[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