Carbon Steel Butt-Weld Pipe Fittings From Thailand; Preliminary Results of Countervailing Duty Administrative Review

DEPARTMENT OF COMMERCE

[C-549-804]

Carbon Steel Butt-Weld Pipe Fittings From Thailand; Preliminary

Results of Countervailing Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Countervailing Duty

Administrative Review.

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SUMMARY: The Department of Commerce (the Department) is conducting an

administrative review of the countervailing duty order on carbon steel

butt-weld pipe fittings from Thailand. We preliminarily determine the

net subsidy to be 0.22 percent ad valorem for all companies for the

period January 1, 1992 through December 31, 1992. In accordance with 19

CFR 355.7, any net subsidy less than 0.5 percent ad valorem is de

minimis. If the final results of this review remain the same as these

preliminary results, the Department intends to instruct the U.S.

Customs Service to liquidate, without regard to countervailing duties,

all shipments of the subject merchandise from Thailand exported on or

after January 1, 1992, and on or before December 31, 1992. Interested

parties are invited to comment on these preliminary results.

[[Page 57850]]

EFFECTIVE DATE: November 22, 1995.

FOR FURTHER INFORMATION CONTACT: Brian Albright or Cameron Cardozo,

Office of Countervailing Compliance, Import Administration,

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

Street and Constitution Avenue NW., Washington, DC 20230; telephone:

(202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

On January 19, 1990, the Department published in the Federal

Register (55 FR 1695) the countervailing duty order on carbon steel

butt-weld pipe fittings from Thailand. On January 13, 1993, the

Department published a notice of ``Opportunity to Request an

Administrative Review'' (58 FR 4148) of this countervailing duty order.

We received a timely request for review from the petitioner, the U.S.

Fittings Group.

We initiated the review, covering the period January 1, 1992

through December 31, 1992, on March 8, 1993 (58 FR 12931). We conducted

a verification of the questionnaire responses on July 20 through 27,

1995. The review covers two producers/exporters of the subject

merchandise, Awaji Sangyo (Thailand) Co. (AST), and TTU Industrial

Corp. (TTU), which account for virtually all exports of the subject

merchandise from Thailand, and 15 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

The merchandise subject to this review (hereinafter subject

merchandise) is certain carbon steel butt-weld pipe fittings, having an

inside diameter of less than 360 millimeters (fourteen inches),

imported in either finished or unfinished form. These formed or forged

pipe fittings are used to join sections in piping systems where

conditions require permanent, welded connections, as distinguished from

fittings based on other fastening methods (e.g., threaded, grooved, or

bolted fittings), as currently classifiable under the Harmonized Tariff

Schedule (HTS). The products covered in this review are provided for

under item number 7307.93.30 of the HTS. The HTS subheadings are

provided for convenience and Customs purposes; our written description

of the scope of this proceeding is dispositive.

Calculation Methodology for Assessment and Cash Deposit Purposes

We calculated the net subsidy on a country-wide basis by first

calculating the subsidy rate for each company subject to the

administrative review. We then weight-averaged the rate received by

each company using as the weight its share of total Thai exports to the

United States of subject merchandise, including all companies, even

those with de minimis and zero rates. We then summed the individual

companies' weight-averaged rates to determine the subsidy rate from all

programs benefitting exports of subject merchandise to the United

States.

Since the country-wide rate calculated using this methodology was

de minimis, as defined by 19 CFR 355.7(1994), no further calculations

were necessary.

Analysis of Programs

I. Program Preliminarily Found To Confer Subsidies

Tax Exemptions Under Section 31 of the 1977 Investment Promotions Act

(IPA)

In the investigation (55 FR 1695, January 18, 1990) and the first

review of this order (57 FR 5248, February 13, 1992), section 31 of the

IPA was found not to have been used. In its questionnaire response for

this review, AST indicated that it claimed an exemption under this

program on its tax return filed during the review period. TTU did not

claim a section 31 exemption on its tax return filed during the review

period.

The Thai Board of Investment (BOI) provides certain investment

incentives to companies through the IPA in order to promote economic

development in Thailand. Under section 31 of the IPA, companies can

apply to receive a three to eight-year exemption from payment of

corporate income tax on profits derived from promoted activities, as

well as deductions from net profits for losses incurred during the tax

exempt period. AST was approved for a five-year exemption, from 1987-

1991, on income earned from all export sales of butt-weld pipe

fittings, including both subject and non-subject merchandise.

On its tax return filed during the review period, AST claimed a tax

exemption under section 31. Because benefits under this program are

contingent upon export performance, we preliminarily determine that

such benefits are countervailable. See Sec. 355.43(a)(1), Proposed

Regulations and Final Negative Countervailing Duty Determination;

Disposable Pocket Lighters from Thailand, 60 FR 13961 (March 15, 1995).

To calculate the benefit received under section 31, we used as a

numerator the value of the tax exemption claimed by AST during the

review period. AST did not provide the Department with the value of

total exports sales of pipe fittings during the review period.

Therefore, to calculate the subsidy rate, we used as a denominator the

value of AST's total export sales of subject merchandise during the

same period. We then weight-averaged AST's and TTU's rates for this

program, using as the weights each company's share of total Thai

exports to the United States of subject merchandise, and summed the

individual companies' weight-averaged rates to determine the subsidy

rate for this program. On this basis, we preliminarily determine the

subsidy from this program to be 0.22 percent ad valorem for the period

January 1, 1992 through December 31, 1992.

