61 FR 2797

                                   NOTICES

                           DEPARTMENT OF COMMERCE

                                  [C-549-401]

    Certain Textile Mill Products From Thailand; Final Results of Countervailing
                           Duty Administrative Review

                            Monday, January 29, 1996

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AGENCY: Import Administration, International Trade Administration, Department of
Commerce.

ACTION: Notice of Final Results of the Countervailing Duty Administrative Review on
Certain Yarn Products covered under the Suspended Investigation on Certain Textile Mill
Products from Thailand.

SUMMARY: On August 2, 1995, the Department of Commerce (the Department) published in the
Federal Register its preliminary results of administrative review of Certain Yarn Products covered
under the agreement suspending the countervailing duty investigation on Certain Textile
Mill Products from Thailand for the period May 18, 1992 through December 31, 1993
(suspension agreement). We have completed this review and have determined that the signatories
were not in violation of the suspension agreement. However, we note that the Department will
require that four signatories repay the Royal Thai Government (RTG), in an annual adjustment, the
amount by which all tax certificates received exceeded the import duties on physically
incorporated inputs.

EFFECTIVE DATE: January 29, 1996. 

FOR FURTHER INFORMATION CONTACT: Lisa Yarbrough or Jim Doyle, Office of Agreements
Compliance, Import Administration, International Trade Administration, U.S.
Department of Commerce, Washington, D.C. 20230, telephone (202) 482-3793.

SUPPLEMENTARY INFORMATION:

Background

On November 23, 1990, the Department published in the Federal Register (55 FR 48885) a notice
terminating in part the suspension agreement on Certain Textile Mill Products from
Thailand (50 FR 9837, March 12, 1985). On May 9, 1992, the Court of International Trade
(CIT) held that the Department's termination was not in accordance with the law because the
Department failed to strictly follow 19 CFR 355.25(d)(4). The Court of Appeals for the Federal
Circuit (CAFC) affirmed the decision of the CIT on October 12, 1993, and instructed the Department
to reinstate the suspension agreement. Subsequently, on October 22, 1993, the Department
reinstated the suspension agreement, effective May 18, 

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1992, the date the Department published notice of the CIT decision (58 FR 54552).
On March 4, 1994, the Department published in the Federal Register a notice of "Opportunity to
Request Administrative Review" (59 FR 10368) of the suspended investigation for the period May
18, 1992 to December 31, 1993. The Department received requests for an administrative review of
certain yarn products on March 31, 1994, from the American Yarn Spinners Association (AYSA)
and certain individual yarn producers. On April 15, 1994, the Department initiated a
countervailing duty administrative review on Certain Yarn Products for the period May 18,
1992 to December 31, 1993 (59 FR 18099, April 15, 
1994). The Department verified the responses of the RTG and the Thai Textile Manufacturers
Association (TTMA) from January 16 through January 25, 1995 pursuant to the administrative
review.
On August 2, 1995, the Department published in the Federal Register (60 FR 39363) the
preliminary results of its administrative review of certain yarn products. We invited interested
parties to comment on the preliminary results. On August 14, 1995, a case brief was submitted by
Economic Consulting Services (ECS), a representative for the AYSA and individual member
companies of the AYSA.
The Department has now completed this administrative review in accordance with section 751 of
the Tariff Act of 1930, as amended (the Act). The review covers nine programs and eight
producers/exporters: Saha Union, Venus Thread, Union Thread, Union Spinning, Thai Melon, Thai
American, Thai Blanket, and Thai Synthetic.

Applicable Statute and Regulations

The Department is conducting this administrative review in accordance with section 751(a) of the
Act. Unless otherwise indicated, all citations to the statute and to the Department's regulations are
in reference to the provisions as they existed on December 31, 1994.

Scope of Review

Imports covered by this review are shipments of certain yarns from Thailand. During the
period of review, such merchandise was classifiable under the Harmonized Tariff Schedule (HTS)
item numbers 5204.11.0000, 5204.19.0000, 5204.20.0000, 5206.21.0000, 5206.22.0000,
5206.23.0000, 5206.24.0000, 5206.25.0000, 5206.41.0000, 5206.42.0000, 5206.43.0000,
5206.44.0000, 5206.45.0000, 5207.10.0000, 5207.90.0000, 5401.10.0000, 5402.31.3000,
5402.32.3000, 5402.33.6000, 5406.10.0020, 5406.10.0040, 5406.10.0090, 5508.20.0000,
5510.12.0000, 5510.90.4000, and 5511.30.0000.

