[Federal Register Volume 62, Number 3 (Monday, January 6, 1997)]
[Notices]
[Pages 728-731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-184]


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DEPARTMENT OF COMMERCE
C-549-802


Ball Bearings and Parts Thereof From Thailand: Final Results of 
Countervailing Duty Administrative Review

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

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

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SUMMARY: On July 3, 1996, the Department of Commerce (``the 
Department'') published in the Federal Register its preliminary results 
of administrative review of the countervailing duty order on ball 
bearings and parts thereof from Thailand for the period 1994 (61 FR 
34794, July 3, 1996). The Department has now completed this 
administrative review in accordance with section 751(a) of the Tariff 
Act of 1930, as amended. For information on the net subsidy, please see 
the Final Results of Review section of this notice. We will instruct 
the U.S. Customs Service to assess countervailing duties as detailed in 
the Final Results of Review section of this notice. The countervailing 
duty order on ball bearings and parts thereof from Thailand was revoked 
effective January 1, 1995, as a result of a changed circumstances 
review (see 61 FR 20799). Because this order has been revoked, the

[[Page 729]]

Department will not issue further instructions with respect to cash 
deposits of estimated countervailing duties.

EFFECTIVE DATE: January 6, 1997.

FOR FURTHER INFORMATION CONTACT: Robert Copyak or Megan Waters, Office 
of CVD/AD Enforcement VI, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 
482-2786.

SUPPLEMENTARY INFORMATION:

Background

    Pursuant to section 355.22(a) of the Department's Interim 
Regulations, this review covers only those producers or exporters of 
the subject merchandise for which a review was specifically requested. 
See Antidumping and Countervailing Duties: Interim regulations; request 
for comments, 60 FR 25130, 25139 (May 11, 1995) (``Interim 
Regulations''). Accordingly, this review covers the Minebea Group of 
Companies in Thailand, NMB Thai, Pelmec Thai, and NMB Hi-Tech, which 
manufacture and export the subject merchandise. During this review, the 
Department learned of another Minebea company, NMB Precision Ball, 
Ltd., which manufactures balls. The company does not export directly to 
the United States but it does sell balls to the other three companies 
which in turn export finished ball bearings to the United States and 
elsewhere. This company, like the other three Minebea producers in 
Thailand, is a wholly-owned subsidiary of Minebea Japan, and because 
NMB Precision Ball, Ltd. received export subsidies during the period of 
review (see ``Programs Conferring Subsidies'' section below) for its 
sales of balls to the related Thai ball bearing producers, we determine 
that it is appropriate to include the export subsidies to NMB Precision 
Ball, Ltd. in our calculations of the net subsidy.
    All of these companies are wholly owned by one parent company. As a 
result of this affiliation, we continue to find, as we did in the 
investigation and in previous reviews (see for example, Ball Bearings 
and Parts Thereof from Thailand: Final Results of Countervailing Duty 
Administrative Review, 60 FR 52374, October 6, 1995), that the Minebea 
Group of Companies should be collapsed and treated as one corporate 
entity in our calculations. This review covers the period January 1 
through December 31, 1994, and nine programs.
    Since the publication of the preliminary results on July 3, 1996 
(61 FR 34794), the following events have occurred. We invited 
interested parties to comment on the preliminary results. On August 2, 
1996, a case brief was submitted by the Royal Thai Government (``RTG'') 
and the Minebea Group of Companies, which exported ball bearings and 
parts thereof to the United States during the review period.
    On November 2, 1995, we extended the period for completion of the 
preliminary and final results pursuant to section 751(a)(3) of the Act 
(see Extension of the Time Limit for Certain Countervailing Duty 
Administrative Reviews, 60 FR 55699). As explained in the memoranda 
from the Assistant Secretary for Import Administration dated November 
22, 1995, and January 11, 1996 (on file in the public file of the 
Central Records Unit, Room B-099 of the Department of Commerce), all 
deadlines were further extended to take into account the partial 
shutdowns of the Federal Government from November 15 through November 
21, 1995, and December 15, 1995, through January 6, 1996. As a result 
of these extensions, the deadline for these final results is no later 
than December 30, 1996--180 days from July 3, 1996, the date on which 
the preliminary results were published in the Federal Register.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions of the Tariff Act of 1930, as amended by 
the Uruguay Round Agreements Act (``URAA'') effective January 1, 1995 
(``the Act'').

Scope of the Review

    Imports covered by this review are ball bearings and parts thereof. 
Such merchandise is described in detail in the Appendix to this notice. 
The Harmonized Tariff Schedule (HTS) item numbers listed in the 
Appendix are provided for convenience and Customs purposes. The written 
description remains dispositive.

