[Federal Register Volume 64, Number 150 (Thursday, August 5, 1999)]
[Notices]
[Pages 42672-42675]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20224]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-535-001]


Final Results of Expedited Sunset Review: Cotton Shop Towels From 
Pakistan

AGENCY: Import Administration, International Trade Administration, U.S. 
Department of Commerce.

ACTION: Notice of final results of expedited sunset review: cotton shop 
towels from Pakistan.

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SUMMARY: On January 4, 1999, the Department of Commerce (``the 
Department'') initiated a sunset review of the countervailing duty 
order on cotton shop towels from Pakistan pursuant to section 751(c) of 
the Tariff Act of 1930, as amended (``the Act''). On the basis of a 
notice of intent to participate and an adequate substantive response 
filed on behalf of the domestic party, and inadequate response (in this 
case, no response) from respondent interested parties, the Department 
determined to conduct an expedited review. As a result of this review, 
the Department finds that revocation of the countervailing duty order 
would be likely to lead to continuation or recurrence of a 
countervailing subsidy. The net countervailable subsidy and the nature 
of the subsidy are identified in the Final Results of Review section to 
this notice.

For Further Information Contact: Martha V. Douthit or Melissa G. 
Skinner, Office of Policy for Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th St. & 
Constitution Ave., NW., Washington, DC 20230; telephone (202) 482-3207 
or (202) 482-1560, respectively.

Effective Date: August 5, 1999.

Statute and Regulations

    This review was conducted pursuant to sections 751(c) and 752 of 
the Act. The Department's procedures for the conduct of sunset reviews 
are set forth in Procedures for Conducting Five-year (``Sunset'') 
Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516 
(March 20, 1998) (``Sunset Regulations''). Guidance on methodological 
or analytical issues

[[Page 42673]]

relevant to the Department's conduct of sunset reviews is set forth in 
the Department's Policy Bulletin 98:3--Policies Regarding the Conduct 
of Five-year (``Sunset'') Reviews of Antidumping and Countervailing 
Duty Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset 
Policy Bulletin'').

Scope

    The subject merchandise is cotton shop towels from Pakistan. This 
merchandise is classifiable under item number 6307.10.20 of the 
Harmonized Tariff Schedule (HTS). The HTS item number is provided for 
convenience and customs purposes. The written description remains 
dispositive.

History of the Order

    On January 11, 1984, the Department issued a final affirmative 
countervailing duty determination on cotton shop towels from 
Pakistan.1 The Department found a country-wide estimated net 
subsidy rate of 12.67 percent ad valorem based on seven programs: 7.5 
percent under the compensatory rebate program, 3.8 percent under the 
excise tax program, 0.11 percent under the sales tax rebate program, 
0.37 percent under the customs duty rebate program, 0.013 percent under 
the income tax reduction program, 0.08 percent under the export 
financing program, and 0.8 percent under the export credit insurance 
program. Receipt of benefits under each of these programs was 
contingent upon exports. The Department also found that the import duty 
rebate program was not used.2
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    \1\ Cotton Shop Towels From Pakistan; Final Affirmative 
Countervailing Duty Determination, 49 FR 1408, (January 11, 1984).
    \2\ Id.
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    On March 9, 1984, the Department issued a countervailing duty order 
which confirmed the subsidy rates found in the original 
investigation.3 Since the issuance of the order, the 
Department has conducted eight administrative reviews covering the 
eight programs investigated in the original investigation.4
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    \3\ Cotton Shop Towels From Pakistan, Countervailing Duty Order, 
49 FR 8974 (March 9, 1984).
    \4\ Cotton Shop Towels From Pakistan; Final Results of 
Administrative Review of Countervailing Duty Order, 51 FR 5219 
(February 12, 1986); Cotton Shop Towels From Pakistan; Final Results 
of Countervailing Duty Administrative Review, 54 FR 14671 (April 12, 
1989); Cotton Shop Towels From Pakistan; Final Results of 
Countervailing Duty Administrative Review, 56 FR 28740 (June 24, 
1991); Cotton Shop Towels From Pakistan; Final Results of 
Countervailing Duty Administrative Review, 57 FR 12475 (April 10, 
1992); Cotton Shop Towels From Pakistan; Final Results of 
Countervailing Duty Administrative Review, 58 FR 48038, (September 
14, 1993); and Cotton Shop Towels From Pakistan; Final Results of 
Countervailing Duty Administrative Reviews, 62 FR 24082 (May 2, 
1997).
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    During the administrative reviews covering April 1, 1984 through 
December 31, 1984 and January through December 1985, the Department 
determined that the compensatory rebate scheme had been repealed. In 
addition, during these same reviews, the Department found that Pakistan 
producers/exporters received countervailable benefits under the import 
duty rebate program at a rate of zero percent in 1984 and 0.000028 
percent in 1985.
    In the final results of the administrative review of the period 
January 1, 1993 through December 31, 1993, the Department, for the 
first time, issued company-specific rates in addition to a country-wide 
rate. Net subsidies of 11.50 percent and 11.54 percent were determined 
for Eastern Textiles, Ltd., and Creation (Pvt.) Ltd., respectively.
    This review covers all producers and exporters of cotton shop 
towels from Pakistan.

