Certain Textile Mill Products From Thailand; Final Results of Countervailing Duty Administrative Review

DEPARTMENT OF COMMERCE

[C-549-401]

Certain Textile Mill Products From Thailand; Final Results of

Countervailing Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Final Results of the Countervailing Duty

Administrative Review on Noncontinuous Noncellulosic Yarns (NCNC Yarns)

covered under the Suspended Investigation on Certain Textile Mill

Products from Thailand.

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SUMMARY: On July 18, 1995, the Department of Commerce (the Department)

published in the Federal Register its preliminary results of

administrative review on NCNC Yarns covered under the agreement

suspending the countervailing duty investigation on Certain Textile

Mill Products from Thailand for the period January 1, 1993 through

December 31, 1993 (suspension agreement). We have completed this review

and have determined that the signatories were not in violation of the

suspension agreement. However, we do note that the Department will

require that one signatory repay the Royal Thai Government (RTG), in an

annual adjustment, the amount by which the tax certificate received

exceeded the import duties on physically incorporated inputs.

EFFECTIVE DATE: January 29, 1996.

FOR FURTHER INFORMATION CONTACT: Lisa Yarbrough or Jim Doyle, Office of

Agreements Compliance, Import Administration, International Trade

Administration, U.S. Department of Commerce, Washington, D.C. 20230,

telephone (202) 482-3793.

SUPPLEMENTARY INFORMATION:

Background

On February 26, 1990, the Department published in the Federal

Register (55 FR 6669) a notice stating its intent to terminate the

suspension agreement on certain textile mill products from Thailand (50

FR 9837, March 12, 1985). On March 26, 1990, the American Yarn Spinners

Association (AYSA), a trade association, objected to the Department's

intent to terminate the suspension agreement. As a result, on November

23, 1990, the Department terminated the suspension agreement with

regard to all non-yarn products covered by the suspension agreement (55

FR 48885).

Subsequent to publication of the November 23, 1990 notice, counsel

for the RTG filed a lawsuit in the United States Court of International

Trade (CIT) challenging the Department's determination that AYSA had

standing to oppose the termination of the suspension agreement. On May

17, 1991, the CIT remanded the determination to the Department for

reconsideration of AYSA's standing to oppose the termination. On July

3, 1991, the Department issued remand results finding that AYSA had

standing to oppose the termination vis-a-vis only one like product

covered by the suspension agreement, i.e., NCNC yarns. The CIT affirmed

the remand determination in its entirety on August 5, 1991. The Royal

Thai Government, et al., v. United States, Slip Op. 91-68 (August 5,

1991).

On March 16, 1994, the Department published in the Federal Register

a notice of ``Opportunity to Request Administrative Review'' (59 FR

12240) of the suspension agreement for the period January 1, 1993 to

December 31, 1993. The Department received requests for an

administrative review of NCNC yarns on March 31, 1994, from AYSA and

certain individual producers. On April 15, 1994, the Department

initiated a countervailing duty administrative review on NCNC yarns for

the period January 1, 1993 to December 31, 1993 (59 FR 18099, April 15,

1994). The Department verified the responses of the RTG and the Thai

Textile Manufacturers Association (TTMA) from January 16 through

January 25, 1995 pursuant to the administrative review.

On July 18, 1995, the Department published in the Federal Register

(60 FR 36779) the preliminary results of its administrative review of

NCNC yarns for the period January 1, 1993 through December 31, 1993.

The Department invited interested parties to comment on the preliminary

results. On August 14, 1995, a case brief was submitted by Economic

Consulting Services (ECS), a representative for the AYSA and individual

member companies of the AYSA.

The Department has now completed this administrative review in

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

Act). The review covers nine programs and seven producers/exporters:

Saha Union, Venus Thread, Union Thread, Union Spinning, Union Knitting,

Union Industries, and Thai Melon.

Applicable Statute and Regulations

The Department is conducting this administrative review in

accordance with section 751(a) of 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.

