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

DEPARTMENT OF COMMERCE

[A-583-824]

Notice of Final Determination of Sales at Less Than Fair Value:

Polyvinyl Alcohol From Taiwan

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: March 29, 1996.

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

Goldberger, Office of Antidumping Investigations, Import

Administration, International Trade Administration, U.S. Department of

Commerce, 14th Street and Constitution Avenue NW., Washington, D.C.

20230; telephone: (202) 482-0629 or (202) 482-4136, 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

[[Page 14065]]

Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act

(URAA).

FINAL DETERMINATION: As explained in the memoranda from the Assistant

Secretary for Import Administration dated November 22, 1995, and

January 11, 1996, the Department of Commerce (the Department) has

exercised its discretion to toll all deadlines for the duration of the

partial shutdowns of the Federal Government from November 15 through

November 21, 1995, and December 16, 1995, through January 6, 1996.

Thus, the deadline for the final determination in this investigation

has been extended by 28 days, i.e., one day for each day (or partial

day) the Department was closed. As such, the deadline for this final

determination is no later than March 21, 1996.

We determine that polyvinyl alcohol (PVA) from Taiwan is being sold

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

section 735 of the Act. The estimated margins are shown in the

``Suspension of Liquidation'' section of this notice.

Case History

Since the preliminary determination of sales at less than fair

value in this investigation on October 2, 1995, (60 FR 52651, October

10, 1995), the following events have occurred:

On October 10, 1995, Chang Chun Petrochemical Co., Ltd. (Chang

Chun), the sole Taiwan producer of the subject merchandise, and the

respondent in this investigation, timely requested a postponement of

the final determination until not later than 135 days after publication

of the preliminary determination in the Federal Register. The notice

postponing the final determination was published on October 25, 1995

(60 FR 54667). The Department has determined that such requests contain

an implied request to extend the provisional measures period, during

which liquidation is suspended, to six months (see Extension of

Provisional Measures memorandum dated February 7, 1996.).

We conducted verification of Chang Chun's sales and cost

questionnaire responses in Taiwan during October.

On November 20, 1995, the petitioner, Air Products and Chemicals,

Inc., stated that polyvinyl alcohol fiber was not intended to be within

the scope of this investigation.

Monsanto Company (Monsanto), a party to the proceeding in this

investigation, submitted comments on the cost of production

verification report on December 18, 1995. National Starch and Chemical

Company, Perry Chemical Corp., and Rhone-Poulenc, importers of the

subject merchandise, submitted comments on the sales verification

report on January 11, 1996.

Chang Chun and the petitioner, Air Products and Chemicals, Inc.,

submitted case briefs on January 16, 1996, and rebuttal briefs on

January 24, 1996. Monsanto also submitted a rebuttal brief on January

24, 1996. At the request of both the petitioner and Chang Chun, a

public hearing was held on February 26, 1996.

Scope of Investigation

The merchandise under investigation is polyvinyl alcohol. Polyvinyl

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

polymer. This product consists of polyvinyl alcohols hydrolyzed in

excess of 85 percent, whether or not mixed or diluted with defoamer or

boric acid. Excluded from this investigation are 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, and 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.

Polyvinyl alcohol in fiber form is not included in the scope of this

investigation.

The merchandise under investigation is currently classifiable under

subheading 3905.30.00 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

For purposes of determining appropriate product comparisons to U.S.

sales, we compared identical merchandise, or where there were no sales

of identical merchandise in the home market to compare to U.S. sales,

we made comparisons based on the characteristics listed in the

Department's antidumping questionnaire, as had been applied in the

preliminary determination, and in accordance with section 771(16) of

the Act.

In its case brief, petitioner claimed that the Department should

determine that ``targeted dumping'' exists under section 777A(d)(1)(B)

because of a pattern of export prices, which petitioner alleged

differed significantly across time. Pursuant to section 777A(d)(1)(B),

the Department may compare weighted-average normal values (NV) to

transaction-specific export prices, if there is a pattern of export

prices (EP) for comparable merchandise that differ significantly among

purchases, regions, or periods of time (see section 777A(d)(1)(B)(i))

(emphasis added) when these differences cannot be taken into account by

using an average to average or transaction to transaction comparison

(see section 777A(d)(1)(B)(ii)). Petitioner requested that the

Department compare monthly average NV to monthly EP averages to

alleviate the significant price distortions occurring in the home

market at the end of the POI. Petitioner, however, failed to provide

any evidence or argument as to why the alleged pattern of export prices

constitute targeted dumping. Consequently, we have rejected

petitioner's allegation of targeted dumping. However, the Department

has found significant differences over time in home market pricing.

Those differences have been taken into account in price averaging. For

discussion of the price averaging issue, see Comment 3 in the

Interested Party Comments section of this notice below.

Level of Trade

As set forth in section 773(a)(1)(B)(i) of the Act and in the

Statement of Administrative Action (SAA) accompanying the URAA, to the

extent practicable, the Department will calculate normal values based

on sales at the same level of trade as U.S. sales.

Pursuant to 773(a)(7)(A)(i), level of trade involves the

performance of different selling activities by the producer/exporter.

On September 22, 1995, we sent Chang Chun supplemental questions

requesting that Chang Chun establish any claimed levels of trade based

on selling functions performed and services offered by Chang Chun to

each customer or customer class, and to document and explain any claims

for a level of trade adjustment. Chang Chun provided no additional

information regarding its selling functions and continued to claim

that, pursuant to section 773(a)(7) (A) and (B), levels of trade are

based on customer classification.

We examined the record evidence on the selling functions performed

by Chang Chun on sales in each market and found that Chang Chun

provides nearly all of the same or very similar selling functions to

all customers including: packing and freight services, warranty claims,

advertising, technical services, and inventory maintenance. As a

result,

[[Page 14066]]

we rejected the level of trade claim because, pursuant to section

773(a)(7)(A)(i), differences in level of trade must involve the

performance of different selling activities by the seller (i.e. the

respondent producer/exporter) (see Comment 4). Therefore, we determine

that the selling functions performed among home market sales are

sufficiently similar for us to consider the home market to be one level

of trade.

For the U.S. market, Chang Chun reported payment of commissions on

certain U.S. sales. It reported, and we verified, that the commissions

paid did not reflect payments for any services provided by the

commissionaire. Apart from tolled sales, which are not used in our

final determination (see Comment 7), we also found that the selling

functions performed by the respondent in the U.S. are sufficiently

similar for all sales for us to consider the U.S. market to be one

level of trade.

