[Federal Register Volume 61, Number 112 (Monday, June 10, 1996)]
[Notices]
[Pages 29348-29350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14623]



-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE
[C-559-001]


Certain Refrigeration Compressors from the Republic of Singapore; 
Preliminary Results of Countervailing Duty Administrative Review

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

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

-----------------------------------------------------------------------

SUMMARY: The Department of Commerce is conducting an administrative 
review of the agreement suspending the countervailing duty 
investigation on certain refrigeration compressors from the Republic of 
Singapore. We preliminarily determine that the signatories have 
complied with the terms of the suspension agreement during the period 
April 1, 1993, through March 31, 1994. We invite interested parties to 
comment on these preliminary results. Parties who submit arguments in 
this proceeding are requested to submit with their argument (1) a 
statement of the issue and (2) a brief summary of the argument.

EFFECTIVE DATE: June 10, 1996.

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

SUPPLEMENTARY INFORMATION:

Background

    On November 30, 1994, the Government of the Republic of Singapore 
(GOS), Matsushita Refrigeration Industries (Singapore) Pte. Ltd. 
(MARIS), and Asia Matsushita Electric (Singapore) Pte. Ltd. (AMS), 
requested an 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 
initiated the review, covering the period April 1, 1993, through March 
31, 1994, on December 15, 1994 (59 FR 64650-1). The Department of 
Commerce (the Department) sent out a questionnaire on February 27, 
1995, and received a joint questionnaire response from the GOS, MARIS, 
and AMS, on April 26, 1995. Subsequently, the Department sent out a 
supplemental questionnaire on July 31, 1995 and received a joint 
supplemental questionnaire response on August 25, 1995. Finally, the 
Department sent out a second supplemental questionnaire on September 
21, 1995 and received a joint supplemental questionnaire response on 
October 2, 1995.
    The final results of the last administrative review in this case 
were published on March 13, 1996 (60 FR 10315-18), which is on file in 
the Central Records Unit (room B-099 of the Main Commerce Building).

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 (January 
3, 1995).

Scope of 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, 1993 through March 31, 1994, and 
includes 6 programs. 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).

Analysis of Programs

(1) The Economic Expansion Incentives Act--Part VI
    The Production for Export Programme under Part VI of the Economic 
Expansion Incentives Act allows a 90-percent tax exemption on a 
company's export profit if the GOS designates a company as an export 
enterprise. In the investigation, the Department preliminarily found 
this program to be countervailable because ``this tax exemption is 
provided only to certified export enterprises.'' See Preliminary 
Affirmative Countervailing Duty Determination: Certain Refrigeration 
Compressors from the Republic of Singapore, 48 FR 39109, 39110 (August 
29, 1983). MARIS is designated as an export enterprise and used this 
tax exemption during the period of review. AMS was not designated an 
export enterprise under Part VI of the Economic Expansion Incentives 
Act for the period of review.
    According to the Export Enterprise Certificate awarded to MARIS in 
a letter dated May 12, 1981, MARIS is to receive this benefit on the 
production of compressors, electrical parts and accessories for 
refrigerators, and plastic refrigerators. To calculate the benefit, we 
divided the tax savings claimed by MARIS under this program by the 
f.o.b. value of total exports of products receiving the benefit, for 
the period of review.
    MARIS' response to the Department's countervailing duty 
questionnaire for this review indicated that MARIS deducted export 
charges levied pursuant to the suspension agreement in

[[Page 29349]]

