[Federal Register Volume 61, Number 50 (Wednesday, March 13, 1996)]
[Notices]
[Pages 10315-10318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5914]



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DEPARTMENT OF COMMERCE
[C-559-001]


Certain Refrigeration Compressors From the Republic of Singapore; 
Final Results of Countervailing Duty Administrative Review

AGENCY: International Trade Administration, Import Administration, 
Commerce.

ACTION: Notice of final results of countervailing duty administrative 
review.

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SUMMARY: On November 18, 1994, the Department of Commerce published the 
preliminary results of its administrative review of the agreement 
suspending the countervailing duty investigation on certain 
refrigeration compressors from the Republic of Singapore.
    We have now completed this review and determine that the Government 
of the Republic of Singapore (GOS), Matsushita Refrigeration Industries 
(Singapore) Pte. Ltd. (MARIS) and Asia Matsushita Electric (Singapore) 
Pte. Ltd. (AMS), the signatories to the suspension agreement, have 
complied with the terms of the suspension agreement during the period 
April 1, 1992 through March 31, 1993.

EFFECTIVE DATE: March 13, 1996.

FOR FURTHER INFORMATION CONTACT: Rick Johnson or Jean Kemp, Office of 
Agreements Compliance, International Trade Administration, U.S. 
Department of Commerce, Washington, DC 20230; telephone: (202) 482-
3793.

SUPPLEMENTARY INFORMATION:

Background

    On November 18, 1994, the Department of Commerce (the Department) 
published in the Federal Register (59 FR 59750-2) the preliminary 
results of its administrative review of the agreement suspending the 
countervailing duty investigation on certain refrigeration compressors 
from the Republic of Singapore (48 FR 51167; November 7, 1983). We have 
now completed this administrative review in accordance with section 751 
of the Tariff Act of 1930, as amended (the Tariff Act).

Scope of the Review

    Imports covered by this review are shipments of hermetic 
refrigeration compressors rated not over one-quarter horsepower from 
Singapore. This merchandise is currently classified under Harmonized 
Tariff Schedule (HTS) item number 8414.30.40. The HTS item number is 
provided for convenience and Customs purposes. The written description 
remains dispositive.
    The review period is April 1, 1992 through March 31, 1993. The 
Department examined six programs, one of which, Operational 
Headquarters, was determined not to apply to subject merchandise (see 
discussion below). The review covers one producer and one exporter of 
the subject merchandise, MARIS and AMS, respectively. These two 
companies, along with the GOS, are the signatories to the suspension 
agreement.
    Under the terms of the suspension agreement, the GOS agrees to 
offset completely the amount of the net bounty or grant determined by 
the Department in this proceeding to exist with respect to the subject 
merchandise. The offset entails the collection by the GOS of an export 
charge applicable to the subject merchandise exported on or after the 
effective date of the agreement. See Certain Refrigeration Compressors 
from the Republic of Singapore: Suspension of Countervailing Duty 
Investigation, 48 FR 51167, 51170 (November 7, 1983).

Applicable Statute and Regulations

    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).

Analysis of Comments Received

    In our preliminary results of review, we preliminarily determined 
that the signatories to the suspension agreement complied with the 
terms of the suspension agreement during the period of review. We 
invited interested parties to comment on the preliminary results. We 
received comments from petitioner and respondents. Our analysis of 
these comments follows.
    Comment 1: Respondents argue that the Department incorrectly found 
the Finance and Treasury Center (FTC) program to be countervailable on 
the basis of a de facto specificity analysis, because even though the 
FTC program has only been in existence since 1990, the program has been 
used by ten companies in five separate and disparate industries or 
groups of industries. Respondents assert that a program cannot be found 
to be used by a ``specific group'' of industries simply because the 
beneficiaries are identifiable, or because a program benefits only a 
small portion of the economy. According to respondents, the Department 
must find that the program's participants fall within the same industry 
or group of industries in order to reach a determination that a program 
is de facto specific.

