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NOTICES
DEPARTMENT OF COMMERCE
[C-122-815]
Pure Magnesium and Alloy Magnesium From Canada; Preliminary Results of
Countervailing Duty Administrative Reviews
Monday, October 7, 1996
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AGENCY: Import Administration, International Trade Administration, Department of Commerce.
ACTION: Notice of preliminary results of countervailing duty administrative reviews.
SUMMARY: The Department of Commerce (the Department) is conducting
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administrative reviews of the countervailing duty orders on pure and alloy magnesium from Canada. We
preliminarily determine the net subsidy to be 4.01 percent ad valorem for Norsk Hydro Canada Inc. (NHCI) for the
period January 1, 1994 through December 31, 1994. If the final results of these reviews remain the same as these preliminary
results, the Department will instruct the U.S. Customs Service to assess countervailing duties as indicated above.
EFFECTIVE DATE: October 7, 1996.
FOR FURTHER INFORMATION CONTACT: Cynthia Thirumalai, AD/CVD Enforcement, Group 1, Office 1, Import
Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution
Avenue, N.W., Washington, D.C. 20230; telephone: (202) 482-4087.
Background
On August 1, 1995, the Department published in the Federal Register a notice of "Opportunity to Request an Administrative
Review" (60 FR 39151) of the countervailing duty orders on pure and alloy magnesium from Canada (57 FR
39392 (August 31, 1992)). On August 16, 1995, Norsk Hydro Canada Inc. requested that the Department conduct
administrative reviews of the
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countervailing duty orders. We initiated the reviews for the period January 1, 1994 through December 31, 1994, on
September 15, 1995 (60 FR 47931). (See also Period of Review section below.)
On September 25, 1995, the Department issued questionnaires to NHCI, the Government of Canada (GOC), and the
Government of Que1bec (GOQ). On October 10, 1995, the GOQ requested the Department re-issue its questionnaire,
specifically identifying the sections meant to be answered by the GOQ. On October 17, 1995, the Department re-issued its
questionnaire to the GOQ. The Department received questionnaire responses from NHCI, the GOC, and the GOQ on January
29, 1996.
On August 15, 1996, the Department issued a supplemental questionnaire to the GOQ, and, on August 20, 1996, the
Department issued a supplemental questionnaire to NHCI. The Department received questionnaire responses from the GOQ
and NHCI on September 10, 1996.
Applicable Statute and Regulations
The Department is conducting these administrative reviews in accordance with section 751(a) of the Tariff Act of 1930, as
amended by the Uruguay Round Agreements Act (the Act). Unless otherwise indicated, all citations to the statute are
references to the provisions of the Act. References to the
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Department's Countervailing Duties; Notice of Proposed Rulemaking and Request for Public Comments, 54 FR 23366
(May 31, 1989) (Proposed Regulations), are provided solely for further explanation of the Department's countervailing
duty practice. Although the Department has withdrawn the particular rulemaking proceeding pursuant to which the
Proposed Regulations were issued, the subject matter of these regulations is being considered in connection with an ongoing
rulemaking proceeding which, among other things, is intended to conform the Department's regulations to the Uruguay
Round Agreements Act (URAA). See 60 FR 80 (January 3, 1995).
Scope of the Review
The products covered by these reviews are pure and alloy magnesium from Canada. Pure magnesium
contains at least 99.8 percent magnesium by weight and is sold in various slab and ingot forms and sizes.
Magnesium alloys contain less than 99.8 percent magnesium by weight with magnesium being the largest
metallic element in the alloy by weight, and are sold in various ingot and billet forms and sizes. Secondary and granular
magnesium are not included. Pure and alloy magnesium are currently provided for in subheadings 8104.11.0000
and 8104.19.0000, respectively, of the Harmonized Tariff Schedule (HTS). Although the HTS subheadings are provided for
convenience and Customs purposes,
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our written descriptions of the scopes of these proceedings is dispositive.
Period of Review
For purposes of calculating the net subsidy, the period of review (POR) is January 1, 1994 through December 31, 1994. NHCI
accounted for all exports of subject merchandise during the period of review.
Analysis of Programs
I. Programs Previously Determined To Confer Subsidies
1. Exemption From Payment of Water Bills
Pursuant to a December 15, 1988 agreement between NHCI and La Socie1te1 du Parc Industriel et Portuaire de Be1cancour
(Industrial Park), NHCI is exempt from payment of its water bills. Except for the taxes associated with its bills, NHCI does not
pay the invoiced amounts of its water bills.
