[Federal Register Volume 68, Number 54 (Thursday, March 20, 2003)]
[Notices]
[Pages 13674-13681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6735]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-879]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Polyvinyl Alcohol From
the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary determination of sales at less than fair
value.
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SUMMARY: We preliminarily determine that polyvinyl alcohol from the
People's Republic of China 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 135
days after the date of publication of this preliminary determination.
EFFECTIVE DATE: March 20, 2003.
FOR FURTHER INFORMATION CONTACT: Elizabeth Eastwood or Alice Gibbons,
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) 482-3874 or (202) 482-0498, respectively.
Preliminary Determination
We preliminarily determine that polyvinyl alcohol (PVA) from the
People's Republic of China (PRC) is being sold, 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 of sales at LTFV are shown in the ``Suspension of
Liquidation'' section of this notice.
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 reasonable
indication that imports of PVA from the PRC 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)).
Also on October 21, 2002, we issued an antidumping questionnaire to
the Chinese Ministry of Foreign Trade and Economic Cooperation (MOFTEC)
with a letter requesting that it forward the questionnaire to Chinese
producers/exporters accounting for all known exports of subject
merchandise from the PRC during the period of investigation (POI). The
Department also sent courtesy copies of the antidumping questionnaire
to the China Chamber of Commerce of Metals, Minerals, and Chemicals
Importers and Exporters, to all companies identified in U.S. customs
data as exporters of the subject merchandise during the POI with
shipments in commercial quantities, and any additional companies
identified in the petition as exporters of PVA. These companies
included: B.V. Rebes, Chang Chun Plastics Co., Ltd. (Chang Chun),\1\
Sichuan Mianyang International Trade Co., Ltd., Sinopec Maoming
Refining & Chemical Co., Ltd., Sinopec Sichuan Vinylon Works (SVW), and
Sichuan Weinilun Chang. For further discussion, see the November 7,
2002, memorandum from Alice Gibbons to the File entitled ``Antidumping
Duty Investigation of Polyvinyl Alcohol from the People's Republic of
China--Selection of Respondents.'' The letters sent to MOFTEC and
individual exporters provided deadlines for responses to the different
sections of the questionnaire.
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\1\ Both B.V Rebes and Chang Chun appeared to be third country
resellers.
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On October 28, 2002, B.V. Rebes informed us that it is merely a
provider of logistics services and, therefore, it did not intend to
respond to the Department's questionnaire in this investigation. For
further discussion, see the October 28, 2002, memorandum from Elizabeth
Eastwood to the File entitled ``Response from B.V. Rebes to the
Questionnaire in the Antidumping Duty Investigation of Polyvinyl
Alcohol from the People's Republic of China.'' On November 4, 2002,
Chang Chun informed us that its records did not reflect any exports of
PRC-produced PVA to the United States during the POI. Chang Chun also
requested additional U.S. customs information in order to ascertain the
reason that it appeared as an exporter. See the February 19, 2003,
memorandum from Alice Gibbons to the File entitled ``Placing
Information on the Record in
[[Page 13675]]
the Antidumping Duty Investigation of Polyvinyl Alcohol from the
People's Republic of China.'' On November 7, 2002, we informed Chang
Chun that, due to the fact that the customs data in question was not
public information, we were unable to provide it with this information.
We received no further correspondence from Chang Chun.\2\
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\2\ We note, however, that we did not designate Chang Chun as a
mandatory respondent in this investigation.
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On November 6, 2002, Wego Chemical & Mineral Corporation (Wego), an
importer of PVA from the PRC, notified the Department that it sold
subject merchandise in the United States, and that these sales
constituted ``relevant sales'' within the meaning of sections 772(a)
and (b) of the Act. Based on these assertions, we informed Wego that it
was eligible to participate as a voluntary respondent in this
investigation and on November 7, 2002, we issued it a questionnaire.
For further discussion, see the November 7, 2002, memorandum from Alice
Gibbons to the File entitled ``Issuance of Questionnaire to Wego
Chemical & Mineral Corp. in the Antidumping Duty Investigation of
Polyvinyl Alcohol from the People's Republic of China.'' On November
25, 2002, Wego informed us that it did not intend to submit a voluntary
response in this proceeding.
On November 25, 2002, the Department invited interested parties to
comment on surrogate country selection and to provide publicly
available information for valuing the factors of production. We
received a response from the petitioners on January 6, 2003, and from
SVW on February 14, 2003.