[[Page 10316]]

    Respondents further assert that, in accordance with PPG Industries, 
Inc. v. United States, 978 F.2d 1232, 1240-41 (Fed. Cir. 1992) (``PPG 
II''), the actual make-up of the eligible firms must be evaluated to 
determine whether those firms comprise a specific industry or group of 
industries.
    Petitioner argues that the Department properly determined that the 
FTC program is used by a specific group of industries, because it is 
clear from the small number of users of the program that the program 
has in fact a narrow (as opposed to general) application, which 
petitioner contends is the objective of the Department's specificity 
analysis. Furthermore, petitioner asserts that respondents' 
interpretation would present ``insurmountable'' problems of 
administration, because the level of aggregation or disaggregation of 
industries would become the critical factor in specificity cases.
    Department's Position: It is established Departmental practice to 
find a program's benefits to be de facto specific, and therefore 
countervailable, when the Department has determined that the number of 
enterprises, industries, or groups thereof using the program is too 
few. (See, e.g., Live Swine from Canada; Final Results of 
Countervailing Duty Administrative Review, 59 FR 12243, 12246-7 (March 
16, 1994). See also Final Affirmative Countervailing Duty 
Determinations: Certain Steel Products from Belgium, 58 FR 37273, 37290 
(July 9, 1993).)
    With respect to PPG II, the Department notes that this decision 
upheld the Department's determination of the non-specificity of a 
program in which there were many more users than in the instant review. 
While the Court of Appeals has thereby addressed what is evidence 
insufficient to reverse a finding of non-specificity, PPG II did not 
address what is required for the Department to make an affirmative de 
facto specificity finding based on ``too few'' users. This is 
consistent with the Court's long-standing practice of recognizing the 
Department's broad discretion to interpret the statutory definition of 
subsidy. See, e.g., PPG Indus. v. United States, 928 F.2d 1571 (Fed. 
Cir. 1991) (``PPG I'').
    Moreover, we disagree with respondent's contention that the 
Department is required in every case to evaluate the actual make-up of 
eligible firms to determine whether those firms comprise a specific 
industry or group thereof before determining whether the number of 
users of a program is too few. In clear cases, the make-up of the firms 
and industries receiving benefits is irrelevant to the Department's 
specificity determination because the number of users is sufficiently 
small relative to the total number of enterprises and industries in the 
economy as a whole to end the inquiry at that point. In this case, 
given that Singapore has a great number of companies and industries, 
the number of companies (10) and industries (5) receiving benefits 
under the FTC program is sufficiently small enough that the Department 
need not inquire further.
    Comment 2: Respondents argue that the FTC program could not be 
found to be de facto specific based on a finding that the GOS has acted 
to limit the availability of the FTC program. Respondents assert that 
the criteria for approval under the FTC program are broad and do not 
unduly restrict availability, and that the program's eligibility 
requirements are simply designed to prevent firms from taking advantage 
of the program by establishing fraudulent ``shells''. Thus, the GOS 
argues, it has not acted to limit the availability of the FTC program.
    In turn, petitioner argues that respondents have stated in the 
questionnaire response that the program is de facto limited to 
multinational corporations, specifically the small number having 
sufficiently large operations in Singapore to maintain the 
establishment of an expensive treasury support office, and that there 
is no record support for the assertion that the qualifications of the 
program serve only to prevent fraud.
    Department's Position: The Department notes that, in its 
preliminary results, it concluded that the FTC program is de facto 
specific, and therefore countervailable, on the basis that only a small 
group of enterprises, representing five industries, participates in the 
program. Furthermore, after considering comments submitted by both 
parties on this point, the Department continues to find the small 
number of users of the program dispositive evidence of de facto 
specificity. See Comment 1.
    The Department did conclude in its preliminary determination that 
the GOS has acted to limit the availability of the FTC program because, 
as respondents have stated for the record, the GOS has limited 
participation to a small number of multinational corporations having 
sufficiently large operations in Singapore to support the establishment 
of an expensive treasury support office. However, the Department notes 
that its finding of countervailable specificity was not based on its 
consideration of the GOS' actions to limit the availability of the FTC 
program to large firms. Indeed, the exception for not finding 
specificity based on firm size is limited to ``small and small-to-
medium-sized'' firms. See section 355.43(7) of the Proposed 
Regulations.
    Comment 3: Respondents argue that the FTC program could not be 
found to be de facto specific based on a finding that the GOS has used 
discretion in conferring benefits. Respondents claim that the GOS' 
discretion to determine the length of the award period, ``with longer 
awards granted to applicants who commit more manpower, activities, and 
financial resources to the FTC operations,'' is not enough to support a 
finding by the Department that such discretion serves to benefit a 
specific industry, because ``these are neutral, non-specific 
criteria.'' In any event, respondents continue, since AMS was not the 
beneficiary of a longer award, the ``GOS has not used whatever 
discretion it may have to favor the investigated industry.''
    Petitioner argues that the GOS is the only entity that acts on 
applications, and for this reason, respondents' assertion that the 
Department would not find a program countervailable if neutral, non-
specific criteria were applied is misplaced. Petitioner, relying on In 
the Matter of Live Swine from Canada: Final Results of Redetermination 
Pursuant to Binational Panel Remand (``Live Swine''), USA-91-1904-03, 
1992 WL 212444, *11 U.S.Can.F.T.A.Binat.Panel (July 20, 1992), also 
contends that specificity is not determined on the basis of an actual 
exercise of discretion, but rather on a government's ability to 
exercise it.
    Department's Position: As noted in Comment 1, the Department 
continues to find the FTC program to be specific, and therefore 
countervailable, based on the ``too few users'' prong. Therefore, we 
did not reach the issue of whether the FTC program is specific based on 
the extent to which a government exercises discretion in conferring 
benefits under a program.
    Comment 4: Petitioner asserts that there is evidence to support a 
conclusion that there are dominant users of the FTC program, noting 
that half of the ten companies, including AMS, are members of a single 
industry. Respondents did not comment on this issue.
    Department's Position: The Department has found de facto 
specificity based on the fact that a small number of enterprises 
participate, representing only five industries. We therefore did not 
reach the issue of whether the FTC program is specific based on the 
dominant users prong.

