[Federal Register Volume 60, Number 225 (Wednesday, November 22, 1995)]
[Notices]
[Pages 57849-57852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28457]



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DEPARTMENT OF COMMERCE
[C-549-804]


Carbon Steel Butt-Weld Pipe Fittings From Thailand; Preliminary 
Results of Countervailing Duty Administrative Review

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

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

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the countervailing duty order on carbon steel 
butt-weld pipe fittings from Thailand. We preliminarily determine the 
net subsidy to be 0.22 percent ad valorem for all companies for the 
period January 1, 1992 through December 31, 1992. In accordance with 19 
CFR 355.7, any net subsidy less than 0.5 percent ad valorem is de 
minimis. If the final results of this review remain the same as these 
preliminary results, the Department intends to instruct the U.S. 
Customs Service to liquidate, without regard to countervailing duties, 
all shipments of the subject merchandise from Thailand exported on or 
after January 1, 1992, and on or before December 31, 1992. Interested 
parties are invited to comment on these preliminary results.


[[Page 57850]]

EFFECTIVE DATE: November 22, 1995.

FOR FURTHER INFORMATION CONTACT: Brian Albright or Cameron Cardozo, 
Office of Countervailing Compliance, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue NW., Washington, DC 20230; telephone: 
(202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

    On January 19, 1990, the Department published in the Federal 
Register (55 FR 1695) the countervailing duty order on carbon steel 
butt-weld pipe fittings from Thailand. On January 13, 1993, the 
Department published a notice of ``Opportunity to Request an 
Administrative Review'' (58 FR 4148) of this countervailing duty order. 
We received a timely request for review from the petitioner, the U.S. 
Fittings Group.
    We initiated the review, covering the period January 1, 1992 
through December 31, 1992, on March 8, 1993 (58 FR 12931). We conducted 
a verification of the questionnaire responses on July 20 through 27, 
1995. The review covers two producers/exporters of the subject 
merchandise, Awaji Sangyo (Thailand) Co. (AST), and TTU Industrial 
Corp. (TTU), which account for virtually all exports of the subject 
merchandise from Thailand, and 15 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

    The merchandise subject to this review (hereinafter subject 
merchandise) is certain carbon steel butt-weld pipe fittings, having an 
inside diameter of less than 360 millimeters (fourteen inches), 
imported in either finished or unfinished form. These formed or forged 
pipe fittings are used to join sections in piping systems where 
conditions require permanent, welded connections, as distinguished from 
fittings based on other fastening methods (e.g., threaded, grooved, or 
bolted fittings), as currently classifiable under the Harmonized Tariff 
Schedule (HTS). The products covered in this review are provided for 
under item number 7307.93.30 of the HTS. The HTS subheadings are 
provided for convenience and Customs purposes; our written description 
of the scope of this proceeding is dispositive.

Calculation Methodology for Assessment and Cash Deposit Purposes

    We calculated the net subsidy on a country-wide basis by first 
calculating the subsidy rate for each company subject to the 
administrative review. We then weight-averaged the rate received by 
each company using as the weight its share of total Thai exports to the 
United States of subject merchandise, including all companies, even 
those with de minimis and zero rates. We then summed the individual 
companies' weight-averaged rates to determine the subsidy rate from all 
programs benefitting exports of subject merchandise to the United 
States.
    Since the country-wide rate calculated using this methodology was 
de minimis, as defined by 19 CFR 355.7(1994), no further calculations 
were necessary.