During the period November 2002 through February 2003, the
Department received responses to sections A, C, and D of the
Department's original and supplemental questionnaires from SVW. We
received no other responses to our questionnaire from any of the other
exporters noted above.
On January 21, 2003, pursuant to 19 CFR 351.205(e), the petitioners
\3\ made a timely request to postpone the preliminary determination for
30 days. We granted this request and, on January 23, 2003, postponed
the preliminary determination until no later than March 14, 2003. See
Postponement of Preliminary Determinations of Antidumping Duty
Investigations: Polyvinyl Alcohol from the People's Republic of China
and the Republic of Korea, 68 FR 4763 (Jan. 30, 2003).
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\3\ The petitioners in this investigation are Celanese Chemicals
Ltd. and E.I. Dupont de Nemours & Co. (collectively, ``the
petitioners'').
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Postponement of Final Determination
Section 735(a)(2) of the Act provides that a final determination
may be postponed until not later than 135 days after the date of the
publication of the preliminary determination if, in the event of an
affirmative preliminary determination, a request for such postponement
is made by exporters who account for a significant proportion of
exports of the subject merchandise, or in the event of a negative
preliminary determination, a request for such postponement is made by
the petitioner. The Department's regulations, at 19 CFR 351.210(e)(2),
require that requests by respondents for postponement of a final
determination be accompanied by a request for extension of provisional
measures from a four-month period to not more than six months.
On January 9, 2003, SVW requested that the Department postpone its
final determination until 135 days after the publication of the
preliminary determination. SVW also included a request to extend the
provisional measures to not more than six months. Accordingly, since we
have made an affirmative preliminary determination and no compelling
reasons for denial exist, we have postponed the final determination
until not later than 135 days after the publication of the preliminary
determination.
Period of Investigation
Pursuant to 19 CFR 351.204(b)(1), the POI for an investigation
involving merchandise from a non-market economy (NME) is the two most
recent fiscal quarters prior to the month of the filing of the petition
(i.e., September 2002). Therefore, in this case, the POI is January 1,
2002, through June 30, 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 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, 68 FR 8203, 8204-05 (Feb. 20, 2003).
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.
[[Page 13676]]
(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.
Nonmarket Economy Country Status
The Department has treated the PRC as an NME country in all past
antidumping investigations. See, e.g., Final Determination of Sales at
Less Than Fair Value: Certain Preserved Mushrooms from the People's
Republic of China, 63 FR 72255, 72256 (December 31, 1998) (Mushrooms).
A designation as an NME remains in effect until it is revoked by the
Department. See section 771(18)(C) of the Act.
When the Department is investigating imports from an NME country,
section 773(c)(1) of the Act directs us to base normal value (NV) on
the NME producer's 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 ``Normal
Value'' section of the notice, below.
No party in this investigation has requested a revocation of the
PRC's NME status. We have, therefore, preliminarily continued to treat
the PRC as an NME.
Separate Rates
SVW is owned by ``all the people'' and has provided separate rates
information in its November 22, 2002, section A response and in its
January 9, January 13, and January 21, 2003, supplemental responses.
SVW has stated that there is no element of government ownership or
control and has requested a separate company-specific rate.
As stated in Notice of Final Determination of Sales at Less Than
Fair Value: Silicon Carbide from the People's Republic of China, 59 FR
22585, 25586 (May 2, 1994) (Silicon Carbide) and Notice of Final
Determination of Sales at Less Than Fair Value: Furfuryl Alcohol from
the People's Republic of China, 60 FR 22544, 25545 (May 8, 1995)
(Furfuryl Alcohol), ownership of the company by ``all the people'' does
not require the application of a single rate. Accordingly, SVW is
eligible for consideration of a separate rate.
The Department's separate rate test is not concerned, in general,
with macroeconomic/border-type controls (e.g., export licenses, quotas,
and minimum export prices), particularly if these controls are imposed
to prevent dumping. The test focuses, rather, on controls over the
investment, pricing, and output decision making process at the
individual firm level. See Certain Cut-to-Length Carbon Steel Plate
from Ukraine: Final Determination of Sales at Less than Fair Value, 62
FR 61754, 61757 (Nov. 19, 1997); Tapered Roller Bearings and Parts
Thereof, Finished and Unfinished, from the People's Republic of China;
Final Results of Antidumping Duty Administrative Review, 62 FR 61276,
61279 (Nov. 17, 1997); and Honey from the People's Republic of China:
Preliminary Determination of Sales at Less than Fair Value, 60 FR
14725, 14726 (Mar. 20, 1995).
