NOTICES
DEPARTMENT OF COMMERCE
[C-542401]
Final Affirmative Countervailing Duty Determinations and Orders; Certain
Textile Mill Products and Apparel From Sri Lanka; Cotton Inspectors' Gloves
Tuesday, March 12, 1985
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AGENCY: Import Administration, International Trade
Administration, Commerce.
ACTION: Notice.
SUMMARY: We determine that certain benefits which constitute bounties or
grants within the meaning of the countervailing duty law are being provided
to manufacturers, producers, or exporters in Sri Lanka of certain textile mill
products and apparel. The estimated net bounty or grant is 5 percent ad valorem
for certain textile mill products and 3.06 percent ad valorem for apparel. We are
directing the U.S. Customs Service to continue to suspend liquidation of all
entries of certain textile mill products and apparel from Sri Lanka, except
"Cotton Inspectors' Gloves," and products produced by Texwood Industries
Limited, that are entered, or withdrawn from warehouse, for consumption on or
after the date of publication of this notice, and to require a cash deposit on
entries of the subject merchandise in the amount equal to the estimated net
bounty or grant.
EFFECTIVE DATE: March 12, 1985.
FOR FURTHER INFORMATION CONTACT: Laura Campobasso or Vincent Kane,
Office of Investigations, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and Constitution
Avenue, NW., Washington, D.C. 20230; telephone: (202) 377-5403 or
377-5414.
SUPPLEMENTARY INFORMATION:
Final Determinations
Based upon our investigations, we determine 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 to manufacturers, producers,
or exporters in Sri Lanka of certain textile mill products and apparel. For
purposes of these investigations, the following programs are found to confer a
bounty or grant:
- Investment Promotion Zone
- Export Expansion Grants
- Pre-Shipment Export Refinancing
- Rebate of Import Duties and Indirect Taxes
- Export-Related Corporate Tax Exemption for Non-Zone Companies
We estimate the net bounty or grant to be 5 percent ad valorem for certain
textile mill products and 3.06 percent ad valorem for apparel.
Case History
On July 20, 1984, we received a petition from the American Textile
Manufacturers Institute ("ATMI"), the Amalgamated Clothing and Textile
Workers Union ("ACTWU"), and the International Ladies' Garment Workers
Union ("ILGWU"), on behalf for the U.S. industry producing certain textiles and
textile products. In compliance with the filing requirements of section § 355.26
of our regulations (19 CFR 355.26), the petition alleges that manufacturers,
producers, or exporters in Sri Lanka of textiles and textile products receive,
directly or indirectly, benefits which constitute bounties or grants within the
meaning of section 303 of the Act.
We found that the petition contained sufficient grounds upon which to initiate
countervailing duty investigations, and on August 9, 1984, we initiated such
investigations (49 FR 32646). These investigations were initiated by the
Department under the title "Certain Textile and Textile Products from Sri
Lanka." Because of the number of products covered, and the differences in
those products, the Department determined that it should conduct separate
investigation--one for textiles and non-apparel textile products, and one of
apparel. Because of the potential for confusion, as apparel can also be
considered a textile product, we changed the titles of these investigations to
"Certain Textile Mill Products and Apparel from Sri Lanka." Except for the
product with respect to which we are rescinding our initiation, the scope of these
investigations remains the same as announced in the initiation and the
preliminary determinations.
We stated that we expected to issue preliminary determinations by October 15,
1984. On September 21, 1984, we determined these investigations to be
"extraordinarily complicated," as defined in section 703(c)(1)(B) of the Act.
Therefore, we extended the period for making our preliminary determinations
by 65 days until December 17, 1984 (49 FR 40198).
Since Sri Lnaka is not a "country under the Agreement" within the meaning of
secion 701(b) of the Act and the merchandise being investigated is dutiable,
sections 303 (a)(1) and (b) of the Act apply to these investigations. Accordingly,
the petitioners are not required to allege that, and the U.S. International Trade
Commission is not required to determine whether, imports of these products
cause or threaten material injury to a U.S. industry.
Due to the scope of these investigations, we employed a two-step questionnaire
process. We presented a preliminary questionnaire to the Government of Sri
Lanka in Washington, D.C., on August 27, 1984. Based on the response to the
preliminary questionnaire, we identified the 17 apparel producers who
accounted for at least 60 percent of the exports of apparel to the United States.
We initially requested the 17 apparel producers and exporters to respond to the
detailed questionnaire, because we believed that only apparel was exported
from Sri Lanka to the United States. On October 25, 1984, we presented the
detailed government and company questionnaire to the Government of Sri
Lanka in Washington, D.C. The responses to our detailed questionnaires were
received on November 26, 1984. During the course of our investigations, we
discovered that some textile mill products also were exported from Sri Lanka
to the U.S. and we identified and requested a response from the company that
accounts for at least 60 percent of exports of textile mill products to the United
States. We received a response from the company of January 25, 1985.