arriving at an adjusted profit figure, which was then used to calculate 
exempt export profit for the review period. In the eighth 
administrative review, the Department determined that the amount of the 
export charge deduction must be added ``back to MARIS' export profit in 
calculating MARIS' tax savings in order to offset the deduction of the 
export charges in the review period.'' See Preliminary Results of 
Countervailing Duty Review: Certain Refrigeration Compressors from 
Singapore, 57 FR 31175 (July 14, 1992), upheld in Final Results of 
Countervailing Duty Review: Certain Refrigeration Compressors from 
Singapore, 57 FR 46539 (October 9, 1992). Therefore, as the Department 
did in the tenth administrative review, in calculating the benefit from 
this program, we have added back this deduction. On this basis, we 
preliminarily determine the benefit from this program during the review 
period to be 2.20 percent of the f.o.b. value of the merchandise.
(2) Finance & Treasury Center (FTC)
    The Finance & Treasury Center Program allows for the taxation at a 
concessionary rate of 10 percent on certain income earned by companies 
providing treasury, investment, or financial services in Singapore for 
their subsidiaries/affiliates outside Singapore. The FTC program under 
Section 43E of the Singapore Income Tax Act has been in effect since 
April 1, 1989 (since Singapore tax ``year of assessment 1991''). 
According to the response, 10 companies' applications to the FTC 
program had been received and approved by March 31, 1994, including 
AMS. Every company which has applied to the program has been accepted. 
MARIS did not participate in the program for the period of review.
    The Department examined this program in the tenth review and found 
it to be de facto specific, and therefore countervailable. See Certain 
Refrigeration Compressors from Singapore; Final Results of 
Countervailing Duty Administrative Review (``Final Results''), 60 FR 
10315-16 (March 13, 1996). The Department also stated in its 
preliminary results for the tenth review that, ``(b)ecause it is 
probable that participation in the FTC program by MNCs in Singapore 
could change over time, in future reviews we may re-examine the 
circumstances which have led the Department to find the program de 
facto specific, should any new information about the program's 
specificity arise.'' See Certain Refrigeration Compressors from the 
Republic of Singapore: Preliminary Results of Countervailing Duty 
Administrative Review (``Preliminary Results''), 59 FR 59749, 59750 
(November 18, 1994).
    Because the numbers for firms and industries participating remain 
unchanged from the tenth review, the Department continues to find the 
FTC program de facto specific, and therefore countervailable.
    To calculate the benefit, we divided the tax savings attributable 
to the subject merchandise under this program by the value of all AMS 
product sales for the period of review. On this basis, we preliminarily 
determine the benefit from this program during the review period to be 
0.02 percent of the f.o.b. value of the merchandise.
(3) The Investment Allowance Program
    The Investment Allowance Program under Part X of the Economic 
Expansion Incentives Act provides tax allowances for investment in 
automated/mechanized systems. The program is available to companies 
engaged in the manufacturing of any product, the provision of services, 
or any of a wide variety of additional activities. In the tenth 
administrative review, the Department determined that this program is 
not countervailable. (See Preliminary Results at 59751, upheld in the 
Final Results, 10315). Additionally, according to the response, AMS 
(which has qualified for this program) did not use this program for the 
period of review. Therefore, barring new information, the Department 
will not consider this program in future reviews.
(4) Technical Assistance Fees/Royalty Payments
    Under Part IX of the Economic Expansion Incentives Act, payment by 
Singaporean companies of license, royalty, and technical assistance 
fees to offshore companies is exempted from withholding tax in 
Singapore. MARIS receives tax exempt treatment for its payment of 
technical assistance fees to its Japanese parent and to another related 
party in Japan. AMS did not use this program during the period of 
review.
    However, in the tenth administrative review, the Department 
concluded that there was no evidence on the record to indicate that the 
TAF program provided any direct or indirect benefits, including 
countervailable benefits, for the period of review. See Final Results 
at 10317-18. The Department has no evidence that the program operated 
differently for this review period. Therefore, absent new information, 
the Department will not consider this program in future reviews.
(5) Operational Headquarters Program
    The Operational Headquarters Program (OHQ) is a program under which 
companies are eligible to receive certain tax concessions for up to ten 
years on income arising from a company's overseas affiliated companies. 
Income arising from the provision of qualifying services is subject to 
a concessionary tax rate of 10 percent. AMS had OHQ status during the 
period of review, while MARIS did not.
    In the Final Results (at 10317) of the tenth review, the Department 
stated that it ``found in previous reviews and verified in [the tenth] 
review that no benefits are conferred upon the subject merchandise.'' 
For the current period of review, the Department notes that the terms 
of the program regarding qualifying income in the case of AMS have not 
changed in such a way as to qualify any of AMS' income related to 
subject merchandise. Therefore, the Department preliminarily determines 
that because AMS has not used this program in connection with the 
subject merchandise, the OHQ program confers no benefits which would be 
countervailable under the terms of the suspension agreement.
(6) Financing through the Monetary Authority of Singapore
    Under the terms of the suspension agreement, MARIS and AMS agreed 
not to apply for or receive any financing provided by the rediscount 
facility of the Monetary Authority of Singapore for shipments of the 
subject merchandise to the United States. We determined during the 
review that neither MARIS nor AMS received any financing through the 
Monetary Authority of Singapore on the subject merchandise exported to 
the United States during the review period. Therefore, we preliminarily 
determine that both companies have complied with this clause of the 
agreement.

Preliminary Results of Review

    The suspension agreement states that the GOS will offset completely 
with an export charge the net bounty or grant calculated by the 
Department. As a result of our review, we preliminarily determine that 
the signatories have complied with the terms of the suspension 
agreement, including the payment of the provisional export charges in 
effect for the period April 1, 1993 through March 31, 1994. We also 
preliminarily determine the net bounty or grant to be 2.22 percent of 
the f.o.b. value of the merchandise for the April

[[Page 29350]]

1, 1993 through March 31, 1994 review period.
    Following the methodology outlined in section B.4 of the agreement, 
the Department preliminarily determines that, for the period April 1, 
1993 through March 31, 1994, a negative adjustment may be made to the 
provisional export charge rate in effect. The adjustments will equal 
the difference between the provisional rate in effect during the review 
period and the rate determined in this review, plus interest. This 
rate, established in the notice of the final results of the eighth 
administrative reviews of the suspension agreement, was 5.52 percent. 
See Certain Refrigeration Compressors from the Republic of Singapore; 
Final Results of Countervailing Duty Administrative Review, 57 FR 46540 
(October 9, 1992). The GOS may refund or credit, in accordance with 
section B.4.c of the agreement, the difference, plus interest, 
calculated in accordance with section 778(b) of the Tariff Act, within 
30 days of notification by the Department. The Department will notify 
the GOS of these adjustments after publication of the final results of 
this review.
    If the final results of this review remain the same as these 
preliminary results, the Department intends to notify the GOS that the 
provisional export charge rate on all exports 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 2.22 percent of 
the f.o.b. value of the merchandise.
    The agreement can remain in force only as long as shipments from 
the signatories account for at least 85 percent of imports of the 
subject refrigeration compressors into the United States. Information 
on the record of this review indicates that the two signatory companies 
accounted for 100 percent of imports into the United States from 
Singapore of this merchandise during the review period.
    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. Pursuant to 19 
CFR 355.38(c), interested parties may submit written comments 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. 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 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) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
355.22.

    Dated: June 4, 1996.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-14623 Filed 6-7-96; 8:45 am]
BILLING CODE 3510-DS-P