[Federal Register Volume 63, Number 26 (Monday, February 9, 1998)]
[Notices]
[Pages 6526-6531]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3210]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-583-824]


Polyvinyl Alcohol From Taiwan: Preliminary Results of Antidumping 
Duty Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

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SUMMARY: In response to requests by the petitioner, Air Products and 
Chemicals, Inc., and by two manufacturers/exporters and an importer of 
subject merchandise, the Department of Commerce is conducting an 
administrative review of the antidumping duty order on polyvinyl 
alcohol from Taiwan. The period of review is May 15, 1996, through 
April 30, 1997.
    We have preliminarily found that sales of subject merchandise have 
been made below normal value. If these preliminary results are adopted 
in our final results of administrative review, we will instruct the 
Customs Service to assess antidumping duties based on the difference 
between the export price or constructed export price and the normal 
value.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit case briefs in this proceeding should 
provide a summary of the arguments not to exceed five pages and a table 
of statutes, regulations, and cases cited.

EFFECTIVE DATE: February 9, 1998.

FOR FURTHER INFORMATION CONTACT: Everett Kelly, at (202) 482-4194; or 
Sunkyu Kim, at (202) 482-2613, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, Washington, D.C. 20230.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

    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, as amended 
(``the Act''), by the Uruguay Round Agreements Act (``URAA''). In 
addition, unless otherwise indicated, all citations to the Department 
of Commerce's (``the Department's'') regulations are to the provisions 
codified at 19 CFR Part 353 (April 1997). Where appropriate, references 
are made to the Department's final regulations at 19 CFR Part 351 (62 
FR 27926), as a statement of current departmental practice.

Case History

    On May 14, 1996, the Department published in the Federal Register 
an antidumping duty order on polyvinyl alcohol from Taiwan. See 61 FR 
24286. On May 2, 1997, the Department published a notice providing an 
opportunity to request an administrative review of this order for the 
period May 15, 1996, through April 30, 1997 (62 FR 24081). On May 23, 
1997, we received a request for an administrative review from E.I. du 
Pont de Nemours & Co. (``DuPont''). We received requests for a review 
from Chang Chun Petrochemical (``Chang Chun'') and Perry Chemical 
Corporation (``Perry'') on May 30, 1997. The petitioner also requested 
a review of Chang Chun and Perry on May 30, 1997. We published a notice 
of initiation of this review on June 19, 1997 (62 FR 33394).
    On June 23, 1997, we issued an antidumping questionnaire to the 
three companies. The Department received responses from Chang Chun, 
DuPont and Perry in August 1997. We issued supplemental questionnaires 
to these companies in October 1997. Responses to these questionnaires 
were received in November 1997.
    Although we initiated this review on three respondents, as a result 
of facts examined during the course of the review, we are now covering 
only two respondents, Chang Chun and DuPont (see Treatment of Sales of 
Tolled Merchandise section of the notice below).
    On October 24, 1997, the petitioner requested that we find DuPont 
and Perry to be affiliated with Chang Chun. Further, the petitioner 
argued that for purposes of calculating a dumping margin, DuPont and 
Perry should be collapsed with Chang Chun. Alternatively, the 
petitioner argued that if the Department does not collapse DuPont and 
Perry with Chang Chun, the Department must consider evidence which 
demonstrates that DuPont's and Perry's sales to their respective third-
country markets during the POR were made at prices below the cost of 
production.
    With regard to affiliation, we do not find that either Perry or 
DuPont is affiliated with Chang Chun (see Treatment of Sales of Tolled 
Merchandise section of the notice below for further discussion.) With 
respect to the petitioner's allegation of sales below the cost of 
production against Perry, we note that because the Department has 
determined that Chang Chun, and not Perry, is the producer of the 
tolled PVA imported by Perry under the tolling agreement with Chang 
Chun, the issue of whether Perry's third-country market sale was below 
its cost of production is moot for purposes of our analysis. With 
regard to Dupont, based on our analysis of the petitioner's allegation, 
we determine that there are reasonable grounds to believe or suspect 
that DuPont sold PVA to Australia at prices which were below COP (see 
Memorandum from Team to Office Director, dated January 30, 1998). 
Accordingly, we are incorporating a sales-below-the-cost-of-production 
analysis for DuPont in our preliminary margin calculation.