We also sent detailed questionnaires to three companies that had filed timely
requests for exclusion: Sinotex Lanka Limited (Sinotex), Texwood Industries
Limited (Texwood), and Asiaknit Limited. We verified that Texwood received
benefits which are de minimis, and it is therefore exluded from these final
determinations. Sinotex and Asiaknit receive countervailable benefits above the
de minimis, rate of 0.50 percent. Therefore, we have not excluded Sinotex and
Asiaknit from these final determinations and orders.
Certain respondents in the Certain Textile Mill Products and Apparel
investigations have raised issues as to whether petitioners have standing to file
these cases. Petitioners have also made
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comments regarding our
methodology in selecting companies to receive detailed questionnaires, and our
investigation of only those companies that account for sixty percent of exports
on the subject merchandise to the United States. We have addressed these issues
in our final determinations of Certain Textile Mill Products and Apparel from
Malaysia, published concurrently with this notice. See that notice for our
comments on these issues.
On December 21, 1984, we issued our preliminary determinations in these
investigations (49 FR 49687). We preliminarily determined that benefits
constituting bounties or grants within the meaning of the Act are being provided
to manufacturers, producers, or exporters in Sri Lanka of the subject
merchandise. We conducted verification on Sri Lanka of the subject
merchandise. We conducted verification in Sri Lanka from January 23, 1985,
through February 1, 1985. A hearing was held February 15, 1985, and comments
have been received from the parties to the proceeding.
Scope of the Investigations
The products covered by these investigations are certain textile mill products
and apparel which are described in the Appendix attached to this notice.
Rescission of Initiation of Investigation
The John Plant Company, a domestic U.S. manufacturer and importer of
lightweight cotton lisle disposable work gloves from Sri Lanka, has requested
that the Department rescind its initiation of investigation with respect to
lightweight cotton lisle disposable work gloves from Sri Lanka. Commonly
known as inspectors' gloves, lightweight cotton lisle disposable work gloves
("cotton inspectors' gloves") are imported from Sri Lanka under TSUSA item
number 704.4506. The John Plant Company argues that cotton inspectors'
gloves constitute a separate "like product" in that they are not "like" other cotton
work gloves, and that petitioners lack standing to seek imposition of
countervailing duties on cotton inspectors' gloves from Sri Lanka.
The U.S. Court of International Trade has held that the Department has the
authority to rescind an initiation of an investigation if the Department
determines that the petitioners lack standing. Gilmore Steel Corp. v. United
States, 585 F. Supp. 670 (1984). Thus, the Department has the authority to
rescind its initiation in this case should it determine that petitioners lack
standing with respect to cotton inspectors' gloves. Under section 702(b)(1) of
the Act, in order to have standing to file a countervailing duty petition, a
petitioner must be a domestic interested party within the meaning of sections
771(9) (C), (D), or (E), and must file the petition on behalf of an industry in the
United States. In this case, in order for petitioners to be an interested party with
respect to cotton inspectors' gloves, the unions must be "representative of an
industry engaged in the manufacture of a like product". 19 U.S.C. 1677(9)(D).
Both the definitions of "domestic interested party" and "industry" depend upon
the definition of "like product," which is defined in section 771(10) of the Act as:
A product which is like, or in the absence of like, most similar in characteristics
and uses with, the article subject to an investigation under this title.
Petitioners here have essentially argued that all gloves are one "like product,"
and that the industry producing all types of gloves is one domestic industry.
Thus, if the unions have members producing any type of glove, they are
representative of the entire industry and have standing with respect to all gloves
as one "like product." Evidence on the record indicates that the unions represent
workers who produce cotton work gloves; however, the domestic producers of
cotton inspectors' gloves do not have union workers. The threshold question
therefore is whether cotton work gloves are a "like product" to cotton inspectors'
gloves.
In making this determination, we have examined various competitive factors in
the U.S. market, primarily the general physical characteristics and intended use
of the gloves, the channels of trade in which the gloves are sold, ultimate use and
consumer expectations, and cost of the gloves.
Cotton inspectors' gloves are made of lightweight cotton lisle to allow flexible
hand movements, are disposed of after short-term use, and are not designed for
reuse. Cotton inspectors' gloves have a different function from other work
gloves, in that they are designed to protect delicate industrial equipment from
contact with workers' hands. Traditional cotton work gloves are made of
heavier-weight cotton materials for long-term and repeated use under
heavy-duty work conditions and are designed with cuffs and other
reinforcements to protect workers' hands from outside elements or injury.
