NOTICES
DEPARTMENT OF COMMERCE
[C-559-001]
Certain Refrigeration Compressors From the Republic of Singapore;
Final
Results of Countervailing Duty Administrative Review
Wednesday, December 26, 1990
AGENCY: International Trade Administration/Import
Administration, Department of Commerce.
ACTION: Notice of final results of countervailing duty
administrative reviews.
SUMMARY: On May 22, 1990, the Department of Commerce
published the preliminary results of its administrative reviews of the
agreement suspending the countervailing duty investigation on
certain refrigeration compressors from the Republic of Sinagapore.
We gave interested parties an opportunity to comment on the
preliminary results. In our review of the comments received, we
determined that additional information was required for our analysis.
To obtain this information, the Department sent a supplemental
questionnaire on July 19, 1990. Further information was requested
and received in October and November 1990. Based on our analysis
of this information, we have recalculated the export charge rates
published in the preliminary results of these reviews.
We have now completed these reviews and determine that Matsushita
Refrigeration Industries (Singapore) Pte. Ltd. (MARIS), Matsushita
Electric Trading (Singapore) Pte. Ltd. (METOS), currently known as
Asia Matsushita Electric (Singapore) Pte. Ltd, and the Government of
the Republic of Singapore, the signatories to the suspension
agreement, have complied with the terms of the suspension
agreement during the periods January 1, 1986 through December 31,
1986, and January 1, 1987 through March 31, 1988.
EFFECTIVE DATE: December 26, 1990.
FOR FURTHER INFORMATION CONTACT:Megan Pilaroscia or
Barbara Williams, Office of Agreements Compliance, International
Trade Administration, U.S. Department of Commerce,
Washington, DC 20230; telephone: (202) 377-3793.
SUPPLEMENTARY INFORMATION: .
Background
On May 22, 1990, the Department of Commerce ("the Department")
published in the Federal Register (55 FR 21069) the preliminary
results of its administrative reviews of the agreement suspending the
countervailing duty investigation on certain refrigeration
compressors from the Republic of Singapore (48 FR 51170)
November 7, 1983). We have new completed these reviews in
accordance with section 751 of the Traiff Act of 1930 ("the Traiff
Act").
Scope of Review
Imports covered by these reviews are shipments of Singaporean
hermetic refrigeration compressors rated not over one-quarter
horsepower. During the review periods, such merchandise was
classifiable under item number 661.0900 of the Tariff Schedules of
the United States Annotated. This merchandise is currently
classifiable under item number 8414.30.40 of the Harmonized Tariff
Schedule (HTS). The HTS item numbers are provided for convenience
and Customs purposes. The written description remains dispositive.
The reviews cover one producer and one exporter of the subject
merchandise. These two companies, along with the Government of
Singapore, are the signatories to the suspension agreement. The
reviews cover the periods January 1, 1986 through December 31,
1986, and January 1, 1987 through March 31, 1988, and five
programs.
*53029
Analysis of Comments Received
We invited interested parties to comment on the preliminary results.
We received written comments from petitioner, Tecumseh Products
Company, and rebuttal comments from respondents. Our analysis of
these comments resulted in additional information being requested
from respondents on two matters. The information received on one of
these issues resulted in a recalculation of the export charge rates
published in the preliminary results of these reviews.
Comment 1: Tecumseh takes issue with the inclusion of refrigeration
compressor parts in this proceeding. Tecumseh states that because
respondents report sales of compressor parts as well as
compressors for purposes of calculating the net subsidy, the
Department should specifically state that the suspension agreement
covers compressors and all components, whether the parts are
assembled or in kits. Alternatively, petitioner states that the
Department should excise the value of parts from the export charge
rate calculation.
Respondents state that all compressor shipments include relays and
verious other parts necessary for compressors to function. They
state they have always maintained that both fully assembled and "kit"
form compressor shipments are covered by the suspension
agreement, thus no clarification with respect to compressors and
compressor components is required.
Department's Position: The suspension agreement covers complete
compressors, whether fully assembled or in "kit" form. Discrete
parts are not covered by the suspension agreement but are included
in the export charge rate calculations for these review periods, as
explained below, because they were included by respondents in the
reported benefit.
To clarify the products for which respondents receive a benefit, and
in order to determine what values should be used in calculating the
export charge rates, the Department sent a supplemental
questionnaire to respondents. In their response, respondents state
that the reported reduction in MARIS' tax liability includes export
profits earned for all products exported by MARIS directly and
indirectly during the review periods. These products consisted of
complete compressors, compressor parts, as well as other
non-compressor-related products.
Although discrete compressor parts and non-compressor-related
parts are not included in the suspension agreement, the Department
has determined that these exports should be included in the export
charge rate calculations, as MARIS' reported tax liability reduction
includes export profits earned on these products as well as complete
compressors, and the Department could not separate out these
profits from the export charge rate calculations.
