Polyvinyl Alcohol From Taiwan: Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination, 55552-55558 [2010-22776]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 75, Number 176 (Monday, September 13, 2010)]
[Notices]
[Pages 55552-55558]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-22776]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-841]


Polyvinyl Alcohol From Taiwan: Preliminary Determination of Sales 
at Less Than Fair Value and Postponement of Final Determination

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

SUMMARY: The U.S. Department of Commerce (the Department) preliminarily 
determines that sales of polyvinyl alcohol (PVA) from Taiwan are being, 
or are likely to be, sold in the United States at less than fair value 
(LTFV) as provided in section 733(b) of the Tariff Act of 1930, as 
amended (the Act). The estimated margins of sales at LTFV are listed in 
the ``Suspension of Liquidation'' section of this notice. Interested 
parties are invited to comment on this preliminary determination.
    Pursuant to requests from the respondent, we are postponing by 60 
days the final determination and extending provisional measures from a 
four-month period to not more than 6 months. Accordingly, we will make 
our final determination not later than 135 days after publication of 
this preliminary determination.

DATES: Effective Date: September 13, 2010

FOR FURTHER INFORMATION CONTACT: Thomas Schauer or Richard Rimlinger, 
AD/CVD Operations, Office 5, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
0410 or (202) 482-4477 respectively.

SUPPLEMENTARY INFORMATION: 

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Act or the 
Department's regulations, 19 CFR part 351, are to those provisions in 
effect on September 27, 2004, the date of initiation of this 
investigation.

Background

    On September 27, 2004, the Department initiated the antidumping 
duty investigation on PVA from Taiwan. See Initiation of Anti Dumping 
Duty Investigation: Polyvinyl Alcohol From Taiwan, 69 FR 59204 (October 
4, 2004) (Initiation Notice). On October 22, 2004, the International 
Trade Commission (ITC) made a preliminary determination that there was 
not a reasonable indication of injury due to imports of the subject 
merchandise. See Polyvinyl Alcohol From Taiwan, 69 FR 63177 (October 
29, 2004). As a result, the Department terminated the investigation.
    The petitioner appealed the negative ITC preliminary determination 
to the Court of International Trade (CIT). On remand from the CIT, the 
ITC reversed its preliminary determination and found instead that there 
was a reasonable indication of injury due to imports of the subject 
merchandise. The CIT affirmed the ITC's remand determination. See 
Celanese Chemicals, Ltd. v. United States, Slip Op. 08-125 (CIT 2008). 
DuPont, an importer of the subject merchandise, appealed the CIT's 
decision to the Court of Appeals for the Federal Circuit (CAFC). On 
December 23, 2009, the CAFC affirmed the ITC's decision. See Polyvinyl 
Alcohol From Taiwan; Determination, 75 FR 15726 (March 30, 2010). The 
ITC notified the Department of its affirmative determination in the 
preliminary phase of an antidumping duty investigation concerning 
imports of PVA from Taiwan on March 25, 2010. See letter from the ITC 
dated March 25, 2010. On April 20, 2010, the Department issued a 
decision memorandum which stated that the deadline for its preliminary 
determination is July 18, 2010. See memorandum to Laurie Parkhill dated 
April 20, 2010, at 10.
    On April 20, 2010, we issued the antidumping questionnaire to Chang 
Chun Petrochemical Co., Ltd. (CCPC). On May 24, 2010, we received a 
response to section A of our questionnaire from CCPC. On June 10, 2010, 
we received a response to sections B-D of our questionnaire from CCPC. 
We issued supplemental questionnaires to CCPC and received responses to 
these questionnaires from CCPC.
    On June 17, 2010, the petitioner requested that the Department 
postpone its preliminary determination by 50 days. In accordance with 
section 733(c)(1)(A) of the Act, we postponed our preliminary 
determination by 50 days. See Postponement of

[[Page 55553]]

Preliminary Determination of Antidumping Duty Investigation: Polyvinyl 
Alcohol From Taiwan, 75 FR 38079 (July 1, 2010).
    On July 22, 2010, and August 6, 2010, the petitioner submitted 
allegations that CCPC engaged in targeted dumping during the POI.
    On July 28, 2010, the petitioner amended the scope of the 
investigation and the definition of the domestic like product.
    On August 4, 2010, CCPC submitted comments on the scope of the 
investigation. On August 13, 2010, the petitioner submitted comments 
opposing CCPC's requested exclusions.
    On August 6, 2010, the petitioner submitted comments for 
consideration in the preliminary determination.
    On August 16, 2010, CCPC submitted comments on the petitioner's 
targeted-dumping allegations. On August 31, 2010, the petitioner 
submitted comments rebutting CCPC's arguments on the targeted-dumping 
allegations.
    On August 20, 2010, CCPC submitted a request that, in the event 
that the Department issues an affirmative preliminary antidumping 
determination, the Department should extend the final determination to 
the maximum of 135 days after the date of publication of the 
preliminary determination. CCPC also requested that, in the event that 
the Department issues an affirmative preliminary antidumping 
determination, the Department should extend the application of 
provisional measures by the corresponding period of extension in 
accordance with section 733(d) of the Act.
    On September 1, 2010, the petitioner submitted further comments 
regarding CCPC's reported physical characteristics.

