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

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## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** February 8, 1999
- **Citation:** 64 FR 6042

## Text

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.

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

SUMMARY: In response to requests by the petitioner, Air Products and
Chemicals, Inc., and by two manufacturers/exporters of subject
merchandise, the Department of Commerce (``the Department'') is
conducting an administrative review of the antidumping duty order on
polyvinyl alcohol (``PVA'') from Taiwan. The period of review is May 1,
1997, through April 30, 1998.
We have preliminarily found that no 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 not to assess antidumping duties on entries subject
to this review. 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 statues, regulations, and case cited.

EFFECTIVE DATE: February 8, 1999.

FOR FURTHER INFORMATION CONTACT: Everett Kelly, at (202) 482-4194; or
Brian Smith, at (202) 482-1766, 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 references are made to the
Department's final regulations at 19 CFR Part 351 (1998).

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 12, 1997, the Department published a notice providing an
opportunity to request an administrative review of this order for the
period May 1, 1997, through April 30, 1998 (63 FR 26143). On May 27,
1998, we received a request for an administrative review from E.I. du
Pont de Nemours & Co. (``DuPont''). On May 29, 1998, we received a
request for a review from Chang Chun Petrochemical (``Chang Chun''). On
May 29, 1998, the petitioner also requested reviews of Chang Chun and
DuPont, and an additional review of Perry Chemical Corporation
(``Perry''). On June 29, 1998, we published a notice of initiation of
this review for Chang Chun and Dupont (63 FR 35188). We did not
initiate a review of the importer Perry because we do not consider
Perry to be a manufacturer or exporter of the subject merchandise based
on the factors set forth in section 351.401(h) of the Department's
regulations (see Final Results of Antidumping Duty Administrative
Review: Polyvinyl Alcohol from Taiwan, 63 FR 32810, 32813 (June 16,
1998)).
On June 17, 1998, we issued an antidumping questionnaire to Chang
Chun and Dupont. The Department received responses from the two
companies in September and December 1998. We issued supplemental
questionnaires to these companies in October 1998 and January 1999.
Responses to these questionnaires were received in November 1998 and
January 1999.
On July 24, 1998, Chang Chun requested that the Department clarify
and confirm that the scope of the merchandise includes PVA ``hydrolyzed
in excess of 85 percent whether or not mixed or diluted with defoamer
or boric acid.'' In addition, Chang Chun requested that the Department
confirm that the language in the scope of the order is still effective.
Chang Chun contended that the language describing

[[Page 6043]]

the scope of subject merchandise covered by the antidumping order still
controls the scope of review in this proceeding. Pursuant to Chang
Chun's request, we confirmed that the scope of the merchandise includes
PVA ``hydrolyzed in excess of 85 percent whether or not mixed or
diluted with defoamer or boric acid.'' See ``Scope of Review'' section
of this notice for confirmation of the scope of subject merchandise
covered by the antidumping duty order and this review.
On August 26, 1998, DuPont requested that the Department apply the
special rule set forth in 19 CFR 351.402(c) with respect to its
further-manufactured sales in the United States. DuPont claimed that
sales of non-further-manufactured subject merchandise should be used as
``proxy'' sales if the Department deems that there are a sufficient
number of such sales to provide a reasonable basis for an accurate
dumping margin calculation. Otherwise, DuPont stated that if the
Department were to include the further-manufactured sales in its
calculations, the results would be unreliable and inaccurate (see
``Further Manufactured Sales'' section below for further discussion).
On September 25, 1998, DuPont submitted further analysis in support
of its contention that the Department should exclude its further-
manufactured sales in the preliminary results.
On November 10, 1998, the Department preliminarily determined that
the application of the special rule to DuPont's further-manufactured
sales was not appropriate. (See Memorandum from the Team to Louis Apple
dated November 10 , 1998 (``Special Rule Memo'').)

Scope of Review

The product covered by this review is PVA. PVA 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
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.

Period of Review

The period of review (``POR'') covers the period May 1, 1997,
through April 30, 1998.

