Pure Magnesium From Canada; Final Results of Antidumping Duty Administrative Review and Determination Not to Revoke Order in Part

DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-814]

Pure Magnesium From Canada; Final Results of Antidumping Duty

Administrative Review and Determination Not to Revoke Order in Part

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of administrative review and

determination not to revoke order in part.

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SUMMARY: On May 11, 1999, the Department of Commerce published the

preliminary results of the administrative review of the antidumping

duty order on pure magnesium from Canada and its notice of intent not

to revoke the order with respect to pure magnesium produced by Norsk

Hydro Canada Inc. We gave interested parties an opportunity to comment

on the preliminary results. Based on our analysis of the comments

received, we have made certain changes for the final results.

This review covers one producer/exporter of pure magnesium to the

United States during the period August 1, 1997, through July 31, 1998.

The review indicates no dumping margins during the review period.

EFFECTIVE DATE: September 17, 1999.

FOR FURTHER INFORMATION CONTACT: Zak Smith, Import Administration, AD/

CVD Enforcement Group I, Office 1, U.S. Department of Commerce, 14th

Street and Constitution Avenue, NW, Washington, D.C. 20230; telephone

(202) 482-0189.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

The Department of Commerce (``the Department'') is conducting this

administrative review in accordance with section 751 of the Tariff Act

of 1930 (``the Act''), as amended. Unless otherwise indicated, all

citations to the statute are references to the provisions effective

January 1, 1995, the effective date of the amendments made to the Act

by the Uruguay Round Agreements Act (``URAA''). In addition, unless

otherwise indicated, all citations to the Department's regulations are

to those codified at 19 CFR Part 351 (April 1998).

Background

On May 11, 1999, the Department published the preliminary results

of the administrative review of the antidumping duty order on pure

magnesium from Canada and notice of the intent not to revoke the order

in part (64 FR 25276) (``Preliminary Results''). The producer/exporter

in this review is Norsk Hydro Canada Inc. (``NHCI''). We received case

briefs from NHCI and petitioner, Magnesium Corporation of America

(``Magcorp''), and a rebuttal brief from NHCI (see Interested Party

Comments, below).

Scope of the Review

The product covered by this review is pure magnesium. Pure

unwrought magnesium contains at least 99.8 percent magnesium by weight

and is sold in various slab and ingot forms and sizes. Granular and

secondary magnesium are excluded from the scope of this review. Pure

magnesium is currently classified under subheading 8104.11.0000 of the

Harmonized Tariff Schedule (``HTS''). The HTS item number is provided

for convenience and for customs purposes. The written description

remains dispositive.

Determination Not to Revoke Order in Part

The Department ``may revoke, in whole or in part'' an antidumping

duty order upon completion of a review under section 751 of the Act.

While Congress has not specified the procedures that the Department

must follow in revoking an order, the Department has developed a

procedure for revocation that is described in 19 CFR 351.222. This

regulation requires, inter alia, that a company requesting revocation

must submit the following: (1) A certification that the company has

sold the subject merchandise at not less than normal value (``NV'') in

the current review period and that the company will not sell at less

than NV in the future; (2) a certification that the company sold the

subject merchandise in each of the three years forming the basis of the

request in commercial quantities; and (3) an agreement to reinstatement

of the order if the Department concludes that the company, subsequent

to the revocation, sold subject merchandise at less than NV. See 19 CFR

351.222(e)(1). Upon receipt of such a request, the Department may

revoke an order, in part, if it concludes that (1) the company in

question has sold subject merchandise at not less than NV for a period

of at least three consecutive years; (2) it is not likely that the

company will in the future sell the subject merchandise at less than

NV; and (3) the company has agreed to its immediate reinstatement in

the order if the Department concludes that the company, subsequent to

the revocation, sold subject merchandise at less than NV. See 19 CFR

351.222(b)(2).

In our Preliminary Results, we determined that ``NHCI does not

qualify for revocation of the order on pure magnesium because it does

not have three consecutive years of sales in commercial quantities at

not less than normal value'' (see Preliminary Results at 25277).

