[Federal Register Volume 60, Number 195 (Tuesday, October 10, 1995)]
[Notices]
[Pages 52647-52649]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25059]



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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-842]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Polyvinyl Alcohol From the People's Republic of China

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

EFFECTIVE DATE: October 10, 1995.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Everett Kelly, 
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) 482-4136 or (202) 482-4194, respectively.

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 Rounds Agreements Act (URAA).

Preliminary Determination

    We preliminarily determine that polyvinyl alcohol (PVA) from the 
People's Republic of China (PRC) is being, or is likely to be, sold in 
the United States at less than fair value (LTFV), as provided in 
section 733 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 initiation of this investigation on March 29, 1995 (60 FR 
17053, April 4, 1995) the following events have occurred:
    On April 18, 1995, we sent a survey to the PRC's Ministry of 
Foreign Trade and Economic Cooperation (MOFTEC) requesting the 
identification of producers and exporters, and information on 
production and sales of PVA exported to the United States. We received 
a response in May 1995, identifying Sichuan Vinylon Works (Sichuan) and 
Guangxi Import and Export Corporation (Guangxi) as companies who sold 
the subject merchandise during the period of investigation (POI).
    On April 24, 1995, the United States International Trade Commission 
(ITC) notified the Department of Commerce (the Department) of its 
affirmative preliminary determination.
    In May 1995, the Department presented questionnaires to MOFTEC and 
counsel for Guangxi and Sichuan. Responses to the questionnaire were 
received in June and July from Guangxi, Guangxi Vinylon Plant (Guangxi 
Vinylon), which produces PVA sold by Guangxi, and Sichuan. The 
Department issued supplemental questionnaires to these companies and 
received responses to them, during August 1995. We also requested and 
received additional information during September 1995.
    The Department invited petitioner and respondents to provide 
information for valuing the factors of production. The parties 
submitted such information during August and September 1995.
    On September 19, 1995, petitioner amended the petition to exclude 
from the scope of this investigation 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, or 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. We have revised the 
scope of this investigation to reflect petitioners' amendment (see the 
``Scope of Investigation'' section of this notice, below).
    On September 21, 1995, Isolyser Co., Inc. (Isolyser), an importer 
of the subject merchandise, requested the Department to consider PVA 
hydrolyzed at a level of at least 98 percent to be a separate like 
product. Isolyser's request was submitted too late for consideration in 
the preliminary determination. We will, however, consider it in our 
final determination.

Scope of Investigation

    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, except for 
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, or 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, which are excluded.
    The merchandise under investigation is currently classifiable under 
subheading 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.

Period of Investigation

    The period of investigation is October 1, 1994, through March 31, 
1995.

Separate Rates

    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, 22586 
(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 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 

[[Page 52648]]
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). Nothing on the 
record of this investigation would lead us to reconsider this 
determination.
    However, as stated in previous cases, there is some evidence (on 
this record), 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 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 there is no information on the record that 
suggests central government control over selection of management; 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. This information supports a preliminary 
finding that there is a de facto absence of governmental control of 
export functions.
    Consequently, we preliminarily determine that Guangxi and Sichuan 
have met the criteria for the application of separate rates. We will 
examine this matter further at verification and determine whether the 
questionnaire responses are supported by verifiable documentation.

Nonmarket Economy Country Status

    The Department has treated the PRC as a nonmarket economy country 
(NME) in all past antidumping investigations and administrative reviews 
(see, e.g., Silicon Carbide and Furfuryl Alcohol). Neither respondents 
nor petitioners have challenged such treatment. Therefore, in 
accordance with section 771(18)(c) of the Act, we will continue to 
treat the PRC as an NME in this investigation.
    When the Department is investigating imports from an NME, section 
773(c)(1) of the Act directs us to base normal value (NV) on the NME 
producers' factors of production, valued in a comparable market economy 
that is a significant producer of comparable merchandise. The sources 
of individual factor prices are discussed under the NV section, below.

Surrogate Country

    Section 773(c)(4) of the Act requires the Department to value the 
NME producers' factors of production, to the extent possible, in one or 
more market economy countries that (1) are at a level of economic 
development comparable to that of the NME country, and (2) are 
significant producers of comparable merchandise. The Department has 
determined that India, Kenya, Nigeria, Pakistan, Sri Lanka, and 
Indonesia are the countries most comparable to the PRC in terms of 
overall economic development (see Memorandum from David Mueller, 
Director, Office of Policy, to Gary Taverman, Acting Director, Office 
of Antidumping Investigations, dated June 15, 1995). According to the 
available information on the record, we have determined that India is 
the only significant producer of PVA among these six potential 
surrogate countries. Accordingly, we have calculated Normal Value (NV) 
using Indian prices for the PRC producers' factors of production. We 
have obtained and relied upon published, publicly available information 
wherever possible.