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, 20589 (May 6, 1991), as
modified by Silicon Carbide. Under the separate rates criteria, the
Department assigns separate rates in NME cases only if the respondents
can demonstrate the absence of both de jure and de facto governmental
control over export activities. See Silicon Carbide and Furfuryl
Alcohol.
1. Absence of De Jure Control
The Department considers the following de jure criteria in
determining whether an individual company may be granted a separate
rate: (1) An absence of restrictive stipulations associated with an
individual exporter's business and export licenses; (2) any legislative
enactments decentralizing control of companies; and (3) any other
formal measures by the government decentralizing control of companies.
SVW has placed on the record a number of documents to demonstrate
absence of de jure control, including the ``Law of the People's
Republic of China on Industrial Enterprises Owned By the Whole
People.''
In prior cases, the Department has analyzed these laws and found
that they establish an absence of de jure control. See, e.g., Notice of
Preliminary Determination of Sales at Less Than Fair Value and
Postponement of Final Determination: Certain Partial-Extension Steel
Drawer Slides With Rollers From the People's Republic of China, 60 FR
29571, 29573 (June 5, 1995); \4\ Notice of Final Determination of Sales
at Less Than Fair Value: Manganese Metal From the People's Republic of
China, 60 FR 56045, 56046 (Nov. 6, 1995). We have no new information in
this proceeding which would cause us to reconsider this determination.
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\4\ This was unchanged in the final determination. See Notice of
Final Determination of Sales at Less Than Fair Value: Certain
Partial-Extension Steel Drawer Slides with Rollers from the People's
Republic of China, 60 FR 54472, 54474 (Oct. 24, 1995).
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According to SVW, PVA exports are not affected by export licensing
provisions or export quotas. SVW claims to have autonomy in setting the
contract prices for sales of PVA through independent price negotiations
with its foreign customers without interference from the PRC
government. Based on the assertions of SVW, we preliminarily determine
that there is an absence of de jure government control over the pricing
and marketing decisions of SVW with respect to its PVA export sales.
2. Absence of De Facto Control
As stated in previous cases, there is some evidence that certain
enactments of the PRC central government have not been implemented
uniformly among different sectors and/or jurisdictions in the PRC. See
Mushrooms, 63 FR 72257. 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.
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 its management; and (4)
whether the respondent retains the proceeds of its export sales and
makes
[[Page 13677]]
independent decisions regarding disposition of profits or financing of
losses. See Id.
SVW 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 (4) it retains the proceeds of its export sales and uses
profits according to its business needs. Additionally, SVW's
questionnaire responses indicate that it does not coordinate with other
exporters in setting prices or in determining which companies will sell
to which markets. This information supports a preliminary finding that
there is an absence of de facto governmental control of the export
functions of these companies. Consequently, we preliminarily determine
that SVW has met the criteria for the application of separate rates.
In addition to the above analysis, the Department further analyzed
information provided by the petitioners in a submission dated December
11, 2002. In this submission, the petitioners provided documentation
which indicated that SVW was part of a debt-equity conversion agreement
in April 2000, mandated by the PRC government between Sinopec Group
Company (a ministry-level enterprise) and certain PRC banks. However,
because there is no evidence on the record that shows that Sinopec
Group Company exercises any influence or control in the day-to-day
operations of SVW, we preliminarily determine that SVW has met the
criteria for the application of separate rates. For further discussion,
see the memorandum entitled ``Concurrence Memorandum for the
Preliminary Determination in the Investigation of Polyvinyl Alcohol
from the People's Republic of China,'' dated March 14, 2003 (the
Concurrence Memorandum), on file in room B-099 of the Department's
Central Records Unit (CRU).
PRC-Wide Rate and Use of Facts Otherwise Available
As in all NME cases, the Department implements a policy whereby
there is a rebuttable presumption that all exporters or producers
located in the NME comprise a single exporter under common government
control, the ``NME entity.'' The Department assigns a single NME rate
to the NME entity unless an exporter can demonstrate eligibility for a
separate rate.
Section 776(a)(2) of the Act provides that if an interested party
or any other person (A) withholds information that has been requested
by the administering authority; (B) fails to provide such information
by the deadline, or in the form or manner requested, (C) significantly
impedes a proceeding, or (D) provides such 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.
