[Federal Register Volume 59, Number 153 (Wednesday, August 10, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-19541]
[[Page Unknown]]
[Federal Register: August 10, 1994]
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DEPARTMENT OF COMMERCE
[C-307-810]
Final Negative Countervailing Duty Determination: Phthalic
Anhydride From Venezuela
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: August 10, 1994.
FOR FURTHER INFORMATION CONTACT:
Kristin M. Heim, Office of Countervailing Investigations, Import
Administration, U.S. Department of Commerce, Room B099, 14th Street and
Constitution Avenue NW., Washington, DC 10130; telephone (202) 482-
3798.
Final Determination
Case History
Since the publication of the preliminary negative determination in
the Federal Register (59 FR 3842, January 27, 1994) the following
events have occurred.
On March 4, 1994, we published a notice aligning this investigation
with the companion antidumping duty investigation in the Federal
Register (59 FR 10372). We conducted verification from March 22 through
25, 1994. A case brief was filed by petitioners on June 1, 1994, and a
rebuttal brief was filed by Oxidor on June 10, 1994. A public hearing
was not requested.
Scope of Investigation
For purposes of this investigation, phthalic anhydride (``PA'') is
an aromatic synthetic organic chemical usually produced from a primary
petrochemical called orthoxylene, although sometimes it is produced
from naphthalene. PA is predominately used in the production of
plasticizers, unsaturated polyester resins, and alkyd resins, which in
turn are generally used to produced plastics and paints. The subject PA
is produced in two physical forms, molten and flaked.
The PA subject to this investigation is currently classified under
subheading 2917.35.00 of the Harmonized Tariff Schedule of the United
States (HTSUS). The HTSUS subheading is provided for convenience and
customs purposes. Our written description of the scope of this
investigation is dispositive.
Injury Test
On August 31, 1990, Venezuela became a contracting party to the
General Agreement on Tariffs and Trade (GATT). Since a country cannot
qualify as a ``country under the Agreement'' under section 701(b)(3) of
the Tariff Act of 1930, as amended (``the Act'') if it is a contracting
party to the GATT, Venezuela is no longer eligible for treatment as a
``country under the Agreement'' within the meaning of section 701(b)(3)
of the Act. However, because Venezuela is a GATT contracting party and
the merchandise under investigation is non-dutiable, the ITC is
required to determine whether, pursuant to section 303(a)(2) of the
Act, imports of the merchandise from Venezuela materially injure, or
threaten material injury to, a U.S. industry. On December 1, 1993, the
ITC preliminary determined that there is a reasonable indication that
an industry in the United States is threatened with material injury by
reason of imports of PA from Venezuela.
Petitioners
Petitioners are Aristech Chemical Corporation, BASF Corporation,
Koppers Industries, Inc. and Stepan Company. Petitioners state that
they represent 75 percent of the domestic PA industry.
Respondents
The Government of Venezuela (``GOV'') and Oxidaciones Organicas,
C.A. (``Oxidor'') are respondents. While there are two producers of PA
in Venezuela, Oxidor accounted for over 85 percent of exports to the
United States during the POI and, hence, was selected as the sole
respondent.
Analysis of Programs
For purposes of this determination, the period of investigation
(``the POI'') is April 1, 1992 to March 30, 1993, which corresponds to
Oxidor's fiscal year.
Based upon our analysis of the petition and the responses to our
questionnaires, we determine the following:
I. Program Determined Not To Be Countervailable
Preferential Pricing of Orthoxylene Feedstock
Petitioners alleged that the government-owned petrochemical
company, Petroquimica de Venezuela, C.A. (``Pequiven''), is selling
orthoxylene (an input product to PA) to Venezuelan producers of PA at
preferential prices, thus providing a subsidy under section
771(5)(A)(ii)(II) of the Act.
In order to measure the preferential provision of goods, the
Department has developed a hierarchy of benchmarks to compare with the
government's price for the good. The Department's preferred benchmark
is non-selective prices the government charges to the same or other
users (See, Notice of Proposed Rulemaking and Request for Public
Comments, 54 FR 23366 (May 31, 1989), Section 355.44(f)(1)) (``Proposed
Regulations''). If there is no non-selective benchmark price, the
Department normally looks to the alternative benchmarks listed in
section 355.44(f)(2) of the Proposed Regulations. The alternative
benchmarks are as follows: (1) The price charged by the same seller for
a similar or related good, (2) the price charged by other sellers in
the same jurisdiction for an identical good, (3) the same seller's cost
of producing the good, and (4) the price paid outside the jurisdiction
for an identical good.
