[Federal Register Volume 64, Number 114 (Tuesday, June 15, 1999)]
[Notices]
[Pages 32024-32027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15177]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-583-824]


Polyvinyl Alcohol From Taiwan: Final Results of Second 
Antidumping Duty Administrative Review

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

SUMMARY: On February 8, 1999, the Department of Commerce published in 
the Federal Register the preliminary results of the second 
administrative review of the antidumping duty order on polyvinyl 
alcohol from Taiwan (64 FR 6042). The review covers two manufacturers/
exporters of the subject merchandise to the United States, Chang Chun 
Petrochemical and E.I. duPont de Nemours & Co. The period of review is 
May 1, 1997, through April 30, 1998.
    We gave interested parties an opportunity to comment on our 
preliminary results. Based on our analysis of the comments received, we 
have made certain changes as described below in the ``Interested Party 
Comments'' section of this notice, but those changes did not result in 
final margins that were different from those calculated in our 
preliminary results. The final results are listed below in the section 
``Final Results of Review.''

EFFECTIVE DATE: June 15, 1999.

FOR FURTHER INFORMATION CONTACT: Brian Smith at (202) 482-1766 or Brian 
Ledgerwood at (202) 482-3836, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230.

SUPPLEMENTARY INFORMATION:

Background

    On February 8, 1999, the Department of Commerce (``the 
Department'') published in the Federal Register its preliminary results 
of the 1997-1998 administrative review of the antidumping duty order on 
polyvinyl alcohol (``PVA'') from Taiwan (64 FR 6042) (``Preliminary 
Results''). The period of review (``POR'') for this administrative 
review is May 1, 1997, through April 30, 1998.
    On February 18, 1999, E.I. duPont de Nemours & Co. (``DuPont'') 
withdrew its request that the Department apply the special rule for 
value added in this case. On March 10, 1999, the Department requested 
Chang Chun Petrochemical Co., Ltd. (``Chang Chun'') to provide 
information clarifying the methodology it used to allocate production 
costs between acetic acid and PVA. Chang Chun provided this data on 
March 17, 1999. The petitioner, Air Products and Chemicals Inc., and 
DuPont submitted case briefs on April 8, 1999. Chang Chun did not 
submit a case brief. Chang Chun submitted a rebuttal brief on April 15, 
1999. Since the petitioner did not comment on DuPont in its case brief, 
DuPont did not submit a rebuttal brief. Neither the petitioner nor the 
respondents requested a hearing in this case. On May 19, 1999, we 
placed on the record of this review information from the record of the 
first administrative review pertaining to the allocation of joint 
production costs between acetic acid and PVA. On May 24, 1999, the 
petitioner submitted comments on the use of this information in this 
review.
    The Department has now completed this administrative review, in 
accordance with section 751(a) of the Act.

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 (``the Act'') by 
the Uruguay Round Agreements Act (``URAA''). In addition, unless 
otherwise indicated, all references are made to the Department's 
regulations at 19 CFR Part 351 (1998).

Scope of Review

    The product covered by this review is 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 3905.30.0000 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.

Changes Since the Preliminary Results

    We have made changes in these final results only to the margin 
calculation for Chang Chun. For Chang Chun, we adjusted its joint 
production costs between PVA and acetic acid using the relative sales 
value of each product

[[Page 32025]]

calculated on the basis of a two-year period prior to the period of the 
less-than-fair-value investigation (``LTFV investigation'') (see 
Comment 1 in the ``Interested Party Comments'' section of this notice, 
Memorandum to the File dated May 19, 1999, and Final Results 
Calculation Memorandum dated June 8, 1999, for further discussion).

