Federal Register / Vol. 62, No. 181 / Thursday, September 18, 1997 / Notices 48985

DEPARTMENT OF COMMERCE

International Trade Administration

[C–557–806]

Extruded Rubber Thread From

Malaysia; 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.

SUMMARY: On May 13, 1997 the

Department of Commerce (‘‘the

Department’’) published in the Federal

Register its preliminary results of

administrative review of the

countervailing duty order on Extruded

Rubber Thread from Malaysia for the

period January 1, 1995 through

December 31, 1995 (62 FR 26289). 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 for each reviewed

company, and for all non-reviewed

companies, please see the Final Results

of Review section of this notice.

EFFECTIVE DATE: September 18, 1997.

FOR FURTHER INFORMATION CONTACT:

Eric Greynolds, Kathleen Lockard or

Richard Herring, 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

Pursuate to 19 C.F.R. § 335.22(a), this

review covers only those producers or

exporters of the subject merchandise for

which a review was specifically

requested. Accordingly, this review

covers Heveafil Sdn. Bhd., Filmax Sdn,

Bhd., Rubberflex Sdn. Bhd., Filati

Lastex Elastofibre Sdn. Bhd. (Filati), and

Rudfil Sdn. Bhd. Heveafil and Filmax

are affiliated parties. (See Affiliated

Parties section below). This review also

covers the period January 1, 1995

through December 31, 1995 and 13

programs.

Since the publication of the

preliminary results on May 13, 1997 (62

FR 26289), the following events have

occurred. We invited interested parties

to comment on the preliminary results.

On June 12, 1997, case briefs were

submitted by Heveafil, Filmax,

Rubberflex, Filati, and Rubfil which

exported extruded rubber thread to the

United States during the review period.

Applicable Statute

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). The

Department is conducting this

administrative review in accordance

with section 751(a) of the Act.

Scope of the Review

The product covered by this review is

extruded rubber thread. Extruded rubber

thread is defined as vulcanized rubber

thread obtained by extrusion of stable or

concentrated natural rubber latex of any

cross sectional shape, measuring from

0.18 mm, which is 0.007 inch or 140

gauge, to 1.42 mm, which is 0.056 inch

or 18 gauge, in diameter. Extruded

rubber thread is currently classified

under subheading 4007.00.00 of the

Harmonized Tariff Schedule of the

United States (HTSUS). The HTSUS

subheadings are provided for

convenience and U.S. Customs

purposes. Our written description of the

scope of this review remains

dispositive.

Affiliated Parties

Heveafil owns and controls Filmax

and both companies produce subject

merchandise. Therefore, we determine

them to be affiliated companies under

section 771(33) of the Act and,

consistent with prior reviews of this

order, we have calculated a single rate

applicable to both of these companies.

See Extruded Rubber Thread From

Malaysia; Final Results of

Countervailing Duty Administrative

Review (61 FR 55272; October 25, 1996)

(Malaysian Rubber Thread 1994

Review). For further information, see

Memorandum to file from Judy Kornfeld

Regarding Status as Affiliated Parties

dated March 28, 1997, on file in the

public file of the Central Records Unit,

Room B–099 of the Department of

Commerce.

Analysis of Programs

Based upon the responses to our

questionnaire, and written comments

from the interested parties we determine

the following:

I. Programs Conferring Subsidies

A. Programs Previously Determined to

Confer Subsidies

1. Export Credit Refinancing (ECR)

Program. In the preliminary results, we

found that both pre- and post-shipment

loans under this program 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, have not led us to

change our findings from the

preliminary results. Accordingly, the

net subsidies for pre-shipment and postshipment loans remain unchanged from

the preliminary results and are as

follows:

PRE-SHIPMENT LOANS

Manufacturer/exporter Rate

(percent)

Heveafil/Filmax ......................... 0.15

Rubberflex ................................. 0.30

Filati .......................................... 0.00

Rubfil ......................................... 0.03

POST-SHIPMENT LOANS

Manufacturer/exporter Rate

(percent)

Heveafil/Filmax ......................... 0.00

Rubberflex ................................. 0.00

Filati .......................................... 0.15

Rubfil ......................................... 0.00

2. Pioneer status. In the preliminary

results, we found that this program

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, have led us

to modify our findings from the

preliminary results for this program for

Rubberflex (See Department’s Position

on Comment 7). Accordingly, the net

subsidies for this program have changed

and are as follows:

Manufacturer/exporter Rate

(percent)

Heveafil/Filmax ......................... 0.74

Rubberflex ................................. 0.00

Filati .......................................... 0.00

Rubfil ......................................... 0.00

3. Industrial building allowance. In

the preliminary results, we found that

this program conferred countervailable

subsidies on the subject merchandise.

