Pure Magnesium and Alloy Magnesium From Canada: Preliminary Results of the Sixth Countervailing Duty Administrative Reviews

DEPARTMENT OF COMMERCE

International Trade Administration

[C-122-815]

Pure Magnesium and Alloy Magnesium From Canada: Preliminary

Results of the Sixth Countervailing Duty Administrative Reviews

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Countervailing Duty

Administrative Reviews.

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SUMMARY: The Department of Commerce is conducting administrative

reviews of the countervailing duty orders on pure magnesium and alloy

magnesium from Canada for the period January 1, 1997 through December

31, 1997. We have preliminarily determined that certain producers/

exporters have received countervailable subsidies during the period of

review. If the final results remain the same as these preliminary

results, we will instruct the Customs Service to assess countervailing

duties as detailed in the Preliminary Results of Reviews section of

this notice. Interested Parties are invited to comment on these

preliminary results.

EFFECTIVE DATE: May 7, 1999.

FOR FURTHER INFORMATION CONTACT: Annika O'Hara or Blanche Ziv, AD/CVD

Enforcement, Group 1, Office 1, Import Administration, U.S. Department

of Commerce, Room 3099, 14th Street and Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone: (202) 482-3798 or (202) 482-4207,

respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

The Department of Commerce (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 (URAA),

effective January 1, 1995 (the Act). Unless otherwise indicated, all

citations to the statute are references to the provisions of the Act.

In addition, unless otherwise indicated, all citations to the

Department's regulations are to the regulations codified at 19 CFR Part

351 (1998).

Background

On August 31, 1992, the Department published in the Federal

Register the countervailing duty orders on pure magnesium and alloy

magnesium from Canada (57 FR 39392). On August 11, 1998, the Department

published a notice of ``Opportunity to Request Administrative Review''

of these orders (63 FR 42821). We received a timely request for review

from Norsk Hydro Canada Inc. (NHCI) on August 25, 1998, and we

initiated these reviews, covering the period January 1, 1997, through

December 31, 1997, on September 29, 1998 (63 FR 51893).

In accordance with 19 CFR 351.213(b), these reviews cover NHCI, the

only producer or exporter of the subject merchandise for which a review

was specifically requested. These reviews cover 17 subsidy programs.

[[Page 24586]]

On October 6, 1998, the Department issued countervailing duty

questionnaires to NHCI, the Government of Canada (GOC), and the

Government of Quebec (GOQ). We received questionnaire responses from

NHCI on November 20, 1998, the GOQ on November 23, 1998, and the GOC on

November 27, 1998.

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.

The pure and alloy magnesium subject to review is currently

classifiable under items 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, the written descriptions of the merchandise subject to the

orders are dispositive.

Secondary and granular magnesium are not included in the scope of

these orders. Our reasons for excluding granular magnesium are

summarized in Preliminary Determination of Sales at Less Than Fair

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

1992).

Period of Review

The period of review (POR) for which we are measuring subsidies is

from January 1, 1997 through December 31, 1997.

Analysis of Programs

I. Programs Preliminarily Determined to Confer Subsidies

A. Exemption From Payment of Water Bills

Pursuant to a December 15, 1988, agreement between NHCI and La

Societe du Parc Industriel et Portuaire de Becancour (Industrial Park),

NHCI was exempt from paying its water bills. In accordance with this

agreement, NHCI did not pay the invoiced amounts of its water bills,

except for the taxes associated with these bills, until June 1997. By

June 1997, NHCI had used the entire credit granted by the Industrial

Park and began paying its water bills in full.

In Final Affirmative Countervailing Duty Determinations: Pure

Magnesium and Alloy Magnesium from Canada, 57 FR 30946, 30948 (July 13,

1992) (Magnesium from Canada), the Department determined that the

exemption received by NHCI was limited to a specific enterprise or

industry, or group of enterprises or industries, because no other

company received such an exemption. In these reviews, 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 for water absent the exemption. To

calculate the benefit under this program, we divided the amount NHCI

would have paid during the POR by the company's total sales of

Canadian-manufactured products during the same period. Thus, we

preliminarily determine the countervailable subsidy provided by this

program to be 0.18 percent ad valorem.