Interested Party Comments

Chang Chun

    Comment 1: Cost Allocation Methodology
    The petitioner contends that Chang Chun's cost methodology produces 
inexplicable and unreasonable results because the sales quantities of 
acetic acid and PVA were less than their production quantities. In 
particular, the petitioner maintains that unless Chang Chun made 
significant changes to its production process, Chang Chun's average 
annual yield ratio of acetic acid to PVA for the POR should be 
representative of the average three-year yield ratio of acetic acid and 
PVA for which Chang Chun reported sales data (see Exhibit 7 of Chan 
Chun's January 19, 1999, submission). The petitioner goes on to state 
that because Chan Chun has sold PVA and acetic acid in unequal 
quantities, Chang Chun must have over-allocated its production costs to 
acetic acid. Finally, the petitioner maintains that although Chang Chun 
has used a unit value ratio to allocate costs in the prior antidumping 
duty administrative review, the Department is not precluded from 
examining the reasonableness of Chang Chun's methodology in subsequent 
reviews.
    Chang Chun states that its sales quantities are lower than its 
production quantities because Chang Chun excluded the internal 
transfers of acetic acid and PVA from the weighted-average sales prices 
of acetic acid and PVA as internal transfers do not reflect any revenue 
raised by these products, thereby refuting the petitioner's claim that 
the difference which exists between sales and production quantities has 
a distortive impact when applying the cost allocation methodology. In 
addition, Chang Chun maintains that most of the sales and production 
data the petitioner is questioning was verified by the Department in 
the first administrative review. Therefore, Chang Chun contends that 
its reported sales and production data should be accepted by the 
Department in this review. Chang Chun maintains that its value-based 
cost allocation methodology is appropriate and requests that the 
Department confirm this fact, as well as confirm that the cost 
allocation methodology correctly reflects the Department's prior 
determinations. Finally, Chang Chun states that the petitioner has 
offered no evidence which would warrant the Department to reexamine the 
reasonableness of Chang Chun's value-based allocation methodology in 
future reviews.
    DOC Position: We agree with Chang Chun, in part. The Department 
confirms, generally, that it is appropriate and in accordance with the 
Department's practice for Chang Chun to maintain a value-based 
methodology for allocating joint production costs between PVA and 
acetic acid. However, the Department has not adopted Chang Chun's 
particular value-based cost allocation methodology in its entirety. Our 
review of Chang Chun's allocation methodology indicates that Chang Chun 
relied upon POR sales prices of PVA as a basis for allocating costs 
between PVA and acetic acid. While we determined in the LTFV 
investigation that a relative-sales-value-based allocation methodology 
is appropriate, we expressed concern that the sales value for PVA, used 
in our calculation, be representative of a period prior to allegations 
of dumping for the subject merchandise (see Notice of Final 
Determination of Sales at Less Than Fair Value: Polyvinyl Alcohol from 
Taiwan, 61 FR 14064, 14071 (March 29, 1996) (``PVA Final 
Determination''). In the final determination of the LTFV investigation 
and first administrative review of the antidumping duty order on PVA 
from Taiwan, we allocated joint production costs between PVA and acetic 
acid using each product's relative sales value from a two-year period 
prior to the initial period of investigation (``POI'') (see Polyvinyl 
Alcohol from Taiwan: Final Results of Antidumping Duty Administrative 
Review, 63 FR 32810, 32815 (June 16, 1998) (``PVA 1st Admin Review'')).
    Consistent with our methodology established in the LTFV 
determination and first administrative review, we consider it 
inappropriate in this review to rely exclusively on PVA sales prices 
relevant during a period of alleged dumping as a basis to allocate 
costs to PVA, particularly when these allocated costs are used as a 
means to measure the fairness of the selling prices for the same 
product. We believe that by adjusting the POR sales figures with sales 
of PVA and acetic acid over an extended period prior to the original 
investigation, the total relative sales value can reasonably be relied 
upon to form the basis for allocating joint production costs, 
particularly in this case where acetic acid and PVA are commodity 
products, and their selling prices are influenced by world market 
forces of supply and demand. In order to reallocate Chang Chun's joint 
production costs in the manner discussed above, we adjusted Chang 
Chun's POR sales values to reflect the relative sales values for the 
two-year period prior to the POI based on data obtained from the record 
of the first administrative review which has been placed on the record 
of this proceeding (see Memorandum to the File, dated May 19, 1999).
    Chang Chun defends its use of POR sales values for acetic acid and 
PVA as the basis for allocating its costs between these two products 
based on the fact that the Department found no sales below the cost of 
production in the first administrative review. Although the Department 
found no below-cost sales of PVA during the first administrative review 
for Chang Chun, we continue to find it appropriate to adjust the POR 
relative sales values to reflect the relative sales values for the two-
year period prior to the POI as we did in the first administrative 
review. This adjustment is appropriate because the manipulation of 
pricing patterns, even slight in nature as a result of future 
antidumping duty proceedings, still may result.
    Accordingly, for this second administrative review, we continue to 
accept Chang Chun's relative-sales-value-based cost allocation 
methodology in general. However, we have applied the same adjustment 
methodology as that in first administrative review in order to allocate 
Chang Chun's joint production costs between PVA and acetic acid (see 
``Final Calculation Memorandum for Chang Chun'' dated June 8, 1999).
    Comment 2: PVA and Acetic Acid Calculated Profitability Margins
    The petitioner contends that Chang Chun's methodology used for 
allocating production cost between PVA and acetic acid produces 
distortive results because the profit margins for PVA and acetic acid 
are not the same.
    Chang Chun maintains that its methodology correctly allocates its 
production costs between acetic acid and PVA based on relative sales 
value. Chang Chun states that the Department has never specified that 
the profit margins be exactly the same for PVA and acetic acid for the 
methodology to be acceptable. In fact, Chang Chun contends that the 
Department has specified only that the methodology should yield 
``approximately the same'' profit margins for PVA and acetic acid. In 
this review, Chang Chun maintains that the profit rates for PVA and 
acetic acid are ``approximately the same.''

