(Cite as: 51 FR 7982)
NOTICES
DEPARTMENT OF COMMERCE
[C-583-509]
Preliminary Negative Countervailing Duty Determination; Porcelain-on-Steel Cooking Ware from Taiwan
Friday, March 7, 1986
*7982 AGENCY: Import Administration, International Trade Administration, Commerce.
ACTION: Notice.
SUMMARY: We preliminary determine that no benefits which constitute subsidies within the meaning of the countervailing duty law are being provided to manufacturers, producers or exporters of porcelain-on-steel cooking ware in Taiwan. The estimated net subsidy is 0.005 percent ad valorem. This rate is de minimis, and therefore our preliminary countervailing duty determination is negative. We have notified the United States International Trade Commission (ITC) of our determination.
If this investigation proceeds normally, we will make our final determination by May 13, 1986.
EFFECTIVE DATE: March 7, 1986.
FOR FURTHER INFORMATION CONTACT: Laurel LaCivita or Mary Martin, Office of Investigations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 377-0189 or (202) 377-2830.
SUPPLEMENTARY INFORMATION:
Preliminary Determination
Based upon the questionnaire responses, we preliminarily determine that the following program is countervailable:
We preliminarily determine the estimated net subsidy to be 0.005 percent ad valorem. Although we have determined this program to be countervailable, the respondents received de minimis benefits during the review period. Therefore, we determine that no benefits which constitute subsidies within the meaning of section 701 of the Tariff Act of 1930, as amended (the Act), are being provided to manufacturers, producers, or exporters of porcelain-on-steel cooking ware in Taiwan.
Case History
On December 4, 1985, we received a petition in proper form filed by the Porcelain-on-Steet Committee of the Cookware Manufacturers Association and the General Housewares Corporation. In compliance with the filing requirements of s 355.26 of our Regulations (19 CFR 355.26), the petition alleged that manufacturers, producers, or exporters of porcelain-on-steel cooking ware in Taiwan receive, directly or indirectly, subsidies within the meaning of section 701 of the Act, and that these imports materially injure, or threaten material injury to, a U.S. industry.
We found that the petition contained sufficient grounds upon which to initiate a countervailing duty investigation, and on December 24, 1985, we initiated the investigation (50 FR 53354). We stated that we expect to issue a preliminary determination by February 27, 1986.
Since Taiwan is entitled to an injury determination under section 701(b) of the Act, the ITC is required to determine whether imports of the subject merchandise from Taiwan materially injure, or threaten material injury to, a U.S. industry. Therefore, we notified the ITC of our initiation. On January 16, 1986, the ITC determined that there is a reasonable indication that imports of porcelain-on-steel cooking ware from Taiwan materially injure a U.S. industry (51 FR 3862).
We received a timely request for exclusion from any countervailing duty order from Four Star International Trading Company (Four Star), an exporter of porcelain-on-steel cooking ware from Taiwan, who indicated that they receive no benefits under the countervailing duty law. On February 14, 1986, the Department requested that the authorities on Taiwan certify whether Four Star received any benefits from the programs under investigation.
On January 3, 1986, we presented questionnaires concerning the petitioners' allegations to the American Institute in Taiwan in Washington, D.C. Responses to the questionnaires were received on February 6, 1986 and February 18, 1986.
Scope of Investigation
The products covered by this investigation are porcelain-on-steel cooking ware, including teakettles, which do not have self-contained electric heating elements. All of the foregoing are constructed of steel, and are enameled or glazed with vitreous glasses. These products are provided for in items 654.0815, 654.0824 and 654.0827 of the Tariff Schedules of the United States, Annotated (TSUSA). Kitchen ware, currently provided for under item 654.0828 of the TSUSA, is not subject to this investigation.
Analysis of Programs
Throughout this notice, we refer to certain general principles applied to the facts of the current investigation. 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).
Consistent with our practice in preliminary determinations, where a response to an allegation denies the existence of a program, receipt of benefits, or eligibility of a company or industry under a program, and the Department has no persuasive evidence showing that the response is incorrect, we accept the response for purposes of the preliminary determination. All such responses are subject to verification. If the response cannot be supported at verification, and the program is otherwise countervailable, the program will be considered a subsidy in the final determination.
For purposes of this preliminary determination, the period for which we are measuring subsidies (the review period) is calendar year 1985. Based upon our analysis of the petition and the responses to our questionnaires, we preliminarily determine the following:
I. Program Preliminarily Determined to be Counterviable
We preliminarily determine that the following program provides countervailable benefits to manufacturers, producers, or exporters of porcelain-on-steel cooking ware in Taiwan.
Article 31 of the Statute for Encouragement of Investment (SEI) permits exporters to establish an export loss reserve of up to one percent of the previous year's export exchange *7983 settlement to be used exclusively for compensating export losses. Companies treat the export loss reserve as a business expense and deduct it from taxable income in one year, then balance the account and carry the reserve funds forward as taxable income for the next year. Tian Shine Enterprise Co., Ltd. (Tian Shine), a producer of porcelain- on-steel cooking ware, reported that it used this program during the review period.
