# Polyvinyl Alcohol From Taiwan: Final Results of Second Antidumping Duty Administrative Review

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URL: https://www.frixlaw.com/law-library/documents/fr%3A99-15177

## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** June 15, 1999
- **Citation:** 64 FR 32024

## Text

DEPARTMENT OF COMMERCE

International Trade Administration
[A-583-824]

Polyvinyl Alcohol From Taiwan: Final Results of Second
Antidumping Duty Administrative Review

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

SUMMARY: On February 8, 1999, the Department of Commerce published in
the Federal Register the preliminary results of the second
administrative review of the antidumping duty order on polyvinyl
alcohol from Taiwan (64 FR 6042). The review covers two manufacturers/
exporters of the subject merchandise to the United States, Chang Chun
Petrochemical and E.I. duPont de Nemours & Co. The period of review is
May 1, 1997, through April 30, 1998.
We gave interested parties an opportunity to comment on our
preliminary results. Based on our analysis of the comments received, we
have made certain changes as described below in the ``Interested Party
Comments'' section of this notice, but those changes did not result in
final margins that were different from those calculated in our
preliminary results. The final results are listed below in the section
``Final Results of Review.''

EFFECTIVE DATE: June 15, 1999.

FOR FURTHER INFORMATION CONTACT: Brian Smith at (202) 482-1766 or Brian
Ledgerwood at (202) 482-3836, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230.

SUPPLEMENTARY INFORMATION:

Background

On February 8, 1999, the Department of Commerce (``the
Department'') published in the Federal Register its preliminary results
of the 1997-1998 administrative review of the antidumping duty order on
polyvinyl alcohol (``PVA'') from Taiwan (64 FR 6042) (``Preliminary
Results''). The period of review (``POR'') for this administrative
review is May 1, 1997, through April 30, 1998.
On February 18, 1999, E.I. duPont de Nemours & Co. (``DuPont'')
withdrew its request that the Department apply the special rule for
value added in this case. On March 10, 1999, the Department requested
Chang Chun Petrochemical Co., Ltd. (``Chang Chun'') to provide
information clarifying the methodology it used to allocate production
costs between acetic acid and PVA. Chang Chun provided this data on
March 17, 1999. The petitioner, Air Products and Chemicals Inc., and
DuPont submitted case briefs on April 8, 1999. Chang Chun did not
submit a case brief. Chang Chun submitted a rebuttal brief on April 15,
1999. Since the petitioner did not comment on DuPont in its case brief,
DuPont did not submit a rebuttal brief. Neither the petitioner nor the
respondents requested a hearing in this case. On May 19, 1999, we
placed on the record of this review information from the record of the
first administrative review pertaining to the allocation of joint
production costs between acetic acid and PVA. On May 24, 1999, the
petitioner submitted comments on the use of this information in this
review.
The Department has now completed this administrative review, in
accordance with section 751(a) of the Act.

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 (``the Act'') by
the Uruguay Round Agreements Act (``URAA''). In addition, unless
otherwise indicated, all references are made to the Department's
regulations at 19 CFR Part 351 (1998).

Scope of Review

The product covered by this review is 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 3905.30.0000 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.

Changes Since the Preliminary Results

We have made changes in these final results only to the margin
calculation for Chang Chun. For Chang Chun, we adjusted its joint
production costs between PVA and acetic acid using the relative sales
value of each product

[[Page 32025]]

calculated on the basis of a two-year period prior to the period of the
less-than-fair-value investigation (``LTFV investigation'') (see
Comment 1 in the ``Interested Party Comments'' section of this notice,
Memorandum to the File dated May 19, 1999, and Final Results
Calculation Memorandum dated June 8, 1999, for further discussion).

