(Cite as: 53 FR 27742)
NOTICES
DEPARTMENT OF COMMERCE
[C-583-802]
Preliminary Affirmative Countervailing Duty Determination; Thermostatically
Controlled Appliance Plugs and Internal Probe Thermostats Therefor From Taiwan
Friday, July 22, 1988
*27742 AGENCY: Import Administration, International Trade Administration, Commerce.
ACTION: Notice.
SUMMARY: We preliminarily determine that benefits which constitute subsidies within the meaning of the countervailing duty law are being provided to manufacturers, producers, or exporters in Taiwan of thermostatically controlled appliance plugs and internal probe thermostats therefore, as described in the "Scope of Investigation" section of this notice. The estimated net subsidy is 8.80 percent ad valdorem.
We have notified the U.S. International Trade Commission (ITC) of our determination. We are directing *27743 the U.S. Customs Service to suspend liquidation of all entries of the subject merchandise from Taiwan, that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice and to require a cash deposit or bond on entries of these products in the amount equal to the estimated net subsidy. If this investigation proceeds normally, we will make our final determination on or before October 3, 1988.
EFFECTIVE DATE: July 22, 1988.
FOR FURTHER INFORMATION CONTACT: Barbara Tillman, Office of Investigations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 377-2438.
SUPPLEMENTARY INFORMATION:
Preliminary Determination
Based on our investigation, we preliminarily determine that there is reason to believe or suspect that 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 in Taiwan of the subject merchandise. For purposes of this investigation, the following programs are preliminarily found to confer subsidies:
- Preferential Export Financing.
- Accelerated Depreciation and Tax Holidays.
- Preferential Income Tax Rate Ceiling of 25 Percent for Big Trading Companies.
- Duty Exemptions and Deferrals on Imported Equipment.
- Preferential Income Tax Rate Ceiling of 22 Percent.
- Overrebate of Duty Drawback on Imported Materials Physically Incorporated in Export Merchandise.
We preliminarily determine the estimated net subsidy for the subject merchandise to be 8.80 percent ad valorem. As discussed in the "Analysis of Programs" section below, this rate is based on best information available.
Case History
Since the publication of the Notice of Initiation in the Federal Register (53 FR 16754, May 11, 1988), the following events have occurred. On May 23, 1988, we presented a questionnaire to the American Institute in Taiwan in Washington, DC and requested that it forward the questionnaire to the Taiwan authorities. We requested a response to our questionnaire by June 22, 1988. On May 26, 1988, the Taiwan authorities requested an extension of the questionnaire response due date. We informed the American Institute in Taiwan that the request for an extension of the due date should be in writing. At that time, we indicated that an extension until June 27, 1988 was possible. We did not receive a written request for an extension, and we did not receive a response from either the Taiwan authorities or the manufacturers, producers, or exporters of the subject merchandise in Taiwan by the June 27, 1988 extension date. On July 1, 1988, we sent a letter to Taiwan authorities through the American Institute in Taiwan, explaining that if we did not receive questionnaire responses from the Taiwan authorities and the companies which export the subject merchandise to the United States by July 6, 1988, we may be required to use the best information available to make our determination in accordance with s 355.39 of our regulations (19 CFR 355.39). We have not received questionnaire responses or any other correspondence to date.
On June 24, 1988 we received a letter from Henslee, Bradley and Robertson, P.C. stating that Etowah Taiwan Enterprises, Ltd., (ETECO) did not export the subject merchandise to the United States during the review period and is not currently exporting the subject merchandise to the United States. On July 8, 1988, we responded to this letter explaining that we will not require ETECO to submit a response for this investigation and that if the company decides to export the subject merchandise to the United States, it will be subject to any countervailing duties that are in effect, if this investigation results in a countervailing duty order.
Since Taiwan is a "country under the Agreement" within the meaning of 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. On May 31, 1988, the ITC determined that there is a reasonable indication that an industry in the United States is materially injured by reason of imports from Taiwan of the subject merchandise (53 FR 21532, June 8, 1988).
Scope of Investigation
The products covered by this investigation are thermostatically controlled appliance plugs and internal probe thermostats therefor. For purposes of this investigation, the term thermostatically controlled appliance plug refers to any device designed to connect an electrical outlet (typically a common wall receptacle) with a small cooking appliance of 2,000 watts or less (typically a griddle, deep fryer, fry pan, multicooker, and/or wok) and regulate the flow of electricity, and thus the temperature, therein; consisting of (1) a probe thermostat encased in a single housing set with a temperature control knob (typically a dial calibrated with various temperature settings), and (2) a cord set.
