Certain Refrigeration Compressors From the Republic of Singapore; Preliminary Results of Countervailing Duty Administrative Review

DEPARTMENT OF COMMERCE

[C-559-001]

Certain Refrigeration Compressors From the Republic of Singapore;

Preliminary Results of Countervailing Duty Administrative Review

AGENCY: International Trade Administration/Import Administration/

Department of Commerce.

ACTION: Notice of Preliminary Results of Countervailing Duty

Administrative Review.

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SUMMARY: In response to a request by the petitioner, Tecumseh Products

Company (Tecumseh), the Department of Commerce (the Department) is

conducting an administrative review of the agreement suspending the

countervailing duty investigation on certain refrigeration compressors

from the Republic of Singapore. This review covers the Government of

the Republic of Singapore (GOS), Matsushita Refrigeration Industries

(Singapore) Pte. Ltd. (MARIS), and Asia Matsushita Electric (Singapore)

Pte. Ltd. (AMS), AMS was the sole exporter of the subject merchandise

to the United States during the period of review (POR) April 1, 1994,

through March 31, 1995. We preliminarily determine that the signatories

have complied with the terms of the suspension agreement during the

POR.

Interested parties are invited to comment on these preliminary

results. Parties who submit arguments in this proceeding are requested

to submit with their argument (1) a statement of the issue and (2) a

brief summary of the argument.

EFFECTIVE DATE: August 29, 1996.

FOR FURTHER INFORMATION CONTACT: Robert Bolling or Jean Kemp, AD/CVD

Enforcement, Group III, International Trade Administration, U.S.

Department of Commerce, Washington, D.C. 20230; telephone: (202) 482-

3793.

APPLICABLE STATUTE: Unless otherwise indicated, all citations to the

statute and to the Department's regulations are in reference to the

provisions as they existed on or after January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Tariff Act)

in accordance with the Uruguay Round Agreements Act (URAA).

SUPPLEMENTARY INFORMATION:

Background

On November 1, 1995, the Department published in the Federal

Register (60 FR 55540) a notice of ``Opportunity to Request an

Administrative Review'' of the agreement suspending the countervailing

duty investigation on certain refrigeration compressor from

[[Page 45403]]

the Republic of Singapore. On November 30, 1995, the petitioner,

Tecumseh, requested an administrative review of the agreement

suspending the countervailing duty investigation on certain

refrigeration compressors from the Republic of Singapore (48 FR 51167,

November 7, 1983). We initiated the review, covering the period April

1, 1994, through March 31, 1995, on December 15, 1995 (60 FR 64413).

The Department is now conducting this review in accordance with section

751 of the Tariff Act and 19 CFR 355.22. The Department sent out a

questionnaire on March 4, 1995, and received a joint questionnaire

response from the GOS, MARIS, and AMS, on April 25, 1996. Subsequently,

the Department sent out a supplemental questionnaire on May 17, 1996

and received a joint supplemental questionnaire response on May 31,

1996.

Scope of the Review

Imports covered by this review are shipments of hermetic

refrigeration compressors rated not over one-quarter horsepower from

Singapore. This merchandise is currently classified under Harmonized

Tariff Schedule (HTS) item number 8414.30.40. The HTS item number is

provided for convenience and Customs purposes. The written description

remains dispositive.

The review period is April 1, 1994 through March 31, 1995, and

includes 3 programs. The review covers one producer and one exporter of

the subject merchandise, MARIS and AMS, respectively. These two

companies, along with the GOS, are the signatories to the suspension

agreement.

Under the terms of the suspension agreement, the GOS agrees to

offset completely the amount of the net bounty or grant determined by

the Department in this proceeding to exist with respect to the subject

merchandise. The offset entails the collection by the GOS of an export

charge applicable to the subject merchandise exported on or after the

effective date of the agreement. See Certain Refrigeration Compressors

from the Republic of Singapore: Suspension of Countervailing Duty

Investigation, 48 FR 51167, 51170 (November 7, 1983).