Cotton inspectors' gloves are not designed to offer hand protection, and are not
decorated in any way to make them suitable for non-industrial use. A consumer
would not expect such gloves to provide hand protection.
Cotton inspectors' gloves are sold in bulk, usually on an annual contract basis, to
certain industrial users in the nuclear utility, jet aircraft, and electronic
equipment manufacturing industries. Traditional cotton work gloves are sold in
small or large quantities on a wholesale basis to industrial users or on a retail
basis to various consumers, including households.
Finally, because of their lightweight fabric, lack of cuffs or other ornamentation,
and disposable nature, cotton inspectors' gloves are much less expensive than
traditional cotton work gloves.
Therefore, we determine that cotton work gloves are not "like products" with
respect to cotton inspectors' gloves. Because the unions do not represent
workers who make a "like product," petitioners lack standing to file a
countervailing duty petition on such merchandise. The evidence on the
record supports the conclusions that domestic U.S. producers of cotton
inspectors' gloves are neither included among the petitioners nor support the
petition and that workers in the domestic cotton inspectors' glove industry are
not members of any union supporting this petition. The John Plant Company
itself is the largest domestic U.S. producer of cotton inspectors' gloves.
Therefore, we are rescinding our initiation of investigation with respect to
cotton inspectors' gloves imported from Sri Lanka under TSUSA item
704.4506.
Analysis of Programs
Throughout this notice, we refer to certain general principles applied to the facts
of the instant investigations. These principles are described in the "Subsidies
Appendix" attached to the notice of "Cold-Rolled Carbon Steel Flat- Rolled
Products from Argentina; Final Affirmative Countervailing Duty
Determination and Countervailing Duty Order," which was published in the
April 26, 1984, issue of the Federal Register (49 FR 18006).
For purposes of these determinations, the period for which we are measuring
bounties or grants ("the review period") is April 1983 through March 1984.
Based upon our analysis of the petition and the responses to our questionnaires,
we determine the following:
I. Programs Determined To Confer Bounties or Grants
We determine that bounties or grants are being provided to manufacturers,
producers, or exporters in Sri Lanka of
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certain textile mill products
and apparel under the following programs:
A. Investment Promotion zone
Petitioners alleged that the government of Sri Lanka provides benefits to
producers and exporters of the subject merchandise through an Investment
Promotion Zone (IPZ). They alleged that benefits received under this program
by firms that locate in the IPZ include exemptions from taxes on corporate and
personal income, exemptions from taxes on royalties and dividends for up to 10
years, availability of developed factory sites at nominal charges, and
exemptions from paying import duties on machinery, equipment, and materials.
Law No. 4 of 1978, amended by Act No. 43 of 1980 and Act No. 21 of 1983,
establishes an IPZ, operated by the Greater Colombo Economic Commission
(GCEC). We verified that the entire production of the firms located in the IPZ
must be marketed abroad. As specified in the responses and verified, firms
locating in the zone are eligible for (1) exemptions from payment of corporate
income taxes; (2) exemptions from payment of import duties and indirect taxes
on imports; (3) exemptions from payment of taxes on dividends; and (4)
exemptions from payment of taxes on royalties paid to non-resident persons or
companies.
We further verified that the GCEC does not build factories within the zone for
lease to investors or provide land at nominal prices. All investors must build
their own factories and no government financial assistance is provided for
construction. Factory sites are available on a commercial basis.
The Department verified that the respondent for textile mill products was not
eligible to receive these benefits because it is not located in the zone. Of the
apparel firms who responded to our questionnaire, ten are located in the IPZ.
These firms receive the following benefits: Corporate income tax exemptions or
tax holidays, and import duty and indirect tax exemptions on machinery,
equipment, and raw materials. We find no countervailable benefits with respect
to duty and indirect tax exemptions on imported raw materials, because duty
and indirect tax exemptions on raw materials that are physically incorporated in
the final exported products are not considered bounties or grants under the Act.
With respect to exemptions from payment of taxes on royalties paid to a
non-resident person or company, there is no evidence on the record that
apparel companies have used this program. With regard to exemptions from
payment of taxes on dividends, all of the companies responding to the
Department's questionnaire, including those located outside the IPZ, indicated
that they did not benefit from any such exemptions. In addition, though several
of the financial statements of these companies indicate that the companies did
declare dividends during the review period, in only one instance did a statement
indicate dividends that were "free of tax," and those dividends were distributed
prior to the review period.
All of the firms we investigated are majority foreign-owned; some are 100
percent foreign-owned. In prior determinations, the Department has found that
dividend tax exemptions for non-resident shareholders do not confer a
countervailable benefit. See Bicycle Tires and Tubes from Korea, 48 FR 32205
(1983). If any new information on tax exemptions on dividends is received, we
will analyze this program further in the administrative review under section 751
of the Act.