Background

    On January 4, 1999, the Department initiated a sunset review of the 
countervailing duty order on cotton shop towels from Pakistan pursuant 
to section 751(c) of the Act. On January 19, 1999, the Department 
received a Notice of Intent to Participate from Milliken & Company 
(``Milliken''), within the deadline specified in Sec. 351.218(d)(1)(i) 
of the Sunset Regulations. Milliken claimed interested party status 
under Sec. 771(9)(C) of the Act, as a domestic producer of cotton shop 
towels. Milliken asserted that it was the petitioner in the original 
countervailing duty investigation and has participated as a domestic 
interested party since that time. On February 3, 1999, the Department 
received Milliken's substantive response to the Department's notice of 
initiation, within the 30-day deadline specified in the Sunset 
Regulations in Sec. 351.218(d)(3)(i). We did not receive a response 
from any respondent interested party, including the Government of 
Pakistan. As a result, pursuant to section 751(c)(3)(B) of the Act and 
our regulations (19 CFR 351.218(e)(1)(ii)(C)(2)), we determined to 
conduct an expedited review.
    The Department determined that the sunset review of the 
countervailing duty order on cotton shop towels from Pakistan is 
extraordinarily complicated. In accordance with section 751(c)(5)(C)(v) 
of the Act, the Department may treat a review as extraordinarily 
complicated if it is a review of a transition order (i.e., an order in 
effect on January 1, 1995). (See section 751(c)(6)(C) of the Act.) 
Therefore, on May 7, 1999, the Department extended the time limit for 
completion of the final results of this review until not later than 
August 2, 1999, in accordance with section 751(c)(5)(B) of the 
Act.5
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    \5\ See Steel Wire Rope from Japan, et. al.: Extension of Time 
Limit for Final Results of Five-Year Reviews, 64 FR 24573 (May 7, 
1999).
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Determination

    In accordance with section 751(c)(1) of the Act, the Department 
conducted this review to determine whether revocation of the 
countervailing duty order would be likely to lead to continuation or 
recurrence of a countervailable subsidy. Section 752(b) of the Act 
provides that, in making this determination, the Department shall 
consider the net countervailable subsidy determined in the 
investigation and subsequent reviews, and whether any change in the 
program which gave rise to the net countervailable subsidy has occurred 
that is likely to affect that net countervailable subsidy. Pursuant to 
section 752(b)(3) of the Act, the Department shall provide to the 
International Trade Commission (``the ITC'') the net countervailable 
subsidy likely to prevail if the order is revoked. In addition, 
consistent with section 752(a)(6), the Department shall provide the ITC 
information concerning the nature of the subsidy and whether the 
subsidy is a subsidy described in Article 3 or Article 6.1 of the 1994 
WTO Agreement on Subsidies and Countervailing Measures (``Subsidies 
Agreement'').
    The Department's determination concerning continuation or 
recurrence of a countervailable subsidy, the net countervailable 
subsidy likely to prevail if the order is revoked, and the nature of 
the subsidy are discussed below. In addition, Milliken's comments with 
respect to each of these issues are addressed within the respective 
sections.