Fair Value Comparisons

In accordance with section 772(a) of the Act, to determine whether

Chang Chun's sales of PVA to the United States were made at less than

fair value, we used EP because the subject merchandise was sold to the

first unaffiliated purchaser in the United States prior to importation

and because constructed export price (CEP) under section 772(b) is not

otherwise warranted based on the facts of this investigation.

Export Price

We calculated EP based on the same methodology used in the

preliminary determination. Furthermore, as in the preliminary

determination, we did not include tolled sales.

Normal Value

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

NV on sales in Taiwan, or, where appropriate, on constructed value

(CV). We compared all home market sales to the cost of production

(COP), as described below. Where home market prices were above COP, we

calculated NV based on the same methodology used in the preliminary

determination, with the following exceptions: (1) we recalculated

reported quantity discounts and special discounts on certain sales (see

Comment 5); and (2) we made an additional circumstance of sale

adjustment for bank charges made on certain U.S.sales, based on

information obtained at verification.

Cost of Production Analysis

As discussed in the preliminary determination notice, the

Department conducted an investigation to determine whether Chang Chun

made home market sales during the POI at prices below COP within the

meaning of section 773(b) of the Act. Before making any fair value

comparisons, we conducted the COP analysis described below.

A. Calculation of COP

We calculated the COP based on the sum of Chang Chun's cost of

materials and fabrication for the foreign like product, plus amounts

for home market general, and administrative expenses (G&A) and packing

costs in accordance with section 773(b)(3) of the Act. We relied on the

reported COP amounts with the following exceptions: (1) we allocated

joint production costs to PVA and acetic acid (AA) based upon relative

sales values (see comment 8); (2) we adjusted the reported cost of

manufacturing (COM) to account for the difference in the COM per Chang

Chun's internal records examined at the verification; (3) we adjusted

the COM to include PVA's share of the difference between Chang Chun's

depreciation expense for tax purposes (the amount that Chang Chun

reported in its response to section D of our questionnaire), and its

depreciation expense for financial statement purposes; and (4) we

recalculated general and administrative expenses based on the revised

COM.

B. Test of Home Market Prices

We compared the adjusted weighted-average COP figures to home

market sales of the foreign like product on a product-specific basis,

in order to determine whether these sales had been made at below-cost

prices within an extended period of time in substantial quantities, and

at prices that did not permit recovery of all costs within a reasonable

period of time. The home market prices compared were exclusive of any

applicable movement charges, discounts, rebates, packing, and direct

and indirect selling expenses.

C. Results of COP Test

Pursuant to section 773(b)(2)(c), where less than 20 percent of

sales during the POI of a given product are at prices less than the

COP, we do not disregard any below-cost sales of that product because

the below-cost sales are not made in substantial quantities within an

extended period of time. Where 20 percent or more of sales of a given

product are at prices less than the COP, we disregard only the below-

cost sales because such sales are found to be made within an extended

period of time, in accordance with section 773(b)(2)(B) of the Act, and

at prices which would not permit recovery of all costs within a

reasonable period of time, in accordance with section 773(b)(2)(D) of

the Act. Where all sales of a specific product are at prices below the

COP, we disregard all sales of that product, and calculate NV based on

CV, in accordance with section 773(a)(4) of the Act.

We found that, for certain PVA products, more than 20 percent of

Chang Chun's home market sales were sold at below COP prices within the

POI. Further, no evidence was presented indicating that these sales

provided for the recovery of costs within a reasonable period of time.

We therefore determined that these below cost sales were made in

substantial quantities within an extended period of time and we

excluded these sales and considered the remaining above-cost sales in

determining NV, if such sales existed, in accordance with section

773(b). For those U.S. sales of PVA products for which there were no

above-cost sales, we compared export prices to CV.

D. Calculation of CV

In accordance with section 773(e)(1) of the Act, we calculated CV

based on the sum of Chang Chun's cost of materials, fabrication,

selling, general and administrative expenses (SG&A) and U.S. packing

costs as reported in the U.S. sales database. In accordance with

sections 773(e)(2)(A), we based SG&A and profit on the amounts incurred

and realized by the respondent in connection with the production and

sale of the foreign like product in the ordinary course of trade for

consumption in the foreign country. Where appropriate, we calculated CV

based on the methodology described above in the calculation of COP and

added an amount for profit. For selling expenses, we used the weighted-

average home market selling expenses.

Comparison Methodology

In accordance with section 777A(d)(1)(A)(i) of the Act, we

calculated weighted-average EPs for comparison to weighted average NVs

or, as discussed above, to CV, where appropriate. The weighted averages

were calculated and compared by the time period of the sale, product

characteristics, and the class of the customer involved.

Chang Chun classified one of its U.S. customers as both an end-user

and a distributor. Based on information in the questionnaire response,

we considered

[[Page 14067]]

this customer as an end-user for purposes of price averaging because

Chang Chun reported that it sold the majority of its PVA sales to this

customer for the customer's internal consumption.

The bases for establishing averaging groups according to time

period and class of customer are discussed in detail below under

Comments 3 and 4, respectively.

Currency Conversion

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. Section 773A(a) of the Act

directs the Department to use a daily exchange rate in order to convert

foreign currencies into U.S. dollars. Further, section 773A(b) directs

the Department to allow a 60-day adjustment period when a currency has

undergone a sustained movement. A sustained movement has occurred when

the weekly average of actual daily rates exceeds the weekly average of

benchmark rates by more than five percent for eight consecutive weeks.

The benchmark is defined as the moving average of rates for the past 40

business days. (For an explanation of this method, see Policy Bulletin

96-1: Currency Conversions, 61 FR 9434, March 8, 1996). Such an

adjustment period is required only when a foreign currency is

appreciating against the U.S. dollar. The use of an adjustment period

was not warranted in this case because the Taiwan dollar did not

undergo a sustained movement, nor were there currency fluctuations

during the POI.

Verification

As provided in section 788(i) of the Act, we verified information

provided by Chang Chun using standard verification procedures,

including the examination of relevant sales and financial records, and

selection of original source documentation containing relevant

information.

Interested Party Comments

Comment: Date of Sale for Home Market Long-Term Purchase Orders.

