[Federal Register Volume 63, Number 234 (Monday, December 7, 1998)]
[Notices]
[Pages 67457-67459]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32436]


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

DEPARTMENT OF COMMERCE

INTERNATIONAL TRADE ADMINISTRATION
[C-533-816]


Preliminary Negative Countervailing Duty Determination: Elastic 
Rubber Tape From India

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

EFFECTIVE DATE: December 7, 1998.

FOR FURTHER INFORMATION CONTACT: Vincent Kane or Suresh Maniam, Office 
I, AD/CVD Enforcement, Import Administration, U.S. Department of 
Commerce, Room 3099, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone (202) 482-2815 or 482-0176, 
respectively.

Preliminary Determination

    The Department of Commerce preliminarily determines that no 
countervailable subsidies are being provided to producers and exporters 
of elastic rubber tape from India.

Petitioners

    The petition in this investigation was filed on August 18, 1998. 
The petitioners are Fulflex, Inc., Middletown, Rhode Island; Elastomer 
Technologies Group, Inc., Stuart, Virginia; and RM Engineered Products, 
Inc., North Charleston, South Carolina (``the petitioners'').

Case History

    Since the publication of the notice of initiation in the Federal 
Register (see Notice of Initiation of Countervailing Duty 
Investigation: Elastic Rubber Tape from India, 63 FR 49549 (September 
16, 1998)), the following events have occurred. On September 18, 1998, 
and October 15, 1998, we issued countervailing duty questionnaires to 
the Government of India (``GOI'') and the only known producer and 
exporter of the subject merchandise, Garware Elastomerics, Ltd. 
(``GEL''). On November 3 and November 13, 1998, we issued supplemental 
questionnaires to GEL and the GOI, respectively.
    We received questionnaire responses from the GOI and GEL on 
November 9, 1998, and a supplemental questionnaire response from GEL on 
November 16, 1998.
    On October 30, 1998, we postponed the preliminary determination of 
this investigation until November 30, 1998. (See Notice of Postponement 
of Time Limit for Countervailing Duty Investigation: Elastic Rubber 
Tape from India, 63 FR 601762.)

Period of Investigation

    The period for which we are measuring subsidies (``the POI'') is 
GEL's 1997 fiscal year from April 1, 1997 through March 31, 1998.

Scope of Investigation

    For purposes of this investigation, the product covered is elastic 
rubber tape. Elastic rubber tape is defined as vulcanized, non-cellular 
rubber strips, of either natural or synthetic rubber, 0.006 inches to 
0.100 inches (0.15 mm to 2.54 mm) in thickness, and \1/8\ inches to 
1\5/8\ inches (3 mm to 42 mm) in width. Such product is generally used 
in swim wear and underwear.
    The merchandise subject to this investigation is classified in the 
Harmonized Tariff Schedule of the United States (``HTSUS'') at 
subheading 4008.21.00. Although the HTSUS subheading is provided for 
convenience and customs purposes, the written description of the 
merchandise under investigation is dispositive.

The 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''). The Department of Commerce (``the Department'') is 
conducting this investigation in accordance with section 701 of the 
Act. All other references are to the Department's regulations codified 
at 19 CFR Part 351 (1997), unless otherwise indicated.

Injury Test

    Because India is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, the International Trade 
Commission (``ITC'') is required to determine whether imports of the 
subject merchandise from

[[Page 67458]]

India materially injure, or threaten material injury to, a U.S. 
industry. On October 15, 1998, the ITC published its preliminary 
determination finding that there is a reasonable indication that an 
industry in the United States is being materially injured, or 
threatened with material injury, by reason of imports of the subject 
merchandise from India (see 63 FR 55407 (October 15, 1998)).

Affiliated Company

    In accordance with section 771(33) of the Act, the Department 
considers the following persons to be affiliated or affiliated persons: 
(1) Members of a family; (2) any officer or director of an organization 
and such organization; (3) partners; (4) employer and employee; (5) any 
person directly or indirectly owning, controlling, or holding with 
power to vote, five percent or more of the outstanding voting stock or 
shares of any organization and such organization; (6) two or more 
persons directly or indirectly controlling, controlled by, or under 
common control with, any person; and (7) any person who controls any 
other person and such other person.
    In cases when a company under investigation is affiliated with 
another company, the Department will require the affiliated company to 
respond to a countervailing duty questionnaire, if (1) that company 
produces the subject merchandise or (2) that company is related to the 
company under investigation, and financial transactions on terms 
inconsistent with commercial considerations have occurred between them. 
Normally, we consider companies to be related, if they prepare 
consolidated financial statements or if one of the companies has at 
least 20 percent ownership in the other. (See Final Affirmative 
Countervailing Duty Determination: Certain Pasta (``Pasta'') from 
Italy, 61 FR 30288, 30290 (June 14, 1996).) If an affiliated company, 
which is related to the company under investigation and has had 
financial transaction on terms inconsistent with commercial 
considerations with that company, is found to have benefitted from 
subsidies during the POI, the Department will attribute a portion of 
these subsidies to the company under investigation.
    In this case, based on proprietary information in GEL's November 9, 
1998 questionnaire response and its November 16, 1998 supplementary 
questionnaire response, we have preliminarily determined that GEL is 
related to its affiliate through direct and indirect stock ownership 
and through shared board members. In addition, GEL reported that 
financial transactions have taken place between the two companies.
    During GEL's start up in 1995, the affiliated company supplied 
technical advice to GEL. It has also provided loans and loan guarantees 
to GEL. In addition, the affiliated company provided certain machinery 
and equipment to GEL during its start up year and, on limited 
occasions, certain inputs to production. GEL claims that the machinery, 
inputs to production, loans and technical advise have been provided to 
it on market terms and, in support of its claim, has referred to an 
annexure to its 1997 audited financial statements. In this annexure, 
the auditors stated that the prices and terms for GEL purchases and 
sales of goods, materials, and services are reasonable based on the 
prices prevailing in the market. The auditors qualify this statement, 
however, indicating that it does not apply to those goods, materials, 
and services for which comparable quotations were not available because 
of the specialized nature of the goods, materials, and services. 
Regarding the loans and loan guarantees received by GEL, the auditors 
stated that the interest rate and other terms on loans from companies 
and other parties were not prejudicial to the interest of GEL.
    Based on the auditors' statements and other information currently 
on the record, we are unable to preliminarily conclude that the 
financial transactions between GEL and its affiliate are on terms 
consistent with commercial considerations. In the case of goods, 
materials, and services, the auditors' statement applies only to those 
purchases for which comparable products could be found in the market 
place. In the case of the loans, the auditors' statement may be 
suggesting that the loans to GEL were provided on favorable terms to 
the company. Therefore, we are currently gathering additional 
information about these financial transactions. Once this information 
has been obtained and, subject to verification, we will determine 
whether they were on terms inconsistent with commercial considerations. 
If we find these transactions to be inconsistent with commercial 
considerations, we will request that the affiliated company respond to 
a countervailing duty questionnaire and, if appropriate, attribute a 
portion of any subsidies that it may have received to GEL in 
calculating a subsidy rate for the final determination.

