Notice of Preliminary Determination of Sales at Less Than Fair Value: Polyvinyl Alcohol From Taiwan

DEPARTMENT OF COMMERCE

[A-583-824]

Notice of Preliminary Determination of Sales at Less Than Fair

Value: Polyvinyl Alcohol From Taiwan

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: October 10, 1995.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Barbara Wojcik-

Betancourt, 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) 482-0629, 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 Round Agreements Act (URAA).

Preliminary Determination

We preliminarily determine that polyvinyl alcohol from Taiwan 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 24, 1995, the U.S. International Trade Commission (ITC)

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

preliminary determination.

In May 1995, the Department presented an antidumping duty

questionnaire to Chang Chun Petrochemical Co., Ltd. (Chang Chun), the

sole Taiwan producer of the subject merchandise. Chang Chun submitted

its questionnaire responses in June and July 1995. The Department

issued supplemental questionnaires, and Chang Chun responded to them,

in August 1995. During September 1995, the Department requested and

received additional information from Chang Chun. In addition, both

petitioner and Chang Chun submitted comments regarding treatment of

various issues for the preliminary determination.

Pursuant to section 733(c)(1)(B) of the Act, as amended, the

Department determined that this investigation is extraordinarily

complicated and additional time is necessary to make the preliminary

determination. Accordingly, we postponed the preliminary determination

until October 2, 1995 (60 FR 35899, July 12, 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 petitioner's amendment (see the

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

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

[[Page 52652]]

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 (POI) is April 1, 1994, through March

31, 1995.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all

products in the home market to be foreign like products for purposes of

determining appropriate product comparisons to U.S. sales. Where there

were no sales of identical merchandise in the home market to compare to

U.S. sales, we made comparisons on the basis of the characteristics

listed in the Department's antidumping questionnaire.

Chang Chun reported that it sells to customers at three levels of

trade in the home market: distributor, retailer, and end-user; and to

two levels of trade in the U.S. market: distributor and end-user. It

has requested that we make comparisons at the same level of trade, in

accordance with section 773(a)(1)(B) of the Act.

Under this section of the Act, the Department will compare

products, to the extent practicable, at the same level of trade.

Section 773(a)(7)(A)(i) specifies that the difference in level of trade

must involve the performance of different selling activities by the

seller (i.e. the responding exporter).

While Chang Chun has identified different functions performed by

its customers at the alleged levels of trade, it has failed to

demonstrate that Chang Chun itself engages in different selling

activities among end-users, distributors, and retailers. Chang Chun

states that it ``treats end-users and distributors the same as far as

the handling of the transactions.'' Apart from a quantity rebate

offered only to home market distributors, and a commission paid on some

end-user U.S. sales, it has not reported any other selling activities

that differ among the alleged levels of trade. Because Chang Chun

reports performing no other selling activities and reports incurring no

expenses for technical service, warranty or advertising, it has failed

to demonstrate that it performs different selling activities dependent

on the customer.

Based on this analysis, we have determined that Chang Chun has

failed to support its contention that it sells to different levels of

trade. In making our comparisons, we therefore, made no distinctions

between levels of trade.

Fair Value Comparisons

To determine whether Chang Chun's sales of PVA to the United States

were made at less than fair value, we compared Export Price (EP) to the

Normal Value (NV), as specified below.

Export Price

We calculated EP, in accordance with section 772(a) of the Act,

because the subject merchandise was sold to the first unaffiliated

purchaser in the United States prior to importation, and Constructed

Export Price (CEP) under section 772(b) is not otherwise warranted

based on the facts of this investigation.

We calculated EP based on packed, FOB factory, C&F or CIF prices to

unaffiliated customers in the United States. We made deductions from

the starting price (gross unit price), where appropriate, for the

following charges: inland freight in Taiwan; freight and marine

insurance; brokerage and handling; ocean freight, ocean freight fees;

and harbor construction tax.