After consideration of the various comments that were submitted in

response to the Preliminary Results, we determine that NHCI did not

sell the subject merchandise in the United States in commercial

quantities in each of the three years cited by NHCI to support its

request for revocation. Specifically, NHCI made one sale in one of the

relevant years and two sales in another. One or two sales to the United

States during a one year period is not consistent with NHCI's selling

activity prior to the order, nor is it consistent with NHCI's selling

activity in the home market (see Memorandum from Team to Susan Kuhbach,

``Commercial Quantities,'' dated September 8, 1999 (``Commercial

Quantities Memorandum''), for a discussion of NHCI's selling activity).

Therefore, we find that NHCI does not qualify for revocation of the

order on pure magnesium under 19 CFR 351.222(e)(1)(ii).

We note that on January 29, 1999, a panel established by the

Dispute

[[Page 50490]]

Settlement Body (``DSB'') of the World Trade Organization (``WTO'')

determined that the ``not likely'' standard contained in 19 CFR

353.25(a)(2) was inconsistent with the United States' obligations under

Article 11.2 of the WTO Antidumping Agreement. See United States--Anti-

Dumping Duty on Dynamic Random Access Memory Semiconductors (DRAMS) of

One Megabit or Above From Korea, WTO Doc. WT/DS99/R (January 29, 1999)

(``DRAMS Panel''). The panel recommended that the United States ``bring

section 353.25(a)(2)(ii) of the DOC regulations * * * into conformity

with its obligations under Article 11.2 of the AD Agreement.'' The DSB

adopted the panel report on March 19, 1999. On April 15, 1999, the

United States announced its intention to implement the recommendations

and rulings of the DSB. Consistent with section 123(g) of the URAA,

which governs the Department's implementation of adverse panel reports,

the Department is revising 19 CFR 351.222(b). The determination not to

revoke in the instant case is not premised upon the interpretation or

application of the ``not likely'' standard currently found in 19 CFR

351.222(b).

Comparisons

We calculated export price and normal value based on the same

methodology used in the Preliminary Results, with the following

exceptions:

Based upon comments received from respondent, when determining the

appropriate home market sales to use for comparison purposes the

Department is now matching to sales of identical merchandise. Also

based upon comments received from respondent, we have corrected the

currency conversions applied to home market freight charges.

Interested Party Comments

In accordance with 19 CFR 351.309, we invited interested parties to

comment on our Preliminary Results. On June 10, 1999, the petitioner

and the respondent submitted case briefs and the respondent submitted a

rebuttal brief on June 15, 1999.

Comment 1: Appropriateness of Commercial Quantities Analysis

NHCI argues that the Department erred in conducting a commercial

quantities analysis because its request for revocation was based on an

absence of dumping over three consecutive years, not over a period of

time in which there was an unreviewed intervening year. According to

the respondent, section 351.222(b)(2) of the Department's regulations

neither authorizes nor instructs the Department to conduct a commercial

quantities analysis. NHCI contends that such analyses are only for

revocations based on unreviewed intervening years. In support of this

contention, NHCI cites the Department's notice of proposed rule in

which the Department stated that, with respect to the new changes

concerning intervening years, it would require a certification

regarding sales in commercial quantities. See Antidumping Duties;

Countervailing Duties; Proposed Rule, 61 FR 7308, 7320 (February 27,

1996) (``Proposed Rule''). The respondent notes that the certification

was promulgated into the final regulations with respect to revocations

based on an intervening year through section 351.222(d)(1), which

states that the Department ``must be satisfied that, during each of the

three (or five) years, there were exports to the United States in

commercial quantities. * * *''

NHCI agrees that such an analysis is reasonable in the case of a

request based on unreviewed intervening years because a revocation of

the antidumping duty order is weaker when based on only two, rather

than three, years of sales above normal value. The respondent notes

that the Department has reasoned that if sales are made in commercial

quantities during an intervening year in which no review was requested,

it is reasonable to conclude that the sales were not dumped because, if

they had been, the domestic industry would have requested a review.

Thus, according to the respondent, if reviews have taken place in each

year upon which a revocation request is made, a commercial quantities

analysis has no relevance. Rather, the fact that sales have been made

above normal value each year is the relevant factor.

