the Act, section 303 of the Act applies to
this investigation. Because the product under investigation is
dutiable, the domestic industry is not required to allege that, and the
U.S. International Trade Commission is not required to determine
whether imports of this product cause or threaten to cause material
injury to a U.S. industry. We found the petition to contain sufficient
grounds upon which to initiate a countervailing duty
investigation, and on June 13, 1983, we initiated a countervailing
duty investigation (48 FR 28888).
On June 29, 1983, we presented a questionnaire concerning the
allegations to the government of Singapore at the Department of
Commerce in Washington, D.C. On August 8, 1983, we received the
responses to the questionnaire.
On August 15, 1983, we received a brief from petitioner alleging that
benefits flowing from the "utilization" of the Pioneer Program,
discussed below, by a company under investigation have
ramifications far beyond the period during which this company
technically held pioneer status. Petitioner also alleged that the
companies in Singapore which are producing and exporting
refrigeration compressors are receiving private subsidies from their
parent companies.
We issued an affirmative preliminary determination on August 29,
1983 (48 FR 39109). We preliminarily determined that there was
reason to believe or suspect that certain benefits which constitute
bounties or grants within the meaning of the Act are being provided
to manufacturers, producers, or exporters in Singapore of certain
refrigeration compressors. We preliminarily determined the net
bounty or grant was 4.87 per ad valorem. The programs preliminarily
determined to bestow countervailable benefits were the Economic
Expansion Incentives Act, Part IV, and certain financing provided by
the rediscount facility of the Singapore Monetary Authority.
We directed the U.S. Customs Service to suspend liquidation of all
entries of the product under investigation which were entered, or
withdrawn from warehouse, for consumption, and to require a cash
deposit or the posting of a bond on this product in an amount equal to
the estimated net bounties or grants.
Verification of the questionnaire responses from the government and
both companies was conducted in Singapore during the week of
September 11-17, 1983
Our notice of preliminary determination gave interested parties an
opportunity to submit oral and written views. We received no request
for a public hearing. Both petitioners and respondents submitted
comments subsequent to our preliminary determination.
On September 30, 1983, we initiated a proposed suspension
agreement. Petitioners have had 30 days in which to submit
comments regarding the proposed suspension agreement. Their
coments have been received and taken into consideration in this
suspension of investigation.
On October 26 and 27, 1983, the Department obtained information
relating to three additional programs. Two of the new programs were
under the Singapore Skills Development Fund, a Training Grant
Scheme and an interest Grant for Mechanisation. The third was Public
Utilities Board surtax exemption. Since information regarding these
programs was obtained at the last stage of this investigation, the
Department was unable to verify such information. For the purpose of
this suspension, the best information available has been used in
determining that these programs are countervailable.
Scope of Investigation
The product covered by this investigation is certain hermetic
refrigeration compressors rated not over one-quarter horsepower.
The merchandise is corrently classifiable under item number
661.0900 of the Tariff Schedules of the United States Annotated
(TSUSA),
Two companies were identified by the government of Singapore as
being manufacturers, producers, or exporters of the product under
investigation. They are Matsushita Refrigeration Industries
(Singapore) Pte. Ltd. ("MARIS"), producer, and Matsushita Electric
Trading (Singapore) Pte. Ltd. ("METOS"), exporter.
The period for which we are measuring subsidization is calendar year
1982 or fiscal year 1982, as appropriate.
Changes Since the Preliminary Determination
We determine that the total bounty or grant applicable to the subject
product is 5.86 percent ad valorem, in accordance with the changes
cited below.
The Economic Expansion Incentives Act
In the preliminary determination we calculated a bounty or grant by
allocating total tax savings over total exports. The tax savings were
earned on a calendar year basis, but the export value was based on
exports during a fiscal year beginning October 1981. The bounty or
grant calculated for the purposes of the suspension agreement will be
based on export statistics adjusted to coincide with the calendar
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year on which tax savings are based. In addition, due to an
additional assessment for taxes from that time period, we have
included additional tax savings in our calculation. The benefit from
this program is 5.52 percent ad valorem.
Singapore Monetary Authority ("MAS")
In the preliminary determination we calculated a bounty or grant on
the benefit obtained through the use of the rediscount facility
operated by the MAS. During verification, we found that no loans are
outstanding on exports of the product under investigation to the
United States. Further, under the terms of the suspension agreement,
MARIS and METOS have agreed not to apply for or receive any MAS
financing with respect to future exports of the product under
investigation to the United States.