Period of Investigation

    The period of investigation (POI) is July 1, 2003, through June 30, 
2004. This period corresponds to the four most recent fiscal quarters 
prior to the month of the filing of the petition, September 2004. See 
19 CFR 351.204(b)(1).

Scope of the 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. PVA 
in fiber form and PVB-grade low-ash PVA are not included in the scope 
of this investigation. PVB-grade low-ash PVA is defined to be PVA that 
meets the following specifications: Hydrolysis, Mole % of 98.40  0.40, 4% Solution Viscosity 30.00  2.50 centipois, 
and ash--ISE, wt% less than 0.60, 4% solution color 20mm cell, 10.0 
maximum APHA units, haze index, 20mm cell, 5.0, maximum. 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.

Scope Comments

    On July 28, 2010, the petitioner amended the scope of the petition 
and the definition of the domestic like product to exclude ``PVB-grade 
low-ash'' PVA, which it defined as ``PVA that meets the following 
specifications: Hydrolysis, Mole % of 98.40  0.40, 4% 
Solution Viscosity 30.00  2.50 centipois, and ash--ISE, wt% 
less than 0.60, 4% solution color 20mm cell, 10.0 maximum APHA units, 
haze index, 20mm cell, 5.0, maximum.'' See the petitioner's July 28, 
2010, submission. We have adopted the petitioner's amendment and the 
scope of the investigation, described above, reflects this amendment.
    On August 4, 2010, CCPC submitted comments on the scope of the 
investigation. Specifically, CCPC requested that the Department exclude 
15 categories of merchandise that the Department excluded from the 
scope of the antidumping duty orders on PVA from Japan and from the 
People's Republic of China. CCPC argues that these exclusions are 
appropriate because the three proceedings are virtually 
contemporaneous, because the petitioner still cannot manufacture these 
products, and because doing so would allow U.S. Customs and Border 
Protection (CBP) to administer the three antidumping duty orders on PVA 
consistently.
    On August 13, 2010, the petitioner submitted comments opposing 
CCPC's requested exclusions. The petitioner observes that the first 
product for which CCPC requested exclusion, PVA in fiber form, is 
already specifically excluded from the investigation. With respect to 
the remaining products, the petitioner states that CCPC's assertion 
that the petitioner cannot manufacture the products at issue is 
incorrect. The petitioner states that it has the competence to 
manufacture products that fall within or that are functionally 
equivalent to and commercially competitive with products that fall 
within all of CCPC's proposed exclusions that are at issue. The 
petitioner states that it is actively selling or developing markets for 
products that fall into several of these categories. The petitioner 
argues that its ability to compete in the domestic PVA market with 
products in any of these categories will be directly affected by dumped 
imports in these categories.
    Because the petitioner opposes CCPC's proposed exclusions and 
because the petitioner has stated that it is both actively developing 
and capable of producing PVA that is commercially competitive with 
products that fall within all of CCPC's proposed exclusions (with the 
exception of PVA in fiber form, which is already excluded from the 
investigation), we have not adopted the scope exclusions requested by 
CCPC.

Targeted-Dumping Allegation

    The statute allows the Department to employ the average-to-
transaction margin-calculation methodology under the following 
circumstances: (1) There is a pattern of export prices that differ 
significantly among purchasers, regions, or periods of time; (2) the 
Department explains why such differences cannot be taken into account 
using the average-to-average or transaction-to-transaction methodology. 
See section 777A(d)(1)(B) of the Act.
    On July 21, 2010, the petitioner submitted a timely allegation of 
targeted dumping with respect to CCPC and asserted that the Department 
should apply the average-to-transaction methodology in calculating the 
margin for CCPC. In its allegation, the petitioner asserts that there 
are patterns of export prices (EPs) for comparable merchandise that 
differ significantly among purchasers and regions. On August 6, 2010, 
the petitioner amended its allegation to assert that there are patterns 
of EPs for comparable merchandise that differ significantly among time 
periods. The petitioner relied on the Department's targeted-dumping 
test in Certain Steel Nails from the United Arab Emirates: Notice of 
Final Determination of Sales at Not Less Than Fair Value, 73 FR 33985 
(June 16, 2008), and Certain Steel Nails from the People's Republic of 
China: Final Determination of Sales at Less Than Fair Value and Partial 
Affirmative Determination of Critical Circumstances, 73 FR 33977 (June 
16, 2008) (collectively, Nails).
    Because our analysis includes business-proprietary information, for 
a full discussion see Memorandum to Susan Kuhbach entitled ``Less-Than-
Fair-Value Investigation on Polyvinyl Alcohol from Taiwan: Targeted

[[Page 55554]]

Dumping--Chang Chun Petrochemical Co., Ltd.,'' dated September 7, 2010 
(Targeted-Dumping Memo).