Interested Party Comments

Chang Chun

Comment 1: Cost Allocation Methodology
The petitioner contends that Chang Chun's cost methodology produces
inexplicable and unreasonable results because the sales quantities of
acetic acid and PVA were less than their production quantities. In
particular, the petitioner maintains that unless Chang Chun made
significant changes to its production process, Chang Chun's average
annual yield ratio of acetic acid to PVA for the POR should be
representative of the average three-year yield ratio of acetic acid and
PVA for which Chang Chun reported sales data (see Exhibit 7 of Chan
Chun's January 19, 1999, submission). The petitioner goes on to state
that because Chan Chun has sold PVA and acetic acid in unequal
quantities, Chang Chun must have over-allocated its production costs to
acetic acid. Finally, the petitioner maintains that although Chang Chun
has used a unit value ratio to allocate costs in the prior antidumping
duty administrative review, the Department is not precluded from
examining the reasonableness of Chang Chun's methodology in subsequent
reviews.
Chang Chun states that its sales quantities are lower than its
production quantities because Chang Chun excluded the internal
transfers of acetic acid and PVA from the weighted-average sales prices
of acetic acid and PVA as internal transfers do not reflect any revenue
raised by these products, thereby refuting the petitioner's claim that
the difference which exists between sales and production quantities has
a distortive impact when applying the cost allocation methodology. In
addition, Chang Chun maintains that most of the sales and production
data the petitioner is questioning was verified by the Department in
the first administrative review. Therefore, Chang Chun contends that
its reported sales and production data should be accepted by the
Department in this review. Chang Chun maintains that its value-based
cost allocation methodology is appropriate and requests that the
Department confirm this fact, as well as confirm that the cost
allocation methodology correctly reflects the Department's prior
determinations. Finally, Chang Chun states that the petitioner has
offered no evidence which would warrant the Department to reexamine the
reasonableness of Chang Chun's value-based allocation methodology in
future reviews.
DOC Position: We agree with Chang Chun, in part. The Department
confirms, generally, that it is appropriate and in accordance with the
Department's practice for Chang Chun to maintain a value-based
methodology for allocating joint production costs between PVA and
acetic acid. However, the Department has not adopted Chang Chun's
particular value-based cost allocation methodology in its entirety. Our
review of Chang Chun's allocation methodology indicates that Chang Chun
relied upon POR sales prices of PVA as a basis for allocating costs
between PVA and acetic acid. While we determined in the LTFV
investigation that a relative-sales-value-based allocation methodology
is appropriate, we expressed concern that the sales value for PVA, used
in our calculation, be representative of a period prior to allegations
of dumping for the subject merchandise (see Notice of Final
Determination of Sales at Less Than Fair Value: Polyvinyl Alcohol from
Taiwan, 61 FR 14064, 14071 (March 29, 1996) (``PVA Final
Determination''). In the final determination of the LTFV investigation
and first administrative review of the antidumping duty order on PVA
from Taiwan, we allocated joint production costs between PVA and acetic
acid using each product's relative sales value from a two-year period
prior to the initial period of investigation (``POI'') (see Polyvinyl
Alcohol from Taiwan: Final Results of Antidumping Duty Administrative
Review, 63 FR 32810, 32815 (June 16, 1998) (``PVA 1st Admin Review'')).
Consistent with our methodology established in the LTFV
determination and first administrative review, we consider it
inappropriate in this review to rely exclusively on PVA sales prices
relevant during a period of alleged dumping as a basis to allocate
costs to PVA, particularly when these allocated costs are used as a
means to measure the fairness of the selling prices for the same
product. We believe that by adjusting the POR sales figures with sales
of PVA and acetic acid over an extended period prior to the original
investigation, the total relative sales value 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. In order to reallocate Chang Chun's joint
production costs in the manner discussed above, we adjusted Chang
Chun's POR sales values to reflect the relative sales values for the
two-year period prior to the POI based on data obtained from the record
of the first administrative review which has been placed on the record
of this proceeding (see Memorandum to the File, dated May 19, 1999).
Chang Chun defends its use of POR sales values for acetic acid and
PVA as the basis for allocating its costs between these two products
based on the fact that the Department found no sales below the cost of
production in the first administrative review. Although the Department
found no below-cost sales of PVA during the first administrative review
for Chang Chun, we continue to find it appropriate to adjust the POR
relative sales values to reflect the relative sales values for the two-
year period prior to the POI as we did in the first administrative
review. This adjustment is appropriate because the manipulation of
pricing patterns, even slight in nature as a result of future
antidumping duty proceedings, still may result.
Accordingly, for this second administrative review, we continue to
accept Chang Chun's relative-sales-value-based cost allocation
methodology in general. However, we have applied the same adjustment
methodology as that in first administrative review in order to allocate
Chang Chun's joint production costs between PVA and acetic acid (see
``Final Calculation Memorandum for Chang Chun'' dated June 8, 1999).
Comment 2: PVA and Acetic Acid Calculated Profitability Margins
The petitioner contends that Chang Chun's methodology used for
allocating production cost between PVA and acetic acid produces
distortive results because the profit margins for PVA and acetic acid
are not the same.
Chang Chun maintains that its methodology correctly allocates its
production costs between acetic acid and PVA based on relative sales
value. Chang Chun states that the Department has never specified that
the profit margins be exactly the same for PVA and acetic acid for the
methodology to be acceptable. In fact, Chang Chun contends that the
Department has specified only that the methodology should yield
``approximately the same'' profit margins for PVA and acetic acid. In
this review, Chang Chun maintains that the profit rates for PVA and
acetic acid are ``approximately the same.''