In the Final Affirmative Countervailing Duty Determinations: Pure Magnesium and Alloy Magnesium from
Canada (Magnesium from Canada) 57 FR 30948 (July 13, 1992), the Department determined that the exemption
received by NHCI was
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limited to a specific enterprise or industry, or group of enterprises or industries because no other company receives such an
exemption. In this review, neither the GOQ nor NHCI provided new information which would warrant reconsideration of this
determination.
We preliminarily determine the countervailable benefit to be the amount NHCI would have paid absent the exemption. To
calculate the benefit under this program, we divided the amount NHCI would have paid for water during the POR by NHCI's
total POR sales of Canadian-manufactured *52436
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products. On this basis, we preliminarily determine that the net subsidy provided by this program is 0.58 percent ad
valorem.
2. Article 7 Grants from the Que1bec Industrial Development Corporation
The Socie1te1 de De1veloppement Industriel du Que1bec (SDI) administers development programs on behalf of the GOQ. SDI
provides assistance under Article 7 of the SDI Act in the form of loans, loan guarantees, grants, assumptions of costs
associated with loans, and equity investments. This assistance involves projects capable of having a major impact upon the
economy of Que1bec. Article 7 assistance greater than 2.5 million dollars must be approved by the Council of Ministers, and
assistance over 5 million dollars becomes a separate budget item under Article 7. Assistance provided in such
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amounts must be of "special economic importance and value to the province." (See Magnesium from Canada, 57 FR
30949 (July 13, 1992).)
In 1988, NHCI was awarded a grant under Article 7 to cover a large percentage of the cost of certain environmental
protection equipment. In Magnesium from Canada, we determined that NHCI received a disproportionately large
share of assistance under Article 7. On this basis, we determined that the Article 7 grant was limited to a specific enterprise
or industry, or group of enterprises or industries. In this review, neither the GOQ nor NHCI provided new information which
would warrant reconsideration of this determination.
For the reasons set forth in Magnesium from Canada, we preliminarily determine that the grant provided under
Article 7 was non-recurring because it represented a one-time provision of funds. (61 FR 11186 (March 19, 1996).)
We calculated the benefit from the grant received by NHCI using the company's cost of long-term, fixed-rate debt as the
discount rate and our declining balance methodology, consistent with 355.49 of the Proposed Regulations. We divided that
portion of the benefit allocated to the POR by NHCI's total sales of Canadian-manufactured products. (See the Allocation
Methodology section below regarding the selection of the allocation period.) We preliminarily determine the net subsidy to
be 3.43 percent ad valorem for NHCI.
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II. Programs Preliminarily Found Not To Be Used
We preliminarily find that NHCI did not apply for or receive benefits under the following programs during the POR: St.
Lawrence River Environment Technology Development Program, Program for Export Market Development, the Export
Development Corporation, Canada-Que1bec Subsidiary Agreement on the Economic Development of the Regions of
Que1bec, Opportunities to Stimulate Technology Programs, Development Assistance Program, Industrial Feasibility Study
Assistance Program, Export Promotion Assistance Program, Creation of Scientific Jobs in Industries, Business Investment
Assistance Program, Business Financing Program, Research and Innovation Activities Program, Export Assistance Program,
Energy Technologies Development Program, and Transportation Research and Development Assistance Program.
Allocation Methodology
In the past, the Department has relied upon information from the U.S. Internal Revenue Service on the industry-specific
average useful life of assets in determining the allocation period for non-recurring grant benefits. (See General Issues
Appendix appended to Final Countervailing Duty Determination; Certain Steel Products from Austria (58 FR 37063,
37226 (July 9, 1993)).)
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However, in British Steel plc. v. United States, 879 F. Supp. 1254 (CIT 1995) (British Steel), the U.S. Court of International
Trade (the Court) ruled against this allocation methodology. In accordance with the Court's remand order, the Department
calculated a company-specific allocation period for non- recurring subsidies based on the average useful life (AUL) of
non-renewable physical assets. This remand determination was affirmed by the Court on June 4, 1996 (British Steel, 929 F.
Supp. 426, 439 (CIT 1996)).
The Department has decided to acquiesce to the Court's decision and, as such, we intend to determine the allocation period
for non-recurring subsidies using company-specific AUL data where reasonable and practicable. Specifically, the Department
has preliminarily determined that it is reasonable and practicable to allocate all new non-recurring subsidies (i.e., subsidies
that have not yet been assigned an allocation period) based on a company- specific AUL. However, if a subsidy has already
been countervailed based on an allocation period established in an earlier segment of the proceeding, it does not appear
reasonable or practicable to reallocate that subsidy over a different period of time. In other words, since the
countervailing duty rate in earlier segments of the proceeding was calculated based on a certain allocation period and
resulting benefit stream, redefining the allocation period in later segments of the proceeding would entail taking the original
grant amount and creating an entirely new benefit stream for that grant. Such
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a practice may lead to an increase or decrease in the amount countervailed and, thus, would result in the possibility of
over-countervailing or under- countervailing the actual benefit. The Department has preliminarily determined that a more
reasonable and accurate approach is to continue using the allocation period first assigned to the subsidy. We invite the
parties to comment on the selection of this methodology and provide any other reasonable and practicable approaches for
complying with the Court's ruling.