Magcorp argues that the Department's requirement that sales have

been made in commercial quantities applies to all respondents

requesting revocation of an antidumping order, regardless of whether an

unreviewed intervening year has taken place. The petitioner cites to

section 351.222(e)(1)(ii) of the Department's regulations which states

that a request for revocation must include the person's certification

that, during each of the consecutive years, the person sold the subject

merchandise to the United States in commercial quantities. According to

the petitioner, the Department's regulations create a first step that

must be met before the Department will consider revocation and is not

limited to the situation of an unreviewed year. Magcorp cites to the

fifth administrative review of this antidumping order (see Pure

Magnesium From Canada; Final Results of Antidumping Duty Administrative

Review and Determination Not to Revoke Order in Part, 64 FR 12977

(March 16, 1999) (``Fifth Review'')) and to Certain Corrosion-Resistant

Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate

from Canada: Final Results of Antidumping Duty Administrative Review

and Determination to Revoke in Part (64 FR 2173 (January 13, 1999))

(``Corrosion-Resistant Steel from Canada''), in which the Department

did not revoke the antidumping duty order with respect to companies

that had sold above normal value for three consecutive years because

such sales were not made in commercial quantities. While the petitioner

recognizes that the Department's prior regulations did not address the

volume of subject imports with respect to revocation, Magcorp argues

that the Department now views sales in commercial quantities to be

essential for revoking an order.

Department's Position: As noted above, we have developed a

procedure for revocation that is described in 19 CFR 351.222. This

regulation requires that a company requesting revocation must submit a

certification that the company sold the subject merchandise in

commercial quantities in each of the three years forming the basis of

the request. Therefore, we must determine, as a threshold matter, in

accordance with our regulations, whether the company requesting

revocation sold the subject merchandise in commercial quantities in

each of the three years forming the basis of the request. See Fifth

Review at 12978. In the Preliminary Results, we found that NHCI does

not qualify for revocation of the order on pure magnesium because it

did not have three consecutive years of sales in commercial quantities

at not less than normal value. We based this finding on the fact that

two of the three years of sales NHCI is relying upon to support its

request for revocation were not made in commercial quantities.

Specifically, in the Fifth Review we determined that NHCI did not sell

the subject merchandise in the United States in commercial quantities

in any of the three years cited by NHCI to support its request for

revocation. Because NHCI has used two of those three years to support

its current request for revocation and the facts have not otherwise

changed, we determine that NHCI has not met the threshold criterion

outlined in section 351.222 of our regulations requiring sales in

commercial quantities in each of the

[[Page 50491]]

three years forming the basis of the revocation request. See Commercial

Quantities Memorandum.

We also note that while the regulation requiring sales in

commercial quantities may have developed from the unreviewed

intervening year regulation, its application in all revocation cases

based on an absence of dumping is reasonable and mandated by the

regulations. The application of this requirement to all such cases is

reflected not only in the provision for unreviewed intervening years

(see 19 CFR 351.222(d)(1)), but also in the new general requirement

that parties seeking revocation certify to sales in commercial

quantities in each of the years on which revocation is to be based. See

19 CFR 351.222(e)(1)(ii). This requirement ensures that the

Department's revocation determination is based upon a sufficient

breadth of information regarding a company's normal commercial

practice. In this case the number of sales and the total sales volumes

for at least two of the three years are so small, both in absolute

terms and in comparison with the period of investigation and other

review periods, that we do not have sufficient information regarding

the company's normal commercial behavior to make a revocation decision.

If sales levels are not reflective of a company's normal commercial

activities, they can offer no basis upon which to make a revocation

determination, regardless of whether we conducted a review of the sales

in question or the sales took place in an intervening year. See, e.g.,

Corrosion-Resistant Steel from Canada at 2175.

