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 August 16, 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, 1993

through December 31, 1993. We have completed this review and determine

the net subsidy to be 4.85 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 Avenue, N.W., Washington, D.C. 20230;

telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

On August 16, 1995, the Department published in the Federal

Register (60 FR 42532) 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 September 15, 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

September 15, 1995, a case brief was submitted by the Torrington

Company (petitioner). On September 22, 1995, a rebuttal brief was

submitted by respondents. The review covers the period January 1, 1993

through December 31, 1993. 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

[[Page 52375]]

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 prior reviews, we 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

continue to consider, as we did in the investigation and previous

reviews, 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)--

4.85 percent ad valorem

B. Electricity Discounts for Exporters--less than .005 percent ad

valorem

Our analysis of the comments submitted by the interested parties,

summarized below, has led us to change the result in our preliminary

results from 1.33 to 4.85 percent ad valorem.

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.

Analysis of Comments

Comment 1: 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 export requirements for the Board of Investment

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

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

one exception, the BOI licenses issued to Minebea Group company Pelmec

Thai. 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, since the amendments made in the BOI

licenses did not eliminate all export requirements or constitute a

program-wide change, the licensing benefits of the IPA program remain

countervailable. They also point out that the IPA program remains

countervailable because of regional eligibility requirements and export

requirements related to foreign-owned companies such as the Minebea

Group.

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.

Because these liftings do not constitute a program-wide change, the

IPA program remains countervailable. 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. However, the lifting of the export

requirements for certain IPA benefits applicable to certain types of

ball bearings does not constitute a program-wide change with respect to

the class or kind of merchandise. 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.

Moreover, the 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

[[Page 52376]]

(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 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 merchandises in order to claim

benefits under Section 31. A similar argument holds for benefits

received under Section 28.1 During the review period, the Minebea

Group were able to import fixed assets with licenses which contained

export requirements as a condition of receiving Section 28 benefits.

\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 42532). 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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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, there is no evidence that export

requirements could have been lifted under this decree. See Exhibit 23

of the public version of respondents' December 12, 1994 questionnaire

response.

As explained in our preliminary results, effective April 1, 1993,

all types of ball bearings and parts thereof were reclassified under

industrial category 4.8, ``Manufacture of fabricated metal products,

including metal parts for automotive and electronic products.'' In

addition, new policies and criteria issued by the BOI stipulate that

tax and duty privileges for promoted projects approved after April 1,

1993 are contingent upon location of the promoted company in one of

three types of investment promotion zones. Therefore, promoted projects

approved after April 1, 1993 for products classified under category 4.8

must be located in industrial promotion zones 2 or 3. In addition,

export performance is a criterion for approval of promoted projects

involving companies which are wholly or significantly foreign-owned.

In conclusion, IPA licences conferred countervailable benefits

during the review period, and there has not been a program-wide change

which would warrant an adjustment of the cash deposit rate. 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.

Comment 2: Petitioner alleges that, in the preliminary results,

there was a clerical error in the calculation of the mark-up

adjustment.

Department's Position: We agree. We used an incorrect figure in the

calculation. Using the correct mark-up ratio, we calculate the net

subsidy rate to be 4.85 percent ad valorem.

Final Results of Review

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

determine the net subsidy to be 4.85 percent 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.................................................. 4.85

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

cash deposit of estimated countervailing duties of 4.85 percent ad

valorem 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 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. 95-24930 Filed 10-5-95; 8:45 am]

BILLING CODE 3510-DS-P