[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