New Programs
On October 26 and 27, 1983, respondents provided new information
regarding grants MARIS received from two programs under the Skills
Development Fund (a Training Grant Scheme and an Interest Grant
for Mechanization) and from a Public Utilities Board surtax
exemption. Respondents contended that these grants are not
countervailable because they are "generally available." Due to its later
receipt, we were unable to verify this information. Therefore, for
purposes of the suspension agreement, we have presumed that these
program are countervailable and have included them for purposes of
calculating the export charge to be collected pursuant to the
agreement. The aggregate benefit from these three grants is 0.34
percent ad valorem.
Petitioner's Comments
The Department has consulted with the petitioner and has received
the following comments from it concerning the proposed suspension
agreement. Our response is shown for each comment.
Comment 1
The proposed suspension agreement, initialed on September 30,
1983, was based on a renunciation of both benefits preliminarily
determined to be countervailable. Petitioner objects to these
provisions and urges that the suspension agreement would be more
effective if the benefits were offset by an export tax, rather than
renounced. Petitioner also suggests numerous technical amendments
to the proposed agreement.
DOC Position
We have carefully considered petitioner's comments. In view of the
three new grants which came to light late in the investigation, we have
determined that an offset is the most effective way to neutralize the
benefits received from these grants. Since an export charge is
necessary to offset these benefits, the suspension agreement has been
redrafted in such a way that the benefits accruing under the Economic
Expansion Incentives Act, Part IV, are also offset by an export
charge. Under the terms of the suspension agreement signed on
October 31, 1983, the MAS financing on exports to the United States
continues to be eliminated by means of a renunciation. We have also
adopted many of the technical amendments suggested by petitioner.
Comment 2
The value to MARIS of the export subsidy it received as an "export
enterprise" must be based on the verified data for MARIS's tax exempt
profits and for MARIS's "overseas sales," not on information regarding
METOS's sales.
DOC Position
The Department allocates export subsidies received over the export
value of the product under investigation. Because the METOS value
represents the export value, we have allocated the countervailable
benefit over that figure.
Comment 3
Petitioner recontends that the Pioneer Enterprise Program has been
found in the past to be countervailable (the Treasury Department's
preliminary determination in Certain Textiles and Textile Products
from Singapore, 44 FR 2748 (June 10, 1979)) and that because this
program has an immediate competitive benefit on the production of
compressors produced during the period of investigation, it is not
enough to simply conclude that the program was "not used" during
the period of investigation. Instead, the Department should treat any
benefits received in the past, under both the Pioneer and Export
Enterprise Programs, as grants tied to capital equipment. Further,
petitioner contends that benefits received as a result of Export
Enterprise Status during the period of investigation, and each year
thereafter, must be allocated to merchandise produced in the
relevant year.
DOC Position
Treasury's preliminary determination in Certain Textiles and Textile
Products from Singapore, did not find the Pioneer Program to be
countervailable. Indeed, in the final determination in that
proceeding, the Treasury Department stated:
Certain other programs were preliminarily determined not to
constitute bounties or grants because they are not used by
Singapore's textile and apparel industry, including an exemption from
corporate income tax for companies designated as being part of a
"pioneer" industry * * * For the reasons explained in the notice of
"Preliminary Countervailing Duty Determination," the conclusions
reached in that determination remain unchanged (emphasis
supplied).
44 FR 35335 (June 19, 1979). Therefore, there has been no prior
determination of countervailability of this Pioneer Enterprise
Program.
Regardless of the Treasury decision, the Department normally
allocates tax benefits received in the period of investigation to that
period. Tax incentives provide a benefit to the extent that they
reduce the firm's current tax liability. As such, this is a benefit which
is realized on an annual basis. Furthermore, although investment is a
relevant factor in qualifying for Pioneer status, the amount of benefit
is not directly tied to, or proportionate to the level of investment.
Comment 4
MARIS's tax savings are increased by payment of excessive technical
assistance fees, which are a specified supplement to export enterprise
benefits and a countervailable subsidy. The Department should
conclude that no subsidy is being provided only if it is satisfied that
the technical assistance services provided are paid for on an
arms-length basis.
DOC Position
The Department has determined that the fees paid do not appear to be
excessive. Petitioners will have the opportunity, during an
administrative review of the suspension agreement or if the
investigation is continued, to present further evidence that these
technical assistance fees are excessive.
