[Federal Register Volume 60, Number 64 (Tuesday, April 4, 1995)]
[Notices]
[Pages 17053-17056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8193]



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DEPARTMENT OF COMMERCE
[A-588-836, A-580-826, A-570-842, A-583-824]


Initiation of Antidumping Duty Investigations: Polyvinyl Alcohol 
From Japan, the Republic of Korea, the People's Republic of China, and 
Taiwan

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

EFFECTIVE DATE: April 4, 1995.

FOR FURTHER INFORMATION CONTACT: Louis Apple or John Brinkmann at (202) 
482-1769 or (202) 482-5288, Office of Antidumping Investigations, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230. [[Page 17054]] 

Initiation of Investigations

The Applicable Statute

    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) by the 
Uruguay Round Agreements Act (URAA).

The Petition

    On March 9, 1995, the Department of Commerce (the Department) 
received a petition filed in proper form by Air Products and Chemicals, 
Inc. (the petitioner), one of three U.S. producers of polyvinyl 
alcohol. Supplements to the petition were filed on March 21 and 24, 
1995.
    In accordance with section 732(b) of the Act, the petitioner 
alleges that imports of polyvinyl alcohol from Japan, the Republic of 
Korea (Korea), the People's Republic of China (PRC), and Taiwan are 
being, or are likely to be, sold in the United States at less than fair 
value within the meaning of section 731 of the Act, and that such 
imports are materially injuring, or threatening material injury to, a 
U.S. industry.
    The petitioner states that it has standing to file the petition 
because it is an interested party, as defined under section 771(9)(C) 
of the Act.

Determination of Industry Support for the Petition

    Section 732(c) of the Act, as amended by the URAA, requires that 
the Department determine, prior to the initiation of an investigation, 
that a minimum percentage of the domestic industry supports an 
antidumping petition. A petition meets those minimum requirements if 
(1) domestic producers or workers who support the petition account for 
at least 25 percent of the total production of the domestic like 
product; and (2) those domestic producers or workers expressing support 
account for more than 50 percent of the production of the domestic like 
product produced by that portion of the industry expressing support 
for, or opposition to, the petition.
    The petitioner, one of three known domestic producers of the 
domestic like product, accounts for more than 25 percent of the total 
production of the domestic like product as defined in the petition. One 
producer has informed the Department that it takes no position 
regarding this antidumping petition. Although the petition identified 
only two U.S. producers of polyvinyl alcohol, on March 29, 1995, the 
Department received a statement from another company indicating that it 
is a producer of polyvinyl alcohol and that it opposes the petition. A 
review of production data reveals that the petitioner accounts for more 
than 25 percent of the total production of the domestic like product 
and for more than 50 percent of that produced by companies expressing 
support for, or opposition to, the petition. Accordingly, the 
Department determines that this petition is supported by the domestic 
industry.

Scope of the Investigations

    The merchandise under investigation is polyvinyl alcohol. Polyvinyl 
alcohol is a dry, white to cream-colored, water-soluble synthetic 
polymer, usually prepared by hydrolysis of polyvinyl acetate. This 
product includes polyvinyl alcohols hydrolyzed in excess of 85 percent, 
whether or not mixed or diluted with defoamer or boric acid.
    The merchandise under investigation is currently classifiable under 
item 3905.20.00 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.