Verification

    We verified information provided by the RTG and by the Minebea 
Group of Companies, producers/exporters of the subject merchandise (as 
provided in section 782(i) of the Act) . We followed standard 
verification procedures, including meeting with government and company 
officials and examining relevant accounting and original source 
documents. Our verification results are outlined in the public versions 
of the verification reports, which are on file in the Central Records 
Unit (Room B-099 of the Main Commerce Building).

Analysis of Programs

    Based upon the responses to our questionnaire, the results of 
verification, and written comments from the interested parties we 
determine the following:

I. Programs Conferring Subsidies

A. Programs Previously Determined to Confer Subsidies

Investment Promotion Act of 1977--Sections 28, 31, 36(1), and 36(4)
    In the preliminary results, we found that these programs conferred 
countervailable subsidies on the subject merchandise. Our review of the 
record and our analysis of the comments submitted by the interested 
parties, summarized below, has not led us to change our findings from 
the preliminary results. Accordingly, our calculation of the net 
subsidies for this program remains unchanged from the preliminary 
results and is as follows:

------------------------------------------------------------------------
                     Manufacturer/Exporter                         Rate 
------------------------------------------------------------------------
Minebea Group of Companies.....................................   5.25%.
------------------------------------------------------------------------

II. Programs Found to be Not Used

    In the preliminary results, we found that the producers and/or 
exporters of the subject merchandise did not apply for or receive 
benefits under the following programs:

A. Tax Certificates for Exporters
B. Electricity Discounts for Exporters
C. Export Packing Credits
D. Rediscount of Industrial Bills
E. IPA Section 33
F. Export Processing Zones
G. Reduced Business Taxes for Producers of Intermediate Goods for 
Export Industries
H. International Trade Promotion Fund

    Our analysis of the comments submitted by the interested parties, 
summarized below, has not led us to change our findings from the 
preliminary results.

Analysis of Comments

    Comment 1: Respondents argue that the Department must liquidate 
entries during 1994 without regard to countervailing duties because the 
URAA does not provide an injury test for 1994 entries as required under 
the Agreement on Subsidies and Countervailing Measures (Subsidies 
Agreement). Citing Article 32.3 of the Subsidies Agreement, respondents 
argue that the Subsidies Agreement is applicable to all reviews, 
including the instant review, initiated pursuant to requests made after 
January 1, 1995. Respondents argue that the requirements of the 
Agreement include

[[Page 730]]

