[Federal Register Volume 61, Number 62 (Friday, March 29, 1996)]
[Notices]
[Pages 14057-14063]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7634]
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DEPARTMENT OF COMMERCE
[A-570-842]
Notice of Final Determination of Sales at Less Than Fair Value;
Polyvinyl Alcohol From the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Commerce.
EFFECTIVE DATE: March 29, 1996.
FOR FURTHER INFORMATION CONTACT: Everett Kelly or David J. Goldberger,
Office of Antidumping Investigations, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230;
telephone: (202) 482-4194 or (202) 482-4136, respectively.
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)
[[Page 14058]]
by the Uruguay Rounds Agreements Act (URAA).
Final Determination
As explained in the memoranda from the Assistant Secretary for
Import Administration dated November 22, 1995, and January 11, 1996,
the Department of Commerce (the Department) has exercised its
discretion to toll all deadlines for the duration of the partial
shutdowns of the Federal Government from November 15 through November
21, 1995, and December 16, 1995, through January 6, 1996. Thus, the
deadline for the final determination in this investigation has been
extended by 28 days, i.e., one day for each day (or partial day) the
Department was closed. As such, the deadline for this final
determination is no later than March 21, 1996.
We determine that polyvinyl alcohol (PVA) from the People's
Republic of China (PRC) is being sold in the United States at less than
fair value (LTFV), as provided in section 735 of the Tariff Act of
1930, as amended (the Act). The estimated margins are shown in the
``Suspension of Liquidation'' section of this notice.
Case History
Since the preliminary determination on October 2, 1995 (60 FR
52647, October 10, 1995), the following events have occurred:
On October 13 and 17, 1995, Guangxi GITIC Import and Export
Corporation (Guangxi), Guangxi Vinylon Plant (Guangxi Vinylon) and
Sinopec Sichuan Vinylon Works (Sichuan), respectively, requested a
postponement of the final determination pursuant to 19 CFR 353.20. The
Department has determined that such requests contain an implied request
to extend the provisional measures period, during which liquidation is
suspended, to six months (see Extension of Provisional Measures
memorandum dated February 7, 1996). Accordingly, on October 19, 1995,
the Department postponed the final determination until February 22,
1996. (Postponement of Final Antidumping Duty Determinations: Polyvinyl
Alcohol from Japan, Taiwan, and the People's Republic of China 60 FR
54667, October 25, 1995).
On November 3, 1995, Isolyser Co., Inc. (Isolyser), an importer of
the subject merchandise, entered an appearance in this investigation,
and submitted a request for clarification to the scope of this
investigation, to exclude PVA fiber.
On November 20, 1995, in response to concerns of Isolyser,
petitioner clarified that the scope does not include polyvinyl alcohol
fiber.
In October and November, we verified the respondents' questionnaire
responses. Additional publicly available published information (PAPI)
on surrogate values was submitted by petitioner and respondents on
January 19, 1996. Petitioner, respondents, and Isolyser submitted case
briefs on January 30, 1996. Petitioner and respondents filed rebuttal
briefs on February 6, 1996. A public hearing was held on February 14,
1996.
Scope of Investigation
The merchandise under investigation is polyvinyl alcohol. Polyvinyl
alcohol is a dry, white to cream-colored, water-soluble synthetic
polymer. Excluded from this investigation are polyvinyl alcohols
covalently bonded with acetoacetylate, carboxylic acid, or sulfonic
acid uniformly present on all polymer chains in a concentration equal
to or greater than two mole percent, and polyvinyl alcohols covalently
bonded with silane uniformly present on all polymer chains in a
concentration equal to or greater than one-tenth of one mole percent.
Polyvinyl alcohol in fiber form is not included in the scope of this
investigation.
The merchandise under investigation is currently classifiable under
subheading 3905.30.00 of the Harmonized Tariff Schedule of the United
States (HTSUS). Although the HTSUS subheading is provided for
convenience and customs purposes, the written description of the
merchandise under investigation is dispositive.
Period of Investigation
The period of investigation is October 1, 1994, through March 31,
1995.