A. Targeted-Dumping Test

    We conducted customer, regional, and time-period targeted-dumping 
analyses for CCPC using the methodology we adopted in Nails as modified 
in Polyethylene Retail Carrier Bags From Taiwan: Preliminary 
Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination, 74 FR 55183 (October 27, 2009) (test unchanged in 
final; 75 FR 14569 (March 26, 2010)), to correct a ministerial error.
    The methodology we employed involves a two-stage test; the first 
stage addresses the pattern requirement and the second stage addresses 
the significant-difference requirement. See section 777A(d)(1)(B)(i) of 
the Act and Nails. In this test we made all price comparisons on the 
basis of identical merchandise (i.e., by control number or CONNUM). The 
test procedures are the same for the customer, region, and time-period 
targeted-dumping allegations. We based all of our targeted-dumping 
calculations on the U.S. net price which we determined for U.S. sales 
by CCPC in our standard margin calculations. For further discussion of 
the test and the results, see the Targeted-Dumping Memo.
    As a result of our analysis, we preliminarily determine that there 
is a pattern of EPs for comparable merchandise that differ 
significantly among certain customers and time periods for CCPC in 
accordance with section 777A(d)(1)(B)(i) of the Act and our practice as 
discussed in Nails.

B. Price-Comparison Method

    Section 777A(d)(1)(B)(ii) of the Act states that the Department may 
compare the weighted average of the normal value to EPs or constructed 
export prices (CEPs) of individual transactions for comparable 
merchandise if the Department explains why differences in the patterns 
of EPs and CEPs cannot be taken into account using the average-to-
average methodology. As described above, we have preliminarily 
determined that, with respect to sales by CCPC for certain customers 
and time periods, there was a pattern of prices that differ 
significantly. We find that these differences cannot be taken into 
account using the average-to-average methodology because the average-
to-average methodology conceals differences in the patterns of prices 
between the targeted and non-targeted groups by averaging low-priced 
sales to the targeted group with high-priced sales to the non-targeted 
group.
    Once we determine that the customer, regional, or time-period 
pattern-of-price differences are significant, our recent practice has 
been to apply the average-to-transaction methodology to all sales 
regardless of whether they are targeted. See, e.g., Polyethylene Retail 
Carrier Bags from Taiwan: Final Determination of Sales at Less Than 
Fair Value, 75 FR 14569 (March 26, 2010), and accompanying Issues and 
Decision Memorandum at Comment 1 (Taiwan Bags). Prior to the 
publication of Withdrawal of the Regulatory Provisions Governing 
Targeted Dumping in Antidumping Duty Investigations, 73 FR 74930 
(December 10, 2008) (Withdrawal of Regulations), however, the 
regulation in effect when we initiated this investigation, 19 CFR 
351.414(f)(2) (2004), specified that ``the Secretary normally will 
limit the application of the average-to-transaction methodology to 
those sales that constitute targeted dumping.''
    The use of the qualifier ``normally'' in 19 CFR 351.414(f)(2) 
(2004) indicates that we have the discretion to depart from limiting 
the application of the average-to-transaction methodology to those 
sales that constitute targeted dumping if we find it appropriate to do 
so. We preliminarily determine that such a departure is appropriate in 
this investigation. After this investigation was initiated, we withdrew 
this regulation because we recognized that the regulation ``may have 
established thresholds or other criteria that have prevented the use of 
this comparison methodology to unmask dumping, contrary to the 
Congressional intent.'' See Withdrawal of Regulations, 73 FR at 74931. 
We said further that ``{w{time} ithdrawal {of the regulation{time}  
will allow the Department to exercise the discretion intended by the 
statute and, thereby, develop a practice that will allow interested 
parties to pursue all statutory avenues of relief in this area.'' Id. 
Since the publication of Withdrawal of Regulations, we have refined our 
practice in cases involving targeted dumping. Specifically, ``if the 
criteria of section 777A(d)(1)(B) of the Act are satisfied, the 
Department will apply average-to-transaction comparisons for all sales 
in calculating the weighted-average dumping margin.'' See Taiwan Bags 
and accompanying Issues and Decision Memorandum at Comment 1.
    Accordingly, because 19 CFR 351.414(f)(2) (2004) gives us the 
discretion to depart from limiting the application of the average-to-
transaction methodology to only those sales that constitute targeted 
dumping and because we have developed a practice which better reflects 
Congressional intent, we have applied the average-to-transaction 
methodology to all U.S. sales that CCPC reported and have not offset 
any margins found.

