Pure and Alloy Magnesium From Canada; Final Results of the Fifth (1996) Countervailing Duty Administrative Reviews

DEPARTMENT OF COMMERCE

International Trade Administration

[C-122-815]

Pure and Alloy Magnesium From Canada; Final Results of the Fifth

(1996) Countervailing Duty Administrative Reviews

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of countervailing duty administrative

reviews.

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SUMMARY: On April 30, 1998, the Department of Commerce (the Department)

published in the Federal Register its preliminary results of the fifth

administrative reviews of the countervailing duty orders on pure and

alloy magnesium from Canada covering the period January 1, 1996 through

December 31, 1996 (see Pure Magnesium and Alloy Magnesium From Canada;

Preliminary Results of the Fifth Countervailing Duty Administrative

Reviews (Preliminary Results), 63 FR 23728). We have completed these

reviews and determine the net subsidy in each to be 2.78 percent ad

valorem for Norsk Hydro Canada, Inc. (NHCI). We will instruct the U.S.

Customs Service (Customs) to assess countervailing duties in this

amount.

EFFECTIVE DATE: August 24, 1998.

FOR FURTHER INFORMATION CONTACT: Marian Wells or Rosa Jeong, AD/CVD

Enforcement, Group 1, Office 1, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW, Washington, DC. 20230; telephone: (202) 482-

6309 or (202) 482-3853, respectively.

SUPPLEMENTARY INFORMATION:

Background

In accordance with 19 CFR 355.22(a), these reviews cover only those

producers or exporters of the subject merchandise for which reviews

were specifically requested. Accordingly, these reviews cover only

NHCI, a producer of the subject merchandise which exported pure and

alloy magnesium to the United States during the review period.

On April 30, 1998, the Department published in the Federal Register

the Preliminary Results of its fifth administrative reviews of the

countervailing duty orders on pure and alloy magnesium from Canada (63

FR 23728). We invited interested parties to comment on the Preliminary

Results. On June 1, 1998, case briefs were submitted by the Government

of Quebec (GOQ), and the petitioner, Magnesium Corporation of America

(MAGCORP). The GOQ subsequently filed a rebuttal brief on June 8, 1998.

The Department did not conduct a hearing for these reviews because none

of the interested parties requested one.

These reviews cover the period January 1, 1996 through December 31,

1996 (the period of review or POR). The reviews involve one company

(NHCI) and the following programs: Exemption from Payment of Water

Bills, Article 7 Grants from the Quebec Industrial Development

Corporation (SDI), St. Lawrence River Environment Technology

Development Program, Program for Export Market Development, the Export

Development Corporation, Canada-Quebec Subsidiary Agreement on the

Economic Development of the Regions of Quebec, 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.

Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions of the Tariff Act of 1930, as amended by

the Uruguay Round Agreements Act (URAA), effective January 1, 1995 (the

Act). The Department is conducting this administrative review in

accordance with section 751(a) of the Act. References to

``Countervailing Duties: Notice of Proposed Rulemaking and Request for

Public Comments,'' (54 FR 23366, May 31, 1989) (``1989 Proposed

Regulations''), which have been withdrawn, are provided solely for

further explanation of the Department's countervailing duty practice.

Scope of the Reviews

The products covered by these reviews are shipments of 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.

Pure and alloy magnesium are currently classifiable under subheadings

8104.11.0000 and 8104.19.0000, respectively, of the Harmonized Tariff

Schedule of the United States (HTSUS). Although the HTSUS subheadings

are provided for convenience and customs purposes, our written

description of the scope of this proceeding is dispositive.

Secondary and granular magnesium are not included in the scopes of

these orders. Our reasons for excluding granular magnesium are

summarized in the Preliminary Determination of Sales at Less Than Fair

Value: Pure and Alloy Magnesium From Canada (57 FR 6094, February 20,

1992).

[[Page 45046]]

Analysis of Programs

Based upon our analysis of the questionnaire responses and written

comments from the interested parties, we determine the following:

I. Programs Conferring Subsidies

A. Exemption from Payment of Water Bills

In the Preliminary Results, we found that this program conferred

countervailable benefits on the subject merchandise. Our analysis of

the comments submitted by the interested parties, summarized below, has

not led us to change our findings from the Preliminary Results. On this

basis, the net subsidy rate for this program is as follows:

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

Rate

Manufacturer/exporter (percent)

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

NHCI......................................................... 0.46

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B. Article 7 Grants from the Quebec Industrial Development Corporation

In the Preliminary Results, we found that this program conferred

countervailable benefits on the subject merchandise. Our analysis of

the comments submitted by the interested parties, summarized below, has

not led us to change our findings from the Preliminary Results. On this

basis, the net subsidy rate for this program is as follows:

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

Rate

Manufacturer/exporter (percent)

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

NHCI......................................................... 2.32

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

II. Programs Found Not to be Used

In the Preliminary Results, we found that NHCI did not apply for or

receive benefits under the following programs:

St. Lawrence River Environment Technology Development

Program

Program for Export Market Development

Export Development Corporation

Canada-Quebec Subsidiary Agreement on the Economic

Development of the Regions of Quebec

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

Transportation Research and Development Assistance

Program.

