[Federal Register Volume 68, Number 33 (Wednesday, February 19, 2003)]
[Notices]
[Pages 7980-7983]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-3994]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[A-428-836]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Polyvinyl Alcohol from Germany

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

ACTION: Notice of Preliminary Determination of Sales at Less Than Fair 
Value.

-----------------------------------------------------------------------

SUMMARY: We preliminarily determine that polyvinyl alcohol from Germany 
is being, or is likely to be, sold in the United States at less than 
fair value, as provided in section 733(b) of the Tariff Act of 1930, as 
amended.
    Interested parties are invited to comment on this preliminary 
determination. We will make our final determination not later than 75 
days after the date of this preliminary determination.

EFFECTIVE DATE: February 19, 2003.

FOR FURTHER INFORMATION CONTACT: Mike Strollo or Robin Moore, Office of 
AD/CVD Enforcement, Office 2, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0629 or (202) 482-3773, respectively.

SUPPLEMENTARY INFORMATION:

Preliminary Determination

    We preliminarily determine that polyvinyl alcohol (PVA) from 
Germany is being sold, or is likely to be sold, in the United States at 
less than fair value (LTFV), as provided in section section 733 of the 
Tariff Act of 1930, as amended (the Act). The estimated margins of 
sales at LTFV are shown in the ``Suspension of Liquidation'' section of 
this notice.

[[Page 7981]]

Case History

    Since the initiation of this investigation (Initiation of 
Antidumping Duty Investigations: Polyvinyl Alcohol from Germany, Japan, 
the People's Republic of China, the Republic of Korea, and Singapore, 
67 FR 61591 (Oct. 1, 2002)) (Initiation Notice), the following events 
have occurred.
    On October 21, 2002, the United States International Trade 
Commission (ITC) preliminarily determined that there is a reasonable 
indication that imports of PVA from Germany are materially injuring the 
United States industry (see ITC Investigation Nos. 731-TA-1014-1018 
(Publication No. 3553, Polyvinyl Alcohol from Germany, Japan, the 
People's Republic of China, the Republic of Korea, and Singapore, 67 FR 
65597 (Oct. 25, 2002))).
    On October 22, 2002, we selected Clariant GMBH (Clariant) and 
Kuraray Specialties Europe GMBH (Kuraray Europe), the producers/
exporters accounting for the vast majority of exports of subject 
merchandise from Germany during the period of investigation (POI), as 
the mandatory respondents in this proceeding. For further discussion, 
see the memorandum to Louis Apple, Director, Office 2, from the Team 
entitled ``Antidumping Duty Investigation of Polyvinyl Alcohol from 
Germany - Selection of Respondents,'' dated October 22, 2002. Due to 
limited resources, we determined that we could only investigate these 
two largest producers/exporters. We also issued antidumping 
questionnaires to Clariant and Kuraray Europe on October 22, 2002.
    On November 22, 2002, Kuraray Europe submitted a response to 
Section A of the Department's questionnaire. On December 5, 2002, 
Kuraray Europe notified the Department that it would no longer 
participate in this investigation, and it requested that the Department 
remove all of its business proprietary information from the record of 
this proceeding. On December 11, 2002, the Department destroyed Kuraray 
Europe's business proprietary information and notified Kuraray Europe 
of this action. For further discussion, see the ``Facts Available 
(FA)'' section of this notice.
    On December 9, 2002, in a letter faxed to the Department, Clariant 
acknowledged receipt of the Department's questionnaire. The fax was 
placed on the record of this proceeding on December 17, 2002. However, 
Clariant stated that, because it had sold the entirety of its 
production assets on January 1, 2002, and no longer produced PVA, it 
did not intend to respond to the Department's questionnaire. For 
further discussion, see the ``Facts Available (FA)'' section of this 
notice.

Period of Investigation

    The POI is July 1, 2001, through June 30, 2002. This period 
corresponds to the four most recent fiscal quarters prior to the month 
of the filing of the petition (i.e., September 2002).

Scope Comments

    In accordance with the preamble to our regulations (see Antidumping 
Duties; Countervailing Duties, 62 FR 27296, 27323 (May 19, 1997)), we 
set aside a period of time for parties to raise issues regarding 
product coverage and encouraged all parties to submit comments within 
20 calendar days of publication of the initiation notice. See the 
Initiation Notice, 67 FR at 61591. Although no comments on the scope of 
the investigation were received in this proceeding, scope comments were 
received in the companion Japanese case. Because these comments relate 
to PVA in general, we find that they are applicable to this proceeding. 
Accordingly, we have placed on the record of this proceeding all public 
scope comments as well as all public versions of the proprietary scope 
documents filed in the companion Japanese case, and we have modified 
the scope to conform to that set forth in the preliminary determination 
of that proceeding. See the ``Scope Comments'' section of the Notice of 
Preliminary Determination of Sales at Less Than Fair Value: Polyvinyl 
Alcohol from Japan, published in the Federal Register concurrently with 
this notice.