Date of Sale

    Section 351.401(i) of the Department's regulations states that the 
Department normally will use the date of invoice, as recorded in the 
producer's or exporter's records kept in the ordinary course of 
business, as the date of sale. The regulation provides further that the 
Department may use a date other than the date of the invoice if the 
Secretary is satisfied that a different date better reflects the date 
on which the material terms of sale are established.
    CCPC reported that the essential terms of sale (i.e., price and 
quantity) were set on the date of the customer's order for both home-
market and U.S. sales. For home-market sales, CCPC reported the 
``customer-order entry date'' as the date of sale because home-market 
customers placed orders by telephone or online; as a result, there is 
no customer-order form and the date on which CCPC entered the order 
into its sales system is the closest date to when CCPC received the 
customer order. See CCPC's July 21, 2010, supplemental response at page 
8. For U.S. sales, CCPC was able to report the date of the customer 
order as the date of sale because U.S. customers placed order by fax or 
by e-mail. Id.
    We preliminarily determine that the material terms of sale are set 
on the invoice date for both home-market and U.S. sales. Although CCPC 
reported that the price and quantity did not change after the customer-
order date for either its home-market or U.S. sales, CCPC reported that 
other terms of sale, such as the product code, designated customer, or 
packing type, changed after the customer-order date with respect to a 
number of both home-market and U.S. sales. See CCPC's August 20, 2010, 
supplemental response at Exhibits 4 and 8. The record is not clear as 
to the extent that changes in product type or packing type have on 
price. The record does demonstrate that there are significantly 
different costs associated with different packing types. See CCPC's 
section B-D response dated June 10, 2010, at exhibits 13 and 18. 
Therefore, we are preliminarily treating these types of changes as 
changes to the essential terms of sale. Accordingly, we have 
preliminarily determined that the invoice date is the date of sale with 
respect to CCPC's home-market and U.S. sales.

Fair-Value Comparisons

    To determine whether sales of PVA to the United States by CCPC were 
made

[[Page 55555]]

at LTFV during the POI, we compared EP to normal value as described in 
the ``U.S. Price'' and ``Normal Value'' sections of this notice. As 
described in the ``Targeted-Dumping Allegation'' section, above, we 
made average-to-transaction comparisons for all of CCPC's reported 
sales and did not provide offsets for non-dumped comparisons.

Product Comparisons

    We have taken into account the comments that were submitted by the 
interested parties concerning product-comparison criteria. In 
accordance with section 771(16) of the Act, all products produced by 
the respondent that are covered by the description in the ``Scope of 
the Investigation'' section, above, and sold in the home market during 
the POI are considered to be foreign like product for purposes of 
determining appropriate product comparisons to U.S. sales. We have 
relied on eleven criteria to match U.S. sales of subject merchandise to 
home-market sales of the foreign like product: viscosity, molecular 
structure, hydrolysis, degree of modification, particle size, 
tackifier, defoamer, ash, color, volatiles, and visual impurities. 
Where there were no sales of identical merchandise in the home market 
made in the ordinary course of trade for comparison to U.S. sales, we 
matched U.S. sales to the next most similar foreign like product on the 
basis of the characteristics listed above.
    CCPC reported viscosity, hydrolysis, and degree of modification 
using ranges rather than specific values because, it explained, CCPC 
sells PVA by grades which are defined by ranges. See CCPC's July 7, 
2010, submission at pages 2-4. The petitioner has argued that the 
Department should require CCPC to code the product characteristics 
accurately and to assign the identical product-characteristic code to 
products that are identical with respect to the characteristic. 
According to the petitioner, the ranges CCPC used to report these 
characteristics include overlapping ranges, meaning that the different 
product codes could be employed for products with identical 
characteristics. As a result, the petitioner contends, products that 
are identical with respect to certain physical characteristics can be 
coded as different. The petitioner asserts that CCPC's reporting 
methodology prevents the Department from matching identical and most 
similar products accurately. The petitioner suggests that the 
Department use adverse facts available for CCPC's margin or collapse 
certain models for the preliminary determination.
    We preliminarily determine that it would be inappropriate to revise 
CCPC's codes for reporting viscosity, hydrolysis, or degree of 
modification. CCPC has stated that it produces and sells PVA on the 
basis of grades which are defined principally in terms of ranges of 
hydrolysis, viscosity, and polymerization. See CCPC's July 7, 2010, 
submission at page 2. CCPC also submitted evidence indicating that 
other PVA producers also sell PVA on the basis of grades. Id. at 
Exhibits 1 through 3. Furthermore, CCPC's ranges for these 
characteristics correspond to the definitions of the grades it produces 
and sells in its ordinary course of business. Compare CCPC's May 14, 
2010, section B response at pages 8-10 and its May 14, 2010, section C 
response at pages 39-40 with its product brochure at CCPC's May 14, 
2010, section A response at Exhibit 16.
    The petitioner does not dispute any of this. Rather, the 
petitioner's argument is based on the fact that certain ranges for 
viscosity overlap. As a preliminary matter, the ranges CCPC used to 
report hydrolysis and degree of modification do not overlap. 
Accordingly, with respect to these physical characteristics, the 
petitioner's concern about the assignment of different codes to 
identical products is not relevant.
    With respect to viscosity, while there is overlap between certain 
viscosity codes, there are specific viscosities for which a product 
would be within one range but not the other. For example, CCPC's code 
12 covers PVA with a viscosity of between 24 and 32 centipoises, code 
13 covers PVA with a viscosity of between 25 and 30 centipoises, and 
code 14 covers PVA with a viscosity of between 27 and 33 centipoises. 
See CCPC's May 14, 2010, section B response at pages 8-10 and its May 
14, 2010, section C response at pages 39-40. Thus, a sale of PVA with a 
viscosity between 27 and 30 centipoises could be assigned any three of 
these codes. By contrast, however, a sale of PVA with a centipoises of 
above 32 but below 33 could only be assigned a code of 14. While the 
petitioner is correct that the certificates of analysis which CCPC 
submitted indicate that the PVA corresponding to those certificates 
could be assigned any of these three codes, the petitioner based its 
argument on four certificates of analysis which CCPC submitted with its 
July 21, 2010, supplemental response. This is a very small sample in 
relation to the number of transactions CCPC submitted in its home-
market and U.S. sales databases. See CCPC's July 21, 2010, supplemental 
response at Exhibits 6 and 7.
    Furthermore, the record demonstrates that, with respect to certain 
grades of PVA which have overlapping viscosity codes, there are batches 
of these grades of PVA which could only be assigned one code but not 
another. For example, the first of the certificates of analysis CCPC 
submitted in Exhibit 5 of its July 21, 2010, supplemental response 
shows a grade which can only be assigned a particular viscosity code. 
If we were to adopt the petitioner's suggestion, we would collapse this 
viscosity code with another code, thus opening the possibility that we 
could treat non-identical merchandise as identical.
    Furthermore, although the petitioner raised the possibility that we 
could treat identical products as non-identical products, there is no 
evidence on the record showing that we would actually do so. The two 
grades on the four certificates of analysis which the petitioner cites 
could all conceivably be assigned the same viscosity code, but the 
hydrolysis values on these certificates of analysis demonstrate that 
these two grades must be assigned different hydrolysis codes. See 
CCPC's July 21, 2010, supplemental questionnaire at Exhibit 4. Thus, 
even if we collapsed these viscosity codes, these two grades would 
still not be identical merchandise.
    For the foregoing reasons, we preliminarily determine that it is 
not appropriate to modify CCPC's reported physical characteristics.