For the preliminary determination, the Department had no
information to indicate that there was a non-specific price for
orthoxylene. Pequiven reported that within Venezuela it sold
orthoxylene only to the two PA producers, Oxidor and Anhiven, who were
charged the same price. However, we discovered at verification that
Pequiven also made one sale during the POI to a non-PA producer who was
charged a different price.
The Department has faced a similar situation in the past. In the
Final Countervailing Duty Determination: Aluminum Sulfate from
Venezuela 54 FR 43440 (October 25, 1989) (``Aluminum Sulfate''), the
Department examined a government-owned company which sold to two
producers of the subject merchandise, SULFORCA and FERRALCA. These two
producers were charged different prices for the input product. One
factor we evaluated in Aluminum Sulfate to determine whether the price
charged to FERRALCA could be used as a benchmark for SULFORCA, was to
compare the quantity and other terms of sale to the two companies.
``After comparing the quantities and terms of SULFORCA's contract to
the quantities and terms of FERRALCA's purchase orders, we determined
that these [the quantities and terms] did not provide a basis for
justifying the price difference involved.'' (Aluminum Sulfate, at
43441). Because the difference in price could not be attributed to the
difference in quantity and terms, the price charged to FERRALCA was
determined to be a reliable benchmark.
Consistent with the analysis performed in Aluminum Sulfate, we have
examined the quantities and terms of Pequiven's sales to the non-PA
producer and compared them to the quantities and terms of Pequiven's
sales to Oxidor. We have concluded that Pequiven's price to the non-PA
producer would not be a reliable benchmark price because there was only
one sale in the POI and the sale involved too small a quantity to be
comparable to the sales made to Oxidor and Anhiven. In addition, there
is no other evidence on the record indicating that this price could
serve as a proper benchmark. Therefore, we have determined that the
price charged to the non-PA producer cannot serve as an appropriate
benchmark. Due to the proprietary nature of the quantities and terms of
these sales, we cannot address them in this notice; however there is a
proprietary concurrence memorandum on the record that explains the
basis of our determination (see, Concurrence Memorandum, August 3,
1994).
Since we have concluded that we cannot use the government's price
for the same good as our benchmark, we have evaluated the alternative
benchmarks in our hierarchy. The first alternative in the hierarchy is
the price charged by the same seller for a similar or related good.
Consistent with our preliminary determination, we have determined that
we cannot use the first alternative benchmark because Pequiven does not
sell any of the products identified on the record as being similar to
orthoxylene (i.e., paraxylene, metaxylene and mixed-xylene).
The second alternative listed in the Proposed Regulations is the
price charged within the jurisdiction by other sellers for an identical
good or service. As stated in Carbon Black from Mexico: Preliminary
Results of Countervailing Duty Administrative Review (51 FR 13269,
April 18, 1986), ``[t]hese other sellers may include private sellers
within the jurisdiction or foreign sellers selling into the
jurisdiction * * *'' Pequiven is the only domestic producer/seller of
orthoxylene in Venezuela. However, orthoxylene was imported into
Venezuela during the POI.
In the preliminary determination, we used U.S. export statistics on
shipments of orthoxylene to Venezuela during the period 1992-1993. From
these statistics, we used the information on the one entry that
occurred during the POI to calculate a benchmark price, since this was
``a price charged within the jurisdiction by other sellers for an
identical good.'' Based on our comparison of Pequiven's price for
orthoxylene with the U.S. export price (adjusted for freight and
insurance), we preliminarily determined that the Pequiven's price to
Oxidor was non-preferential.
We have examined this transaction carefully for purposes of our
final determination to determine whether it can serve as a proper
benchmark for sales of orthoxylene by Pequiven. First, we have
considered the quantity involved and the terms of sale. Based on a
comparison of the U.S. export to Pequiven's monthly sales to the two PA
producers, we have determined that this sale is within the range of
quantities purchased from Pequiven each month and, therefore, involves
sufficiently large quantities to serve as an appropriate benchmark.
