Polyvinyl Alcohol From Taiwan: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-824]

Polyvinyl Alcohol From Taiwan: Preliminary Results of Antidumping

Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review.

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SUMMARY: In response to requests by the petitioner, Air Products and

Chemicals, Inc., and by two manufacturers/exporters and an importer of

subject merchandise, the Department of Commerce is conducting an

administrative review of the antidumping duty order on polyvinyl

alcohol from Taiwan. The period of review is May 15, 1996, through

April 30, 1997.

We have preliminarily found that sales of subject merchandise have

been made below normal value. If these preliminary results are adopted

in our final results of administrative review, we will instruct the

Customs Service to assess antidumping duties based on the difference

between the export price or constructed export price and the normal

value.

Interested parties are invited to comment on these preliminary

results. Parties who submit case briefs in this proceeding should

provide a summary of the arguments not to exceed five pages and a table

of statutes, regulations, and cases cited.

EFFECTIVE DATE: February 9, 1998.

FOR FURTHER INFORMATION CONTACT: Everett Kelly, at (202) 482-4194; or

Sunkyu Kim, at (202) 482-2613, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, Washington, D.C. 20230.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

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, as amended

(``the Act''), by the Uruguay Round Agreements Act (``URAA''). In

addition, unless otherwise indicated, all citations to the Department

of Commerce's (``the Department's'') regulations are to the provisions

codified at 19 CFR Part 353 (April 1997). Where appropriate, references

are made to the Department's final regulations at 19 CFR Part 351 (62

FR 27926), as a statement of current departmental practice.

Case History

On May 14, 1996, the Department published in the Federal Register

an antidumping duty order on polyvinyl alcohol from Taiwan. See 61 FR

24286. On May 2, 1997, the Department published a notice providing an

opportunity to request an administrative review of this order for the

period May 15, 1996, through April 30, 1997 (62 FR 24081). On May 23,

1997, we received a request for an administrative review from E.I. du

Pont de Nemours & Co. (``DuPont''). We received requests for a review

from Chang Chun Petrochemical (``Chang Chun'') and Perry Chemical

Corporation (``Perry'') on May 30, 1997. The petitioner also requested

a review of Chang Chun and Perry on May 30, 1997. We published a notice

of initiation of this review on June 19, 1997 (62 FR 33394).

On June 23, 1997, we issued an antidumping questionnaire to the

three companies. The Department received responses from Chang Chun,

DuPont and Perry in August 1997. We issued supplemental questionnaires

to these companies in October 1997. Responses to these questionnaires

were received in November 1997.

Although we initiated this review on three respondents, as a result

of facts examined during the course of the review, we are now covering

only two respondents, Chang Chun and DuPont (see Treatment of Sales of

Tolled Merchandise section of the notice below).

On October 24, 1997, the petitioner requested that we find DuPont

and Perry to be affiliated with Chang Chun. Further, the petitioner

argued that for purposes of calculating a dumping margin, DuPont and

Perry should be collapsed with Chang Chun. Alternatively, the

petitioner argued that if the Department does not collapse DuPont and

Perry with Chang Chun, the Department must consider evidence which

demonstrates that DuPont's and Perry's sales to their respective third-

country markets during the POR were made at prices below the cost of

production.

With regard to affiliation, we do not find that either Perry or

DuPont is affiliated with Chang Chun (see Treatment of Sales of Tolled

Merchandise section of the notice below for further discussion.) With

respect to the petitioner's allegation of sales below the cost of

production against Perry, we note that because the Department has

determined that Chang Chun, and not Perry, is the producer of the

tolled PVA imported by Perry under the tolling agreement with Chang

Chun, the issue of whether Perry's third-country market sale was below

its cost of production is moot for purposes of our analysis. With

regard to Dupont, based on our analysis of the petitioner's allegation,

we determine that there are reasonable grounds to believe or suspect

that DuPont sold PVA to Australia at prices which were below COP (see

Memorandum from Team to Office Director, dated January 30, 1998).

Accordingly, we are incorporating a sales-below-the-cost-of-production

analysis for DuPont in our preliminary margin calculation.

Scope of Review

The product covered by this review is polyvinyl alcohol (``PVA'').

