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 July 3, 1996, 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 1994 (61 FR

34794, July 3, 1996). The Department has now completed this

administrative review in accordance with section 751(a) of the Tariff

Act of 1930, as amended. For information on the net subsidy, please see

the Final Results of Review section of this notice. We will instruct

the U.S. Customs Service to assess countervailing duties as detailed in

the Final Results of Review section of this notice. The countervailing

duty order on ball bearings and parts thereof from Thailand was revoked

effective January 1, 1995, as a result of a changed circumstances

review (see 61 FR 20799). Because this order has been revoked, the

[[Page 729]]

Department will not issue further instructions with respect to cash

deposits of estimated countervailing duties.

EFFECTIVE DATE: January 6, 1997.

FOR FURTHER INFORMATION CONTACT: Robert Copyak or Megan Waters, Office

of CVD/AD Enforcement VI, 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

Pursuant to section 355.22(a) of the Department's Interim

Regulations, this review covers only those producers or exporters of

the subject merchandise for which a review was specifically requested.

See Antidumping and Countervailing Duties: Interim regulations; request

for comments, 60 FR 25130, 25139 (May 11, 1995) (``Interim

Regulations''). Accordingly, this review covers the Minebea Group of

Companies in Thailand, NMB Thai, Pelmec Thai, and NMB Hi-Tech, which

manufacture and export the subject merchandise. During this review, the

Department learned of another Minebea company, NMB Precision Ball,

Ltd., which manufactures balls. The company does not export directly to

the United States but it does sell balls to the other three companies

which in turn export finished ball bearings to the United States and

elsewhere. This company, like the other three Minebea producers in

Thailand, is a wholly-owned subsidiary of Minebea Japan, and because

NMB Precision Ball, Ltd. received export subsidies during the period of

review (see ``Programs Conferring Subsidies'' section below) for its

sales of balls to the related Thai ball bearing producers, we determine

that it is appropriate to include the export subsidies to NMB Precision

Ball, Ltd. in our calculations of the net subsidy.

All of these companies are wholly owned by one parent company. As a

result of this affiliation, we continue to find, as we did in the

investigation and in previous reviews (see for example, Ball Bearings

and Parts Thereof from Thailand: Final Results of Countervailing Duty

Administrative Review, 60 FR 52374, October 6, 1995), that the Minebea

Group of Companies should be collapsed and treated as one corporate

entity in our calculations. This review covers the period January 1

through December 31, 1994, and nine programs.

Since the publication of the preliminary results on July 3, 1996

(61 FR 34794), the following events have occurred. We invited

interested parties to comment on the preliminary results. On August 2,

1996, a case brief was submitted by the Royal Thai Government (``RTG'')

and the Minebea Group of Companies, which exported ball bearings and

parts thereof to the United States during the review period.

On November 2, 1995, we extended the period for completion of the

preliminary and final results pursuant to section 751(a)(3) of the Act

(see Extension of the Time Limit for Certain Countervailing Duty

Administrative Reviews, 60 FR 55699). As explained in the memoranda

from the Assistant Secretary for Import Administration dated November

22, 1995, and January 11, 1996 (on file in the public file of the

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

deadlines were further extended to take into account the partial

shutdowns of the Federal Government from November 15 through November

21, 1995, and December 15, 1995, through January 6, 1996. As a result

of these extensions, the deadline for these final results is no later

than December 30, 1996--180 days from July 3, 1996, the date on which

the preliminary results were published in the Federal Register.

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions of the Tariff Act of 1930, as amended by

the Uruguay Round Agreements Act (``URAA'') effective January 1, 1995

(``the Act'').

Scope of the Review

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

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

The Harmonized Tariff Schedule (HTS) item numbers listed in the

Appendix are provided for convenience and Customs purposes. The written

description remains dispositive.