Information on the record of this investigation indicates that
there are numerous producers/exporters of the subject merchandise in
the PRC. As noted in the ``Case History'' section above, all exporters
were given the opportunity to respond to the Department's
questionnaire. Based upon our knowledge of PRC exporters (including
correspondence received in this proceeding) and the fact that U.S.
import statistics show that the responding company did not account for
all imports into the United States from the PRC, we have preliminarily
determined that PRC exporters of PVA failed to respond to our
questionnaire. As a result, use of facts available (FA), pursuant to
section 776(a)(2)(A) of the Act, is appropriate.
In selecting among the facts otherwise available, section 776(b) of
the Act authorizes the Department to use adverse facts available (AFA)
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: Bicycles from the People's Republic of China, 61 FR
19026, 19028 (April 30, 1996); Notice of Final Determination of Sales
at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality
Steel Products From the Russian Federation, 65 FR 5510, 5518 (February
4, 2000). MOFTEC was notified in the Department's questionnaire that
failure to submit the requested information by the date specified might
result in use of FA. The producers/exporters that decided not to
respond to the Department's questionnaire failed to act to the best of
their ability in this investigation. Absent a response, we must presume
government control of these companies. The Department has determined,
therefore, that in selecting from among the facts otherwise available
an adverse inference pursuant to section 776(b) of the Act is
warranted.
In accordance with our standard practice, as AFA, we are assigning
as the PRC-wide rate the higher of: (1) The highest margin stated in
the notice of initiation (i.e., the recalculated petition margin); or
(2) the highest margin calculated for any respondent in this
investigation. See, e.g., Notice of Final Determination of Sales at
Less Than Fair Value: Certain Cold-Rolled Carbon Quality Steel Products
from the People's Republic of China, 64 FR 34660 (May 31, 2000) and
accompanying decision memorandum at Comment 1. In this case, the
preliminary AFA margin is 97.86 percent, which is the highest margin
stated in the notice of initiation. See Initiation Notice, 67 FR 61594.
Corroboration of Information
Section 776(b) of the Act authorizes the Department to use 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 the 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, customs data, and information
obtained from interested parties during the particular investigation.
See the SAA at 870.
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
[[Page 13678]]
for this purpose. See the October 1, 2002, Initiation Checklist, on
file in the CRU, Room B-099, of the Main Commerce Department building,
for a discussion of the margin 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 NV
calculations on which the margins in the petition were based.
In order to corroborate the petition's EP calculations, we compared
the prices in the petition for PVA to the prices submitted by SVW. In
order to corroborate the petitioners' NV calculation, we compared the
petitioners' factor consumption and/or surrogate value data for PVA to
the data reported by SVW for the most significant factors--vinyl
acetate monomer (VAM) and its by-product acetic acid, electricity,
factory overhead, and selling, general, and administrative (SG&A)
expenses, and profit--and to surrogate values selected by the
Department for the preliminary determination, as discussed below.
As discussed in the March 14, 2003, memorandum from the team to the
file entitled ``Corroboration of Data Contained in the Petition for
Assigning an Adverse Facts Available Rate,'' we found that the U.S.
price and factors of production information in the petition to be
reasonable and of probative value. As a number of the surrogate values
selected for the preliminary determination differed from those used in
the petition, we compared the petition margin calculations to the
calculations based on the selected surrogate values wherever possible
and found they were reasonably close. Therefore, we preliminarily
determine that the petition information has probative value.
Accordingly, we find that the highest margin stated in the notice of
initiation, 97.86 percent, is corroborated within the meaning of
section 776(c) of the Act. For further discussion, see the March 14,
2003, memorandum to the file from the team entitled ``Corroboration of
Data Contained in the Petition for Assigning an Adverse Facts Available
Rate.''
Fair Value Comparisons
To determine whether sales of PVA from the PRC were made at LTFV,
we compared the EP to the NV, as described in the ``Export Price,'' and
``Normal Value'' sections of this notice, below. In accordance with
section 777A(d)(1)(A)(i) of the Act, we compared POI-wide weighted-
average EPs by product to the appropriate product-specific NV.