[[Page 32026]]

Therefore, Chang Chun requests the Department to dismiss the
petitioner's argument and find that Chang Chun's methodology correctly
allocates its production costs between acetic acid and PVA based on the
respective sales values of each product. Chang Chun cites to PVA 1st
Admin Review, 63 FR at 32815 in support of its argument.
DOC Position: We agree, in part, with Chang Chun. We have re-
examined Chang Chun's methodology for the calculation of the profit
rate for acetic acid and PVA and found that the sales revenues upon
which those profitability margins were based generally reflect relative
sales values for acetic acid and PVA. As discussed in Comment 1 above,
in the LTFV investigation and first administrative review, application
of a relative-sales-value-based allocation methodology was considered
appropriate (see PVA Final Determination, 61 FR at 14071 and PVA 1st
Admin Review, 63 FR at 32815). Accordingly, in this review we find that
Chang Chun's general methodology is appropriate.
Furthermore, we agree with Chang Chun's argument that its profit
rates for acetic acid and PVA are approximately the same. As the
Department stated in the first administrative review, a relative-sales-
value-based allocation should yield approximately the same profit rates
for acetic acid and PVA (see PVA 1st Admin Review, 63 FR 32815).
However, for the reasons stated in the LTFV determination, the first
administrative review, and Comment 1 above, the Department has adjusted
Chang Chun's production costs by relative sale values representative of
a two-year period prior to the POI. We note that any differences in the
resulting POR profit rates for PVA and acetic acid are effectively
compensated through the Department's adjustment of the POR cost data on
the basis of the relative sales values representative of a two-year
period prior to the POI in which there was no allegation of dumping for
the subject merchandise (see Attachment 2 of the ``Final Calculation
Memorandum for Chang Chun'' dated June 8, 1999). This adjustment is
appropriate for allocating joint production costs and calculating the
profit rates between PVA and acetic acid (see PVA Final Determination,
61 FR at 14071, and PVA 1st Admin Review, 63 FR at 32815).
Comment 3: Acetic Acid Sales Prices and the Major Input Rule
The petitioner alleges that Chang Chun's reported acetic acid sales
prices are problematic. Based on a comparison of acetic acid sales
prices contained in Exhibits 5 and 7 of Chang Chun's January 19, 1999,
supplemental section D response, the petitioner purports that Chang
Chun under-reported its average sales price of acetic acid to
unaffiliated purchasers of acetic acid. Furthermore, the petitioner
argues that these sales prices warrant close scrutiny in future
administrative reviews because Chang Chun uses these prices for the
allocation of costs between PVA and acetic acid. Finally, the
petitioner questions whether Dairen, Chang Chun's affiliated vinyl
acetate monomer (``VAM'') supplier, has properly reported its costs for
producing VAM, which is a major input used in the production of PVA.
Specifically, the petitioner takes issue with the acetic acid price
that Dairen paid Chang Chun and included in its reported VAM production
costs.
Chang Chun urges the Department to reject the petitioner's
arguments because they are untimely and are not supported by record
evidence. Chang Chun notes that the petitioner's argument for applying
the major input rule to VAM production was untimely under 19 CFR
351.301(d)(3). Moreover, Chang Chun maintains that the major input rule
under section 773(f)(3) of the Act does not apply to acetic acid sales
transactions between Chang Chun and Dairen because acetic acid is not a
major input of the subject merchandise; rather, the major input to PVA
in this case is the VAM produced by Dairen. Specifically, Chang Chun
maintains that the Department verified the sales prices of acetic acid
reported in Chang Chun's submission in the first administrative review
of PVA. Furthermore, in support of its argument that the Department may
rely on knowledge of a respondent's records and data acquired from past
reviews in determining the reasonableness of its reporting
methodologies used in a current review, Chang Chun cites to Timken Co.
v. United States, 16 F. Supp. 2d 1102 (CIT 1998).
DOC Position: We agree with petitioner, in that Chang Chun's acetic
acid prices may be problematic. However, because this issue was raised
for the first time in the petitioner's case brief, there is
insufficient information on the record that would allow the Department
to address the differences that exist among Chang Chun's per-unit
market price for acetic acid, Chang Chun's per-unit transfer price for
acetic acid, or Chang Chun's per-unit COP for acetic acid. Based on the
record of the current review, we are unable to determine what impact,
if any, this issue may have on the final margin calculation. However,
we will consider this issue, if raised in a timely manner, in future
reviews as appropriate.
With respect to Chang Chun's untimeliness argument under 19 CFR
351.301(d)(3), we note that application of this regulation is
inappropriate because we conducted a cost investigation in this review.
Specifically, the Department's normal practice is to analyze an
affiliated supplier's production cost data for major inputs whenever it
conducts a cost investigation. Thus, the cited regulation is only
applicable where the Department has determined to base normal value on
constructed value, but there is no cost investigation (see Antidumping
Duties; Countervailing Duties; Final Rule, 62 FR at 27296, 27336 (May
19, 1997)).
Comment 4: U.S. Customs Investigation
The petitioner requests that the Department obtain and review the
results of an investigation conducted by the U.S. Customs Service
(``Customs Service'') which involved examining shipments of PVA to the
U.S. market to determine whether sales of merchandise claimed to be
outside the scope of the antidumping duty order were properly
classified.
Chang Chun claims that, since it has reported all of its U.S. sales
of subject merchandise during this review period, the Department should
reject the petitioner's request.
DOC Position: To establish the accuracy of the petitioner's
allegation regarding whether Chang Chun or DuPont properly reported all
sales of PVA during the POR, we would have had to conduct verifications
of the two firms' sales data. Because the petitioner did not raise the
allegation until it presented its case brief on April 8, 1999, we could
not verify in this administrative review.
In accordance with the petitioner's suggestion, we made a request
that the Customs Service provide us with the status of any
investigation into whether imports of subject PVA had been declared
improperly as being outside the scope of the antidumping duty order
(see Memorandum to the Customs Service dated April 16, 1999). In a May
13, 1999, reply to our request, the Customs Service stated it had
``conducted an analysis of shipments of PVA,'' but it could not
disclose whether any shipments of PVA were found to be non-compliant
with the antidumping duty order (see Memorandum to the file dated May
13, 1999). Instead, the Customs Service said that if there were any
shipments of PVA found to be non-compliant, it would have notified the
importer and corrective action would have been taken. Based on the
record of this proceeding, we cannot conclude