[[Page 10317]]

    Comment 5: Petitioner alleges that the Department should have 
discussed the Operational Headquarters (OHQ) program in its preliminary 
results, and that by omitting a discussion of this program, the 
Department failed to set out the basis in fact and law for denying a 
determination that the OHQ program is a dutiable subsidy. Petitioner 
also asserts that it has consistently argued that this program has 
conferred a countervailable benefit.
    Respondents argue that Commerce was not required to address the OHQ 
program in its preliminary determination. Respondents claim that in the 
absence of new information, Commerce has no obligation to reopen the 
issue again. Respondents observe, as well, that petitioner has not been 
denied an opportunity to comment on the OHQ program, since in its case 
brief it addresses this program in detail.
    Department's Position: We agree with respondents. The OHQ program 
has been examined in past reviews (the seventh and the eighth), and the 
Department has consistently found that because no benefits are 
conferred in connection with the subject merchandise, the OHQ program 
therefore has not been countervailable. See Verification of 
Questionnaire Response for Certain Refrigeration Compressors from 
Singapore: Review Period--April 1, 1989 through March 31, 1990, July 
30, 1991, page 11, in the public file of the Department's Central 
Records Unit, located in Room B-099 in the main Commerce building and 
which has been added to the record in this case. See also Certain 
Refrigeration Compressors from the Republic of Singapore; Preliminary 
Results of Countervailing Duty Administrative Review, 57 FR 31174-31175 
(July 14, 1992), in which the Department preliminarily determined (and 
upheld in the final determination--See Certain Refrigeration 
Compressors from the Republic of Singapore; Final Results of 
Countervailing Duty Administrative Review, 57 FR 46539, 46540 (October 
9, 1992)) that AMS did not receive any benefits under the OHQ program 
because petitioner had not made any new allegations that were different 
from those made in the previous review. That is, profits arising from 
the use of income tied to the production of subject merchandise are 
explicitly excluded, in law and under the terms of AMS' OHQ 
certificate, from receiving benefits under the program. This was again 
found to be the case, and was verified by the Department, in the 
current review, and petitioner has presented no new information 
suggesting that the program operates any differently now than in past 
reviews. Moreover, petitioner's arguments regarding the program were 
premised on the assumption that benefits could not be tied to specific 
products. Petitioner itself states that ``only where the benefits are 
specifically not applicable to the product under investigation is 
further inquiry precluded.'' Since that is in fact the case, as it has 
been in all of the Department's previous reviews of this program under 
the suspension agreement, petitioner's arguments are moot.
    Regarding petitioner's claim that it has been denied an opportunity 
to comment on the OHQ program, such a statement ignores the fact that 
petitioner submitted a case brief which discussed the program, and that 
the Department held a hearing at which petitioner's extensive comments 
about the OHQ program were discussed.
    Concerning the Department's obligation to discuss OHQ in its 
preliminary determination, the record clearly shows that the Department 
found in previous reviews and verified in this review that no benefits 
are conferred upon the subject merchandise. Because no argument has 
been made which challenges that finding, the Department is not 