Analysis of Programs

(1) The Economic Expansion Incentives Act--Part VI

The Production for Export Programme under Part VI of the Economic

Expansion Incentives Act allows a 90-percent tax exemption on a

company's export profit if the GOS designates a company as an export

enterprise. In the investigation, the Department preliminarily found

this program to be countervailable because ``this tax exemption is

provided only to certified export enterprises.'' See Preliminary

Affirmative Countervailing Duty Determination: Certain Refrigeration

Compressors from the Republic of Singapore, 48 FR 39109, 39110 (August

29, 1983). MARIS is designated as an export enterprise and used this

tax exemption during the period of review. AMS was not designated an

export enterprise under Part VI of the Economic Expansion Incentives

Act for the period of review.

According to the Export Enterprise Certificate awarded to MARIS in

a letter dated May 12, 1981, MARIS is to receive this benefit on the

production of compressors, electrical parts and accessories for

refrigerators, and plastic refrigerators. To calculate the benefit, we

divided the tax savings claimed by MARIS under this program by the

f.o.b. value of total exports of products receiving the benefit, for

the period of review.

MARIS' response to the Department's countervailing duty

questionnaire for this review indicated that MARIS deducted export

charges levied pursuant to the suspension agreement in arriving at an

adjusted profit figure, which was then used to calculate exempt export

profit for the review period. In the 90-91 administrative review, the

Department determined that the amount of the export charge deduction

must be added ``back to MARIS' export profit in calculating MARIS' tax

savings in order to offset the deduction of the export charges in the

review period.'' See Preliminary Results of Countervailing Duty Review:

Certain Refrigeration Compressors from Singapore, 57 FR 31175 (July 14,

1992), affirmed in Final Results of Countervailing Duty Review: Certain

Refrigeration Compressors from Singapore, 57 FR 46539 (October 9,

1992). Therefore, as the Department did in the 92-93 administrative

review, in calculating the benefit from this program, we have added

back this deduction. On this basis, we preliminarily determine the

benefit from this program during the review period to be 1.23 percent

of the f.o.b. value of the merchandise.

(2) Finance & Treasury Center (FTC)

The Finance & Treasury Center Program allows for the taxation at a

concessionary rate of ten percent on certain income earned by companies

providing treasury, investment, or financial services in Singapore for

their subsidiaries/affiliates outside Singapore. The FTC program under

Section 43E of the Singapore Income Tax Act has been in effect since

April 1, 1989 (since Singapore tax ``year of assessment 1991'').

According to the response, applications to the FTC program had been

received and approved by March 31, 1995 for 14 companies, including

AMS. Every company which has applied to the program has been accepted.

MARIS did not participate in the program for the period of review.

The Department examined this program in the 92-93 review and found

it to be de facto specific, and therefore countervailable. (See Certain

Refrigeration Compressors from the Republic of Singapore: Final Results

of Countervailing Duty Administrative Review (``Final Results''), 61 FR

10315-8 (March 13, 1996)). The Department also stated in its

preliminary results for the 92-93 review that, ``(b)ecause it is

probable that participation in the FTC program by MNCs in Singapore

could change over time, in future reviews we may re-examine the

circumstances which have led the Department to find the program de

facto specific, should any new information about the program's

specificity arise.'' (See Certain Refrigeration Compressors from the

Republic of Singapore: Preliminary Results of Countervailing Duty

Administrative Review (``Preliminary Results''), 59 FR 59749 (November

18, 1994

During the 92-93 review, the Department found that 10 enterprises,

representing five industries, were participating in the program (See

Preliminary Results at 59750 (November 18, 1994)). For this review, the

number of firms/enterprises participating in the FTC program for this

review has increased to 14, and the number of industries participating

has increased to eight. In performing our analysis of this program, the

Department found that the overall increase in the number of firms/

enterprises (i.e., 10 to 14) and industries (i.e., 5 to 8)

participating in the FTC program was neglible. Section 771

(5A)(D)(iii)(I) of the Tariff Act provides that, where there are

reasons to believe that a subsidy may be specific as a matter of fact,

the subsidy is specific if one or more of four factors exist. The first

factor is whether the actual recipients of the subsidy, whether

considered on an enterprise or industry basis, are limited in number.