Scope of Review

    The product covered by this review is polyvinyl alcohol (``PVA''). 
PVA is a dry, white to cream-colored, water-soluble synthetic polymer. 
Excluded from this review are PVAs 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, and PVAs covalently bonded with silane uniformly present on 
all polymer chains in a concentration equal to or greater than one-
tenth of one mole percent. PVA in fiber form is not included in the 
scope of this review.
    The merchandise under review is currently classifiable under 
subheading 3905.30.00 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 
is dispositive.

Treatment of Sales of Tolled Merchandise

    DuPont and Perry sold in the U.S. and third-country markets subject 
merchandise tolled by the Taiwan producer, Chang Chun. Both DuPont and 
Perry claim that they are the manufacturer of the tolled merchandise 
under the Department's newly articulated treatment of subcontractors in 
tolling arrangements. See 19 CFR 353.401(h). Accordingly, each company 
claims that it is entitled to its own dumping rate.

[[Page 6527]]

    Under section 351.401(h) of the new regulations, which, although 
not legally in effect for this administrative review, are, at the time 
of this request for review, an expression of the Department's practice, 
the Department will not consider a toller or subcontractor to be a 
manufacturer or producer where the toller or subcontractor does not 
acquire ownership of the finished product and does not control the 
relevant sale of the subject merchandise and the foreign like product. 
See also Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 
27296, 27411 (legally effective only for segments of the proceeding 
initiated based on requests filed after June 18, 1997, but nevertheless 
a restatement of the Department's practice).
    In determining whether a company that uses a subcontractor in a 
tolling arrangement is a producer under 351.401(h), we will look at all 
relevant facts surrounding a tolling agreement.
    DuPont claims that under the tolling arrangement with Chang Chun, 
DuPont is the producer of the PVA at issue. DuPont is a chemical 
producer. It produces the main input, vinyl acetate monomer (``VAM''), 
which it then ships to Taiwan. Under contract with Chang Chun, the VAM 
is then converted into subject merchandise, after which DuPont exports 
the PVA back to the United States and to third-country markets. DuPont 
has had a tolling agreement with Chang Chun since prior to the original 
less-than-fair-value (``LTFV'') investigation of PVA.
    Based on this evidence, we determine that DuPont is the 
manufacturer of the tolled merchandise, and hence the appropriate 
respondent.
    Perry has asserted that it is the producer of the PVA it imported 
from Taiwan during the period covered by this review, claiming it meets 
the requirements set out in 351.401(h) of the Department's new 
regulations. However, based on a review of the facts, we preliminarily 
determine that the tolling arrangement between Perry and Chang Chun 
does not transform Perry into the producer of the PVA at issue.
    Perry has been an importer and reseller of PVA produced and 
exported by Chang Chun since 1978. At no time has Perry been in the 
business of producing or manufacturing PVA or any other chemical. Nor 
has Perry, prior to the tolling agreement with Chang Chun, been in the 
business of subcontracting any kind of chemical production or 
processing. Additionally, Perry does not have any production 
facilities. (See January 30, 1998, Perry Verification Report at page 
8.)
    After the conclusion of the LTFV investigation in 1996, when Chang 
Chun was found to be dumping at an estimated rate of 19.21 percent, 
Perry decided to pursue a tolling arrangement. Perry then negotiated 
the tolling agreement with Chang Chun, which resulted in the agreement 
in effect during this review. Perry began purchasing VAM, the main 
input in producing PVA, through a U.S. trading company. The trading 
company, in turn, purchased the VAM from a Taiwan producer of VAM 
affiliated with Chang Chun, a fact known to Perry. (See Verification 
Report at page 8.) Thus, both the primary input and the final product 
are produced by Chang Chun and its affiliate.
    Based on these facts, we find that Perry is not the producer of the 
PVA it imports into the United States. Prior to the tolling agreement, 
Perry had never, as part of its normal business practice, been engaged 
in any research and development (``R&D''), production, processing or 
subcontracting of production. Moreover, there is no evidence that 
suggests that Perry's decision to enter into a tolling arrangement with 
Chang Chun was for the purpose of expanding its operations to begin 
producing PVA or any other chemical. To the contrary, after the tolling 
agreement, Perry's normal course of conducting business has not 
substantively changed; it remains for all intents and purposes an 
importer and reseller. The only change resulting from the tolling 
arrangement is that now Perry makes two payments to Chang Chun for 
Chang Chun's PVA--one for the VAM and one for the conversion of VAM 
into PVA. This minor change in the contractual relationship between 
Perry and Chang Chun is insufficient to conclude that Perry has moved 
from reselling to producing.
    The facts presented in this review demonstrate that Perry's 
circumstance is fundamentally different from that of DuPont. While 
DuPont is a chemical producer in its own right with substantial 
production and R&D facilities, Perry has no production or R&D 
facilities. DuPont has had a tolling agreement with Chang Chun for 
several years before the antidumping duty order on PVA from Taiwan was 
issued, while Perry entered into its contract with Chang Chun after the 
LFTV investigation. DuPont produces the VAM which it exports to Taiwan 
where Chang Chun processes it into PVA in accordance with DuPont's 
instructions; Perry purchased VAM produced by an affiliate of Chang 
Chun. Based on these facts, we find that DuPont is the producer of 
Taiwan PVA, through a subcontract with Chang Chun, and Perry is not a 
producer of subject merchandise. See Chrome-Plated Lug Nuts From 
Taiwan, 56 FR 36130, 131 (1991).
    Because we have preliminarily determined that Perry is not a 
producer of PVA, Perry is treated in this review as an importer and 
reseller. Chang Chun is the producer and original seller. Because Chang 
Chun had knowledge that the PVA it sold to Perry was for export to the 
United States, we have determined the export price based on the sale 
from Chang Chun to Perry. Normal value was determined using Chang 
Chun's home market price or constructed value.
    In considering a request from Perry for a new shipper review, 
(November 27, 1996), the Department determined that Perry was not a 
``new shipper'' because it was affiliated with Chang Chun through its 
tolling contract. In this review, we have reexamined this issue and 
have preliminarily determined that neither Perry nor DuPont is 
affiliated with Chang Chun. The tolling contracts do not establish 
legal or operational control over Chang Chun within the meaning of 
section 771(33)(G) of the Act. Rather, the tolling agreements set out 
contractual obligations under which Chang Chun has agreed to produce 
PVA for Perry and DuPont at the specified grades in specific quantities 
at specified times. Such agreements do not grant Perry or DuPont 
control over the manner in which Chang Chun operates (e.g., Perry and 
DuPont have no ability to direct or restrain financial or operational 
decisions such as which suppliers Chang Chun must buy from, prices 
Chang Chun will charge or what other customers Chang Chun will serve). 
Therefore, it cannot be said that, based solely on the tolling 
agreements, Perry or DuPont is affiliated with Chang Chun.