Critical Circumstances

    The petitioners have alleged that critical circumstances within the 
meaning of section 703(e) of the Act exist with respect to the subject 
merchandise. For critical circumstances to exist, there must be massive 
imports of the subject merchandise over a relatively short period, and 
the company must have received a countervailable subsidy, which is 
inconsistent with the Subsidies Agreement. In this investigation, GEL 
has responded that it has not used nor benefitted from any of the 
programs under investigation. Therefore, we have preliminarily found no 
subsidies which are inconsistent with the Subsidies Agreement. On this 
basis, we preliminarily determine that critical circumstances do not 
exist in this investigation. However, because of the outstanding 
affiliation issue, we will continue to gather import statistics in the 
event that subsidies inconsistent with the Subsidies Agreement may be 
identified later in this investigation.

Programs Preliminarily Determined To Be Not Used

    Based upon the information provided in the responses, we determine 
that GEL did not apply for or receive benefits under the following 
programs during the POI:

A. Passbook/Duty Entitlement Passbook Scheme
B. Export Promotion Capital Goods Scheme
C. Export Processing Zones/Export Oriented Units Programs
D. Income Tax Exemption Scheme
E. Pre-Shipment Export Financing
F. Post-Shipment Export Financing
G. Import Mechanism (Sale of Import Licenses)
H. Exemption of the Interest Tax on Export Credits
I. Rediscounting of Export Bills Abroad
J. Programs Operated by the Small Industries Development Bank of India
K. Special Imprest Licenses
L. Market Development Assistance
M. Special Benefits to Export and Trading Houses and Super Star Trading 
Houses
N. Duty Drawback on Excise Taxes
O. Pre-Shipment Export Financing in Foreign Currency
P. Preferential Freight Rates

Verification

    In accordance with section 782(i) of the Act, we will verify the 
information submitted by respondent prior to making our final 
determination.

ITC Notification

    In accordance with section 703(f) of the Act, we will notify the 
ITC of our determination. In addition, we are making available to the 
ITC all non-privileged and nonproprietary

[[Page 67459]]

information relating to this investigation. We will allow the ITC 
access to all privileged and business proprietary information in our 
files, provided the ITC confirms that it will not disclose such 
information, either publicly or under an administrative protective 
order, without the written consent of the Assistant Secretary, Import 
Administration.
    If our final determination is affirmative, the ITC will make its 
final determination within 45 days after the Department makes its final 
determination.

Public Comment

    In accordance with 19 CFR 351.310, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
this preliminary determination. The hearing will tentatively be held 57 
days from the date of publication of the preliminary determination at 
the U.S. Department of Commerce, 14th Street and Constitution Avenue, 
N.W., Washington, D.C. 20230. Individuals who wish to request a hearing 
must submit a written request within 30 days of the publication of this 
notice in the Federal Register to the Assistant Secretary for Import 
Administration, U.S. Department of Commerce, Room 1870, 14th Street and 
Constitution Avenue, N.W., Washington, DC 20230. Parties should confirm 
by telephone the time, date, and place of the hearing 48 hours before 
the scheduled time.
    Requests for a public hearing should contain: (1) The party's name, 
address, and telephone number; (2) the number of participants; and, (3) 
to the extent practicable, an identification of the arguments to be 
raised at the hearing. In addition, six copies of the business 
proprietary version and three copies of the nonproprietary version of 
the case briefs must be submitted to the Assistant Secretary no later 
than 50 days from the date of publication of the preliminary 
determination. As part of the case brief, parties are encouraged to 
provide a summary of the arguments not to exceed five pages and a table 
of statutes, regulations, and cases cited. Six copies of the business 
proprietary version and three copies of the nonproprietary version of 
the rebuttal briefs must be submitted to the Assistant Secretary no 
later than 55 days from the date of publication of the preliminary 
determination. An interested party may make an affirmative presentation 
only on arguments included in that party's case or rebuttal briefs. 
Written arguments should be submitted in accordance with 19 CFR 351.309 
and will be considered if received within the time limits specified 
above.
    This determination is issued and published in accordance with 
pursuant to sections 703(f) and 777(i)(1) of the Act.

    Dated: November 30, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-32436 Filed 12-4-98; 8:45 am]
BILLING CODE 3510-DS-P