Fair Value Comparisons

To determine whether sales of the subject merchandise by the
respondents to the United States were made at prices below normal
value, we compared, where appropriate, the export price (``EP'') or
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 made in the ordinary course of trade.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all
products produced by Chang Chun and Dupont covered by the description
in the ``Scope of the Review'' section, above, to be foreign like
products for purposes of determining appropriate product comparisons to
U.S. sales. We compared U.S. sales to sales made in the home market or
third country, where appropriate, within the contemporaneous window
period, which extends from three months prior to the month of the U.S.
sale through two months after the month of the U.S. sale. Where there
were no sales of identical merchandise in the home market or third
country made in the ordinary course of trade to compare to U.S. sales,
we compared U.S. sales to sales of the most similar foreign like
product made in the ordinary course of trade. In making the product
comparisons, we matched foreign like products based on the physical
characteristics reported by the respondents in the following order:
viscosity, hydrolysis, particle size, tackifier, defoamer, ash, color,
volatiles, and visual impurities.

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 expenses
included domestic inland freight, foreign brokerage and handling,
international freight, and marine insurance.

DuPont

We calculated CEP for all sales of subject merchandise, which were
made in the United States after importation. We based 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), U.S. warehousing
expenses, 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, respectively.

DuPont's Further-Manufactured Sales

Dupont claims that the special rule set forth in section 772(e) of
the Act should apply to its further-manufactured sales because the
value added is above the Department's 65 percent threshold, and there
are a sufficient number of sales of the subject merchandise with no
value-added to use as ``proxy sales.'' Further, DuPont states that
because of the way in which it reports costs associated with further
manufacturing the subject merchandise, including its further-
manufactured sales in the Department's dumping analysis would produce
unreliable and inaccurate results.

[[Page 6044]]

Moreover, the exclusion of its further-manufactured sales from the
Department's analysis would not appreciably affect the accuracy of the
margin results, and that the burdens of preparing, reporting, and
analyzing information for its further-manufactured sales would outweigh
any gains from such an analysis. Therefore, DuPont requests that the
Department exclude these further-manufactured sales and apply the
``Special Rule'' set forth in 19 CFR 351.402(c). Finally, Dupont notes
in its Section E questionnaire response dated December 7, 1998, that if
the Department finds that it must include the selling prices of the
further-manufactured product in its margin calculation, it should
compare the U.S. price of the further-manufactured product to the CV of
that product. According to Dupont, this methodology would result in a
more accurate and reliable margin calculation.
For the reasons stated in the November 10, 1998, Special Rule Memo,
we disagree with DuPont that including the sales of the subject
merchandise that is further-manufactured would necessarily produce
unreliable or inaccurate results, or present a burden for the
Department to calculate a margin using its normal methodology (see
Special Rule Memo for further discussion). Because the purpose of
section 772(e) is to reduce the administrative burden on the
Department, the Department has the discretion to refrain from applying
the special rule in circumstances where, as here, the value-added,
while above the 65 percent threshold, is simple to calculate and does
not present an administrative burden. Moreover, we do not agree with
Dupont that applying our standard methodology will result in inaccurate
and distortive results. However, we may revisit our preliminary
decision to include the further-manufactured sales in our analysis
based on our findings at verification.

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)(C)(ii) 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)(C) of the Act, we based NV on
sales in Taiwan.
For DuPont, in accordance with section 773(a)(1)(B)(ii) and
773(a)(1)(C) 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 the 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 costs in accordance with section 773(a)(6)(A) and (B) of the
Act. We also made adjustments, where appropriate, for movement expenses
consistent with section 773(a)(6)(B) of the Act; these expenses
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 C.F.R. 351.410. 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, ocean freight, and inland freight)
in accordance with section 773(a)(6)(B) of the Act. 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 C.F.R.
351.410. We made COS adjustments by deducting direct selling expenses
incurred for third-country market sales (i.e., credit expenses) and
adding U.S. direct selling expenses (i.e., credit expenses), where
appropriate. Since DuPont was unable to separate packing expenses from
its variable cost of manufacture, we made no adjustment for differences
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 (including inventory
carrying costs), 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 determined 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 the exporter to the importer. For CEP, it is the level of the
constructed export sale from the exporter to the affiliated 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 the 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).
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 performed in both the home market and
the United States were similar. Therefore, we have found that sales in
both markets are at the same