Export Price

    In accordance with section 772(a) of the Act, we used EP for CCPC's 
U.S. sales because the subject merchandise was sold directly to 
unaffiliated customers in the United States prior to importation. As 
described in the ``Targeted-Dumping Allegation'' section, above, we 
compared transaction-specific EPs to the weighted-average normal 
values.
    We calculated EP based on the packed price to unaffiliated 
purchasers in the United States. We made deductions for movement 
expenses in accordance with section 772(c)(2)(A) of the Act. See 
memorandum to the file entitled ``Preliminary Determination of Sales at 
Less Than Fair Value in the Antidumping Duty Investigation of Polyvinyl 
Alcohol from Taiwan--Analysis Memorandum for Chang Chun Petrochemical 
Co., Ltd.'' dated September 7, 2010 (Analysis Memo), for additional 
information.

[[Page 55556]]

Normal Value

A. Home-Market Viability and Comparison-Market Selection

    To determine whether there is a sufficient volume of sales in the 
home market to serve as a viable basis for calculating normal value 
(i.e., the aggregate volume of home-market sales of the foreign like 
product is equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared each respondent's volume of home-
market sales of the foreign like product to its volume of U.S. sales of 
the subject merchandise. See section 773(a)(1)(B) of the Act. Based on 
this comparison, we have preliminarily determined that CCPC had a 
viable home market during the POI. Consequently, we based normal value 
on home-market sales in accordance with section 773(a)(1)(B) of the 
Act.

B. Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine normal value based on sales in the comparison 
market at the same level of trade as the EP sales in the U.S. market. 
Pursuant to 19 CFR 351.412(c)(1), the normal-value level of trade is 
based on the starting price of the sales in the comparison market or, 
when normal value is based on constructed value, the starting price of 
the sales from which we derive selling, general and administrative 
expenses and profit. For EP sales, the U.S. level of trade is based on 
the starting price of the sales in the U.S. market, which is usually 
from the exporter to the importer.
    To determine whether comparison-market sales are at a different 
level of trade than EP sales, we examine stages in the marketing 
process and selling functions along the chain of distribution between 
the producer and the unaffiliated customer. See 19 CFR 351.412(c)(2). 
If the comparison-market sales are at a different level of trade and 
the difference affects price comparability, as manifested in a pattern 
of consistent price differences between the sales on which normal value 
is based and the comparison-market sales at the level of trade of the 
export transaction, we make a level-of-trade adjustment under section 
773(a)(7)(A) of the Act. See Notice of Final Determination of Sales at 
Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate From 
South Africa, 62 FR 61731, 61733 (November 19, 1997).
    In this investigation, we obtained information from CCPC regarding 
the marketing stages involved in making its reported home-market and 
U.S. sales, including a description of the selling activities the 
respondent performed for each channel of distribution.
    During the POI, CCPC reported that it sold PVA in the home market 
through a single channel of distribution. We found that the selling 
activities associated with all sales through this channel of 
distribution did not differ. Accordingly, we found that the home-market 
channel of distribution constituted a single level of trade.
    CCPC reported that its EP sales were made to distributors through a 
single channel of distribution. We found that the selling activities 
associated with all sales through this channel of distribution did not 
differ. Accordingly, we found that the EP channel of distribution 
constituted a single level of trade. We found that the EP level of 
trade was identical to the home-market level of trade in terms of 
selling activities. Thus, we matched CCPC's EP sales at the same level 
of trade in the home market and made no level-of-trade adjustment. See 
Analysis Memo.