Separate Rates
As stated in our preliminary determination, the PRC is a non-market
economy (NME). Each of the responding PRC exporters, Sichuan and
Guangxi, has requested a separate, company-specific rate. According to
both respondents' business licenses, each is ``owned by all the
people''. As stated in the Final Determination of Sales at Less than
Fair Value: Silicon Carbide from the People's Republic of China 59 FR
22585, (May 2, 1994) (Silicon Carbide), and the Final Determination of
Sales at Less than Fair Value: Furfuryl Alcohol from the People's
Republic of China 60 FR 22545 (May 8, 1995) (Furfuryl Alcohol),
ownership of a company by all the people does not, in itself, require
the application of a single PRC-wide rate. Accordingly, both
respondents are eligible for consideration for a separate rate.
To establish whether a firm is sufficiently independent from
government control to be entitled to a separate rate, the Department
analyzes each exporting entity under a test arising out of the Final
Determination of Sales at Less Than Fair Value: Sparklers from the
People's Republic of China 56 FR 20588 (May 6, 1991) (Sparklers) and
amplified in Silicon Carbide. Under the separate rates criteria, the
Department assigns separate rates in nonmarket economy cases only if
respondents can demonstrate the absence of both de jure and de facto
governmental control over export activities.
1. Absence of De Jure Control
The respondents have placed on the administrative record a number
of documents to demonstrate absence of de jure control, including laws,
regulations and provisions enacted by the State Council of the central
government of the PRC. Respondents have also submitted documents which
establish that PVA is not included on the list of products that may be
subject to central government export constraints (Export Provisions).
The Department has reviewed these and other enactments in prior cases
and has previously determined that these laws indicate that the
responsibility for managing state-owned enterprises has been shifted
from the government to the enterprise itself (See Silicon Carbide and
Furfuryl Alcohol).
However, as stated in previous cases, there is some evidence that
the PRC central government enactments have not been implemented
uniformly among different sectors and/or jurisdictions in the PRC (See
Silicon Carbide and Furfuryl Alcohol). Therefore, the Department has
determined that an analysis of de facto control is critical in
determining whether respondents are, in fact, subject to a degree of
governmental control which would preclude the Department from assigning
separate rates.
2. Absence of De Facto Control
The Department typically considers four factors in evaluating
whether each respondent is subject to de facto governmental control of
its export functions: (1) whether the export prices are set by or
subject to the approval of a governmental authority; (2) whether the
respondent has authority to negotiate and sign contracts and other
agreements; (3) whether the respondent has autonomy from the government
in making decisions regarding the selection of management; and (4)
whether the respondent retains the proceeds of its export sales and
makes independent decisions regarding
[[Page 14059]]
disposition of profits or financing of losses (see Silicon Carbide and
Furfuryl Alcohol).
Each respondent has asserted the following: (1) it establishes its
own export prices; (2) it negotiates contracts, without guidance from
any governmental entities or organizations; (3) it makes its own
personnel decisions; and (4) it retains the proceeds of its export
sales, uses profits according to its business needs and has the
authority to sell its assets and to obtain loans. In addition,
respondents' questionnaire responses indicate that company-specific
pricing during the POI does not suggest coordination among exporters.
During verification proceedings, Department officials viewed such
evidence as sales documents, company correspondence, and bank
statements. This information supports a finding that there is a de
facto absence of governmental control of export functions.
Consequently, we have determined that Sichuan and Guangxi have met the
criteria for the application of separate rates (see, also Comment 1
under Interested Party Comments section below).
Fair Value Comparisons
To determine whether sales of PVA from the PRC to the United States
by Guangxi and Sichuan were made at less than fair value, we compared
Export Price (EP) to the Normal Value (NV), as specified in the
``Export Price'' and ``Normal Value'' sections of this notice.
Export Price
For both Guangxi and Sichuan, we calculated EP in accordance with
section 772(a) of the Act, because the subject merchandise was sold
directly to the first unaffiliated purchaser in the United States prior
to importation and because constructed export price under section
772(b) is not otherwise warranted on the basis of the facts of this
investigation.