We did not receive any comments on

this program from the interested parties,

and our review of the record has not led

us to change our findings from the

preliminary results. Accordingly, the

net subsidies for this program remain

unchanged from the preliminary results

and are as follows:
48986 Federal Register / Vol. 62, No. 181 / Thursday, September 18, 1997 / Notices

Manufacturer/exporter Rate

(percent)

Heveafil/Filmax ......................... 1

Rubberflex ................................. 0.00

Filati .......................................... 0.00

Rubfil ......................................... 0.00

1 Less than 0.005%.

4. Double deduction for export

promotion expenses. In the preliminary

results, we found that this program

conferred countervailable subsidies on

the subject merchandise. We did not

receive any comments on this program

from the interested parties, and our

review of the record has not led us to

change our findings from the

preliminary results. Accordingly, the

net subsidies for this program remain

unchanged from the preliminary results

as are as follows:

Manufacturer/exporter Rate

(percent)

Heveafil/Filmax ......................... 0.01

Rubberflex ................................. 0.00

Filati .......................................... 0.00

Rubfil ......................................... 0.00

II. Programs Found To Be Not Used

In the preliminary results, we

examined the following programs and

determined that the producers and/or

exporters of the subject merchandise did

not apply for or receive benefits under

these programs during the period of

review:

• Investment Tax Allowance,

• Abatement of a Percentage of Net

Taxable Income Based on the F.O.B.

Value of Export Sales,

• Abatement of Five Percent of

Taxable Income Due to Location in a

Promoted Industrial Area,

• Abatement of Taxable Income of

Five Percent of Adjusted Income of

Companies due to Capital Participation

and Employment Policy Adherence,

• Double Deduction of Export Credit

Insurance Payment, and

• Preferential Financing for

Bumiputras.

We did not received any comments on

these programs from the interested

parties, and our review of the record has

not led us to change our findings from

the preliminary results.

Analysis of Comments

Comment 1: The Department had no

authority to issue a CVD order.

Respondents allege that the Department

initiated the original investigation

pursuant to Section 303(a)(2) of the Act,

and, therefore, the Department can

impose countervailing duties under this

section only if there is an injury

determination by the International

Trade Commission (ITC). (The ITC

discontinued its injury determination

under Section 303(a)(2) because the

duty-free status of rubber thread from

Malaysia was terminated). Respondents

contend that without an injury

determination, the Department had no

authority to issue a countervailing duty

order and to require the payment of cash

deposits. Respondents further maintain

that the Department cannot simply

transfer the jurisdiction for an

investigation from Section 303(a)(2) to

Section 303(a)(1) without issuing a

public notice that it intends to proceed

with the investigation under a different

statutory provision. See Certain Textile

Mill Products and Apparel from Turkey

(50 FR 9817; March 12, 1987); Certain

Textile Mill Products and Apparel from

the Philippines (50 FR 1195; March 26,

1985) and Certain Textile Mill Products

and Apparel from Indonesia (50 FR

9861; March 12, 1985). Further, because

there was no initiation notice or a

preliminary determination under

Section 303(a)(1), a final determination

under that section was not appropriate.

If the Department wanted to proceed

with the investigation, it was required to

reinitiate under the appropriate

provision.

In addition, respondents argue that

the Department’s untimeliness theory in

previous reviews is misplaced. They

state that the Department has the power

to modify its judgments or correct its

errors and that Ceramica Regiomontana

v. United States, 64 F.3d 1579 (Fed. Cir.

1995) (Ceramica 1995) confirmed the

right to challenge the continuing

validity of an order during a review

proceeding. Respondents also cite to

Gilmore Steel Corp. v. United States,

585 F. Supp. 670, 674 (CIT 1984)

(Gilmore), to support their ‘‘timeliness’’

argument regarding the Department’s

authority to correct errors, such as

‘‘jurisdictional defects.’’