The term internal probe thermostat refers to any device designed to automatically regulate the flow of electricity, and thus the temperature, in a small heating apparatus of 2,000 watts or less (typically small cooking appliances); consisting of a stainless steel tube (which connects to the heating apparatus) and other components used for thermostatic control. The products are currently provided for under Tariff Schedules of the United States Annotated item numbers 711.7820 and 711.7840 and under the Harmonized System item numbers 9032.10.00, 9032.20.00, 9032.89.60, 9032.90.60, 9033.00.00.
Analysis of Programs
Because we did not receive responses to our questionnaire, we are using the best information available as required under s 355.39 of our regulations (19 CFR 355.39), adversely inferring countervailability and receipt of benefits based on the absence of responses. As best information available, we used the highest estimated net subsidy found for each program in any past countervailing duty final determination involving Taiwan. For programs which have been alleged, but which were determined not used in all previous cases, the petitioner was unable to provide information as to whether and to what degree the manufacturers, producers, or exporters of the subject merchandise receive countervailable benefits under these programs. Therefore, we are inferring countervailability of these programs and are using, as the best information available, the highest rate applied to a subsidy program in this investigation.
Based upon our analysis of the petition and the past final countervailing duty determinations involving imports from Taiwan, we preliminarily determine the following:
*27744 I. Programs Preliminarily Determined To Confer Subsidies
A. Preferential Export Financing
Petitioner alleges that under the Export Financing Program, registered exporters, upon presentation of a letter of credit to authorized foreign currency banks, are eligible for below-market financing covering up to 85 percent of an export transaction. The Central Bank then arranges an interest rate accommodation with the participating banks. The most recent investigation in which this program was determining to be countervailable was the Final Negative Countervailing Duty Determination: Porcelain-on-Steel Cooking Ware from Taiwan (51 FR 36453, October 10, 1986) (Porcelain-on-Steel Cooking Ware). We have received no further information on the preferential export financing program in this investigation. Therefore, as best information available, we preliminarily determine that exporters of the subject merchandise in Taiwan benefit from this program.
The highest estimated net subsidy for this program in any previous final countervailing duty determination is 0.10 percent ad valorem, which is the rate found in the Final Negative Countervailing Duty Determination: Oil Country Tubular Goods from Taiwan (51 FR 19583, May 30, 1986).
Petitioner alleges that Article 31 of the Statute for Encouragement of Investment (SEI) allows firms to set aside a reserve of up to one percent of the previous year's export sales to be used for compensation of export losses. Petitioner alleges that this reserve is treated as a deduction from taxable income and allows firms to shelter significant amounts of revenue from taxation. The most recent investigation in which this program was determined to be countervailable was the Final Affirmative Countervailing Duty Determination: Stainless Steel Cooking Ware from Taiwan (51 FR 4289, November 26, 1986) (Stainless Steel Cooking Ware). We have received no further information on the export loss revenue program in this investigation. Therefore, as best information available, we preliminarily determine that exporters of the subject merchandise from Taiwan benefit from this program.
The highest estimated net subsidy for this program in any previous final countervailing duty determination is 0.02 percent ad valorem, which is the rate fround in the Final Negative Countervailing Duty Determination: Welded Carbon Steel Line Pipe from Taiwan (50 FR 53363, December 31, 1985).
C. Preferential Income Tax Rate Ceiling of 25 Percent for Big Trading Companies
Petitioner alleges that Article 15 of the SEI permits certain business firms to pay no more than 25 percent in corporate income tax rather than the standard 35 percent. We determined in Stainless Steel Cooking Ware, the most recent investigation in which this program was determined to be countervailable, that the 25 percent income tax ceiling granted to big trading companies is based on export performance; therefore, it confers an export subsidy. We have received no further information on the preferential income tax rate ceiling of 25 percent for big trading companies program in this investigation, Therefore, as best information available, we preliminarily determine that manufacturers, producers or exporters of the subject merchandise from Taiwan benefit from this program.
The highest estimated net subsidy for this program in any previous final countervailing duty determination is 0.16 percent ad valorem, which is the rate found in Porcelain-on-Steel Cooking Ware.
D. Overrebate of Duty Drawback on Imported Materials Physically Incorporated in Export Merchandise
Taiwan authorities give duty drawback on imported materials physically incorporated in export products. Duty drawback is refunded on a shipment-by- shipment basis and is calculated by applying a pre-estimated duty drawback rate to the net weight of the finished product in each shipment. The most recent investigation in which this program was determined to be countervailable was Stainless Steel Cooking Ware. We have received no further information on the overrebate of duty drawback on imported materials physically incorporated in export merchandise program in this investigation. Thefore, as best information available, we preliminarily determine that exporters of the subject merchandise from Taiwan benefit from this program.
