[Federal Register Volume 61, Number 19 (Monday, January 29, 1996)]
[Notices]
[Pages 2797-2800]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1454]



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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 Certain Yarn Products covered under the 
Suspended Investigation on Certain Textile Mill Products from Thailand.

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SUMMARY: On August 2, 1995, the Department of Commerce (the Department) 
published in the Federal Register its preliminary results of 
administrative review of Certain Yarn Products covered under the 
agreement suspending the countervailing duty investigation on Certain 
Textile Mill Products from Thailand for the period May 18, 1992 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 note that the Department will require 
that four signatories repay the Royal Thai Government (RTG), in an 
annual adjustment, the amount by which all tax certificates 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 November 23, 1990, the Department published in the Federal 
Register (55 FR 48885) a notice terminating in part the suspension 
agreement on Certain Textile Mill Products from Thailand (50 FR 9837, 
March 12, 1985). On May 9, 1992, the Court of International Trade (CIT) 
held that the Department's termination was not in accordance with the 
law because the Department failed to strictly follow 19 CFR 
355.25(d)(4). The Court of Appeals for the Federal Circuit (CAFC) 
affirmed the decision of the CIT on October 12, 1993, and instructed 
the Department to reinstate the suspension agreement. Subsequently, on 
October 22, 1993, the Department reinstated the suspension agreement, 
effective May 18, 

[[Page 2798]]
1992, the date the Department published notice of the CIT decision (58 
FR 54552).
    On March 4, 1994, the Department published in the Federal Register 
a notice of ``Opportunity to Request Administrative Review'' (59 FR 
10368) of the suspended investigation for the period May 18, 1992 to 
December 31, 1993. The Department received requests for an 
administrative review of certain yarn products on March 31, 1994, from 
the American Yarn Spinners Association (AYSA) and certain individual 
yarn producers. On April 15, 1994, the Department initiated a 
countervailing duty administrative review on Certain Yarn Products for 
the period May 18, 1992 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 August 2, 1995, the Department published in the Federal Register 
(60 FR 39363) the preliminary results of its administrative review of 
certain yarn products. We 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 eight producers/exporters: 
Saha Union, Venus Thread, Union Thread, Union Spinning, Thai Melon, 
Thai American, Thai Blanket, and Thai Synthetic.

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 certain yarns from 
Thailand. During the period of review, such merchandise was 
classifiable under the Harmonized Tariff Schedule (HTS) item numbers 
5204.11.0000, 5204.19.0000, 5204.20.0000, 5206.21.0000, 5206.22.0000, 
5206.23.0000, 5206.24.0000, 5206.25.0000, 5206.41.0000, 5206.42.0000, 
5206.43.0000, 5206.44.0000, 5206.45.0000, 5207.10.0000, 5207.90.0000, 
5401.10.0000, 5402.31.3000, 5402.32.3000, 5402.33.6000, 5406.10.0020, 
5406.10.0040, 5406.10.0090, 5508.20.0000, 5510.12.0000, 5510.90.4000, 
and 5511.30.0000.

Analysis of Programs

    Based upon our analysis of the responses to 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 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. 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 duties pertaining to 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, Thai 
American, Thai Synthetic, and Thai Blanket applied for tax certificates 
on subject merchandise to the United States at nominal rates 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 
these companies repay the RTG, in an annual adjustment, the amount by 
which the tax certificates exceed the import duties on physically 
incorporated inputs.
B. Export Packing Credits
    Under Section II (a) of the suspension agreement, the producers and 
exporters are not to apply for, or receive, Export Packing Credits 
(EPCs) from the Bank of Thailand (BOT) that permit the rediscounting of 
promissory notes arising from shipments of subject merchandise to the 
United States.
    EPCs are pre-shipment short-term loans available to exporters for a 
maximum of 180 days from the date of issuance. Under the EPC program, 
commercial banks issue loans based on promissory notes from 
creditworthy exporters. Such notes have to be supported by an 
irrevocable letter of credit, a sales contract, a purchase order, or a 
warehouse receipt. The commercial bank will then resell 50% of the 
promissory note to the BOT at a lower interest rate. The maximum 
interest rate a commercial bank can charge the exporter is 10% per 
annum.
    If an exporter does not fulfill the contract by the due date of the 
EPC, the BOT will automatically charge the commercial bank a penalty 
interest rate. The commercial bank will then pass this penalty onto the 
exporter. The penalty interest rate is 6.5% per annum calculated over 
the full term of the loan. However, penalties can be refunded if the 
exporter ships the merchandise within 60 days after the due date. If 
only a portion of the goods is shipped by the due date, the exporter 
receives a partial refund in proportion to the value of the goods 
shipped.
    In the preliminary results, we found that Thai Melon and Thai 
American used this program for exports of subject merchandise to the 
United States. 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 net subsidy received on EPCs 
for this administrative review is 0.19%.
C. 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 

[[Page 2799]]
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.
D. 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 
products. 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: Section 28, 31, 35, and 36
D. Export Processing Zones
E. Double Deduction for Foreign Marketing Expenses

    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 (60 FR 39363), the programs found 
to be used did not confer a subsidy which violated the terms of the 
agreement. Due to the unusual circumstances surrounding this case and 
the reinstatement of the suspension agreement, the Department does not 
consider the calculation of EPCs in this POR to constitute a violation 
of the agreement within the meaning of 19 CFR 355.19 (d)(1994). 
However, we note that Section II (a) of the suspension agreement 
prohibits participation by any signatory in the EPC program at 
noncommercial rates and terms for subject merchandise. Thus, in future 
reviews, the signatories shall follow Section II (a) of the suspension 
agreement or they will be found in violation of the agreement.
    In regard to the tax certificates received by signatories 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 the signatories repay to the RTG, 
in an annual adjustment, any amount by which the tax certificate 
exceeds the amount of import duties on physically incorporated inputs. 
The annual adjustment shall be calculated in accordance with Section 
IIc (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 the signatories 
repay the amount in which the tax certificates exceed import duties on 
physically incorporated inputs. If the signatories fail to comply with 
the Department, we will determine that the signatories have 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 

[[Page 2800]]
the agreement in order to ensure that the excess amounts of the tax 
certificates are 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 May 18, 1992 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 C.F.R. 
355.22(1994).

    Dated: December 14, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-1454 Filed 1-26-96; 8:45 am]
BILLING CODE 3510-DS-P