The benefit was allocated over export values which include
compressor parts but do not include non-compressor-related
products. While we requested that respondents provide us with
export values for non-compressor-related products, they did not do
so. Without this information, we have relied on the best information
available, and have calculated the export charge rates with only
compressor and compressor parts f.o.b. export values. The
Department has tied the benefit received by respondents are closely
as possible to those products receiving the benefit.
It should be noted that the absence of non-compressor-related
product f.o.b. export values from the calculation as a result of
incompleteness of respondents' submission is to their disadvantage.
Moreover, the sales values provided for non-compressor-related
products indicate that the omitted f.o.b. export values would be
relatively small amounts with minimal effects on the export charge
rates.
Comment 2: Tecumseh argues that new information exists to warrant
review of the Skills Development Fund and Public Utilities Board
Surcharge. Tecumseh states that since verification in the first
administrative review, when these programs were found to be
generally available, the U.S. government has found that these
programs are offered only to specific industry segements. Tecumseh
cites a 1988 State Department report on the investment climate in
Singapore, which states that investment incentives are offered
selectively to companies in high-tech manufacturing and services.
Tecumseh also contends that revisions to the U.S. trade law by the
Omnibus Trade and Competitiveness Act of 1988 limit the
Department from accepting at face value that these programs are
"generally available" without examining how the programs are
actually implemented during the periods of review and requests that
the Department review these programs through verification.
Respondents reply that these programs were reviewed by the
Department during verification in the first administrative review and
were found to be generally available and not countervailable.
Respondents state that there have been no changes in these programs
and that the State Department report contains no specific reference to
either program or the refrigeration compressor industry.
Respondents further state that the part of the report cited by
petitioner refers to the Government of Singapore's efforts to attract
"high-tech" industries, and that refrigeration compressor
manufacturing is not a high-tech industry. Respondents maintain that
this report provides no basis for renewed investigation of either
program.
Respondents also contend that changes to the countervailing duty
law as a result of the 1988 Omnibus Trade and Competitiveness Act
concerning the definition of "generally available" in no way compel
the Department to reinvestigate these programs. They argue that
these programs are still generally available as previously confirmed
during verification and that no new evidence has been provided to
indicate that either program has since been revised.
Department's Position: In the absence of new information, the
Department will not re-examine any program previously found to be
not countervailable. The Department reviewed these programs using
the de facto analysis contained in the 1988 law in a previous review
and found them generally available. (See Final Results of
Administrative Review, (50 FR 30493, July 26, 1985).)
Tecumseh has not provided the Department with any information
indicating that either program has in fact changed; the State
Department report mentions neither these programs nor the
refrigeration compressor industry.
Comment 3: Tecumseh argues that exporters should not be entitled to
deduct export charges as business expenses in calculating profit.
Tecumseh claims that the result of deductions permitted MARIS by
the Singaporean government is to reduce the amount of profit and,
consequently, the amount of benefit received by MARIS. They state
that this is a partial reinstatement of the net effect of the benefit and is
contrary to the intent of the countervailing duty law.
Respondents state that export charges are permissible deductible
business expenses. Respondents state that the deductions, made
pursuant to Singapore's general tax laws, are available to any
company doing business in Singapore, and in no way can be
conceived of as a subsidy. They argue that petitioner's contention is
not supported by any countervailing duty determination
disallowing these tax
*53030
deductions. Respondents maintain that
Tecumseh's contentions regarding this business expense should be
rejected by the Department.
Department's Position: Pursuant to paragraph two of the suspension
agreement, the Government of Singapore is obligated to offset
completely the amount of the net bounty or grant determined by the
Department to exist with respect to the subject product. According to
the supplementary information we received from respondents,
MARIS made the export charge deducations before calculating
exempt export profit in both periods of review. As a result, export
charge rates based on these figures do not completely offset the
amount of the net bounty or grant in accordance with the suspension
agreement. We therefore determine that the deduction of the export
charges in each review period should be offset by adding the amount
of the deductions back to MARIS' profit figures, and recalculating the
export charge rates. As a result, the rate for the period January 1,
1986 through December 31, 1986 increases to 4.37 percent, and the
rate for the period January 1, 1987 through March 31, 1988 increases
to 2.23 percent. These export charge rates offset completely the
benefits received by MARIS.
Comment 4: Tecumseh requests that the Department review the
technical assistance fees paid by MARIS to its parent company, citing
an entry in MARIS' financial statement. They argue that the particular
intercompany treatment given to these fees in these reviews gives
possible rise to countervailable benefits. Respondents state that the
Department has previously determined that deduction of these fees is
not countervailable because they are not excessive.
They maintain that the financial statement entry questioned by
petitioner was to correct an entry on a previous MARIS financial
statement. Respondents state that MARIS paid income tax on the sum
in question, and that no benefit was received.
Department's Position: Petitioner has provided no basis for finding
that the intercompany treatment of the technical assistance fees by
MARIS' parent company provides a countervailable benefit. The
Department considers the fee situation examined in these reviews to
be the result of private contractual arrangements and does not find
that a countervailable benefit has been conveyed.