The water bill credit program was terminated in June 1997. As of

June 30, 1997, the credit given for water consumption had been reached

and NHCI began to make water bill payments. Since NHCI has continued to

make water bill payments thereafter, we preliminarily determine this

program terminated with no residual benefits. Moreover, there is no

evidence on the record which would indicate that residual benefits are

being provided or received or that a substitute program has been

implemented. Therefore, we will not examine this program in the future,

and the cash deposit rate will be zero for this program.

B. Article 7 Grants From the Quebec Industrial Development Corporation

The Societe de Developpement Industriel du Quebec (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 Quebec. 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 amounts must be of

``special economic importance and value to the province.'' (See

Magnesium from Canada at 30949.)

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 these

reviews, neither the GOQ nor NHCI provided new information which would

warrant reconsideration of this determination.

For the reasons set forth in Preliminary Results of First

Countervailing Duty Administrative Reviews: Pure Magnesium and Alloy

Magnesium from Canada, 61 FR 11186, 11187 (March 19, 1996), we

preliminarily determine that the Article 7 assistance received by NHCI

was a non-recurring grant because it represented a one-time provision

of funds.

We calculated the benefit received by NHCI using our standard grant

methodology. As the discount rate, we used the company's cost of long-

term, fixed-rate debt in the year in which the grant was awarded. We

divided the portion of the benefit allocated to the POR by NHCI's total

sales of Canadian-manufactured products during the same period. We

preliminarily determine the net subsidy provided by this program to be

1.84 percent ad valorem.

II. Programs Preliminarily Determined To Be Not Used

We examined the following programs and preliminarily determine that

NHCI did not apply for or receive benefits under these programs during

the POR:

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.

Transportation Research and Development Assistance

Program.

[[Page 24587]]

Preliminary Results of Reviews

In accordance with 19 CFR 351.221(b)(4)(i), we calculated a subsidy

rate for NHCI, the sole producer/exporter subject to these

administrative reviews. For the period January 1, 1997, through

December 31, 1997, we preliminarily determine the net subsidy rate for

NHCI to be 2.02 percent ad valorem. 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 the net subsidy rate.

The Department also intends to instruct the Customs Service to

collect cash deposits of estimated countervailing duties (exclusive of

the net subsidy rate calculated for the water program, see section I.

A. above), at the rate of 1.84 percent of the f.o.b. value of all

shipments of the subject merchandise from NHCI entered, or withdrawn

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

the final results of these administrative 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. The requested reviews

will normally cover only those companies specifically named. See 19 CFR

351.213(b). Pursuant to 19 CFR 351.212(c), 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), the predecessor to

19 CFR 351.212(c)). Therefore, the cash deposit rates for all companies

except those covered by these reviews will be unchanged by the results

of these reviews.

We will instruct the the Customs Service to continue to collect

cash deposits for non-reviewed companies, except Timminco Limited

(which was excluded from the orders during the investigation), 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 covered by these orders are those established in

the most recently completed administrative proceeding, conducted

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

URAA amendments. See Final Results of the Second Countervailing Duty

Administrative Reviews: Pure Magnesium and Alloy Magnesium from Canada,

62 FR 48607 (September 16, 1997). These rates shall apply to all non-

reviewed companies until a review of a company assigned these rates is

requested. In addition, for the period January 1, 1997, through

December 31, 1997, the assessment rates applicable to all non-reviewed

companies covered by these orders are the cash deposit rates in effect

at the time of entry, except for Timminco Limited (which was excluded

from the orders during the original investigation).

Public Comment

Interested parties may request a hearing not later than 30 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 briefs, may be submitted five days after the

time limit for filing the case brief. Parties who submit an argument in

these proceedings 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 two 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 19 CFR

351.303(f).

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 351.309(c)(ii), 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.

These administrative reviews and notice are in accordance with

sections 751(a)(1) and 777(i)(1) of the Act.

Dated: May 3, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-11576 Filed 5-6-99; 8:45 am]

BILLING CODE 3510-DS-P