Scope of Investigation

    The merchandise covered by this investigation is PVA. This product 
consists of all PVA hydrolyzed in excess of 80 percent, whether or not 
mixed or diluted with commercial levels of defoamer or boric acid, 
except as noted below.
    The following products are specifically excluded from the scope of 
this investigation:
    1) PVA in fiber form.
    2) PVA with hydrolysis less than 83 mole percent and certified not 
for use in the production of textiles.
    3) PVA with hydrolysis greater than 85 percent and viscosity 
greater than or equal to 90 cps.
    4) PVA with a hydrolysis greater than 85 percent, viscosity greater 
than or equal to 80 cps but less than 90 cps, certified for use in an 
ink jet application.
    5) PVA for use in the manufacture of an excipient or as an 
excipient in the manufacture of film coating systems which are 
components of a drug or dietary supplement, and accompanied by an end-
use certification.
    6) PVA covalently bonded with cationic monomer uniformly present on 
all polymer chains in a concentration equal to or greater than one mole 
percent.
    7) PVA covalently bonded with carboxylic acid uniformly present on 
all polymer chains in a concentration equal to or greater than two mole 
percent, certified for use in a paper application.
    8) PVA covalently bonded with thiol uniformly present on all 
polymer chains, certified for use in emulsion polymerization of non-
vinyl acetic material.
    9) PVA covalently bonded with paraffin uniformly present on all 
polymer chains in a concentration equal to or greater than one mole 
percent.
    10) PVA covalently bonded with silan uniformly present on all 
polymer chains certified for use in paper coating applications.
    11) PVA covalently bonded with sulfonic acid uniformly present on 
all polymer chains in a concentration level equal to or greater than 
one mole percent.
    12) PVA covalently bonded with acetoacetylate uniformly present on 
all polymer chains in a concentration level equal to or greater than 
one mole percent.
    13) PVA covalently bonded with polyethylene oxide uniformly present 
on all polymer chains in a concentration level equal to or greater than 
one mole percent.
    14) PVA covalently bonded with quaternary amine uniformly present 
on all polymer chains in a concentration level equal to or greater than 
one mole percent.
    The merchandise under investigation 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, the written description of the 
merchandise under investigation is dispositive.

Facts Available (FA)

1. Application of FA
    Section 776(a)(2) of the Act provides that if an interested party 
(A) withholds information requested by the Department, (B) fails to 
provide such information by the deadline, or in the form or manner 
requested, (C) significantly impedes a proceeding, or

[[Page 7982]]