We received no comments on these programs from the interested

parties; therefore, we have not changed our findings from the

Preliminary Results.

Analysis of Comments

In its June 1, 1998 case brief, Magcorp affirmed all of the

Department's positions in the preliminary results of review.

Comment 1: Obligation of Department to Re-examine Specificity of

Article 7 Assistance

In the event the Department continues to treat the Article 7

assistance as a nonrecurring grant, the GOQ argues that the Department

must re-examine whether the assistance was specific. In particular, the

Department is obliged to evaluate, according to the GOQ, in each

administrative review the countervailability of a program previously

determined to be de facto specific, regardless of whether the parties

have provided new information. The Department may not rely, as it did

in the Preliminary Results, on a de facto specificity determination

made in the original investigations.

DOC Position

Just as it does not revisit prior determinations that a program is

not specific, it is the Department's policy not to revisit prior

determinations that a program is specific, absent the presentation of

new facts or evidence (see e.g., Carbon Steel Wire Rod From Saudi

Arabia; Final Results of Countervailing Duty Administrative Review and

Revocation of Countervailing Duty Order (Carbon Steel Wire Rod from

Saudi Arabia), 59 FR 58814 (November 15, 1994); Final Results of the

First Countervailing Duty Administrative Reviews: Pure Magnesium and

Alloy Magnesium From Canada (First Magnesium Reviews), 62 FR 13857

(March 24, 1997); Final Results of the Second Countervailing Duty

Administrative Reviews: Pure Magnesium and Alloy Magnesium From Canada

(Second Magnesium Reviews), 62 FR 48607 (September 16, 1997); and Final

Results of the Third Countervailing Duty Administrative Reviews: Pure

Magnesium and Alloy Magnesium From Canada (Third Magnesium Reviews), 62

FR 18749 (April 17, 1997)). In the present reviews, no new facts or

evidence have been presented which would lead us to question our

original specificity determination for the POI.

Comment 2: Alternative Methodology for Determining Specificity of

Article 7 Assistance

The GOQ continues to argue, as it has in previous reviews, that the

Department should take an entirely different approach to the question

of how to determine if a nonrecurring grant is disproportionately

large, and therefore, specific. Rather than base its analysis on the

entire amount of the grant at the time of bestowal, the GOQ maintains

that the Department must instead examine only the portion of the

benefit allocated--in accordance with the Department's standard

allocation methodology--to the POR. It is this amount, in relationship

to the portions of benefits allocated to the POR for all assistance

bestowed under the program to all other enterprises, that must be

determined to be disproportionate. Because the benefit attributable to

the POR is the subsidy at issue, it is that amount, according to the

GOQ, that must be found specific before it may be countervailed.

The GOQ also counters the Department's assertion in Final Results

of the Fourth Countervailing Duty Administrative Reviews: Pure

Magnesium and Alloy Magnesium From Canada (Fourth Magnesium Reviews),

62 FR 48812, 48814 (September 17, 1997) that the GOQ has not cited a

single determination by the Department or any other legal authority to

support its position. The GOQ asserts that it has cited to the sixth

administrative review of Live Swine from Canada: Final Results of

Countervailing Duty Administrative Review (Live Swine from Canada), 59

FR 12243, 12249 (March 16, 1994) as an example where the Department

reexamined the countervailability of benefits found to be de facto

specific in prior reviews.

DOC Position

As we have explained in previous final results (see First Magnesium

Reviews, Second Magnesium Reviews, and Third Magnesium Reviews), the

GOQ is confusing the determination of specificity with the measurement

of the subsidy.

The specificity determination and the measurement of the subsidy

are two separate and distinct processes. The question of whether a

nonrecurring grant is disproportionately large is based on an

examination of the entire amount of the grant at the time of bestowal.

If such a grant is found to be

[[Page 45047]]

disproportionately large, it is determined to be specific. (As a grant

specifically provided, it is also at this point that the statutory

requirements for countervailing the grant are met. See section 771(5)

of the Act.) The separate and distinct second step is the measurement

of the benefit. This step involves allocating portions of the grant

over time. It is these portions of the grant which then provide the

basis for the calculation of the ad valorem rate of subsidization. The

portions of subsidies allocated to periods of time using the

Department's standard allocation methodology are irrelevant to an

examination of the actual distribution of benefits by the granting

government at the time of bestowal.

The GOQ refers to the sixth review of the countervailing duty order

on Live Swine from Canada as demonstrating that the Department has, as

a matter of course, revisited its de facto specificity determinations

from one segment of a proceeding to another. We continue to believe

that the situation in the Magnesium reviews can be distinguished from

the situation in Live Swine from Canada. As explained in the First,

Second, and Third Magnesium Reviews the facts underlying our analyses

in Live Swine from Canada differ from the situation here. Because those

facts have not changed, we continue to make the identical distinction

in the current reviews. For a full discussion of the distinction made

between the revisiting specificity determinations in Live Swine from

Canada and the Magnesium case, see First Magnesium Reviews at 13861,

Second Magnesium Reviews at 48609, and Third Magnesium Reviews at

18753.)