Department’s Position: As the

Department pointed out in the previous

views, respondents’ challenge to the

Department’s authority to issue the

order is untimely. Challenges to the

issuance of an order must be filed

within 30 days of the date the order is

published. See 19 U.S.C. Sec.

1516a(a)(2). The countervailing duty

order on extruded rubber thread from

Malaysia was published on August 25,

1992. Respondents voluntarily

withdrew a timely-filed complaint

challenging the order on these same

grounds. Respondents’ attempt to revive

that challenge in this proceeding is

untimely.

Contrary to respondents’ assertions,

there was not requirement that the

Department reinitiate its investigation as

a result of the decision by the United

States to terminate the duty-free status

of Malaysian rubber thread. Indeed,

respondents’ interpretation could create

an impermissible gap in statutory

coverage, which Congress did not

intend. See Techsnabexport. Ltd. v.

United States, 802 F. Supp. 469, 472

(CIT 1992). Nor do the administrative

cases relied upon by respondents

support their position. In those cases,

the Department published notice that

authority to continue the particular

investigations was transferred from

section 303 of the Tariff Act of 1930 to

title VII of the Act.

In the course of administrative

reviews conducted under this order,

respondents have misconstrued judicial

precedent regarding the correction of

‘‘jurisdictional defects.’’ Gilmore

involved a challenge to the termination

of a pending investigation based upon

information obtained in the course of

that investigation. In particular, the

petitioner contended that the

Department lacked the authority to

rescind the investigation based upon

insufficient industry support for the

petition after the 20-day initiation

period had elapsed. 585 F.Supp. at 673.

In upholding the Department’s

determination, the court recognized that

administrative officers have the

authority to correct errors, such as

‘‘jurisdictional defects,’’ at any time

during the proceeding. Id. At 674–75.

The court did not state or imply that the

Department may reverse a decision to

issue an antidumping duty order in the

context of an administrative review

under section 751 of the Act. Indeed,

the case did not even involve an

administrative review. The court simply

held that the administering authority

may, in the context of the original

investigation, rescind an ongoing

proceeding after the expiration of the

20-day initiation period. In short,

Gilmore says nothing to excuse

respondents’ failure to timely challenge

the issuance of the order in this case.

Similarly, we disagree with

respondents’ reliance on Ceramica

1995. Ceramica 1995 challenged the

continued imposition of countervailing

duties following Mexico’s change in

status to a ‘‘country under the

Agreement’’ which entitled it to an

injury test. Unlike respondents in the

instant review, Ceramica 1995 did not

challenge the validity of the original

countervailing duty order, nor did the

Federal Circuit determine that the

issuance of the order was invalid.

Consequently, Ceramica 1995 is an

inappropriate basis to excuse

respondents’ failure to timely challenge

the issuance of the order.
Federal Register / Vol. 62, No. 181 / Thursday, September 18, 1997 / Notices 48987

Comment 2: Country-wide subsidy

rate. Respondents argue that the

Department improperly assigned

company-specific rates without first

determining whether the overall

country-wide subsidy rate was above de

minimis. They contend that the

Department acted contrary to its

established practice of applying its twopart test in measuring levels of

subsidization. According to

respondents, the Department should

first calculate the net subsidy on a

country-wide basis to determine

whether the country-wide rate was

above de minimis, in accordance with

Ceramica Regiomontana, S.A. v. United

States, 853 Supp. 431,439 (Ct. Intl.

Trade 1994) (Ceramica 1994). If the

country-wide benefit is de minimis, the

overall subsidy level would be zero.

Only if the country-wide rate was above

de minimis would the Department

proceed to the second step of its test to

determine if individual rates would

apply. Respondents cite Certain Iron

Metal Castings from India, Preliminary

Results of Countervailing Duty

Administrative Review (61 FR 25623;

May 22, 1996); Carbon Steel Butt-Weld

Pipe Fitting from Thailand; Final

Results of Countervailing

Administrative Review (61 FR 4959;

Feb. 9, 1996); Extruded Rubber Thread

from Malaysia, Final Results of

Countervailing Duty Administrative

Review (60 FR 51982, 51983; October 4,

1995), in which the Department applied

its two-step test.

