[Federal Register Volume 63, Number 91 (Tuesday, May 12, 1998)]
[Notices]
[Pages 26147-26149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12595]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-122-814]
Pure Magnesium From Canada; Preliminary Results of Antidumping
Administrative Review and Notice of Intent Not To Revoke Order in Part
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative review and notice of intent not to revoke order in part
of pure magnesium from Canada.
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SUMMARY: The Department of Commerce is conducting an administrative
review of the antidumping duty order on pure magnesium from Canada. The
period of review is August 1, 1996 through July 31, 1997. This review
covers imports of pure magnesium from one producer/exporter.
We have preliminarily found that sales of subject merchandise have
not been made below normal value. Further, we intend not to revoke the
order with respect to pure magnesium from Canada produced by Norsk
Hydro Canada Inc. If these preliminary results are adopted in our final
results, we will instruct the Customs Service not to assess antidumping
duties.
Interested parties are invited to comment on these preliminary
results. We will issue the final results not later than 120 days from
the date of publication of this notice.
EFFECTIVE DATE: May 12, 1998.
FOR FURTHER INFORMATION CONTACT: Zak Smith, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington D.C. 20230; telephone
(202) 482-1279.
The Applicable Statute and Regulations
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 Tariff Act of 1930 (``the Act'') by
the Uruguay Round Agreements Act (``URAA''). In addition, unless
otherwise indicated, all citations to the Department of Commerce's
(``the Department's'') regulations refer to the regulations, codified
at 19 CFR part 351 (62 FR 27399, May 19, 1997).
Background
The Department published an antidumping duty order on pure
magnesium from Canada on August 31, 1992 (57 FR 39390). On August 4,
1997, the Department published a notice of ``Opportunity to Request an
Administrative Review'' of the antidumping duty order on pure magnesium
from Canada (62 FR 41925). On August 29, 1997, a producer/exporter,
Norsk Hydro Canada Inc. (``NHCI'') requested an administrative review
of its exports of the subject merchandise to the United States for the
period of review August 1, 1996, through July 31, 1997. In accordance
with 19 CFR 351.221, we initiated the review on September 25, 1997. The
Department is now conducting this administrative review in accordance
with section 751 of the Act.
Scope of 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 currently classifiable
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.
Verification
As provided in section 751(d) of the Act, we verified information
provided by the respondent, NHCI, by using our standard verification
procedures, including on-site examination of relevant sales and
financial records.
Export Price
For sales to the United States, we used export price (``EP'') as
defined in section 772(a) of the Act because the merchandise was sold
directly to the first unaffiliated purchaser in the United States prior
to importation. The use of constructed export prices was not warranted
based on the facts of the record. EP was based on the packed delivered,
duties unpaid price to unaffiliated purchasers in the United States. We
made a deduction for movement expenses in accordance with section
772(c)(2)(A) of the Act; this included the foreign and U.S. inland
freight expense.
Normal Value
We compared the aggregate quantity of home market and U.S. sales
and determined that the quantity of the company's sales in its home
market was more than five percent of the quantity of its sales to the
U.S. market. Consequently, pursuant to section 773(a)(1)(B) of the Act,
we based normal value (``NV'') on home market sales.
We made adjustments for differences in packing in accordance with
sections 773(a)(6)(A), B(i) of the Act. We also made adjustments for
movement expenses, consistent with section 773(a)(6)(B)(ii) of the Act,
for inland freight. In addition, we made adjustments for differences in
circumstances of sale (``COS'') in accordance with section
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We made COS
adjustments by deducting direct selling expenses incurred on home
market sales (credit expenses) and adding U.S. direct selling expenses
(credit expenses).
Revocation
Pursuant to 19 CFR 351.222(b)(2), NHCI requested revocation of the
antidumping duty order in part. In accordance with 19 CFR 351.222(e),
the request was accompanied by certifications that NHCI had not sold
the subject merchandise at less than normal value during the current
period of review and would not do so in the future. NHCI further
certified that it sold the subject merchandise to the United States in
commercial quantities for a period of at least three consecutive years.
