[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