Notice of Preliminary Determination of Sales at Less Than Fair Value: Polyvinyl Alcohol From the People's Republic of China

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-842]

Notice of Preliminary Determination of Sales at Less Than Fair

Value: Polyvinyl Alcohol From the People's Republic of China

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: October 10, 1995.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Everett Kelly,

Office of Antidumping Investigations, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W., Washington, D.C. 20230;

telephone: (202) 482-4136 or (202) 482-4194, respectively.

The Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

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

Uruguay Rounds Agreements Act (URAA).

Preliminary Determination

We preliminarily determine that polyvinyl alcohol (PVA) from the

People's Republic of China (PRC) is being, or is likely to be, sold in

the United States at less than fair value (LTFV), as provided in

section 733 of the Tariff Act of 1930, as amended (the Act). The

estimated margins are shown in the ``Suspension of Liquidation''

section of this notice.

Case History

Since the initiation of this investigation on March 29, 1995 (60 FR

17053, April 4, 1995) the following events have occurred:

On April 18, 1995, we sent a survey to the PRC's Ministry of

Foreign Trade and Economic Cooperation (MOFTEC) requesting the

identification of producers and exporters, and information on

production and sales of PVA exported to the United States. We received

a response in May 1995, identifying Sichuan Vinylon Works (Sichuan) and

Guangxi Import and Export Corporation (Guangxi) as companies who sold

the subject merchandise during the period of investigation (POI).

On April 24, 1995, the United States International Trade Commission

(ITC) notified the Department of Commerce (the Department) of its

affirmative preliminary determination.

In May 1995, the Department presented questionnaires to MOFTEC and

counsel for Guangxi and Sichuan. Responses to the questionnaire were

received in June and July from Guangxi, Guangxi Vinylon Plant (Guangxi

Vinylon), which produces PVA sold by Guangxi, and Sichuan. The

Department issued supplemental questionnaires to these companies and

received responses to them, during August 1995. We also requested and

received additional information during September 1995.

The Department invited petitioner and respondents to provide

information for valuing the factors of production. The parties

submitted such information during August and September 1995.

On September 19, 1995, petitioner amended the petition to exclude

from the scope of this investigation polyvinyl alcohols covalently

bonded with acetoacetylate, carboxylic acid, or sulfonic acid uniformly

present on all polymer chains in a concentration equal to or greater

than two mole percent, or polyvinyl alcohols covalently bonded with

silane uniformly present on all polymer chains in a concentration equal

to or greater than one-tenth of one mole percent. We have revised the

scope of this investigation to reflect petitioners' amendment (see the

``Scope of Investigation'' section of this notice, below).

On September 21, 1995, Isolyser Co., Inc. (Isolyser), an importer

of the subject merchandise, requested the Department to consider PVA

hydrolyzed at a level of at least 98 percent to be a separate like

product. Isolyser's request was submitted too late for consideration in

the preliminary determination. We will, however, consider it in our

final determination.

Scope of Investigation

The merchandise under investigation is polyvinyl alcohol. Polyvinyl

alcohol is a dry, white to cream-colored, water-soluble synthetic

polymer, usually prepared by hydrolysis of polyvinyl acetate. This

product includes polyvinyl alcohols hydrolyzed in excess of 85 percent,

whether or not mixed or diluted with defoamer or boric acid, except for

polyvinyl alcohols covalently bonded with acetoacetylate, carboxylic

acid, or sulfonic acid uniformly present on all polymer chains in a

concentration equal to or greater than two mole percent, or polyvinyl

alcohols covalently bonded with silane uniformly present on all polymer

chains in a concentration equal to or greater than one-tenth of one

mole percent, which are excluded.

The merchandise under investigation is currently classifiable under

subheading 3905.20.00 of the Harmonized Tariff Schedule of the United

States (HTSUS). Although the HTSUS subheading is provided for

convenience and customs purposes, the written description of the

merchandise under investigation is dispositive.

Period of Investigation

The period of investigation is October 1, 1994, through March 31,

1995.

Separate Rates

Each of the responding PRC exporters, Sichuan and Guangxi, has

requested a separate, company-specific rate. According to both

respondents' business licenses, each is ``owned by all the people''. As

stated in the Final Determination of Sales at Less than Fair Value:

Silicon Carbide from the People's Republic of China 59 FR 22585, 22586

(May 2, 1994) (Silicon Carbide), and the Final Determination of Sales

at Less than Fair Value: Furfuryl Alcohol from the People's Republic of

China 60 FR 22545 (May 8, 1995) (Furfuryl Alcohol), ownership of a

company by all the people does not, in itself, require the application

of a single rate. Accordingly both respondents are eligible for

consideration for a separate rate.

To establish whether a firm is sufficiently independent from

government control to be entitled to a separate rate, the Department

analyzes each exporting entity under a test arising out of the Final

Determination of Sales at Less Than Fair Value: Sparklers from the

People's Republic of China 56 FR 20588 (May 6, 1991) (Sparklers) and

amplified in Silicon Carbide. Under the separate rates criteria, the

Department assigns separate rates in nonmarket economy cases only if

respondents can demonstrate the absence of both de jure and de facto

governmental control over export activities.