PVA is a dry, white to cream-colored, water-soluble synthetic polymer.

Excluded from this review are PVAs 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 PVAs covalently bonded with silane uniformly present on

all polymer chains in a concentration equal to or greater than one-

tenth of one mole percent. PVA in fiber form is not included in the

scope of this review.

The merchandise under review 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, our written description of the scope

is dispositive.

Treatment of Sales of Tolled Merchandise

DuPont and Perry sold in the U.S. and third-country markets subject

merchandise tolled by the Taiwan producer, Chang Chun. Both DuPont and

Perry claim that they are the manufacturer of the tolled merchandise

under the Department's newly articulated treatment of subcontractors in

tolling arrangements. See 19 CFR 353.401(h). Accordingly, each company

claims that it is entitled to its own dumping rate.

[[Page 6527]]

Under section 351.401(h) of the new regulations, which, although

not legally in effect for this administrative review, are, at the time

of this request for review, an expression of the Department's practice,

the Department will not consider a toller or subcontractor to be a

manufacturer or producer where the toller or subcontractor does not

acquire ownership of the finished product and does not control the

relevant sale of the subject merchandise and the foreign like product.

See also Antidumping Duties; Countervailing Duties; Final Rule, 62 FR

27296, 27411 (legally effective only for segments of the proceeding

initiated based on requests filed after June 18, 1997, but nevertheless

a restatement of the Department's practice).

In determining whether a company that uses a subcontractor in a

tolling arrangement is a producer under 351.401(h), we will look at all

relevant facts surrounding a tolling agreement.

DuPont claims that under the tolling arrangement with Chang Chun,

DuPont is the producer of the PVA at issue. DuPont is a chemical

producer. It produces the main input, vinyl acetate monomer (``VAM''),

which it then ships to Taiwan. Under contract with Chang Chun, the VAM

is then converted into subject merchandise, after which DuPont exports

the PVA back to the United States and to third-country markets. DuPont

has had a tolling agreement with Chang Chun since prior to the original

less-than-fair-value (``LTFV'') investigation of PVA.

Based on this evidence, we determine that DuPont is the

manufacturer of the tolled merchandise, and hence the appropriate

respondent.

Perry has asserted that it is the producer of the PVA it imported

from Taiwan during the period covered by this review, claiming it meets

the requirements set out in 351.401(h) of the Department's new

regulations. However, based on a review of the facts, we preliminarily

determine that the tolling arrangement between Perry and Chang Chun

does not transform Perry into the producer of the PVA at issue.

Perry has been an importer and reseller of PVA produced and

exported by Chang Chun since 1978. At no time has Perry been in the

business of producing or manufacturing PVA or any other chemical. Nor

has Perry, prior to the tolling agreement with Chang Chun, been in the

business of subcontracting any kind of chemical production or

processing. Additionally, Perry does not have any production

facilities. (See January 30, 1998, Perry Verification Report at page

8.)

After the conclusion of the LTFV investigation in 1996, when Chang

Chun was found to be dumping at an estimated rate of 19.21 percent,

Perry decided to pursue a tolling arrangement. Perry then negotiated

the tolling agreement with Chang Chun, which resulted in the agreement

in effect during this review. Perry began purchasing VAM, the main

input in producing PVA, through a U.S. trading company. The trading

company, in turn, purchased the VAM from a Taiwan producer of VAM

affiliated with Chang Chun, a fact known to Perry. (See Verification

Report at page 8.) Thus, both the primary input and the final product

are produced by Chang Chun and its affiliate.

Based on these facts, we find that Perry is not the producer of the

PVA it imports into the United States. Prior to the tolling agreement,

Perry had never, as part of its normal business practice, been engaged

in any research and development (``R&D''), production, processing or

subcontracting of production. Moreover, there is no evidence that

suggests that Perry's decision to enter into a tolling arrangement with

Chang Chun was for the purpose of expanding its operations to begin

producing PVA or any other chemical. To the contrary, after the tolling

agreement, Perry's normal course of conducting business has not

substantively changed; it remains for all intents and purposes an

importer and reseller. The only change resulting from the tolling

arrangement is that now Perry makes two payments to Chang Chun for

Chang Chun's PVA--one for the VAM and one for the conversion of VAM

into PVA. This minor change in the contractual relationship between

Perry and Chang Chun is insufficient to conclude that Perry has moved

from reselling to producing.

