01-4405. Polyvinyl Alcohol From Taiwan: Preliminary Results of Fourth Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results of fourth antidumping duty administrative review.

SUMMARY:

In response to a request by Chang Chun Petrochemical Co., Ltd.,^[1] a producer and exporter of polyvinyl alcohol from Taiwan, 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 1, 1999, through April 30, 2000.

We preliminarily find that sales of subject merchandise have not 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 for which the importer-specific rate is de minimis (i.e., less than 0.5 percent). Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

February 22, 2001.

FOR FURTHER INFORMATION CONTACT:

Brian Ledgerwood, at [phone], or Brian Smith, at [phone], Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 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 (“the Act”), as amended, by the Uruguay Round Agreements Act (“URAA”). In addition, unless otherwise indicated, all references are made to the Department of Commerce's (“the Department's”) final regulations at 19 CFR Part 351 (2000).

Case History

On May 14, 1996, the Department published in the Federal Register an antidumping duty order on polyvinyl alcohol (“PVA”) from Taiwan. See 61 FR 24286. On May 16, 2000, the Department published a notice providing an opportunity to request an administrative review of this order for the period May 1, 1999, through April 30, 2000 (65 FR 31141). On May 31, 2000, we received a timely request for an administrative review from Chang Chun Petrochemical Co., Ltd. (“Chang Chun”). In addition, Chang Chun requested that the Department revoke the antidumping duty order with respect to it. On May 31, 2000, we received a timely request for an administrative review from the petitioner. On July 7, 2000, we published a notice of initiation of this review for Chang Chun (65 FR 41942).

On June 30, 2000, we issued an antidumping questionnaire to Chang Chun. Because the Department disregarded sales that failed the cost test in the last completed review for Chang Chun (at that time) (see Polyvinyl Alcohol from Taiwan: Final Results of Second Antidumping Duty Administrative Review, 64 FR 32024, 32025 (June 15, 1999) (hereafter “Second Administrative Review-PVA”)), the Department had reasonable grounds to believe or suspect that Chang Chun's sales of the foreign like product may have been made at prices below the cost of production (“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 an investigation to determine whether Chang Chun made home market sales during the period of review (“POR”) at prices below its COP, and required Chang Chun to respond to the COP section of the questionnaire issued on June 30, 2000.

The Department received Chang Chun's response in August 2000. We issued a supplemental questionnaire to Chang Chun in October 2000. The response to this questionnaire was received in November 2000. On October 6, 2000, Chang Chun withdrew its request for revocation, in part, of the antidumping duty order on polyvinyl alcohol from Taiwan.

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 POR is May 1, 1999, through April 30, 2000.

Fair Value Comparisons

To determine whether sales of the subject merchandise to the United States were made at prices below normal value, we compared the export price to normal value as described below. In accordance with section 777A(d)(2) of the Act, we compared the export price of individual transactions to the monthly weighted-average price of sales of the foreign like product made in the ordinary course of trade (see section 773(a)(1)(B)(i) of the Act).

Product Comparisons

In accordance with section 771(16) of the Act, we considered all products produced by Chang Chun covered by the description in the “Scope of 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 within the contemporaneous window period, which extends from three months prior to the U.S. sale and until two months after the sale. Where there were no sales of identical merchandise made in the home market in the ordinary course of trade, 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 Chang Chun in the following order: viscosity, hydrolysis, particle size, tackifier, defoamer, ash, color, volatiles, and visual impurities.

Export Price

In accordance with sections 772(a) and (c) of the Act, we calculated an export price for all of Chang Chun's sales since the merchandise was sold directly to the first unaffiliated purchaser in the United States prior to importation, and because constructed export price methodology was not otherwise warranted based on the facts of the record. We calculated export price based on the packed, CIF or FOB prices to unaffiliated purchasers in, or for exportation to, the United States. We made deductions, where appropriate, from the starting price for foreign inland freight, foreign brokerage and handling, international freight (including harbor construction taxes), and marine insurance in accordance with section 772(c)(2)(A) 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 normal value (i.e., the aggregate volume of home market sales of the foreign like product is five percent or more of the aggregate volume of U.S. sales), we compared Chang Chun's volume of home market sales of the foreign like product to its volume of U.S. sales of the subject merchandise, in accordance with 19 CFR 351.404(b). 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)(B)(i) of the Act, we based normal value on sales in Taiwan.

Level of Trade

In accordance with section 773(a)(1)(B)(i) of the Act, to the extent practicable, we determined normal value based on sales in the comparison market at the same level of trade (“LOT”) as the export price transaction. The normal value LOT is that of the starting-price sales in the comparison market or, when normal value is based on constructed value, that of the sales from which we derive selling, general, and administrative (“SG&A”) expenses and profit. For export price, the LOT is also the level of the starting-price sale, which is usually from the exporter to the importer.

To determine whether normal value sales are at a different LOT than export price sales, 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 normal value is based and comparison-market sales at the LOT of the export transaction, we make a LOT adjustment under section 773(a)(7)(A) of the Act. See Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731, 61732-33 (November 19, 1997).