Regarding exemptions from corporate income taxes, we determine that these
exemptions are countervailable because they apply solely to export income. To
calculate the benefit from corporate income tax exemptions for the review
period, the amount of tax savings received under this program was divided by
the total value of exports in the review period to determine an estimated net
bounty or grant of 1.93 ad valorem for apparel.
Exemption from import duties and indirect taxes on machinery and equipment
confer a bounty or grant because they are available only to the exporting firms
located in the IPZ. To calculate the benefits from exemptions on import duties,
we divided the amount of import duties and indirect taxes exempted during the
review period by the total value of exports. The estimated net bounty or grant is
.08 percent ad valorem for apparel.
B. Export-Related Corporate Tax Exemptions for Non-Zone Companies
According to supplemental responses, companies not located in the IPZ, which
are engaged in the manufacture and export of textile mill products and apparel,
other than apparel under quota, are eligible for a five year tax holiday related to
their export profits. In order to receive the tax holiday, an apparel company
must apply and receive approval from the Minister of Finance Planning.
We verified that the respondent for textile mill products was not eligible to
receive this benefit. Thus, for textile mill products, we determine that the
program was not used.
With respect to apparel, we determine that these exemptions of corporate
income tax are countervailable because the program is limited to exporters. To
calculate the benefit from the exemptions of corporate income tax for the review
period, the amount of tax savings received under this program was divided by
the total value of exports in the review period to determine an estimated bounty
or grant of .40 percent ad valorem for apparel.
C. Rebate of Import Duties and Indirect Taxes
The government of Sri Lanka operates two separate programs that rebate
import duties and indirect taxes. One applies to textile mill products and the
other to apparel. In the final determination on Certain Apparel from Thailand,
published concurrently with this notice, we explain our test for determining
whether rebate systems that are designed to rebate both prior stage indirect
taxes and import duties confer bounties or grants upon exports. The test for
such rebate systems is similar to the so-called linkage test for systems which
purport to rebate prior-stage indirect taxes only.
Based on our investigations, we determine that the customs duty rebate
program for apparel is designed to rebate import duties and indirect taxes. The
program is administered by a Duty Rebate Committee. This committee sets rates
on both a case-by-case basis and on a product-wide basis. The Minister of
Finance must approve the rates set by the Duty Rebate Committee. Prior to
establishing a rate, the committee collects company or industry cost data. When
the duty or turnover tax rate changes, a study is prepared.
The last study on apparel was conducted in September 1983 following duty
increases in February 1983. In the study, cost structure statements were
collected from the manufacturers and exporters of various types of apparel. For
each type of apparel a detailed analysis was completed that identified the
company, individual export sales, the FOB value of the sales, the import duties
paid on imported materials used in the exported merchandise, and the import
duty as a percent of FOB value. For each type of apparel, the sum of import
duties divided by the sum of FOB values provides the weighted-average rebate
rate for import duties for that particular type of apparel. The sum of import
duties paid on all seven types of apparel divided by the FOB values for all seven
types of apparent equals the
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weighted-average incidence of import
duties on the FOB value of apparel.
The analyses for each type of apparel and for all apparel combined also included
import duty and turnover tax incidence on locally purchased raw materials as
well as a factor covering the cost of bank guarantees and a factor for incentives.
The rebate rate that was approved on the basis of this study is equal to only the
incidence of import duties on imported raw materials and the indirect taxes on
locally purchased raw materials as a percentage of FOB value.
This study was subsequently reviewed by a consultant who analyzed the
collective impact of import duties and turnover taxes paid on the raw materials
and ancillaries (buttons, zippers, ribbon, etc.) and packing materials used in the
manufacture of apparel for export. The consultant's report and the supporting
analyses stated that the collective incidence of duties and turnover taxes
imposed on imported raw materials and local and imported packing materials in
garment exports equals 32.1 percent. The authorized rebate rate is 32 percent.
The consultant also reviewed the rebate rates established for individual
companies on a case-by-case basis. The actual incidence of import duties and
turnover taxes correlates with the rebate received.
Based on the analysis outlined above, we determine the rebate program for
apparel does not constitute an excessive remission of indirect taxes or import
duties on exports of apparel. Therefore, we find the apparel rebate program not
to be countervailable.
With regard to textile mill products, the government stated that the rebate
program for textiles was designed to rebate customs duties and indirect taxes
paid on items physically incorporated into exported products. However, the
government was unable to provide any reliable documentation to support the
level of rebate authorized.
