(Cite as: 53 FR 50060)
NOTICES
DEPARTMENT OF COMMERCE
[C-583-802]
Final Affirmative Countervailing Duty Determination: Thermostatically Controlled Appliance Plugs and Internal Probe Thermostats Therefor From Taiwan
Tuesday, December 13, 1988
*50060 AGENCY: Import Administration, International Trade Administration, Commerce.
ACTION: Notice.
SUMMARY: We 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 therefor (the subject merchandise), as described in the "Scope of *50061 Investigation" section of this notice. The estimate net subsidy and duty deposit rate is 2.41 percent ad valorem.
We haved notified the U.S. International Trade Commission (ITC) of our determination. If the ITC determines that imports of these products materially injure, or threaten material injury to, a U.S. industry, we will direct the U.S. Customs Service to resume the suspension of liquidation of all entries of the subject merchandise from Taiwan, that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of the countervailing duty order and to require a cash deposit or bond on entries of these products in the amount equal to the estimated net subsidy.
EFFECTIVE DATE: December 13, 1988.
FOR FURTHER INFORMATION CONTACT: Vincent P. Kane or Roy Malmrose, Office of Countervailing Investigations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 377-2815 or 377-5414.
SUPPLEMENTARY INFORMATION:
Final Determination
Based on our investigation, we determine that certain 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 found to confer subsidies:
- Preferential Export Financing.
- Preferential Income Tax Rate Ceiling of 22 Percent.
- Overrebate of Duty Drawback on Imported Materials Physically Incorporated in Export Merchandise.
As discussed in the "Analysis of Programs" section below, the estimated net subsidy rate is based on best information available.
Case History
Since the publication of the preliminary determination in the Federal Register, (Preliminary Affirmative Countervailing Duty Determination: Thermostatically Controlled Appliance Plugs and Internal Probe Thermostats Therefor from Taiwan (53 FR 27742, July 22, 1988)), the following events have occurred. On August 22, 1988, we received a request from the petitioner, pursuant to section 705(a)(1) of the Act, to extend the date of the final determination to correspond with the date of the final determinations in the antidumping investigations of the same products from Canada, Hong Kong, Japan, Malaysia and Taiwan. We extend the due date to December 6, 1988 and we published notice of the extension in the Federal Register (Extension of the Due Dates for the Final Countervailing Duty Determinations: Certain Thermostatically Controlled Appliance Plugs and Internal Probe Thermostats Therefor From Canada, Malaysia and Taiwan (53 FR 39493, October 7, 1988)).
As detailed in the Case History section of our preliminary determination, we received no responses to our questionnaire from either the Taiwanese authorities or the manufacturers, producers, or exporters of the subject merchandise.
Scope of Investigation
The United States has developed a system of tariff classification based on the international harmonized system of customs nomenclature. On January 1, 1989, the U.S. tariff schedules will be fully converted to the Harmonized Tariff Schedule (HTS) and all the merchandise entered or withdrawn from warehouse for consumption on or after that date will be classified solely according to the appropriate HTS item number(s). Until that time, however, the Department will be providing both the appropriate Tariff Schedules of the United States Annotated (TSUSA) item number(s) and the appropriate HTS item number(s) with its product descriptions. As with the TSUSA, the HTS item numbers are provided for convenience and Customs purposes. The Department's written description of the products under investigation remains dispositive as to the scope of the product coverage.
We are requesting petitioners to include the appropriate HTS item number(s) as welll as the TSUSA item number(s) in all petitions filed with the Department through the end of this year. A reference copy of the HTS is available for consultation in the Central Records Unit, Room B-099, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.Additionally, all U.S. Costoms offices have reference copies, and petitioners may contact the import specialist at their local Customs office to consult the schedule.
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 regulate automatically 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 TSUSA item numbers 711.7820 and 711.7840 and under HTS 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 questionnaires, we are using the best information available as required under section 776(c) of the Act (19 U.S.C. 1677e(c)), 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 from each program in any past countervailing duty final determination involving Taiwan.
For programs which have been alleged, but which we have never found to be used in any previous case, we inferred the use and countervailability of these programs in our preliminary determination and used, as best information available, the highest rate applied to a subsidy program in any investigation on Taiwan. Upon further evaluation, we have changed this approach for the final determination and are assuming that these programs were not used. We have made this assumption because the petitioner has not provided any information as to the extent or use of these programs, the programs were found not used in all previous investigations and we have never determined if the programs are countervailable. This approach is more consistant with our approach in cases involving similar circumstances. See, for example, the Final Affirmative *50062 Countervailing Duty Determination: Industrial Phosphoric Acid from Israel (52 FR 25447, July 7, 1987) and the Preliminary Affirmative Countervailing Duty Determination: Industrial Belts and Components and Parts Thereof, Whether Cured or Uncured, from Israel (53 FR 48670, December 2, 1988).
Based upon our analysis of the petition and the past final countervailing duty determinations involving imports from Taiwan, we determine the following:
I. Programs 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 determined 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 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: Certain Stainless Steel Cooking Ware from Taiwan (51 FR 42891, 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 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 found 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 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-established 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. Therefore, as best information available, we 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 import 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 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.
II. Programs Determined Not to be Used
The following programs were found to be not used in all previous countervailing duty determinations involving imports from Taiwan. In our preliminary determination we inferred the use and counteravailability of these programs and used, as best information available, the highest rate applied to a subsidy program in any investigation on Taiwan. We have changed this approach for the final determination and are assuming that these programs were not used. The justification for this assumption is described in the Analysis of Programs section of this notice.
A. 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.
*50063 B. 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 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.
C. 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(c) of the Act, we made our final determination on the basis of the best information available. We verified this information in prior countervailing duty investigations of merchandise from Taiwan.
Suspension of Liquidation
In accordance with our preliminary affirmative countervailing duty determination published on July 22, 1988, we directed the U.S. Customs Service to suspend liquidation on the products under investigation and to require a cash deposit or bond equal to the duty deposit rate. This final countervailing duty determination was extended to coincide with the companion final antidumping determinations, pursuant to section 606 of the Trade and Tariff Act of 1984 (section 705(a)(1) of the Act). Under Article 5, paragraph 3 of the Agreement on Interpretation and Application of Articles VI, XVI, and XXIII of the General Agreement on Tariffs and Trade (the Subsidies Code), provisional measures cannot be imposed for more than 120 days without final affirmative determinations of subsidy and injury. Therefore, on October 7, 1988, we instructed the U.S. Customs Service to discontinue the suspension of liquidation on the subject merchandise entered on or after November 21, 1988, but to continue the suspension of liquidation of all entries or withdrawals from warehouse, for consumption, of the subject merchandise entered between July 22, 1988, and November 20, 1988. We will reinstate suspension of liquidation under section 703(d) of the Act on the date of publication of the countervailing duty order, if the ITC issues a final affirmative injury determination, and again require duty deposits on all entries of the subject merchandise.
ITC Notification
In accordance with section 705(d) 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 the ITC determines that material injury, or the threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or cancelled. If, however, the ITC determines that such injury does exist, we will issue a countervailing duty order, directing Customs officers to assess countervailing duties on all entries of thermostatically controlled appliance plugs and internal probe thermostats therefor entered, or withdrawn from warehouse, for consumption, as described in the "Suspension of Liquidation" section of this notice.
This determination is published pursuant to section 705(d) of the Act (19 U.S.C. 1671(d)).
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 88-28665 Filed 12-12-88; 8:45 am]
BILLING CODE 3510-DS-M