Petitioner has claimed that certain U.S. customers of the
respondents are affiliated with respondents, pursuant to section
771(33) of the Act, through common PRC government control. However,
there is no information on the record that supports the claim that the
U.S. customers are affiliated with the PRC government. Further,
respondents have been deemed free of government control. Therefore, we
find no basis to consider these customers as affiliated with
respondents.
We calculated EP based on packed, FOB PRC port or CIF U.S. port
prices to unaffiliated purchasers in the United States, as appropriate,
based on the same methodologies in the preliminary determination with
the following exceptions:
We excluded all U.S. sales by Sichuan and Guangxi that were
reported as having been made through third country resellers, as we
determined that, at the time of sale, respondents were unaware of the
final destination of the subject merchandise (see Comment 6). For
Guangxi, we valued ocean freight based on the actual price paid for
this expense, as we determined at verification that Guangxi used market
economy carriers and paid with market economy currencies. We also
included in the final determination a sale by Guangxi that was excluded
from our preliminary determination, because we verified that this sale
was, in fact, made during the POI.
Normal Value
As in our preliminary determination, we are relying on India as the
surrogate country in accordance with section 773(c)(4) of the Act.
Accordingly, we have continued to calculate normal value (NV) using
Indian prices for the PRC producers' factors of production. We have
obtained and relied on published, publicly-available information
wherever possible.
In accordance with section 773(c) of the Act, we calculated NV
based on factors of production reported by Sichuan, and by Guangxi
Vinylon, which produced the PVA for Guangxi. To calculate NV, the
reported unit factor quantities were multiplied by Indian values.
Except as noted below, we applied surrogate values to the factors of
production in the same manner as in our preliminary determination. For
a complete discussion of surrogate values, see Valuation Memorandum,
dated March 21, 1996. We then added amounts for overhead, general
expenses (including interest) and profit, based on the experience of
two Indian PVA producers (see also Comment 3), and packing expenses.
For both Sichuan and Guangxi, we have corrected the affected
factors of consumption to reflect verification results. For Sichuan,
these revisions include changes to PVA production stage based on actual
PVA production levels, rather than the standards of the industry, (see
Comment 8), and changes to the acetic acid consumption factors to net
out regained acetic acid. For Guangxi, we revised calcium carbide
factors to reflect actual rather than standard consumption (see Comment
7).
All-Others Rate
The Department requested the PRC Ministry of Foreign Trade and
Economic Corporation (MOFTEC) to identify all exporters of subject
merchandise. MOFTEC identified two PRC companies as the only known PRC
exporters of PVA to the United States during the POI. Both of these
identified exporters have responded in this investigation, and both
were found to meet the criteria for application of separate rates. We
compared the respondents' sales data with U.S. import statistics for
time periods including the POI, and found no indication of unreported
sales, with the possible exception of re-sales made by a third country
reseller. This reseller was not investigated as a respondent in this
proceeding because it was not identified as a potential respondent
until after the preliminary determination. All known PRC exporters
responded to our questionnaires and qualified for separate rates. We
have no evidence that there are any other PRC exporters that may be
subject to common government control. Therefore, we have not calculated
a PRC-Wide rate in this investigation. We have calculated an all-others
rate in accordance with section 735 (c)(5) of the Act.
Verification
As provided in section 776(b) of the Act, we verified the
information submitted by respondents for use in our final
determination. We used standard verification procedures, including
examination of relevant accounting and production records and original
source documents provided by respondents.
Interested Party Comments
Comment 1: Separate Rate for Sichuan Vinylon
Petitioner states that Sichuan did not demonstrate the absence of
de jure or de facto governmental control and thus should not be granted
a separate rate. Petitioner claims the Department found evidence at
verification to indicate a relationship between Sichuan and China
National Petrochemical Corporation (Sinopec), which petitioner
identifies as a state-owned petroleum company. According to the
petitioner, as Sichuan is a subsidiary of Sinopec, the Department's
analysis of de jure and de facto governmental control should have been
at the Sinopec level. Further, petitioner contends that Sichuan's
questionnaire response should be considered incomplete and incorrect,
since it did not disclose its business relationship with Sinopec.
Therefore, petitioner asserts that the Department should rely on the
facts available for calculating a margin for Sichuan, Sinopec and all
other PRC entities except Guangxi.