obligated to look at this program under the terms of the suspension 
agreement, which applies only to subject merchandise. The Department's 
regulations were not intended to require the Department to discuss 
programs which do not apply to subject merchandise. Therefore, it was 
not necessary for the Department to address this program in its 
preliminary determination.
    Comment 6: Regarding the Department's preliminary determination of 
non-countervailability of Part IX of the Economic Expansion Incentives 
Act (EEIA), also known as the technical assistance fee (TAF) exemption, 
petitioner contends that the Department's preliminary determination in 
the investigation did not preclude a finding of countervailability at 
this stage. Petitioner argues that the Department's findings in 1983 
are not determinative for a case raising this issue in 1994.
    Respondents assert that petitioner has provided no new information 
demonstrating why the TAF program should be countervailed. Respondents 
claim that because the Department stated, in its final determination 
for the fourth and fifth reviews, that the TAF program was not 
countervailable, the Department should not re-examine this program in 
the absence of new information.
    Department's Position: The Department is under no statutory or 
regulatory obligation to re-examine the TAF program absent new evidence 
of changed circumstances. See Final Affirmative Countervailing Duty 
Determination and Countervailing Duty Order: Fabricated Automotive 
Glass From Mexico, 50 FR 1906, 1909 (January 14, 1985), in which the 
Department states that ``(a)bsent new evidence or changed 
circumstances, we do not reinvestigate programs found not to be 
countervailable in earlier investigations''; aff'd, PPG Indus., Inc. v. 
United States, 781 F. Supp. 781 789 (Ct. Int'l Trade 1991). See also 
Final Affirmative Countervailing Duty Determination and Countervailing 
Duty Order; Lime from Mexico, 49 FR 35672, 35677 (September 11, 1984), 
in which the Department did not investigate an allegation concerning a 
program because it had ``previously been found not to confer a bounty 
or grant, and petitioners did not allege new facts to justify a review 
of this finding''; aff'd, Can-Am Corp. V. United States, 664 F. Supp. 
1444, 1449 (Ct. Int'l. Trade 1987), (``(s)ince there was no new 
evidence...the Court finds that Commerce's decision not to 
reinvestigate is reasonable and in accordance with law''). However, the 
Department is not prohibited, either under the terms of the suspension 
agreement or pursuant to its regulations, from re-examining this 
program. In fact, the Department is open to new arguments regarding 
previously examined programs. Because petitioner has represented the 
TAF program in a new light for this review, the Department has 
addressed the new argument with respect to ``benefit'' below.
    Comment 7: Petitioner argues that the TAF exemption confers a 
benefit by reducing the cost of that assistance purchased by MARIS.
    Petitioner contends that, because the program eliminates the 
withholding tax normally charged by the GOS, it changes the cost 
structure for technical assistance, permitting a lower price to the 
purchaser in Singapore. Petitioners also assert that the program 
operates to allow foreign licensors to escape all taxation of their 
Singapore revenues--both Singapore taxes and home country taxes.
    Respondents argue that the purpose of the program is not to lower 
the cost of technical assistance to the purchaser (MARIS), but to non-
Singaporean licensors (MARIS' Japanese parent, and Mana Precision 
Casting Co., Ltd. (``Mana''), a Japanese licensor which is related to 
MARIS), so that foreign