NHCI also agreed to immediate reinstatement of the antidumping duty
order, as long as any exporter or producer is subject to the order, if
the Department concludes that NHCI, subsequent to the revocation, sold
the
[[Page 26148]]
subject merchandise at less than normal value.
On October 22 and November 6, 1997, the petitioner submitted
argumentation opposing NHCI's revocation request. On February 12, 1998,
the Department established a process for the submission of factual
information and argument pertaining to the issue of likelihood of
future dumping.
Interested Party Comments on Whether Future Dumping Is Likely
On April 2 and April 9, 1998, NHCI and the petitioner submitted
comments and rebuttals, respectively, on the issue of whether it is
likely that NHCI would resume dumping if the Department granted NHCI's
revocation request.
Petitioner's Arguments: The petitioner contends that NHCI did not
make sales in commercial quantities during the last three consecutive
review periods, and thus has not fulfilled one of the revocation
requirements under the new regulations. In this case, the petitioner
states that although one sale during a one-year period may be
sufficient for the calculation of an antidumping margin, it does not
constitute commercial quantities for the relevant product and industry.
The petitioner also argues that the dramatic decline in NHCI's sales
after the imposition of the order is indicative of NHCI's inability to
make sales in the United States without dumping.
The petitioner made comments as to the condition of the pure
magnesium market as well. The petitioner argues that the likelihood
that NHCI will resume dumping is all the greater because of the
substantial fall and continuing decline in magnesium prices that has
occurred over the past two years, which is due to a fundamental
oversupply in the global market. According to the petitioner, this
oversupply will be exacerbated in coming years as new production
facilities come on line in Canada (unrelated to NHCI) and in third
countries. Furthermore, NHCI has plans to increase its own production
capacity, which, according to the petitioner, will contribute to the
oversupply in the global market and thus, likely lead to a resumption
of dumping. In response to NHCI's argument that it is focusing on the
alloy market, the petitioner states that greater competition in
magnesium products along with supply exceeding demand will pressure
NHCI to engage the U.S. pure magnesium market. Furthermore, according
to the petitioner, if NHCI vigorously enters the U.S. pure magnesium
market it will be facing a situation where pure magnesium prices are
actually on the decline, making dumping more likely.
Respondent's Arguments: NHCI argues that it has met all the
procedural requirements for revocation. It has made the proper
submissions and certifications, has a record of three years of U.S.
sales at not less than normal value, and will continue to trade fairly
and abide by trade laws in all markets. In response to the petitioner's
allegations with respect to commercial quantities, NHCI argues that the
Department has stated in past cases that there has been no substantive
change of the revocation policy pursuant to the new regulations, and
thus no additional revocation threshold in the form of the
certification of sales in commercial quantities has been created.
Rather, NHCI states that the Department should give great weight to the
fact that it has met the Department's requirement of three consecutive
years without dumping, all based on bona fide sales.
With respect to the likelihood of future dumping, NHCI argues that
it has no incentive to engage in dumping in the U.S. pure magnesium
market because it has a stable customer base in Canada and third
countries. Additionally, it has no incentive to shift production from
alloy magnesium to pure magnesium, given the growth in the alloy
magnesium market. While NHCI's planned plant expansion may give it the
ability to produce more pure magnesium for sale in the U.S. market, the
company contends that the planned expansion is for the alloy magnesium
market, and that any increases in production are not necessarily
targeted for the United States. Even if some of the new production
capacity were for pure magnesium, NHCI states that there has been
growth in all magnesium markets, not just alloy. NHCI notes that such
market conditions do not lend themselves to dumping.
NHCI maintains that the growth in the alloy magnesium market
accounts for the drop off in NHCI's U.S. sales of pure magnesium. In
support of its position, NHCI argues that the Norsk Hydro group
produces the subject merchandise in both Canada and Norway, yet sales
from Norway also declined during the same period, despite the absence
of antidumping duties applicable to Norwegian imports. NHCI explains
that the controlling factor for these marketing decisions has been the
growth of the alloy magnesium market.