According to respondents, as a

precondition to imposing countervailing

duties, the statute requires subsidization

to occur with respect to imports of the

subject merchandise on an overall or

aggregated basis. In addition,

respondents contend that the URAA

altered the assessment provision but not

the requirement to determine whether

subsidies were being provided on a

country-wide basis.

Department’s Position: There is no

legal basis to support respondent’s

argument. Pursuant to the URAA, there

is no longer a preference for calculating

a single country-side subsidy rate in

countervailing duty proceedings. The

URAA replaced the former practice of

calculating subsidies on a country-wide

basis in favor of individual rates for

investigated or reviewed companies.

The procedures for countervailing duty

cases are now essentially the same as

those in antidumping case, except as

provided for in section 777A(a)(2)(B) of

the Act. Section 777A(e) requires the

calculation of an individual

countervailable subsidy rate for each

known producer/exporter of the subject

merchandise, except where it is not

practicable to determine individual

countervailable subsidy rates because of

the larger number of exporters or

producers involved in the investigation

or review. This exception was

inapplicable in this review as there were

only five producers/exporters for which

a review was requested.

As a result, the judicial and

administrative precedents relied upon

by respondents are inappropriate as

they refer to the requirements as they

existed prior to effective date of the

URAA. All of the reviews cited by

respondents were requested and

initiated prior to January 1, 1995, the

effective date of the URAA. More

pertinent citations would be to reviews

conducted under the URAA. See, e.g.,

Certain Iron-Metal Castings From India;

Final Results of Countervailing Duty

Administrative Review (1994 Castings

Review) (62 FR 32297; June 13, 1997),

since that review was initiated pursuant

to requests for administrative reviews

filed after January 1, 1995.

Comment 3: Financial contribution.

Respondents argue that the Department

cannot countervail benefits under the

ECR loan program or the Pioneer

Industries program because neither

involves a financial contribution by the

Government of Malaysia (GOM). The

WTO Subsidies Agreement defined the

term ‘‘subsidy’’ as one involving a

‘‘financial contribution,’’ therefore

adding a new requirement to the preexisting notion of a subsidy.

Accordingly, a program cannot be a

countervailable subsidy unless it

involves a ‘‘financial contribution.’’ In

the case of the ECR loans, they argue

that there cannot be any financial

contribution because the funds that the

GOM lends to exporters generate a

profit. In the case of the Pioneer

Industries program, they argue that

because the only company claiming the

tax exemption would have paid the

same amount of taxes without the

exemption, the GOM did not forgo or

fail to collect any revenues as a result

of the program. Respondents believe

that the Department’s preliminary

determination overlooks this new

requirement.

Department’s Position: We disagree

with respondents that the Department

overlooked the requirement of a

financial contribution. Under section

771(5)(D) (i) and (ii) of the Act, a

financial contribution is defined as ‘‘the

direct transfer of funds, such as grants,

loans, and equity infusions, or the

potential direct transfer of funds or

liabilities, such as loan guarantees,’’ or

‘‘foregoing or not collecting revenue that

is otherwise due, such as granting tax

credits or deductions from taxable

income.’’ The ECR Loan and Pioneer

Industries tax programs clearly fall

within these definitions. We also note

that under Article 1.1(a)(1) (i) and (ii) of

the Subsidies Agreement, a financial

contribution is defined as ‘‘where

government practice involves a direct

transfer of funds (e.g., grants, loans, and

equity infusions), potential direct

transfers of funds of liabilities (e.g., loan

guarantees)’’ or ‘‘government revenue

that is otherwise due, is foregone or not

collected (e.g., fiscal incentives such as

tax credits).’’

Respondents mistakenly focus on the

‘‘financial contribution’’ concept in

terms of the cost to the Malaysian

government. As explained in the

previous reviews, the Department has a

longstanding practice of valuing the

benefit to the recipient rather than the

cost to the government for the purpose

of calculating countervailing duty rates.

This practice is now reflected in section

771(5)(E) of the Act, which states that

the subsidy benefit ‘‘shall normally be

treated as conferred where there is a

benefit to the recipient.’’ In addition,

Article 14 of the Subsidies Agreement

defines the method for calculating the

amount of a subsidy in terms of the

benefit to the recipient.