[[Page 14060]]
Sichuan argues that, at the outset of this investigation, it fully
disclosed its past relationship with Sinopec. Sichuan argues that,
under recent PRC law, Sichuan is an independent legal person with its
own management and is not related to any level of government or to
Sinopec. Additionally, Sichuan states that, in past cases, the
Department recognized the 1988 laws and the 1992 regulations as
sufficient evidence of the absence of de jure government control.
Further, Sichuan asserts that verification revealed no evidence of
affiliation with Sinopec or de facto governmental control.
Additionally, Sichuan contends that the name Sinopec is attached to
Sichuan Vinylon Works only as a trademark used for international
business recognition, a practice used by other PRC companies, and not
as an indication of a continued business relationship.
DOC Position
We have calculated a separate margin rate for Sichuan. All evidence
on the record supports Sichuan's assertion that there is no current
relationship between Sichuan and Sinopec. Accordingly, examination of
whether Sinopec was subject to government control was not necessary in
considering whether to give Sichuan a separate rate. At verification,
we reviewed a wide variety of sales documents including contracts,
invoices, records of payments, and correspondence and found that
Sichuan acted independently from Sinopec and any other entities in its
day to day business activities. We found that Sichuan officials made
all decisions regarding sales pricing and contracting, appointment of
management personnel, and disposition of profits, and that these
decisions were neither reviewed nor approved by Sinopec or any other
entity. Accordingly, we determine that Sichuan has satisfactorily met
the Department's criteria for showing an absence of de jure and de
facto governmental control.
Comment 2: Separate Like Product for Certain PVA Grades
Isolyser, an importer of the subject merchandise, asserts that PVA
hydrolyzed at a level of 98% should be considered a separate domestic
like product. Thus, Isolyser contends that the Department should
calculate a separate antidumping margin for PVA with a hydrolysis level
of at least 98% in order for the International Trade Commission (ITC)
to analyze the magnitude of the domestic margin on the domestic
producers for each specific like product.
DOC Position
There is no evidence on the record to show that PVA hydrolyzed at a
98% level has physical characteristics and uses different from the
subject merchandise for separate consideration as a domestic like
product pursuant to section 771(10) of the Act. Therefore, we are
rejecting Isolyser's request.
Comment 3: Application of Factory Overhead
Petitioner claims that the Department understated NV for both
Sichuan and Guangxi in the preliminary determination by applying
factory overhead only at the final stage of production, rather than to
the upstream stages of the vertically integrated production processes.
Petitioner argues that both respondents incur overhead costs throughout
the production process, rather than simply at the final stage, because
both are involved in processing and producing many of the inputs used
in PVA production. Petitioner contends that the Indian PVA
manufacturers are not as vertically integrated as the PRC respondents
and thus the factory overhead percentage derived from the Indian
companies' financial statements does not fully capture the factory
overhead incurred by the PRC producers. In order to fully account for
the overhead incurred, petitioners claim that an appropriate surrogate
factory overhead percentage must be applied to both respondents at each
upstream stage of production.
Sichuan and Guangxi argue that if factory overhead were applied to
each stage of production, the Department would engage in ``double
counting.'' Each respondent states that its production processes are
continuous and although overhead costs are incurred throughout, by
applying the overhead percentage to the factors of production at the
final stage, the Department captures the total overhead cost for the
entire production process.
DOC Position
We disagree with the petitioner. Our analysis of the information on
the record, including the financial statements of the Indian PVA
producers, does not support the assumptions made by petitioner
regarding the level of vertical integration of the Indian surrogate PVA
producers. There is no evidence on the record to indicate that the
Indian producers are any less vertically integrated than the PRC PVA
producers.
To support its claim, petitioner states that the Indian producers
must purchase such inputs as acetylene gas, oxygen, nitrogen, and
treated water, while the PRC producers manufacture or process these
materials themselves. However, the Indian financial statements state
only that the Indian producers consume such inputs, but contain no
information as to whether or not such consumption is derived from
internal manufacture or outside manufacture. Further analysis of these
documents indicates that the Indian producers have considerable
investment in PVA production facilities. Such investment may, in fact,
represent vertical integration at the same level or close to that of
the PRC producers.