C. Cost of Production

    Based on our analysis of an allegation contained in the petition, 
we found that there were reasonable grounds to believe or suspect that 
sales of PVA in the home market were made at prices below their cost of 
production (COP). Accordingly, pursuant to section 773(b) of the Act, 
we initiated a countrywide sales-below-cost-investigation to determine 
whether sales were made at prices below their respective COP (see 
Initiation Notice, 69 FR at 59206).
1. Calculation of Cost of Production
    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of the cost of materials and fabrication for the 
foreign like product plus an amount for selling, general and 
administrative expenses (SG&A), financial expenses, and comparison-
market packing costs (see the ``Test of Comparison-Market Sales 
Prices'' section below for treatment of home-market selling expenses 
and packing costs). We relied on the COP data submitted by CCPC with 
one exception: We increased the reported general and administrative 
(G&A) expenses to include a non-operating expense line-item from the 
financial statements, ``loss on work stoppages.'' This expense is 
associated with a temporary shutdown of CCPC's operations for its 
copper foil division. See Memorandum to Neal Halper from Ernest Gziryan 
entitled ``Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Determination--Chang Chun Petrochemical 
Co. Ltd.,'' dated September 7, 2010.
2. Test of Home-Market Sales Prices
    On a product-specific basis, we compared the adjusted weighted-
average COP to the home-market sales of the foreign like product, as 
required under section 773(b) of the Act, to determine whether the 
sales were made at prices below the COP. For purposes of this 
comparison, we used the COP exclusive of selling and packing expenses. 
The prices were adjusted for discounts and were exclusive of any 
applicable movement charges, direct and indirect selling expenses, and 
packing expenses, adjusted as discussed below.
3. Results of the COP Test
    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20 
percent of the respondent's sales of a given product are at prices less 
than the COP, we do not disregard any below-cost sales of that product 
because we determine that the below-cost sales were not made in 
``substantial quantities.'' Where 20 percent or more of the 
respondent's sales of a given product during the POI were at prices 
less than COP, we determine that such sales have been made in 
``substantial quantities'' and, thus, we disregard below-cost sales. 
See section 773(b)(2)(C) of the Act. Further, we determine that the 
sales were made within an extended period of time, in accordance with 
section 773(b)(2)(B) of the Act, because we examine below-cost sales 
occurring during the entire POI. In such cases, because we compare 
prices to POI-average costs, we also determine that such sales were not 
made at prices which would permit recovery of all costs within a 
reasonable period of time in accordance with section 773(b)(2)(D) of 
the Act.
    In this case, we found that, for certain specific products, more 
than 20 percent of CCPC's home-market sales were at prices less than 
the COP and, in addition, such sales did not provide for the recovery 
of costs within a reasonable period of time. Therefore, we disregarded 
these sales and used the remaining sales as the basis for determining 
normal value in accordance with section 773(b)(1) of the Act.

D. Calculation of Normal Value Based on Home-Market Prices

    We based normal value on packed, delivered prices to unaffiliated 
customers in the home market.
    The petitioner has argued that the Department should remove 
``transport'' sales from the home-market sales

[[Page 55557]]

