[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]
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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.
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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