[[Page 10318]]
companies will transfer technology to Singapore companies that do not 
have such technological capabilities. In any event, respondents assert 
that petitioner has not established that the TAF program confers a 
subsidy, bounty or grant on MARIS itself. Respondents also note that 
MARIS does not receive a tax benefit; rather, Mana does. As such, 
respondents conclude that TAF does not confer a benefit to MARIS. 
Petitioner also makes a number of claims regarding the 
countervailability of the TAF exemption, including arguments to support 
their assertion that this program is specific. Respondents have replied 
to these claims.
    Department's Position: In order for the Department to find that 
benefits conferred under a program are countervailable, the Department 
must determine at the outset whether a benefit has been conferred on 
the investigated company. In past reviews, petitioner has alleged that 
the TAF program would confer a countervailable benefit if MARIS' 
technical assistance fee payments were excessive, thereby allowing 
MARIS to artificially lower its reported taxable profit. (See Certain 
Refrigeration Compressors from the Republic of Singapore; Final Results 
of Administrative Review of Suspension Agreement, 50 FR 30493-30494 
(July 26, 1985), and Certain Refrigeration Compressors from the 
Republic of Singapore; Final Results of Countervailing Duty 
Administrative Review, 53 FR 25647-25648 (July 8, 1988).)
    Petitioner now argues that in fact, MARIS receives a benefit by 
paying lower fees than it would absent the TAF program. The Department 
has verified in past reviews that such transactions between MARIS and 
its non-Singaporean licensor are ``normal commercial transactions'' 
(See Certain Refrigeration Compressors from the Republic of Singapore; 
Preliminary Results of Countervailing Duty; Administrative Review, 51 
FR 37055 (October 17, 1986), aff'd, Certain Refrigeration Compressors 
from Singapore, Final Results of Countervailing Duty Administrative 
Review, 52 FR 849 (January 9, 1987).) As such, these payments are 
neither too high nor too low (although the Department found, in the 
1985 review, that the fees did not cover the costs of the assistance 
provided, the licensor raised its rates subsequent to that review). 
While petitioner has assumed that the result of the technical 
assistance program is that Mana charges MARIS lower fees for technical 
assistance than it otherwise would, petitioner has submitted no 
evidence that this is in fact the case.
    Because petitioner has not proven that a benefit to MARIS, either 
direct or indirect, exists with regard to this program, and because no 
evidence on the record indicates that benefits are conferred on MARIS, 
the Department concludes that MARIS has not been the recipient of any 
benefits, including countervailable benefits, under the TAF program for 
the period of review.
    Because the Department has concluded that MARIS has not received 
any benefits under the TAF program for the period of review, the 
question of the countervailability of the TAF program is moot.

Final Results of Review

    After considering the comments received, we determine that the 
signatories to the suspension agreement have complied with the terms of 
the suspension agreement, including the payment of the provisional 
export charge for the review period. From April 1, 1992, through 
October 1, 1992, a provisional export charge rate of 4.05 percent was 
in effect, and from October 2, 1992, through March 31, 1993, a rate of 
5.52 percent was in effect.
    We determine the total bounty or grant to be 3.00 percent of the 
f.o.b. value of the merchandise for the April 1, 1992 through March 31, 
1993 review period. Following the methodology outlined in section B.4 
of the agreement, the Department determines that, for the April 1, 
1992, through October 1, 1992, portion of the review period, and for 
the October 2, 1992, through March 31, 1993, portion of the review 
period, negative adjustments may be made to the provisional export 
charge rates in effect. The adjustments will equal the difference 
between the provisional rates in effect during the review period and 
the rate determined in this review, plus interest. These rates, 
established in the notices of the final results of the seventh and 
eighth administrative reviews of the suspension agreement (See Certain 
Refrigeration Compressors from the Republic of Singapore; Final Results 
of Countervailing Duty Administrative Review, 56 FR 63714 (December 5, 
1991); and 57 FR 46540 (October 9, 1992)) are 4.05 and 5.52 percent, 
respectively. For this period the GOS may refund or credit, in 
accordance with section B.4.c of the agreement, the difference to the 
companies, plus interest, calculated in accordance with section 778(b) 
of the Tariff Act.
    The Department intends to notify the GOS that the provisional 
export charge rate on all exports of the subject merchandise to the 
United States with Outward Declarations filed on or after the date of 
publication of the final results of this administrative review shall be 
3.00 percent of the f.o.b. value of the merchandise.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1) and section 
355.22 of the Department's regulations (19 CFR 355.22(1994)).

    Dated: March 4, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-5914 Filed 3-12-96; 8:45 am]
BILLING CODE 3510-DS-P