(D) provides information that cannot be verified, the Department shall 
use, subject to sections 782(d) and (e) of the Act, facts otherwise 
available in reaching the applicable determination.
    Pursuant to section 782(e) of the Act, the Department shall not 
decline to consider submitted information if all of the following 
requirements are met: (1) The information is submitted by the 
established deadline; (2) the information can be verified; (3) the 
information is not so incomplete that it cannot serve as a reliable 
basis for reaching the applicable determination; (4) the interested 
party has demonstrated that it acted to the best of its ability; and 
(5) the information can be used without undue difficulties.
    On October 22, 2002, the Department issued its questionnaire to 
Clariant and Kuraray Europe. On December 9 and December 5, 2002, 
respectively, these parties informed the Department that they did not 
intend to participate in this investigation. Because both Clariant and 
Kuraray Europe failed to supply necessary information, we have applied 
FA to calculate their dumping margins, pursuant to section 776(a)(2)(B) 
of the Act.
2. Selection of Adverse FA (AFA)
    In selecting from among the facts otherwise available, section 
776(b) of the Act authorizes the Department to use an adverse inference 
if the Department finds that an interested party failed to cooperate by 
not acting to the best of its ability to comply with the request for 
information. See, e.g., Notice of Final Determination of Sales at Less 
Than Fair Value and Final Negative Critical Circumstances: Carbon and 
Certain Alloy Steel Wire Rod from Brazil, 67 FR 55792, 55794-96 (Aug. 
30, 2002). Both respondents were notified in the Department's 
questionnaires that failure to submit the requested information by the 
date specified might result in use of FA. As a general matter, it is 
reasonable for the Department to assume that Clariant and Kuraray 
Europe possessed the records necessary for this investigation and that 
by not supplying the information the Department requested, Clariant and 
Kuraray Europe failed to cooperate to the best of their ability. As the 
respondents failed to cooperate to the best of their ability, we are 
applying an adverse inference pursuant to section 776(b) of the Act.
3. Corroboration of Information
    Section 776(b) of the Act authorizes the Department to use as AFA 
information derived from the petition, the final determination from the 
LTFV investigation, a previous administrative review, or any other 
information placed on the record.
    Section 776(c) of the Act requires the Department to corroborate, 
to the extent practicable, secondary information used as FA. Secondary 
information is defined as ``[i]nformation derived from the petition 
that gave rise to the investigation or review, the final determination 
concerning the subject merchandise, or any previous review under 
section 751 concerning the subject merchandise.'' See Statement of 
Administrative Action (SAA) accompanying the Uruguay Round Agreements 
Act, H.R. Doc. No. 103-316 at 870 (1994) and 19 CFR 351.308(d).
    The SAA clarifies that ``corroborate'' means that the Department 
will satisfy itself that the secondary information to be used has 
probative value. See SAA at 870. The SAA also states that independent 
sources used to corroborate such evidence may include, for example, 
published price lists, official import statistics and customs data, and 
information obtained from interested parties during the particular 
investigation. Id.
    In order to determine the probative value of the margins in the 
petition for use as AFA for purposes of this determination, we examined 
evidence supporting the calculations in the petition. We reviewed the 
adequacy and accuracy of the information in the petition during our 
pre-initiation analysis of the petition, to the extent appropriate 
information was available for this purpose (see the September 25, 2002, 
Initiation Checklist, on file in the Central Records Unit, Room B-099, 
of the Main Commerce Department building, for a discussion of the 
margin calculations in the petition). In addition, in order to 
determine the probative value of the margins in the petition for use as 
AFA for purposes of this determination, we examined evidence supporting 
the calculations in the petition. In accordance with section 776(c) of 
the Act, to the extent practicable, we examined the key elements of the 
export price (EP) and normal value (NV) calculations on which the 
margins in the petition were based.

Export Price

    With respect to the margins in the petition, EP was based on POI 
price quotes from a U.S. distributor for the sale of fully-hydrolyzed 
PVA produced by Kuraray Europe. The petitioners calculated net U.S. 
prices by deducting a distributor mark-up, certain movement expenses, 
and U.S. imputed credit expenses. We adjusted the petitioners' EP 
calculation by not deducting an amount for U.S. credit expenses; 
instead, we made an adjustment to NV, in accordance with the 
Department's EP circumstance-of-sale calculation methodology.
    We compared the U.S. market price quotes with official U.S. import 
statistics and U.S. customs data, and found the prices used by the 
petitioners to be reliable. For further discussion, see the February 
12, 2003, memorandum to the file from the team entitled ``Corroboration 
of Data Contained in the Petition for Assigning Facts Available Rates'' 
(Corroboration Memo).

Normal Value

    The petitioners based NV on a home market price quote from a German 
PVA producer for PVA of a comparable grade to the products exported to 
the United States. This price quote was contemporaneous with the U.S. 
price quotes used as the basis for EP. In addition, the petitioners 
alleged that sales of PVA products in the home market were made at 
prices below the fully absorbed cost of production (COP), within the 
meaning of section 773(b) of the Act, and requested that the Department 
conduct a country-wide sales-below-cost investigation. Based upon a 
comparison of the price of the foreign like product in the home market 
to the calculated COP of the product, we found reasonable grounds to 
believe or suspect that sales of the foreign like product were made 
below the COP, within the meaning of section 773(b)(2)(A)(i) of the 
Act. Accordingly, the Department initiated a country-wide cost 
investigation. Pursuant to section 773(b)(3) of the Act, COP consisted 
of the cost of manufacture (COM), selling, general and administrative 
(SG&A) expenses, and packing. The petitioners calculated COP based on 
the experience of a U.S. PVA producer during the 2001 fiscal year, 
adjusted for known differences between costs incurred to manufacture 
PVA in the United States and Germany.
    Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, the 
petitioners based NV for sales in Germany on constructed value (CV). 
The petitioners calculated CV using the same COM, SG&A and financial 
expense figures used to compute the COP. Consistent with Section 
773(e)(2) of the Act, the petitioners included in CV an amount for 
profit. For profit, the petitioners relied upon amounts reported in 
Clariant International's 2001 financial statements. The petitioners' 
calculation of profit was based on operating profit and not on the net 
income of the German PVA producer. Therefore, for