the application of an injury test to entries covered by such a review. 
According to respondents, however, the URAA did not provide a mechanism 
to implement this obligation; rather, the URAA only provides an injury 
test for merchandise entered on or after January 1, 1995. Therefore, 
respondents assert that assessment of countervailing duties on 1994 
entries would violate U.S. obligations under the Subsidies Agreement.
    Department's Position: Respondents have misinterpreted both U.S. 
law and the Subsidies Agreement. There is no legal basis under U.S. law 
for respondents' claim. Because Thailand became a Subsidies Agreement 
country on January 1, 1995, only entries made on or after January 1, 
1995 are entitled to the injury test. See section 753 of the Act; 19 
U.S.C. Sec. 1675b. Section 753 (a) (4) makes this clear by providing 
for the suspension of liquidation of entries of subject merchandise 
made ``on or after . . . the date on which the country . . . becomes a 
Subsidies Agreement country . . . .'' See also Ceramica Regiomontana, 
S.A. v. United States, 64 F.3d 1579 (Fed. Cir. 1995) (the right to an 
injury test is conferred at the time of importation (entry) in the 
United States). Therefore, countervailing duties may be assessed on 
Thai imports entered before January 1, 1995, without regard to an 
injury test.
    Moreover, Article 32.3 of the Subsidies Agreement does not require 
an injury determination for merchandise entered prior to January 1, 
1995. (See also Footwear from Brazil GATT Panel Decision confirming 
that liability for countervailing duties attaches at the time of 
importation, not assessment.) Liability for countervailing duties 
attaches at the time of entry and, because the subject merchandise 
entered in 1994, there is no obligation under the Subsidies Agreement 
to supply an injury test to these 1994 entries.
    Comment 2: Respondents argue that, due to the ``upstream 
subsidies'' provision, the Department's inclusion of benefits received 
by NMB Precision Ball, Ltd. in the subsidy calculation is contrary to 
law. They claim that, because NMB Precision Ball, Ltd. is separately 
incorporated, any benefits it receives on inputs must be analyzed under 
the upstream provision. They also contend that the Department lacks 
authority to countervail any subsidies provided on the input balls 
supplied by NMB Precision Ball, Ltd. because petitioners have not made 
an ``upstream subsidies'' allegation.
    Department's Position: We disagree with respondents. Including the 
benefits received by NMB Precision Ball, Ltd. in the benefit 
calculation is not contrary to the upstream provision of the statute. 
In fact, it is necessary to include these subsidies in order to 
accurately determine the total net subsidy attributable to subject 
merchandise.
    NMB Precision Ball, Ltd. does not produce bearings; nor does it 
make commercial shipments of bearings to the United States. However, it 
does produce balls which it then supplies to other Minebea companies, 
including Minebea companies in Thailand. When the Department issued its 
questionnaire for this review, it requested information for all 
companies in Thailand which produced and/or exported subject 
merchandise that was exported to the United States. At verification, 
the Department learned that NMB Precision Ball, Ltd. produced balls 
that were exported to the United States as parts of finished ball 
bearings during the review period. Only then, upon request, did the 
Department gather information to determine whether NMB Precision Ball, 
Ltd. should be included in the subsidy calculations.
    At verification, we found that the balls produced by NMB Precision 
Ball, Ltd. were exported either directly or as parts of bearings 
assembled by other Minebea companies in Thailand. Both the balls and 
bearings are merchandise subject to this review. As explained in the 
preliminary results of this review (61 FR 34794, July 3, 1996), the 
subsidies received by NMB Precision Ball, Ltd. on its sales of these 
balls are export subsidies. NMB Precision Ball, Ltd. receives these 
export subsidies not only for the balls that are exported directly but 
also for the balls that are sold to other Minebea companies for 
incorporation into ball bearings which are then exported. Therefore, 
the Department properly included in the subsidy calculation the 
benefits attributable to balls produced by NMB Precision Ball, Ltd. but 
exported by other Minebea companies in Thailand as parts of finished 
ball bearings.
    Because these are export subsidies, the upstream subsidy provision 
is not applicable (see section 771A(a) of the Act). Specifically, the 
upstream subsidy provision, by its terms, expressly excludes export 
subsidies from its coverage (based on the presumption that an export 
subsidy paid on a nonsubject input product benefits the exportation of 
that product, not the downstream product). The upstream subsidy 
provision is not intended to cover the situation in this case. Further, 
separate and apart from this provision, such export subsidies on 
subject merchandise are plainly covered by the U.S. countervailing duty 
law. Accordingly, the export subsidies here on balls and ball bearings 
are countervailable.
    Further, the fact that NMB Precision Ball, Ltd. is separately 
incorporated is irrelevant because these are export subsidies which are 
provided to balls contingent on their subsequent exportation, and the 
balls are covered by the order. It does not matter whether the balls 
are exported directly or whether the balls are sold to another company, 
incorporated into ball bearings, and then exported; all of the balls 
receive the export subsidy. Thus, the subject merchandise exported to 
the United States by the other Minebea companies during the period of 
review benefitted not only from the export subsidies on balls produced 
by NMB Precision Ball, Ltd. but also from the export subsidies provided 
on finished ball bearings.
    Comment 3: Respondents claim that several of the essential 
materials for which BOI grants duty exemptions meet the ``consumed in 
production'' standard, and, therefore, duty exemptions on these 
materials should be found not countervailable. They argue that the 
Department improperly countervailed certain duty exemptions on inputs 
used in the production process because it has interpreted the meaning 
of the footnote 61 of Annex II of the Subsidies Agreement regarding 
``inputs consumed in the production process'' too narrowly.
    Department's Position: We disagree with respondents. Prior to the 
Uruguay Round Agreement, only duty exemptions on inputs that were 
physically incorporated into the product being exported (e.g., raw 
material inputs) were considered non-countervailable. Under the 
Subsidies Agreement, this has been broadened to include duty exemptions 
on products that are ``consumed in production.'' Annex II of the 
Agreement contains a footnote (n. 61) which defines inputs consumed in 
the production process as: ``inputs physically incorporated, energy, 
fuels and oils used in the production process and catalysts which are 
consumed in the course of their use to obtain the exported product.'' 
Upon examination of the breakouts of duty exemptions that respondents 
claimed, we discovered that, with the exception of fixed assets, the 
RTG treated almost anything used in the production process as duty 
exempt. We found that a number of duty-exempt materials fall outside 
the definition in footnote 61 and have therefore countervailed the 
exemptions provided on items which fall outside that definition.
    Respondents argue that the term ``consumed in production'' should

[[Page 731]]

include all items that are worn out during the production process and 
that physically touch the product (e.g., grinding wheels and drill 
bits) as well as items such as packing materials. However, it is the 
Department's position that the definition in Annex II is unambiguous, 
and therefore, the only duty exemptions that we find not 
countervailable are those on materials which are physically 
incorporated into the exported product and on oils used in the 
production process. The remaining duty exemptions received by the 
respondent companies on items such as drill bits and grinding wheels do 
not fit the definition in Annex II. They are not physically 
incorporated; nor are they energy, fuels, oils, or catalysts consumed 
in the course of their use. Accordingly, we continue to find those 
exemptions countervailable.