Petitioner argues that the date of sale for home market sales made

according to long-term purchase orders should not be the purchase order

date, but rather the purchase order log date as used for other home

market sales. Petitioner claims that the verification demonstrated that

the long-term purchase orders did not constitute a binding agreement on

quantity. Thus, petitioner contends, these purchase orders failed to

satisfy the requirement that both price and quantity be agreed upon by

the buyer and the seller for purposes of establishing date of sale.

Petitioner alleges that: (1) significant amounts of purchase order

quantities were unfulfilled as of the time of the Department's

verification; (2) the purchase orders resemble ``blanket purchase

orders'', which set sales terms and conditions over a time period for a

maximum quantity of merchandise, but involve no commitment to purchase

a fixed quantity and still require further communication to specify the

quantity to be delivered; and (3) the purchase orders did not set

quantities because Chang Chun did not meet the specified delivery

period.

Chang Chun argues that the long-term purchase orders set the key

terms of sale--price and quantity--and, therefore, the date of sale for

these transactions should be the purchase order date. Chang Chun states

that delivery terms are material only if the parties treat them as

such--which the parties did not in this case. Further, Chang Chun

maintains that even if purchase order quantities were not fully shipped

in accordance with the delivery schedule, it does not mean that the

terms of the purchase order were not met. Chang Chun cites Final

Determination of Sales at Less Than Fair Value: Stainless Steel Bar

from India (59 FR 66915, December 28, 1994), where the purchase order

date was used as the date of sale even though part of the purchase

order quantity was canceled; and Final Determination of Sales at Less

Than Fair Value: Crankshafts from Germany (52 FR 28170, July 28, 1987)

(Crankshafts), where price and quantity changes after the POI did not

affect the sale date for those sales shipped under the original terms.

Monsanto and U.S. importers Rhone-Poulenc, Perry Chemical, and

National Starch also contend that the delivery date is not an essential

term of sale, and that delays in meeting delivery date do not affect

the establishment of price and quantity as of the purchase order date.

DOC Position: We agree with respondent Chang Chun that the sales

made under what Chang Chun describes as ``long term purchase orders''

were made pursuant to valid contracts, and thus we are treating the

date of the purchase order as the date of sale.

Neither the statute nor the Department's regulations detail how the

Department is to determine the date of sale of a transaction.

Therefore, under principles of administrative law, the agency is

obliged to fill in the statutory gaps, either by regulation or through

developing a practice. In determining the date of sale, the Department

has a well-established and long-standing practice that a sale is

completed within the meaning of the Act when the essential terms, i.e.,

usually price and quantity, are definite and firm (see ,e.g., Final

Results of Antidumping Administrative Review: Antifriction Bearings

(Other Than Tapered Roller Bearings) and Parts Thereof from the Federal

Republic of Germany, (56 FR 31692, July 11, 1991) (Department's

established practice to use date when price and quantity terms are set

as the date of sale); see also Mitsubishi Elec. Corp. v. United States,

700 F. Supp. 538, 561 (CIT 1988), aff'd. 898 F.2d 1577 (Fed. Cir.

1990)). The essential terms of price and quantity are firm when they

are no longer within the control of the parties to alter (see, e.g.,

Final Determination of Sales at Less Than Fair Value: Brass Sheet and

Strip From France, (52 FR 812, January 9, 1987) (price term pegged to

publicly quoted metal prices considered definite and fixed); Voss

International v. United States, 628 F.2d 1328 (CCPA 1980) (price set in

dollars was definite despite provision for adjustment for currency

fluctuations because the parties had nothing more to negotiate

regarding price); Final Results of Antidumping Administrative Review:

Titanium Sponge From Japan, (54 FR 13403, April 3, 1989) (absolute

quantity was fixed and definite because contract required customer to

purchase all that customer required)). Additionally, the Department

often looks to the course of conduct between the parties in evaluating

whether a written document represents a binding agreement (see, e.g.,

Final Determination of Sales at Less Than Fair Value: Grey Portland

Cement and Clinker from Mexico, 55 FR 29244, July 18, 1990) (parties

had begun performance pursuant to a letter agreement that Department

found established a definite price and quantity); Crankshafts, at 28175

(the parties clearly acted in a manner consistent with a meeting of the

minds that there was a binding agreement because production, acceptance

of delivery and payment were in accord with the price and quantity of

the written purchase order)).

Evidence on the record demonstrates that each of the contracts

Chang Chun entered into during mid-February 1995 were binding

agreements for purposes of establishing date of sale. Each of these

written agreements, referred to by respondent as long-term purchase

orders, set definite price and quantity terms and were signed by the

seller Chang Chun and by each purchaser.

[[Page 14068]]

Moreover, for each agreement, the parties' later course of conduct

evidenced that there was a meeting of the minds as to the essential

terms, the price and quantity, because neither price nor quantity were

altered in the course of performance.

Petitioner argues that Chang Chun had not fully delivered all of

the quantity to any of the purchasers within the stated delivery

period, and points to this fact as evidence that none of the long-term

contracts had set firm quantities, hence, none were binding agreements.

However, each long-term contract merely set out a delivery schedule

wherein deliveries were to be made in installments which Chang Chun was

to deliver when inventory was sufficient and its capacity to transport

was available. Such language demonstrates that delivery was not

intended by either party to be an essential term in the agreement.

Unlike a circumstance where the parties intentionally make time of the

essence, these long-term contracts did not provide that delivery within

a date certain was material (see, e.g., Final Determination of Sales at

Less Than Fair Value: Oil Country Tubular Goods From Argentina, 60 FR

33539, June 28, 1995)(OCTG from Argentina) (where the Department found

that a change in delivery terms did not alter the date of sale because

the parties themselves did not treat the delivery terms as material to

the long-term contract)). The fact that at the end of the delivery time

period Chang Chun sent out written extensions of delivery to each

purchaser, and that each purchaser accepted deliveries of PVA pursuant

to the delivery extension, is consistent with the conclusion that

delivery terms were not essential to the contract. The Department has

often found that changes in non-essential terms do not alter the date

of sale. See Final Determination of Sales at Less Than Fair Value:

Aramid Fiber Formed of Poly-Phenylene Terephthalamide From the

Netherlands, (59 FR 23684, May 6, 1994); see also General Electric Co.

v. United States, Slip. Op. 93-55 (CIT 1993)).

Moreover, record evidence demonstrates that Chang Chun had

substantially performed on each long-term contract within the time set

out in the delivery schedule and that every purchaser had accepted late

delivery of remaining quantities at the price set out in the contracts.

