[Federal Register Volume 60, Number 194 (Friday, October 6, 1995)]
[Notices]
[Pages 52371-52374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24929]



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DEPARTMENT OF COMMERCE
[C-549-802]


Ball Bearings and Parts Thereof From Thailand; Final Results of 
Countervailing Duty Administrative Review

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

ACTION: Notice of Final Results of Countervailing Duty Administrative 
Review.

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SUMMARY: On May 8, 1995, the Department of Commerce (the Department) 
published in the Federal Register its preliminary results of 
administrative review of the countervailing duty order on Ball Bearings 
and Parts Thereof from Thailand for the period January 1, 1992 through 
December 31, 1992. We have completed this review and determine the net 
subsidy to be 4.29 percent ad valorem for all companies. We will 
instruct the U.S. Customs Service to assess countervailing duties as 
indicated above.

EFFECTIVE DATE: October 6, 1995.

FOR FURTHER INFORMATION CONTACT: Robert Copyak or Kelly Parkhill, 
Office of Countervailing Compliance, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution 

[[Page 52372]]
Avenue, NW., Washington, DC 20230; telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

    On May 8, 1995, the Department published in the Federal Register 
(60 FR 22563) the preliminary results of its administrative review of 
the countervailing duty order on Ball Bearings and Parts Thereof from 
Thailand. The Department has now completed this administrative review 
in accordance with section 751 of the Tariff Act of 1930, as amended 
(the Act).
    We invited interested parties to comment on the preliminary 
results. On June 7, 1995, a case brief was submitted by Pelmec Thai 
Ltd., NMB Thai Ltd., and NMB Hi-Tech Ltd. (three related companies, 
hereinafter the Minebea Group), producers/exporters of the subject 
merchandise during the review period (respondents). On June 14, 1995, a 
rebuttal brief was submitted by the Torrington Company (petitioner). 
The review covers the period January 1, 1992 through December 31, 1992. 
The review involves the Minebea Group of companies, which accounts for 
virtually all exports of subject merchandise from Thailand, and nine 
programs.

Applicable Statute 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. However, references to the 
Department's Countervailing Duties; Notice of Proposed Rulemaking and 
Request for Public Comments, 54 FR 23366 (May 31, 1989) (Proposed 
Regulations), are provided solely for further explanation of the 
Department's countervailing duty practice. Although the Department has 
withdrawn the particular rulemaking proceeding pursuant to which the 
Proposed Regulations were issued, the subject matter of these 
regulations is being considered in connection with an ongoing 
rulemaking proceeding which, among other things, is intended to conform 
the Department's regulations to the Uruguay Round Agreements Act. See 
60 FR 80 (Jan. 3, 1995).

Scope of the Review

    Imports covered by this review are ball bearings and parts thereof. 
Such merchandise is described in detail in Appendix A to this notice. 
The Harmonized Tariff Schedule (HTS) item numbers listed in Appendix A 
are provided for convenience and Customs purposes. The written 
description remains dispositive.

Calculation Methodology for Assessment and Cash Deposit Purposes

    In the first administrative review, respondents claimed that the 
F.O.B. value of the subject merchandise entering the United States is 
greater than the F.O.B. price charged by the companies in Thailand (57 
FR 26646; June 15, 1992). They explained that this discrepancy is due 
to a mark-up charged by the parent company, located in a third country, 
through which the merchandise is invoiced. However, the subject 
merchandise is shipped directly from Thailand to the United States and 
is not transshipped, combined with other merchandise, or repackaged 
with other merchandise. In other words, for each shipment of subject 
merchandise, there are two invoices and two corresponding F.O.B. export 
prices: (1) the F.O.B. export price at which the subject merchandise 
leaves Thailand, and on which subsidies from the Royal Thai Government 
(RTG) are earned by the companies, and upon which the subsidy rate is 
calculated; and (2) the F.O.B. export price which includes the parent 
company mark-up, and which is listed on the invoice accompanying the 
subject merchandise as it enters the United States, and upon which the 
cash deposits are collected and the countervailing duty is assessed. 
Respondents argued that the calculated ad valorem rate should be 
adjusted by the ratio of the export value from Thailand to the export 
value charged by the parent company to the U.S. customer so that the 
amount of countervailing duties collected would reflect the amount of 
subsidies bestowed. The Department agreed and made this adjustment in 
the first and second administrative reviews (57 FR 26646; June 15, 
1992; and 58 FR 36392; July 7, 1993).
    In the present review, we again verified, on a transaction-specific 
basis, the direct correlation between the invoice which reflects the 
F.O.B. price on which the subsidies are earned and the invoice which 
reflects the marked-up price that accompanies each shipment as it 
enters the United States. Since the mark-up is not part of the export 
value upon which the respondents earn bounties or grants, the 
Department has followed the methodology adopted in the first and second 
administrative reviews, and calculated the ad valorem subsidy rate as a 
percentage of the original export value from Thailand, multiplied by 
the adjustment ratio--the original export value from Thailand divided 
by the marked-up value of the same goods entering the United States.
    We did not calculate a separate rate for each company because NMB 
Thai, Pelmec, and NMB Hi-Tech are wholly owned by one parent company, 
and are therefore related. As a result of this relationship, we 
considered the three companies as one corporate entity in our 
calculations. We calculated the bounty or grant by first totaling the 
benefits received by the three companies for each program used. 
Dividing these sums by total Thai export value for the three companies, 
we calculated the unadjusted bounty or grant for each program used. As 
described above, we adjusted these rates by multiplying them by the 
ratio of the original export price from Thailand to the marked-up price 
of the same goods entering the United States. Finally, we summed the 
adjusted bounty or grant for each program, to arrive at the total 
country-wide bounty or grant.