[[Page 32026]]

Therefore, Chang Chun requests the Department to dismiss the 
petitioner's argument and find that Chang Chun's methodology correctly 
allocates its production costs between acetic acid and PVA based on the 
respective sales values of each product. Chang Chun cites to PVA 1st 
Admin Review, 63 FR at 32815 in support of its argument.
    DOC Position: We agree, in part, with Chang Chun. We have re-
examined Chang Chun's methodology for the calculation of the profit 
rate for acetic acid and PVA and found that the sales revenues upon 
which those profitability margins were based generally reflect relative 
sales values for acetic acid and PVA. As discussed in Comment 1 above, 
in the LTFV investigation and first administrative review, application 
of a relative-sales-value-based allocation methodology was considered 
appropriate (see PVA Final Determination, 61 FR at 14071 and PVA 1st 
Admin Review, 63 FR at 32815). Accordingly, in this review we find that 
Chang Chun's general methodology is appropriate.
    Furthermore, we agree with Chang Chun's argument that its profit 
rates for acetic acid and PVA are approximately the same. As the 
Department stated in the first administrative review, a relative-sales-
value-based allocation should yield approximately the same profit rates 
for acetic acid and PVA (see PVA 1st Admin Review, 63 FR 32815). 
However, for the reasons stated in the LTFV determination, the first 
administrative review, and Comment 1 above, the Department has adjusted 
Chang Chun's production costs by relative sale values representative of 
a two-year period prior to the POI. We note that any differences in the 
resulting POR profit rates for PVA and acetic acid are effectively 
compensated through the Department's adjustment of the POR cost data on 
the basis of the relative sales values representative of a two-year 
period prior to the POI in which there was no allegation of dumping for 
the subject merchandise (see Attachment 2 of the ``Final Calculation 
Memorandum for Chang Chun'' dated June 8, 1999). This adjustment is 
appropriate for allocating joint production costs and calculating the 
profit rates between PVA and acetic acid (see PVA Final Determination, 
61 FR at 14071, and PVA 1st Admin Review, 63 FR at 32815).
    Comment 3: Acetic Acid Sales Prices and the Major Input Rule
    The petitioner alleges that Chang Chun's reported acetic acid sales 
prices are problematic. Based on a comparison of acetic acid sales 
prices contained in Exhibits 5 and 7 of Chang Chun's January 19, 1999, 
supplemental section D response, the petitioner purports that Chang 
Chun under-reported its average sales price of acetic acid to 
unaffiliated purchasers of acetic acid. Furthermore, the petitioner 
argues that these sales prices warrant close scrutiny in future 
administrative reviews because Chang Chun uses these prices for the 
allocation of costs between PVA and acetic acid. Finally, the 
petitioner questions whether Dairen, Chang Chun's affiliated vinyl 
acetate monomer (``VAM'') supplier, has properly reported its costs for 
producing VAM, which is a major input used in the production of PVA. 
Specifically, the petitioner takes issue with the acetic acid price 
that Dairen paid Chang Chun and included in its reported VAM production 
costs.
    Chang Chun urges the Department to reject the petitioner's 
arguments because they are untimely and are not supported by record 
evidence. Chang Chun notes that the petitioner's argument for applying 
the major input rule to VAM production was untimely under 19 CFR 
351.301(d)(3). Moreover, Chang Chun maintains that the major input rule 
under section 773(f)(3) of the Act does not apply to acetic acid sales 
transactions between Chang Chun and Dairen because acetic acid is not a 
