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

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 May 8, 1995, 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 January 1, 1992 through

December 31, 1992. We have completed this review and determine the net

subsidy to be 4.29 percent ad valorem for all companies. We will

instruct the U.S. Customs Service to assess countervailing duties as

indicated above.

EFFECTIVE DATE: October 6, 1995.

FOR FURTHER INFORMATION CONTACT: Robert Copyak or Kelly Parkhill,

Office of Countervailing Compliance, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution

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Avenue, NW., Washington, DC 20230; telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

On May 8, 1995, the Department published in the Federal Register

(60 FR 22563) the preliminary results of its administrative review of

the countervailing duty order on Ball Bearings and Parts Thereof from

Thailand. The Department has now completed this administrative review

in accordance with section 751 of the Tariff Act of 1930, as amended

(the Act).

We invited interested parties to comment on the preliminary

results. On June 7, 1995, a case brief was submitted by Pelmec Thai

Ltd., NMB Thai Ltd., and NMB Hi-Tech Ltd. (three related companies,

hereinafter the Minebea Group), producers/exporters of the subject

merchandise during the review period (respondents). On June 14, 1995, a

rebuttal brief was submitted by the Torrington Company (petitioner).

The review covers the period January 1, 1992 through December 31, 1992.

The review involves the Minebea Group of companies, which accounts for

virtually all exports of subject merchandise from Thailand, and nine

programs.

Applicable Statute and Regulations

The Department is conducting this administrative review in

accordance with section 751(a) of the Tariff Act of 1930, as amended

(the Act). 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).

Scope of the Review

Imports covered by this review are ball bearings and parts thereof.

Such merchandise is described in detail in Appendix A to this notice.

The Harmonized Tariff Schedule (HTS) item numbers listed in Appendix A

are provided for convenience and Customs purposes. The written

description remains dispositive.

Calculation Methodology for Assessment and Cash Deposit Purposes

In the first administrative review, respondents claimed that the

F.O.B. value of the subject merchandise entering the United States is

greater than the F.O.B. price charged by the companies in Thailand (57

FR 26646; June 15, 1992). They explained that this discrepancy is due

to a mark-up charged by the parent company, located in a third country,

through which the merchandise is invoiced. However, the subject

merchandise is shipped directly from Thailand to the United States and

is not transshipped, combined with other merchandise, or repackaged

with other merchandise. In other words, for each shipment of subject

merchandise, there are two invoices and two corresponding F.O.B. export

prices: (1) the F.O.B. export price at which the subject merchandise

leaves Thailand, and on which subsidies from the Royal Thai Government

(RTG) are earned by the companies, and upon which the subsidy rate is

calculated; and (2) the F.O.B. export price which includes the parent

company mark-up, and which is listed on the invoice accompanying the

subject merchandise as it enters the United States, and upon which the

cash deposits are collected and the countervailing duty is assessed.

Respondents argued that the calculated ad valorem rate should be

adjusted by the ratio of the export value from Thailand to the export

value charged by the parent company to the U.S. customer so that the

amount of countervailing duties collected would reflect the amount of

subsidies bestowed. The Department agreed and made this adjustment in

the first and second administrative reviews (57 FR 26646; June 15,

1992; and 58 FR 36392; July 7, 1993).

In the present review, we again verified, on a transaction-specific

basis, the direct correlation between the invoice which reflects the

F.O.B. price on which the subsidies are earned and the invoice which

reflects the marked-up price that accompanies each shipment as it

enters the United States. Since the mark-up is not part of the export

value upon which the respondents earn bounties or grants, the

Department has followed the methodology adopted in the first and second

administrative reviews, and calculated the ad valorem subsidy rate as a

percentage of the original export value from Thailand, multiplied by

the adjustment ratio--the original export value from Thailand divided

by the marked-up value of the same goods entering the United States.

We did not calculate a separate rate for each company because NMB

Thai, Pelmec, and NMB Hi-Tech are wholly owned by one parent company,

and are therefore related. As a result of this relationship, we

considered the three companies as one corporate entity in our

calculations. We calculated the bounty or grant by first totaling the

benefits received by the three companies for each program used.

