57 FR 8434
NOTICES
DEPARTMENT OF COMMERCE
(C-549-401)
Noncontinuous Noncellulosic Yarn From Thailand; Preliminary Results of
Countervailing Duty Administrative Review
Tuesday, March 10, 1992
AGENCY: International Trade Administration/Import Administration, Department of
Commerce.
ACTION: Notice of preliminary results of countervailing duty administrative review.
SUMMARY: The Department of Commerce is conducting an administrative review of
the agreement suspending the countervailing duty investigation on noncontinuous
noncellulosic yarn from Thailand. The review covers the period January 1, 1989 through
December 31, 1989 and nine programs. We preliminarily determine that the Government of
Thailand and the Thai exporters of noncontinuous noncellulosic yarn have complied with the
terms of the suspension agreement. We invite interested parties to comment on these results.
EFFECTIVE DATE: March 10, 1992.
FOR FURTHER INFORMATION CONTACT:Robert Bolling or Wendy Frankel, Office of Agreements
Compliance, International Trade Administration, U.S. Department of Commerce,
Washington, DC 20230; telephone: (202) 377-3793.
SUPPLEMENTARY INFORMATION:
Background
On February 26, 1990, the Department of Commerce (the Department) published in the Federal
Registger (55 FR 6669) a notice stating its intent to terminate the suspended countervailing
duty investigation on certain textile mill products from Thailand (50 FR 9862; March 12,
1985), pursuant to § 355.25(d)(4)
of the Commerce Regulations. On March 26, 1990, the American Yarn Spinners Association
(AYSA), a trade association, objected to the Deparment's intent to terminate the suspended
investigation and requested an administrative review for calendar year 1989. On January 17, 1991,
the Department initiated an administrative review covering yarn products imported during
calendar year 1989 (56 FR 1800). Subsequently, as a result of litigation, the Department terminated
the suspended investigation with respect to all products but noncontinuous noncellulosic yarn (56
FR 54838; October 23, 1991). The Department is now conducting the review on noncontinuous
noncellulosic yarn in accordance with section 751 of the Tariff Act of 1930, as amended (the Tariff
Act).
Scope of Review
Imports covered by this review are shipments of noncontinuous noncellulosic yarn from
Thailand. During the period of review, such merchandise was classifiable under item numbers
5509.21.0000, 509.22.0010, 5509.22.0090, 5509.32.0000, 5509.51.3000, 5509.51.6000, and
5509.69.4000 of the Harmonized Tariff Schedule (HTS). The HTS item numbers are provided for
convenience and Customs purposes. The written description remains dispositive.
During the review period, three producers/exporters exported the subject
merchandise to the United States: Saha Union Corporation (Saha Union), Thai American Textile
Company (Thai American), and Thai Melon Textile Company (Thai Melon). The review covers the
period January 1, 1989 through December 31, 1989 and nine programs: (1) Export Packing Credits:
(2) Rediscount of Industrial Bills; (3) Electricity Discounts for Exporters; (4) Tax Certificates for
Exports; (5) Foreign Marketing Expenses; (6) Flat Rate Tax Rebates; (7) Investment Promotion Act;
(8) International Trade Promotion Act; and (9) Export Processing Zones.
Analysis of Programs
(1) Export Packing Credit
Under the terms of the suspension agreement, the producers and exporters are not to apply for, or
receive, Export Packing Credits (EPCs) from the Bank of Thailand that permit the
rediscounting of promissory notes for exports of the subject merchandise to the United States.
EPCs are pre- or post-shipment short-term loans available to exporters for a maximum of 180 days
from the date of issuance. Under the EPC program, commercial banks are allowed to lend up to 100
percent of the value of a shipment to the exporter, and then may rediscount up to 50 percent of the
loan amount with the Bank of Thailand (BOT).
The BOT grants EPCs on a shipment-by-shipment basis. To be eligible for EPCs on pre-shipment
loans, an exporter must submit one of the following: An irrevocable letter of credit from a foreign
customer, a sales contract, a purchase order, or a warehouse receipt. To be eligible for EPCs on
post- shipment loans, an exporter must submit a bill of exchange.
The exporter applies for EPCs through its commercial bank by providing a promissory note to the
bank at an interest rate slightly below the prime interest rate. The commercial bank then sells a
note at a lower interest rate to the BOT for up to one half the amount of the loan it issued to the
exporter.
At verification, we examined the accounting records at the BOT and found that this program was
not used by Saha Union, Thai American or Thai Melon for exports of noncontinous noncellulosic
yarn to the United States during the review period. In addition, we examined the three companies'
accounting records and found no indication of the program being used during the review period.
(2) Tax Certificates for Export
The RTG issues tax certificates to exporters to rebate indirect taxes and import duties on raw
materials that are
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manufactured into exported
products. The rebate is provided for in the "Tax and Duty Compensation of Exported Goods
Produced in the Kingdom Act" (Tax and Duty Act). The rebate rates are computed on the basis of an
input/output (I/O) study initially published in 1980 based on 1975 data, and updated in 1985 using
1980 data.