Comment 3: Appropriate Time of Specificity Determination:

``Bestowal'' or Disbursement

The GOQ argues that although the Department concluded in the First

Magnesium Reviews and the Third Magnesium Reviews that the proper time

period for a specificity determination is the time of bestowal, the

Department did not examine specificity in the original period of

investigation (POI) at the time of bestowal. Rather, the Department

examined specificity at the time of approval of the funds. The GOQ

states that it is confused by the Department's policy to determine

specificity at a time when no funds have been provided to NHCI. The GOQ

argues that the time of bestowal for the purpose of a specificity

determination should refer to the time of actual disbursement of funds,

and should not refer to the time funds are approved by the granting

authority.

DOC Position

We disagree with the GOQ's assertion that the Department's

specificity analysis during the original investigations should have

been conducted based on the time of actual disbursement of funds. We

acknowledge that the specificity determination in the original

investigations was based on the action of the granting authority, i.e.,

the GOQ, at the time of approval. However, we note that the Department

uses the terms ``approval'' and ``bestowal'' interchangeably in this

context. The time of bestowal or approval is the appropriate basis for

the specificity determination because it most directly demonstrates

whether a government has limited the benefits bestowed upon an

enterprise or industry, or group thereof.

Comment 4: Relevance of New Information

The GOQ maintains that given the Department's responsibility to

make a finding of specificity and countervailability based on the

information relevant to the POR, the Department should consider any new

assistance provided by SDI since the end of the original POI. To this

end, the GOQ provided information on the Article 7 assistance extended

up to, and including, the POR in a submission dated January 15, 1997.

According to the GOQ, this new factual information was apparently

considered irrelevant information by the Department.

DOC Position

As stated above, the proper time period for a specificity

determination is the time of bestowal. Therefore, information submitted

by the GOQ concerning assistance that was provided subsequent to the

time of bestowal of the assistance granted to NHCI under Article 7 of

the SDI Act is not relevant to the specificity determination. The

remaining information presented by the GOQ on the Article 7 assistance

granted prior to and including the time of bestowal of NHCI's Article 7

benefits is nearly identical to that utilized by the Department in its

original specificity determination. Differences between the updated

information on Article 7 provided by the GOQ and information used in

the original specificity determination are sufficiently small so as not

to compromise the original specificity determination. Fourth Magnesium

Reviews at 48815.

Comment 5: Relevance of Article 9 Information

The GOQ argues that assistance under Article 9 should be included

in the Article 7 specificity analysis because Article 9 was the

predecessor of Article 7 and the provisions of Article 9 functioned

basically the same as those of Article 7.

DOC Position

We disagree. The GOQ did not provide any information which would

allow us to make a determination on whether Article 9 and Article 7

should be considered integrally linked or otherwise considered a single

program for purposes of our specificity analysis (see Section

355.43(b)(6) of the 1989 Proposed Regulations). Information on the

record in these proceedings with respect to Article 9 consists only of

a statement by the GOQ in its case brief that Article 9 was the

predecessor of Article 7. This is an insufficient basis to determine

that the two programs should be treated as one.

Final Results of Review

In accordance with 19 CFR 355.22(c)(4)(ii), we calculated an

individual subsidy rate for each producer/exporter subject to these

administrative reviews. For the period January 1, 1996 through December

31, 1996, we determine the net subsidy for NHCI to be 2.78 percent ad

valorem. We will instruct Customs to assess countervailing duties in

this amount for all entries of NHCI's merchandise during this period.

The Department will also instruct Customs to collect cash deposits of

estimated countervailing duties of 2.78 percent of the f.o.b. invoice

price on all shipments of subject merchandise from NHCI, entered, or

withdrawn from warehouse, for consumption on or after the date of

publication of the final results of these reviews.

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 antidumping cases, except as

provided for in section 777A(e)(2)(B) of the Act. Consequently, the

requested review will normally cover only those companies specifically

named (19 CFR 355.22(a)). 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

[[Page 45048]]

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 cash deposit rates for all companies except

NHCI are unchanged by the results of these reviews.

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, except from Timminco Limited

(which was excluded from the order in the original investigations).

Accordingly, the cash deposit rates that will be applied to non-

reviewed companies covered by these orders are those established in the

administrative reviews completed for the most recent POR, conducted

pursuant to the statutory provisions that were in effect prior to the

URAA amendments. See Fourth Magnesium Reviews. This rate shall apply to

all non-reviewed companies until a review of a company assigned this

rate is requested. In addition, countervailing duties will be assessed

on any entries during the period January 1, 1996 through December 31,

1996, for all non-reviewed companies at the cash deposit rates in

effect at the time of entry.

This notice serves as a reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 355.34(d). Timely written notification of

return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations and the terms of an APO is a sanctionable violation.

These administrative reviews and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)).

Dated: August 18, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-22664 Filed 8-21-98; 8:45 am]

BILLING CODE 3510-DS-P