Second, with respect to the terms of sale, petitioners argued that
the prices reported in the U.S. export statistics are spot prices,
whereas Pequiven's prices are on a contract basis. Petitioners stated
that this fact should preclude the Department from using the U.S.
export data as a benchmark since they are incomparable to Pequiven's
prices. Respondents countered that, while Pequiven did have a contract
with its customers, the terms of ``contract'' and ``spot'' sales are
different in Venezuela than in the United States. Specifically, they
argued that contract needs and obligations of secured quantity are much
greater in the U.S. than in Venezuela. Because the Venezuelan market is
so small, respondents took the position that a spot price is a more
appropriate benchmark. Both parties have submitted world market prices
for orthoxylene as reported by the industry publications of several
private reporting agencies to support their arguments.
Based on the information provided by both parties, we determined
that there is a consistent difference between contract and spot prices
as reported by the private reporting agencies. Given that the degree of
difference is consistent throughout the POI, we believe it is possible
to adjust the U.S. export spot price to make it comparable to a
contract price. To calculate the adjustment, we averaged the difference
between monthly contract and spot prices as reported by the three
reporting services, and added the average spread for April, 1992 (the
month of the single importation) to the U.S. export price.
In addition, because this import into Venezuela was reported on a
FAS basis, we added an amount for ocean freight and insurance from the
United States to Venezuela. The amount for ocean freight and insurance
was obtained from an independent shipping company (see memorandum from
case analyst to the file, January 14, 1994).
We then compared the adjusted U.S. export price to the price
Pequiven charged for orthoxylene in the month that orthoxylene was
exported from the United States. Based on this comparison, we found
that Pequiven's price was greater than the price of imported U.S.
orthoxylene.
As a final check on the validity of the single importation as a
benchmark, we averaged U.S. export prices (adjusted for freight and
insurance as well as the difference between the spot and contract
prices) for the three months in which we had data (one within the POI
and two outside of the POI). For the two exports occurring outside of
the POI, we added the average spread between spot and contract prices
for the POI to the export prices because monthly data on the difference
between spot and contract prices outside of the POI was not available.
We compared the average of the adjusted U.S. export prices to the
average price Pequiven charged in the same three months and found that
Pequiven's average price was greater than the average price of the
imports from the United States.
Therefore, we find that the GOV, through Pequiven, did not provide
orthoxylene to PA producers at preferential rates. Accordingly, we
determine that no benefits which constitute bounties or grants within
the meaning of the countervailing duty law are being provided to
manufacturers, producers, or exporters of PA from Venezuela.
II. Programs Determined not to be Used
We determine that producers or exporters in Venezuela of the
subject merchandise did not receive benefits during the POI for exports
of the subject merchandise to the United States under the following
programs:
A. FINEXPO Preferential Short-Term Export Loans
B. FINEXPO Preferential Long-Term Export Loans
C. Excessive Tariff Drawback
D. Preferential Tax Exemptions Under the 1966 Income Tax Law
Because we find that the GOV did not provide orthoxylene at
preferential rates and all other alleged programs were not used, we
determine that no benefits which constitute bounties or grants within
the meaning of the countervailing duty law are being provided to
manufacturers, producers, or exporters of PA from Venezuela.
Comments
All written comments submitted by the interested parties in this
investigation either have been previously addressed in this notice or
relate to alternative benchmarks that are lower in the preferentiality
hierarchy than the one we used to reach our final determination.
Verification
In accordance with section 776(b) of the Act, we verified the
information used in making our final determination. We followed
standard verification procedures, including meeting with government and
company officials, examination of relevant accounting records, and
examination of original source documents. Our verification results are
outlined in detail in the public versions of the verification reports,
which are on file in the Central Records Unit (Room B-099 of the Main
Commerce Building).
ITC Notification
In accordance with section 705(d) of the Act, we will notify the
ITC of our determination. Since we have determined that no bounties or
grants are being provided to manufacturers, producers or exporters of
PA in Venezuela, the investigation will be terminated upon publication
of this notice in the Federal Register. Hence, the ITC is not required
to make a final injury determination with respect to this
countervailing duty proceeding.
Return or Destruction of Proprietary Information
This notice serves as the only reminder to parties subject to
Administrative Protective Order (APO) of their responsibility
concerning the return or destruction of proprietary information
disclosed under APO in accordance with 19 CFR 355.34(d). Failure to
comply is a violation of the APO.
This determination is published pursuant to section 705(d) of the
Act (19 U.S.C. 1671d(d)).
Dated: August 3, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-19541 Filed 8-9-94; 8:45 am]
BILLING CODE 3510-DS-P