The Thai Ministry of Finance (MOF) uses the I/O study to compute the value of all inputs (both
imports and local purchases) to calculate two distinct rebate rates ("A" and "B") on a sectoral basis at
ex-factory prices. The "A" rate rebates both import duties and indirect domestic taxes. Exporters
that received duty drawback, or import duty exemptions on raw materials, are eligible only for the
"B" rate. The "A" or "B" rate is then applied to the total f.o.b. value of the export to determine the
amount of the rebate. The rebates are granted in the form of tax certificates which may be used for
payment of any future tax liabilities, transferred, or sold to other companies.
In the Final Affirmative Countervailing Duty Determination and Countervailing Duty
Order; Certain Apparel from Thailand (50 FR 9818; March 12, 1985), we examined
Thailand's tax certificate rebate system under the Tax and Duty Act. We found that, as noted
above, the program was intended to rebate indirect taxes and import duties and that the rebate
rates had been reasonably calculated.
In subsequent investigations involving products from Thailand, most recently in the Final
Affirmative Countervailing Duty Determination and
Countervailing Duty Order; Steel Wire Rope from Thailand (56 FR 46299;
September 11, 1991), we reaffirmed this determination. Because this program is available only to
exporters, it is countervailable to the extent that it confers a rebate in excess of the Department's
calculated allowable rebate of import duties and indirect taxes on physically incorporated inputs.
In the original investigation in this proceeding, the Department calculated allowable "A" and "B" tax
rates for the spinning sector (I/O 67) and weaving sector (I/O 68), and then calculated a
weighted-average of those rates, because the products in the scope of the original investigation
included products other than noncontinuous noncellulosic yarn (i.e.., included products from both
of those sectors). These rates ("A" rate, 5.06 percent and "B" rate, 0.56 percent) were applied by the
Department at the time the suspension agreement was signed, and subsequently were the rates at
which the RTG offered rebates.
Under the terms of the suspension agreement, the RTG will not provide any tax certificates or other
rebates, remissions or exemptions under the Tax and Duty Act on the subject merchandise
exported to the United States in excess of the import duties and indirect taxes on items that are
physically incorporated into the exported products. At verification in this review, we reviewed the
original investigation methodology used to calculate the "A" and "B" rates. We confirmed that during
the period of review the RTG only rebated indirect taxes for the subject merchandise at the "A" and
"B" rates that were established in
the original investigation. Because Saha Union, Thai American and Thai Melon received rebates at
the rates established in the original investigation, we preliminarily determine that no overrebate of
indirect taxes occurred and that this program did not provide any countervailable benefit to the
noncontinuous noncellulosic yarn exporters during the review period.
In the Final Affirmative Countervailing Duty Determination and Countervailing Duty
Order; Butt-Weld Pipe Fittings from Thailand (55 FR 1695, January 18, 1990) (Butt-Weld Pipe
Fittings), the Department revised its methodology for calculating the "A" and "B" rates. In the RTG's
questionnaire and supplemental responses in this review, in addition to using the original
calculation methodology used by the Department in the investigation, the RTG submitted
calculations based upon this new methodology. The RTG submitted this revised methodology
because the instant period of review post-dated the period of investigation in the Butt-Weld Pipe
Fittings case. Further, since the revised scope of the suspension agreement only covers
noncontinuous noncellulosic yarn (merchandise under the spinning sector), in this review the RTG
employed the new methodology properly using only those physically-incorporated inputs
applicable to the spinning sector, including some inputs that were not included in the orginal
investigation methodology.
We verified the revised calculations that were submitted prior to verification and which were based
on the Butt-Weld Pipe Fittings methodology
and found no discrepancies. However, at verification the RTG submitted additional calculations
that embodied additional physically-incorporated inputs which were not included in their
questionnaire calculations: Printing and publishing, basic industrial chemicals, and plastic ware.
Because this recalculation constituted new information under section 353.31(a)(ii) of the
Department's regulations (19 CFR 353.31(a)(ii)(1991)), the Department has not considered this
information for this preliminary determination.
Because a new methodology for calculating tax rebates has been employed since the original
investigation, the Department has determined to set new allowable tax rebate rates based upon the
methodology derived in the Butt-Weld Pipe Fittings investigation and the RTG's information
submitted for this review. The new rates are as follows: "A" rate, 5.31 percent; and the "B" rate, 0.60
percent. These new rates will be applicable from the date of publication of the notice of final results
of the administrative review.
(3) Electricity Discounts for Exporters
Under the terms of the suspension agreement, the producers and exporters are not to apply for, or
receive, any discount on electricity rates provided by the electricity authorities in Thailand
(the Electricity Generating Authority of Thailand (EGAT), Metropolitan Electricity
Authority (MEA) or the Provincial
Electricity Authority (PEA)) for exports of the subject merchandise.