Analysis of Programs

Based upon our analysis of the responses to our questionnaire and verification, we determine the
following:

I. Programs Found To Be Used 

A. Tax Certificates

Under Section II (c) of the suspension agreement, the producers and exporters can apply or
receive tax certificates on shipments of subject merchandise exported directly or indirectly to the
United States for import duties paid on items that are physically incorporated into exported
products. If the producers and exporters apply for tax certificates in excess of the items physically
incorporated, the suspension agreement requires that the producers and exporters repay to the
RTG, in an annual adjustment, the amount by which the tax certificates exceed the import duties on
physically incorporated inputs.
Tax certificate applications are made on a shipment by shipment basis after the producer/exporter
receives payment for its shipment. The application can include up to 10 shipments and must be
submitted within one year of the shipment date. Exporters can apply for an extension if they do not
meet the one year deadline.
The law governing this program is the "Tax and Duty Compensation of Exported Goods Produced in
the Kingdom Act, B.E. 2524 (1981)." Effective January 1, 1992, new nominal rebate rates were
established for all products by the Committee on Tax and Duty Rebates for Exported Goods
Produced in the Kingdom. The new nominal rates applicable to signatories are categorized by the
following sectors: spinning, weaving, made-up textile goods, and knitting. Because nominal
rates are in excess of duties pertaining to physically 
incorporated inputs, the Department has calculated, and requested that the RTG implement
non-excessive rates. See verification report dated September 15, 1994, and letter from Roland L.
MacDonald to Arthur J. Lafave III dated November 15, 1994.
In the preliminary results, we found that Thai Melon, Thai American, Thai Synthetic, and Thai
Blanket applied for tax certificates on subject merchandise to the United States at nominal rates
during the POR. Our analysis of the comments submitted by the interested parties, summarized
below, has not led us to change our findings in the preliminary results. On this basis, the
Department will require that these companies repay the RTG, in an annual adjustment, the amount
by which the tax certificates exceed the import duties on physically incorporated inputs.

B. Export Packing Credits

Under Section II (a) of the suspension agreement, the producers and exporters are not to apply for,
or receive, Export Packing Credits (EPCs) from the Bank of Thailand (BOT) that permit the
rediscounting of promissory notes arising from shipments of subject merchandise to the United
States.
EPCs are pre-shipment short-term loans available to exporters for a maximum of 180 days from the
date of issuance. Under the EPC program, commercial banks 
issue loans based on promissory notes from creditworthy exporters. Such notes have to be
supported by an irrevocable letter of credit, a sales contract, a purchase order, or a warehouse
receipt. The commercial bank will then resell 50% of the promissory note to the BOT at a lower
interest rate. The maximum interest rate a commercial bank can charge the exporter is 10% per
annum.
If an exporter does not fulfill the contract by the due date of the EPC, the BOT will automatically
charge the commercial bank a penalty interest rate. The commercial bank will then pass this
penalty onto the exporter. The penalty interest rate is 6.5% per annum calculated over the full term
of the loan. However, penalties can be refunded if the exporter ships the merchandise within 60
days after the due date. If only a portion of the goods is shipped by the due date, the exporter
receives a partial refund in proportion to the value of the goods shipped.
In the preliminary results, we found that Thai Melon and Thai American used this program for
exports of subject merchandise to the United States. Our analysis of the comments submitted by
the interested parties, summarized below, has not led us to change our findings in the preliminary
results. On this basis, the net subsidy received on EPCs for this administrative review is 0.19%.

C. International Trade Promotion Fund

Under Section II (h) of the suspension agreement, the producers and exporters are to notify the
Department in writing prior to applying for or accepting any new benefit which is, or is likely to be,
a countervailable bounty or grant on shipments of subject merchandise 

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exported, directly or indirectly, to the United States. Although the Department has never
determined this program to be countervailable, we reviewed this program in the administrative
review.
This program, governed by the "Rule on Administration of the International Trade Promotion Fund
(ITPF), B.E. 2532 (1989)," promotes and develops Thai exports worldwide through incoming and
outgoing trade missions. The ITPF provides training and seminars for exporters, and publicity
through public advertisements.
In the preliminary results, we confirmed that Saha Union and its relateds (Union Spinning, Union
Thread, and Venus Thread) participated in an international trade fair, promoting subject
merchandise. However, Saha Union and its related companies paid their own expenses to
participate in the trade fair. Thus, the signatories were not found to be in violation of the
agreement. Our analysis of the comments submitted by the interested parties, summarized below,
has not led us to change our findings in the preliminary results.

D. Duty Drawback

Under Section II (c) of the suspension agreement, exporters and producers are not to apply for, or
receive, rebates on shipments of subject merchandise in excess of the import duties paid on items
that are physically incorporated into exported products.
Under this program, Thai Customs will refund import duties paid on imported goods used in the
production of an exported product. In order to qualify for duty drawback, the goods must be
exported through an authorized port, the exports must be shipped within one year of the date of
importation of the goods on which drawback is claimed, and the producer/exporter must request
drawback within six months of the date of exportation of the goods.
In the preliminary results, we found that Saha Union, Union Spinning, Union Thread, Venus Thread,
and Thai Melon used duty drawback on exported goods of subject merchandise to the United
States. Based on verification, we determined that the amount of drawback received was not in
excess of the items physically incorporated into the exported products. Hence, the signatories
were not found to be in violation of the agreement. Our analysis of the comments submitted by the
interested parties, summarized below, has not led us to change our findings in the preliminary
results.