Normal Value

In accordance with section 773(a)(1)(B) of the Act, we have based

NV on sales in Taiwan, the home market. We compared all home market

sales to the cost of production (COP), as described below. In every

instance, home market prices were above COP, and we calculated NV based

on FOB factory or delivered prices to unaffiliated customers, and made

deductions from the starting price for freight, discounts, and rebates

(reported also as a discounts by Chang Chun), and post-sale billing

corrections. In accordance with section 773(a)(6) of the Act, we

deducted home market packing costs and added U.S. packing costs. In

addition, we adjusted for differences in the circumstances of sale, in

accordance with section 773(a)(6)(C)(iii). These circumstances included

differences in imputed credit expenses and commissions. Chang Chun paid

commissions on some U.S. sales, but paid no commissions on any home

market sales. Thus, we deducted the lesser of either (1) the amount of

the weighted-average commission paid on the U.S. sales of a product; or

(2) the sum of the weighted average indirect selling expenses paid on

the home market sales, and then added the weighted-averaged amount of

the commission paid on the U.S. sales to NV in accordance with 19 CFR

353.56(a)(2).

Petitioner claims that Chang Chun's sales to its major distributors

in the home market should be considered sales to affiliated parties

under section 771(33) because suppliers are so reliant on Chang Chun

that Chang Chun is in a position to legally or operationally exercise

restraint or direction over these suppliers. Chang Chun responds that

it has no ownership, overlapping management, or financial arrangements

with these customers and is in no position to control its distributors.

For the preliminary determination, we have considered these customers

to be unaffiliated, but will examine this issue further at verification

prior to the final determination.

Cost of Production Analysis

Pursuant to an allegation made by the petitioner, we initiated a

cost of production investigation in our notice of initiation ( 60 FR

17053, April 4, 1995). To determine whether the home market prices were

above COP, pursuant to section 773(b), we calculated COP based on the

sum of Chang Chun's reported cost of materials, fabrication, general

expenses, and packing. We made no adjustment to Chang Chun's submitted

cost data for purposes of the preliminary determination.

Petitioner claims that Chang Chun has incorrectly treated acetic

acid as a co-product of PVA production rather than a by-product in its

cost allocation methodology. We have preliminarily treated acetic acid

as a co-product, but will examine this issue further at verification

for the final determination.

Results of COP Analysis

In accordance with section 773(b)(1) of the Act, we compared home

market sales to the weighted-average cost of production, by product, to

determine whether sales were made below the COP within an extended

period of time in substantial quantities at prices that do not permit

the recovery of all costs within a reasonable period of time.

Based on our preliminary analysis, none of Chang Chun's sales were

found to be below cost. Accordingly, we calculated NV for all U.S.

sales based on price to price comparisons.

[[Page 52653]]

Comparison Methodology

In accordance with section 777A(d)(1)(A)(i), we calculated

weighted-average EPs for comparisons to weighted average NVs. The

weighted-averages were calculated and compared by product

characteristics.

Petitioner argues that monthly average home market and U.S. prices

should be used in calculating the dumping margin due to alleged

differences in the time, volume, and distribution of sales during the

POI. Petitioner contends that the use of monthly averages is

appropriate in order to avoid understating a margin calculated using

yearly POI averages.

The Department's standard practice in past antidumping

investigations involving weighted-average foreign market values (now

NV) was to calculate a single weighted-average price for each product

during the 6-month POI. The Department intends to extend this practice

to the calculation of POI average prices in both markets under the new

section 777A of the Act. At this point, the available information on

the record does not establish a sufficient basis to use monthly average

prices instead of POI average prices.

Currency Conversion

For the purpose of the preliminary determination, we made currency

conversions into U.S. dollars based on the official exchange rates in

effect on the dates of the U.S. sales as certified by the Federal

Reserve Bank of Chicago, in accordance with section 773A(a) of the Act.

Verification

As provided in section 788(i) of the Act, we will verify all

information determined to be acceptable for use 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 polyvinyl

alcohol from Taiwan, 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 amount 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

Exporter/manufacturer margin

percentage

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

Chang Chun Petrochemical Co., Ltd.......................... 4.03

All others................................................. 4.03

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

The all others rate applies to all entries of subject merchandise

except for entries of merchandise produced by Chang Chun.

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 an executive summary of issues should accompany

any briefs submitted to the Department. Such summary should be limited

to five pages total, including footnotes. In accordance with 19 CFR

353.38, we will hold a public hearing, if requested, to afford

interested parties an opportunity to comment on arguments raised in

case or rebuttal briefs. Tentatively, the hearing will be held on

November 22, 1995, time and place to be determined, at the U.S.

Department of Commerce, 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 3, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-25061 Filed 10-6-95; 8:45 am]

BILLING CODE 3510-DS-P