Comment 2: Impermissible Change in Revocation Procedure

NHCI argues that the Department's practice of reviewing whether

sales have taken place in commercial quantities in all three revocation

review years constitutes an impermissible substantive change to the

Department's longstanding revocation practice. According to the

respondent, the Department expressly stated in its Proposed Rule (at

7319) that it intended there to be no substantive change in its new

revocation regulations. NHCI notes that this understanding was also

reflected in the Notice of Final Results of Antidumping Duty

Administrative Review and Determination Not to Revoke Order in Part:

Dynamic Random Access Memory Semiconductors of One Megabyte or Above

From the Republic of Korea, 62 FR 39809, 39810 (July 24, 1997) (``DRAMS

from Korea''), where the Department said that its final regulations did

not change the previous revocation requirements.

The respondent further argues that, up to this point, the

development of the Department's revocation procedure has been in the

direction of examining positive evidence indicating the absence of

unfair price discrimination. According to NHCI, the Department must

review sales to make this evaluation but the number of sales or sales

volume from one year to the next has nothing to do with whether

specific sales are evidence of unfair price discrimination. The

respondent notes that when the Department has considered the volume of

a respondent's shipments it has done so in the context of determining

whether future dumping was likely. NHCI contends that the Department's

threshold criterion of requiring sales in commercial quantities results

in the Department ignoring positive evidence of unfair price

discrimination and that this approach constitutes an impermissible

substantive change to the Department's longstanding revocation

practice.

Department's Position: As noted in the preamble, our substantive

criteria for revocation (i.e., an absence of dumping for three years

and no continuing necessity for application of the order--the

likelihood issue) have not changed. However, the new regulations do

establish a new criterion for requesting revocation. Specifically, we

now require a company requesting revocation to have sold the subject

merchandise in commercial quantities during the three periods on which

the revocation request is based, and to certify to that effect. Unless

this criterion is met, we do not consider the revocation request.

However, where it is met, we consider all relevant positive evidence in

making our revocation decision.

Comment 3: Meeting the Commercial Quantities Threshold

NHCI argues that, even if a commercial quantities analysis is

warranted, it has made sales to the United States in commercial

quantities for at least three consecutive years. Specifically, the

respondent contends that the term ``commercial quantities'' refers not

to the number or volume of sales, but to whether any individual sale

was a normal size transaction for the industry. In support of this

argument, respondent points to the proposed regulations in which the

Department states that it will ``establish whether sales were made in

commercial quantities based upon examination of the normal sizes of

sales by the producer/exporter and other producers of subject

merchandise.'' (See Proposed Regulations at 7320.) Respondent believes

that the Department never intended to consider the aggregate volume of

sales made throughout the POR. Rather, NHCI argues, the concept of

commercial quantities was included in the regulations to ensure that

individual sales were bona fide sales that demonstrated the exporter's

ability to sell to U.S. customers without dumping in ordinary

transactions (as opposed to sales of samples or prototypes).

Given this interpretation of commercial quantities, the respondent

argues that its sales were made in commercial quantities because they

were characteristic of NHCI's normal commercial practice and the

industry standard. Specifically, NHCI states that its spot sales in

both the U.S. and home markets involved commercial volumes consistent

with the normal size of sales within the industry in general.

Furthermore, NHCI argues that the sales examined in the last three

years of this proceeding were found by the Department to be sales made

in the ordinary course of trade and were not found to be samples nor

prototypes nor ``noncommercial'' in any other sense.

Magcorp argues that NHCI's sales to the United States during the

last three review periods were far too small to be considered

commercial quantities. The petitioner contends that the concept of

commercial quantities refers to the aggregate volume of sales made by a

respondent over the course of the entire period of review (``POR'') and

not to the size of a single sale. In support of this argument,

petitioner claims that there would be no reason for the requirement of

commercial quantities in 19 CFR 351.222(e)(1)(ii) if the term merely

referred to the existence of any sale recognizable as a U.S. sale for

calculating an antidumping margin because there would be no reason for

the Department to ask a respondent to certify a fact that has already

been established. Under this definition of commercial quantities, the

petitioner states that NHCI's sales during the three years in question

have been negligible throughout the period, noting that in one of the

years NHCI only had one U.S. sale.