II. Programs Found Not To Be Used 

In the preliminary results we found that the producers/exporters of the subject merchandise did
not apply for or receive benefits under the following programs:
A. Electricity Discounts
B. Repurchase of Industrial Bills
C. Investment Promotion Act: Section 28, 31, 35, and 36
D. Export Processing Zones
E. Double Deduction for Foreign Marketing Expenses
Our analysis of the comments submitted by the interested parties, summarized below, has not led
us to change our findings in the preliminary results.

Analysis of Comments

Comment 1 

ECS argues that the Department verified the continued existence of numerous subsidy programs
and the continued receipt by several Thai yarn producers and exporters of benefits from several of
the subsidy programs. They further claim that these subsidy benefits found by the Department are
distinct from and are 
above and beyond the large subsidy benefits that were given to the Thai yarn industry under the
Investment Promotion Act. ECS maintains that the large subsidy benefits received by the Thai yarn
industry under the Investment Promotion Act were instrumental in the massive expansion of the
capacity of the Thai yarn industry several years ago.

Department's Position 

The Department disagrees with the arguments raised by ECS. As described in the preliminary
results (60 FR 39363), the programs found to be used did not confer a subsidy which violated the
terms of the agreement. Due to the unusual circumstances surrounding this case and the
reinstatement of the suspension agreement, the Department does not consider the calculation of
EPCs in this POR to constitute a violation of the agreement within the meaning of 19 CFR 355.19
(d)(1994). However, we note that Section II (a) of the suspension agreement prohibits participation
by any signatory in the EPC program at noncommercial rates and terms for subject merchandise.
Thus, in future reviews, the signatories shall follow Section II (a) of the suspension agreement or
they will be found in violation of the agreement.
In regard to the tax certificates received by signatories during the POR, under Section II (c) of the
suspension agreement, the producers and exporters 
can apply or receive tax certificates on shipments of subject merchandise exported directly or
indirectly to the United States for import duties paid on items that are physically incorporated into
exported products. However, if the producers and exporters apply for tax certificates in excess of
the items physically incorporated, the suspension agreement requires that the producers and
exporters repay to the RTG, in an annual adjustment, the amount by which the tax certificates
exceed the import duties on physically incorporated inputs.
The Department will require that the signatories repay to the RTG, in an annual adjustment, any
amount by which the tax certificate exceeds the amount of import duties on physically
incorporated inputs. The annual adjustment shall be calculated in accordance with Section IIc (i)
and (ii) of the suspension agreement.
With respect to the use of duty drawback, the Department verified that the amount received was
not in excess of the import duties paid on physically incorporated inputs. Thus, the signatories
were not in violation. (See verification report dated June 1, 1995).
Finally, the participation in the international trade promotion fund by four signatories does not
confer a benefit because the Department verified that the signatories paid their own expenses.
Furthermore, the Department has never determined this program to be countervailable.

Comment 2 

ECS wants assurance that any benefits found by the Department during the period of review are
repaid to the RTG in order to reverse any benefits received by the Thai yarn producers during the
POR.

Department's Position 

As stated above, the Department will require that the signatories repay the amount in which the tax
certificates exceed import duties on physically incorporated inputs. If the signatories fail to
comply with the Department, we will determine that the signatories have violated the agreement.

Comment 3 

ECS urges the Department to maintain close scrutiny over the administration of the agreement so
that the U.S. industry can be assured that the subsidies found by the Department will be repaid to
the RTG and that such benefits will not continue in the future.

Department's Position 

The Department will continue to closely monitor the administration of 

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the agreement in order to ensure that the excess amounts of the tax certificates are repaid and that
the signatories do not receive any benefits in the future that would constitute a violation of the
agreement.

Final Results of Review

For the period May 18, 1992 through December 31, 1993, we determine that the signatories were
not in violation of the suspension agreement.
This notice serves as a reminder to parties subject to administrative protective order (APO) of their
responsibility concerning the disposition of proprietary information disclosed under APO in
accordance with 19 C.F.R. 355.34(d). Timely written notification of return/destruction of APO
materials or conversion to judicial protective order is hereby requested. Failure to comply with the
regulations and the terms of an APO is a sanctionable violation.
This administrative review and notice are in accordance with section 751(a)(1) of the Act (19 U.S.C.
1675(a)(1)(1994)) and 19 C.F.R. 355.22(1994).
Dated: December 14, 1995. 

Susan G. Esserman,

Assistant Secretary for Import Administration. 

[FR Doc. 96-1454 Filed 1-26-96; 8:45 am]

BILLING CODE 3510-DS-P