[[Page 32027]]

that the respondents have improperly reported sales of PVA during the
POR. We will review this issue, if it is raised in a timely manner, in
a future administrative review.

DuPont

Comment 1: Application of the Special Rule for Value Added
DuPont withdrew its request that the Department apply the special
rule for value added in this case and therefore exclude its sales of
further manufactured PVA from the analysis. However, DuPont maintains
that although it has withdrawn its request in this particular review,
applying the special rule is an important issue in the calculation of
DuPont's dumping margin and should be considered without prejudice in
future reviews.
The petitioner did not comment on this issue.
DOC Position: Because DuPont withdrew its request that the
Department apply the special rule in this case shortly after the
preliminary results, the Department has not considered further
application of the special rule for these final results. However, if
DuPont should request in a timely manner that the Department apply the
special rule in a subsequent proceeding, the Department will again give
DuPont's request full consideration.

Final Results of the Review

As a result of our review, we have determined that the following
weighted-average margins exist for the period May 1, 1997, through
April 30, 1998:

------------------------------------------------------------------------
Margin
Manufacturer/producer/exporter (percent)
------------------------------------------------------------------------
Chang Chun Petrochemical Co. Ltd........................... 0.00
E.I. DuPont de Nemours & Co................................ 0.00
------------------------------------------------------------------------

Cash Deposit Requirements

The following deposit requirements shall be effective upon
publication of this notice of final results of administrative review
for all shipments of the subject merchandise from Taiwan that are
entered, or withdrawn from warehouse, for consumption on or after the
publication date, as provided for by section 751(a)(1) of the Act: (1)
the cash deposit rates for Chang Chun and DuPont will be the rates
indicated above (i.e., the cash deposit rate will be zero); (2) if the
exporter is not a firm covered in this review or the LTFV
investigation, but the manufacturer is, the cash deposit rate will be
that established for the most recent period for the manufacturer of the
merchandise; and (3) if neither the exporter nor the manufacturer is a
firm covered in this review or the LTFV investigation, the cash deposit
rate will be 19.21 percent, the ``All Other'' rate made effective by
the LTFV investigation. These requirements shall remain in effect until
publication of the final results of the next administrative review.

Assessment Rates

The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. For duty
assessment purposes, we have calculated importer-specific assessment
rates for the subject merchandise. Pursuant to 19 CFR 351.212(b)(1), we
have calculated importer-specific ad valorem duty assessment rates
based on the ratio of the total amount of the dumping margins
calculated for the examined sales to the total entered value of those
same sales. In order to estimate the entered value, we have subtracted
international movement expenses from the gross sales value. In
accordance with 19 CFR 351.106(c)(2), we will instruct the Customs
Service to liquidate without regard to antidumping duties all entries
of subject merchandise during the POR for which the importer-specific
assessment rate is zero or de minimis (i.e., less than 0.50 percent).

Notification to Importers and Interested Parties

This notice serves as a final reminder to importers of their
responsibility under 19 CFR 351.402(f) to file a certificate regarding
the reimbursement of antidumping duties prior to liquidation of the
relevant entries during the 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 notice also serves as a final reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 351.305(a). Timely written notification
or conversion to judicial protective order is hereby requested. Failure
to comply with the regulations and terms of the APO is a sanctionable
violation.
This determination is issued and published in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.

Dated: June 8, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-15177 Filed 6-14-99; 8:45 am]
BILLING CODE 3510-DS-P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A99-15177. Public record. Not legal advice.