There is no basis to assume that applying factory overhead
percentage once, at the final stage of production of the PRC producers,
undervalues factory overhead. By applying the factory overhead to the
final stage of production we have captured all appropriate factory
overhead expenses incurred in the manufacture of PVA. Therefore, we
have continued our preliminary determination methodology for
calculating overhead expenses.
Comment 4: Surrogate Value Source for Factory Overhead, General
Expenses and Profit
Petitioner contends that the Department should continue to rely on
the Annual Report of VAM Organic Chemicals Ltd. (VAM Organic), an
Indian producer of VAM and PVA, as the sole source to calculate factory
overhead, general expenses, and profit. Petitioner argues that VAM
Organic produces mostly VAM and PVA, and its experience is the most
comparable among available sources to that of the PRC producers.
Petitioner argues further that the VAM Organic report is more
representative of the PRC industry experience than the financial
statement of a second Indian producer, Polychem Limited (Polychem),
because PVA related production is a relatively smaller part of
Polychem's business. If, however, the Department were to consider using
both VAM Organic and Polychem data, petitioner contends that the data
should be weight-averaged based on the production of VAM and PVA at
each company.
Sichuan contends that the surrogate value used for factory
overhead, general expenses and profit should be based on the experience
of India's chemical industry as a whole, using aggregate data compiled
by the Reserve Bank of India (RBI), as applied in past Department cases
(see, e.g., Saccharin). Sichuan contends that this data is more
representative than the data from VAM Organic, which Sichuan claims is
aberrational. Sichuan's next preferred methodology is to base these
surrogate
[[Page 14061]]
values on Polychem's experience as Polychem's total PVA sales and VAM
sales are greater than the total sales of VAM Organic's PVA and VAM
sales, and thus Polychem's experience is more representative of the
Indian experience. Finally, Sichuan contends that if the Department
chooses to use both VAM Organic and Polychem data, the data should be
weight-averaged based on each company's total sales volume of PVA.
DOC Position
For valuing such factors as factory overhead, general and
administrative expenses and profit, the Department seeks to base
surrogate values on industry experience closest to the product under
investigation. In this case, we have information from two producers of
the subject merchandise. Thus, there is no need to rely on the
experience of the chemical industry as a whole. Between the two Indian
producers, we found no significant difference in the quality and
representativeness of the data contained in the financial statements.
Thus we find both Polychem and VAM Organic to be equally representative
of the PVA industry in India. Because there is nothing in this case to
indicate that one factor (i.e. sales volume or production volume) is
more important than the other in valuing factory overhead, general and
administrative expenses and profit, we determine that weight-averaging
the data from both companies on the basis of either factor is
inappropriate. Accordingly, we have weighted the data equally between
each company and calculated factory overhead, general and
administrative expenses and profit percentages using a simple average
of the percentages derived from each producer, and applied these
percentages to the factors of production.
Comment 5: Classification of Certain Labor and Overhead Expenses
Petitioner states that the Department should follow the methodology
outlined in Final Determination of Sales at Less than Fair Value:
Manganese Metal from the People's Republic of China (60 FR 56045,
November 6, 1995) (Manganese Metal), where the Department determined
that the surrogate value for labor did not include contributions to the
provident fund and employee welfare expenses and thus these
contributions and expenses were added to the factory overhead
calculation. Petitioner also contends that the data used to derive the
value for overhead should be re-allocated to properly include research
and development expenses.
Sichuan and Guangxi argue that the Department's past practice has
been to include provident fund and employee welfare expenses as
components of total labor cost (see, e.g. Saccharin) and not as part of
overhead expenses. Sichuan states that the example in Manganese Metal
was an aberration and should not be a precedent for this investigation.
Sichuan asserts that the International Labor Organization (ILO) data,
used by the Department in the preliminary determination, is fully
loaded to include employee benefits such as provident fund
contributions and employee welfare expenses. In addition, Sichuan
argues that there is insufficient evidence to support petitioner's re-
allocation of research and development in the factory overhead
calculation. Sichuan maintains that if VAM Organic data is used, no
adjustment for research and development is warranted.