Given the large number of multi-national companies operating in

Singapore, the Department continues to find the FTC program de facto

specific, and therefore countervailable, because only a small group of

firms/enterprises representing

[[Page 45404]]

only eight industries actually used the FTC program.

To calculate the benefit, we divided the tax savings attributable

to the subject merchandise under this program by the value of all AMS

product sales for the period of review. On this basis, we preliminarily

determine the benefit from this program during the review period to be

0.01 percent of the f.o.b. value of the merchandise.

(3) Financing through the Monetary Authority of Singapore

Under the terms of the suspension agreement, MARIS and AMS agreed

not to apply for or receive any financing provided by the rediscount

facility of the Monetary Authority of Singapore for shipments of the

subject merchandise to the United States. We determined during the

review that neither MARIS nor AMS received any financing through the

Monetary Authority of Singapore on the subject merchandise exported to

the United States during the review period. Therefore, we preliminarily

determine that both companies have complied with this clause of the

agreement.

Preliminary Results of Review

The suspension agreement states that the GOS will offset completely

with an export charge the net bounty or grant calculated by the

Department. As a result of our review, we preliminarily determine that

the signatories have complied with the terms of the suspension

agreement, including the payment of the provisional export charges in

effect for the period April 1, 1994 through March 31, 1995. We also

preliminarily determine the net bounty or grant to be 1.24 percent of

the f.o.b. value of the merchandise for the April 1, 1994 through March

31, 1995 review period.

Following the methodology outlined in section B.4 of the agreement,

the Department preliminarily determines that, for the period April 1,

1994 through March 31, 1995, a negative adjustment may be made to the

provisional export charge rate in effect. The adjustments will equal

the difference between the provisional rate in effect during the review

period and the rate determined in this review, plus interest. The

provisional rate, established in the notice of the final results of the

90-91 administrative reviews of the suspension agreement (See Certain

Refrigeration Compressors from the Republic of Singapore; Final Results

of Countervailing Duty Administrative Review, 57 FR 46540 (October 9,

1992)) was 5.52 percent. The GOS may refund or credit, in accordance

with section B.4.c of the agreement, the difference between that amount

and 1.24 percent, plus interest, calculated in accordance with section

778(b) of the Tariff Act, within 30 days of notification by the

Department. The Department will notify the GOS of these adjustments

after publication of the final results of this review.

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

preliminary results, the Department intends to notify the GOS that the

provisional export charge rate on all exports to the United States with

Outward Declarations filed on or after the date of publication of the

final results of this administrative review shall be 1.24% percent of

the f.o.b. value of the merchandise.

The agreement can remain in force only as long as shipments from

the signatories account for at least 85 percent of imports of the

subject refrigeration compressors into the United States. Our

information indicates that the two signatory companies accounted for

100 percent of imports into the United States from Singapore of this

merchandise during the review period.

Parties to the proceeding may request disclosure within 5 days of

the date of publication of this notice. Any interested party may

request a hearing within 10 days of publication. Case briefs and/or

written comments from interested parties may be submitted no later than

30 days after the date of publication. Rebuttal briefs and rebuttals to

written comments, limited to issues raised in the case briefs and

comments, may be filed not later than 37 days after the date of

publication of this notice. Any hearing, if requested, will be held 44

days after the date of publication, or the first workday thereafter.

The Department will publish the final results of this administrative

review including the results of its analysis of issues raised in any

such written comments or at a hearing.

These requirements, when imposed, shall remain in effect until

publication of the final results of the next administrative review.

This administrative review and this notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

Dated: August 22, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-22127 Filed 8-28-96; 8:45 am]

BILLING CODE 3510-DS-P