Verification

    As provided in Section 782(i) of the Act, we verified information 
provided by the respondents. We used standard verification procedures, 
including on-site inspection of the respondents' facilities, the 
examination of relevant sales and financial records, and selection of 
original documentation containing relevant information. Based on 
verification, we made certain changes to the data in the sales listings 
submitted by the respondents used to calculate the preliminary margins 
(see Calculation Memorandum to File dated February 2, 1997). Our 
verification results are outlined in the verification reports placed on 
file in the Central

[[Page 6528]]

Records Unit (CRU) in room B-099 of the Main Commerce Building.

Fair Value Comparisons

    To determine whether sales of the subject merchandise by the 
respondents to the United States were made at below normal value, we 
compared, where appropriate, the export (``EP'') and constructed export 
price (``CEP'') to the normal value (``NV'') as described below. In 
accordance with section 777A(d)(2) of the Act, we compared, where 
appropriate, the EPs and CEPs of individual transactions to the monthly 
weighted-average price of sales of the foreign like product.

Export Price and Constructed Export Price

    For the price to the United States, we used EP or CEP as defined in 
sections 772(a) and 772(b) of the Act, as appropriate.
    We made company-specific adjustments as follows:

Chang Chun

    In accordance with sections 772(a) and (c) of the Act, we 
calculated an EP for all of Chang Chun's sales, since the merchandise 
was sold to the first unaffiliated purchaser in the United States prior 
to importation, and CEP was not otherwise warranted based on the facts 
of record. We calculated EP based on the packed CIF price to 
unaffiliated purchasers in, or for exportation to, the United States. 
We made deductions from the starting price for movement expenses in 
accordance with section 772(c)(2)(A) of the Act; these included 
domestic inland freight, foreign brokerage and handling, international 
freight, and marine insurance.