Comment 5: Tecumseh states that the Department should analyze
how the export incentives program benefits could decrease for
MARIS while exports of their refrigeration compressors to the
United States increased. Techumseh claims that because the export
incentives program is unchanged and these exports have risen, the
export charge rate for the latest review should be significantly higher.
Respondents reply that the export charge rate is calculated by
allocating MARIS' net tax savings from its operation as an Export
Enterprise over the value of METOS' total, worldwide compressor
exports. Respondents maintain that fluctuations in compressor
shipments to the United States are therefore irrelevant to the
calculation.
Department's Position: The suspension agreement states that the
Government of Singapore is to offset completely the amount of the
net bounty or grant determined to exist with respect to the subject
merchandise by collection of an export charge. The export charge
rates calculated by the Department in these final results are correct as
they offset the benefit by allocating MARIS' total tax savings under
Part IV of the Economic Expansion Incentives Act over the f.o.b.
value of METOS' total exports of complete compressors and
compressor parts--not just exports to the United States.
The Department uses total exports because the benefit is reported on
that basis and is not limited to exports to the United States. The
export charge rates fluctuate among reviews as they are based on
export earning-related tax savings and export values, both of which
fluctuate.
In addition, the Department's methodology for calculation of the
export charge rate uses the period in which the benefit was actually
received, not accrued. In this way, the tax savings benefits received
in a given review period, upon filing of taxes, are tied to export
earnings of previous years.
Comment 6: Tecumseh claims that intercompany documents for
payment of the export charge (debit notes) provided in the
questionnaire response suggest understatement of values for export
charge assessment purposes. They state that the documentation
indicates a shift in invoice numbers used by respondents. Tecumseh
argues that one result of such a change could be to reduce the value
reported and thereby reduce the total amount of export charges
collected because the charge is assessed on an ad valorem basis.
Tecumseh asks that the Department consider only transactions made
before the invoicing methodology change and use an average charge
per transaction as a basis for calculating the amount of charges that
should have been collected during the review period.
Respondents argue that there is no evidence of understatement of
values for export charge assessment purposes. They state that the
export charge documentation clearly indicates that there was no
decline in the export charge payments during the review period.
Respondents maintain that the invoice number change provides no
basis for petitioner's allegation of undervaluing.
Department's Position: The Department has seen no evidence to
indicate that incorrect values have been provided or that the change
was for other than company recordkeeping purposes.
Comment 7: Tecumseh argues that Singapore's Control of
Manufacture Act ("the Act"), described in the 1988 State Department
report on the investment climate in Singapore, confers monopoly
power and profits to respondents that must be offset.
Respondents state that the Act is irrelevant to this case, and that the
Act requires only that companies wishing to produce specified
products obtain a special license and that the Act does not indicate
that there is a limited number of licenses available or that the
Singaporean government will grant only one license for the
manufacture of each product listed. Respondents maintain that
Tecumseh has provided no proof that there are, in fact, restrictions
on the entry of new refrigeration compressor producers into
Singapore by the Act, and they note that Tecumseh admits that
MARIS is not subject to the act.
Department's Position: There is no evidence in the record to indicate
that the Act requires a special license to export refrigeration
compressors and petitioner provided no basis for finding that
respondents receive countervailable benefits under the Act.
Final Results of Review
After considering the comments received, we determine that the
signatories to the suspension agreement have complied with the
terms of the suspension agreement, including the payment of the
provisional export charge for both periods.
From January 1, 1986 through January 9, 1987, a provisional export
charge rate of 4.92 percent was in effect, and from January 9, 1987
through March 31, 1988, a rate of 8.35 percent was in effect.
In addition, we determine the total bounty or grant to be 4.37
percent of the f.o.b. value of the merchandise for the January 1, 1986
through December 31, 1986 review period and 2.23 percent of the
f.o.b. value of the merchandise for the January 1, 1987 through
March 31,
*53031
1988 review period. The suspension agreement
states that the Government of Singapore will offset completely the net
bounty or grant determined by the Department to exist with respect
to the subject merchandise by the collection of an export charge
applicable to exports of the subject product.
Following the methodology outlined in section B.4 of the agreement,
the Department determines that, for the period January 1, 1986
through December 31, 1986, and the period January 1, 1987 through
March 31, 1988, a negative adjustment may be made to the
provisional export charge rates in effect.
These rates, established in the notices of the final results of the first
and second administrative reviews of the suspension agreement (50
FR 30493, July 26, 1985; 52 FR 848, January 9, 1987), are 4.92
percent and 8.35 percent, respectively. For the periods covered by
the present reviews, the Government of Singapore may refund the
difference to the companies.
The Department intends to notify the Government of Singapore that
the provisional export charge rate on all exports of the subject
merchandise to the United States with Outward Declarations filed on
or after the date of publication of the final results of these
administrative reviews shall be 2.23 percent of the f.o.b. value of the
merchandise.
These administrative reviews and notices are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
355.22.
Dated: December 19, 1990.
Marjorie A. Chorlins,
Acting Assistant Secretary for Import Administration.
[FR Doc. 90-30189 Filed 12-24-90; 8:45 am]
BILLING CODE 3510-DS-M