The facts presented in this review demonstrate that Perry's

circumstance is fundamentally different from that of DuPont. While

DuPont is a chemical producer in its own right with substantial

production and R&D facilities, Perry has no production or R&D

facilities. DuPont has had a tolling agreement with Chang Chun for

several years before the antidumping duty order on PVA from Taiwan was

issued, while Perry entered into its contract with Chang Chun after the

LFTV investigation. DuPont produces the VAM which it exports to Taiwan

where Chang Chun processes it into PVA in accordance with DuPont's

instructions; Perry purchased VAM produced by an affiliate of Chang

Chun. Based on these facts, we find that DuPont is the producer of

Taiwan PVA, through a subcontract with Chang Chun, and Perry is not a

producer of subject merchandise. See Chrome-Plated Lug Nuts From

Taiwan, 56 FR 36130, 131 (1991).

Because we have preliminarily determined that Perry is not a

producer of PVA, Perry is treated in this review as an importer and

reseller. Chang Chun is the producer and original seller. Because Chang

Chun had knowledge that the PVA it sold to Perry was for export to the

United States, we have determined the export price based on the sale

from Chang Chun to Perry. Normal value was determined using Chang

Chun's home market price or constructed value.

In considering a request from Perry for a new shipper review,

(November 27, 1996), the Department determined that Perry was not a

``new shipper'' because it was affiliated with Chang Chun through its

tolling contract. In this review, we have reexamined this issue and

have preliminarily determined that neither Perry nor DuPont is

affiliated with Chang Chun. The tolling contracts do not establish

legal or operational control over Chang Chun within the meaning of

section 771(33)(G) of the Act. Rather, the tolling agreements set out

contractual obligations under which Chang Chun has agreed to produce

PVA for Perry and DuPont at the specified grades in specific quantities

at specified times. Such agreements do not grant Perry or DuPont

control over the manner in which Chang Chun operates (e.g., Perry and

DuPont have no ability to direct or restrain financial or operational

decisions such as which suppliers Chang Chun must buy from, prices

Chang Chun will charge or what other customers Chang Chun will serve).

Therefore, it cannot be said that, based solely on the tolling

agreements, Perry or DuPont is affiliated with Chang Chun.

Verification

As provided in Section 782(i) of the Act, we verified information

provided by the respondents. We used standard verification procedures,

including on-site inspection of the respondents' facilities, the

examination of relevant sales and financial records, and selection of

original documentation containing relevant information. Based on

verification, we made certain changes to the data in the sales listings

submitted by the respondents used to calculate the preliminary margins

(see Calculation Memorandum to File dated February 2, 1997). Our

verification results are outlined in the verification reports placed on

file in the Central

[[Page 6528]]

Records Unit (CRU) in room B-099 of the Main Commerce Building.

Fair Value Comparisons

To determine whether sales of the subject merchandise by the

respondents to the United States were made at below normal value, we

compared, where appropriate, the export (``EP'') and constructed export

price (``CEP'') to the normal value (``NV'') as described below. In

accordance with section 777A(d)(2) of the Act, we compared, where

appropriate, the EPs and CEPs of individual transactions to the monthly

weighted-average price of sales of the foreign like product.

Export Price and Constructed Export Price

For the price to the United States, we used EP or CEP as defined in

sections 772(a) and 772(b) of the Act, as appropriate.

We made company-specific adjustments as follows:

Chang Chun

In accordance with sections 772(a) and (c) of the Act, we

calculated an EP for all of Chang Chun's sales, since the merchandise

was sold to the first unaffiliated purchaser in the United States prior

to importation, and CEP was not otherwise warranted based on the facts

of record. We calculated EP based on the packed CIF price to

unaffiliated purchasers in, or for exportation to, the United States.

We made deductions from the starting price for movement expenses in

accordance with section 772(c)(2)(A) of the Act; these included

domestic inland freight, foreign brokerage and handling, international

freight, and marine insurance.

DuPont

We calculated EP for some of DuPont's sales where the merchandise

was sold to the first unaffiliated purchaser in the United States prior

to importation. We calculated CEP for the remaining sales of

merchandise, which were made in the United States after importation.