As in previous administrative reviews, Chang Chun reported one channel of distribution for its U.S. and home market sales (see Second Administrative Review—PVA, 64 FR 32024 (June 15, 1999); Notice of Final Results of Third Antidumping Duty Administrative Review: Polyvinyl Alcohol from Taiwan, 65 FR 60615 (October 12, 2000) (hereafter “Third Administrative Review—PVA”)). Based on Chang Chun's submission of its reported selling functions, we found that the selling activities performed by Chang Chun in both the home market and the United States were similar. In both the home market and the U.S. market Chang Chun made sales directly to customers and provided no post sale services (e.g., typically limited to freight and delivery arrangements). Therefore, we determined that sales in both markets are at the same LOT and consequently no LOT adjustment is warranted. (See Final Results of Antidumping Duty Administrative Review: PVA From Taiwan, 63 FR 32810, 32812 (June 16, 1998)).

Cost of Production

As we stated in the “Case History” section, because we disregarded sales below the COP for Chang Chun in the last completed segment of the proceeding (at that time) (see Second Administrative Review—PVA, 64 FR 32024 (June 15, 1999)), we had reasonable grounds to believe or suspect that Chang Chun's sales of the foreign like product under consideration for the determination of normal value 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.

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, general and administrative (“G&A”) expenses, and packing costs. We relied on Chang Chun's submitted COP for PVA. In addition, as we have done in the investigation and previous administrative reviews of this order, we adjusted the joint production costs between PVA and acetic acid using the relative sales value of each product calculated on the basis of a two-year period prior to the period of the less-than-fair-value (“LTFV”) investigation (see January 30, 2001, preliminary results calculation memorandum and Third Administrative Review—PVA, 65 FR 60615 (October 12, 2000), and the accompanying Decision Memorandum at the “Margin Calculations” section).

Consistent with the prior reviews and investigation, we determined that Chang Chun purchased a major input (i.e., vinyl acetate monomer (“VAM”)) used in the production of PVA from an affiliated party (See Final Determination: Polyvinyl Alcohol from Taiwan, 61 FR 14064, 14071 at Comment 8 and 9 (March 29, 1996)). Pursuant to 19 CFR 351.407(b), we applied the major input rule to determine the value of the VAM. Under the major input rule, we normally will determine the value of a major input purchased from an affiliated person based on the higher of: (1) the price paid by the exporter or producer to the affiliated person for the major input; (2) the amount usually reflected in sales of the major input in the market under consideration; or (3) the cost to the affiliated person of producing the major input. In this case, for the preliminary results, we used the affiliated person's COP, which was higher than the market price or the affiliate's transfer price (see, Chang Chun's August 2000 Section D response at page D-27, Exhibits D-2 and D-10, and Chang Chun's November 2000 supplemental response at pages supp-22 and 23). Consistent with 19 CFR 351.407(b), in the previous three reviews the Department used Chang Chun's affiliate's transfer price for VAM, which was the highest of the three values discussed above, for purposes of calculating the weight-average COP. For these preliminary results, we have accepted Chang Chun's valuation of VAM based on its affiliate's COP because it meets the requirements under 19 CFR 351.407(b), as noted above.

B. Test of Home Market Prices

We compared the weighted-average COP, 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 COPs to the comparison market prices, less any applicable movement charges, discounts, and 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. Based on the COP test, we excluded from our analysis certain comparison-market sales of PVA products.

Price-to-Price Comparisons

We calculated normal value based on packed, FOB or delivered prices to unaffiliated purchasers in Taiwan. We made adjustments to the starting price for returns, where appropriate. We also made deductions, where appropriate, for inland freight (inclusive of inland insurance) pursuant to section 773(a)(6)(B) of the Act. In addition, we made adjustments for differences in the physical characteristics of the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411, 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 351.410. We made COS adjustments by deducting home market direct selling expenses (i.e., credit expenses) and adding U.S. direct selling expenses (i.e., credit expenses and bank charges). Finally, we deducted home market packing costs and added U.S. packing costs in accordance with 773(a)(6) of the Act.

Preliminary Results of Review

As a result of this review, we preliminarily determine that the following margin exists for the period May 1, 1998 through April 30, 1999:

Manufacturer/exporter	Margin (percent)
Chang Chun Petrochemical Co., Ltd	0.00

Pursuant to 19 CFR 351.224(b), the Secretary will disclose to the parties to the proceeding the calculations performed in connection with this review, within five days after the date of publication of the preliminary results of this review. 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 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, 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. The request 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 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. The Department shall determine, and the U.S. Customs Service shall assess, antidumping duties on all appropriate entries. Upon completion of this review, the Department will issue appraisement instructions directly to the U.S. Customs Service.

If these preliminary results are adopted in the final results, we will instruct the U.S. Customs Service to assess antidumping duties on all appropriate entries covered by this review for which any importer-specific assessment rates calculated in the final results of this review are above de minimis (i.e., at or above 0.5 percent), in accordance with 19 CFR 351.106(c)(2). For assessment purposes, we intend to calculate importer-specific assessment rates for the subject merchandise 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 sales examined.

Furthermore, the following deposit requirements will be effective upon completion 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 of the final results of this administrative review, as provided by section 751(a) of the Act: (1) No cash deposits will be required for PVA from Taiwan that is produced by Chang Chun (unless the margin established for Chang Chun in the final results of this review is above de minimis); (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.

Notification to Importers

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) and 777(i) of the Act and 19 CFR 351.213. Effective January 20, 2001, Bernard T. Carreau is fulfilling the duties of the Assistant Secretary for Import Administration.

Dated: January 30, 2001.

Bernard T. Carreau,

Deputy Assistant Secretary, AD/CVD Enforcement II.

Footnotes

1.  On January 19, 2001, counsel for Air Products and Chemicals, Inc. (“the petitioner”) stated that the petitioner's PVA business was sold to Celanese Ltd.