[[Page 6045]]

LOT and consequently no LOT adjustment is warranted.
DuPont reported one customer category and one channel of
distribution for its third-country market sales. For its CEP 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 all of its CEP sales comprise a single
level of trade.
For Dupont's CEP sales, after making the appropriate deductions
under the section 772(d) of the Act, we found that there are no selling
expenses or functions associated with selling activities performed by
Dupont that are reflected in the CEP price. In contrast, the NV LOT is
more remote from the factory than the CEP LOT, and NV prices include
the indirect selling expenses attributable to selling activities
performed by DuPont for the third-country market such as sales support
functions. Accordingly, we have concluded that CEP is at a different
LOT from the third-country market LOT.
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 (``COP'')

For Chang Chun, because we disregarded sales below the COP in the
last completed segment of the proceeding (i.e., the first
administrative review), 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. For
DuPont, because DuPont had no sales below the COP in the last review,
we did not initiate a COP investigation (see Policy Bulletin No. 94.1,
Cost of Production--Standards for Initiation of Inquiry (March 25,
1994)). 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 and fabrication, selling, general and administrative
(``SG&A'') expenses, and packing costs. For Chang Chun, we relied on
the submitted COPs.
Chang Chun purchased a major input (i.e., vinyl acetate monomer
(``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)
of the Act. Section 773(f)(3) of the Act 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. See Notice of Final Determination of Sales at Less
Than Fair Value: Stainless Steel Wire Rod from Sweden, 63 FR 40449,
40454 (July 29, 1998) (Comment 1).
Because a COP investigation is being conducted in this case, the
Department requested in its Section D questionnaire that Chang Chun
provide COP 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 transfer price, which is a higher price than
the market price or its affiliate's COP.

B. Test of Home Market Prices

We compared the weighted-average COP for Chang Chun, 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
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 the
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 the 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
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.
For Chang Chun, we found that certain comparison-market sales of
PVA products were made at below-COP prices in substantial quantities
within an extended period of time and at prices which would not permit
recovery of costs within a reasonable period of time.

Preliminary Results of Review

As a result of this review, we preliminarily determine that the
following margin exists for the period May 1, 1997, through April 30,
1998:

------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Chang Chun Petrochemical Corporation......................... 0.00
E.I. du Pont de Nemours & Co................................. 0.00
------------------------------------------------------------------------

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 30 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

[[Page 6046]]

brief summary of the argument. Parties are also encouraged to provide a
summary of the arguments not to exceed five pages and a table of
statutes, regulations and cases cited.
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.
Interested parties who wish to request a hearing or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, Room B-099, within 30 days of the
date of publication of this notice. Requests should contain: (1) the
party's name, address and telephone number; (2) the number of
participants; and (3) a list of issues to be discussed.

Cash Deposit and Assessment Requirements

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 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 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.
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. We will instruct the Customs Service to assess
antidumping duties on all appropriate entries covered by this review if
any importer-specific assessment rate calculated in the final results
of this review is above de minimis. For Chang Chun, for duty assessment
purposes, we will calculate importer-specific assessment rates by
aggregating the dumping margins calculated for all U.S. sales to each
importer and dividing this amount by the total entered value of the
same sales. In order to estimate the entered value, we will subtract
international movement expenses from the gross sales value. For DuPont,
we will calculate an assessment rate by aggregating the dumping margins
calculated for all U.S. sales examined and dividing this amount by the
total entered value of the sales examined
This notice serves as a preliminary reminder to importers of their
responsibility under 19 CFR 351.402(f)(2) 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 351.213.

Dated: February 1, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-2996 Filed 2-5-99; 8:45 am]
BILLING CODE 3510-DS-P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A99-2996. Public record. Not legal advice.