DuPont

    We calculated EP for some of DuPont's sales where the merchandise 
was sold to the first unaffiliated purchaser in the United States prior 
to importation. We calculated CEP for the remaining sales of 
merchandise, which were made in the United States after importation.
    We based EP and CEP on packed FOB or delivered prices to 
unaffiliated purchasers in the United States. As appropriate, we made 
deductions for discounts and rebates. We also made deductions, where 
appropriate, for movement expenses in accordance with section 
772(c)(2)(A) of the Act; these included U.S. brokerage and handling 
expenses, U.S. Customs duties (which include harbor maintenance and 
merchandise processing fees), and U.S. inland freight expenses (freight 
from port to warehouse and freight from warehouse to the customer).
    In accordance with section 772(d)(1) of the Act, we deducted from 
CEP selling expenses associated with DuPont's economic activities 
occurring in the United States, including direct selling expenses and 
indirect selling expenses. We also deducted from CEP an amount for 
profit and further manufacturing costs in accordance with section 
772(d)(3) and section 772(d)(2) of the Act.

Normal Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
we compared each respondent's volume of home market sales of the 
foreign like product to the volume of U.S. sales of the subject 
merchandise, in accordance with section 773(a)(1) of the Act. For Chang 
Chun, we determined that the quantity of foreign like product sold in 
the exporting country was sufficient to permit a proper comparison with 
the sales of the subject merchandise to the United States because Chang 
Chun had sales in its home market which were greater than five percent 
of its sales in the U.S. market. Therefore, in accordance with section 
773(a)(1) of the Act, we based NV on sales in Taiwan.
    For DuPont, in accordance with section 773(a)(1) of the Act, and 
consistent with our practice, we based NV on the prices at which the 
foreign like products were first sold for consumption in the 
respondent's largest third-country market (i.e., Australia) because 
DuPont did not have sales of foreign like product in the exporting 
country during the POR and because Australia was a viable market with 
respect to DuPont's sales of PVA.
    We made company-specific adjustments as follows:

Chang Chun

    We calculated NV based on packed, FOB or delivered prices to 
unaffiliated purchasers in Taiwan. We made adjustments for differences 
in packing in accordance with section 773(a)(6)(A) of the Act. We also 
made adjustments, where appropriate, for movement expenses consistent 
with section 773(a)(6)(B) of the Act; these included inland freight 
from plant to customer. In addition, we made adjustments for 
differences in cost attributable to differences in physical 
characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) 
of the Act, as well as for differences in circumstances of sale 
(``COS'') in accordance with section 773(a)(6)(C)(iii) of the Act and 
19 CFR 353.56. We made COS adjustments by deducting direct selling 
expenses incurred for home market sales (i.e., credit expenses) and 
adding U.S. direct selling expenses (i.e., credit expenses and bank 
charges).

DuPont

    We calculated NV based on packed delivered prices to unaffiliated 
purchasers in Australia. We made adjustments for movement expenses 
(i.e., brokerage and handling fees) consistent with section 
773(a)(6)(B) of the Act. We disallowed DuPont's claim for an inland 
freight expense from Australian port to warehouse (INLFPWT) because the 
company failed to provide support documentation for the claimed amount 
at verification. In addition, we made adjustments for differences in 
cost attributable to differences in physical characteristics of the 
merchandise pursuant to section 773(a)(6)(C)(ii) of the Act, as well as 
for differences in COS in accordance with section 773(a)(6)(C)(iii) of 
the Act and 19 CFR 353.56. We made COS adjustments by deducting direct 
selling expenses incurred for third-country market sales and adding 
U.S. direct selling expenses, where appropriate. Since DuPont was 
unable to separate packing expenses from its reported tolling costs, we 
made no adjustment for a difference in packing expenses. As discussed 
below in the Level of Trade section, we allowed a CEP offset for 
comparisons made at different levels of trade. To calculate the CEP 
offset, we deducted from NV the third-country market indirect selling 
expenses, capped by the amount of the indirect selling expenses 
deducted in calculating the CEP under section 772(d)(1)(D) of the Act.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (``LOT'') as the EP or CEP transaction. The NV 
LOT is that of the starting-price sales in the comparison market or, 
when NV is based on constructed value, that of the sales from which we 
derive selling, general and administrative expenses and profit. For EP, 
the LOT is also the level of the starting-price sale, which is usually 
from exporter to importer. For CEP, it is the level of the constructed 
sale from the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or 
CEP, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and