1. Absence of De Jure Control

The respondents have placed on the administrative record a number

of documents to demonstrate absence of de jure control, including laws,

regulations and provisions enacted by the State Council of the central

government of the PRC. Respondents have also submitted documents which

establish that PVA is not included on the list of products that may be

subject to central government export constraints (Export Provisions).

The Department has reviewed these and

[[Page 52648]]

other enactments in prior cases and has previously determined that

these laws indicate that the responsibility for managing state-owned

enterprises has been shifted from the government to the enterprise

itself. (See Silicon Carbide and Furfuryl Alcohol). Nothing on the

record of this investigation would lead us to reconsider this

determination.

However, as stated in previous cases, there is some evidence (on

this record), that the PRC central government enactments have not been

implemented uniformly among different sectors and/or jurisdictions in

the PRC (See Silicon Carbide and Furfuryl Alcohol). Therefore, the

Department has determined that an analysis of de facto control is

critical in determining whether respondents are, in fact, subject to a

degree of governmental control which would preclude the Department from

assigning separate rates.

2. Absence of De Facto Control

The Department typically considers four factors in evaluating

whether each respondent is subject to de facto governmental control of

its export functions: (1) whether the export prices are set by or

subject to the approval of a governmental authority; (2) whether the

respondent has authority to negotiate and sign contracts and other

agreements; (3) whether the respondent has autonomy from the government

in making decisions regarding the selection of management; and (4)

whether the respondent retains the proceeds of its export sales and

makes independent decisions regarding disposition of profits or

financing of losses (see Silicon Carbide and Furfuryl Alcohol).

Each respondent has asserted the following: (1) it establishes its

own export prices; (2) it negotiates contracts, without guidance from

any governmental entities or organizations; (3) it makes its own

personnel decisions, and there is no information on the record that

suggests central government control over selection of management; and

(4) it retains the proceeds of its export sales, uses profits according

to its business needs and has the authority to sell its assets and to

obtain loans. In addition, respondents' questionnaire responses

indicate that company-specific pricing during the POI does not suggest

coordination among exporters. This information supports a preliminary

finding that there is a de facto absence of governmental control of

export functions.

Consequently, we preliminarily determine that Guangxi and Sichuan

have met the criteria for the application of separate rates. We will

examine this matter further at verification and determine whether the

questionnaire responses are supported by verifiable documentation.

Nonmarket Economy Country Status

The Department has treated the PRC as a nonmarket economy country

(NME) in all past antidumping investigations and administrative reviews

(see, e.g., Silicon Carbide and Furfuryl Alcohol). Neither respondents

nor petitioners have challenged such treatment. Therefore, in

accordance with section 771(18)(c) of the Act, we will continue to

treat the PRC as an NME in this investigation.

When the Department is investigating imports from an NME, section

773(c)(1) of the Act directs us to base normal value (NV) on the NME

producers' factors of production, valued in a comparable market economy

that is a significant producer of comparable merchandise. The sources

of individual factor prices are discussed under the NV section, below.

Surrogate Country

Section 773(c)(4) of the Act requires the Department to value the

NME producers' factors of production, to the extent possible, in one or

more market economy countries that (1) are at a level of economic

development comparable to that of the NME country, and (2) are

significant producers of comparable merchandise. The Department has

determined that India, Kenya, Nigeria, Pakistan, Sri Lanka, and

Indonesia are the countries most comparable to the PRC in terms of

overall economic development (see Memorandum from David Mueller,

Director, Office of Policy, to Gary Taverman, Acting Director, Office

of Antidumping Investigations, dated June 15, 1995). According to the

available information on the record, we have determined that India is

the only significant producer of PVA among these six potential

surrogate countries. Accordingly, we have calculated Normal Value (NV)

using Indian prices for the PRC producers' factors of production. We

have obtained and relied upon published, publicly available information

wherever possible.

Fair Value Comparisons

To determine whether sales of PVA from the PRC to the United States

by Guangxi and Sichuan were made at less than fair value, we compared

Export Price (EP) to the NV, as specified in the ``Export Price'' and

``Normal Value'' sections of this notice.

Export Price

For both Guangxi and Sichuan, we calculated Export Price (EP) in

accordance with section 772(a) of the Act, because the subject

merchandise was sold directly to the first unaffiliated purchaser in

the United States prior to importation. The constructed export price

under section 772(b) is not otherwise warranted on the basis of the

facts of this investigation.

Petitioner has claimed that two customers of the respondents are

affiliated resellers under section 771(33) through common PRC

government control. As we have accepted Guangxi's and Sichuan's

separate rates claims based on absence of PRC government control for

purposes of the preliminary determination, there is no basis to

consider these customers as affiliated parties.

We calculated EP based on packed, FOB PRC port or CIF U.S. port

prices to unaffiliated purchasers in the United States, as appropriate.