The petitioner further argues that only if a respondent's sales are

sufficiently large will a zero dumping margin offer any valid

indication that the respondent can continue to export the subject

merchandise to the United States at normal prices if the antidumping

duty order were revoked. The petitioner refers to the preamble of the

final regulations in which the Department states that a revocation

based on the absence of dumping is based on the fact

[[Page 50492]]

that when a respondent sells in commercial quantities without dumping

it has demonstrated that it will not resume dumping if the order is

revoked (see Antidumping Duties; Countervailing Duties; Final Rule

(``Final Regulations''), 62 FR 27296, 27326 (May 19, 1997)).

Department's Position: In the Fifth Review, we determined that NHCI

did not sell the subject merchandise in the United States in commercial

quantities in any of the three years cited by NHCI to support its

request for revocation. Specifically, NHCI made one sale in two of the

relevant years and two sales in the other. We determined that one or

two sales to the United States during a one year period was neither

consistent with NHCI's selling activity prior to the order nor NHCI's

selling activity in the home market. Specifically, we stated that,

for each year, the volume of merchandise sold was less than one-half

of one percent of the volume of merchandise sold in the last

completed fiscal year prior to the order. These sales and volume

figures are so small, both in absolute terms and in comparison with

the period of investigation, that we cannot reasonably conclude that

the zero margins NHCI received are reflective of the company's

normal commercial experience. More specifically, the abnormally low

level of sales activity does not provide a reasonable basis for

determining that the discipline of the order is no longer necessary

to offset dumping.

(See Fifth Review at 12978.) Two of the 3 years examined in the Fifth

Review have been cited by NHCI in support of its current request for

revocation. Because no party has submitted information indicating that

the facts relied upon in the Fifth Review have changed, we continue to

find that NHCI does not qualify for revocation because it does not have

three consecutive years of sales in commercial quantities.

We disagree with NHCI's argument that the commercial quantities

criterion requires only that there be a bona fide commercial

transaction during a given period. As the Department recently

explained, ``sales during the POR which, in the aggregate, are an

abnormally small quantity do not provide a reasonable basis for

determining that the discipline of the order is no longer necessary to

offset dumping'' (see Corrosion-Resistant Steel from Canada at 2175).

As the record of this case demonstrates, NHCI did not sell the subject

merchandise in the United States in commercial quantities in at least

two of the three years cited by NHCI to support its request for

revocation. Regardless of the bona fide nature of each transaction,

these sales, in the aggregate, are abnormally small in quantity and do

not provide the Department with a reasonable basis to make a revocation

determination. Furthermore, we agree with the petitioner that if

commercial quantities related to the bona fide nature of the sales, the

commercial quantities requirement in our regulations would be

redundant.

Comment 4: Revocation Following a Drop-Off in Sales

NHCI argues that the Department is effectively disqualifying

companies from revocation if there is a sales drop-off following the

imposition of an antidumping duty order. NHCI contends that, in

situations where a sales drop-off has occurred, aggregate sales will

appear ``abnormally small'' when compared to the aggregate sales made

prior to the imposition of the order. However, the respondent states

that there is no requirement in the Department's regulations that a

company maintain a certain number of sales, market share, or sales

volume after imposition of an order to qualify for revocation and that

such a requirement is unreasonable and inappropriate because it has

nothing to do with a company's pricing practice.

Department's Position: The Department's threshold requirement does

not mean, as NHCI suggests, that the Department is effectively

disqualifying companies from revocation if there is a sales drop-off

following the imposition of an antidumping order. The issue that is

analyzed by the Department is the magnitude of the drop-off. In this

regard, the Department has expressed its intent to revoke an

antidumping duty order even where the sales drop-off has been

substantial so long as the sales used to demonstrate a lack of price

discrimination are reflective of the companies' normal commercial

experience. See, e.g., Professional Electric Cutting Tools from Japan:

Preliminary Results of Antidumping Administrative Review and Intent to

Revoke in Part, 64 FR 43346, 43351 (August 10, 1999).

When determining whether a company's sales have been made in

commercial quantities we must look at each case on an individual basis.

In many instances, when making such an assessment we will use the

original period of investigation as a benchmark for a company's normal

commercial behavior. The period of investigation is a logical and

reasonable benchmark for this assessment, especially given that it is

the only time period for which we have evidence concerning the

company's normal commercial behavior with respect to exports to the

United States without the discipline of an antidumping duty order. As

demonstrated in the Commercial Quantities Memorandum, we have

determined that NHCI's sales during the fourth and fifth review periods

were not reflective of its normal commercial behavior.