Analysis of Programs

I. Program Preliminarily Found To Confer Subsidies

Tax Exemptions Under Section 31 of the 1977 Investment Promotions Act 
(IPA)
    In the investigation (55 FR 1695, January 18, 1990) and the first 
review of this order (57 FR 5248, February 13, 1992), section 31 of the 
IPA was found not to have been used. In its questionnaire response for 
this review, AST indicated that it claimed an exemption under this 
program on its tax return filed during the review period. TTU did not 
claim a section 31 exemption on its tax return filed during the review 
period.
    The Thai Board of Investment (BOI) provides certain investment 
incentives to companies through the IPA in order to promote economic 
development in Thailand. Under section 31 of the IPA, companies can 
apply to receive a three to eight-year exemption from payment of 
corporate income tax on profits derived from promoted activities, as 
well as deductions from net profits for losses incurred during the tax 
exempt period. AST was approved for a five-year exemption, from 1987-
1991, on income earned from all export sales of butt-weld pipe 
fittings, including both subject and non-subject merchandise.
    On its tax return filed during the review period, AST claimed a tax 
exemption under section 31. Because benefits under this program are 
contingent upon export performance, we preliminarily determine that 
such benefits are countervailable. See Sec. 355.43(a)(1), Proposed 
Regulations and Final Negative Countervailing Duty Determination; 
Disposable Pocket Lighters from Thailand, 60 FR 13961 (March 15, 1995).
    To calculate the benefit received under section 31, we used as a 
numerator the value of the tax exemption claimed by AST during the 
review period. AST did not provide the Department with the value of 
total exports sales of pipe fittings during the review period. 
Therefore, to calculate the subsidy rate, we used as a denominator the 
value of AST's total export sales of subject merchandise during the 
same period. We then weight-averaged AST's and TTU's rates for this 
program, using as the weights each company's share of total Thai 
exports to the United States of subject merchandise, and summed the 
individual companies' weight-averaged rates to determine the subsidy 
rate for this program. On this basis, we preliminarily determine the 
subsidy from this program to be 0.22 percent ad valorem for the period 
January 1, 1992 through December 31, 1992.

II. Program Preliminarily Found Not To Confer Subsidies

Duty Drawback
    The Thai duty drawback program was established by Section 19 bis of 
the Thai Customs Act. Under Section 19 bis, companies that import raw 
materials used in the production, mixing, assembling, or packaging of 
an exported product are eligible to receive a drawback of import duties 
and taxes on those materials. Upon importation of the materials, 
companies either pay a cash deposit or post a bank guarantee to cover 
the import duties and taxes. If the company subsequently provides 
documentation showing that the imported materials were used in the 

[[Page 57851]]
production, mixing, assembling, or packaging of a finished good that 
was exported within one year of the date of importation of the raw 
materials, the company's cash deposit is refunded or its bank guarantee 
released.
    During the antidumping duty investigation of butt-weld pipe 
fittings from Thailand, petitioners alleged in their comments on the 
Department's preliminary determination that AST received excess duty 
drawbacks on imports of steel pipe that is physically incorporated into 
the subject merchandise, and that this constituted a countervailable 
subsidy. See Final Determination of Sales at Less Than Fair Value: 
Certain Carbon Steel Butt-Weld Pipe Fittings From Thailand (Pipe 
Fittings AD Final), 57 FR 21065, 21069 (May 18, 1992). Based on 
petitioners' allegation, the Department examined the duty drawback 
program in this review, the first administrative review of the 
countervailing duty order since Pipe Fittings AD Final, to determine 
whether producers of the subject merchandise received a countervailable 
benefit during the review period. (For a more detailed explanation of 
the Department's decision to examine the duty drawback program, see the 
January 19, 1995 Memorandum to Barbara E. Tillman Regarding 1992 CVD 
Administrative Review--Subsidy Allegation, on file in the public file 
of the Central Records Unit, Room B-099 of the Department of Commerce.)
    During the antidumping investigation, AST acknowledged that the 
average yield ratio for its production of pipe fittings from imported 
pipe, calculated by the Thai Government to determine the amount of 
drawback on imported pipe, overstated the actual yield ratio in AST's 
favor. In this review, we examined the issue of the average yield 
calculated by the Thai Government. We verified that, during the review 
period, separate production formulas approved by Thai Customs were in 
effect for each type of pipe fittings sold by AST and TTU. Utilizing 
these production formulas, AST and TTU did not receive drawback of 
import duties and taxes in excess of the amount due on imported raw 
materials. Moreover, we confirmed that no drawback was received on 
materials incorporated into finished goods that were not exported 
within one year. (See October 3, 1995 Memorandum to Barbara E. Tillman 
Regarding Verification of Questionnaire Responses--1992 Administrative 
Review of the Countervailing Duty Order on Carbon Steel Butt-Weld Pipe 
Fittings from Thailind (Public Version) for Government of Thailand, 
AST, and TTU, which are on file in the public file of the Central 
Records Unit, Room B-099 of the Department of Commerce). In accordance 
with Annex A (Illustrative List) to the 1979 Agreement of 
Interpretation and Application of Articles VI, XVI, and XXIII of the 
General Agreement on Tariffs and Trade, the remission or drawback of 
import charges is a countervailable subsidy only to the extent that 
such remission or drawback is in excess of the import charges that are 
levied on imported goods that are physically incorporated in the 
exported product. See also 19 U.S.C. 1677(5)(A) and section 355.44 of 
the Proposed Regulations. Because producers of butt-weld pipe fittings 
did not receive excess drawback of import duties and taxes, we 
preliminarily determine that the duty drawback program did not confer 
countervailable benefits on exports of the subject merchandise to the 
United States during the review period.