Export Price
In accordance with section 772(a) of the Act, we based our
calculations on EP for SVW because the subject merchandise was sold by
the producer/exporter directly to the first unaffiliated purchaser
prior to importation. We based EP on the packed FOB PRC port or CIF
U.S. port prices to unaffiliated purchasers in the United States, as
appropriate. We made deductions for movement expenses, in accordance
with 772(c)(2)(A) of the Act; these included, where appropriate,
foreign inland freight (including truck, rail, and waterway), foreign
brokerage and handling, ocean freight, and marine insurance. As certain
of these movement services were provided by NME suppliers, we valued
them using Indian or other market-economy rates. For further discussion
of our use of surrogate data in an NME proceeding, as well as selection
of India as the appropriate surrogate country, see the ``Normal Value''
section of this notice, below.
For foreign inland truck freight we used price quotes obtained by
the Department from Indian truck freight companies. These price quotes
were recently used in the 2000-2001 antidumping duty administrative
review of persulfates from the PRC. See Persulfates From the People's
Republic of China; Preliminary Results of Antidumping Duty
Administrative Review and Notice of Partial Rescission, 67 FR 50866,
50867, 50869 (Aug. 6, 2002) \5\ (Persulfates).
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\5\ This was unchanged in the final determination. See
Persulfates from the People's Republic of China: Final Results of
Antidumping Duty Administrative Review, 68 FR 6712 (Feb. 10, 2003)
(Persulfates Final).
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For foreign inland rail freight, we used per kilometer price quotes
published in the July 2001 Reserve Bank of India Bulletin. These price
quotes were used in the 2001-2002 antidumping duty investigation of
non-malleable cast iron pipe from the PRC and in the 2001-2002
antidumping duty administrative review of synthetic indigo from the
PRC. See Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Non-Malleable Cast Iron
Pipe Fittings from the People's Republic of China, 67 FR 60214 (Sept.
25, 2002) \6\ and See Synthetic Indigo from the People's Republic of
China; Preliminary Results of Antidumping Duty Administrative Review,
68 FR 11371, 11372 (Mar. 10, 2003) (Indigo from the PRC).
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\6\ This was unchanged in the final determination. See Notice of
Final Determination of Sales at Less Than Fair Value: Non-Malleable
Cast Iron Pipe Fittings from the People's Republic of China, 68 FR
7765 (Feb. 18, 2003).
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For foreign inland waterway freight, we used an Indian domestic
ship rate obtained in the 1999-2000 antidumping duty administrative
review and used in the 2000-2001 antidumping duty administrative review
of helical spring lock washers from the PRC. See Certain Helical Spring
Lock Washers From the People's Republic of China; Final Results of
Antidumping Duty Administrative Review, 67 FR 8520 and accompanying
decision memorandum at Comment 5 (Feb. 25, 2002) and Certain Helical
Spring Lock Washers From the People's Republic of China; Preliminary
Results of Antidumping Duty Administrative Review, 67 FR 45702, 45704
(July 10, 2002).\7\
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\7\ This was unchanged in the final determination. See Certain
Helical Spring Lock Washers From the People's Republic of China;
Final Results of Antidumping Duty Administrative Review, 67 FR 69717
(Nov. 19, 2002).
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For foreign brokerage and handling expenses, we used brokerage and
handling data obtained in the 1998-1999 antidumping duty investigation
and used in the 2001-2002 antidumping duty administrative review of
synthetic indigo from the PRC. See Notice of Preliminary Determination
of Sales at Less than Fair Value and Postponement of Final
Determination: Synthetic Indigo from the People's Republic of China, 64
FR 69723 (December 14, 1999) \8\ and Indigo from the PRC, 68 FR 11372.
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\8\ This was unchanged in the final determination. See Synthetic
Indigo from the People's Republic of China: Notice of Final
Determination of Sales at Less Than Fair Value, 65 FR 25706 (May 3,
2000).
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With respect to ocean freight, SVW asserted that it used market-
economy suppliers for its shipments of PVA. However, based on the
submitted information, we could not establish that the ocean freight
expenses SVW paid reflect prices set by market-economy carriers.
Specifically, SVW's questionnaire responses indicate that ocean freight
was paid to a PRC company, not a market-economy supplier. Therefore, in
accordance with our practice, we valued ocean freight using a surrogate
value. See, e.g., Notice of Final Determination of Sales at Less Than
Fair Value: Certain Non-Frozen Apple Juice Concentrate from the
People's Republic of China, 65 FR 19873 (April 13, 2000) and
accompanying decision memorandum at Comment 3. Specifically, we valued
ocean freight for SVW's CIF shipments using a price quote obtained in
the 2001-2002 antidumping duty administrative review of synthetic
indigo from the PRC. See Indigo from the PRC, 68 FR 11372.