[[Page 6529]]

the unaffiliated customer. If the comparison-market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make an LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP offset provision). See, Notice of Final Determination 
of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel 
Plate from South Africa, 62 FR 61731 (November 19, 1997).
    With respect to Chang Chun, Chang Chun reported one channel of 
distribution for its U.S. and home market sales. Based on our analysis 
of the selling functions, we found that the selling activities in both 
the home market and the United States were not different. Therefore, we 
have found that sales in both markets are at the same LOT and 
consequently no LOT adjustment is warranted.
    With respect to DuPont, DuPont reported one customer category and 
one channel of distribution for its third-country market sales. For its 
sales to the United States, it reported three customer categories and 
three channels of distribution corresponding to each customer category. 
Based on our analysis, we found that the three U.S. channels of 
distribution did not differ with respect to selling activities. Similar 
services, such as freight and delivery, inventory maintenance and sales 
support activities, were offered to all or some portion of customers in 
each channel. Based on this analysis, we find that the three U.S. 
channels of distribution comprise a single level of trade.
    DuPont reported both EP and CEP sales in the U.S. market. We noted 
that EP sales involved basically the same selling functions associated 
with the third-country market sales. Therefore, based upon this 
information, we determined that the level of trade for all EP sales is 
the same as that of the third-country sales, and thus no LOT adjustment 
is warranted.
    For CEP sales, based on our analysis, after the section 772(d) 
deductions, we find that there are no selling activities reflected in 
the CEP price, as the CEP is exclusive of all selling expenses. In 
contrast, the NV sales prices include the indirect selling expenses 
attributable to selling activities such as sales support functions. 
Accordingly, we have concluded that CEP is at a different level of 
trade from the third-country market level of trade.
    We then examined whether a LOT adjustment or CEP offset may be 
appropriate. In this case, DuPont only sold at one LOT in the third-
country market; therefore, there is no information available to 
determine a LOT adjustment between LOTs with respect to the foreign 
like product. Further, we do not have information which would allow us 
to examine pricing patterns based on respondent's sales of other 
products, and there are no other respondents or other record 
information on which such an analysis could be based. Accordingly, 
because the data available do not provide an appropriate basis for 
making a LOT adjustment, but the LOT in the third-country is at a more 
advanced stage of distribution than the LOT of the CEP, we made a CEP 
offset adjustment in accordance with section 773(a)(7)(B) of the Act.

Cost of Production Analysis

    As stated above, based on a timely allegation filed by the 
petitioner, the Department initiated a cost of production investigation 
of DuPont to determine whether sales were made at prices below the COP. 
For Chang Chun, because we disregarded sales below the COP in the last 
completed segment of the proceeding (i.e., the less-than-fair-value 
investigation), we had reasonable grounds to believe or suspect that 
sales of the foreign product under consideration for the determination 
of NV in this review may have been made at prices below the COP, as 
provided by section 773(b)(2)(A)(ii) of the Act. Therefore, pursuant to 
section 773(b)(1) of the Act, we initiated a COP investigation of sales 
by Chang Chun in the home market.
    We conducted the COP analysis described below.