Verification

We verified information provided by the RTG and by the Minebea

Group of Companies, producers/exporters of the subject merchandise (as

provided in section 782(i) of the Act) . We followed standard

verification procedures, including meeting with government and company

officials and examining relevant accounting and original source

documents. Our verification results are outlined in the public versions

of the verification reports, which are on file in the Central Records

Unit (Room B-099 of the Main Commerce Building).

Analysis of Programs

Based upon the responses to our questionnaire, the results of

verification, and written comments from the interested parties we

determine the following:

I. Programs Conferring Subsidies

A. Programs Previously Determined to Confer Subsidies

Investment Promotion Act of 1977--Sections 28, 31, 36(1), and 36(4)

In the preliminary results, we found that these programs conferred

countervailable subsidies on the subject merchandise. Our review of the

record and our analysis of the comments submitted by the interested

parties, summarized below, has not led us to change our findings from

the preliminary results. Accordingly, our calculation of the net

subsidies for this program remains unchanged from the preliminary

results and is as follows:

------------------------------------------------------------------------

Manufacturer/Exporter Rate

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Minebea Group of Companies..................................... 5.25%.

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II. Programs Found to be Not Used

In the preliminary results, we found that the producers and/or

exporters of the subject merchandise did not apply for or receive

benefits under the following programs:

A. Tax Certificates for Exporters

B. Electricity Discounts for Exporters

C. Export Packing Credits

D. Rediscount of Industrial Bills

E. IPA Section 33

F. Export Processing Zones

G. Reduced Business Taxes for Producers of Intermediate Goods for

Export Industries

H. International Trade Promotion Fund

Our analysis of the comments submitted by the interested parties,

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

preliminary results.

Analysis of Comments

Comment 1: Respondents argue that the Department must liquidate

entries during 1994 without regard to countervailing duties because the

URAA does not provide an injury test for 1994 entries as required under

the Agreement on Subsidies and Countervailing Measures (Subsidies

Agreement). Citing Article 32.3 of the Subsidies Agreement, respondents

argue that the Subsidies Agreement is applicable to all reviews,

including the instant review, initiated pursuant to requests made after

January 1, 1995. Respondents argue that the requirements of the

Agreement include

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the application of an injury test to entries covered by such a review.

According to respondents, however, the URAA did not provide a mechanism

to implement this obligation; rather, the URAA only provides an injury

test for merchandise entered on or after January 1, 1995. Therefore,

respondents assert that assessment of countervailing duties on 1994

entries would violate U.S. obligations under the Subsidies Agreement.

Department's Position: Respondents have misinterpreted both U.S.

law and the Subsidies Agreement. There is no legal basis under U.S. law

for respondents' claim. Because Thailand became a Subsidies Agreement

country on January 1, 1995, only entries made on or after January 1,

1995 are entitled to the injury test. See section 753 of the Act; 19

U.S.C. Sec. 1675b. Section 753 (a) (4) makes this clear by providing

for the suspension of liquidation of entries of subject merchandise

made ``on or after . . . the date on which the country . . . becomes a

Subsidies Agreement country . . . .'' See also Ceramica Regiomontana,

S.A. v. United States, 64 F.3d 1579 (Fed. Cir. 1995) (the right to an

injury test is conferred at the time of importation (entry) in the

United States). Therefore, countervailing duties may be assessed on

Thai imports entered before January 1, 1995, without regard to an

injury test.

Moreover, Article 32.3 of the Subsidies Agreement does not require

an injury determination for merchandise entered prior to January 1,

1995. (See also Footwear from Brazil GATT Panel Decision confirming

that liability for countervailing duties attaches at the time of

importation, not assessment.) Liability for countervailing duties

attaches at the time of entry and, because the subject merchandise

entered in 1994, there is no obligation under the Subsidies Agreement

to supply an injury test to these 1994 entries.