DOC Position
We agree with Sichuan. As in the cases cited by Sichuan, we
consider the ILO statistics to be fully loaded with respect to all
labor expenses, incorporating such costs as contributions to the
provident fund and employee welfare expenses. In contrast, the labor
value used in Manganese Metal was from a different source, and did not
include these expenses. We also agree there is insufficient evidence to
support petitioner's assumptions for basing re-allocation of research
and development expenses.
Comment 6: Sales to Non-PRC Trading Company
Petitioner contends that at the time of sale, Sichuan and Guangxi
were unaware of the final destination for sales made to a third country
trading company. Petitioner states these sales should be excluded from
the calculation of the PRC producer's export price and assigned an
antidumping rate separate from that of the respondents.
While Sichuan states the exclusion of these sales would have
minimal effect on the final margin calculations, Sichuan states it knew
at the time of sale that the sales to the trading company were destined
to the United States. Sichuan contends that it had numerous sales
documents that would have supported its claim that it knew at the time
of sale the final destination of the sales made to trading companies.
Guangxi agrees that it did not know the final destination of the sales
made through the trading companies.
DOC Position
We reviewed numerous sales documents at the verification of Sichuan
and in no instance did we find that at the time of sale, Sichuan knew
or had any reason to believe the destination of the subject merchandise
was the United States. There is no further information on the record
that supports Sichuan's claim that, at the time of sale, it knew the
destination of the subject merchandise. Although each respondent may
have had some indication of the destination prior to the time of
shipment, all of the sales documents reviewed at each company showed no
information identifying the United States as the ultimate destination
of the subject merchandise. We have therefore excluded the trading
company sales from each company's margin calculation.
Comment 7: Guangxi Vinylon Reporting of Calcium Carbide Factor
Petitioner argues the Department should revise Guangxi's reported
calcium carbide factors based on information discovered at
verification, which revealed that Guangxi Vinylon had reported this
factor based on an industrial standard, rather than the actual
consumption of calcium carbide for PVA production.
Guangxi argues that it reported its calcium carbide factor
consumption consistent with the legally required PRC industry standard
for production of PVA and its production accounting system.
DOC Position
We agree with the petitioner. We have revised the calcium carbide
consumption factors to reflect actual consumption, based on information
discovered at verification. Actual consumption in a production process
is more accurate than a standard figure.
Comment 8: Sichuan Reporting of PVA Production
Petitioner claims that the Department should reject as new
information verification findings that Sichuan's reported concentration
percentage of PVA used to calculate consumption factors of inputs used
at the PVA production stage was inaccurate. Additionally, petitioner
argues that Sichuan has not demonstrated that such an adjustment is
appropriate.
Sichuan argues it provided numerous submissions and complete
accurate and timely responses to the Department. Further, Sichuan
states the Department was able to verify, within the time specified,
the completeness of this factual information. Therefore, Sichuan argues
that the Department should use
[[Page 14062]]
the verified evidence on record to calculate an antidumping margin for
Sichuan.
DOC Position
The information discovered at verification, regarding the
concentration percentages of PVA production, represents a relatively
minor correction of data already provided by Sichuan, rather than new
information not previously provided. Moreover, we find that using the
actual concentration percentages of PVA production will yield more
accurate results. Therefore, we have revised affected input factors
based on the actual PVA production data.
Comment 9: Surrogate Value for Electricity
Petitioner argues that the Department should use data on
electricity prices issued by the Centre for Monitoring the Indian
Economy (CMIE), from March 1, 1995, for the electricity surrogate
value. In applying the rates, petitioner suggests the surrogate value
should be calculated as the weighted-average of rates from the Indian
states where the Indian chemical industry is located.
Sichuan and Guangxi argue that the electricity prices submitted by
the petitioner are effective beginning with the last month of the POI,
while all of their PVA production during the POI occurred earlier.
Therefore, they claim that the petitioners proposed value is
inappropriate for use as a surrogate value because it reflects prices
in effect subsequent to their PVA production. Sichuan suggests that the
Department use either data on an electricity rate for India issued by
the International Energy Agency (IEA), or the CMIE value from June 1994
used in the preliminary determination. Sichuan contends that the IEA
figure, when adjusted to the POI, is an appropriate measure of the cost
of electricity.