Therefore, we determine the government of Sri Lanka provides an excessive
rebate on exports of certain textile mill products. The authorized rebate for
textile mill products is 15 percent of the F.O.B. value of exported textile mill
products. We verified however, that the textile company actually receives only
5 percent of the F.O.B. value of the exported good. Accordingly, the estimated
net bounty or grant is 5 percent ad valorem for certain textile mill products.
D. Export Development Board
The Export Development Act No. of May 1979 created the Sri Lanka Export
Council of Ministers and established the Sri Lanka Export Development Board
(EDB). The EDB provides tax-free export expansion grants to exporting firms
with net foreign exchange earnings equal to 20 percent or more of export value,
and export-marketing services and financial aid to export ventures.
The EDB created an original Export Expansion Grant Scheme in 1981, and
devised another Export Expansion Grant Scheme in 1983. Through this Scheme,
firms may apply for expansion grants to be used for export-oriented projects.
The Export Expansion Grant Scheme is funded by the Export Development Fund
(EDF), which is administered by the EDB. We verified that only producers and
exporters of apparel received export expansion grants.
Because receipt of the export expansion grants is contingent upon exportation,
they confer a bounty or grant on exports. To calculate the benefit from the
export expansion grants, we used the grant methodology outlined in the
Subsidies Appendix and found an estimated net bounty or grant to be .38
percent ad valorem for apparel.
The EDB also has the authority to assist firms with export marketing by
sponsoring participating in international trade fairs and trade missions abroad.
However, we verified that the EDB has not provided any such sponsorship to
exporters of the subject merchandise to the United States during the review
period. We also verified that the EDB has not provided any financial aid to export
ventures for producers and exporters of the subject merchandise during the
review period.
E. Short-Term Working Capital Loans for Exporters
Short-term working capital loans are available to exporters under the pre-
shipment export refinancing program.Commercial banks determine which loans
will be submitted to the Central Bank of Sri Lanka for refinancing. The amount
of refinancing available from each individual commercial bank is subject to
aggregate limits established by the Central Bank.
The Department verified that only exporters of apparel receive such refinancing.
Because the refinancing is available only for export loans, we determine that this
program confers a bounty or grant on exports to the extent that these loans are
made at preferential rates. As specified in the Subsidies Appendix, the
benchmark rate for short-term export loans is the national average commercial
interest rate for short-term financing. For the preliminary determinations, the
Government of Sri Lanka provided the weighted-average short-term lending
rates of commercial banks published in the "Central Bank Annual Surveys of Bank
Deposits and Advances." Because this benchmark rate included the export loans
in question, the Department requested and received from the Central Bank of Sri
Lanka interest rates excluding the refinanced loans. Because this benchmark
rate is higher than the rates on the pre- shipment export loans, we determine
that these loans confer bounties or grants on the products under investigation
for apparel producers. Applying this benchmark rate we calculate a bounty or
grant of .27 percent ad valorem for apparel.
II. Programs Determined Not to Confer Bounties or Grants
We determine that bounties or grants are not being provided to manufacturers,
producers, or exporters in Sri Lanka of certain textile mill products and
apparel under the following program.
A. Textile Self-Sufficiency Program
Petitioners alleged that the government of Sri Lanka provides the producers
and exporters of the subject merchandise with the following benefits under a
textile self-sufficiency program: Modernization projects for mills that produce
fabrics and man-made fiber textile products, construction of new mills and
assistance to the powerloom sector. Based on the responses and our verification,
we determine that the government of Sri Lanka does not administer a textile
self-sufficiency program. The government, through the Ministry of Textile
Industries, owns a number of textile mills engaged in the production and sale of
cotton and synthetic textile products; however, none of the output of these mills
is exported to the United States. We verified that only one of the producers and
exporters selected to respond to our questionnaire purchased the output of
government-owned mills. The prices paid for the products were comparable to
private mill prices.
In addition to owning certain textile mills, the government of Sri Lanka
operates the State Trading Corporation of Sri Lanka, which is called Salusala.
Salusala was established to import textile products and distribute them in the
local market. The company also purchases from local mills. Salusala does not
purchase from government-owned mills and it sells all merchandise at market
prices. Salusala did not export to the U.S. during the review period.
The responses indicated, and the Department verified, that private
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companies exporting to the U.S. during 1983 have never received government
assistance directed at improving or constructing new ones.
Based on our review of the information on the record to date, we determine that
no countervailable benefits are being provided to the selected producers and
exporters of the subject merchandise through government-owned mills or
through Salusala and that the government has not provided any assistance to
producers and exporters for improvement of existing mills or construction of
new mills.
III. Programs Determined Not To Be Used
We determined that manufacturers, producers or exporters in Sri Lanka of
certain textile mill products and apparel did not use the following programs
which were listed in our notice of initiation.