We made deductions from the starting price, where appropriate, for the

following services: foreign inland freight, brokerage and handling,

loading and containerization, ocean freight, and marine insurance. As

all movement services were provided by PRC suppliers, these services

were valued in the surrogate country.

We excluded certain U.S. sales by Guangxi from our analysis because

the information available at this time indicates that the appropriate

date of sale for these transactions is outside the POI.

Normal Value

In accordance with section 773(c) of the Act we calculated NV based

on factors of production reported by Sichuan and by Guangxi Vinylon,

which produced the PVA for Guangxi. To calculate NV, the reported unit

factor quantities were multiplied by Indian values. Where possible, we

used public information for the surrogate values. The selection of the

surrogate values applied in this determination was based on the quality

and contemporaneity of the data. Where possible, we attempted to value

material inputs on the basis of a tax-exclusive domestic price. As

appropriate, we adjusted input prices to make them delivered prices.

For those values not contemporaneous with the POI, we adjusted for

inflation using wholesale price indices or, in the case of labor rates,

consumer price indices, published in the International Monetary Fund's

International Financial Statistics. For a complete analysis of

surrogate values, see the Valuation

[[Page 52649]]

Memorandum, dated October 2, 1995. We then added amounts for overhead,

general expenses (including interest) and profit, based on the

experience of a PVA producer in India (see Valuation Memorandum), and

packing expenses incident to placing the merchandise in condition

packed and ready for shipment to the United States.

Guangxi's reporting of packing material factor units could not be

converted to the weight unit of the surrogate value. For the

preliminary determination, we used the factor weights from the public

version of Sichuan's response to calculate the value for Guangxi's

packing materials.

As we could not identify an appropriate Indian surrogate value for

one raw material-nitrogen, we applied an Indonesian price for this

factor. Sichuan obtained two raw material factors from market economy

sources and paid in market economy currencies. For these two factors,

we valued them based on the price actually paid by Sichuan.

China-Wide Rate

MOFTEC identified what we believe to be the only two PRC exporters

of PVA to the United States during the POI. Both have responded in this

investigation. We compared the respondents' sales data with U.S. import

statistics for time periods including the POI and found no indication

of unreported sales. Accordingly, we have based the China-wide rate on

the weighted-average of the margins calculated in this proceeding.

Verification

As provided in section 782(i) of the Act, we will verify all

information used in making our final determination.

Suspension of Liquidation

In accordance with section 733(d) of the Act, we are directing the

Customs Service to suspend liquidation of all entries of PVA from the

PRC, that are entered, or withdrawn from warehouse, for consumption on

or after the date of publication of this notice in the Federal

Register. The Customs Service will require a cash deposit or posting of

a bond equal to the estimated dumping margins by which the normal value

exceeds the export price, as shown below. These suspension of

liquidation instructions will remain in effect until further notice.

The weighted-average dumping margins are as follows:

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

Weighted-

average

Manufacturer/producer/exporter margin

percentage

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

Guangxi GITIC Import and Export Corp....................... 121.74

Sichuan Vinylon Works...................................... 187.56

PRC-Wide Rate.............................................. 176.10

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

The PRC-Wide rate applies to all entries of subject merchandise

except for entries from exporters that are identified individually

above.

ITC Notification

In accordance with section 733(f) of the Act, we have notified the

ITC of our determination. If our final determination is affirmative,

the ITC will determine before the later of 120 days after the date of

this preliminary determination or 45 days after our final determination

whether these imports are materially injuring, or threaten material

injury to, the U.S. industry.

Public Comment

In accordance with 19 CFR 353.38, case briefs or other written

comments in at least ten copies must be submitted to the Assistant

Secretary for Import Administration no later than November 17, 1995,

and rebuttal briefs, no later than November 20, 1995. A list of

authorities used and a summary of arguments made in the briefs should

accompany these briefs. Such summary should be limited to five pages

total, including footnotes. We will hold a public hearing, if

requested, to afford interested parties an opportunity to comment on

arguments raised in case or rebuttal briefs. At this time, the hearing

is scheduled for November 22, 1995, the time and place to be

determined, at the U.S. Department of Commerce, Room 3606, 14th Street

and Constitution Avenue, N.W., Washington, D.C. 20230. Parties should

confirm by telephone the time, date, and place of the hearing 48 hours

before the scheduled time.

Interested parties who wish to request a hearing, or to participate

if one is requested, must submit a written request to the Assistant

Secretary for Import Administration, U.S. Department of Commerce, Room

B-099, within ten days of the publication of this notice. Requests

should contain: (1) the party's name, address, and telephone number;

(2) the number of participants; and (3) a list of the issues to be

discussed. In accordance with 19 CFR 353.38(b) oral presentations will

be limited to issues raised in the briefs. If this investigation

proceeds normally, we will make our final determination by December 18,

1995.

This determination is published pursuant to section 733(f) of the

Act.

Dated: October 2, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-25059 Filed 10-6-95; 8:45 am]

BILLING CODE 3510-DS-P