Comment 5
The Department should consider that the Skills Development Fund
Loan, which petitioner contends is probably at less than commerical
rates and is likely tied to a grant under either the Training Grant
Scheme the Interest Grant for Mechanisation Scheme, or the
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Development Consultancy Scheme, constitutes an additional
countervailable subsidy.
DOC Position
We have no verified information regarding these benefits. Based on
the information presently available, however, we have included these
benefits in the export charge offset provision of the suspension
agreement.
Comment 6
The payment of taxes during tax year 1982, in installments, when
they would normally be paid in full upon receipt of notices of
assessment constitutes a countervailable benefit in the amount of
interest earnings lost by the government due to the granting of
installment payments.
DOC Position
Based on information currently available, it appears that such
installment payments are consistent with normal practice. More
complete information in this regard will be obtained during the first
administrative review of this agreement or prior to reaching a final
determination, if a continuation is requested. If we conclude at that
time that such a payment practice constitutes a countervailable
benefit, the value of such benefit will be added to the export charge
collected under the suspension agreement.
Comment 7
Benefits derived from MARIS's use of pre-export financing obtained
through the use of the MAS facility should be deemed countervailable
and incorporated in the final calculation of net subsidy.
DOC Position
As noted in the verification report for MARIS, the interest payments
for pre- export financing were made during 1981. As such, the benefit
(if any) would be applicable to 1981. There was no evidence of usage
by MARIS of the MAS facility, for pre-export or export financing, for
the period under investigation. Such benefits on future exports of the
merchandise under investigation to the United States are renounced
under the suspension agreement.
Comment 8
Petitioners contend that (1) funds received by METOS from its parent
company and (2) earnings retained by MARIS for investment in plant
and equipment (rather than distributed as dividends to its parents)
constitute "intra company grants" or private subsidies tht should be
countervailed.
DOC Position
On verification it was learned that funds METOS received from its
parent and related companies were for intracorporate purchases of
merchandise and, as such, do not constitute countervailable "intra
company grants." With regard to petitioner's concern about MARIS's
practice of retaining earnings, we conclude that such practices are
legitimate business decisions and are not private subsidies.
Respondents' Comments
Comment 1
Respondents contend that benefits from the Skills Development Fund
and the Public Utility Board surtax exemption are not
countervailable because they are "generally available."
DOC Position
We have no verified information that supports respondents'
contention. Accordingly, we have presumed that these benefits are
countervailable and have included them in the export charge
required by the suspension agreement in order to offset completely
the bounties or grants provided by the government of Singapore with
respect to the merchandise under investigation.
Comment 2
Respondents urge that in the event that the benefits from the Skills
Development Fund and the Public Utility Board surtax exemption are
ultimately found to be not countervailable, either during the
continuation of this investigation (if such a continuation is requested)
or during an administrative review of the suspension agreement, that
respondents should be entitled to either a refund or credit of export
charges collected to offset these benefits.
DOC Position
If, in a final determination or administrative review, we subsequently
determine that such benefits are not countervailable, the suspension
agreement would allow for an adjustment to the export charge to take
such a determination into account for the time period covered by
that determination.
Suspension of Investigation
The Department has consulted with the petitioners and has
considered the comments submitted with respect to the proposed
suspension agreement. We have determined that the agreement will
eliminate or offset completely the net bounty or grant with respect to
the subject merchandise exported directly or indirectly to the United
States, that the agreement can be monitored effectively, and that the
agreement is in the public interest. Therefore, we find that the criteria
for suspension of an investigation pursuant to section 704 of the Act
have been met. The terms and conditions of the agreement, signed
October 31, 1983, are set forth in Annex I to this notice.
Pursuant to section 704(f)(2)(A) of the Act, the suspension of
liquidation of all entries, entered or withdrawn from warehouse, for
consumption of certain refrigeration compressors from Singapore
effective August 29, 1983, as directed in our notice of "Preliminary
Affirmative Countervailing Duty Determination; Certain
Refrigeration Compressors from the Republic of Sinapore," 48 FR
39109, is hereby terminated. Any cash deposits on entries of
refrigeration compressors from Singapore pursuant to that
suspension of liquidation shall be refunded and any bonds shall be
released.
The Department intends to conduct an administrative review within
12 months of the anniversary date of publication of this suspension of
investigation pursuant to section 751 of the Act.
Notwithstanding the suspension agreement, the Department will
continue the investigation if we receive such a request in accordance
with section 704(g) of the Act within 20 days after the date of
publication of this notice.