[[Page 7983]]

initiation purposes, we recalculated the CV profit rate to include non-
operating items. Because this calculation resulted in a loss, we used a 
profit rate of zero.
    The Department was provided with no useful information by the 
respondents or other interested parties and is aware of no other 
independent sources of information that would enable us to further 
corroborate the margin calculations in the petition. Specifically, we 
attempted to locate both home market prices through publicly available 
sources and U.S. producer costs upon which CV was based, but we were 
unable to do so. See the Corroboration Memo.
    It is worth noting that the implementing regulation for section 776 
of the Act states, ``(t)he fact that corroboration may not be 
practicable in a given circumstance will not prevent the Secretary from 
applying an adverse inference as appropriate and using secondary 
information in question. '' See 19 CFR 351.308(d). Additionally, the 
SAA specifically states that where ``corroboration may not be 
practicable in a given circumstance,'' the Department need not prove 
that the facts available are the best alternative information.'' See 
SAA at 870.
    Therefore, based on our efforts, described above, to corroborate 
information contained in the petition, and in accordance with 776(c) of 
the Act, we consider the margins in the petitions to be corroborated to 
the extent practicable for purposes of this preliminary determination.
    Accordingly, in selecting AFA with respect to Clariant and Kuraray 
Europe, we have applied the margin rate of 19.05 percent, which is the 
highest estimated dumping margin set forth in the notice of initiation. 
See Initiation Notice, 67 FR at 61593.

All Others

    Section 735(c)(5)(B) of the Act provides that, where the estimated 
weighted-average dumping margins established for all exporters and 
producers individually investigated are zero or de minimis, or are 
determined entirely under section 776 of the Act, the Department may 
use any reasonable method to establish the estimated ``all others'' 
rate for exporters and producers not individually investigated. This 
provision contemplates that we weight-average margins other than zero, 
de minimis, and FA margins to establish the ``all others'' rate. Where 
the data do not permit weight-averaging such rates, the SAA provides 
that we may use other reasonable methods. See SAA at 873. Because the 
petition contained two estimated dumping margins, we have used these 
two estimated dumping margins to create an ``all others'' rate based on 
a simple average. Therefore, we have calculated the margin of 10.75 
percent as the ``all others'' rate. See, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value and Final Affirmative 
Finding of Critical Circumstances: Elastic Rubber Tape from India, 64 
FR 19123, 19124 (Apr. 19, 1999).

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
the Customs Service to suspend liquidation of all imports of subject 
merchandise from Germany entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. We will instruct the Customs Service to require a 
cash deposit or the posting of a bond equal to the weighted-average 
amount by which the NV exceeds the EP, as indicated in the chart below. 
These suspension of liquidation instructions will remain in effect 
until further notice.
    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                               Weighted-average margin
             Exporter/producer                   [chyph](in percent)
------------------------------------------------------------------------
Clariant GMBH.............................                         19.05
Kuraray Specialties Europe................                         19.05
All Others................................                         10.75
------------------------------------------------------------------------

Disclosure

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties in this 
proceeding in accordance with 19 CFR 351.224(b).

ITC Notification

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

Public Comment

    Case briefs for this investigation must be submitted no later than 
25 days after the publication of this notice in the Federal Register. 
Rebuttal briefs must be filed within five days after the deadline for 
submission of case briefs. A list of authorities used, a table of 
contents, and an executive summary of issues should accompany any 
briefs submitted to the Department. Executive summaries should be 
limited to five pages total, including footnotes. See 19 CFR 351.309.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case briefs, provided that such a hearing is 
requested by any interested party. If a request for a hearing is made 
in this investigation, the hearing will tentatively be held two days 
after the deadline for submission of the rebuttal briefs, at the U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 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 within 10 days of the 
publication of this notice. Requests should specify the number of 
participants and provide a list of the issues to be discussed. Oral 
presentations will be limited to issues raised in the briefs. See 19 
CFR 351.310.
    We will make our final determination no later than 75 days after 
the date of this preliminary determination, pursuant to section 735 
(a)(1) of the Act.
    This determination is issued and published pursuant to sections 
733(f) and 777(i) of the Act.

    Dated: February 12, 2003.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 03-3994 Filed 2[dash]18-03; 8:45 am]
BILLING CODE 3510-DS-S