Department Analysis
Section 351.222(b)(2) of the Department's regulations states that
the Secretary may revoke an order in part if the Secretary concludes
that: (i) the exporter or producer has sold the merchandise at not less
than normal value for a period of three consecutive years; (ii) it is
not likely that the person will in the future sell the merchandise at
less than normal value; and (iii) the person agrees in writing to its
immediate reinstatement in the order if the Secretary concludes that
dumping has resumed (see, 19 CFR 351.222(b) (1998)). If these
preliminary results are adopted as final results, NHCI will have met
the first criterion. NHCI's agreement to its immediate reinstatement in
the order if the Secretary concludes that dumping has resumed meets the
third criterion. Thus, the issue is whether the evidence supports a
finding that it is not likely that NHCI will in the future sell the
merchandise at less than normal value.
When making this determination, the Department looks at all
relevant information on the record (see, Brass Sheet and Strip from
Canada: Preliminary Results of Antidumping Duty Administrative Review
and Notice of Intent To Revoke Order in Part (63 FR 6519, 6523,
February 9, 1998) (``Canadian Brass Sheet'')). When assessing whether a
company is not likely to sell at less than normal value in the future,
the lack of dumping over the course of three years can be predictive of
future behavior in the absence of contrary evidence. Where, as was done
here, the petitioner makes a compelling argument that dumping may occur
in the future if the order is revoked, the Department may request and
consider additional relevant evidence in making its revocation
decision. As we stated in Canadian Brass Sheet, ``the Department has
considered, in addition to the respondent's prices and margins in the
preceding periods, such other factors as conditions and trends in the
domestic and home market industries, currency movements, and the
ability of the foreign entity to compete in the U.S. marketplace
without sales at less than normal value.'' Id. See also, Brass Sheet
and Strip from Germany; Final Results of Antidumping Duty
Administrative Review and Determination Not to Revoke in Part (61 FR
49727, 49730, September 23, 1996) (``German Brass Sheet'').
Following the general practice discussed above, we closely examined
NHCI's ability to compete in the U.S. market without sales at less than
normal value. We based this particular analysis on NHCI's historical
sales behavior, examining in particular its behavior prior to and after
the issuance of the antidumping duty order. We also analyzed trends and
conditions in the
[[Page 26149]]
U.S. and Canadian magnesium markets. (For a further discussion of the
factual background to our decision, see, Memorandum to Gary Taverman
dated May 4, 1998.) As discussed below, we preliminarily find that the
evidence on the record does not support a conclusion that the standard
for revocation has been met in this case.
An examination of the history of NHCI's U.S. pure magnesium sales
behavior reveals that prior to the antidumping order NHCI had numerous
U.S. pure magnesium customers and sold very large quantities of pure
magnesium. Yet, after the investigation, in which the Department found
that NHCI was making sales at less than normal value, imports of pure
magnesium into the United States essentially stopped. In the two years
after the imposition of the antidumping order, NHCI made no sales of
pure magnesium into the United States. Furthermore, in the succeeding
three years sales were negligible (i.e., for each year, sales were less
than one-half of one percent of the sales volume made in the last
completed fiscal year prior to the order). The severe and abrupt drop-
off in sales by NHCI after the order is a strong indicator that the
company is unable to sell in the United States without engaging in
dumping. As noted in German Brass Sheet, ``the sharp decrease in volume
after imposition of the order . . . suggest[s] that [the respondent]
has difficulty selling [the subject merchandise] above fair value'' (at
61 FR 49731). Thus, based on the virtual abandonment of the U.S. pure
magnesium market by NHCI, it is reasonable to assume that the company
has difficulty selling pure magnesium in the United States at or above
normal value.