This notice is published pursuant to section 704(f)(1)(A) of the Act.
October 31, 1983.
Alan F. Holmer,
Deputy Assistant Secretary for Import Administration.
Annex I--Suspension Agreement
Certain Refrigeration Compressors From the Republic of Singapore
Pursuant to the provisions of section 704 of the Tariff Act of 1930, as
amended, (the "Act"), and § 355.31 of the Commerce Regulations the
United States Department of Commerce (the "Department"), the
Government of the Republic of Singapore, Matsushita Refrigeration
Industries (Singapore) Pte. Ltd. ("MARIS"), and Matsushita Electric
Trading (Singapore) Pte. Ltd. ("METOS") enter into the following
suspension agreement (the "Agreement") on the basis of which the
Department shall suspend its countervailing duty investigation
initiated on June 13, 1983 (48 Fed. Reg.
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28888) with respect
to certain refrigeration compressors from the Republic of Singapore.
The Agreement shall be in accordance with the terms and provisions
set forth below.
A. Scope of the Agreement
The Agreement applies to hermetic refrigeration compressors rated
not over one-quarter horsepower, and exported, directly or
indirectly, from the Republic of Singapore to the United States,
currently classifiable in item 661.0900 to the Tariff Schedules of the
United States Annotated (hereinafter referred to as the "subject
product").
B. Basis of the Agreement
1. MARIS is a manufacturer of the subject product, accounting for
more than 85 percent of the total production of the subject product in
the Republic of Singapore. METOS is an exporter of the subject
product, accounting for more than 85 percent of the total exports of
the subject product from the Republic of Singapore.
2. The Government of the Republic of Singapore hereby agrees to
offset completely the amount of the net bounty or grant determined
by the Department in this proceeding to exist with respect to the
subject product. The offset shall be accomplished by the collection of
an export charge by the Government of the Republic of Singapore
applicable to the subject product exported on or after the effective
date of the Agreement. The export charge on each subject product
shall be collected at the time the exporter submits its Outward
Declaration to the Import and Export Office of the Singapore
Government's Trade Development Board, and shall not be deferred.
The export charge shall offset completely any benefits found to exist
with respect to the following programs:
a. The income tax exemption on export earnings provided for in Part
IV of the Economic Expansion Incentives (Relief from Income Tax)
Act, Chapter 135 of the Revised Edition, Acts of Singapore:
b. Benefits provided under the Skills Development Fund (Training
Grant Scheme and Interest Grants for Mechanisation):
c. The Public Utilities Board surtax exemption; and
d. Any other program subsequently determined by the Department in
an administrative review of this Agreement under section 751 of the
Act to constitute countervailable bounties or grants under the Act to
the subject product.
3. The Department shall officially notify the Government of the
Republic of Singapore, in writing, of any determination made with
respect to paragraph B.2.
4. The export charge shall be composed of a provisional export
charge and, if needed, annual adjustments. The export charge shall be
calculated as follows:
a. The rate of provisional export charge shall be equal to the most
recent rate of bounty or grant under the programs referred to in
paragraph B.2. determined by the Department in this proceeding to
exist with respect to exports of the subject product.
b. The annual adjustment for each shipment shall be calculated as
follows:
1. (a) The amount of benefit found by the Department to exist on that
shipment during the course of administrative reviews on this
Agreement under section 751 of the Act, minus
(b) The amount of provisional export charge paid on that shipment,
plus
2. Interest on that amount, calculated in accordance with section
778(b) of the Act, with "the date on which the rate or amount of the
duty is finally determined" being deemed to be the date on which the
Department notifies the Government of the Republic of Singapore of
its determination in this proceeding.
c. If the annual adjustment is positive, the Government of the
Republic of Singapore shall collect that amount within 30 days of
notification by the Department of its determination. If the annual
adjustment is negative, the Government of Singapore may refund or
credit that amount.
5. Neither MARIS nor METOS will apply for or receive any financing
provided by the rediscount facility of the Monetary Authority of
Singapore with respect to shipments of the subject product exported
and entered, or withdrawn from warehouse, for consumption in the
United States on or after the effective date of this Agreement. Prior to
the effective date of this Agreement, MARIS and METOS agree to
repay, or refinance at market rates, any outstanding loans provided
under this program.
