[Federal Register Volume 60, Number 148 (Wednesday, August 2, 1995)]
[Notices]
[Pages 39363-39365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19016]



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DEPARTMENT OF COMMERCE
[C-549-401]


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

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

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

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of Certain Yarn Products covered under the 
suspended countervailing duty investigation on Certain Textile Mill 
Products from Thailand (``suspension agreement''). We have 
preliminarily determined that for the period May 18, 1992, through 
December 31, 1993, the signatories were not in violation of the 
suspension agreement. Interested parties are invited to comment on 
these preliminary results.

EFFECTIVE DATE: August 2, 1995.

FOR FURTHER INFORMATION CONTACT: Lisa Yarbrough or Jackie Wallace, 
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, 1992, the date the Department published notice of the 
CIT decision.
    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 Royal Thai 
Government (RTG) and the Thai Textile Manufacturers Association (TTMA) 
from January 16 through January 25, 1995 pursuant to the administrative 
review.
    Due to prior analysis of interested party status of AYSA in 1990, 
the Department initiated this review on certain yarn products only for 
the period May 18, 1992, through December 31, 1993 (FR 59 18099, April 
15, 1994). 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 Statue and Regulations

    The Department is conducting this administrative review in 
accordance with section 751(a) of the Tariff Act of 1930, as amended 
(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

1. Electricity Discounts

    Under Section II(b) 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 of Thailand (the 
Electricity Generating Authority of Thailand (EGAT), Metropolitan 
Electricity Authority (MEA) or the Provincial Electricity Authority 
(PEA)) for exports of subject merchandise.
    EGAT is the general producing authority of electricity in Thailand 
selling to regional authorities such as MEA and PEA. PEA and MEA in 
turn sell electricity to companies in their jurisdiction. This program 
was 

[[Page 39364]]
terminated effective January 1, 1990. However, producers and exporters 
who applied for discounts on exports prior to January 1, 1990, are 
still eligible to receive residual benefits on those exports.
    Based on our verification, we found that neither EGAT, MEA, or PEA 
provided residual benefits during the POR on exports of subject 
merchandise to the United States. See verification report dated June 1, 
1995.

2. Repurchase of Industrial Bills

    Under Section II(f) of the suspension agreement, the producers and 
exporters are not to apply for, or receive, any promissory notes from 
the Bank of Thailand (BOT) for exports of subject merchandise to the 
United States.
    In 1988, this program was changed from ``Rediscount of Industrial 
Bills'' to ``Repurchase of Industrial Bills'' (see ``Notification of 
the Bank of Thailand #2531 re: Repurchase of Industrial Bills 1988''). 
Under this program, companies can receive discounted financing for 
working capital on industrial bills for a period of 120 days. This 
program operates similarly to the Export Packing Credit Program where 
companies can receive financing from a commercial bank or the 
Industrial Finance Corporation at interest rates of 10% or less. The 
BOT will then repurchase 50% of the bills from the commercial bank or 
Industrial Finance Corporation.
    Based on our verification, we found the signatories subject to this 
review were not among those that applied for, or received, industrial 
bills for exports of subject merchandise to the United States during 
the POR. See verification report dated June 1, 1995.

3. Investment Promotion Act: Section 28, 31, 35, and 36

    Under Section II (i) of the suspension agreement, the producers and 
exporters are to notify the Department in writing prior to applying 
for, or receiving, benefits under the Investment Promotion Act on 
shipments exported to the United States.
    The Investment Promotion Act of 1977 (IPA) is a general act, 
administered by the Board of Investment (BOI), that allows for the 
promotion of different industries selected for development assistance 
by the BOI. Under this program, producers and exporters must be granted 
a BOI license which enables them to receive various IPA benefits. Such 
benefits include the following:
    Section 28--IPA Section 28 provides an exemption from payment of 
import duties on imported machinery.
    Section 31--IPA Section 31 provides an exemption of juristic person 
income tax on the net profit derived from the promoted activity.
    Section 35--IPA Section 35 provides certain income tax benefits to 
firms located in investment promotion zones.
    Section 36 (1)--IPA Section 36(1) allows companies an exemption 
from import duties on raw and essential materials used to produce goods 
for export.
    Section 36 (4)--IPA Section 36(4) grants companies permission to 
deduct from taxable income an amount equal to 5% of the increase in 
export earnings over the previous year.
    Based on our verification, we found no indication of signatories 
receiving benefits under these programs during the POR. See 
verification report dated June 1, 1995.