Comment 2: Respondents argue that, due to the ``upstream

subsidies'' provision, the Department's inclusion of benefits received

by NMB Precision Ball, Ltd. in the subsidy calculation is contrary to

law. They claim that, because NMB Precision Ball, Ltd. is separately

incorporated, any benefits it receives on inputs must be analyzed under

the upstream provision. They also contend that the Department lacks

authority to countervail any subsidies provided on the input balls

supplied by NMB Precision Ball, Ltd. because petitioners have not made

an ``upstream subsidies'' allegation.

Department's Position: We disagree with respondents. Including the

benefits received by NMB Precision Ball, Ltd. in the benefit

calculation is not contrary to the upstream provision of the statute.

In fact, it is necessary to include these subsidies in order to

accurately determine the total net subsidy attributable to subject

merchandise.

NMB Precision Ball, Ltd. does not produce bearings; nor does it

make commercial shipments of bearings to the United States. However, it

does produce balls which it then supplies to other Minebea companies,

including Minebea companies in Thailand. When the Department issued its

questionnaire for this review, it requested information for all

companies in Thailand which produced and/or exported subject

merchandise that was exported to the United States. At verification,

the Department learned that NMB Precision Ball, Ltd. produced balls

that were exported to the United States as parts of finished ball

bearings during the review period. Only then, upon request, did the

Department gather information to determine whether NMB Precision Ball,

Ltd. should be included in the subsidy calculations.

At verification, we found that the balls produced by NMB Precision

Ball, Ltd. were exported either directly or as parts of bearings

assembled by other Minebea companies in Thailand. Both the balls and

bearings are merchandise subject to this review. As explained in the

preliminary results of this review (61 FR 34794, July 3, 1996), the

subsidies received by NMB Precision Ball, Ltd. on its sales of these

balls are export subsidies. NMB Precision Ball, Ltd. receives these

export subsidies not only for the balls that are exported directly but

also for the balls that are sold to other Minebea companies for

incorporation into ball bearings which are then exported. Therefore,

the Department properly included in the subsidy calculation the

benefits attributable to balls produced by NMB Precision Ball, Ltd. but

exported by other Minebea companies in Thailand as parts of finished

ball bearings.

Because these are export subsidies, the upstream subsidy provision

is not applicable (see section 771A(a) of the Act). Specifically, the

upstream subsidy provision, by its terms, expressly excludes export

subsidies from its coverage (based on the presumption that an export

subsidy paid on a nonsubject input product benefits the exportation of

that product, not the downstream product). The upstream subsidy

provision is not intended to cover the situation in this case. Further,

separate and apart from this provision, such export subsidies on

subject merchandise are plainly covered by the U.S. countervailing duty

law. Accordingly, the export subsidies here on balls and ball bearings

are countervailable.

Further, the fact that NMB Precision Ball, Ltd. is separately

incorporated is irrelevant because these are export subsidies which are

provided to balls contingent on their subsequent exportation, and the

balls are covered by the order. It does not matter whether the balls

are exported directly or whether the balls are sold to another company,

incorporated into ball bearings, and then exported; all of the balls

receive the export subsidy. Thus, the subject merchandise exported to

the United States by the other Minebea companies during the period of

review benefitted not only from the export subsidies on balls produced

by NMB Precision Ball, Ltd. but also from the export subsidies provided

on finished ball bearings.

Comment 3: Respondents claim that several of the essential

materials for which BOI grants duty exemptions meet the ``consumed in

production'' standard, and, therefore, duty exemptions on these

materials should be found not countervailable. They argue that the

Department improperly countervailed certain duty exemptions on inputs

used in the production process because it has interpreted the meaning

of the footnote 61 of Annex II of the Subsidies Agreement regarding

``inputs consumed in the production process'' too narrowly.