Export Price and Normal Value

Japan
    Export price was based on a price offered by a Japanese trading 
company in late September 1994. The petitioner adjusted the price for 
foreign inland and ocean freight, storage and handling, U.S. duties, 
and U.S. inland freight.
    The petitioner based normal value on the low end of a range of 
prevailing domestic invoice pricing obtained from a Japanese trading 
company. The petitioner made adjustments to normal value for home 
market inland freight, trading company mark-ups and differences between 
home market and U.S. credit.
    Based on a comparison of the export price to normal value, the 
calculated dumping margin is 77.49 percent.
Korea
    Export price was based on the average c.i.f. unit value of U.S. 
imports from the Korea during November 1994. The petitioner adjusted 
this price for foreign inland and ocean freight expenses.
    The home market price was based on a letter from a Korean producer 
to a home market customer, announcing an increase from the price in 
effect during the fourth quarter of 1994. The petitioner adjusted the 
price in effect prior to the increase for home market inland freight.
    The petitioner based the normal value on constructed value (CV) 
because it asserts that the Korean home market price provided in the 
petition represented sales that were made below the cost of production 
(COP) and, therefore, was not an appropriate basis for calculating 
normal value.
    The two components of COP are the cost of manufacture (COM) and 
selling, general and administrative expenses (SG&A). The petitioner 
calculated COM on the basis of its own cost and production experience 
and published prices in trade publications for certain chemical inputs, 
adjusted for known differences in Korean costs. For SG&A, including 
financial expenses, the petitioner relied upon the financial statements 
of the Korean producer of polyvinyl alcohol.
    The allegation that the Korean producer is selling the foreign like 
product in its home market at prices below its COP is based upon a 
comparison of the adjusted home market price with the calculated COP. 
Based on this information, we find reasonable grounds to believe or 
suspect that sales of the foreign like product were made at prices 
below COP in accordance with 773(b)(2)(A)(i) of the Act. Accordingly, 
the Department will initiate a cost investigation with respect to 
Korea.
    Therefore, for purposes of this initiation, in accordance with 
section 773(b)(1) of the Act, we are accepting the petitioner's 
estimate of CV as the appropriate basis for Korean normal value. The 
petitioner based CV on its COP methodology, adding an amount for profit 
and export packing to arrive at a total CV. Prior to the amendment of 
the Act by the URAA, the Department used the greater of actual profit 
or an eight percent minimum profit to calculate CV. The URAA eliminated 
the statutory minimum for profit. In the petition, therefore, profit 
was calculated on the basis of the Korean producer's financial 
statements, a method that is consistent with the URAA amendments. 
Packing was based upon the petitioner's own cost experience.
    For Korea, based on comparisons of export price to CV, the 
calculated dumping margin is 187.43 percent.
People's Republic of China
    Export price was based on the average c.i.f. unit value of U.S. 
imports from the PRC during November 1994 and on a sales call report 
from the same month. In both cases, the petitioner adjusted the 
starting prices for ocean freight and U.S. credit. Because this is an 
export price calculation, and because the Department does not deduct 
direct selling expenses [[Page 17055]] from the export price, we have 
recalculated the petitioner's export price to remove the U.S. credit 
adjustment.
    The petitioner asserts that the PRC is an NME within the meaning of 
sections 771(18)(A) and (C) of the Act and in accordance with section 
773(c) of the Act. Accordingly, the normal value of the product should 
be based on the producer's factors of production, valued in a surrogate 
market economy country. In previous investigations, the Department has 
determined that the PRC is an NME, and the presumption of NME status 
continues for the initiation of this investigation. See, e.g., Final 
Determination of Sales at Less Than Fair Value: Glycine from the 
People's Republic of China, 60 FR 5620 (Jan. 30, 1995).
    It is our practice in NME cases to construct normal value from the 
factors of production of those factories that produced polyvinyl 
alcohol sold to the United States during the period of investigation.
    In the course of this investigation, all parties will have the 
opportunity to provide relevant information related to the issues of 
the PRC's NME status and the granting of separate rates to individual 
exporters. See Final Determination of Sales at Less Than Fair Value: 
Silicon Carbide from the PRC, 59 FR 22585 (May 2, 1994).
    With the exception of two raw materials, the petitioner based the 
factors of production (i.e., raw materials, labor, and energy) on its 
own production process and usage experience. For the two exceptions, 
the petitioner made adjustments based on its knowledge of differences 
in the manufacturing processes in the PRC and estimated the raw 
material consumption and the amount of by-product based upon its 
knowledge of the production process of the other U.S. producer. Profit, 
SG&A, and factory overhead were based on rates calculated from a 
financial statement that included the chemical sector in India, 
published in the Reserve Bank of India Bulletin (September 1994).
    The petitioner valued these factors, where possible, on publicly 
available published information from the surrogate country it selected. 
India was selected for the surrogate country because it is the only 
non-industrialized country listed in the Directory of World Chemical 
Producers (1995/1996 Standard Edition) that the petitioner knows is 
producing the merchandise subject to investigation. Further, India's 
gross domestic product is comparable to the PRC's.
    Indian packing costs are not included in the valuation of the 
factors of production because the petitioner was unable to obtain the 
necessary information. Factory overhead, SG&A, and profit are based on 
the financial statement for Indian chemical producers, as published in 
the September 1994 Reserve Bank of India Bulletin.
    Based on a comparison of the export price to the factors of 
production, the calculated dumping margins range from 139.82 to 183.72 
percent.
Taiwan
    Export price was based on the average c.i.f. unit value of U.S. 
imports from Taiwan during October 1994. The petitioner made 
adjustments for foreign inland and ocean freight expenses.
    The home market price was based on a domestic invoice from a 
Taiwanese producer to a home market customer in October 1994. The 
petitioner adjusted this price for home market inland freight.
    The petitioner based the normal value on CV because it asserts that 
the Taiwanese home market price provided in the petition represented 
sales that were made below the COP and, therefore, was not an 
appropriate basis for calculating normal value.
    The components of COP are COM and SG&A. The petitioner calculated 
the COM on the basis of its own cost and production experience and 
published prices in trade publications for certain chemical inputs, 
adjusted for known cost differences in Taiwan. For SG&A, including 
financial expenses, the petitioner relied upon the financial statements 
of the Taiwanese producer of polyvinyl alcohol. This producer 
manufactures and sells products in multiple industries. Since the 
petitioner had submitted financial data for a Taiwanese chemical 
producer whose manufacturing activities are limited to the chemical 
sector, we recomputed SG&A using this data.
    The allegation that the Taiwanese producer is selling the foreign 
like product in its home market at prices below its COP is based upon a 
comparison of the adjusted home market price with the calculated COP. 
Based on this information, we find reasonable grounds to believe or 
suspect that sales of the foreign like product were made at prices 
below COP in accordance with section 773(b)(2)(A)(i) of the Act. 
Accordingly, the Department will initiate a cost investigation with 
respect to Taiwan.
    Therefore, for the purposes of this initiation, we are accepting 
the petitioner's estimate of CV, as adjusted by the Department, as the 
appropriate basis for Taiwanese normal value. The petitioner based CV 
on its COP methodology, described above, adding an amount for profit 
and packing to arrive at a total CV. The Department made the same 
adjustment to the petitioner's Taiwanese SG&A estimate as in the COP 
calculation. The petitioner calculated profit on the basis of financial 
data for three Taiwanese chemical producers, however only one of these 
chemical producers manufactured and sold solely chemical products. 
Therefore, the Department recomputed profit on the basis of the 
financial data for the one company whose operations were limited to 
chemicals. This treatment of profit is consistent with the URAA 
amendments. Packing costs were based on the petitioner's experience.
    For Taiwan, based on comparisons of export prices to CV, the 
recalculated dumping margins are in a range from 82.23 to 91.83 
percent.