This course of conduct indicates that the parties acted in a manner

consistent with their respective obligations under these agreements,

even though all quantities were not delivered in strict accordance with

the delivery schedule.

Lastly, we do not view the fact that respondent continued to record

shipments made pursuant to the long-term contracts as it had recorded

shipments made pursuant to spot sales as evidence that the long-term

contracts were not binding agreements. The record-keeping was not

inconsistent with the long-term contracts. For these reasons, we find

that the purchase orders at issue are binding contracts. Therefore, we

have used the date of the purchase orders as the date of sale.

Comment 2: Long-term Purchase Orders in the Ordinary Course of

Trade.

Petitioner argues that, if the Department accepts the home market

long-term purchase orders as POI sales, shipments made pursuant to

these orders should be considered outside the ordinary course of trade.

According to petitioner, these sales represent a significant deviation

from Chang Chun's prior sales practice in terms of the manner in which

sales are negotiated, and in the large volume covered. In addition,

petitioner notes that these long-term orders are the first and only

ones in the home market during the POI.

Chang Chun, supported by Monsanto, contends that the sales are in

the ordinary course of trade because: (1) the purchase orders covered

all standard grades of PVA and involved a large percentage of POI

sales; (2) additional purchase orders were issued subsequent to the

original ones; (3) the products were sold through Chang Chun's major

channel of distribution; and (4) the sales were not unrepresentative or

aberrational in nature. Furthermore, Chang Chun states that, although

these purchase orders were part of a new sales and marketing strategy

in response to growing competition, they are not uncommon in this

industry.

DOC Position: We disagree with petitioner. It is the Department's

established practice to include home market sales of such or similar

merchandise unless it can be established that such sales were not made

in the ordinary course of trade (see Final Determination of Sales at

Less Than Fair Value: Stainless Steel Angles from Japan, 60 FR 16608,

March 31, 1995). Section 773(a)(1)(B)(i) of the Act provides that NV

shall be based on the price at which the foreign like product is sold

in the exporting country in the ordinary course of trade for home

market consumption. Section 771(15) of the Act states that ``* * *

`ordinary course of trade' means the conditions and practices which,

for a reasonable time prior to the exportation of the subject

merchandise, have been normal in the trade under consideration with

respect to the merchandise of the same class or kind * * *''.

In determining whether sales are made outside the ordinary course

of trade, the Department typically examines several factors taken

together with no one factor dispositive. Further, the SAA at 842-843

states that sales are outside the ordinary course of trade when the ``*

* * sales or transactions have characteristics that are not ordinary as

compared to sales or transactions generally made in the same market.''

This statement also provides guidance to the Department in considering

unusual product specifications, aberrational prices, unusual terms of

sale, or other factors that may make sales extraordinary for the market

in question. None of these sales involved unusual product

specifications, rather, the contracts covered all standard grades of

PVA. The purchasers were established PVA customers that Chang Chun had

dealt with in the past. Although the prices under these contracts

differed from spot-sale prices offered previously, we do not consider

such prices to be unusual given the nature of a long-term contract.

Although the long-term purchase orders may have been new to Chang

Chun, there is no evidence that such long-term contracts are unusual or

extraordinary for the Taiwan PVA market. Further, we found that,

following the institution of the purchase order system, Chang Chun

consistently conducted business according to this system.

While the volume of these long-term contract sales was much greater

than what Chang Chun had been selling previously on a spot sale basis,

there is no evidence on the record that indicates that high volume

sales were not part of the normal course of trade in the Taiwan market

for a reasonble time prior to the exportation of the subject

merchandise. In the past, the Department has said that the number of

sales or the volume sold are not, in and of themselves, dispositive

(see Final Results of Antidumping Administrative Review: Certain Welded

Carbon Steel Standard Pipes and Tubes From India, 56 FR 64753, December

12, 1991). Therefore, we have determined that these sales were made in

the ordinary course of trade and included these sales in our normal

value calculation.

Comment 3: Price Averaging and Time Periods.

Petitioner argues that calculating a single POI weighted- average

price for each product results in distortive comparisons between EP and

NV due to the high volume of home market sales

[[Page 14069]]

at the end of the POI pursuant to the long-term purchase orders.

Petitioner submitted a number of statistical analyses to demonstrate

the relationship between time and U.S. prices. Based on these analyses,

petitioner contends that the price changes over the POI are significant

and warrant the use of monthly, rather than POI, weighted-averages for

price comparisions. In support of its position, petitioner argues that

there is no statutory preference for using POI price averages, and that

the monthly average methodology will satisfy the requirement of the

URAA regarding contemporaneous sales comparisons.

Chang Chun, supported by Monsanto, responds that POI averages

should be used in this case. Both parties contend that the Department

was correct in the preliminary determination by establishing POI

averages as the normal methodology for investigations. Based on its own

statistical analyses, Monsanto asserts that the petitioner's analyses

are faulty and that the relationship between time and price is

relatively weak. Monsanto also contends that the petitioner's

application of a statistical analysis methodology used in adminstrative

reviews is inappropriate for this investigation, because petitioner

limited the analysis to certain sales and based its results on criteria

applicable to administrative reviews, but not investigations. Based on

all of these factors, Monsanto contends that there is no basis to

conclude that the price changes over the POI are significant, and thus

no reason for the Department to abandon POI averages in favor of

monthly averages.

DOC Position: Section 777A(d)(1)(A) gives the Department the

explicit authority to use certain methods for comparing prices in

determining whether sales at less than fair value exist. The Department

may employ an average-to-average comparison of U.S. sales to the

relevant home market or third country sales or rely on individual sales

transactions for comparisons in both markets (see section

777A(d)(1)(A)(i) & (ii)). In applying an averaging approach, the SAA

states that, in determining sales comparability for purposes of

inclusion in a particular average, time is a factor which may affect

the comparability of sales (SAA at 842-843).

As stated in our Notice of Proposed Rulemaking and Requests for

Public Comment, 61 FR 7308, 7349 (February 27, 1996) (Proposed

Regulations), the Department proposes that normally we will calculate

an average to average comparison by weight-averaging sales during the

entire POI. However, the Deparment may resort to shorter time periods

where the normal values, export prices, or constructed export prices

for sales included in an averaging group differ significantly over the

course of the POI.

