[Federal Register Volume 59, Number 18 (Thursday, January 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-1779]


[[Page Unknown]]

[Federal Register: January 27, 1994]


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DEPARTMENT OF COMMERCE
[C-307-810]

 

Preliminary Negative Countervailing Duty Determination: Phthalic 
Anhydride from Venezuela

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

EFFECTIVE DATE: January 27, 1994.

FOR FURTHER INFORMATION CONTACT: Kristin M. Heim or Cynthia Thirumalai, 
Office of Countervailing Investigations, Import Administration, U.S. 
Department of Commerce, room B099, 14th Street and Constitution Avenue, 
NW., Washington, DC 20230; telephone (202) 482-3798 or 482-4087, 
respectively.

PRELIMINARY DETERMINATION

Case History

    Since the publication of the notice of initiation in the Federal 
Register (58 FR 60845, November 18, 1993), the following events have 
occurred.
    On November 23, 1993, we issued a questionnaire to the Government 
of Venezuela (``GOV'') in Washington, DC., concerning petitioners' 
allegations. On January 5, 1994, we received responses from the GOV and 
Oxidaciones Organicas, C.A. (Oxidor).

Scope of Investigations

    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 produce 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). Although 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 qualification as a 
``country under the Agreement'' under section 701(b)(3) requires a 
finding that the GATT does not apply between the United States and the 
country from which the subject merchandise is imported, Venezuela is no 
longer eligible for treatment as a ``country under the Agreement'' 
within the meaning of section 701(b)(3). However, because Venezuela is 
a GATT contracting party and the merchandise under investigation is 
nondutiable, the ITC is required to determine whether, pursuant to 
section 303(a)(2), imports of this merchandise from Venezuela 
materially injure, or threaten material injury to, a U.S. industry. On 
December 1, 1993, the ITC preliminarily 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 phthalic anhydride industry.

Respondents

    The Government of Venezuela and 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 preliminary determination, the period for 
which we are measuring bounties or grants, the period of investigation 
(``the POI''), is April 1, 1992 to March 30, 1993, which corresponds to 
Oxidor's fiscal year.
    Consistent with our practice in preliminary determinations, when a 
response to an allegation denies the existence of a program, receipt of 
benefits under a program, or eligibility of a company or industry under 
a program, and the Department has no persuasive evidence showing that 
the response is incorrect, we accept the response for purposes of the 
preliminary determination. All such responses, however, are subject to 
verification. If the response cannot be supported at verification, and 
the program is otherwise countervailable, the program will be 
considered a bounty or grant in the final determination.
    Based upon our analysis of the petition and the responses to our 
questionnaires, we preliminarily determine the following:

I. Program Preliminarily 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.
    In its response, the GOV stated that, within Venezuela, Pequiven 
sells orthoxylene to only two customers, both of which produce PA. 
Furthermore, it stated that the prices that Pequiven charges these 
companies are tied to international prices for orthoxylene.
    In order to determine whether the GOV, through the state-owned 
company, Pequiven, provided orthoxylene to PA producers at preferential 
prices, we followed the hierarchy for determining benchmark prices as 
found in Sec. 355.44(f) of the Department's Proposed Regulations (54 FR 
23381, May 31, 1989). The Department's preferred benchmark is the non-
specific price that the government charges to the same or other users 
of the same good within the political jurisdiction. As noted above, 
within Venezuela, Pequiven sells orthoxylene only to the two PA 
producers. Both PA producers are charged the same price by Pequiven. As 
a result, we do not have a non-specific price to use as a benchmark.
    In the absence of a non-specific price, the Department normally 
looks to the alternative benchmarks listed in Sec. 355.44(f)(2) of the 
Proposed Regulations. The first alternative listed in the Proposed 
Regulations is the price charged by the same seller for a similar or 
related good adjusted for any cost differences. The petition identified 
paraxylene and mixed-xylene as two similar products. While Pequiven 
agrees that these two products, in addition to metaxylene, are similar 
products to orthoxylene, it does not produce or sell those products. 
Pequiven did not identify any other similar products. Therefore, we 
were unable to use this approach to calculate a benchmark.
    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.
    The GOV provided 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 price reflects ``a price charged 
within the jurisdiction by other sellers for an identical good.'' This 
import into Venezuela from the United States was reported on a FAS 
basis. Therefore, 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 13, 1994).
    We then compared the adjusted import 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 orthoxylene.
    For the purposes of this preliminary determination, we find the use 
of a single import price to be a sufficient basis for our analysis. We 
examined prices in the largest international markets for orthoxylene 
and found minimal price fluctuations during the POI. In addition, the 
import price approximated the prices in these markets.
    Furthermore, as stated above, Pequiven ties its domestic prices to 
international prices. Therefore, we would expect to find only 
negligible differences between the price Pequiven charges domestically 
and the price of imports into Venezuela. To test this assumption, we 
averaged U.S. import prices for the three months in which we had data 
(one within the POI and two within two months of the POI on either 
side). We compared this average 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 during the POI.

II. Programs Preliminarily Determined Not To Be Used

    We preliminarily 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 programs were not used, we 
preliminarily 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.

Verification

    In accordance with section 776(b) of the Act, we will verify the 
information used in making our final determination.

Public Comment

    In accordance with 19 CFR 355.38, any interested party or U.S. 
Government agency may submit case briefs or other written comments with 
ten copies of the business proprietary version and five copies of the 
nonproprietary version to the Assistant Secretary no later than March 
25, 1994, and rebuttal briefs no later than March 30, 1994. In 
accordance with 19 CFR 355.38(b), we will hold a public hearing, if 
requested by an interested party, to give interested parties an 
opportunity to comment on arguments raised in case or rebuttal briefs. 
Tentatively, the hearing will be held on Monday, April 4, 1994, at 1 
p.m. at the U.S. Department of Commerce, room 3708, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230. Parties should confirm 
by telephone the time, date, and place of the hearing 48 hours before 
the scheduled time.
    Interested parties who wish to request a hearing must submit a 
written request to the Assistant Secretary for Import Administration, 
U.S. Department of Commerce, room B099, 14th Street and Constitution 
Avenue, NW., Washington, DC 20230, within ten days of the publication 
of this notice in the Federal Register. Requests should contain: (1) 
The party's name, address, and telephone number; (2) the number of 
participants; (3) the reason for attending; and (4) a list of the 
issues to be discussed. In accordance with 19 CFR 355.38(b), oral 
presentations will be limited to issues raised in the briefs.
    This determination is published pursuant to section 703(f) of the 
Act (19 U.S.C. 1671b(f)).

    Dated: January 18, 1994.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-1779 Filed 1-26-94; 8:45 am]
BILLING CODE 3510-DS-P