[Federal Register Volume 61, Number 195 (Monday, October 7, 1996)]
[Notices]
[Pages 52435-52437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25646]
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DEPARTMENT OF COMMERCE
[C-122-815]
Pure Magnesium and Alloy Magnesium From Canada; Preliminary
Results of 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 (the Department) is conducting
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 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 Quebec
(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 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, 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
Societe du Parc Industriel et Portuaire de Becancour (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 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
[[Page 52436]]
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 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, 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.
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-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.
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)).) 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 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 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
[[Page 52437]]
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 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 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,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-25646 Filed 10-4-96; 8:45 am]
BILLING CODE 3510-DS-P