4. 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 
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.
    Based on our verification, we confirmed that Saha Union and its 
relateds (Union Spinning, Union Thread, and Venus Thread) participated 
in an international trade fair, promoting subject merchandise. Saha 
Union and its related companies paid their own expenses to participate 
in the trade fair. See verification report dated June 1, 1995.
5. Export Processing Zones

    Under Section II (i) of the suspension agreement, producers and 
exporters shall notify the Department in writing prior to making an 
application to locate in an Export Processing Zone.
    This program is governed by the ``Industrial Estates Authority of 
Thailand Act, B.E. 2522, 1979.'' Under this program, a company must 
apply to the Industrial Estate Authority of Thailand (IEAT) for 
permission to locate in an export processing zone (EPZ). All EPZ's are 
located inside an industrial estate. Companies located within an EPZ 
can receive import duty exemptions on equipment and raw materials, and 
exemption of export duties on exported goods.
    Based on our verification, we found no use of this program by 
signatories to the suspension agreement. See verification report dated 
June 1, 1995.

6. 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.
    During the POR, 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 found that 
the amount of drawback received was not in excess of the items 
physically incorporated into the exported product. See verification 
report dated June 1, 1995.

7. Double Deduction for Foreign Marketing Expenses

    Under Section II (e) of the suspension agreement, the producers and 
exporters are not to apply for, or receive, the double deduction of 
foreign marketing expenses for income tax purposes or financing on 
concessionary terms from the BOT on exports of subject merchandise.
    From 1978 through 1981, the BOI granted trading companies a benefit 
on the double deduction of foreign marketing expenses from taxable 
income. In order to receive this benefit, a company had to be promoted 
through the BOI. This program was terminated in 1981 ``BOI Announcement 
No. 1/2524.''
    Based on verification, we found no use of this benefit. See 
verification report dated June 1, 1995.

8. 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 

[[Page 39365]]
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 in 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 the 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.
    Thai Melon, Thai American, Thai Synthetic, and Thai Blanket have 
applied for tax certificates at nominal rates during the period of 
review (POR). The Department will require that these companies repay 
the RTG, in an annual adjustment, the amount in which the tax 
certificates exceed the import duties on physically incorporated 
inputs. See verification report dated June 1, 1995.
9. 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 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.
    Based on our verification, we found that Thai Melon and Thai 
American did use this program for exports of certain yarns to the 
United States during the review period. See verification report dated 
June 1, 1995.
    The Department has calculated a subsidy rate for EPCs received by 
Thai Melon and Thai American for this administrative review. We first 
computed the total benefit received on the export packing credits. We 
then calculated a company specific subsidy rate for Thai Melon and 
included Thai American in the company rate because it is a related 
party . Next, we weight-averaged the benefit rate received by the 
company by its share of total exports of subject merchandise to the 
United States. The net subsidy received on EPCs for this administrative 
review is 0.19%.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that for the 
period May 18, 1992 through December 31, 1993, the signatories were not 
in violation of the suspension agreement. Due to the unusual 
circumstances surrounding this case and the reinstatement of the 
suspension agreement, we do not consider the calculation of EPCs in 
this POR to constitute a violation of the agreement within the meaning 
of 19 CFR Section 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.
    For those signatories who received tax certificates in excess of 
the import duties paid on items physically incorporated into exports of 
subject merchandise, we will require that they repay to the RTG, in an 
annual adjustment, any amount by which the tax certificates exceed the 
amount of import duties on physically incorporated inputs. The annual 
adjustment shall be calculated in accordance with Section II c(i)(ii) 
of the suspension agreement.
    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, in 
accordance with 19 CFR 355.38(c)(1994). Rebuttal briefs, limited to 
arguments raised in case briefs, may be submitted seven days after the 
time limit for filing the case brief, in accordance with 19 CRF 
355.38(d)(1994). Any hearing, if requested, will be held seven days 
after the scheduled date for submission of rebuttal briefs (19 CRF 
355.38(f)(1994)). Copies of case briefs and rebuttal briefs must be 
served on interested parties in accordance with 19 CRF 355.38(e)(1994). 
Representatives of parties to the proceeding may request disclosure of 
proprietary information under administrative protective order no later 
than 10 days after the representative's client or employer becomes a 
party to the proceeding, but in no event later than the date the case 
briefs, under 19 CFR 355.38(c)(1994), are due. The Department will 
publish the final results of this administrative review including the 
results of its analysis 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)(1994)) and 19 
CFR 355.22(1994).

    Dated: July 26, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-19016 Filed 8-1-95; 8:45 am]
BILLING CODE 3510-DS-P