DOC Position
We agree in part with the petitioner that the March 1995 CMIE data
is the most contemporaneous value relative to the POI and is the
appropriate source for deriving the electricity surrogate value.
Petitioners and respondents are both incorrect in stating that these
rates are ``effective'' on March 1, 1995. Rather, the source shows that
these were the rates ``as of'' March 1, 1995, and thus represent Indian
price levels contemporaneous with the POI. However, we disagree with
the petitioner's weighted average methodology. There is insufficient
basis to assume that the electricity rates from the Indian states
selected by petitioner are more appropriate for surrogate value than
electricity rates in other states. Other factors beside chemical
production levels, such as methods of generation and transmission as
well as overall demand, are determinants of price. Since there is not
sufficient information on the record to weigh the appropriateness of
using one Indian state's electricity rates over those in another, we
have based the surrogate value on the simple average of all Indian
state rates found in the 1995 CMIE source.
Comment 10: Surrogate Value for Natural Gas
Petitioner contends that the Department should use the data on
natural gas costs derived from 1994-1995 Gujarat Narmada Valley
Fertilizer Co. Ltd (Gujarat) Annual Report as a surrogate for valuing
natural gas because this value reflects the actual POI cost to an
Indian chemical producer of this input.
Sichuan maintains that the value submitted by petitioner is not
sufficiently representative of Indian prices as it is taken from a
single Indian company's experience. Sichuan supports the use of an
India-wide price rate obtained for 1994-1995 from Hydrocarbon
Perspective: 2010, as used in the preliminary determination.
DOC Position
We agree with Sichuan and have used a rate obtained from
Hydrocarbon Perspective: 2010 as the surrogate value for natural gas.
In determining the most appropriate surrogate value to apply to an
input factor, the Department considers such elements as the specificity
of the value as compared to the factor used, the contemporaneity of the
value with respect to the POI, and the representativeness of the value
for the industry in the surrogate country. In this instance, both
values are equally specific with respect to the natural gas input, and
equally contemporaneous with respect to the POI. For this factor, we
consider the Hydrocarbon Perspective: 2010 value to be more
representative than a value from an annual report of a single company.
Comment 11: Surrogate Value for Coal
Petitioner states that the Department should use a surrogate value
for steam coal derived from the annual report of Sukhjit Starch &
Chemical Ltd (Sukhjit), an Indian chemical manufacturer. Petitioner
contends that this value is specifically for steam coal, an input used
by the respondents, and the value is contemporaneous with the POI.
Sichuan contends that the Department should derive a surrogate
value for steam coal using average numbers for the Indian chemical
industry as a whole rather than use a price quote from specific
companies whose primary production is not PVA.
DOC Position
We valued steam coal inputs using an average price derived from the
Sukhjit annual report and the 1994-95 annual report for Gujarat report,
identified in Comment 10, which also is on the record. Both of these
sources are equally contemporaneous with the POI and are publicly
available. Although the fertilizer company's annual report does not
specifically classify the coal consumed as ``steam coal'', it is clear
from its inclusion in a table relating to power and fuel consumption
that the coal consumed is for generating steam, and thus can be
considered steam coal. Therefore both values are equally specific with
regard to the input. As we have no basis to determine that one of these
sources is superior to the other, we have weighted them equally in
calculating a surrogate value.
We agree with Sichuan that where surrogate values cannot be based
on the experiences of Indian producers of subject merchandise, a
surrogate value based on a broader sample of Indian experience would be
preferable, where all other relevant factors are equal. However, we
consider the contemporaneity to the POI of the two annual reports to be
more important for valuing this factor. While Sukjhit and Gujarat are
not producers of PVA, we do not consider that fact to be relevant for
considering surrogate values of commodity inputs such as coal, where
the prices from PAPI typically represent the overall price level for
that input in the surrogate country. Further, in comparing the average
of the two companies to other, non-contemporaneous values on the
record, we find that our average is reasonably comparable with respect
to the other inflation-adjusted coal values, including those derived
from the annual reports of the Indian PVA producers.