II. Program Preliminarily Found Not To Confer Subsidies

Duty Drawback

The Thai duty drawback program was established by Section 19 bis of

the Thai Customs Act. Under Section 19 bis, companies that import raw

materials used in the production, mixing, assembling, or packaging of

an exported product are eligible to receive a drawback of import duties

and taxes on those materials. Upon importation of the materials,

companies either pay a cash deposit or post a bank guarantee to cover

the import duties and taxes. If the company subsequently provides

documentation showing that the imported materials were used in the

[[Page 57851]]

production, mixing, assembling, or packaging of a finished good that

was exported within one year of the date of importation of the raw

materials, the company's cash deposit is refunded or its bank guarantee

released.

During the antidumping duty investigation of butt-weld pipe

fittings from Thailand, petitioners alleged in their comments on the

Department's preliminary determination that AST received excess duty

drawbacks on imports of steel pipe that is physically incorporated into

the subject merchandise, and that this constituted a countervailable

subsidy. See Final Determination of Sales at Less Than Fair Value:

Certain Carbon Steel Butt-Weld Pipe Fittings From Thailand (Pipe

Fittings AD Final), 57 FR 21065, 21069 (May 18, 1992). Based on

petitioners' allegation, the Department examined the duty drawback

program in this review, the first administrative review of the

countervailing duty order since Pipe Fittings AD Final, to determine

whether producers of the subject merchandise received a countervailable

benefit during the review period. (For a more detailed explanation of

the Department's decision to examine the duty drawback program, see the

January 19, 1995 Memorandum to Barbara E. Tillman Regarding 1992 CVD

Administrative Review--Subsidy Allegation, on file in the public file

of the Central Records Unit, Room B-099 of the Department of Commerce.)

During the antidumping investigation, AST acknowledged that the

average yield ratio for its production of pipe fittings from imported

pipe, calculated by the Thai Government to determine the amount of

drawback on imported pipe, overstated the actual yield ratio in AST's

favor. In this review, we examined the issue of the average yield

calculated by the Thai Government. We verified that, during the review

period, separate production formulas approved by Thai Customs were in

effect for each type of pipe fittings sold by AST and TTU. Utilizing

these production formulas, AST and TTU did not receive drawback of

import duties and taxes in excess of the amount due on imported raw

materials. Moreover, we confirmed that no drawback was received on

materials incorporated into finished goods that were not exported

within one year. (See October 3, 1995 Memorandum to Barbara E. Tillman

Regarding Verification of Questionnaire Responses--1992 Administrative

Review of the Countervailing Duty Order on Carbon Steel Butt-Weld Pipe

Fittings from Thailind (Public Version) for Government of Thailand,

AST, and TTU, which are on file in the public file of the Central

Records Unit, Room B-099 of the Department of Commerce). In accordance

with Annex A (Illustrative List) to the 1979 Agreement of

Interpretation and Application of Articles VI, XVI, and XXIII of the

General Agreement on Tariffs and Trade, the remission or drawback of

import charges is a countervailable subsidy only to the extent that

such remission or drawback is in excess of the import charges that are

levied on imported goods that are physically incorporated in the

exported product. See also 19 U.S.C. 1677(5)(A) and section 355.44 of

the Proposed Regulations. Because producers of butt-weld pipe fittings

did not receive excess drawback of import duties and taxes, we

preliminarily determine that the duty drawback program did not confer

countervailable benefits on exports of the subject merchandise to the

United States during the review period.

III. Programs Preliminarily Found Not To Be Used

A. Tax Certificates for Exporters

B. Export Packing Credits

C. Tax and Duty Exemptions Under Section 28 of the (IPA)

D. Electricity Discounts for Exporters

E. Rediscount of Industrial Bills

F. International Trade Promotion Fund

G. Export Processing Zones

H. Reduced Business Taxes for Producers of Intermediate Goods for

Export Industries

I. Additional Incentives under the IPA

1. Goodwill and Royalties Tax Exemption

2. Tax Deduction of Foreign Marketing Expenses and Foreign Taxes

3. Exemption of Sales Taxes for Promoted Industries

4. Exemption on Export Duties and Business Taxes on Products

Produced or Assembled by Promoted Firms

5. Deduction from Assessable Income of an Amount Equal to Five

Percent of the Increase over the Previous Year of Income Derived from

Exports

Preliminary Results of Review

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

preliminarily determine the net subsidy to be 0.22 percent ad valorem

for all companies. In accordance with 19 CFR 355.7, any net subsidy

less than 0.5 percent ad valorem is de minimis.

If the final results of this review remain the same as these

preliminary results, the Department intends to instruct the U.S.

Customs Service to liquidate, without regard to countervailing duties,

all shipments of the subject merchandise from Thailand exported on or

after January 1, 1992, and on or before December 31, 1992.

This countervailing duty order was determined to be subject to

section 753 of the Act (as amended by the Uruguay Round Agreements Act

of 1994). Countervailing Duty Order; Opportunity to Request a Section

753 Injury Investigation, 60 FR 27,963 (May 26, 1995). Because no

domestic interested parties exercised their right under section 753(a)

of the Act to request an injury investigation, the International Trade

Commission made a negative injury determination with respect to this

order, pursuant to section 753(b)(4) of the Act. As a result, the

Department has revoked this countervailing duty order, effective

January 1, 1995, pursuant to section 753(b)(3)(B) of the Act.

Revocation of Countervailing Duty Orders, 60 FR 40,568 (August 9,

1995). Accordingly, the Department intends to order Customs to

liquidate shipments exported during the period of review in accordance

with the final results of this review and does not intend to issue

further cash deposit instructions.

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. Interested

parties may submit written arguments 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. Parties who

submit argument in this proceeding are requested to submit with the

argument (1) a statement of the issue and (2) a brief summary of the

argument. 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, under Sec. 355.38(c), 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)

[[Page 57852]]

of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.

Dated: November 6, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-28457 Filed 11-21-95; 8:45 am]

BILLING CODE 3510-DS-P