major input of the subject merchandise; rather, the major input to PVA 
in this case is the VAM produced by Dairen. Specifically, Chang Chun 
maintains that the Department verified the sales prices of acetic acid 
reported in Chang Chun's submission in the first administrative review 
of PVA. Furthermore, in support of its argument that the Department may 
rely on knowledge of a respondent's records and data acquired from past 
reviews in determining the reasonableness of its reporting 
methodologies used in a current review, Chang Chun cites to Timken Co. 
v. United States, 16 F. Supp. 2d 1102 (CIT 1998).
    DOC Position: We agree with petitioner, in that Chang Chun's acetic 
acid prices may be problematic. However, because this issue was raised 
for the first time in the petitioner's case brief, there is 
insufficient information on the record that would allow the Department 
to address the differences that exist among Chang Chun's per-unit 
market price for acetic acid, Chang Chun's per-unit transfer price for 
acetic acid, or Chang Chun's per-unit COP for acetic acid. Based on the 
record of the current review, we are unable to determine what impact, 
if any, this issue may have on the final margin calculation. However, 
we will consider this issue, if raised in a timely manner, in future 
reviews as appropriate.
    With respect to Chang Chun's untimeliness argument under 19 CFR 
351.301(d)(3), we note that application of this regulation is 
inappropriate because we conducted a cost investigation in this review. 
Specifically, the Department's normal practice is to analyze an 
affiliated supplier's production cost data for major inputs whenever it 
conducts a cost investigation. Thus, the cited regulation is only 
applicable where the Department has determined to base normal value on 
constructed value, but there is no cost investigation (see Antidumping 
Duties; Countervailing Duties; Final Rule, 62 FR at 27296, 27336 (May 
19, 1997)).
    Comment 4: U.S. Customs Investigation
    The petitioner requests that the Department obtain and review the 
results of an investigation conducted by the U.S. Customs Service 
(``Customs Service'') which involved examining shipments of PVA to the 
U.S. market to determine whether sales of merchandise claimed to be 
outside the scope of the antidumping duty order were properly 
classified.
    Chang Chun claims that, since it has reported all of its U.S. sales 
of subject merchandise during this review period, the Department should 
reject the petitioner's request.
    DOC Position: To establish the accuracy of the petitioner's 
allegation regarding whether Chang Chun or DuPont properly reported all 
sales of PVA during the POR, we would have had to conduct verifications 
of the two firms' sales data. Because the petitioner did not raise the 
allegation until it presented its case brief on April 8, 1999, we could 
not verify in this administrative review.
    In accordance with the petitioner's suggestion, we made a request 
that the Customs Service provide us with the status of any 
investigation into whether imports of subject PVA had been declared 
improperly as being outside the scope of the antidumping duty order 
(see Memorandum to the Customs Service dated April 16, 1999). In a May 
13, 1999, reply to our request, the Customs Service stated it had 
``conducted an analysis of shipments of PVA,'' but it could not 
disclose whether any shipments of PVA were found to be non-compliant 
with the antidumping duty order (see Memorandum to the file dated May 
13, 1999). Instead, the Customs Service said that if there were any 
shipments of PVA found to be non-compliant, it would have notified the 
importer and corrective action would have been taken. Based on the 
record of this proceeding, we cannot conclude