The highest estimated net subsidy for this program in any previous final countervailing duty determination is 2.13 percent ad valorem, which is the rate found in Stainless Steel Cooking Ware.
E. Rebate of Import Duties and Indirect Taxes on Imported Materials Not Physically Incorporated in Export Merchandise
Taiwan authorities approve rebates of imported duties and indirect taxes on imported materials not physically incorporated in export merchandise. The most recent investigation in which this program was determined to be countervailable was Stainless Steel Cooking Ware. We have received no further information on the rebate of import duties and indirect taxes on imported materials not physically incorporated in export merchandise program in this investigation. Therefore, as best information available, we preliminarily determine that exporters of the subject merchandise from Taiwan benefit from this program.
The highest estimated net subsidy for this program in any previous final countervailing duty determination is 0.002 percent ad valorem, which is the rate found in Stainless Steel Cooking Ware.
F. Other Tax and Rebate Programs
The following progarms were found to be not used in all previous countervailing duty determinations involving imports from Taiwan. Since respondents did not provide a response in this case, and the petitioner was unable to provide information as to whether and to what degree the manufacturers, producers, or exporters of the subject merchandise receive countervailable benefits under these programs, we are inferring countervailability of these programs and are using, as best information available, the highest rate applied to a subsidy program in this investigation. Therefore, the estimated net subsidy for each of the three programs listed below is 2.13 percent ad valorem, which is the rate applied in the "Overrebate of Duty Drawback on Imported Materials Physically Incorporated in Export Merchandise" program in this investigation.
1. Accelerated Depreciation and Tax Holidays. Petitioner alleges that Article 6 of the SEI gives newly established "productive enterprises" the right 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 select a four-year holiday on income derived from increased capacity or a rapid depreciation of newly purchased buildings or equipment.
2. Duty Exemptions and Deferrals on Imported Equipment. Petitioner alleges that Article 21 of the SEI allows productive enterprises to pay import duties and dues on selected capital equipment not manufactured domestically in a series of installments beginning one year from the date of importation. In addition, qualified *27745 enterprises may be exempted from paying import duties on machinery or equipment to be used for the establishment or expansion of an approved project or for research and development.
3. Preferential Income Tax Rate Ceiling of 22 Percent. Article 15 of the SEI permits firms designated by the Taiwan authorities as "important" productive enterprises to pay a marginal tax rate of 22 percent as opposed to the standard income tax rate of 35 percent.
Verification
In accordance with section 776(a) of the Act, if we receive complete responses in a timely manner, we will verify the information used in making our final determination.
Suspension of Liquidation
In accordance with section 703(d) of the Act, we are directing the U.S. Customs Service to suspend liquidation of all entries of the subject merchandise from Taiwan which are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register and to require a cash deposit or bond for each entry in the amount of 8.80 percent ad valorem. This suspension will remain in effect until further notice.
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 nonprivileged and nonproprietary information relating to this investigation. We will allow the ITC access to all privileged and business proprietary 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 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 120 days after the Department makes its preliminary affirmative determination, or 45 days after the Department makes its final determination, whichever is later.
Public Comment
In accordance with s 355.35 of the Commerce Regulations (19 CFR 355.35), we will hold a public hearing, if requested, to afford interested parties an opportunity to comment on this preliminary determination on September 7, 1988, at 3:00 p.m. at the U.S. Department of Commerce, Room 3708, 14th Street and Constitution Avenue, NW., Washington, DC 20230. Individuals who wish to participate in the hearing must submit a request to the Assistant Secretary for Import Administration, Room B-099, at the above address within ten days of the publication of this notice in the Federal Register.
Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; (3) the the reason for attending; and (4) a list of the issues to be discussed. In addition, at least ten copies of the business proprietary version and seven copies of the nonproprietary version of the pre-hearing briefs must be submitted to the Assistant Secretary by August 31, 1988. Oral presentations will be limited to issues raised in the briefs. In accordance with 19 CFR 353.33(d) and 19 CFR 355.34, all written views will be considered if received not less than 30 days before the final determination is due, or, if a hearing is held, within seven days after the hearing transcript is available.
This determination is published pursuant to section 703(f) of the Act (19 U.S.C. 1671(f)).
July 18, 1988.
Jan W. Mares,
Assistant Secretary for Import Administration.
[FR Doc. 88-16567 Filed 7-21-88; 8:45 am]
BILLING CODE 3510-DS-M