Medium- and Long-Term Credit Fund
The Central Bank of Sri Lanka provides medium- and long-term refinancing for
export-related investment.
The refinancing program for medium- and long-term loans is operated by the
Central Bank of Sri Lanka through the development and commercial banks.
Development and commercial banks may apply for refinancing of medium- and
long- term loans for export-related investments under the Government's
Medium- and Long-Term Credit Fund (MLCF) program. The Central bank
conducts its own independent evaluation of each loan application before
refinancing the loan. Even if the loan is refinanced by the Central Bank, the risk of
default is borne by the commercial bank.
Neither the textile mill products producer nor the apparel producers received
any medium- and long-term loans under the MLCF program. Therefore, we
determine that the MLCF program was not used.
Petitioners Comments
Comment 1: In their prehearing brief, Petitioners asked that the Department
investigate whether textile and apparel producers located outside of the IPZ
benefit from corporate income tax exemptions and other benefits such as duty
exemptions on machinery and equipment similar to those benefits provided to
companies located in the zone.
DOC Position: The Department has addressed the issue of export-related tax
exemptions in the section of the notice "Export-Related Corporate Tax
Exemptions for Non-Zone Companies." With regard to duty exemptions on
machinery and equipment, there is no evidence on record that companies
located outside the zone are entitled to such duty exemptions.
Comment 2: Petitioners argue that textile and apparel producers located both in
and out of the IPZ receive countervailable benefits through the tax-exempt
status of their dividends.
DOC Position: The Department has addressed this issue in the notice. Refer to the
section, of the notice "Investment Promotion Zone".
Comment 3: Petitioners argue that the benchmark used in calculating the benefit
from pre-shipment export financing loans in the preliminary determination
included preferential export financing. Petitioners contend that the Department
should use a benchmark that has the preferential rates factored out.
DOC Position: For these final determinations, the Department has used a
benchmark from which refinanced export loans have been excluded.
Comment 4: Petitioners argue that textile and apparel producers located outside
of the zone may benefit from import duty rebates in excess of the duties paid on
goods physically incorporated in exported products.
DOC Position: The Department has addressed this issue in the notice. Refer to
section of the notice "Rebater of Import Duties and Indirect Taxes".
Comment 5: Petitioners argue that the Department should find financing
received through Foreign Currency Banking Units (FCBU's) to be
countervailable. They contend that because the interest rates charged by FCBU's
are only one or two points above the London InterBank Offered Rate (LIBOR),
and are only available to Investment Promotion Zone (IPZ) companies, that
FCBU loans are preferential in nature.
DOC Position: The Department does not consider FCBU loans to be
countervailable. FCBU's provide the only banking services available to
companies in the IPZ. Since IPZ companies do not have access to the domestic
banking system, these units constitute an alternative banking system designed
for the IPZ companies. FCBU loans are in dollars and the interest rates charged.
1.5 to 2 points above LIBOR, are comparable to commercial rates on foreign
currency loans outside the IPZ.
Comment 6: Petitioners assert that there is no basis for excluding inspectors'
gloves or cotton work gloves from this investigation. Petitioners submit that
while there may be numerous types of gloves, and while some may be more
suitable for certain tasks than others, there is no justification for breaking down
the category of gloves into more than one like product. Petitioners rely on a
1978 International Trade Commission investigation of Certain Gloves from the
People's Republic of China (Inv. No. TA-406-1, U.S.I.T.C. Pub. No. 867 (March,
1978) to support their assertion that all gloves are produced by a single glove
industry.
DOC Position: While we agree with petitioners with regard to cotton work gloves
because it appears that union workers do produce cotton work gloves, we
disagree that petitioners have standing with regard to lightweight disposable
cotton inspectors' gloves. As explained in this notice, inspectors' gloves have
different physicial characteristics and uses from other cotton work gloves, and
consumer expectations differ to the extent that there is no head- to-head
competition between inspectors' gloves and other types of work gloves. While it
might be argued that all gloves have similar uses and physical characteristics in
that all are designed to cover the hands, we believe that such a broad
interpretation of "like product" would allow imposition of countervailing
duties on particular products when a petitioning domestic producer is not
adversely affected by imports of those products. For example, we do not believe
that a domestic producer of heavy-gauge welder's gloves could properly petition
for imposition of countervailing duties on imports of knitted children's
gloves on the theory that all gloves are one "like product". It is not unreasonable
to posit that the "like product" definition should not be interpreted so broadly as
to permit the imposition of countervailing duties on a product where the
petitioner does not produce a competing product, especially where, as here, a
major domestic producer of an identical product opposes that petition. Further,
we do not believe that the 1978 ITC report is dispositive of the issues in this
case. The ITC investigation was conducted pursuant to a different law; i.e.,
section 406 of the Trade Act of 1974. That law does not use the phrase "like
product." Moreover, the specific "like product" issue could not have been
reached in that case, especially as respondents assert that there were no imports
of inspectors' gloves from China during the period covered by the ITC
investigation. The ITC acknowledged that "several distinct types" of gloves,
including inspectors' gloves are
*9831
produced "by the domestic industry."