We agree with petitioner that time significantly influences price

comparability in this case. An analysis of the record evidence

indicates that price trends in the United States and Taiwan were

essentially moving in tandem, i.e., steadily rising over the POI, as

were cost trends (see Price Analysis Memorandum dated March 20, 1996).

This data tends to support the fact that prices of PVA and costs for

its main input, vinyl acetate monomer (VAM), were influenced to a

significant extent by world market prices. Notwithstanding this fact,

and in the face of an upwardly moving cost trend during the POI, in the

last six weeks of the POI Chang Chun departed from its normal spot sale

selling practice and entered into several long-term contracts at prices

which diverged significantly from the price trends in the first ten and

a half months, and for considerably different quantities than what

respondent had been selling previously through spot sales over a

comparable time period.

The record evidence shows a distinct dividing line between price

trends in the home market prior to February 15, 1995, when the first of

the long-term contracts was entered into. While the price trend in the

United States did not significantly differ in the last month and a half

from the price trend evident throughout the first ten and a half months

of the POI, the price trend in Taiwan in the last month and a half of

the POI changed significantly from that of the first ten and a half

months. Therefore, we find that price trends for NV differed

significantly over time. This approach is consistent with the

Department's past practice in such cases as Final Determination of

Sales at Less Than Fair Value: Nitrocellulose From Brazil, 55 FR 23120

(June 6, 1990) (influence of time on home market sales in

hyperinflationary economy), and Final Determination of Sales at Less

Than Fair Value: Fresh Kiwi Fruit From New Zealand, 57 FR 13695 (April

17, 1992) (influence of time on home market sales of perishable

agricultural products).

Moreover, the change in the home market price trends was

accompanied by a change in selling practice from selling PVA on a spot

sale basis to entering into long-term contracts for quantities to be

delivered over a substantially longer time period. Thus, the change in

selling practice enhanced the effect of time on price comparability.

Because time affects price comparability, we have used two averaging

periods: period 1, encompassing sales from April 1, 1994 to February

14, 1995, and period 2, covering sales from February 15, 1995 to March

31, 1995. These averages calculated by the Department effectively take

into account the effect of time on price comparability.

The monthly averaging proposed by petitioner is unnecessary.

Because price trends in both markets closely tracked each other except

in the last 6 weeks of the POI, as described above, the evidence

indicates that price comparability is unaffected by time in the first

ten and half months of the POI. We reviewed the data submitted by

petitioner and found insufficient information concerning the

assumptions petitiioner relied upon to perform its statistical tests.

As a result, we have concluded that the monthly averages proposed by

petitioner are unwarranted (see Price Analysis Memorandum).

Comment 4: Level of Trade.

Chang Chun and Monsanto argue that comparisons should be made at

the same level of trade, which they define as the position of the

customer within the channels of distribution. Both parties contend

that, pursuant to section 773(a)(7)(A), the ``functions of the seller''

analysis is only relevant when examining whether a level of trade

adjustment should be applied. Accordingly, these parties contend that

comparisons should be made at the same level of trade, defining

``distributors'', ``end-users'', and ``retailers'' as distinct levels

of trade. These parties further assert that a ``retailer'' level of

trade exists as a separate level of trade in the home market. In

support of this argument, Monsanto adds that a pattern of consistent

price differences supports consideration of customer groups as a

separate level of trade and, in this regard, sales to retailers qualify

as a distinct level of trade.

Petitioner claims that a ``retail'' level of trade does not exist

for this industry and therefore sales to such customers should not be

considered to be at a separate level of trade.

DOC Position: Levels of trade are defined by the functions of the

seller, not the class of customer. Level of trade is defined as the ``.

. . difference between the actual functions performed by the sellers at

the different levels of trade in the two markets'' (section

773(a)(7)(A)(i) of the Act; see also Preliminary Determination of Sales

at Less Than Fair Value: Certain Pasta from Italy (61 FR 7472, February

28,

[[Page 14070]]

1996) and Preliminary Results of Antidumping Administrative Review:

Stainless Steel Wire Rod from France (61 FR 8915, March 6, 1996). As

discussed above, we found no differences in selling functions between

the customer categories defined by Chang Chun, nor did Chang Chun claim

any differences in selling functions between these categories.

Accordingly, we find no basis for considering any of these

categories to be separate levels of trade.

Although we have rejected the contention that the class of the

customer forms the basis for level of trade, in composing an averaging

group, customer classification is a factor the Department may take into

account (see SAA). The record establishes that there are distinct

customer classifications in both markets, and that Chang Chun offered

significantly different prices, depending on the customer category

(including different prices to home market retailers). Therefore, we

have made comparisons of average prices within the same customer class

wherever possible. Where such comparisons were not possible, we made

comparisons without regard to customer class.

Comment 5: Discounts and Rebates on Home Market Sales.

Petitioner contends that, because the Department was unable to

verify reported per-unit amounts of ``quantity discounts'' and

``special discounts'' on home market sales, all such discount claims

should be rejected. Further, petitioner notes that some of these

``discounts'', which we considered as rebates in the preliminary

determination, were granted after the filing of the petition and

therefore should be rejected in accordance with Department practice

(see Final Determination of Sales at Less Than Fair Value: Color

Negative Photographic Paper and Chemical Components Thereof from Japan,

59 FR 16177, April 6, 1994).

Chang Chun responds that, although the classification of a discount

as a ``quantity'' or ``special'' discount may have been incorrect, the

Department was able to verify that the customer received discounts

equal to the amount claimed on each transaction. Chang Chun adds that

its discount policy was consistent between the period prior to the

filing of the petition, and the period subsequent to it. Thus, Chang

Chun contends that there is no relationship between its discount

programs and the filing of the petition and, therefore, Chang Chun's

discount claims should be accepted as claimed.

DOC Position: We were unable to verify the specific discount

amounts claimed for individual home market transactions. Therefore, we

cannot accept the transaction-specific amounts claimed for these

transactions. We were able to verify, however, that certain customers

received credits after sales that equalled the total amounts of

``quantity'' or ``special'' discounts claimed for sales to that

customer. Further, we verified that Chang Chun's normal practice was to

grant its customers periodic discounts in the form of credits, or

rebates, based on the volume of PVA purchases (see Chang Chun Sales

Verification Report at pages 10 and 11).

While Chang Chun may have granted some of these discounts after the

filing of the petition, in most cases, the discounts were granted for

sales made prior to the petition filing on the same basis, and in the

same manner as such payments had been made, and credits had been

granted prior to the filing of the petition. We found no evidence to

conclude that post-petition discounts were granted for programs

established after the filing of the petition. Thus, we find no basis to

reject these discount claims solely because the customer received them

after the petition was filed.