database. Transport sales occur when the transportation company is 
responsible for any loss during the shipment from CCPC's factory to the 
customer; the transportation company will compensate the customer for 
the loss of product by purchasing an equal amount of the product from 
CCPC and delivering the replacement product to the customer. See CCPC's 
July 21, 2010, supplemental response at 20. The petitioner contends 
that these transactions are not really sales but are reimbursement by 
the transportation company for lost product.
    We preliminarily determine that these transactions are sales. Any 
reimbursement is between the transportation company and the original 
customer. From CCPC's point of view, it made a sale to the original 
customer and then made a sale to a transport company and it gets 
compensated for both. Accordingly, we have not removed these sales from 
our analysis. See Analysis Memo.
    We made an adjustment to the starting price, where appropriate, for 
discounts in accordance with 19 CFR 351.401(c). We made deductions, 
where appropriate, for movement expenses under section 773(a)(6)(B)(ii) 
of the Act.
    Pursuant to section 773(a)(6)(C)(iii) of the Act, we made 
circumstance-of-sale adjustments by deducting home-market direct 
selling expenses from, and adding U.S. direct selling expenses to, 
normal value. See also 19 CFR 351.410.
    We made an adjustment to CCPC's reported credit expense for certain 
U.S. sales where the customer paid by letter of credit and CCPC 
``negotiated with the paying banks for earlier release of customer 
payments with interest.'' See CCPC's July 21, 2010, supplemental 
response at page 33. CCPC reported the date of payment, which it used 
to calculate imputed credit expenses, for such sales based on when it 
received funds from the bank. Id. at page 20. We preliminarily 
determine that it is appropriate to use the date when the customer 
actually paid as the date of payment. Although CCPC received funds from 
the customer's bank at an earlier date, it had to pay interest to the 
customer's bank for early release of the funds. Id. at page 33. Thus, 
this is essentially a loan transaction between CCPC and the customer's 
bank; CCPC's customer is not involved. Indeed, CCPC acknowledges that 
its customers did not pay earlier than the payment terms prescribed. 
Id. Because the circumstance-of-sale adjustment to normal value for 
imputed credit expenses is meant to capture differences in the credit 
terms a respondent extends its customers in different markets, it is 
appropriate to use the date that the customer actually paid as the date 
of payment rather than the date on which CCPC negotiated a loan with 
the customer's bank. Accordingly, where CCPC's reported payment date 
for these U.S. sales were less than the payment terms prescribed, we 
have revised the payment date to match the prescribed payment terms and 
have recalculated imputed credit expenses accordingly.
    We made adjustments for differences in cost attributable to 
differences in physical characteristics of the merchandise pursuant to 
section 773(a)(6)(C)(ii) of the Act. We deducted the costs of home-
market packing materials from and added U.S. packing costs to normal 
value in accordance with sections 773(a)(6)(A) and (B) of the Act.
    The Department's regulations at 19 CFR 351.401(g)(1) provide that 
the Department may consider allocated expenses where the Department 
``is satisfied that the allocation methodology does not cause 
inaccuracies or distortions.'' We preliminarily determine that CCPC's 
reported allocation of its packing-labor expense is unreasonably 
distortive because CCPC allocated packing labor equally to all sales 
even though U.S. sales are generally packed using many more packing 
materials (and, therefore, presumably require more time to pack) than 
home-market sales. See CCPC's questionnaire response dated June 10, 
2010, at exhibits 13 and 18. CCPC has admitted that it ``incurred its 
packing expenses solely based on outside packing labor's overall time 
performed.'' See CCPC's August 20, 2010, supplemental response at page 
4. Despite our two requests of CCPC to recalculate packing labor to 
reflect differences in labor time associated with different packing 
types, CCPC has failed to do so. See CCPC's July 21, 2010, response at 
page 25 and CCPC's August 20, 2010, supplemental response at pages 3-4. 
CCPC asserts that its allocation is accurate because it incurred 
packing expenses based on time ``regardless of the packing types and 
markets of polyvinyl alcohol.'' See CCPC's August 20, 2010, 
supplemental response at page 4. While it may be true that there is no 
difference in the per-hour rate charged by the providers of the packing 
service based on market or packing type, U.S. sales are packed using 
many more packing materials than home-market sales; we commented in our 
supplemental questionnaire that, as a result, it would presumably mean 
that it would take more time to pack U.S. sales than home-market sales. 
CCPC did not address this comment in its response. Id. at pages 3-4.
    As a result of CCPC's allocation, we preliminarily determine that 
the reported packing labor for U.S. sales is understated while the 
reported packing labor for home-market sales is overstated. Each of 
these distortions has the effect of reducing the dumping margin.
    Section 776(a)(1)(A) of the Act provides that the Department may 
use the facts available if necessary information is not available on 
the record. Because CCPC did not provide a reasonable allocation 
methodology to account for the difference in packing times, we have 
preliminarily determined that the use of facts available with respect 
to CCPC's packing-labor expenses is warranted.
    Section 776(b) of the Act provides that the Department may use an 
adverse inference when using the facts available when a respondent has 
not acted to the best of its ability to provide necessary information. 
Because CCPC did not provide a reasonable allocation methodology to 
account for the difference in packing times despite our multiple 
requests to do so, we have preliminarily determined that an adverse 
inference with respect to CCPC's packing-labor expenses is warranted. 
Accordingly, as adverse facts available, we have denied CCPC's claimed 
packing-labor adjustment for home-market sales and we have allocated 
all of CCPC's packing-labor expenses to export sales. Because we are 
using the actual expenses and shipments reported by CCPC rather than 
secondary information, corroboration under section 776(c) of the Act is 
not necessary.

Currency Conversion

    It is our normal practice to make currency conversions into U.S. 
dollars in accordance with section 773A(a) of the Act based on exchange 
rates in effect on the dates of the U.S. sales, as certified by the 
Federal Reserve Bank. We have converted all prices, costs, expenses, 
and adjustments denominated in Taiwan dollars into U.S. dollars in 
accordance with our normal practice.