Department's Position: We disagree with respondents. Prior to the

Uruguay Round Agreement, only duty exemptions on inputs that were

physically incorporated into the product being exported (e.g., raw

material inputs) were considered non-countervailable. Under the

Subsidies Agreement, this has been broadened to include duty exemptions

on products that are ``consumed in production.'' Annex II of the

Agreement contains a footnote (n. 61) which defines inputs consumed in

the production process as: ``inputs physically incorporated, energy,

fuels and oils used in the production process and catalysts which are

consumed in the course of their use to obtain the exported product.''

Upon examination of the breakouts of duty exemptions that respondents

claimed, we discovered that, with the exception of fixed assets, the

RTG treated almost anything used in the production process as duty

exempt. We found that a number of duty-exempt materials fall outside

the definition in footnote 61 and have therefore countervailed the

exemptions provided on items which fall outside that definition.

Respondents argue that the term ``consumed in production'' should

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include all items that are worn out during the production process and

that physically touch the product (e.g., grinding wheels and drill

bits) as well as items such as packing materials. However, it is the

Department's position that the definition in Annex II is unambiguous,

and therefore, the only duty exemptions that we find not

countervailable are those on materials which are physically

incorporated into the exported product and on oils used in the

production process. The remaining duty exemptions received by the

respondent companies on items such as drill bits and grinding wheels do

not fit the definition in Annex II. They are not physically

incorporated; nor are they energy, fuels, oils, or catalysts consumed

in the course of their use. Accordingly, we continue to find those

exemptions countervailable.

Final Results of Review

In accordance with section 355.22(c)(4)(ii) of the Department's

Interim Regulations, we calculated an individual subsidy rate for each

producer/exporter subject to this administrative review. As discussed

above in the Background section, the Department considers the Minebea

Group of Companies as one corporate entity. Therefore, we have

calculated one subsidy rate for the Minebea Group of Companies in

Thailand. For the period January 1 through December 1, 1994, we

determine the net subsidy to be as follows:

------------------------------------------------------------------------

Net

Net subsidies--producer/exporter subsidy

rate

------------------------------------------------------------------------

Minebea Group of Companies (NMB Thai, Pelmec Thai, NMB Hi-Tech,

NMB Precision Ball, Ltd.)..................................... 5.25%.

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We will instruct the U.S. Customs Service (``Customs'') to assess

countervailing duties as indicated above.

Because the URAA replaced the general rule in favor of a country-

wide rate with a general rule in favor of individual rates for

investigated and reviewed companies, the procedures for establishing

countervailing duty rates, including those for non-reviewed companies,

are now essentially the same as those in antidumping cases, except as

provided for in section 777A(e)(2)(B) of the Act. The requested review

will normally cover only those companies specifically named. See

section 355.22(a) of the Interim Regulations. Pursuant to 19 CFR

Sec. 355.22(g), for all companies for which a review was not requested,

duties must be assessed at the cash deposit rate previously ordered.

Accordingly, we will instruct Customs to liquidate at the cash deposit

rate in effect at the time of entry all entries of subject merchandise

from non-reviewed companies.

Pursuant to petitioner's statement of no further interest in the

CVD order on ball bearings and parts thereof from Thailand for entries

after December 31, 1994, the Department conducted a changed

circumstances review and, effective January 1, 1995, revoked this

countervailing duty order pursuant to section 782(h)(2) of the Act.

Ball Bearings and Parts Thereof from Thailand: Final Results of Changed

Circumstances Countervailing Duty Review and Revocation of

Countervailing Duty Order, 61 FR 20799 (May 8, 1996). Accordingly,

suspension of liquidation was terminated effective January 1, 1995, and

the Department will not issue further instructions with respect to cash

deposits of estimated countervailing duties.

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 CFR Sec. 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)).

Dated: December 30, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

Appendix

Scope of Review

Ball Bearings, Mounted or Unmounted, and Parts Thereof

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

unmounted, and parts thereof, 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,

and 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

parts which will be subject to heat treatment after importation.

[FR Doc. 97-184 Filed 1-3-97; 8:45 am]

BILLING CODE 3510-DS-P