Comment 5: Commercial Quantities Threshold Conflicts with WTO Agreement

The respondent argues that the Department's preliminary analysis is

inconsistent with the 1994 WTO Antidumping Agreement because Article

11.1 of this agreement states that an antidumping duty ``shall remain

in force only as long as and to the extent necessary to counteract

dumping which is causing injury.'' Respondent supports this position by

noting that in a recent decision a WTO panel found that the ``continued

imposition [of an antidumping duty] must * * * be essentially dependent

on, and therefore assignable to, a foundation of positive evidence that

circumstances demand it'' (see DRAMS Panel). NHCI states that the

Department's application of a commercial quantities threshold in this

proceeding is in direct violation of the positive evidence rule set

forth in the DRAMS Panel because the Department has determined to keep

the order in place after refusing to consider any positive evidence.

Department's Position: The Department's revocation procedures are

fully consistent with Article 11 of the WTO Antidumping Agreement.

Consistent with the Agreement, under U.S. law, the Department is not

required to review whether application of an order continues to be

necessary unless there is positive evidence that such a review is

warranted. Under the Department's regulations, three years of sales in

commercial quantities at not less than normal value is the minimum

evidence required to establish that a revocation review is warranted.

This evidentiary threshold is reasonable because, as discussed above,

absent commercially meaningful sales, we do not have a sufficient basis

to make a reasoned judgement as to revocation. Moreover, while this

specific evidentiary threshold was not at issue in the DRAMS Panel, it

is in no way inconsistent with the Panel's findings.

Comment 6: Likelihood of Future Dumping

In addition to their arguments respecting the commercial quantities

threshold requirement, both the petitioner and the respondent submitted

[[Page 50493]]

comments, in the alternative, on the likelihood of future dumping.

Department's Position: Because we have determined that NHCI is not

eligible for revocation, based on the fact that it did not make sales

in commercial quantities during the three year period being analyzed,

we do not reach the likelihood of future dumping issue.

Final Results of Review

As a result of this review, we find that the following margin

exists for the period August 1, 1997, through July 31, 1998:

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

Manufacturer/exporter Period Margin

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

Norsk Hydro Canada Inc.................... 8/1/96-7/31/97 0

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

The results of this review shall be the basis for the assessment of

antidumping duties on entries of merchandise covered by the review and

for future deposits of estimated duties for the manufacturers/exporters

subject to this review. The Department will issue appraisement

instructions directly to the Customs Service.

Furthermore, the following deposit requirements will be effective

for all shipments of the subject merchandise entered, or withdrawn from

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

final results of this new shipper administrative review, as provided by

section 751(a)(1) of the Act: (1) the cash deposit rate for the

reviewed company will be the rate indicated above; (2) for companies

not covered in this review, but covered in previous reviews or the

original less-than-fair-value investigation, the cash deposit rate will

continue to be the company-specific rate published for the most recent

period; (3) if the exporter is not a firm covered in this review, a

prior review, or the original investigation, but the manufacturer is,

the cash deposit rate will be the most recent rate established for the

manufacturer of the merchandise; and (4) if neither the exporter nor

the manufacturer is a firm covered in this or any previous review or

the original investigation, the cash deposit rate will be the ``all

others'' rate of 21 percent established in the amended final

determination of sales at less than fair value (58 FR 62643 (November

29, 1993)).

These deposit requirements will remain in effect until publication

of the final results of the next administrative review.

This notice also serves as a final reminder to importers of their

responsibility under 19 CFR 351.402(f) to file a certificate regarding

the reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This notice also serves as a reminder to parties subject to

administrative protective orders (``APOs'') of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 351.306. Timely written notification of

the 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.

We are issuing and publishing this administrative review and notice

in accordance with sections 751(a)(1) and 771(i)(1) of the Act.

Dated: September 8, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-24302 Filed 9-16-99; 8:45 am]

BILLING CODE 3510-DS-P