Dividing these sums by total Thai export value for the three companies,

we calculated the unadjusted bounty or grant for each program used. As

described above, we adjusted these rates by multiplying them by the

ratio of the original export price from Thailand to the marked-up price

of the same goods entering the United States. Finally, we summed the

adjusted bounty or grant for each program, to arrive at the total

country-wide bounty or grant.

Analysis of Programs

Based upon our analysis of responses to our questionnaire and

written comments from the interested parties, we determine the

following:

I. Programs Conferring Subsidies

In the preliminary results, we found the following programs to be

countervailable:

A. Investment Promotion Act (IPA) of 1977--Sections 31, 28, and 36(1)--

4.27 percent ad valorem

B. Electricity Discounts for Exporters--0.02 percent ad valorem

Our analysis of the comments submitted by the interested parties,

summarized below, has not led us to change our findings in the

preliminary results.

II. Programs Found Not To Be Used

In the preliminary results, we found that the Minebea Group did not

apply for or receive benefits under the following programs during the

period of review:

A. Tax Certificates for Exporters

B. Export Packing Credits

C. Rediscount of Industrial Bills

D. Export Processing Zones

E. IPA--Sections 33 and 36(4)

F. Reduced Business Taxes for Producers of Intermediate Goods for

Export Industries

G. International Trade Promotion Fund

Our analysis of the comments submitted by the interested parties,

summarized below, has not led us to change our findings in the

preliminary results.

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Analysis of Comments

Comment: Respondents argue that the Department should adjust the

calculations of the net subsidy and the deposit rate to account for the

RTG's liftings of the export requirements for the Board of Investment

Certificates of Promotion (BOI licenses) issued under the IPA program

to the Minebea Group companies NMB Thai and NMB Hi-Tech and, with one

exception, the BOI licenses issued to Minebea Group subsidiary Pelmec

Thai. They argue that these liftings of requirements constitute a

program-wide change as defined by section 355.50 of the Notice of

Proposed Rulemaking and Request for Public Comments, 54 FR 23366, 23385

(May 31, 1989). See Respondents' Case Brief, page 2. They request that

the Department deduct the amount of the benefits related to these

liftings from the calculation of the net subsidy for the review period

and consider for cash deposit purposes only the proportion of the

production related to the one BOI license issued to Pelmec Thai for

which the RTG did not lift the export requirements.

Petitioners argue that the Department should not adjust its

calculations of the net subsidy and the deposit rate because (1) The

removal of some export requirements in the BOI licenses did not

eliminate all export requirements or constitute a program-wide change,

and (2) the Thai government did not terminate the IPA program.

Department's Position: Under the IPA program, benefits are

transmitted to IPA recipients through the recipients' BOI licenses. BOI

licenses pertain to a promoted activity and list the IPA benefits for

which the recipient is eligible, and the various conditions that must

be met in order to receive those benefits. Although the BOI has lifted

some of the export conditions for several of the Minebea Group's BOI

licenses, IPA licensing benefits were nonetheless tied to export

performance.

The Minebea Group has several BOI licenses pertaining to ball

bearings. In January 1990, producers of electronic parts (BOI Category

4.6) became eligible to apply for the lifting of export requirements

for their BOI licenses. Since ball bearings used in electronic products

(electronic ball bearings) are classified under BOI Category 4.6, the

Minebea Group applied for the lifting of export requirements for its

BOI licenses pertaining to electronic ball bearings. The BOI awarded

such liftings for several of the Minebea Group's BOI licenses, but the

fact that the RTG only lifted the export requirements for certain IPA

benefits applicable to certain types of ball bearings undermines

respondents' argument that a program-wide change has taken place with

respect to the IPA program as it applies to the subject merchandise.

Moreover, IPA licensing benefits received by the Minebea Group were

tied to export performance. The IPA clearly states that the import duty

exemption benefits under Section 36(1) (which is contained in licenses

held by all three of the Minebea Group of companies) are conditional

upon export of the final product, and these conditions were not lifted.