Scope of Review

Imports covered by this review are shipments of NCNC Yarns from

Thailand. During the period of review (POR), such merchandise was

classifiable under the Harmonized Tariff Schedule (HTS) item numbers

5508.10.0000, 5509.21.0000, 5509.22.0010, 5509.22.0090, 5509.32.0000,

5509.51.3000, 5509.51.6000, 5509.69.4000, 5511.10.0030, 5511.10.0060,

and 5511.20.0000.

Analysis of Programs

Based upon our analysis of our questionnaire and verification we

determine the following:

I. Programs Found To Be Used

A. Tax Certificates

Under Section II (c) of the suspension agreement, the producers and

exporters can apply for or receive tax certificates on shipments of

subject merchandise exported directly or indirectly to the United

States for import duties paid on

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items that are physically incorporated into exported products. If the

producers and exporters apply for tax certificates in excess of the

items physically incorporated, the suspension agreement requires that

the producers and exporters repay to the RTG, in an annual adjustment,

the amount by which the tax certificates exceed the import duties on

physically incorporated inputs.

Tax certificate applications are made on a shipment by shipment

basis after the producer/exporter receives payment for its shipment.

The application can include up to 10 shipments and must be submitted

within one year of the shipment date. Exporters can apply for an

extension if they do not meet the one year deadline.

The law governing this program is the ``Tax and Duty Compensation

of Exported Goods Produced in the Kingdom Act, B.E. 2524 (1981).''

Effective January 1, 1992, new nominal rebate rates were established

for all products by the Committee on Tax and Duty Rebates for Exported

Goods Produced in the Kingdom. The new nominal rates applicable to

signatories are categorized by the following sectors: spinning,

weaving, made-up textile goods, and knitting. Because nominal rates are

in excess of the physically incorporated inputs, the Department has

calculated, and requested that the RTG implement, non-excessive rates.

See verification report dated September 15, 1994, and letter from

Roland L. MacDonald to Arthur J. Lafave III dated November 15, 1994.

In the preliminary results, we found that Thai Melon applied for a

tax certificate on subject merchandise to the United States at a

nominal rate during the POR. Our analysis of the comments submitted by

the interested parties, summarized below, has not led us to change our

findings in the preliminary results. On this basis, the Department will

require that Thai Melon repay the RTG, in an annual adjustment, the

amount by which the tax certificate exceeded the import duties on

physically incorporated inputs.

B. International Trade Promotion Fund

Under Section II (h) of the suspension agreement, the producers and

exporters are to notify the Department in writing prior to applying for

or accepting any new benefit which is, or is likely to be, a

countervailable bounty or grant on shipments of subject merchandise

exported, directly or indirectly, to the United States. Although the

Department has never determined this program to be countervailable, we

reviewed this program in the administrative review.

This program, governed by the ``Rule on Administration of the

International Trade Promotion Fund (ITPF), B.E. 2532 (1989),'' promotes

and develops Thai exports worldwide through incoming and outgoing trade

missions. The ITPF provides training and seminars for exporters, and

publicity through public advertisements.

In the preliminary results, we confirmed that Saha Union and its

relateds (Union Spinning, Union Thread, and Venus Thread) participated

in an international trade fair, promoting subject merchandise. However,

Saha Union and its related companies paid their own expenses to

participate in the trade fair. Thus, the signatories were not found to

be in violation of the agreement. Our analysis of the comments

submitted by the interested parties, summarized below, has not led us

to change our findings in the preliminary results.

C. Duty Drawback

Under Section II (c) of the suspension agreement, exporters and

producers are not to apply for, or receive, rebates on shipments of

subject merchandise in excess of the import duties paid on items that

are physically incorporated into exported products.

Under this program, Thai Customs will refund import duties paid on

imported goods used in the production of an exported product. In order

to qualify for duty drawback, the goods must be exported through an

authorized port, the exports must be shipped within one year of the

date of importation of the goods on which drawback is claimed, and the

producer/exporter must request drawback within six months of the date

of exportation of the goods.