Continuation or Recurrence of a Countervailable Subsidy

    Drawing on the guidance provided in the legislative history 
accompanying the Uruguay Round Agreement Act (``URAA''), specifically 
the Statement of Administrative Action (``the SAA''), H.R. Doc. No. 
103-316, vol. 1 (1994), the House Report, H.R. Rep. No.103-826, pt.1 
(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the

[[Page 42674]]

Department issued its Sunset Policy Bulletin providing guidance on 
methodological and analytical issues, including the basis for 
likelihood determinations. The Department clarified that determinations 
of likelihood will be made on an order-wide basis (see section III.A.2 
of the Sunset Policy Bulletin). Additionally, the Department normally 
will determine that revocation of a countervailing duty order is likely 
to lead to continuation or recurrence of a countervailable subsidy when 
(a) a subsidy program continues, (b) a subsidy program has been only 
temporarily suspended, or (c) a subsidy program has been only partially 
terminated (see section III.A.3.a of the Sunset Policy Bulletin). 
Exceptions to this policy are provided when a company has a long record 
of not using a program (see section III.A.3.b of the Sunset Policy 
Bulletin).
    In addition to considering the guidance on likelihood cited above, 
section 751(c)(4)(B) of the Act provides that the Department shall 
determine that revocation of an order is likely to lead to continuation 
or recurrence of a countervailable subsidy when a respondent interested 
party waives its participation in the sunset review. Pursuant to the 
SAA, at 881, in a review of a countervailing duty order, when the 
foreign government has waived participation, the Department shall 
conclude that revocation of the order would be likely to lead to a 
continuation or recurrence of a countervailable subsidy for all 
respondent interested parties.6 In the instant review, the 
Department did not receive a response from the foreign government or 
from any other respondent interested party. Pursuant to 
Sec. 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes a 
waiver of participation.
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    \6\ See 19 CFR 351.218(d)(2)(iv).
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    In its substantive response, Milliken asserted that revocation of 
the countervailing duty order on cotton shop towels from Pakistan would 
likely result in the recurrence of countervailable subsidies. Milliken 
asserted that in the original investigation and in the subsequent 
administrative reviews, the Department found several programs to confer 
countervailable subsidies. Further, Milliken asserted that the 
Government of Pakistan's recent withdrawal of its administrative review 
request strongly suggests that there has been no change in the programs 
giving rise to countervailing subsidies.7 In its substantive 
response, Milliken asserted that, with the exception of the 
compensatory rebate program, to the best of its knowledge, there is no 
evidence that the programs giving rise to the subsidies have been 
suspended or terminated, or that the respondent exporters have 
renounced the countervailable subsidies under these 
programs.8
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    \7\ See Milliken Substantive Response (February 3, 1999) at 4, 
and Cotton Shop Towels From Pakistan; Termination of Countervailing 
Duty Administrative Review, 62 FR 34046 (June 24, 1997).
    \8\ See Milliken Substantive Response (February 3, 1999) at 6.
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    In conclusion, Milliken argued that, based on the history of this 
case, the Department must determine that revocation of the 
countervailing duty order would likely lead to the recurrence of 
subsidized imports of cotton shop towels from Pakistan.
    The Sunset Policy Bulletin, at section III.A.3, states that, 
consistent with the SAA at 888, continuation of a program will be 
probative of the likelihood of continuation or recurrence of 
countervailable subsidies. Temporary suspension or partial termination 
of a subsidy program also will be probative of continuation or 
recurrence of countervailable subsidies, absent significant evidence to 
the contrary. Additionally, the Sunset Policy Bulletin provides that, 
when a program has been officially terminated by the foreign 
government, this will be probative of the fact that the program will 
not continue or recur if the order is revoked (see Sunset Policy 
Bulletin at section III.A.5).
    We agree with Milliken that Pakistan producers/exporters continue 
to benefit from several countervailable subsidy programs. The 
Department, in the most recent administrative review, determined that 
producers/exporters received countervailable benefits under the export 
financing program, the excise tax, sales tax, and customs duty rebate 
programs, and the income tax reduction program. The Department also 
listed two programs found not to be used that had previously been found 
countervailable.
    As stated above, the continued use of a program is highly probative 
of the likelihood of continuation or recurrence of countervailable 
subsidies if the order were revoked. Additionally, the presence of 
programs that have not been used, but that also have not been 
terminated, is also probative of the likelihood of continuation or 
recurrence of a countervailable subsidy. Therefore, because there are 
countervailable programs that are currently being used and others that 
remain in existence, the foreign government and other respondent 
interested parties waived their right to participate in this review 
before the Department, and absent argument and evidence to the 
contrary, the Department determines that it is likely that a 
countervailable subsidy will continue if the order is revoked.