Verification

    As provided in section 782(i)(1) of the Act, we intend to verify 
the information upon which we will rely in making our final 
determination for CCPC.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we will direct CBP 
to suspend liquidation of all entries of PVA from Taiwan that are 
entered, or

[[Page 55558]]

withdrawn from warehouse, for consumption on or after the date of 
publication of this notice in the Federal Register. We will instruct 
CBP to require a cash deposit or the posting of a bond equal to the 
weighted-average margins, as indicated below, as follows: (1) The rate 
for CCPC will be the rate we have determined in this preliminary 
determination; (2) if the exporter is not a firm identified in this 
investigation but the producer is, the rate will be the rate 
established for the producer of the subject merchandise; (3) the rate 
for all other producers or exporters will be 3.02 percent, as discussed 
in the ``All-Others Rate'' section, below. These suspension-of-
liquidation instructions will remain in effect until further notice.

------------------------------------------------------------------------
                                                             Weighted-
                  Manufacturer/exporter                   average margin
                                                             (percent)
------------------------------------------------------------------------
Chang Chun Petrochemical Co., Ltd.......................            3.02
All Others..............................................            3.02
------------------------------------------------------------------------

All-Others Rate

    Section 735(c)(5)(A) of the Act provides that the estimated all-
others rate shall be an amount equal to the weighted average of the 
estimated weighted-average dumping margins established for exporters 
and producers individually investigated excluding any zero or de 
minimis margins and any margins determined entirely under section 776 
of the Act. CCPC is the only respondent in this investigation for which 
the Department has calculated a company-specific rate. Therefore, for 
purposes of determining the all-others rate and pursuant to section 
735(c)(5)(A) of the Act, we are using the weighted-average dumping 
margin calculated for CCPC, 3.02 percent. See, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value: Stainless Steel Sheet 
and Strip in Coils From Italy, 64 FR 30750, 30755 (June 8, 1999), and 
Coated Free Sheet Paper from Indonesia: Notice of Preliminary 
Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination, 72 FR 30753, 30757 (June 4, 2007) (unchanged in 
Notice of Final Determination of Sales at Less Than Fair Value: Coated 
Free Sheet Paper from Indonesia, 72 FR 60636 (October 25, 2007)).

Disclosure

    We will disclose the calculations performed in our preliminary 
determination to interested 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 preliminary affirmative determination. If the Department's 
final determination is affirmative, the ITC will determine within 75 
days after the date of that affirmative determination whether imports 
of PVA from Taiwan are materially injuring, or threatening material 
injury to, the U.S. industry (see section 735(b)(3) of the Act).

Public Comment

    Interested parties are invited to comment on the preliminary 
determination. Interested parties may submit case briefs to the 
Department no later than seven days after the date of the issuance of 
the last verification report in this proceeding. See 19 CFR 351.309(c). 
Rebuttal briefs, the content of which is limited to the issues raised 
in the case briefs, must be filed within five days from the deadline 
date for the submission of case briefs. See 19 CFR 351.309(d). A list 
of authorities used, a table of contents, and an executive summary of 
issues should accompany any briefs submitted to the Department. See 19 
CFR 351.309(c)(2). Executive summaries should be limited to five pages 
total, including footnotes. Further, we request that parties submitting 
briefs and rebuttal briefs provide the Department with a copy of the 
public version of such briefs on diskette.
    In accordance with section 774 of the Act, the Department will hold 
a public hearing, if timely requested, to afford interested parties an 
opportunity to comment on issues raised in case briefs, provided that 
such a hearing is requested by an interested party. See also 19 CFR 
351.310. If a timely request for a hearing is made in this 
investigation, we intend to hold the hearing two days after the 
deadline for filing a rebuttal brief at the U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230, at a time and in a room to be determined. Parties should confirm 
by telephone the date, time, and location of the hearing 48 hours 
before the scheduled date.
    Interested parties who wish to request a hearing, or to participate 
in a hearing if one is requested, must submit a written request to the 
Assistant Secretary for Import Administration, U.S. Department of 
Commerce, Room 1870, within 30 days of the publication of this notice. 
Requests should contain the following: (1) The party's name, address, 
and telephone number; (2) a list of participants; (3) a list of the 
issues to be discussed. See 19 CFR 351.310(c). At the hearing, oral 
presentations will be limited to issues raised in the briefs.

Postponement of Final Determination and Extension of Provisional 
Measures

    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. Section 351.210(e)(2) of the Department's regulations 
requires 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 August 20, 2010, CCPC requested that, in the event of an 
affirmative preliminary determination in this investigation, the 
Department postpone its final determination by 60 days. At the same 
time, CCPC requested that the Department extend the application of the 
provisional measures prescribed under section 733(d) of the Act and 19 
CFR 351.210(e)(2) from a four-month period to a six-month period. In 
accordance with section 735(a)(2) of the Act and 19 CFR 351.210(b)(2), 
because (1) our preliminary determination is affirmative, (2) the 
requesting exporter accounts for a significant proportion of exports of 
the subject merchandise, and (3) no compelling reasons for denial 
exist, we are granting this request and are postponing the final 
determination until no later than 135 days after the publication of 
this notice in the Federal Register. Suspension of liquidation will be 
extended accordingly.
    This determination is issued and published pursuant to sections 
733(f) and 777(i)(1) of the Act.

    Dated: September 7, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-22776 Filed 9-10-10; 8:45 am]
BILLING CODE 3510-DS-P