[Federal Register Volume 60, Number 194 (Friday, October 6, 1995)]
[Notices]
[Pages 52374-52376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24930]



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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 August 16, 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, 1993 
through December 31, 1993. We have completed this review and determine 
the net subsidy to be 4.85 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 Avenue, N.W., Washington, D.C. 20230; 
telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

    On August 16, 1995, the Department published in the Federal 
Register (60 FR 42532) 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 September 15, 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 
September 15, 1995, a case brief was submitted by the Torrington 
Company (petitioner). On September 22, 1995, a rebuttal brief was 
submitted by respondents. The review covers the period January 1, 1993 
through December 31, 1993. 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 

[[Page 52375]]
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 prior reviews, we 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 
continue to consider, as we did in the investigation and previous 
reviews, 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)--
4.85 percent ad valorem
B. Electricity Discounts for Exporters--less than .005 percent ad 
valorem

    Our analysis of the comments submitted by the interested parties, 
summarized below, has led us to change the result in our preliminary 
results from 1.33 to 4.85 percent ad valorem.

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.

Analysis of Comments

    Comment 1: 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 export requirements for the Board of Investment 
Certificates of Promotion (BOI licenses) issued under the IPA program 
to the Minebea Group of companies NMB Thai and NMB Hi-Tech, and, with 
one exception, the BOI licenses issued to Minebea Group company Pelmec 
Thai. 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, since the amendments made in the BOI 
licenses did not eliminate all export requirements or constitute a 
program-wide change, the licensing benefits of the IPA program remain 
countervailable. They also point out that the IPA program remains 
countervailable because of regional eligibility requirements and export 
requirements related to foreign-owned companies such as the Minebea 
Group.
    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.
    Because these liftings do not constitute a program-wide change, the 
IPA program remains countervailable. 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. However, the lifting of the export 
requirements for certain IPA benefits applicable to certain types of 
ball bearings does not constitute a program-wide change with respect to 
the class or kind of merchandise. 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.
    Moreover, the 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 

[[Page 52376]]
(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 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 merchandises in order to claim 
benefits under Section 31. A similar argument holds for benefits 
received under Section 28.1 During the review period, the Minebea 
Group were able to import fixed assets with licenses which contained 
export requirements as a condition of receiving Section 28 benefits.

    \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 42532). 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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    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, there is no evidence that export 
requirements could have been lifted under this decree. See Exhibit 23 
of the public version of respondents' December 12, 1994 questionnaire 
response.
    As explained in our preliminary results, effective April 1, 1993, 
all types of ball bearings and parts thereof were reclassified under 
industrial category 4.8, ``Manufacture of fabricated metal products, 
including metal parts for automotive and electronic products.'' In 
addition, new policies and criteria issued by the BOI stipulate that 
tax and duty privileges for promoted projects approved after April 1, 
1993 are contingent upon location of the promoted company in one of 
three types of investment promotion zones. Therefore, promoted projects 
approved after April 1, 1993 for products classified under category 4.8 
must be located in industrial promotion zones 2 or 3. In addition, 
export performance is a criterion for approval of promoted projects 
involving companies which are wholly or significantly foreign-owned.
    In conclusion, IPA licences conferred countervailable benefits 
during the review period, and there has not been a program-wide change 
which would warrant an adjustment of the cash deposit rate. 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.
    Comment 2: Petitioner alleges that, in the preliminary results, 
there was a clerical error in the calculation of the mark-up 
adjustment.
    Department's Position: We agree. We used an incorrect figure in the 
calculation. Using the correct mark-up ratio, we calculate the net 
subsidy rate to be 4.85 percent ad valorem.

Final Results of Review

    For the period January 1, 1992, through December 31, 1992, we 
determine the net subsidy to be 4.85 percent 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..................................................     4.85
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    The Department will instruct the U.S. Customs Service to collect a 
cash deposit of estimated countervailing duties of 4.85 percent ad 
valorem 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 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. 95-24930 Filed 10-5-95; 8:45 am]
BILLING CODE 3510-DS-P