Because Chang Chun's revenues from PVA sales were reduced by these

discounts amounts, we have revised the ``quantity'' and ``special''

discount amounts in the calculation of normal value by allocating the

total of these discounts equally among eligible sales to each eligible

customer on the basis of the respective total discount amounts and

sales value to that customer.

Comment 6: Quantity Discount Claim.

Chang Chun argues that, because it granted quantity discounts on at

least 20% of its sales, NV should be calculated based on sales with

quantity discounts, as provided for under 19 CFR 353.55(b)(1) of the

Department's pre-URAA regulations. Accordingly, Chang Chun states that

EP should be adjusted to reflect the quantity discount granted to

comparable sales in the home market.

Petitioner contends that the quantity discounts claimed on home

market sales should be rejected because the Department was unable to

verify that quantity discounts were actually granted on a unified basis

to substantially all of Chang Chun's home market customers. Petitioner

also argues that the Department was unable to verify that such

discounts actually applied to 20% of home market sales.

DOC Position: We agree with petitioner. To be eligible for a

quantity-based discount, a respondent must demonstrate that the

discounts reflect savings specifically attributable to the production

of the different quantities, or that the respondent granted quantity

discounts of at least the same magnitude on 20% or more of sales of

such or similar merchandise (see 19 CFR 353.55(b)). If either of these

tests is met, the Department applies a discount adjustment equal to the

minimum discount given.

As discussed in Comment 5, Chang Chun could not demonstrate that

the specific amounts claimed as ``quantity discounts'' on specific

transactions had any connection to the quantity sold, but rather, as

described above, these discounts were in the nature of volume rebates.

Moreover, the Department also requires a respondent to establish that

it gave discounts on a uniform basis, which were made available to

substantially all home market customers (see, e.g., Final Determination

of Sales at Less Than Fair Value: Brass Sheet and Strip from the

Netherlands, 53 FR 23431, June 22, 1988). This requirement was

expressed in the Department's antidumping questionnaire at pages B-15

and B-16. However, Chang Chun made no attempt to demonstrate this;

indeed, Chang Chun specifically stated that only customers classified

as ``distributors'' were eligible for the ``home market quantity

discount program'' (see, e.g., letter from Ablondi, Foster, Sobin &

Davidow to Ronald Brown of September 19, 1995, at page 3). Accordingly,

we have disallowed this claimed adjustment.

Comment 7: Treatment of U.S. Tolled Sales.

Chang Chun argues that the Department should follow its ``long

established past practice'' and estimate a separate dumping margin for

its tolled sales (i.e., vinyl acetate monomer owned by a U.S. customer

but further processed into PVA by Chang Chun) by comparing Chang Chun's

price for tolling to Chang Chun's tolling cost.

Petitioner states that the Department should not analyze these

tolled transactions because the U.S. customer withdrew its request that

a separate margin be calculated for these sales, and the Department has

already determined not to analyze these sales (See Memorandum to

Barbara Stafford dated August 8, 1995).

DOC Position: We agree with petitioner. As stated in the memorandum

cited by the petitioner, as a result of the customer's withdrawal of

its request for a separate rate in the investigation, and that the

customer's participation is not otherwise essential to this

investigation, we have not included tolled transactions in our

[[Page 14071]]

investigation. We note that our past practice of analyzing tolling

transactions has changed. The party contracting for the tolling, rather

than the processor, will be considered the producer/exporter of the

merchandise (see Proposed Regulations, section 353.401(h) at 7381, as

well as discussion at 7330).

Comment 8: Allocation of Acetic Acid Costs for COP Analysis.

Petitioner does not object to Chang Chun's treatment of PVA and

acetic acid as coproducts of a joint production process. Petitioner

does, however, object to the respondent's allocation of the joint

production costs on the basis of the two product's relative production

volumes. Petitioner asserts that because PVA has a significantly higher

per-unit value than acetic acid, production costs should be allocated

to the coproducts based upon their relative sales values. Petitioner

adds, however, that if the Department determines not to apply a value-

based allocation methodology in computing the costs of PVA and acetic

acid, then it should treat acetic acid as a byproduct by allocating all

costs to PVA and offsetting such costs by revenues earned from acetic

acid sales.

Chang Chun defends its treatment of acetic acid as a coproduct as

well as its volume-based cost allocation methodology and urges the

Department to rely on these methodologies in order to compute PVA costs

for the final determination. According to Chang Chun, acetic acid is a

coproduct of PVA because it meets each of the Department's criteria for

identifying and accounting for jointly-produced merchandise as either

byproducts or coproducts. Chang Chun also maintains that the production

volume allocation methodology it used to compute PVA costs for COP and

CV is the same method used by the company to compute both PVA and

acetic acid costs in its normal books and records. Chang Chun adds that

its volume-based cost allocation method is acceptable under Taiwan's

generally accepted accounting principles (GAAP), and it was in place at

the company for several months prior to the filing of the petition.

Monsanto supports Chang Chun's accounting treatment of PVA and

acetic acid as coproducts, and agrees with the respondent that its

volume-based allocation methodology is appropriate in this case.

DOC Position: We agree with both petitioner and Chang Chun that

acetic acid should be treated as a coproduct of PVA production. As

discussed in our preliminary determination, we analyzed four of the

five specific factors that the Department relies on in determining

whether a product should be treated as a coproduct (see Memorandum from

Art Stein to Chris Marsh, September 29, 1995). Based on our analysis

and our verification findings, we have now examined all of these

factors and have concluded that acetic acid is a coproduct in the

production process of polyvinyl alcohol (see, also, Elemental Sulphur

from Canada; Final Results of Antidumping Finding Administrative

Review, 61 FR 8239, March 4, 1996). Having made that determination,

however, we disagree with Chang Chun's contention that its volume-based

cost allocation methodology is appropriate in this instance.