Fair Value Comparisons

    Based on the data provided by the petitioner, there is reason to 
believe that imports of polyvinyl alcohol from Japan, Korea, the PRC, 
and Taiwan are being, or likely to be, sold at less than fair value. If 
it becomes necessary at a later date to consider the petition as a 
source of facts available, we may review the calculations.

Initiation of Investigations

    We have examined the petition on polyvinyl alcohol and have found 
that it meets the requirements of section 732 of the Act, including the 
requirements concerning the material injury or threat of material 
injury to the domestic producers of a domestic like product by reason 
of the complained-of imports, allegedly sold at less than fair value. 
Therefore, we are initiating antidumping duty investigations to 
determine whether imports of polyvinyl alcohol from the PRC, Japan, 
Korea, and Taiwan are being, or are likely to be, sold in the United 
States at less than fair value. Unless extended, we will make our 
preliminary determinations by August 16, 1995.

Distribution of Copies of the Petition

    In accordance with section 732(b)(3)(A) of the Act, copies of the 
public version of the petition have been provided to the 
representatives of the PRC, Japan, Korea, and Taiwan. We will attempt 
to provide copies of the public version of the petition to all the 
exporters named in the petition.

ITC Notification

    We have notified the International Trade Commission (ITC) of our 
[[Page 17056]] initiations, as required by section 732(d) of the Act.

Preliminary Determination by the ITC

    The ITC will determine by April 24, 1995, whether there is a 
reasonable indication that imports of polyvinyl alcohol from Japan, 
Korea, the PRC, and Taiwan are causing material injury, or threaten to 
cause material injury to a U.S. industry. A negative ITC determination 
will result in the investigations being terminated; otherwise, these 
investigations will proceed according to statutory and regulatory time 
limits.
    This notice is published pursuant to section 732(c)(2) of the Act.

    Dated: March 29, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-8193 Filed 4-3-95; 8:45 am]
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