In the case of ECR loans, the funds

that the GOM lends to the exporters are

lent on a short-term basis at an interest

rate below the amount the exporters

would have paid on a comparable

commercial loan. In the case of the

Pioneer Industries program, a company

that has received pioneer status is

allowed not to pay taxes otherwise due

to the government. (Also, see

Department’s Position on Comment 7.)

Therefore, under both programs,

financial contributions are provided to

the recipients (the respondents) and the

Department properly treated those

benefits as countervailable subsidies.

Comment 4: Short-term loan

benchmark. Respondents contend that

the benefit from the ECR program was

overstated because the Department’s

benchmark for the ECR pre-shipment

loans incorrectly excluded Banker’s

Acceptances (‘‘BA’s’’) from the

calculated benchmark interest rate and

incorrectly included rates on overdrafts

in calculating the benchmark.

Department’s Position: We disagree

with respondents. While the BA rates

are an acceptable benchmark for postshipment loans, pre-shipment financing

used by the respondents is based on a

line of credit, much like a general shortterm loan in the Malaysian market. As

such, we used the average of the

commercial bank lending rates charged

to each company during the POR for

revolving lines of credit and overdrafts
48988 Federal Register / Vol. 62, No. 181 / Thursday, September 18, 1997 / Notices

as the benchmark. ECR post-shipment

loans and BAs are short-term borrowing

instruments used to finance specified

export shipments, unlike ECR preshipment loans that provide a more

general line of credit.

Comment 5: Pre-shipment ECR loans

do not benefit U.S. exports.

Respondents argue that the Department

overstated the net subsidy for the review

period and for duty deposit purposes

because in calculating eligibility for the

pre-shipment export financing, the

Department failed to take account of the

exclusion by Heveafil and Filmax of

U.S. exports in obtaining export

financing. In addition, respondents

claim that the two companies did not

use funds from exports to the United

States to repay any of the pre-shipment

loans. They claim that in a similar

situation, the Department concluded

that exports to the United States did not

receive benefits from short-term

financing. See Suspension of

Countervailing Duty Investigation;

Certain Forged Steel Crankshafts from

Brazil (52 FR 28177, 28179; July 28,

1987) (Crankshafts from Brazil).

Although in the first administrative

review, the Department rejected this

method of eliminating the effect of a

subsidy, respondents maintain that

Heveafil and Filmax received no benefit

with regard to U.S. shipments.

Respondents further assert that the

Department found a subsidy in this

case, in part, because there was no strict

segregation of U.S. exports and the

materials used in their manufacture

from materials and exports to other

markets financed with ECR loans.

However, according to the respondents,

the Department was presented with

exactly the same issue in Crankshafts

from Brazil and in that case the

Department did not require that the

exporters segregate raw materials

purchased with export financing.

Department’s Position: The GOM

provides ECR financing based on export

performance. The explicit purpose of

this program is to promote the export of

manufactured and approved agricultural

products. Two types of ECR financing

are available: pre-shipment and postshipment financing. There is no

evidence that the GOM limits these ECR

loans to increase exports only to

markets other than the United States,

nor is there evidence of a provision that

prevents exporters from receiving ECR

loans for exports to the United States.

During the review period, both

Heveafil and Filmax applied for and

used pre-shipment financing based on

certificates of performance (CP). Preshipment financing based on CPs is a

line of credit based on previous exports

and, when received, cannot be tied to

specific sales in specific markets. Where

a benefit is not tied to a particular

product or market, it is the Department’s

practice to allocate the benefit to all

products exported by a firm where the

benefit is received pursuant to an export

program. See e.g., 1994 Castings Review.

Because pre-shipment loans were not

shipment-specific, we included all loans

in calculating the subsidy rate.

By excluding exports to the United

States from their application for ECR

pre-shipment export financing, the

companies merely reduced the amount

of financing they received. Reducing the

pool of funds available for total export

financing does not eliminate financing

to any particular product. Tying occurs

in the provision of the subsidy, usually

through government mandate

requirements or in certain limited

situations where the application for the

subsidy can be isolated to specific

shipments, e.g., post-shipment loans

provided on a shipment-by-shipment

basis where the company can

demonstrate through source

documentation that it did not apply for

or receive loans on shipments to the

United States. See e.g., 1994 Castings

Review. Hence, the companies did not

eliminate ECR pre-shipment financing

for U.S. exports.