A. Calculation of COP

    In accordance with section 773(b)(3) of the Act, we calculated the 
weighted-average COP, by grade, based on the sum of the cost of 
materials, fabrication and general expenses, and packing costs. For 
Chang Chun, we relied on the submitted COPs.
    Chang Chun purchased a major input (i.e., VAM) for PVA from an 
affiliated party. Section 773(f)(3) of the Act indicates that, if 
transactions between affiliated parties involve a major input, then the 
Department may value the major input based on the COP if the cost is 
greater than the amount (higher of transfer price or market price) that 
would be determined under section 773(f)(2). Section 773(f)(3) applies 
if the Department ``has reasonable grounds to believe or suspect that 
an amount represented as the value of such input is less than the COP 
of such input.'' The Department generally finds that such ``reasonable 
grounds'' exist where it has initiated a COP investigation of the 
subject merchandise.
    Because a COP investigation is being conducted in this case, the 
Department requested in its Section D questionnaire that Chang Chun 
provide cost of production information for VAM. That cost information 
was provided by Chang Chun in its Section D response. For purposes of 
our analysis, we used the per-unit costs as reported by Chang Chun, 
which included the cost of VAM based on the highest of the transfer 
price, the market price, or its affiliate's cost of production.
    For DuPont, we calculated the weighted-average COP based on the sum 
of its cost of producing VAM and the tolling fee paid to Chang Chun and 
SG&A expenses. We recalculated DuPont's general and administrative 
expenses based on verification findings. See Verification Report at 
page 18.

B. Test of Home Market and Third-Country Comparison Market Sales Prices

    We compared the weighted-average COP for each respondent, adjusted 
where appropriate, to the comparison market sales of the foreign like 
product as required under section 773(b) of the Act, in order to 
determine whether these sales had been made at prices below the COP 
within an extended period of time in substantial quantities, and 
whether such prices were sufficient to permit the recovery of all costs 
within a reasonable period of time. On a grade-specific basis, we 
compared the revised COP to the comparison market prices, less any 
applicable movement charges, discounts, rebates, commissions and other 
direct and indirect selling expenses.

C. Results of the COP Test

    Pursuant to section 773(b)(2)(C), where less than 20 percent of a 
respondent's sales of a given product were made at prices below the 
COP, we did not disregard any below-cost sales of that product because 
we determined that the below-cost sales were not made in ``substantial 
quantities.'' Where 20 percent or more of a respondent's sales of a 
given product were made at prices below the COP, we disregarded the 
below-cost sales because such sales were found to be made within an

[[Page 6530]]

extended period of time in ``substantial quantities'' in accordance 
with sections 773(b)(2)(B) and (C) of the Act, and because the below 
cost sales of the product were at prices which would not permit 
recovery of all costs within a reasonable period of time, in accordance 
with section 773(b)(2)(D) of the Act. Where all contemporaneous sales 
of a specific product were made at prices below the COP, we calculated 
NV based on CV, in accordance with section 773(a)(4) of the Act.
    For both Chang Chun and DuPont, we did not find that comparison 
market sales of PVA products were made at below COP prices within the 
POR.

Constructed Value

    For DuPont's PVA products for which we could not determine the NV 
based on comparison market sales because there were no contemporaneous 
sales of a comparable product, we compared export prices to CV.
    On January 8, 1998, the Court of Appeals for the Federal Circuit 
issued a decision in Cemex v. United States, 1998 WL 3626 (Fed Cir.). 
In that case, based on the pre-URAA version of the Act, the Court 
discussed the appropriateness of using CV as the basis for foreign 
market value when the Department finds home market sales to be outside 
the ordinary course of trade. This issue was not raised by any party in 
this review. However, the URAA amended the definition of sales outside 
the ``ordinary course of trade'' to include sales below cost. See 
Section 771(15) of the Act. Because the Court's decision was issued so 
close to the deadline for completing this preliminary results, we have 
not had sufficient time to evaluate and apply (if appropriate and if 
there are adequate facts on the record) the decision to the facts of 
this post-URAA review. For these reasons, we have determined to 
continue to apply our policy regarding the use of CV when we have 
disregarded below-cost sales from the calculation of NV; however, we 
invite interested parties to comment, in their case briefs, on the 
applicability of the Cemex decision to this review.
    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of the COM of the product sold in the United States, 
plus amounts for third-country comparison market SG&A expenses, and 
profit and U.S. packing costs. We calculated CV based on the 
methodology described in the ``Calculation of COP'' section of this 
notice, above, plus an amount for profit. In accordance with section 
773(e)(2)(A), we used the actual amounts incurred and realized by 
DuPont in connection with the production and sale of the foreign like 
product, in the ordinary course of trade, for consumption in the 
foreign country to calculate SG&A expenses and profit.
    For price-to-CV comparisons, we made adjustments to CV in 
accordance with section 773(a)(8) of the Act and 19 C.F.R. 353.56 for 
COS differences. For comparisons to EP, we made COS adjustments by 
deducting direct selling expenses incurred on third-country market 
sales and adding U.S. direct selling expenses. For comparisons to CEP, 
we made deductions for direct selling expenses incurred on third-
country market sales.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions based on the official exchange rates published by the 
Federal Reserve in effect on the dates of the U.S. sales. Section 
773A(a) of the Act directs the Department to use a daily exchange rate 
in effect on the date of sale of subject merchandise in order to 
convert foreign currencies into U.S. dollars, unless the daily rate 
involves a ``fluctuation.'' In accordance with the Department's 
practice, we have determined as a general matter that a fluctuation 
exists when the daily exchange rate differs from a benchmark by 2.25 
percent (For a detailed explanation, see Policy Bulletin 96-1: Currency 
Conversions, 61 FR 9434, March 8, 1996). The benchmark is defined as 
the rolling average of rates for the past 40 business days. When we 
determine that a fluctuation exists, we substitute the benchmark for 
the daily rate.