We based EP and CEP on packed FOB or delivered prices to

unaffiliated purchasers in the United States. As appropriate, we made

deductions for discounts and rebates. We also made deductions, where

appropriate, for movement expenses in accordance with section

772(c)(2)(A) of the Act; these included U.S. brokerage and handling

expenses, U.S. Customs duties (which include harbor maintenance and

merchandise processing fees), and U.S. inland freight expenses (freight

from port to warehouse and freight from warehouse to the customer).

In accordance with section 772(d)(1) of the Act, we deducted from

CEP selling expenses associated with DuPont's economic activities

occurring in the United States, including direct selling expenses and

indirect selling expenses. We also deducted from CEP an amount for

profit and further manufacturing costs in accordance with section

772(d)(3) and section 772(d)(2) of the Act.

Normal Value

In order to determine whether there was a sufficient volume of

sales in the home market to serve as a viable basis for calculating NV,

we compared each respondent's volume of home market sales of the

foreign like product to the volume of U.S. sales of the subject

merchandise, in accordance with section 773(a)(1) of the Act. For Chang

Chun, we determined that the quantity of foreign like product sold in

the exporting country was sufficient to permit a proper comparison with

the sales of the subject merchandise to the United States because Chang

Chun had sales in its home market which were greater than five percent

of its sales in the U.S. market. Therefore, in accordance with section

773(a)(1) of the Act, we based NV on sales in Taiwan.

For DuPont, in accordance with section 773(a)(1) of the Act, and

consistent with our practice, we based NV on the prices at which the

foreign like products were first sold for consumption in the

respondent's largest third-country market (i.e., Australia) because

DuPont did not have sales of foreign like product in the exporting

country during the POR and because Australia was a viable market with

respect to DuPont's sales of PVA.

We made company-specific adjustments as follows:

Chang Chun

We calculated NV based on packed, FOB or delivered prices to

unaffiliated purchasers in Taiwan. We made adjustments for differences

in packing in accordance with section 773(a)(6)(A) of the Act. We also

made adjustments, where appropriate, for movement expenses consistent

with section 773(a)(6)(B) of the Act; these included inland freight

from plant to customer. In addition, we made adjustments for

differences in cost attributable to differences in physical

characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii)

of the Act, as well as for differences in circumstances of sale

(``COS'') in accordance with section 773(a)(6)(C)(iii) of the Act and

19 CFR 353.56. We made COS adjustments by deducting direct selling

expenses incurred for home market sales (i.e., credit expenses) and

adding U.S. direct selling expenses (i.e., credit expenses and bank

charges).

DuPont

We calculated NV based on packed delivered prices to unaffiliated

purchasers in Australia. We made adjustments for movement expenses

(i.e., brokerage and handling fees) consistent with section

773(a)(6)(B) of the Act. We disallowed DuPont's claim for an inland

freight expense from Australian port to warehouse (INLFPWT) because the

company failed to provide support documentation for the claimed amount

at verification. In addition, we made adjustments for differences in

cost attributable to differences in physical characteristics of the

merchandise pursuant to section 773(a)(6)(C)(ii) of the Act, as well as

for differences in COS in accordance with section 773(a)(6)(C)(iii) of

the Act and 19 CFR 353.56. We made COS adjustments by deducting direct

selling expenses incurred for third-country market sales and adding

U.S. direct selling expenses, where appropriate. Since DuPont was

unable to separate packing expenses from its reported tolling costs, we

made no adjustment for a difference in packing expenses. As discussed

below in the Level of Trade section, we allowed a CEP offset for

comparisons made at different levels of trade. To calculate the CEP

offset, we deducted from NV the third-country market indirect selling

expenses, capped by the amount of the indirect selling expenses

deducted in calculating the CEP under section 772(d)(1)(D) of the Act.

Level of Trade

In accordance with section 773(a)(1)(B) of the Act, to the extent

practicable, we determine NV based on sales in the comparison market at

the same level of trade (``LOT'') as the EP or CEP transaction. The NV

LOT is that of the starting-price sales in the comparison market or,

when NV is based on constructed value, that of the sales from which we

derive selling, general and administrative expenses and profit. For EP,

the LOT is also the level of the starting-price sale, which is usually

from exporter to importer. For CEP, it is the level of the constructed

sale from the exporter to the importer.