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 NV, as specified in the ``Export Price'' and 
``Normal Value'' sections of this notice.

Export Price

    For both Guangxi and Sichuan, we calculated Export Price (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. The constructed export price 
under section 772(b) is not otherwise warranted on the basis of the 
facts of this investigation.
    Petitioner has claimed that two customers of the respondents are 
affiliated resellers under section 771(33) through common PRC 
government control. As we have accepted Guangxi's and Sichuan's 
separate rates claims based on absence of PRC government control for 
purposes of the preliminary determination, there is no basis to 
consider these customers as affiliated parties.
    We calculated EP based on packed, FOB PRC port or CIF U.S. port 
prices to unaffiliated purchasers in the United States, as appropriate. 
We made deductions from the starting price, where appropriate, for the 
following services: foreign inland freight, brokerage and handling, 
loading and containerization, ocean freight, and marine insurance. As 
all movement services were provided by PRC suppliers, these services 
were valued in the surrogate country.
    We excluded certain U.S. sales by Guangxi from our analysis because 
the information available at this time indicates that the appropriate 
date of sale for these transactions is outside the POI.

Normal Value

    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. Where possible, we 
used public information for the surrogate values. The selection of the 
surrogate values applied in this determination was based on the quality 
and contemporaneity of the data. Where possible, we attempted to value 
material inputs on the basis of a tax-exclusive domestic price. As 
appropriate, we adjusted input prices to make them delivered prices. 
For those values not contemporaneous with the POI, we adjusted for 
inflation using wholesale price indices or, in the case of labor rates, 
consumer price indices, published in the International Monetary Fund's 
International Financial Statistics. For a complete analysis of 
surrogate values, see the Valuation 

[[Page 52649]]
Memorandum, dated October 2, 1995. We then added amounts for overhead, 
general expenses (including interest) and profit, based on the 
experience of a PVA producer in India (see Valuation Memorandum), and 
packing expenses incident to placing the merchandise in condition 
packed and ready for shipment to the United States.
    Guangxi's reporting of packing material factor units could not be 
converted to the weight unit of the surrogate value. For the 
preliminary determination, we used the factor weights from the public 
version of Sichuan's response to calculate the value for Guangxi's 
packing materials.
    As we could not identify an appropriate Indian surrogate value for 
one raw material-nitrogen, we applied an Indonesian price for this 
factor. Sichuan obtained two raw material factors from market economy 
sources and paid in market economy currencies. For these two factors, 
we valued them based on the price actually paid by Sichuan.

China-Wide Rate

    MOFTEC identified what we believe to be the only two PRC exporters 
of PVA to the United States during the POI. Both have responded in this 
investigation. We compared the respondents' sales data with U.S. import 
statistics for time periods including the POI and found no indication 
of unreported sales. Accordingly, we have based the China-wide rate on 
the weighted-average of the margins calculated in this proceeding.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information used in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all entries of PVA 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 will require a cash deposit or posting of 
a bond equal to the estimated dumping margins by which the normal value 
exceeds the export price, as shown below. These suspension of 
liquidation instructions will remain in effect until further notice.
    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
               Manufacturer/producer/exporter                   margin  
                                                              percentage
------------------------------------------------------------------------
Guangxi GITIC Import and Export Corp.......................       121.74
Sichuan Vinylon Works......................................       187.56
PRC-Wide Rate..............................................       176.10
------------------------------------------------------------------------

    The PRC-Wide rate applies to all entries of subject merchandise 
except for entries from exporters that are identified individually 
above.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

Public Comment

    In accordance with 19 CFR 353.38, case briefs or other written 
comments in at least ten copies must be submitted to the Assistant 
Secretary for Import Administration no later than November 17, 1995, 
and rebuttal briefs, no later than November 20, 1995. A list of 
authorities used and a summary of arguments made in the briefs should 
accompany these briefs. Such summary should be limited to five pages 
total, including footnotes. We will hold a public hearing, if 
requested, to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs. At this time, the hearing 
is scheduled for November 22, 1995, the time and place to be 
determined, at the U.S. Department of Commerce, Room 3606, 14th Street 
and Constitution Avenue, N.W., Washington, D.C. 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, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
B-099, within ten days of the publication of this notice. Requests 
should contain: (1) the party's name, address, and telephone number; 
(2) the number of participants; and (3) a list of the issues to be 
discussed. In accordance with 19 CFR 353.38(b) oral presentations will 
be limited to issues raised in the briefs. If this investigation 
proceeds normally, we will make our final determination by December 18, 
1995.
    This determination is published pursuant to section 733(f) of the 
Act.

    Dated: October 2, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-25059 Filed 10-6-95; 8:45 am]
BILLING CODE 3510-DS-P