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following margin exists for the period May 15, 1996, through April 30, 
1997:

------------------------------------------------------------------------
                                                                Margin  
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Chang Chun Petrochemical Corporation........................        0.55
E.I. du Pont de Nemours & Co................................         .54
Perry Chemical Corporation * ...............................            
------------------------------------------------------------------------
* We did not calculate a dumping margin for Perry because we            
  preliminarily determined that Perry is not the producer of subject    
  merchandise it imported into the United States during the POR (see    
  Treatment of Sales of Tolled Merchandise section of the notice above).

    Parties to the proceeding may request disclosure within five days 
of the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the date of publication or the 
first business day thereafter.
    Issues raised in hearings will be limited to those raised in the 
respective case briefs and rebuttal briefs. Case briefs from interested 
parties and rebuttal briefs, limited to the issues raised in the 
respective case briefs, may be submitted not later than 30 days and 37 
days, respectively, from the date of publication of these preliminary 
results. Parties who submit case briefs or rebuttal briefs in this 
proceeding are requested to submit with each argument (1) a statement 
of the issue and (2) a brief summary of the argument.
    The Department will subsequently issue the final results of this 
administrative review, including the results of its analysis of issues 
raised in any such written briefs or at the hearing, if held, not later 
than 120 days after the date of publication of this notice.
    The Department shall determine and the Customs Service shall assess 
antidumping duties on all appropriate entries. The Department will 
issue appropriate appraisement instructions directly to the Customs 
Service upon completion of this review. The final results of this 
review shall be the basis for the assessment of antidumping duties on 
entries of merchandise covered by this review and for future deposits 
of estimated duties. For Chang Chun, for duty assessment purposes, we 
calculated an importer-specific assessment rate by aggregating the 
dumping margins calculated for all U.S. sales to each importer and 
dividing this amount by the total value of subject merchandise entered 
during the POR for each importer. In order to estimate the entered 
value, we subtracted international movement expenses from the gross 
sales value. For DuPont, we calculated an assessment rate by 
aggregating the dumping margins calculated for all U.S. sales and 
dividing this amount by the total value of subject merchandise entered 
during the POR.
    Furthermore, the following deposit requirements will be effective 
upon publication of the final results of this antidumping duty review 
for all shipments of PVA from Taiwan, entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided by section 751(a) of the Tariff Act: (1) The cash deposit 
rates for the reviewed companies will be those established in the final 
results of this review; (2) for exporters not covered in this review, 
but covered in the LTFV investigation or prior reviews, the cash 
deposit rate will continue to be the company-specific rate from the 
LTFV investigation or the prior review; (3) if the exporter is not a 
firm

[[Page 6531]]

covered in this review, a prior review, or the original LTFV 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (4) the cash deposit rate for all other 
manufacturers or exporters will continue to be 19.21 percent, the ``All 
Others'' rate made effective by the LTFV investigation. These 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative review.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
sections 751(a)(1) of the Act and 19 CFR 353.22(5).

    Dated: February 2, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-3210 Filed 2-6-98; 8:45 am]
BILLING CODE 3510-DS-P