Like other joint production processes, PVA production is

characterized by certain joint costs which cannot readily be identified

or traced to the individual products resulting from the joint

processing performed in the manufacture of PVA. In PVA production,

chemical inputs are mixed together in a process that results in two

distinct products: PVA and acetic acid. These products are produced

simultaneously up to a point, the split-off point, after which they

become physically separated from one another. This situation presents a

unique cost allocation issue because prior to the physical split-off

point, the production costs, like the joint products themselves, are

commingled. We note that this situation differs from cost allocations

found in a batch production process which yields two or more grades of

a single product (e.g., steel bar). In such situations, the individual

units of production can be identified, apart from one another,

throughout the production process, thus presenting a readily

identifiable basis upon which to allocate costs. In contrast, where a

single process commingles inputs up to a split-off point, allocating

joint costs to the distinct products becomes more difficult.

While there are several acceptable methods of allocating joint

costs among simultaneously produced coproducts, in general, each of

these acceptable methods is based on either some measure of relative

value or on the physical units produced (e.g., number of units, weight,

etc.) (See Cost Accounting: A Managerial Emphasis, Charles T. Horngren,

5th edition, Prentice-Hall Inc., pp. 531-539). The choice of allocation

method can have a profound impact on the outcome of relative costs,

depending on the significance of the joint costs involved and the

nature of the products resulting from the process.

This case presents an additional complication because of the

involvement of Dairen, an affiliated supplier, which produces VAM and

sells it to Chang Chun. VAM is the major raw material input in PVA

production. Chang Chun, in turn, uses the VAM (from Dairen) to produce

PVA and acetic acid. Chang Chun then sells much of its acetic acid

production back to Dairen which, in turn, uses it as a major input in

its production of VAM. Because of the nature of this cycle and the

affiliation between Chang Chun and Dairen, it is important that the

method used to allocate joint costs not distort the cost of PVA and

acetic acid.

Section 773(f)(1)(A) of the Act provides that the Department will

calculate costs based on the records of the producer of the

merchandise, if such records are kept in accordance with the GAAP of

the exporting country and reasonably reflect the costs associated with

the production and sale of the merchandise (see also Final

Determination of Sales at Less Than Fair Value: Canned Pineapple Fruit

From Thailand, (Canned Pineapple), 60 FR 29559, June 5, 1995, where we

stated that the Department's practice is to adhere to an individual

firm's recording of costs in accordance with GAAP of its home country

if the Department is satisfied that such principles reasonably reflect

the costs of producing the subject merchandise). The Department's

practice has been sustained by the Court of International Trade (CIT)

(see, e.g., Laclede Steel Co. v. United States, Slip Op. 94-160 at 21-

25 (CIT October 12, 1994), where the CIT upheld the Department's

decision to reject respondent's reported depreciation expenses in favor

of verified information obtained directly from the company's financial

statements that was consistent with Korean GAAP). In addition, pursuant

to section 773(f)(1)(A), the Department may only consider evidence from

an exporter or producer regarding the proper allocation of costs if

such allocations have been used historically by the exporter or

producer (emphasis added).

Under its current accounting system, Chang Chun allocates joint

production costs based on the relative production volumes of PVA and

acetic acid. According to the company's financial statements, the

current allocation methodology is accepted under Taiwan's GAAP.

Although the company's financial statements indicate that this

allocation methodology is in accordance with its home country GAAP, we

note that Taiwan's GAAP does not endorse this methodology as the only

acceptable cost allocation methodology. In fact, during verification,

company officials stated

[[Page 14072]]

that they did not know how costs had been allocated under the earlier

method (see Cost Verification Report at page 2), however, they stated

that the company's previous allocation methodology was also in

accordance with Taiwan's GAAP.

Chang Chun's current cost allocation methodology was adopted in

1994. Prior to 1994, the company relied upon a different methodology to

allocate costs between PVA and acetic acid. As noted above, company

officials could not explain the basis for the earlier methodology.

Accordingly, based on our verification findings, we cannot conclude

that a volume-based allocation has been used historically by Chang

Chun.

Moreover, we find that in this case, the allocation of costs

equally to each kilogram produced results in an unreasonable division

of joint production costs between PVA and acetic acid. Basing the

allocation of costs solely on production volume ignores the vastly

different revenue-producing powers of the joint products at issue in

this case. Specifically, while the relative volumes of Chang Chun's PVA

and acetic acid output are almost equal, the price commanded by PVA is

much greater than that of acetic acid. Thus, the company's volume-based

cost allocation results in large profits accruing to PVA, while

significant losses result from the sale of acetic acid. The Department,

therefore, has determined that it is appropriate to reject Chang Chun's

volume-based allocation methodology because it does not reasonably

reflect the costs associated with the production and sale of PVA, as

required by statute (see also Canned Pineapple, where the Department

rejected respondent's argument for a weight-based joint cost allocation

for pineapple and used a value-based cost allocation, citing as one of

its reasons the relationship of the revenue-producing powers of the

joint products that resulted from the pineapple production process).

As noted above, the need for an appropriate allocation method for

joint costs is made all the more important in this case because of the

unique nature of the transactions between Chang Chun and its affiliated

supplier, Dairen. Because costs are over-allocated to acetic acid as a

result of Chang Chun's volume-based methodology, such costs may not be

fully recovered when the acetic acid is sold to Dairen. In turn, the

cost of VAM produced from acetic acid may be understated when it is

resold to Chang Chun for PVA production.

Given the fact that we cannot rely upon Chang Chun's own allocation

methodology, the vastly different revenue-producing powers of the two

joint products, and the fact that the affiliation between Chang Chun

and Dairen has the potential to result in understatement of certain PVA

costs, we believe a value-based allocation methodology produces a more

reasonable and accurate reflection of costs in this case.

Therefore, we are allocating joint production costs between PVA and

acetic acid using the relative value of each product calculated on the

basis of a two-year period prior to the POI (see Canned Pineapple). We

believe that by using sales of both products over an extended period

prior to this investigation, prices can reasonably be relied upon to

form the basis for allocating joint production costs, particularly in

this case where acetic acid and PVA are commodity products, and their

selling prices are influenced by world market forces of supply and

demand.

Comment 9: Chang Chun's VAM Cost.

Petitioner claims that Chang Chun incorrectly valued VAM that it

purchased from Dairen, an affiliated supplier of VAM, at the transfer

price for those months in which the transfer price was less than

Dairen's COP. Accordingly, petitioner contends that the Department

should adjust Chang Chun's VAM cost for the specific purchases of VAM

that were made at less than Dairen's monthly COP.

DOC Position: We disagree with petitioner. We verified that, for

each month of the POI, the transfer price paid by Chang Chun for its

VAM purchases from Dairen exceeded Dairen's COP. We therefore relied on

the transfer price between the two affiliated companies as the basis

for valuing VAM in our calculation of Chang Chun's COP.