Analysis of Programs

    Based upon our analysis of responses to our questionnaire and 
written comments from the interested parties, we determine the 
following:

I. Programs Conferring Subsidies

    In the preliminary results, we found the following programs to be 
countervailable:

A. Investment Promotion Act (IPA) of 1977--Sections 31, 28, and 36(1)--
4.27 percent ad valorem
B. Electricity Discounts for Exporters--0.02 percent ad valorem

    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 Minebea Group did not 
apply for or receive benefits under the following programs during the 
period of review:

A. Tax Certificates for Exporters
B. Export Packing Credits
C. Rediscount of Industrial Bills
D. Export Processing Zones
E. IPA--Sections 33 and 36(4)
F. Reduced Business Taxes for Producers of Intermediate Goods for 
Export Industries
G. International Trade Promotion Fund

    Our analysis of the comments submitted by the interested parties, 
summarized below, has not led us to change our findings in the 
preliminary results. 

[[Page 52373]]


Analysis of Comments

    Comment: Respondents argue that the Department should adjust the 
calculations of the net subsidy and the deposit rate to account for the 
RTG's liftings of the export requirements for the Board of Investment 
Certificates of Promotion (BOI licenses) issued under the IPA program 
to the Minebea Group companies NMB Thai and NMB Hi-Tech and, with one 
exception, the BOI licenses issued to Minebea Group subsidiary Pelmec 
Thai. They argue that these liftings of requirements constitute a 
program-wide change as defined by section 355.50 of the Notice of 
Proposed Rulemaking and Request for Public Comments, 54 FR 23366, 23385 
(May 31, 1989). See Respondents' Case Brief, page 2. They request that 
the Department deduct the amount of the benefits related to these 
liftings from the calculation of the net subsidy for the review period 
and consider for cash deposit purposes only the proportion of the 
production related to the one BOI license issued to Pelmec Thai for 
which the RTG did not lift the export requirements.
    Petitioners argue that the Department should not adjust its 
calculations of the net subsidy and the deposit rate because (1) The 
removal of some export requirements in the BOI licenses did not 
eliminate all export requirements or constitute a program-wide change, 
and (2) the Thai government did not terminate the IPA program.
    Department's Position: Under the IPA program, benefits are 
transmitted to IPA recipients through the recipients' BOI licenses. BOI 
licenses pertain to a promoted activity and list the IPA benefits for 
which the recipient is eligible, and the various conditions that must 
be met in order to receive those benefits. Although the BOI has lifted 
some of the export conditions for several of the Minebea Group's BOI 
licenses, IPA licensing benefits were nonetheless tied to export 
performance.
    The Minebea Group has several BOI licenses pertaining to ball 
bearings. In January 1990, producers of electronic parts (BOI Category 
4.6) became eligible to apply for the lifting of export requirements 
for their BOI licenses. Since ball bearings used in electronic products 
(electronic ball bearings) are classified under BOI Category 4.6, the 
Minebea Group applied for the lifting of export requirements for its 
BOI licenses pertaining to electronic ball bearings. The BOI awarded 
such liftings for several of the Minebea Group's BOI licenses, but the 
fact that the RTG only lifted the export requirements for certain IPA 
benefits applicable to certain types of ball bearings undermines 
respondents' argument that a program-wide change has taken place with 
respect to the IPA program as it applies to the subject merchandise.
    Moreover, IPA licensing benefits received by the Minebea Group were 
tied to export performance. The IPA clearly states that the import duty 
exemption benefits under Section 36(1) (which is contained in licenses 
held by all three of the Minebea Group of companies) are conditional 
upon export of the final product, and these conditions were not lifted. 
With regard to benefits received under Section 31 (which exempts 
companies from payment of corporate income tax on profits derived from 
promoted activities), export requirements were in place during the tax 
year covered by the tax returns filed during the POR. That, in 1992 and 
1993, the BOI retroactively lifted the export requirements of certain 
licenses does not change the fact that the Minebea Group of companies 
had to export the subject merchandise in order to claim benefits under 
Section 31. A similar argument holds for benefits received under 
Section 28.\1\