Comment 12: Sichuan Indirect Labor Factors
Petitioner claims that Sichuan significantly underreported its
indirect labor cost by reporting indirect labor only for the final
stage of the production process. Petitioner contends that the
Department must apply a value for indirect labor to all upstream
production stages, as in Manganese Metal.
[[Page 14063]]
Sichuan contends that it reported, and the Department verified, all
of its indirect labor factors and no further adjustment is warranted.
DOC Position
We agree with Sichuan. We verified Sichuan's indirect labor
reporting and found no basis to add additional factors for this input.
Petitioner's reliance on the Manganese Metal case is misplaced. In
Manganese Metal, the respondent did not report any separate factors for
indirect labor, and the factory overhead value did not include indirect
labor factors. Thus, an adjustment was warranted. In this case, both
Sichuan and Guangxi reported all indirect labor factors and no further
accounting for this input is needed.
Comment 13: Valuation of Guangxi Vinylon's Water Consumption
Petitioner argues that Guangxi Vinylon's water factor should be
considered as a direct manufacturing cost. Petitioner states that
Guangxi's water factor is distinguishable from the Department's
treatment of water in past cases. Petitioner argues that, in past
cases, water was considered an overhead item, since there was no
information in the Reserve Bank of India Bulletin data to indicate
otherwise. In this case, petitioner contends that water is a direct
manufacturing cost of producing PVA. Further, Petitioner argues that
the Indian producers of PVA treat water as a component of power and
fuel, thus identifying water as a direct manufacturing cost. Therefore,
water should be calculated separately from factory overhead.
Guangxi Vinylon states that the Department's treatment of water as
a factory overhead item is consistent with past practice (see, e.g.
Saccharin) and should continue in this investigation.
DOC Position
We agree with Guangxi Vinylon. There is no information on the
record that supports petitioners claim that water must be treated as a
direct manufacturing cost. Consistent with our practice in such cases
as Saccharin, which involved a chemical product and relied on a similar
type of factory overhead data, we have considered Guangxi's Vinylon's
water consumption factor to be part of factory overhead.
Continuation of Suspension of Liquidation
For Sichuan, we calculated a zero margin. Consistent the with
Notice of Final Determination of Sales at Less Than Fair Value: Certain
Cased Pencils from the People's Republic of China (59 FR 55625,
November 8, 1994), merchandise that is sold by Sichuan but manufactured
by other producers will not receive the zero margin. Instead, such
entries will be subject to the ``All-Others'' rate.
In accordance with section 733(d)(1) and 735(c)(4)(B) of the Act,
we are directing the Customs Service to continue to suspend liquidation
of all entries of polyvinyl alcohol (except those entries that
represent U.S. sales by Sichuan of PVA that Sichuan has manufactured)
from the PRC, that are entered, or withdrawn from warehouse for
consumption, on or after the date of publication of this notice in the
Federal Register. The Customs Service shall require a cash deposit or
posting of a bond equal to the estimated amount by which the normal
value exceeds the export price as shown below. These suspension of
liquidation instructions will remain in effect until April 7, 1996.
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average
Manufacturer/Producer/Exporter margin
percentage
------------------------------------------------------------------------
Guangxi GITIC Import and Export Corp........................ 116.75
Sichuan Vinylon Works....................................... 0.00
All-Others Rate............................................. 116.75
------------------------------------------------------------------------
The All-Others rate applies to all entries of subject merchandise
except for entries from Guangxi and entries of merchandise manufactured
by Sichuan.
ITC Notification
In accordance with section 735(d) of the Act, we have notified the
ITC of our determination. As our final determination is affirmative,
the ITC will, within 45 days, determine whether these imports are
materially injuring, or threaten material injury to, the U.S. industry.
If the ITC determines that material injury, or threat of material
injury does not exist, the proceeding will be terminated and all
securities posted will be refunded or canceled. If the ITC determines
that such injury does exist, the Department will issue an antidumping
duty order directing Customs officials to assess antidumping duties on
all imports of the subject merchandise entered for consumption on or
after the effective date of the suspension of liquidation.
This determination is published pursuant to section 735(d) of the
Act.
Dated: March 21, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-7634 Filed 3-28-96; 8:45 am]
BILLING CODE 3510-DS-P
