55 FR 25856
NOTICES
DEPARTMENT OF COMMERCE
International Trade Administration
[C-549-503]
Rice From Thailand; Preliminary Results of Countervailing Duty Administrative
Review
Monday, June 25, 1990
AGENCY: International Trade Administration/Import Administration, Department of
Commerce.
ACTION: Notice of preliminary results of countervailing duty administrative review.
SUMMARY: The Department of Commerce has conducted an administrative review of the
countervailing duty order on rice from Thailand. We preliminarily determine the
total bounty or grant to be 0.24 percent ad valorem during the period January 27, 1986 through
December 31, 1986. In accordance with 19 CFR 355.7, any rate less than 0.50 percent ad valorem
is de minimis. We invite interested parties to comment on these preliminary results.
EFFECTIVE DATE: June 25, 1990.
FOR FURTHER INFORMATION CONTACT:Sylvia Chadwick or Maria MacKay, Office of
Countervailing Compliance, International Trade Administration, U.S. Department of
Commerce, Washington, DC 20230; telephone: (202) 377-2786.
SUPPLEMENTARY INFORMATION:
Background
On April 10, 1986, the Department of Commerce (the Department) published in the Federal Register
(51 FR 12356) the final affirmative countervailing duty determination and order on rice
from Thailand. On April 30, 1987, the Rice
Millers' Association requested an administrative review of the order. We published the initiation of
the administrative review on May 20, 1987 (52 FR 18937). The Department has now conducted
that administrative review in accordance with section 751 of the Tariff Act of 1930, as amended
(the Tariff Act).
Scope of Review
The United States, under the auspices of the Customs Cooperation Council, has developed a system
of tariff classification based on the international harmonized system of customs nomenclature. On
January 1, 1989, the United States fully converted to the Harmonized Tariff Schedule (HTS), as
provided for in section 1201 et seq. of the Omnibus Trade and Competitiveness Act of 1988. All
merchandise entered, or withdrawn from warehouse, for consumption on or after that date is now
classified solely according to the appropriate HTS item number(s).
Imports covered by this review are shipments of Thai rice including rice in the husk (paddy
or rough); husked (brown) rice including basmati and other; semi-milled or wholly-milled
rice, whether or not polished or glazed, including parboiled and other; and broken rice.
During the period of review, the imports were classifiable under items 130.5000, 130.5600,
130.5800, 131.3000,
and 131.3300 of the Tariff Schedules of the United States Annotated. This merchandise is currently
classifiable under HTS item numbers 1006.10.00, 1006.20.20, 1006.20.40, 1006.30.10,
1006.30.90 and 1006.40.00. The HTS item numbers are provided for convenience and Customs'
purposes. The written description remains dispositive.
The review covers the period January 27, 1986 through December 31, 1986 and 11 programs.
Analysis of Programs
1. Export Packing and Stocking Credits
Export packing and stocking credits are short-term loans used for either pre- shipment,
post-shipment, or stocking financing. These loans are provided to exporters in baht through
commercial banks. Under the new regulations effective January 2, 1986, the Bank of Thailand
purchases the exporters' promissiory notes from the commerical banks. On March 27, 1986, the
interest rate for these loans changed from 9 percent to 7 percent and the penalty rate for late
payment changed from 11 percent to 8 percent. The loans are generally provided for 180 days.
However, pre-shipment loans extend from the date the funds are received to either the shipment
date of the rice or to the due date of the loan, whichever occurs first.
For all loans, the due date may not fall beyond the expiry date of the letter of credit,
ten days after the delivery date indicated in a sales contract or purchase order, ten days
after the due date on a usance export bill, or the date the goods
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are due to be discharged from the warehouse.
We preliminarily determine that these loans are countervailable because only exporters are eligible
to receive these loans, and they are provided at preferential rates. As the benchmark for short-term
loans, it is our practice to use the national average commercial interest rate or the most
comparable, predominant commercial interest rate for short-term financing. For purposes of this
determination, we are using the verified weighted-average interest rate of 12.27 percent charged in
Thailand by commercial banks on short-term loans, bills, and overdrafts during 1986 as the
benchmark rate for short-term loans. See Certain Steel Wire Nails from Thailand: Final
Countervailing Duty Determination, 52 FR 36987 (1987). Comparing this benchmark rate to
the rate charged on export packing and stocking credits, we find that the interest rate on these
credits is preferential. However, with regard to credits on which a late payment penalty was
charged and not refunded, the interest rate is not preferential because the addition of the penalty
charge results in a rate that is higher than the benchmark interest rate. Therefore, we included in
our calculation all export packing loans for shipments of rice to the United States
for which there was no penalty and loans for which the penalty had been refunded. Where the loans
covered multi-product shipments, we used only that percentage of the loan equal to the relative
invoice value of rice included in the shipment.