[[Page 13679]]
For marine insurance we used price quotes obtained by the
Department from a market-economy provider and used in the 2000-2001
antidumping duty administrative review of persulfates from the PRC. See
Persulfates, 67 FR 50867.
Where appropriate, we adjusted the values to reflect inflation up
to the POI using the wholesale price indices (WPI) or the purchase
price indices published by the International Monetary Fund (IMF), as
appropriate.
Normal Value
A. Surrogate Country
Section 773(c)(4) of the Act requires the Department to value an
NME producer's 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, Pakistan, Indonesia, Sri Lanka, and the
Philippines are countries comparable to the PRC in terms of overall
economic development. See the October 30, 2002, memorandum from Jeffrey
May to Louis Apple entitled ``Antidumping Duty Investigation on
Polyvinyl Alcohol from the People's Republic of China (PRC).''
According to the available information on the record, we have
determined that India is a significant producer of merchandise
comparable to PVA (i.e., polyvinyl acetate, the precursor polymer of
fully-hydrolyzed PVA). For purposes of the preliminary determination,
we have selected India as the surrogate country, based on the quality
and contemporaneity of the currently available data. Accordingly, we
have calculated NV using Indian values for the PRC producer's factors
of production. We have obtained and relied upon publicly available
information wherever possible.
B. Self-Produced Inputs
In accordance with section 773(c) of the Act, we calculated NV
based on factors of production reported by SVW for the POI. As the
basis for NV, SVW reported factors of production information for each
separate stage of production, including the factors used in the
production of all self-produced material and energy inputs, and by-
products.\9\
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\9\ In addition to its own factors of production, SVW reported
the factors of production used by a joint venture to produce acetic
acid. However, we did not value those factors when calculating NV in
this investigation. Rather, we have valued the acetic acid purchased
from the joint venture and consumed during the POI, accordance with
our practice. See Notice of Preliminary Determination of Sales at
Less Than Fair Value and Postponement of Final Determination:
Ferrovanadium From the People's Republic of China, 67 FR 45088,
45092 (July 8, 2002). For further discussion, see the Concurrence
Memorandum.
---------------------------------------------------------------------------
Our general policy, consistent with section 773(c)(1)(B) of the
Act, is to value the factors of production that a respondent uses to
produce the subject merchandise. See Notice of Preliminary
Determination of Sales at Less Than Fair Value, Affirmative Preliminary
Determination of Critical Circumstances and Postponement of Final
Determination: Certain Frozen Fish Fillets from the Socialist Republic
of Vietnam, 68 FR 4986 (January 31, 2003).
If the NME respondent is an integrated producer, we take into
account the factors utilized in each stage of the production process.
For example, in the case of preserved canned mushrooms produced by a
fully integrated firm, the Department valued the factors used to grow
the mushrooms, the factors used to further process and preserve the
mushrooms, and any additional factors used to can and package the
mushrooms, including any used to manufacture the cans (if produced in-
house). If, on the other hand, the firm was not integrated, but simply
a processor that bought fresh mushrooms to preserve and can, the
Department valued the purchased mushrooms and not the factors used to
grow them. See the final results valuation memorandum for Final Results
of First New Shipper Review and First Antidumping Duty Administrative
Review: Certain Preserved Mushrooms From the People's Republic of
China, 66 FR 31204 (June 11, 2001). This policy has been applied to
both agricultural and industrial products. See, e.g., Persulfates Final
and Notice of Final Determinations of Sales at Less Than Fair Value:
Brake Drums and Brake Rotors From the People's Republic of China; 62 FR
9160 (February 28, 1997). Accordingly, our standard NME questionnaire
asks respondents to report the factors used in the various stages of
production.
There are, however, two limited exceptions to this general rule.
First, in some cases a respondent may report factors used to produce an
intermediate input that accounts for a small or insignificant share of
total output. The Department recognizes that, in those cases, the
increased accuracy in our overall calculations that would result from
valuing (separately) each of those factors may be so small so as to not
justify the burden of doing so. Therefore, in those situations, the
Department would value the intermediate input directly.