6. Neither MARIS nor METOS will apply for or reveive benefits under
any other program subsequently determined by the Department in an
administrative review of this Agreement under section 751 of the Act
to constitute countervailable bounties or grants under the Act to the
subject product. If any program under which benefits have been
received in the past but eliminated or offset in this Agreement is
ultimately found not to constitute a bounty or grant under the Act in
an administrative review of this Agreement under section 751 of the
Act, then this Agreement will not longer apply to such program.
7. Neither the execution of this Agreement nor the elimination or
offset of benefits specified herein constitutes an admission by the
Government of the Republic of Singapore, MARIS, or METOS that
such benefits are bounties or grants within the meaning of the U.S.
countervailing duty law. The Government of the Republic of
Singapore, MARIS, and METOS execute this Agreement solely for the
purpose of suspending this investigation.
C. Monitoring of the Agreement
1. The Government of the Republic of Singapore, MARIS, and METOS
agree to supply to the Department any information and
documentation the Department deems necessary to demonstrate that
they are in full compliance with the Agreement. The Government of
the Republic of Singapore, MARIS, and METOS agree to permit such
data collection and verification as the Department deems necessary
in order to monitor this Agreement. The Department will request
information and may perform verifications periodically pursuant to
administrative reviews conducted under section 751 of the Act.
2. The Government of the Republic of Singapore shall certify to the
Department within 15 days after the last day of each three-month
period beginning on October 1, 1983 whether:
a. It continues to be in compliance with the Agreement by offsetting
completely the net subsidy referred to paragraph B.2; and
b. MARIS and METOS continue to be in compliance with the
Agreement by renouncing completely the financing referred to in
paragraph B.5.
The first certification shall include the period from the effective date
of this Agreement through December 31, 1983.
3. The Government of the Republic of Singapore agrees to notify the
Department in writing within 30 days prior to granting any new
benefits to producers, manufacturers or exporters of the subject
product which may be countervailable.
4. The Government of the Republic of Singapore shall notify the
Department in writing within 30 days with appropriate
documentation of any changes in the amount of available benefits as
described in paragraph B.2 of this agreement to the subject product
or if it decides to alter or terminate its obligation with respect to any
of the terms of this Agreement.
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5. MARIS or METOS will notify the Department in writing if
they: (1) Transship hermetic refrigeration compressors rated not
over one-quarter horsepower to the United States through third
countries: (2) alter their position with respect to any terms of this
Agreement: (3) apply for or receive directly or indirectly the benefits
of the programs described in paragraph B.2 of this Agreement for the
manufacture produciton or exportation of the subject product: or (4)
apply for or receive directly or indirectly any new benefits on the
subject product.
6. In accordance with the procedure during the investigation, MARIS,
METOS, and the Government of the Republic of Singapore agree to
continue to provide the petitioner with non-confidential summaries
of all submissions required to be provided to the Department under
the terms of this Agreement at the time such submissions are
provided to the Department.
D. Violation or Termination of the Agreement
1. If the Government of the Republic of Singapore withdraws from this
Agreement, or if the Department determines that the Agreement is
being or has been violated of no longer meets the requirements of
section 704(b) or (d) of the Act, then section 704(i) shall apply.
2. Additionally should METOS annual exports to the United States
account for less than 85% of the subject product imported into the
United States from the Republic of Singapore, directly or indirectly
the Department may terminate this Agreement and reopen the
investigation or issue a countervailing duty order as appropriate
under § 355.32 of the Commerce Regulations. If reopened, the
investigation will be resumed for all exporters of the subject product
as if the affirmative preliminary determination was made on the date
that the Department terminates this Agreement.
E. Effective Date
The effective date of the Agreement is the date of publication in the
Federal Register.
Signed on this 31st day of October 1983 for the Government of the
Republic of Singapore.
Jack Choo.
Signed on this 31st day of October 1983 for MARIS and METOS.
A. Paul Victor.
I have determined pursuant to section 704(b) of the Act that the
provisions of paragraph B completely eliminate or offset the subsidies
that the Government of the Republic of Singapore is providing with
respect to certain refrigeration compressors exported directly or
indirectly from the Republic of Singapore to the United States.
Furthermore, I have determined that suspension of the investigation
is in the public interest that the provisions of paragraph C ensure that
this Agreement can be monitored effectively and that the Agreement
meets the requirements of section 704(d) of the Act.
United States Department of Comnmerce.
Alan F. Holmer,
Deputy Assistant Secretary for Import Administration.
October 31, 1983.
[FR Doc. 83-30109 Filed 11-4-83; 8:45 am]
BILLING CODE 3510-DS-M