Because export loss reserves are contingent on export sales, we preliminarily determine that it confers a benefit which constitutes an export subsidy. To calculate the benefit, we treated tax savings from the export loss reserve as a one-year interest-free loan. We compared the interest-free rate with the maximum lending rate set by the Central Bank, multiplied the difference by the amount of the tax savings, then allocated the benefit over the value of Tian Shine's 1985 exports of porcelain-on-steel cooking ware. The estimated net subsidy is 0.005 percent ad valorem.
II. Programs Preliminarily Determined Not to be Used
We preliminarily determine that the following programs are not used by the manufacturers, producers, or exporters of porcelain-on-steel cooking ware in Taiwan:
A. Preferential Export Financing
The Export Loan Discount Regulations of the Central Bank of China permit registered exporters to apply for low-cost export loans upon presentation of a letter of credit. Authorized commercial banks provide export loans at normal commercial rates, then apply for interest-rate reductions from the Central Bank. If the Central Bank approves the reduction, commercial banks correspondingly reduce the lending rate to the exporters.
The responses stated that none of the companies under investigation obtained export financing under the Export Loan Discount Regulations of the Central Bank of China. Therefore, we preliminarily determine this program was not used.
B. Preferential Income Tax Ceiling--22 Percent
Article 15 of the SEI permits capital-intensive and/or technology-intensive enterprises engaged in the basic metal production industry, heavy machinery industry, or petrochemical industry to use a marginal tax rate of 22 percent instead of the 25- or 35-percent rate required by Taiwan's graduated income tax law.
The responses stated that none of the companies under investigation claimed the 22-percent income tax rate. Therefore, we preliminarily determine this program was not used.
C. Accelerated Depreciation and Tax Holiday
Article 6 of the SEI allows newly established "productive enterprises" to accelerate depreciation on fixed assets, machinery and equipment or to select a five-year holiday on corporate income taxes. In addition, expanding firms may participate in a four-year tax holiday on increased profits from expansion or a rapid depreciation of newly purchased buildings or equipment.
The responses stated that none of the companies under investigation received benefits under Article 6 of the SEI. Therefore, we preliminarily determine this program was not used.
D. Duty Exemptions and Deferrals on Imported Equipment
Article 21 of the SEI allows productive enterprises to pay import duties and dues on selected capital equipment in a series of installments beginning one year from the date of importation. In addition, qualified enterprises are exempt from import duties on selected machinery and equipment used for the establishment or expansion of an approved project or for research and development.
The responses stated that none of the companies under investigation used dtuy exemptions or deferrals on imported equipment. Therefore, we preliminarily determine this program was not used.
E. Preferential Long-Term Loans
Article 84 of the SEI permits the Executive Yuan to establish and administer a special development fund to promote investments of interest to national economic development. The response stated that none of the companies under investigation obtained Article 84 loans. Therefore, we preliminarily determine this program was not used.
Verification
In accordance with section 776(a) of the Act, we will verify all data used in making our final determination. As previously stated, we will not accept for our final determination any statement in the responses that cannot be verified.
ITC notification
In accordance with section 703(f) of the Act, we will notify the ITC of our determination. In addition, we are making available to the ITC all non- privileged and non-confidential information relating to this investigation. We will allow the ITC access to all privileged and confidential information in our files, provided the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order, without the written consent of the Deputy Assistant Secretary for Import Administration.
If our final determination is affirmative, the ITC will determine whether these imports materially injure, or threaten material injury to, a U.S. industry within 75 days after the Department makes its final affirmative determination.
Public Comment
In accordance with s 355.35 of our regulations, we will hold a public hearing, if requested, to afford interested parties an opportunity to comment on this preliminary determination at 10 a.m. on April 14, 1986, at the U.S. Department of Commerce, Room 3708, 14th Street and Constitution Avenue NW., Washington, DC 20230. Individuals who wish to participtate in the hearing must submit a request to the Deputy Assistant Secretary for Import Administration, Room B- 099, at the above address within 10 days of the publication of this notice.
Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; (3) the reason for attending; and (4) a list of the issues to be discussed. In addition, pre-hearing briefs with at least 10 copies must be submitted to the Deputy Assitant Secretary by April 7, 1986. Oral presentations will be limited to issues raised in the briefs.
In accordance with 19 CFR 355.33(d) and 19 CFR 355.34, written views will be considered if received not less than 30 days before the final determination or, if a hearing is held, within 10 days after the hearing transcript is available.
This notice is published pursuant to section 703(f) of the Act (19 U.S.C. 1671b(f)).
Dated: February 27, 1986.
Gilbert B. Kaplan,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 86-4992 Filed 3-6-86; 8:45 am]
BILLING CODE 3510-DS-M