Comment 10: Unreconciled Differences Between Chang Chun's Records

and Questionnaire Response.

Petitioner notes that during verification, the Department found

unreconciled differences in PVA costs between Chang Chun's internal

books and the costs as submitted to the Department in its questionnaire

response. Most of these discrepancies related to the cost of material

inputs for PVA production. Petitioner maintains that the Department

should increase Chang Chun's reported PVA costs to reflect the

additional costs that result from these discrepancies.

DOC Position: We agree with petitioner. At verification, Chang Chun

informed the Department that it had detected a clerical error in its

submission which underreported its material costs. For the final

determination, we increased material costs to account for this error.

Our correction of this error resolves the discrepancies noted by

petitioner.

Comment 11: Depreciation.

Petitioner claims that the Department should adjust depreciation

expense incurred for PVA production to reflect the amount reported in

Chang Chun's financial statements, rather than the amount reported for

tax purposes (which Chang Chun reported in its questionnaire response).

Petitioner contends that the Department's normal methodology is to rely

on costs recorded for financial statement purposes unless there is

reason to believe that such costs are distortive.

Chang Chun claims that petitioner's suggested depreciation

adjustment relates to the boiler department's cogeneration equipment,

which produces power and steam used by not only the PVA/acetic acid

cost center, but also by non-subject product cost centers. Therefore,

Chang Chun asserts that any depreciation adjustment should be limited

to PVA/acetic acid's percentage share of the costs of the boiler

department.

DOC Position: We agree with petitioner that Chang Chun

underreported its submitted depreciation expense. The Department

normally requires that a respondent report depreciation expense

calculated based on the methods it normally uses for financial

statement purposes, unless such methods distort production costs. We

also agree with Chang Chun that PVA/acetic acid production should only

be allocated with its share of the costs associated with the co-

generation equipment. Based on our review of Chang Chun's fixed asset

and depreciation records during verification, we found no reason to

believe that Chang Chun's method of computing depreciation expense for

financial statement purposes distorts the company's PVA production

costs. We therefore adjusted the company's submitted tax basis

depreciation expense to reflect depreciation computed for PVA/acetic

acid production assets based on Chang Chun's normal financial statement

depreciation method.

Comment 12: Over-packing.

Petitioner asserts that because Chang Chun systematically over-

packs PVA above the nominal weight and the customer pays for only the

nominal weight, PVA's COP should be adjusted in order to equate the

cost of the product as packed with the price of the product as sold.

Chang Chun claims that because sales are recorded on the basis of

nominal

[[Page 14073]]

quantities rather than the over-packed quantities, in order to be

consistent, Chang Chun records production based on nominal quantities.

Thus, Chang Chun asserts that there is no need for the Department to

adjust the company's costs to reflect the over-packed quantities.

DOC Position: We verified that both production and sales were

reported based on nominal weight, therefore, no further adjustment is

necessary.

Comment 13: Dairen's VAM Costing Issues.

Petitioner notes that Dairen shut down its plant in January 1994

and asserts that the costs of the shutdown should be included as part

of Dairen's 1994 VAM production costs. Petitioner also claims that

Dairen's VAM COP should be increased to account for the cost of

purchased liquid nitrogen. Furthermore, petitioner contends that the

Department should reject Dairen's allocation of engineering and

indirect labor costs to non-subject merchandise because it represents a

deviation from Dairen's 1994 audited financial statements and is merely

an internal management estimate founded upon no verifiable, objective

criteria.

Chang Chun maintains that, since Dairen's plant maintenance

shutdown occurred prior to the POI, no adjustment to include any

portion of these costs is necessary. Chang Chun also claims that

Dairen's purchased nitrogen was sold at a profit and that the cost of

the nitrogen should not be charged to VAM production because the sales

revenue was not deducted from the production costs. Furthermore, Chang

Chun asserts that, because both its engineering and indirect labor

costs benefit VAM and PVA emulsions production, its allocation of these

costs to both products is appropriate.

DOC Position: We agree with petitioner that a portion of Dairen's

plant shutdown costs should be added to Dairen's reported cost of

producing VAM because we consider the shutdown costs a form of major

maintenance which benefits production over the entire POI. Accordingly,

a pro rata share of the shutdown costs incurred in the one month of

1994 that is part of the POI should be allocated to the cost of

producing VAM during the POI.

Because the cost of VAM used in the production of PVA is based upon

the transfer price, no adjustment is required. Dairen's transfer price

to Chang Chun exceeds its COP for VAM (including the cost of purchased

liquid nitrogen). Therefore there would be no impact on Chang Chun's

COP for PVA.

Lastly, we disagree with petitioner that Dairen's allocation of

engineering and indirect labor costs to non-subject merchandise should

be rejected. During verification, we found that these engineering and

indirect labor costs do benefit certain non-subject products.

Accordingly, we consider it reasonable to allocate these costs to non-

subject merchandise.

Continuation of Suspension of Liquidation

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

Customs Service to continue to suspend liquidation of all entries of

PVA from Taiwan, as defined in the ``Scope of Investigation'' section

of this notice, that are entered, or withdrawn from warehouse for

consumption, on or after October 10, 1995, the date of publication of

our preliminary determination in the Federal Register. The Customs

Service shall 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. This suspension of liquidation will remain in effect until

April 7, 1996 (i.e., six months after the effective date of these

instructions), in accordance with section 733(d) of the Act.

The weighted-average dumping margins are as follows:

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

Weighted-

average

Exporter/manufacturer margin

percentage

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

Chang Chun Petrochemical Co., Ltd........................... 19.21

All others.................................................. 19.21

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

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 735(d) of the Act, we have notified the

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

the ITC will determine whether these imports are causing material

injury, or threat of material injury, to the industry within 45 days.

If the ITC determines that material injury, or threat of material

injury, does not exist, the proceeding will be terminated and all

securities posted will be refunded or cancelled. If the ITC determines

that such injury does exist, the Department will issue an antidumping

duty order directing Customs officials to assess antidumping duties on

all imports of the subject merchandise entered, or withdrawn from

warehouse, for consumption on or after the effective date of the

suspension of liquidation.

This determination is published pursuant to section 735(d) of the

Act.

Dated: March 21, 1996.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 96-7636 Filed 3-28-96; 8:45 am]

BILLING CODE 3510-DS-P