Second, in certain circumstances, it is clear that attempting to
value the factors used in a production process yielding an intermediate
product would lead to an inaccurate result because a significant
element of cost would not be adequately accounted for in the overall
factors buildup. For example, in a recent case, we addressed whether we
should value the respondent's factors used in extracting iron ore--an
input to its wire rod factory. The Department determined that, if it
were to use those factors, it would not sufficiently account for the
capital costs associated with the iron ore mining operation given that
the surrogate used for valuing production overhead did not have mining
operations. Therefore, because ignoring this important cost element
would distort the calculation, the Department declined to value the
inputs used in mining iron ore and valued the iron ore instead. See
Notice of Final Determination of Sales at Less Than Fair Value: Carbon
and Certain Alloy Steel Wire Rod From Ukraine, 67 FR 55785 (August 30,
2002); Final Determination of Sales at Less Than Fair Value: Certain
Hot-Rolled Carbon Steel Flat Products From the People's Republic of
China; 66 FR 49632 (September 28, 2001); Final Determination of Sales
at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate From
the People's Republic of China; 62 FR 61964 (November 20, 1997); and
Notice of Final Determination of Sales at Less Than Fair Value:
Furfuryl Alcohol From the People's Republic of China; 60 FR 22544 (May
8, 1995).
The petitioners have argued that the Department's policy is
inappropriate in this investigation because the surrogate producer from
which the financial ratios are derived is at a level of integration
which differs significantly from SVW's own. Given these circumstances,
the petitioners conclude that valuing each component would understate
factory overhead, SG&A expenses, and profit; instead, the petitioners
request that the Department begin its valuation at either the ultimate
or penultimate stage of the production process.
After analyzing this issue, we find that the facts on the record do
not warrant a departure from our normal practice, because we find that
SVW and the surrogate producer in question are at similar levels of
vertical integration. Therefore, we have valued the factors reported
for each self-produced input for purposes of the preliminary
determination. For further discussion, see the March 14, 2003,
memorandum
[[Page 13680]]
from the team to Susan Kuhbach, Acting Deputy Assistant Secretary for
Group 1, entitled ``Treatment of Self-Produced Inputs in the Less Than
Fair Investigation on Polyvinyl Alcohol from the People's Republic of
China.''
C. Factors of Production
For purposes of calculating NV, we valued PRC factors of
production, in accordance with section 773(c)(1) of the Act. Factors of
production include, but are not limited to: (1) Hours of labor
required; (2) quantities of raw materials employed; (3) amounts of
energy and other utilities consumed; and (4) representative capital
cost, including depreciation. In examining surrogate values, we
selected, where possible, the publicly available value which was: (1)
An average non-export value; (2) representative of a range of prices
within the POI or most contemporaneous with the POI; (3) product-
specific; and (4) tax-exclusive. For a more detailed explanation of the
methodology used in calculating various surrogate values, see the
memorandum entitled ``Preliminary Determination Factors Valuation
Memorandum,'' dated March 14, 2003 (the Factors Memorandum), on file in
the CRU.
In selecting the surrogate values, we considered the quality,
specificity, and contemporaneity of the data. As appropriate, we
adjusted input prices by including freight costs to make them delivered
prices. We added to Indian surrogate values surrogate freight costs
using the shorter of the reported distance from the domestic supplier
to the factory or the distance from the nearest seaport to the factory.
This adjustment is in accordance with the Court of Appeals for the
Federal Circuit's decision in Sigma Corporation v. United States, 117
F. 3d 1401, 1407-08 (Fed. Cir. 1997). For a discussion of the valuation
of SVW's freight costs, see the ``Export Price'' section of this
notice, above.
We valued acetic acid, d-tartaric acid, solid sodium hydroxide,
sodium hexametaphosphate, sodium nitrite, sulfuric acid, and zinc oxide
using Indian domestic market prices reported in Chemical Weekly
contemporaneous with the POI. We valued activated carbon,\10\
antioxidant, azodiisobutyronitrile, bacteria killer, hydroquinone,
liquid ammonia, liquid sodium hydroxide, monoethanolamine, n-butyl
acetate, polyferric sulfate, and sodium carbonate using India import
statistics as published by the Monthly Statistics of Foreign Trade of
India covering the period April 2001 through January 2002.
---------------------------------------------------------------------------
\10\ See the Factors Memorandum for discussion of our selection
of surrogate value data for activated carbon.
---------------------------------------------------------------------------
We valued natural gas using a price obtained from the website of
the Gas Authority of India Ltd., a supplier of natural gas in India,
covering the period January through June 2002. For further discussion,
see the Factors Memorandum.