[[Page 32027]]

that the respondents have improperly reported sales of PVA during the 
POR. We will review this issue, if it is raised in a timely manner, in 
a future administrative review.

DuPont

    Comment 1: Application of the Special Rule for Value Added
    DuPont withdrew its request that the Department apply the special 
rule for value added in this case and therefore exclude its sales of 
further manufactured PVA from the analysis. However, DuPont maintains 
that although it has withdrawn its request in this particular review, 
applying the special rule is an important issue in the calculation of 
DuPont's dumping margin and should be considered without prejudice in 
future reviews.
    The petitioner did not comment on this issue.
    DOC Position: Because DuPont withdrew its request that the 
Department apply the special rule in this case shortly after the 
preliminary results, the Department has not considered further 
application of the special rule for these final results. However, if 
DuPont should request in a timely manner that the Department apply the 
special rule in a subsequent proceeding, the Department will again give 
DuPont's request full consideration.

Final Results of the Review

    As a result of our review, we have determined that the following 
weighted-average margins exist for the period May 1, 1997, through 
April 30, 1998:

------------------------------------------------------------------------
                                                                Margin
               Manufacturer/producer/exporter                 (percent)
------------------------------------------------------------------------
Chang Chun Petrochemical Co. Ltd...........................         0.00
E.I. DuPont de Nemours & Co................................         0.00
------------------------------------------------------------------------

Cash Deposit Requirements

    The following deposit requirements shall be effective upon 
publication of this notice of final results of administrative review 
for all shipments of the subject merchandise from Taiwan that are 
entered, or withdrawn from warehouse, for consumption on or after the 
publication date, as provided for by section 751(a)(1) of the Act: (1) 
the cash deposit rates for Chang Chun and DuPont will be the rates 
indicated above (i.e., the cash deposit rate will be zero); (2) if the 
exporter is not a firm covered in this review or the LTFV 
investigation, but the manufacturer is, the cash deposit rate will be 
that established for the most recent period for the manufacturer of the 
merchandise; and (3) if neither the exporter nor the manufacturer is a 
firm covered in this review or the LTFV investigation, the cash deposit 
rate will be 19.21 percent, the ``All Other'' rate made effective by 
the LTFV investigation. These requirements shall remain in effect until 
publication of the final results of the next administrative review.

Assessment Rates

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. For duty 
assessment purposes, we have calculated importer-specific assessment 
rates for the subject merchandise. Pursuant to 19 CFR 351.212(b)(1), we 
have calculated importer-specific ad valorem duty assessment rates 
based on the ratio of the total amount of the dumping margins 
calculated for the examined sales to the total entered value of those 
same sales. In order to estimate the entered value, we have subtracted 
international movement expenses from the gross sales value. In 
accordance with 19 CFR 351.106(c)(2), we will instruct the Customs 
Service to liquidate without regard to antidumping duties all entries 
of subject merchandise during the POR for which the importer-specific 
assessment rate is zero or de minimis (i.e., less than 0.50 percent).

Notification to Importers and Interested Parties

    This notice serves as a final reminder to importers of their 
responsibility under 19 CFR 351.402(f) to file a certificate regarding 
the reimbursement of antidumping duties prior to liquidation of the 
relevant entries during the 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 notice also serves as a final reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 351.305(a). Timely written notification 
or conversion to judicial protective order is hereby requested. Failure 
to comply with the regulations and terms of the APO is a sanctionable 
violation.
    This determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: June 8, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-15177 Filed 6-14-99; 8:45 am]
BILLING CODE 3510-DS-P