In the preliminary results, we found that Saha Union, Union

Spinning, Union Thread, Venus Thread, and Thai Melon used duty drawback

on exported goods of subject merchandise to the United States. Based on

verification, we determined that the amount of drawback received was

not in excess of the items physically incorporated into the exported

product. Hence, the signatories were not found to be in violation of

the agreement. 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 producers/exporters of

the subject merchandise did not apply for or receive benefits under the

following programs:

A. Electricity Discounts

B. Repurchase of Industrial Bills

C. Investment Promotion Act: Sections 28, 31, 35, and 36

D. Export Processing Zones

E. Double Deduction of Foreign Marketing Expenses

F. Export Packing Credits

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

ECS argues that the Department verified the continued existence of

numerous subsidy programs and the continued receipt by several Thai

yarn producers and exporters of benefits from several of the subsidy

programs. They further claim that these subsidy benefits found by the

Department are distinct from and are above and beyond the large subsidy

benefits that were given to the Thai yarn industry under the Investment

Promotion Act. ECS maintains that the large subsidy benefits received

by the Thai yarn industry under the Investment Promotion Act were

instrumental in the massive expansion of the capacity of the Thai yarn

industry several years ago.

Department's Position

The Department disagrees with the arguments raised by ECS. As

described in the preliminary results of administrative review (60 FR

39363), the programs found to be used did not confer a subsidy which

violated the terms of the agreement.

In regard to the tax certificate received by Thai Melon during the

POR, under Section II (c) of the suspension agreement, the producers

and exporters can apply or receive tax certificates on shipments of

subject merchandise exported directly or indirectly to the United

States for import duties paid on items that are physically incorporated

into exported products. However, if the producers and exporters apply

for tax certificates in excess of the items physically incorporated,

the suspension agreement requires that the producers and exporters

repay to the RTG, in an annual adjustment, the amount by which the tax

certificates exceed the import duties on physically incorporated

inputs.

The Department will require that Thai Melon repay to the RTG, in an

annual adjustment, any amount by which the tax certificate received

exceeded the amount of import duties on physically incorporated inputs.

The annual

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adjustment shall be calculated in accordance with Section II c(i) and

(ii) of the suspension agreement.

With respect to the use of duty drawback, the Department verified

that the amount received was not in excess of the import duties paid on

physically incorporated inputs. Thus, the signatories were not in

violation. (See verification report dated June 1, 1995).

Finally, the participation in the international trade promotion

fund by four signatories does not confer a benefit because the

Department verified that the signatories paid their own expenses.

Furthermore, the Department has never determined this program to be

countervailable.

Comment 2

ECS wants assurance that any benefits found by the Department

during the period of review are repaid to the RTG in order to reverse

any benefits received by the Thai yarn producers during the POR.

Department's Position

As stated above, the Department will require that Thai Melon repay

the amount in which the tax certificate exceeds the import duties on

physically incorporated inputs. If Thai Melon fails to comply with this

requirement, the Department will have grounds to determine that the

signatory has violated the agreement.

Comment 3

ECS urges the Department to maintain close scrutiny over the

administration of the agreement so that the U.S. industry can be

assured that the subsidies found by the Department will be repaid to

the RTG and that such benefits will not continue in the future.

Department's Position

The Department will continue to closely monitor the administration

of the agreement in order to ensure that the excess amount of the tax

certificate is repaid and that the signatories do not receive any

benefits in the future that would constitute a violation of the

agreement.

Final Results of Review

For the period January 1, 1993 through December 31, 1993, we

determine that the signatories were not in violation of the suspension

agreement.

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)(1994)) and 19 CFR

3.5.5.22 (1994).

Dated: December 14, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 96-1455 Filed 1-26-96; 8:45 am]

BILLING CODE 3510-DS-P