To determine whether NV sales are at a different LOT than EP or

CEP, we examine stages in the marketing process and selling functions

along the chain of distribution between the producer and

[[Page 6529]]

the unaffiliated customer. If the comparison-market sales are at a

different LOT, and the difference affects price comparability, as

manifested in a pattern of consistent price differences between the

sales on which NV is based and comparison-market sales at the LOT of

the export transaction, we make an LOT adjustment under section

773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is

more remote from the factory than the CEP level and there is no basis

for determining whether the difference in the levels between NV and CEP

affects price comparability, we adjust NV under section 773(a)(7)(B) of

the Act (the CEP offset provision). See, Notice of Final Determination

of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel

Plate from South Africa, 62 FR 61731 (November 19, 1997).

With respect to Chang Chun, Chang Chun reported one channel of

distribution for its U.S. and home market sales. Based on our analysis

of the selling functions, we found that the selling activities in both

the home market and the United States were not different. Therefore, we

have found that sales in both markets are at the same LOT and

consequently no LOT adjustment is warranted.

With respect to DuPont, DuPont reported one customer category and

one channel of distribution for its third-country market sales. For its

sales to the United States, it reported three customer categories and

three channels of distribution corresponding to each customer category.

Based on our analysis, we found that the three U.S. channels of

distribution did not differ with respect to selling activities. Similar

services, such as freight and delivery, inventory maintenance and sales

support activities, were offered to all or some portion of customers in

each channel. Based on this analysis, we find that the three U.S.

channels of distribution comprise a single level of trade.

DuPont reported both EP and CEP sales in the U.S. market. We noted

that EP sales involved basically the same selling functions associated

with the third-country market sales. Therefore, based upon this

information, we determined that the level of trade for all EP sales is

the same as that of the third-country sales, and thus no LOT adjustment

is warranted.

For CEP sales, based on our analysis, after the section 772(d)

deductions, we find that there are no selling activities reflected in

the CEP price, as the CEP is exclusive of all selling expenses. In

contrast, the NV sales prices include the indirect selling expenses

attributable to selling activities such as sales support functions.

Accordingly, we have concluded that CEP is at a different level of

trade from the third-country market level of trade.

We then examined whether a LOT adjustment or CEP offset may be

appropriate. In this case, DuPont only sold at one LOT in the third-

country market; therefore, there is no information available to

determine a LOT adjustment between LOTs with respect to the foreign

like product. Further, we do not have information which would allow us

to examine pricing patterns based on respondent's sales of other

products, and there are no other respondents or other record

information on which such an analysis could be based. Accordingly,

because the data available do not provide an appropriate basis for

making a LOT adjustment, but the LOT in the third-country is at a more

advanced stage of distribution than the LOT of the CEP, we made a CEP

offset adjustment in accordance with section 773(a)(7)(B) of the Act.

Cost of Production Analysis

As stated above, based on a timely allegation filed by the

petitioner, the Department initiated a cost of production investigation

of DuPont to determine whether sales were made at prices below the COP.

For Chang Chun, because we disregarded sales below the COP in the last

completed segment of the proceeding (i.e., the less-than-fair-value

investigation), we had reasonable grounds to believe or suspect that

sales of the foreign product under consideration for the determination

of NV in this review may have been made at prices below the COP, as

provided by section 773(b)(2)(A)(ii) of the Act. Therefore, pursuant to

section 773(b)(1) of the Act, we initiated a COP investigation of sales

by Chang Chun in the home market.

We conducted the COP analysis described below.

A. Calculation of COP

In accordance with section 773(b)(3) of the Act, we calculated the

weighted-average COP, by grade, based on the sum of the cost of

materials, fabrication and general expenses, and packing costs. For

Chang Chun, we relied on the submitted COPs.