With regard to benefits received under Section 31 (which exempts

companies from payment of corporate income tax on profits derived from

promoted activities), export requirements were in place during the tax

year covered by the tax returns filed during the POR. That, in 1992 and

1993, the BOI retroactively lifted the export requirements of certain

licenses does not change the fact that the Minebea Group of companies

had to export the subject merchandise in order to claim benefits under

Section 31. A similar argument holds for benefits received under

Section 28.\1\

\1\ Prior to the review period, IPA Section 28 allowed companies

to import fixed assets free of import duties, the business tax and

the local tax. However, effective January 1, 1992, the RTG

eliminated both the business tax and the local tax and instituted a

value added tax (VAT) system.

In the preliminary results of this administrative review, the

Department determined that the exemption of the VAT on imports of

fixed assets under Section 21(4) of the VAT Act does not constitute

a countervailable benefit to the companies specified in Section

21(4). See Ball Bearings and Parts Thereof from Thailand (60 FR

22563). Our analysis of the comments submitted by the interested

parties, summarized below, has not led us to change this finding or

our finding that the exemptions of import duties on fixed assets

under Section 28 continue to provide countervailable benefits.

However, as stated in the preliminary results, the Department will

continue to examine provisions of the VAT Act, including Section

21(4), in future administrative reviews to ascertain that no

countervailable benefits are being provided to manufacturers of

subject merchandise.

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At the time its fixed assets were imported, most of the Minebea

Group's licenses contained export requirements as a condition of

receiving Section 28 benefits.

Not all of the BOI liftings were based upon BOI Category status.

The export requirements for one of the Minebea Group's BOI licenses

were lifted based on the fact that one of the Minebea Group's

subsidiaries had a long-standing export history. Thus, the continued

receipt of the benefits is contingent upon the fact that the company

had an export history. Had the company been unable to demonstrate a

history of export performance, the export requirements could not have

been lifted under this decree.

Section 355.50 of the Proposed Regulations states that the term

``program-wide change'' means a change that is (1) not limited to an

individual firm or firms and (2) effectuated by an official act, such

as the enactment of a statute, regulation, or decree, or contained in

the schedule of an existing statute, regulation, or decree. Since the

changes in export requirements by the BOI were only for companies that

had licenses for BOI Category 4.6 products and they had to be requested

and approved on a license-by-license basis rather than applicable

across the board, the BOI's actions do not constitute a program-wide

change.

In conclusion, we will continue to countervail IPA licensing

benefits received under Sections 36(1), 31, and 28. The RTG's liftings

of certain export requirements for certain BOI licenses held by the

Minebea Group do not constitute the outright elimination of export

conditions with respect to the subject merchandise. Rather, IPA

benefits continue to be contingent upon export performance with respect

to ball bearings, the class or kind of merchandise subject to the

countervailing duty order. As discussed above, export requirements were

in place as a specific condition with respect to Section 36(1)

benefits, and export performance criteria continued to exist with

respect to the class or kind of merchandise for both Section 31 and

Section 28 benefits. Furthermore, that producers of electronic parts

were able to apply for and attain liftings of export requirements from

certain BOI licenses does not constitute a program-wide change in the

IPA program with respect to the subject merchandise covered in this

review, ball bearings.

Final Results of Review

For the period January 1, 1992, through December 31, 1992, we

determine the net subsidy to be 4.29 ad valorem for all companies. The

Department will instruct the U.S. Customs Service to assess the

following countervailing duties:

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Manufacturer/exporter Rate

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All Companies.................................................. 4.29

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The Department will instruct the U.S. Customs Service to collect a

cash deposit of estimated countervailing duties of 4.29 percent of the

f.o.b. invoice price on all shipments of the subject merchandise from

all companies.

This notice serves as a reminder to parties subject to

administrative protective order (APO) of their

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responsibility concerning the disposition of proprietary information

disclosed under APO in accordance with 19 C.F.R. 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)) and 19 CFR 355.22.

Dated September 29, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

Appendix A

Scope of the Review

The products covered by this review, ball bearings, mounted or

unmounted, and parts thereof, are described below.

Ball Bearings, Mounted or Unmounted, and Parts Thereof

These products 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,

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 where the part will be subject to heat treatment after

importation.

[FR Doc. 95-24929 Filed 10-5-95; 8:45 am]

BILLING CODE 3510-DS-P