    \1\ Prior to the review period, IPA Section 28 allowed companies 
to import fixed assets free of import duties, the business tax and 
the local tax. However, effective January 1, 1992, the RTG 
eliminated both the business tax and the local tax and instituted a 
value added tax (VAT) system.
    In the preliminary results of this administrative review, the 
Department determined that the exemption of the VAT on imports of 
fixed assets under Section 21(4) of the VAT Act does not constitute 
a countervailable benefit to the companies specified in Section 
21(4). See Ball Bearings and Parts Thereof from Thailand (60 FR 
22563). Our analysis of the comments submitted by the interested 
parties, summarized below, has not led us to change this finding or 
our finding that the exemptions of import duties on fixed assets 
under Section 28 continue to provide countervailable benefits. 
However, as stated in the preliminary results, the Department will 
continue to examine provisions of the VAT Act, including Section 
21(4), in future administrative reviews to ascertain that no 
countervailable benefits are being provided to manufacturers of 
subject merchandise.
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    At the time its fixed assets were imported, most of the Minebea 
Group's licenses contained export requirements as a condition of 
receiving Section 28 benefits.
    Not all of the BOI liftings were based upon BOI Category status. 
The export requirements for one of the Minebea Group's BOI licenses 
were lifted based on the fact that one of the Minebea Group's 
subsidiaries had a long-standing export history. Thus, the continued 
receipt of the benefits is contingent upon the fact that the company 
had an export history. Had the company been unable to demonstrate a 
history of export performance, the export requirements could not have 
been lifted under this decree.
    Section 355.50 of the Proposed Regulations states that the term 
``program-wide change'' means a change that is (1) not limited to an 
individual firm or firms and (2) effectuated by an official act, such 
as the enactment of a statute, regulation, or decree, or contained in 
the schedule of an existing statute, regulation, or decree. Since the 
changes in export requirements by the BOI were only for companies that 
had licenses for BOI Category 4.6 products and they had to be requested 
and approved on a license-by-license basis rather than applicable 
across the board, the BOI's actions do not constitute a program-wide 
change.
    In conclusion, we will continue to countervail IPA licensing 
benefits received under Sections 36(1), 31, and 28. The RTG's liftings 
of certain export requirements for certain BOI licenses held by the 
Minebea Group do not constitute the outright elimination of export 
conditions with respect to the subject merchandise. Rather, IPA 
benefits continue to be contingent upon export performance with respect 
to ball bearings, the class or kind of merchandise subject to the 
countervailing duty order. As discussed above, export requirements were 
in place as a specific condition with respect to Section 36(1) 
benefits, and export performance criteria continued to exist with 
respect to the class or kind of merchandise for both Section 31 and 
Section 28 benefits. Furthermore, that producers of electronic parts 
were able to apply for and attain liftings of export requirements from 
certain BOI licenses does not constitute a program-wide change in the 
IPA program with respect to the subject merchandise covered in this 
review, ball bearings.

Final Results of Review

    For the period January 1, 1992, through December 31, 1992, we 
determine the net subsidy to be 4.29 ad valorem for all companies. The 
Department will instruct the U.S. Customs Service to assess the 
following countervailing duties:

------------------------------------------------------------------------
                     Manufacturer/exporter                         Rate 
------------------------------------------------------------------------
All Companies..................................................     4.29
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    The Department will instruct the U.S. Customs Service to collect a 
cash deposit of estimated countervailing duties of 4.29 percent of the 
f.o.b. invoice price on all shipments of the subject merchandise from 
all companies.
    This notice serves as a reminder to parties subject to 
administrative protective order (APO) of their 

[[Page 52374]]
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)) and 19 CFR 355.22.

    Dated September 29, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.

Appendix A

Scope of the Review

    The products covered by this review, ball bearings, mounted or 
unmounted, and parts thereof, are described below.

Ball Bearings, Mounted or Unmounted, and Parts Thereof

    These products include all antifriction bearings which employ 
balls as the rolling element. During the review period, imports of 
these products were classifiable under the following categories: 
antifriction balls; ball bearings with integral shafts; ball 
bearings (including radial ball bearings) and parts thereof; ball 
bearing type pillow blocks and parts thereof; ball bearing type 
flange, take-up, cartridge, and hanger units, and parts thereof; and 
other bearings (except tapered roller bearings) and parts thereof. 
Wheel hub units which employ balls as the rolling element are 
subject to the review. Finished but unground or semiground balls are 
not included in the scope of this review. Imports of these products 
are currently classifiable under the following HTS item numbers: 
8482.10.10, 8482.10.50, 8482.80.00, 8482.91.00, 8482.99.10, 
8482.99.70, 8483.20.40, 8483.20.80, 8483.30.40, 8483.30.80, 
8483.90.20, 8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 
8708.99.50.
    This review covers all of the subject bearings and parts thereof 
outlined above with certain limitations. With regard to finished 
parts (inner race, outer race, cage, rollers, balls, seals, shields, 
etc.), all such parts are included in the scope of this review. For 
unfinished parts (inner race, outer race, rollers, balls, etc.), 
such parts are included if (1) they have been heat treated, or (2) 
heat treatment is not required to be performed on the part. Thus, 
the only unfinished parts that are not covered by this review are 
those where the part will be subject to heat treatment after 
importation.

[FR Doc. 95-24929 Filed 10-5-95; 8:45 am]
BILLING CODE 3510-DS-P