The EGAT, the MEA and the PEA are responsible for administering the electricity discounts for
exporters program. To calculate the discount EGAT calculates the amount of electricity consumed
(in kilowatt hours) per unit of output and the electricity cost in baht per kilowatt hour charged to
the producer. Separate rates are calculated for each producer. Actual discounts are applied on a
shipment-by-shipment basis.
During verification, we examined accounting records of Saha Union, Thai American and Thai Melon
and found that the EGAT, MEA, and PEA did not provide, and the three exporters did not receive,
electricity discounts for exports on noncontinuous noncellulosic yarn to the United States during
the review period.
(4) Rediscount of Industrial Bills
Under the terms of the suspension agreement, the producers and exporters are not to apply for, or
receive, any promissory notes from the Bank of Thailand for exports of the subject
merchandise to the United States.
The Bank of Thailand's "Regulations Governing the Rediscount of Promissory Notes Arising
from Industrial Undertakings" permit commercial banks to rediscount short-term promissory
notes for industrial purchases. These
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industrial promissory notes are also called industrial bills. The BOT
determines the maximum rediscount amount each year for each eligible company as a percentage
of that company's annual production costs. This program is aimed at financing particular industries
based on types of input products, a company's contribution to urban development, etc.
During verification, we examined BOT's accounting records and found no listing of Saha Union, Thai
American and Thai Melon having applied for, or received, industrial bills for exports of
noncontinuous noncellulosic yarn to the United States during the review period. In addition, we
examined the three compaines' accounting records and found no indication of the program having
been applied for, or benefits received, during the review period.
(5) Double Deduction for Foreign Marketing Expenses
Under the terms of the suspension agreement, the producers and exporters are not to apply for, or
receive, double deductions of foreign marketing expenses for income tax purposes or
concessionary financing from the BOT for exports of the subject merchandise.
Under this program, an international trading enterprise may reduce income tax payments by
doubling its foreign maketing expenses and including this amount in its operating expense
deductions from income on its income tax return. This program was only available to companies
holding a valid Board of Investment
(BOI) license which met qualifications outlined in the Investment Promotion Act (see Below). As of
March 2, 1981, international trading companies were no longer eligible to be promoted under the
IPA.
During verification, we examined tax returns at the Ministry of Finance which all three companies
filed for 1989. We verified that Saha Union, Thai American and Thai Melon did not claim a double
deduction for foreign marketing expenses on their tax returns.
(6) Flat Rate Tax Rebates
During verification, government officials stated that the flat tax rebate program was terminated on
March 31, 1985. We reviewed documentation that stated that this program had indeed been
terminated on that date.
Other Programs
Although not listed specifically in the suspension agreement, under section II(g) of the suspension
agreement, we examined the following programs detailed in the questionnaire responses:
(1) Investment Promotion Act, Section 28: Tax and Duty Exemptions
The Investment Promotion Act of 1977 (IPA) is a general act, administered by the BOI, that allows
for the promotion of different industries selected for development assistance by the BOI. Section 28
of the IPA provides an exemption from payments of import duties and business taxes on imported
machinery.
Only Thai Melon Received tax and duty exemptions under Section 28 during the review period.
Thai Melon claimed that the exemptions it received under section 28 during the review period were
granted on machinery used to produce merchandise outside the scope of the agreement. During
verification, we examined Thai Melon's accounting records and found that the company paid taxes
on all imported machinery used in the production of the subject merchandise and that tax
exemptions were earned exclusively for machinery used for the production of non-subject
merchandise.
(2) International Trade Promotion Act
During verification, we reviewed documentation that stated that exporters did not use this program
during the period of review.
(3) Export Processing Zones
During verification, we reviewed documentation that stated that exporters did not use this program
during the period of review.
Preliminary Results of Review
As a result of our review, we preliminarily determine that the RTG and Saha Union, Thai American
and Thai Melon, the Thai exporters of noncontinuous noncellulosic yarn to the United States during
the period January 1, 1989 through December 31, 1989, complied with the terms of the suspension
ageement.
Interested parties may submit written comments on these preliminary results within 30 days of the
date of publication of this notice and may request disclosure and/or a hearing within 10 days of the
date of publication. Any hearing, if requested, will be held 44 days after the date of publication or
the first workday thereafter. Rebuttal briefs and rebuttals to written comments, limited to issues
raised in those comments, must be filed not later than 37 days after the date of publication. The
Department will publish the final results of its analysis of issues raised in any such written
comments 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: March 9, 1992.
Marjorie A. Chorlins,
Acting Assistant Secretary for Import Administration.
(FR Doc. 92-5579 Filed 3-9-92; 8:45 am)
BILLING CODE 3510-DS-M