Net Countervailable Subsidy

    In the Sunset Policy Bulletin, the Department stated that, 
consistent with the SAA and House Report, the Department normally will 
select a rate from the investigation, because that is the only 
calculated rate that reflects the behavior of exporters and foreign 
governments without the discipline of an order or suspension agreement 
in place. The Department went on to clarify that this rate may not be 
the most appropriate rate if, for example, the rate was derived (in 
whole or in part) from subsidy programs which were found in subsequent 
reviews to be terminated, there has been a program-wide change, or the 
rate ignores a program found to be countervailable in a subsequent 
administrative review. Additionally, when the Department determined 
company-specific countervailing duty rates in the original 
investigation, the Department normally will report to the Commission 
those company-specific rates from the original investigation, or where 
no company-specific rate was determined for a company, the Department 
normally will provide to the Commission the country-wide or ``all 
others'' rate. (See Sunset Policy Bulletin at section III.B.2.)
    Milliken suggested that the Department select the original subsidy 
rate of 12.67 percent as the net countervailable subsidy rate likely to 
prevail if the order is revoked. Milliken argued that, should the 
Department decide that adjustments to the original subsidy rate are 
warranted, the Department should provide the Commission the rates from 
the final results of the most recent administrative review: Eastern 
Textiles, Ltd., 11.50 percent ad valorem, and Creation (Pvt), Ltd., 
11.54 percent ad valorem, and for all other producers/exporters of 
cotton shop towels from Pakistan, 8.49 percent ad valorem; the rates 
from the final results of the most recent administrative review (see 
Milliken's February 3, 1999, Substantive Response, at 9.)
    We disagree with Milliken's arguments that we use either the 
unadjusted rate from the original investigation or the rates from the 
most recent administrative review. As stated above, the Department 
normally will select the rate from the investigation, because that is 
the only calculated rate that reflects the behavior of exporters and 
foreign governments without the

[[Page 42675]]

discipline of the order in place. However, the Sunset Policy Bulletin 
(in section III.B.3.) also provides that adjustments may be made to the 
original net countervailable subsidy when programs have been terminated 
or when new programs have been added.
    As Milliken noted in its substantive response, the compensatory 
rebate scheme was found to have been terminated. Additionally, over the 
life of this order, the Department found that producers/exporters 
received countervailable benefits under the import duty rebate 
program--a program found not used in the original investigation.
    As a result of changes in programs since the imposition of the 
order, the Department determines that using the net countervailable 
subsidy rate as determined in the original investigation is no longer 
appropriate. Rather, we have adjusted the net countervailable subsidy 
from the original investigation by adding in the rate from the import 
duty rebate program (first used in the review covering April 1984 
through December 1984) and subtracting out the subsidy from the 
compensatory rebate scheme which was terminated on May 29, 1986. (See 
calculation memo.)

Nature of the Subsidy

    In the Sunset Policy Bulletin, the Department stated that, 
consistent with section 752(a)(6) of the Act, the Department will 
provide information to the Commission concerning the nature of the 
subsidy and whether the subsidy is a subsidy described in Article 3 or 
Article 6.1 of the Subsidies Agreement. In this case, Milliken did not 
address this issue.
    Because receipt of benefits under each of the countervailable 
programs is contingent upon exports, these programs fall within the 
definition of an export subsidy under Article 3.1(a) of the Subsidies 
Agreement. Each of the countervailable programs is described below.

Customs Duty Rebate

    The government provides a 2% customs duty rebate on exported goods. 
The program, is in effect, a duty drawback. The government pays this 
rebate on items not physically incorporated into the exported product.

Rebates On Exportation

    The government of Pakistan provides exporters of shop towels with 
cash rebates which are calculated as a percentage of the f.o.b. value 
of the exported product.

Income Tax Reduction

    The government of Pakistan provides a 55% reduction of taxes 
attributable to income generated by products made for export.

Preferential Export Financing

    The government permits short-term export financing to be provided 
to exporters at rates considerably lower than those otherwise charged 
on short-term loans in Pakistan.

Excise Tax and Sales Tax Rebate

    The government of Pakistan provides an excise tax rebate and sales 
tax rebate on exports of shop towels.

Final Results of Review

    As a result of this review, the Department finds that revocation of 
the countervailing duty order would be likely to lead to continuation 
or recurrence of a countervailable subsidy at the rate listed below.

------------------------------------------------------------------------
                                                                Margin
                  Manufacturers/exporters                     (percent)
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All manufacturers/exporters................................         5.17
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    This notice serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with Sec. 351.305 of the Department's regulation (19 
CFR 351.305).
    Timely 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 five-year (``sunset'') review and notice are in accordance 
with sections 751(c), 752, and 777(i)(1) of the Act.

    Dated: July 30, 1999.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-20224 Filed 8-4-99; 8:45 am]
BILLING CODE 3510-DS-P