III. Programs Preliminarily Found Not To Be Used

A. Tax Certificates for Exporters
B. Export Packing Credits
C. Tax and Duty Exemptions Under Section 28 of the (IPA)
D. Electricity Discounts for Exporters
E. Rediscount of Industrial Bills
F. International Trade Promotion Fund
G. Export Processing Zones
H. Reduced Business Taxes for Producers of Intermediate Goods for 
Export Industries
I. Additional Incentives under the IPA
    1. Goodwill and Royalties Tax Exemption
    2. Tax Deduction of Foreign Marketing Expenses and Foreign Taxes
    3. Exemption of Sales Taxes for Promoted Industries
    4. Exemption on Export Duties and Business Taxes on Products 
Produced or Assembled by Promoted Firms
    5. Deduction from Assessable Income of an Amount Equal to Five 
Percent of the Increase over the Previous Year of Income Derived from 
Exports

Preliminary Results of Review

    For the period January 1, 1992 through December 31, 1992, we 
preliminarily determine the net subsidy to be 0.22 percent ad valorem 
for all companies. In accordance with 19 CFR 355.7, any net subsidy 
less than 0.5 percent ad valorem is de minimis.
    If the final results of this review remain the same as these 
preliminary results, the Department intends to instruct the U.S. 
Customs Service to liquidate, without regard to countervailing duties, 
all shipments of the subject merchandise from Thailand exported on or 
after January 1, 1992, and on or before December 31, 1992.
    This countervailing duty order was determined to be subject to 
section 753 of the Act (as amended by the Uruguay Round Agreements Act 
of 1994). Countervailing Duty Order; Opportunity to Request a Section 
753 Injury Investigation, 60 FR 27,963 (May 26, 1995). Because no 
domestic interested parties exercised their right under section 753(a) 
of the Act to request an injury investigation, the International Trade 
Commission made a negative injury determination with respect to this 
order, pursuant to section 753(b)(4) of the Act. As a result, the 
Department has revoked this countervailing duty order, effective 
January 1, 1995, pursuant to section 753(b)(3)(B) of the Act. 
Revocation of Countervailing Duty Orders, 60 FR 40,568 (August 9, 
1995). Accordingly, the Department intends to order Customs to 
liquidate shipments exported during the period of review in accordance 
with the final results of this review and does not intend to issue 
further cash deposit instructions.
    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. Rebuttal 
briefs, limited to arguments raised in case briefs, may be submitted 
seven days after the time limit for filing the case brief. Parties who 
submit argument in this proceeding are requested to submit with the 
argument (1) a statement of the issue and (2) a brief summary of the 
argument. Any hearing, if requested, will be held seven days after the 
scheduled date for submission of rebuttal briefs. Copies of case briefs 
and rebuttal briefs must be served on interested parties in accordance 
with 19 CFR 355.38(e).
    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 Sec. 355.38(c), 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) 

[[Page 57852]]
of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.

    Dated: November 6, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-28457 Filed 11-21-95; 8:45 am]
BILLING CODE 3510-DS-P