To calculate the benefit from this program, we allocated the difference between the interest due at
the benchmark rate and the interest paid at the preferential rates over the value of Thailand's
rice exports to the United States. Applying the 1986 benchmark rate of 12.27 percent, we
calculated a net bounty or grant of 0.2265 percent ad valorem during the period of review.
2. Public Warehouse Organization (PWO)
The PWO is a state organization under the Ministry of Commerce. From 1983 through 1985, it
intervened in the market by buying rice during peak seasons to create a greater market demand
for paddy rice and thereby raise paddy rice prices. This intervention program was
terminated in 1985. During our period of review, PWO traded only for its own account. We verified
that, during the period of review, PWO exported no rice to the United States nor did they sell
domestically to exporters who exported to the United States. Therefore, we preliminarily
determine that there was no countervailable benefit from this program during the period of review.
3. Marketing Organization for Farmers (MOF)
The MOF operates under the Ministry of Agriculture and Cooperatives for the general purpose of
supporting farmers and farmers' institutions. During the period of review, the MOF traded rice
for its own account and was involved in the following three rice purchase programs:
A. Supplementary Program to Purchase Paddy Rice from Farmers--Under this program, the
MOF purchased paddy rice at about 10 percent above the prevailing market price.
B. Payment-in-kind Program--Under this program, the MOF accepted paddy rice valued at the
prevailing local price as payment for farmer's fertilizer debt.
C. Paddy Rice Purchase Program--Under this program, the MOF purchased additional paddy
rice from farmers in an equivalent amount and at the same price as it accepted paddy rice
under the payment-in-kind program.
We verified that the MOF exported no rice to the United States. Therefore, we preliminarily
determine that there was no countervailable benefit from this program during the period of review.
4. Agricultural Cooperative Federation of Thailand (ACFT)
ACFT is a private organization of farmer cooperatives operated by the Department of Agriculture
and Agricultural Cooperatives (DAC). During the period of review, ACFT received one-year,
interest-free loans from DAC. The loans could be repaid in cash or in milled rice. We verified
that no loans under this program were used for the purchase of rice. Therefore, we
preliminarily determine that there was no countervailable benefit from this program during the
period of review.
5. Paddy Rice Mortgage Program
This program was administered jointly by the Bank of Agriculture and Agricultural Cooperatives
(BAAC) and the PWO. Its purpose was to allow farmers to hold back paddy rice sales at the
beginning of the harvest season when the market prices were low until prices were more favorable.
It allowed farmers to store their rice in PWO warehouses and receive low interest loans from
BAAC by mortgaging their rice. We verified that this program did not operate during the period
of review.
6. Paddy Rice Raising Project and Compensatory Interest Payments Program for Millers
On October 22, 1985, the Cabinet approved a program requiring rice millers to purchase paddy
rice at a 10 percent premium over the market price. Millers were to be compensated for this
requirement by receiving compensatory payments of interest on loans. Because the market price of
rice was high, this program was unnecessary and was terminated January 22, 1968, before our
period of review. However, millers who bought and stocked rice at the premium price before
the program was terminated, were eligible for interest compensation if they applied before March
20, 1986.
We preliminarily determine that this program was limited to a specific industry and the interest
rates were inconsistent with commercial considerations. To calculate the benefit, we divided the
total amount of interest compensation payments made during the period of review by the total
value of domestic milled rice production for a benefit of 0.0092 percent ad valorem. We will
adjust any deposit rate to reflect the termination of this program.
7. Supplementary Program to Implement the Government's Rice Policy-- Preferential Financing
to Rice Millers
This program was operated by the Office of Agriculture and Economics (OAE), Ministry of
Agriculture and Agricultural Cooperatives in conjunction with
commercial banks. The program provided low-interest loans to millers buying paddy rice at or
above the prices set by Government decree. The OAE provided 40 percent of the loan interest free
and private banks provided 60 percent of the loan at a rate not to exceed 15 percent for an effective
interest rate of nine percent. The program was terminated May 31, 1986.