In the current review, there are no new non-recurring grant subsidies. The non-recurring grant under review was provided
prior to the POR; the allocation period for the grant was established during prior segments of these proceedings. Therefore,
for purposes of these preliminary results, the Department is using the original allocation period assigned to the grant.
Preliminary Results of Review
We preliminarily determine the net subsidy for the period January 1, 1994 through December 31, 1994, to be 4.01 percent ad
valorem.
Because the URAA replaced the general rule in favor of a country-wide rate with a general rule in favor of individual rates for
investigated and reviewed companies, the procedures for establishing countervailing duty rates, including those for
non-reviewed companies, are now essentially the same as those in
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antidumping cases, except as provided for in section 777A(e)(2)(B) of the Act. The requested review will normally cover
only those companies specifically named. See section 355.22(a) of the Interim Regulations. Pursuant to 19 CFR 355.22(g), for
all companies for which a review was not requested, duties must be assessed at the cash deposit rate, and cash deposits must
continue to be collected, at the rate previously ordered. As such, the countervailing duty cash deposit rate applicable
to a company can no longer change, except pursuant to a request for a review of that company. See Federal-Mogul
Corporation and The Torrington Company v. United States, 822 F.Supp. 782 (CIT 1993) and Floral Trade Council v. United
States, 822 F.Supp. 766 (CIT 1993) (interpreting 19 CFR 353.22(e), the antidumping regulation on automatic assessment,
which is identical to 19 CFR 355.22(g)). Therefore, the case deposit rates for all *52437
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companies except those covered by this review will be unchanged by the results of this review.
We will instruct Customs to continue to collect cash deposits for non- reviewed companies at the most recent
company-specific or country-wide rate applicable to the company. Accordingly, the cash deposit rates that will be applied to
non-reviewed companies, except Timminco Limited (which was excluded from the order during the original investigation),
covered by this order are those established in the most recently completed administrative proceeding. See 57 FR 30946.
These rates shall apply to all non-reviewed companies until a
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review of a company assigned these rates is requested. In addition, for the period January 1, 1994 through December 31,
1994, the assessment rates applicable to all non-reviewed companies covered by this order are the cash deposit rates in
effect at the time of entry.
If the final results of these reviews remain the same as these preliminary results, the Department intends to instruct the
Customs Service to assess countervailing duties at 4.01 percent of the F.O.B. invoice price on all shipments by NHCI of
the subject merchandise, exported on or after January 1, 1994 and on or before December 31, 1994. The Department also
intends to instruct the Customs Service to collect a cash deposit of 4.01 percent on all shipments by NHCI of the subject
merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of
these administrative reviews.
Public Comment
Parties to these proceedings may request disclosure of the calculation methodology and interested parties may request a
hearing not later than 10 days after the date of publication of this notice. Interested parties may submit written arguments in
case briefs on these preliminary results within 30 days of the date of publication. Rebuttal briefs, limited to arguments raised
in case
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briefs, may be submitted seven days after the time limit for filing the case brief. Parties who submit an argument in this
proceeding are requested to submit with the argument (1) a statement of the issue, and (2) a brief summary of the argument.
Any hearing, if requested, will be held seven days after the scheduled date for submission of rebuttal briefs. Copies of case
briefs and rebuttal briefs must be served on interested parties in accordance with section 355.38 of the Department's Interim
Regulations.
Representatives of parties to the proceeding may request disclosure of proprietary information under administrative
protective order no later than 10 days after the representative's client or employer becomes a party to the proceeding, but in
no event later than the date the case briefs, under 19 CFR 355.38, are due.
The Department will publish the final results of these administrative reviews, including the results of its analysis of issues
raised in any case or rebuttal briefs or at a hearing, within 120 days of publication of this notice, according to 19 CFR
355.22(c)(7).
This administrative review and notice are in accordance with section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)).
Dated: September 25, 1996.
Robert S. LaRussa,
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Acting Assistant Secretary for Import Administration.
[FR Doc. 96-25646 Filed 10-4-96; 8:45 am]
BILLING CODE 3510-DS-P