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[C-580-051]

Bicycle Tires and Tubes From Korea; Preliminary Results of Administrative Review of Countervailing Duty Order

Thursday, September 29, 1983

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ACTION: Notice of Preliminary Results of Administrative Review of Countervailing Duty Order.

SUMMARY: The Department of Commerce has conducted an administrative review of the countervailing duty order on bicycle tires and tubes from Korea manufactured by Korea Inoue Kasei Co., Ltd. The review convers the period January 1, 1981 through December 31, 1981.

As a result of the review, the Department has preliminarily determined the aggregate net subsidy to

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EFFECTIVE DATE: September 29, 1983.

FOR FURTHER INFORMATION CONTACT: John S. McKean or Brian Kelly, Office of Compliance, International Trade Administration, U.S. Department of Commerce, Washington, D.C. 20230; telephone: (202) 377-2786.

SUPPLEMENTARY INFORMATION:

Background

On July 14, 1983, the Department of Commerce ("the Department") published in the Federal Register (48 FR 32205) the final results of its last administrative review of the countervailing duty order on bicycle tires and tubes from Korea (44 FR 25701, January 12, 1979) and announced its intent to conduct the next administrative review. As required by section 751(a)(1) of the Tariff Act of 1930 ("the Tariff Act"), the Department has now conducted that administrative review.

Scope of the Review

Imports covered by the review are shipments of pneumatic bicycle tires and tubes, of rubber or plastic, whether such tires and tubes are sold together as units or separately, manufactured by Korea Inoue Kasei Co., Ltd. ("KIK"). Such merchandise is currently classifiable under items 772.4800 and 772.5700 of the Tariff Schedules of the United States Annotated.

The review covers the period January 1, 1981 through December 31, 1981 and includes seven programs: (1) The Foreign Capital Inducement Law ("FCIL"), (2) short-term preferential financing, (3) tax exemptions for land acquisition, (4) tax exemptions for imported capital equipment, (5) accelerated depreciation, (6) reserve funds for export market development, and (7) reserve funds for export losses.

The Department also investigated one additional program alleged by the petitioner during the previous review to confer a countervailable subsidy. The program involves possible rent, construction, and/or loan benefits conferred on firms located on government-owned land.

Analysis of Programs

(1) Foreign Capital Inducement Law
Under the FCIL program, KIK receives partial forgiveness of its income and property tax liabiltiies. In 1981, KIK received a 62.68 percent exemption from its total income tax liability and a 50 percent exemption from its total property tax liability. The Ad valorem benefits attributed to this program are 0.94 percent and 0.01 percent, respectively.

(2) Short-term Preferential Financing
The financing program provides short-term loans at preferential rates to manufacturers for the purpose of acquiring imported raw materials used in production for export.

We calculated the rate on preferential loans outstanding in 1981, using the loan-by-loan difference between comparable commercial interest rates and the preferential rates. We have preliminarily determined that the benefit bestowed under this program is 0.11 percent ad valorem.

(3) Other Programs

We examined the following programs and preliminarily find them not to have been used by KIK during the period of review: (a) Tax exemptions for land acquisition, (b) tax exemptions for imported capital equipment, (c) accelerated depreciation, (d) reserve funds for export market development, and (e) reserve funds for export losses.

The Department also investigated an alleged rent, construction, and/or loan benefit available to firms located on government-owned land and found no evidence of its existence.

Preliminary Results of the Review

As a result of the review, we preliminarily determine the aggregate net subsidy to be 1.06 percent ad valorem for the period of review. The Department intends to instruct the Customs Service to assess countervailing duties of 1.06 percent of the f.o.b. invoice price on all shipments by KIK of this merchandise exported on or after January 1, 1981 and entered, or withdrawn from warehouse, for consumption on or before August 9, 1981.

Because the International Trade Commission ("the ITC") determined that no industry in the United States would be injured by importations of this merchandise if this countervailing duty order were revoked with respect to KIK (48 FR 24795), the Department revoked this order effective August 10, 1981, the date the ITC notified the Department that KIK had requested an injury determination.

Interested parties may submit written comments on these preliminary results within 30 days of the date of publication of this notice and may request disclosure and/or a hearing within 10 days of the date of publication. Any hearing, if requested, will be held 45 days after the date of publication or the first workday thereafter. Any request for an administrative protective order must be made no later than 5 days after the date of publication. The Department will publish the final results of this administrative review including the results of its analysis of issues raised in any such comments or at a hearing.

This administrative review and notice are in accordance with section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and s 355.41 of the Commerce Regulations (19 CFR 355.41).

Dated: September 22, 1983.

Alan F. Holmer,

Deputy Assistant Secretary for Import Administration.