We disagree with respondents that, in

similar circumstances, the Department

has concluded that the exclusion of U.S.

exports from applications in the manner

described by respondents eliminates

any countervailable subsidy that would

otherwise be present. As stated in the

last review of this order, Extruded

Rubber Thread From Malaysia; Final

Results of Countervailing Duty

Administrative Review (61 FR 55272;

October 25, 1996), respondents’ reliance

on the Crankshafts from Brazil

suspension agreement is misplaced.

Suspension agreements are unusual,

negotiated arrangements in which

parties to a proceeding agree to

renounce countervailable subsidies. As

such, unlike final determinations, they

do not serve as administrative

precedent. Moreover, the Crankshafts

from Brazil suspension agreement is

consistent with our allocation practice.

Comment 6: Pioneer Program is

neither specific nor contingent upon

export performance. Respondents argue

that the Department previously found

the Pioneer Status Program not

countervailable because it was found to

be not specific. See Carbon Steel Wire

Rod from Malaysia: Final Results of

Countervailing Duty Administrative

Review; 56 FR 14927 (April 12, 1991)

(Wire Rod). Respondents assert that it is

not countervailable because tax benefits

under this program are not limited to

any sector or region of the Malaysian

economy, nor is the program exclusively

available to exporting companies. They

contend that the Department confirmed,

in the first administrative review, both

the de jure and de facto availability of

this program to the entire Malaysian

economy, and that the pioneer status tax

benefits are not targeted to specific

industries or companies in a

discriminatory manner. Further, the

Department verified in the original

investigation that the internal guidelines

used to grant pioneers status are

characterized by neutral criteria

unrelated to exports, location or any

other factors that could require a

determination that the program is

countervailable.

Respondents further argue that the

Department verified in the first

administrative review that the GOM

does not require export commitments,

or view them as preponderant, in

evaluating applications; that export

potential is merely one of 12 factors

considered in granting status; and that

a product will not be accepted based on

export potential alone. Further,

respondents argue that the Department

verified in the first administrative

review that the GOM commonly

approves companies that do not make

export commitments, as well as some

that do make them.

Therefore, export performance is not

viewed as a preponderant factor, but as

one of many neutral criteria.

Department’s Position: We addressed

this identical argument in the previous

review of this order. In Wire Rod, we

concluded that benefits were not used

by a specific industry or group of

industries and that no industry or group

of industries used the program

disproportionately; accordingly, we

found the program not to be

countervailable. That determination,

however, did not specifically address

situations where companies had a

specific export condition attached to

their pioneer status approval. In the

Wire Rod investigation, although

petitioners raised the issue of an export

requirement with respect to pioneer

status, the export requirement was not

at issue with the companies investigated

in Wire Rod.

In this case, recipients of the tax

benefits conferred by Pioneer Status can

be divided into two categories:

industries and activities that will find

market opportunities in Malaysia and

elsewhere, and those that face a

saturated domestic market. At

verification of the first administrative

review, we established that an export

requirement may sometimes be applied
Federal Register / Vol. 62, No. 181 / Thursday, September 18, 1997 / Notices 48989

to certain industries after it is

determined that the domestic market

will no longer support additional

producers. The extruded rubber thread

industry is among these industries.

The combination of the necessary

export orientation of the industry due to

lack of domestic market opportunities

and the explicit export condition

attached to pioneer status approval in

the rubber thread industry leads us to

conclude that the Pioneer Status

program constitutes an export subsidy

to the rubber thread industry. Whether

or not the commitment was voluntary,

as respondents suggest, the company

has obligated itself to export a very large

portion of its production, and that

commitment was a condition for

approval of benefits. Thus, the

Department upholds its decision to

countervail this program as an export

subsidy.

Comment 7: Overstatement of Pioneer

Program. Respondents argue that the

Department overstated the benefit from

the Pioneer program because it failed to

deduct the normal capital allowances

that would have been allowed if the

program had not been used. Further,

they claim, the Department incorrectly

allocated pioneer status tax benefits

over only export sales even though

pioneer status tax benefits are also

applicable to profits on domestic sales.

According to the respondents, this is

inconsistent with the Department’s

practice to allocate benefits over total

sales to which they are ‘‘tied.’’