To value paper bags and polyethylene plastic bags (i.e., the
packing materials reported by the respondent), we used import values
from the Monthly Statistics of Foreign Trade of India.
Regarding the remaining raw material factors of production reported
by SVW, we did not value these factors because: (1) Surrogate value
information was not available; and (2) the materials were reported as
used in very small amounts. Moreover, we did not value certain
treatment chemicals used in treated water in our calculation of NV.
Rather, we classified these treatment chemicals as part of factory
overhead, in order to avoid the possibility of double counting them.
See the Concurrence Memorandum.
Regarding electricity and steam, we valued each of the factors of
production reported by SVW for which we were able to obtain surrogate
value information (i.e., direct labor, compressed air, and steam coal)
using the regression-based wage rate from the Department's Import
Administration website, the input factors provided by SVW, and the
Monthly Statistics of Foreign Trade of India, respectively. We find
that it is appropriate to value SVW's energy inputs in this manner
given that the surrogate producer from which the factory overhead ratio
is derived also produces its own electricity and steam. For further
discussion on the valuation of electricity and steam, see the
Concurrence Memorandum and the Factors Memorandum.
We valued labor based on a regression-based wage rate, in
accordance with 19 CFR 351.408(c)(3).
To determine factory overhead, depreciation, SG&A expenses,\11\
interest expenses, and profit for the finished product, we relied on
rates derived from the financial statements of Jubilant Organosys Ltd.
(formerly VAM Organic Chemical Ltd.), an Indian producer of comparable
merchandise. We applied these ratios to SVW's costs (determined as
noted above) for materials, labor, and energy, prior to the offset for
the recovery of acetic acid. For further discussion, see the Factors
Memorandum. See also the March 14, 2003, memorandum from the team to
Susan Kuhbach entitled ``Treatment of Self-Produced Inputs in the Less
Than Fair Investigation on Polyvinyl Alcohol from the People's Republic
of China.''
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\11\ Because we believe that SG&A labor is not classified as
part of the SG&A costs reflected on Jubilant's financial statements,
we have accounted for SG&A labor hours by calculating a dollar-per-
MT labor hours amount and adding this amount to SG&A. For further
discussion, see the March 14, 2003, memorandum from the Team,
entitled ``U.S. Price and Factors of Production Adjustments for the
Preliminary Determination.''
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Finally, SVW reported that it generated certain by-products as a
result of the production of PVA or the inputs used to produce PVA.\12\
Because either SVW did not provide sufficient information to permit the
accurate valuation of these by-products or we were unable to obtain
appropriate surrogate value data for them, we did not value these by-
products for the preliminary determination. For further discussion, see
the Concurrence Memorandum.
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\12\ These by-products included alkynes gas, methyl acetate, and
PVA scrap.
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Verification
As provided in section 782(i) of the Act, we intend to verify all
information relied upon in making our final determination.
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 the PRC entered, or withdrawn from warehouse, for
consumption on or after the date of publication of this notice in the
Federal Register. Because the estimated weighted-average preliminary
dumping margin for SVW is de minimis, we are not directing the Customs
Service to suspend liquidation of entries of merchandise produced and
exported by SVW. We are also instructing the Customs Service to require
a cash deposit or the posting of a bond equal to the weighted-average
dumping margin for all entries of PVA from the PRC, except for entries
of this merchandise produced and exported by SVW. These suspension of
liquidation instructions will remain in effect until further notice.
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average
Manufacturer/exporter margin
(in
percent)
------------------------------------------------------------------------
Sinopec Sichuan Vinylon Works................................ 0.20
PRC-wide..................................................... 97.86
------------------------------------------------------------------------
[[Page 13681]]
The PRC-wide rate applies to all entries of the subject merchandise
except for entries from exporters/producers that are identified
individually above.
Disclosure
We will disclose the calculations performed within five days of the
date of publication of this notice to 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 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
seven days after the date of the final verification report issued in
this proceeding. Rebuttal briefs must be filed five days from the
deadline date for 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 30 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 by 135 days after the date of
this preliminary determination, pursuant to section 735(a)(2) of the
Act.
This determination is published pursuant to sections 733(f) and
777(i) of the Act.
Dated: March 14, 2003.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 03-6735 Filed 3-19-03; 8:45 am]
BILLING CODE 3510-DS-P