Chang Chun purchased a major input (i.e., VAM) for PVA from an

affiliated party. Section 773(f)(3) of the Act indicates that, if

transactions between affiliated parties involve a major input, then the

Department may value the major input based on the COP if the cost is

greater than the amount (higher of transfer price or market price) that

would be determined under section 773(f)(2). Section 773(f)(3) applies

if the Department ``has reasonable grounds to believe or suspect that

an amount represented as the value of such input is less than the COP

of such input.'' The Department generally finds that such ``reasonable

grounds'' exist where it has initiated a COP investigation of the

subject merchandise.

Because a COP investigation is being conducted in this case, the

Department requested in its Section D questionnaire that Chang Chun

provide cost of production information for VAM. That cost information

was provided by Chang Chun in its Section D response. For purposes of

our analysis, we used the per-unit costs as reported by Chang Chun,

which included the cost of VAM based on the highest of the transfer

price, the market price, or its affiliate's cost of production.

For DuPont, we calculated the weighted-average COP based on the sum

of its cost of producing VAM and the tolling fee paid to Chang Chun and

SG&A expenses. We recalculated DuPont's general and administrative

expenses based on verification findings. See Verification Report at

page 18.

B. Test of Home Market and Third-Country Comparison Market Sales Prices

We compared the weighted-average COP for each respondent, adjusted

where appropriate, to the comparison market sales of the foreign like

product as required under section 773(b) of the Act, in order to

determine whether these sales had been made at prices below the COP

within an extended period of time in substantial quantities, and

whether such prices were sufficient to permit the recovery of all costs

within a reasonable period of time. On a grade-specific basis, we

compared the revised COP to the comparison market prices, less any

applicable movement charges, discounts, rebates, commissions and other

direct and indirect selling expenses.

C. Results of the COP Test

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

respondent's sales of a given product were made at prices below the

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

we determined that the below-cost sales were not made in ``substantial

quantities.'' Where 20 percent or more of a respondent's sales of a

given product were made at prices below the COP, we disregarded the

below-cost sales because such sales were found to be made within an

[[Page 6530]]

extended period of time in ``substantial quantities'' in accordance

with sections 773(b)(2)(B) and (C) of the Act, and because the below

cost sales of the product were 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 contemporaneous sales

of a specific product were made at prices below the COP, we calculated

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

For both Chang Chun and DuPont, we did not find that comparison

market sales of PVA products were made at below COP prices within the

POR.

Constructed Value

For DuPont's PVA products for which we could not determine the NV

based on comparison market sales because there were no contemporaneous

sales of a comparable product, we compared export prices to CV.

On January 8, 1998, the Court of Appeals for the Federal Circuit

issued a decision in Cemex v. United States, 1998 WL 3626 (Fed Cir.).

In that case, based on the pre-URAA version of the Act, the Court

discussed the appropriateness of using CV as the basis for foreign

market value when the Department finds home market sales to be outside

the ordinary course of trade. This issue was not raised by any party in

this review. However, the URAA amended the definition of sales outside

the ``ordinary course of trade'' to include sales below cost. See

Section 771(15) of the Act. Because the Court's decision was issued so

close to the deadline for completing this preliminary results, we have

not had sufficient time to evaluate and apply (if appropriate and if

there are adequate facts on the record) the decision to the facts of

this post-URAA review. For these reasons, we have determined to

continue to apply our policy regarding the use of CV when we have

disregarded below-cost sales from the calculation of NV; however, we

invite interested parties to comment, in their case briefs, on the

applicability of the Cemex decision to this review.

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

based on the sum of the COM of the product sold in the United States,

plus amounts for third-country comparison market SG&A expenses, and

profit and U.S. packing costs. We calculated CV based on the

methodology described in the ``Calculation of COP'' section of this

notice, above, plus an amount for profit. In accordance with section

773(e)(2)(A), we used the actual amounts incurred and realized by

DuPont in connection with the production and sale of the foreign like

product, in the ordinary course of trade, for consumption in the

foreign country to calculate SG&A expenses and profit.

For price-to-CV comparisons, we made adjustments to CV in

accordance with section 773(a)(8) of the Act and 19 C.F.R. 353.56 for

COS differences. For comparisons to EP, we made COS adjustments by

deducting direct selling expenses incurred on third-country market

sales and adding U.S. direct selling expenses. For comparisons to CEP,

we made deductions for direct selling expenses incurred on third-

country market sales.