However, even in current antidumping and countervailing duty
investigations, the ITC is permitted in some cases to find that there is only one
domestic industry for injury purposes, although there may be a number of "like
products." See 19 U.S.C. 1677(4)(D). Thus, the ITC determination of "like
product" for injury purposes may not coincide with our determination of "like
product" for purposes of determining standing. The record in this case supports
our conclusion that the domestic workers producting inspectors' gloves are not
union members, and thus, the unions have no standing as interested parties with
regard to this product.
Respondents' Comments
Comment 1: Respondents argue that both justice and sound policy require that if
it is determined that a firm that made a timely request for exclusion from any
affirmative determination was subsequently found to have received benefits that
exceed de minimis levels, then that firm's data should be utilized in the
calculation of country-wide benefits.
DOC Position: Early on in these investigations, the Department informed both
petitioners and respondents that our calculation of country-wide benefits would
be based on our investigation of firms that account for 60 percent of the exports
of the subject merchandise to the United States, and that that 60 percent would
not include firms that had filed a timely request for exclusion. We believe that
our methodology represents just and sound policy.
Comment 2: Respondents argue that the Department should reserve its
preliminary determination and rescind its initiation of investigation with respect
to textile mill products. They argue that textile companies in Sri Lanka do not
receive countervailable benefits under any programs alleaged by the
petitioners. Further, they assert that the petitioners lack standing with respect
to textile products exported from Sri Lanka, because all their products are
handloomed products, and are thus not "like" other textile mill products.
Respondents add that handloom textile products do not compete with textile
mill products produced in the United States.
DOC Position: In determining whether products are "like products", the
Department examines those products in terms of competitive factors in the U.S.
market, including the general physical characteristics and intended use of the
products, the channels of trade in which the products are sold, and the ultimate
use and cost of the products.
Respondents did not provide sufficient information for any such "like product"
analysis. Respondents simply assert that because textile mill products in Sri
Lanka are loomed on rudimentary machines, they are categorically not "like"
domestic textile mill products.
Based on the information in the record we are unable to find that there are no
domestic textile mill products that are "like, or in absence of like, most similar in
characteristics and use with" textile mill products produced in Sri Lanka.
Comment 3: Star Garments, Ltd., an exporter of apparel from Sri Lanka, argues
that it should be excluded from the Department's determination because it does
not receive any benefits under any program found by the Department to confer a
bounty or grant.
DOC Position: Under our regulations, (19 CFR 355.58) individual companies may
seek, on a timely basis, exclusions from a countervailing duty order. Because
Star Garments did not file request for exclusion within 30 days after the date of
publication of the notice of initiation, we consider their request untimely and we
have not excluded this firm from countervailing duty order.
Verification
In accordance with section 776(a) of the Act, we verified the data used in
making our final determinations. During this verification, we followed normal
procedures, including meetings and inspection of documents with government
officials and on-site inspection of the records and operation for the companies
exporting the merchandise under investigation to the United States.
Administrative Procedures
We afforded interested parties an opportunity to present information and
written views in accordance with Commerce regulations (19 CFR 355.34(a)) we
held a public hearing on February 15, 1985. Written views have been received
and considered in reaching these final determinations.
Suspension of Liquidation
The suspension of liquidation ordered in our preliminary affirmative
determinations shall remain in effect except with respect to cotton inspectors'
gloves and apparel products produced and exported by Texwood Industries,
until further notice. The estimated net bounty or grant for duty deposit purposes
is 5 percent ad valorem for certain textile mill products and 3.06 percent ad
valorem for apparel.
In accordance with section 706(a)(3) of the Act, we are directing the U.S.
Customs Service to require a cash deposit in the amount indicated above for
each entry of the subject merchandise from Sri Lanka which is entered, or
withdrawn from warehouse, for consumption on or after the date of publication
of this notice in the Federal Register and to assess countervailing duties in
accordance with sections 706(a)(1) and 751 of the Act.
This notice is published pursuant to sections 303, 705 and 706 of the Act (19
U.S.C. 1303, 1671d, 1671e).
William T. Archey,
Acting Assistant Secretary for Trade Administration.
March 4, 1985.