Respondents also argue that the

Department countervailed Rubberflex’s

pioneer benefit in the 1993 review, and

must avoid countervailing the same

benefit in the 1995 review.

Department’s Position: The

Department disagrees with the

respondents’ allegation that it overstated

the benefit from the Pioneer Program

because of capital allowances. When a

company receives pioneer status, it is

allowed to accumulate the normal

capital allowances for use in future

years. Heveafil/Filmax did not pay

income taxes during the period of

review because of its pioneer status.

Therefore, the income tax exemption

under the Pioneer Program has

conferred a benefit upon the company

because it used its pioneer status to

offset income. Because Heveafil/Filmax

is also able to accumulate capital

allowances which can be used to offset

taxable income in the future, after its

pioneer status expires, there is no basis

for adjusting the benefit from the

income tax exemption for these

allowances. Moreover, export sales

should form the denominator because

receipt of pioneer status tax benefits is

contingent upon exportation.

Accordingly, we have not overstated the

benefit from the Pioneer Program. See

e.g., Final Affirmative Countervailing

Duty Determination: Certain

Agricultural Tillage Tools From Brazil

(50 FR 34525; August 26, 1985) and

1994 Castings Review.

We agree with the respondents’ claim

that there is no countervailable subsidy

to Rubberflex under the Pioneer

Program in the instant review. In the

1993 review, the Department used the

estimated tax return submitted by

Rubberflex to calculate the

countervailing duty rate for the Pioneer

Program. For the 1995 preliminary

review, the year in which Rubberflex for

this program. Because we have

previously countervailed the benefit

from that tax return in our 1993

administrative review of this order, we

have not countervailed it again in this

review. Therefore, the new ad valorem

rate for Rubberflex for this program is

0.00% (See Section I(A)(2) above).

Final Results of Review

In accordance with 19 CFR

§ 355.22(c)(4)(ii), we calculated an

individual subsidy rate for each

producer/exporter subject to this

administrative review. For the period

January 1, 1995 through December 31,

1995, we determine the net subsidy for

the following companies to be:

Manufacturer/exporter Rate

(percent)

Heveafil/Filmax ......................... 0.90

Rubberflex ................................. 0.30

Filati .......................................... 0.15

Rubfil ......................................... 0.03

The Department will instruct Customs

to collect cash deposits of estimated

countervailing duties in the percentages

detailed above of the f.o.b. invoice price

on all shipments from reviewed

companies, entered, or withdrawn from

warehouse, for consumption on or after

the date of publication of the final

results of this review. As provided for

in 19 C.F.R. § 355.7, any rate less than

0.5 percent ad valorem in an

administrative review is de minimis.

Accordingly, for those producers/

exporters, no cash deposits will be

required.

We will instruct Customs to continue

to collect cash deposits for nonreviewed companies at the most recent

company-specific or country-wide rate

applicable to the company. Accordingly,

the cash deposit rates that will be

applied to non-reviewed companies

covered by this order are those

established in the most recently

completed administrative proceeding,

conducted pursuant to the statutory

provisions that were in effect prior to

the URAA amendments. (See Extruded

Rubber Thread From Malaysia: Final

Results of Countervailing Duty

Administrative Review, 60 FR 51982

(October 4, 1995). These rates shall

apply to all non-reviewed companies

until a review of a company assigned

these rates is requested. In addition, for

the period January 1, 1995 through

December 31, 1995, the assessment rates

that will be applicable to all nonreviewed companies covered by this

order are the cash deposit rates in effect

at the time of entry.

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), amended 60 FR 32,942 (June 26,

1995). In accordance with section

753(a), domestic interested parties have

requested an injury investigation with

respect to this order with the

International Trade Commission (ITC).

Pursuant to section 753(a)(4),

liquidation of entries of subject

merchandise made on or after January 1,

1995, the date Malaysia joined the

World Trade Organization, is suspended

until the ITC issues a final injury

determination. We will not issue

assessment instructions for any entries

made after January 1, 1995; however, as

discussed above, we will instruct

Customs to collect cash deposits in

accordance with the final results of this

administrative review.

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)).

Dated: September 10, 1997.

Jeffrey P. Bialos,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–24845 Filed 9–17–97; 8:45 am]

BILLING CODE 3510–DS–M