In order for the Department to revoke the antidumping duty order
with respect to NHCI, the record evidence must support a finding that
it is not likely that the company will sell at less than normal value
in the future. As noted above, three years of no dumping is normally
probative as to a company's future pricing practices. However, this
approach assumes the company continues to participate meaningfully in
the U.S. market. In this case, the three years in question are
characterized by a negligible number and volume of sales by NHCI to the
U.S. market and therefore does not have the same probative value.
NHCI states that the decline in its U.S. sales is not due to its
inability to make sales above normal value, but rather due to its focus
on the alloy magnesium market. We do not accept this explanation for
two reasons. First, while we recognize the recent and projected rapid
growth rates for alloy magnesium, we find it extremely difficult to
conclude that NHCI's abrupt abandonment of the U.S. market for pure
magnesium was unrelated to the dumping proceedings.
Second, given the size and importance of the U.S. pure magnesium
market and NHCI's continued sales of pure magnesium in other markets,
we are not convinced that NHCI has permanently changed its marketing
and sales strategy to focus solely on alloy magnesium. Although the
company implies that it has little interest in the U.S. market for pure
magnesium, we note that NHCI maintains significant sales of pure
magnesium in Canada and third countries. The magnitude of NHCI's pure
magnesium sales in Canada reflects the current global reality of a
higher demand for pure than alloy magnesium. The higher demand for pure
magnesium also exists in the United States. U.S. consumption of pure
magnesium in 1996, for instance, was nearly triple that of alloy
magnesium consumption. Given the mix of magnesium products (alloy
versus pure) in the United States and the fact that the United States
is the largest market in the world for pure magnesium, it appears
likely that NHCI, in the absence of the antidumping duty order, would
seek to reestablish itself in the U.S. pure magnesium market.
Thus, based on the above, we preliminarily conclude that the
revocation standard has not been met in this case. Therefore, we have
preliminarily determined not to revoke the antidumping duty order with
respect to pure magnesium from Canada produced by NHCI.
Preliminary Results of the Review
As a result of this review, we preliminarily determine that NHCI's
margin for the period August 1, 1996, through July 31, 1997, is zero.
Parties to the proceeding may request disclosure within five days
of the date of publication of this notice. Interested parties may also
request a hearing within thirty days of publication. If requested, a
hearing will be held 37 days after publication. Interested parties may
submit case briefs within thirty days of publication. Rebuttal briefs,
which must be limited to issues raised in the case briefs, may be filed
not later than five days after the case briefs. The Department will
issue a notice of the final results of this administrative review,
which will include the results of its analysis of issues raised in any
such briefs, within 120 days from the publication of these preliminary
results.
Furthermore, the following deposit requirements will be effective
upon completion of the final results of this administrative review for
all shipments of pure magnesium from Canada entered, or withdrawn from
warehouse, for consumption on or after the publication date of the
final results of this 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 established in the final results of this
administrative review (except no cash deposit will be required for the
company if its weighted-average margin is de minimis, i.e., less than
0.5 percent); (2) for merchandise exported by manufacturers or
exporters not covered in this review but covered in the original less
than fair value investigation or a previous review, the cash deposit
will continue to be the most recent rate published in the final
determination or final results for which the manufacturer or exporter
received an individual rate; (3) if the exporter is not a firm covered
in this review, the previous review, or the original investigation, but
the manufacturer is, the cash deposit rate will be the rate established
for the most recent period for the manufacturer of the merchandise; and
(4) if neither the exporter nor the manufacturer is a firm covered in
this or any previous reviews, the cash deposit rate will be 21 percent,
the ``all others'' rate established in Pure Magnesium from Canada;
Amendment of Final Determination of Sales At Less Than Fair Value and
Order in Accordance With Decision on Remand (58 FR 62643, November 29,
1993).
This notice serves as a preliminary reminder to importers of their
responsibility 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 administrative review and notice are in accordance with
sections 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR section
351.213.
Dated May 4, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-12595 Filed 5-11-98; 8:45 am]
BILLING CODE 3510-DS-P