We preliminarily determine that this program is countervailable because it is limited to a specific
enterprise or industry and the interest rate is inconsistent with commercial considerations. To
calculate the benefit, we multiplied the total amount of loans repaid during the period of review by
the average number of days the loans were outstanding by the difference between the effective
interest rate, nine percent, and the benchmark interest rate, 12.27 percent. We allocated the
benefit over the value of domestic milled rice production during the period of review for a
benefit of 0.0009 percent ad valorem. We will adjust any deposit
*25858
rate to reflect the termination of this program.
8. Incentives for International Trading Firms
The Board of Investment, Office of the Prime Minister, Thailand, (BOI) administers the
Investment Promotion Act of 1977. Certified exporters and companies doing business with a
certified company are exempt from paying
certain import duties and business taxes. They may also deduct income taxes paid in a foreign
country and advertising expenses in foreign countries. They may receive financial aids from the
BOI and may hold foreign currency accounts. This program was terminated on March 11, 1981.
However, companies certified before that date continue to be eligible for tax incentives. Two
companies that export rice to the United States are eligible to receive benefits under this
program. We verified that, during the review period, one company received an exemption from
paying a business tax and subtracted the exemption from his municipal tax.
We preliminarily determine that this program confers a countervailable benefit because it is limited
to exporters. We allocated the sum of the one company's business tax exemption and municipal tax
exemption over the value of the company's total rice exported and calculated a benefit that was
significantly less than 0.01 percent ad valorem. The weighted-average country-wide benefit from
this program is effectively zero.
9. Tax Certificates for Exporters
Rebates in the form of tax certificates for exporters are provided under section 12 of the "Tax and
Duty Compensation of Exported Goods Produced in the Kingdom Act." However, goods subject to
tax and duty or fees when exported are
not eligible for tax certificates. Because there was an export tax and export premium on rice,
exports of rice were not eligible for rebates. Rice became eligible for these rebates after the
export tax on rice was eliminated in October 1985 and the export premiums on rice were
lifted in January 1986. However, a decree issued March 6, 1986, retroactive to January 1986,
announced that exporters of rice were not eligible to receive these tax certificates. We verified
that rice exporters did not receive benefits under this program during the period of review.
10. Other Programs
We also examined the following programs and preliminarily determine that exporters of rice
did not use them during the review period:
A. Export Processing Zones.
B. Export Promotion Fund.
Preliminary Results of Review
As a result of our review, we preliminarily determine the total bounty or grant to be 0.24 percent
ad valorem during the period January 17, 1986 through December 31, 1986. In accordance with 19
CFR 355.7, any benefit less than 0.50
percent ad valorem is de minimis and is disregarded for purposes of this review.
The Department intends to instruct the Customs Service to liquidate, without regard to
countervailing duties, all shipments of this merchandise entered or withdrawn from
warehouse, for consumption on or after January 17, 1986 and exported on or before December 31,
1986. The Department also intends to instruct the Customs Service to waive cash deposits of
estimated countervailing duties, as provided by section 751(a)(1) of the Tariff Act, on
shipments of this merchandise entered, or withdrawn from warehouse, for consumption on or after
the date of publication of the final results of this review. This waiver shall remain in effect until
publication of the final results of the next administrative review.
Parties to the proceeding may request disclosure of the calculation methodology and interested
parties may request a hearing not later than 10 days after the date of publication of this notice.
Interested parties may submit written arguments in case briefs on these preliminary results within
30 days of the date of publication. Rebuttal briefs, limited to arguments raised in case briefs, may
be submitted seven days after the time limit for filing the case brief. Any hearing, if requested, will
be held seven days after the scheduled date for submission of rebuttal briefs. Copies of case briefs
and rebuttal briefs must be served on interested parties in accordance with § 355.38(e) of
the Commerce regulations.
Any request for disclosure under an administrative protective order must be made no later than
five days after the date of publication.
The Department will publish the final results of this administrative review including the results of
itsanalysis of issues raised in any case or rebuttal brief or at a hearing.
This administrative review and notice are in accordance with section 751(a)(1) of the Tariff Act (19
U.S.C. 1675(a)(1)) and 19 CFR 355.22.
Dated: June 12, 1990.
Eric I. Garfinkel,
Assistant Secretary for Import Administration.
[FR Doc. 90-14553 Filed 6-22-90; 8:45 am]
BILLING CODE 3510-DS-M