[Note: The following TABLE/FORM is too wide to be displayed on one screen.
You must print it for a meaningful review of its contents. The table has been
divided into multiple pieces with each piece containing information to help you
assemble a printout of the table. The information for each piece includes: (1)
a three line message preceding the tabular data showing by line # and
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following the tabular data displaying the character positions.]
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******** This is piece 1. -- It begins at character 1 of table line 1. ********
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Appendix.--List of
363.0520
366.1855
367.6040
-----------
376.2430
379.0212
379.2320
379.4050
379.4670
379.5550
379.6250
379.7630
379.9525
379.9585
383.0262
383.0509
383.0622
383.0850
383.2340
383.2715
383.2728
383.2826
383.3405
383.3460
383.4704
383.4720
383.4753
383.4818
383.5034
383.5088
383.6632
383.6647
383.7538
383.7556
383.8024
383.8162
383.9025
383.9050
383.9062
383.9072
383.9273
704.4010
704.8550
-----------
1...+...10....+...
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TSUSA Codes Which Covered SRI Lanka's Exports of Certain Textile Mill Products
Apparel to the United States in 1983
Textile Furnishings
363.3040 363.5015 363.5115 363.5130 364.1800 365.7865
366.1880 366.2740 366.2760 336.2780 366.4660 366.7925
------------
Miscellaneous
------------ 385.5300 ----------- 386.5045
B. Apparel
Apparel
376.2830 376.5408 376.5609 376.5612 376.5630 379.0211
379.0615 379.0620 379.0630 379.0640 379.0642 379.0646
379.2350 379.3110 379.3120 379.3905 379.4020 379.4030
379.4060 379.4140 379.4330 379.4610 379.4650 379.4660
379.5220 379.5520 379.5530 379.5535 379.5540 379.5545
379.5560 379.5565 379.6210 379.6220 379.6230 379.6240
379.6260 379.6270 379.6448 379,6470 379.7250 379.7620
379.8340 379.8735 379.9030 379.9035 379.9220 379.9520
379.9530 379.9540 379.9550 379.9555 379.9575 379.9580
379.9643 379.9650 383.0213 383.0219 383.0222 383.0236
383.0264 383.0266 383.0268 383.0505 383.0506 383.0507
383.0606 383.0608 383.0612 383.0614 383.0616 383.0618
383.0631 383.0638 383.0640 383.0805 383.0820 383.0841
383.0860 383.2005 383.2052 383.2205 383.2225 383.2305
383.2352 383.2360 383.2706 383.2710 383.2712 383.2714
383.2716 383.2718 383.2721 383.2722 383.2724 383.2726
383.2730 383.2732 383.2736 383.2738 383.2750 383.2820
383.2828 383.2835 383.3040 383.3037 383.3038 383.3200
383.3415 383.3435 383.3445 383.3446 383.3448 383.3450
383.3465 383.3466 383.3770 383.4015 383.4300 383.4702
383.4705 383.4709 383.4711 383.4716 383.4717 383.4718
383.4721 383.4724 383.4726 383.4747 383.4748 383.4750
383.4754 383.4756 383.4761 383.4762 383.4764 383.4765
383.4825 383.5027 383.5028 383.5029 383.5031 383.5033
383.5041 383.5043 383.5051 383.5078 383.5082 383.5086
383.5090 383.5304 383.5830 383.6345 383.6360 383.6371
383.6634 383.6636 383.6638 383.6642 383.6644 383.6646
383.6648 383.7210 383.7522 383.7532 383.7534 383.7536
383.7542 383.7544 383.7546 383.7548 383.7552 383.7554
383.7708 383.8002 383.8012 383.8014 383.8017 383.8019
383.8026 383.8045 383.8073 383.8110 383.8114 383.8145
383.8164 383.8620 383.8665 383.9010 383.9015 383.9020
383.9027 383.9029 383.9032 383.9035 383.9040 383.9042
383.9051 383.9056 383.9057 383.9058 383.9059 383.9061
383.9063 383.9064 383.9066 383.9068 383.9069 383.9070
383.9074 383.9076 383.9225 383.9235 383.9245 383.9270
383.9276 383.9290 383.9291 ----------- ----------- -----------
Gloves
704.4025. 704.4504 704.4506 704.4508 704.5015 704.8520
707.9000 ----------- ----------- ----------- ----------- -----------
Luggage and Hand Bags
------------ 706.3640 ----------- 706.4111
19....+...30....+...40....+...50....+...60....+...70....+...80....+...90....+..
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******* This is piece 3. -- It begins at character 98 of table line 1. ********
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and
98...
*9832
[FR Doc. 85-5822 Filed 3-11-85; 8:45 am]
BILLING CODE 3510-05-M