Final Results of Review

    In accordance with section 355.22(c)(4)(ii) of the Department's 
Interim Regulations, we calculated an individual subsidy rate for each 
producer/exporter subject to this administrative review. As discussed 
above in the Background section, the Department considers the Minebea 
Group of Companies as one corporate entity. Therefore, we have 
calculated one subsidy rate for the Minebea Group of Companies in 
Thailand. For the period January 1 through December 1, 1994, we 
determine the net subsidy to be as follows:

------------------------------------------------------------------------
                                                                   Net  
                Net subsidies--producer/exporter                 subsidy
                                                                   rate 
------------------------------------------------------------------------
Minebea Group of Companies (NMB Thai, Pelmec Thai, NMB Hi-Tech,         
 NMB Precision Ball, Ltd.).....................................   5.25%.
------------------------------------------------------------------------

    We will instruct the U.S. Customs Service (``Customs'') to assess 
countervailing duties as indicated above.
    Because the URAA replaced the general rule in favor of a country-
wide rate with a general rule in favor of individual rates for 
investigated and reviewed companies, the procedures for establishing 
countervailing duty rates, including those for non-reviewed companies, 
are now essentially the same as those in antidumping cases, except as 
provided for in section 777A(e)(2)(B) of the Act. The requested review 
will normally cover only those companies specifically named. See 
section 355.22(a) of the Interim Regulations. Pursuant to 19 CFR 
Sec. 355.22(g), for all companies for which a review was not requested, 
duties must be assessed at the cash deposit rate previously ordered. 
Accordingly, we will instruct Customs to liquidate at the cash deposit 
rate in effect at the time of entry all entries of subject merchandise 
from non-reviewed companies.
    Pursuant to petitioner's statement of no further interest in the 
CVD order on ball bearings and parts thereof from Thailand for entries 
after December 31, 1994, the Department conducted a changed 
circumstances review and, effective January 1, 1995, revoked this 
countervailing duty order pursuant to section 782(h)(2) of the Act. 
Ball Bearings and Parts Thereof from Thailand: Final Results of Changed 
Circumstances Countervailing Duty Review and Revocation of 
Countervailing Duty Order, 61 FR 20799 (May 8, 1996). Accordingly, 
suspension of liquidation was terminated effective January 1, 1995, and 
the Department will not issue further instructions with respect to cash 
deposits of estimated countervailing duties.
    This notice serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR Sec. 355.34(d). Timely written 
notification of return/destruction of APO materials or conversion to 
judicial protective order is hereby requested. Failure to comply with 
the regulations and the terms of an APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)).

    Dated: December 30, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.

Appendix

Scope of Review

Ball Bearings, Mounted or Unmounted, and Parts Thereof
    The products covered by this review, ball bearings, mounted or 
unmounted, and parts thereof, include all antifriction bearings which 
employ balls as the rolling element. During the review period, imports 
of these products were classifiable under the following categories: 
antifriction balls; ball bearings with integral shafts; ball bearings 
(including radial ball bearings) and parts thereof; ball bearing type 
pillow blocks and parts thereof; ball bearing type flange, take-up, 
cartridge, and hanger units, and parts thereof; and other bearings 
(except tapered roller bearings) and parts thereof. Wheel hub units 
which employ balls as the rolling element are subject to the review. 
Finished but unground or semiground balls are not included in the scope 
of this review.
    Imports of these products are currently classifiable under the 
following HTS item numbers: 8482.10.10, 8482.10.50, 8482.80.00, 
8482.91.00, 8482.99.10, 8482.99.70, 8483.20.40, 8483.20.80, 8483.30.40, 
8483.30.80, 8483.90.20, 8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 
and 8708.99.50. This review covers all of the subject bearings and 
parts thereof outlined above with certain limitations. With regard to 
finished parts (inner race, outer race, cage, rollers, balls, seals, 
shields, etc.), all such parts are included in the scope of this 
review. For unfinished parts (inner race, outer race, rollers, balls, 
etc.), such parts are included if (1) they have been heat treated, or 
(2) heat treatment is not required to be performed on the part. Thus, 
the only unfinished parts that are not covered by this review are those 
parts which will be subject to heat treatment after importation.
[FR Doc. 97-184 Filed 1-3-97; 8:45 am]
BILLING CODE 3510-DS-P