Currency Conversion

For purposes of the preliminary results, we made currency

conversions based on the official exchange rates published by the

Federal Reserve in effect on the dates of the U.S. sales. Section

773A(a) of the Act directs the Department to use a daily exchange rate

in effect on the date of sale of subject merchandise in order to

convert foreign currencies into U.S. dollars, unless the daily rate

involves a ``fluctuation.'' In accordance with the Department's

practice, we have determined as a general matter that a fluctuation

exists when the daily exchange rate differs from a benchmark by 2.25

percent (For a detailed explanation, see Policy Bulletin 96-1: Currency

Conversions, 61 FR 9434, March 8, 1996). The benchmark is defined as

the rolling average of rates for the past 40 business days. When we

determine that a fluctuation exists, we substitute the benchmark for

the daily rate.

Preliminary Results of Review

As a result of this review, we preliminarily determine that the

following margin exists for the period May 15, 1996, through April 30,

1997:

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

Margin

Manufacturer/exporter (percent)

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

Chang Chun Petrochemical Corporation........................ 0.55

E.I. du Pont de Nemours & Co................................ .54

Perry Chemical Corporation * ...............................

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

* We did not calculate a dumping margin for Perry because we

preliminarily determined that Perry is not the producer of subject

merchandise it imported into the United States during the POR (see

Treatment of Sales of Tolled Merchandise section of the notice above).

Parties to the proceeding may request disclosure within five days

of the date of publication of this notice. Any interested party may

request a hearing within 10 days of publication. Any hearing, if

requested, will be held 44 days after the date of publication or the

first business day thereafter.

Issues raised in hearings will be limited to those raised in the

respective case briefs and rebuttal briefs. Case briefs from interested

parties and rebuttal briefs, limited to the issues raised in the

respective case briefs, may be submitted not later than 30 days and 37

days, respectively, from the date of publication of these preliminary

results. Parties who submit case briefs or rebuttal briefs in this

proceeding are requested to submit with each argument (1) a statement

of the issue and (2) a brief summary of the argument.

The Department will subsequently issue the final results of this

administrative review, including the results of its analysis of issues

raised in any such written briefs or at the hearing, if held, not later

than 120 days after the date of publication of this notice.

The Department shall determine and the Customs Service shall assess

antidumping duties on all appropriate entries. The Department will

issue appropriate appraisement instructions directly to the Customs

Service upon completion of this review. The final results of this

review shall be the basis for the assessment of antidumping duties on

entries of merchandise covered by this review and for future deposits

of estimated duties. For Chang Chun, for duty assessment purposes, we

calculated an importer-specific assessment rate by aggregating the

dumping margins calculated for all U.S. sales to each importer and

dividing this amount by the total value of subject merchandise entered

during the POR for each importer. In order to estimate the entered

value, we subtracted international movement expenses from the gross

sales value. For DuPont, we calculated an assessment rate by

aggregating the dumping margins calculated for all U.S. sales and

dividing this amount by the total value of subject merchandise entered

during the POR.

Furthermore, the following deposit requirements will be effective

upon publication of the final results of this antidumping duty review

for all shipments of PVA from Taiwan, entered, or withdrawn from

warehouse, for consumption on or after the publication date, as

provided by section 751(a) of the Tariff Act: (1) The cash deposit

rates for the reviewed companies will be those established in the final

results of this review; (2) for exporters not covered in this review,

but covered in the LTFV investigation or prior reviews, the cash

deposit rate will continue to be the company-specific rate from the

LTFV investigation or the prior review; (3) if the exporter is not a

firm

[[Page 6531]]

covered in this review, a prior review, or the original LTFV

investigation, but the manufacturer is, the cash deposit rate will be

the rate established for the most recent period for the manufacturer of

the merchandise; and (4) the cash deposit rate for all other

manufacturers or exporters will continue to be 19.21 percent, the ``All

Others'' rate made effective by the LTFV investigation. These

requirements, when imposed, shall remain in effect until publication of

the final results of the next administrative review.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice are in accordance with

sections 751(a)(1) of the Act and 19 CFR 353.22(5).

Dated: February 2, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-3210 Filed 2-6-98; 8:45 am]

BILLING CODE 3510-DS-P