[Federal Register Volume 62, Number 205 (Thursday, October 23, 1997)]
[Notices]
[Pages 55215-55218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28154]


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DEPARTMENT OF COMMERCE

INTERNATIONAL TRADE ADMINISTRATION
[A-570-832]


Pure Magnesium From the People's Republic of China: Preliminary 
Results of Antidumping Duty New Shipper Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce

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SUMMARY: In response to a request from one manufacturer/exporter, 
Taiyuan Heavy Machinery Import and Export Corporation, the Department 
of Commerce is conducting a new shipper administrative review of the 
antidumping duty order of Pure Magnesium from the People's Republic of 
China. The review covers the period May 1, 1996, through October 31, 
1996.
    We have preliminarily determined that U.S. sales have been made 
below the normal value (``NV''). If these preliminary results are 
adopted in our final results of administrative review, we will instruct 
the U.S. Customs Service to assess antidumping duties based on the 
difference between Export Price (``EP'') and NV.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: October 23, 1997.

FOR FURTHER INFORMATION CONTACT: Everett Kelly or Brian Smith, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230; telephone: (202) 482-4194 or (202) 482-1766, respectively.

SUPPLEMENTARY INFORMATION: 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, as 
amended (``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 353 
(April 1997). Where appropriate, references are made to the 
Department's final regulations, codified at 19 CFR 351 (62 FR 27296), 
as a statement of current departmental practice.

Background

    On November 3, 1997, the Department of Commerce (``the 
Department'') received a request from Taiyuan Heavy Machinery Import 
and Export Corporation (``Taiyuan'') for a new shipper review pursuant 
to section

[[Page 55216]]

751(a)(2)(B) of the Act and section 19 CFR 353.22(h) of the 
Department's regulations.
    Section 751(a)(2) of the Act and section 19 CFR 353.22(h) of the 
Department's regulations govern determinations of antidumping duties 
for new shippers. These provisions state that, if the Department 
receives a request for review from an exporter or producer of the 
subject merchandise stating that it did not export the merchandise to 
the United States during the period covered by the original less-than-
fair-value investigation (the ``POI'') and that such exporter or 
producer is not affiliated with any exporter or producer who exported 
the subject merchandise during that period, the Department shall 
conduct a new shipper review to establish an individual weighted-
average dumping margin for such exporter or producer, if the Department 
has not previously established such a margin for the exporter or 
producer. The regulations require that the exporter or producer shall 
include in its request, with appropriate certifications: (i) the date 
on which the merchandise was first entered, or withdrawn from 
warehouse, for consumption, or, if it cannot certify as to the date of 
first entry, the date on which it first shipped the merchandise for 
export to the United States or if the merchandise has not yet been 
shipped or entered, the date of sale; (ii) a list of the firms with 
which it is affiliated; and (iii) a statement from such exporter or 
producer, and from each affiliated firm, that it did not, under its 
current or a former name, export the merchandise during the POI (19 CFR 
353.22(h)(2)).
    Taiyuan's request was accompanied by information and certifications 
establishing the effective date on which it first shipped and entered 
pure magnesium. Taiyuan also has no affiliated companies and therefore 
is not affiliated with any person or corporation which exported pure 
magnesium from the People's Republic of China (``PRC'') during the POI. 
Based on the above information, the Department initiated this new 
shipper review of Taiyuan (Notice of Initiation of New Shipper 
Antidumping Duty Administrative Review: Pure Magnesium from the 
People's Republic of China (61 FR 69067 December 31, 1996)). The 
Department is now conducting this review in accordance with section 751 
of the Act and section 19 CFR 353.22.
    Taiyuan submitted responses to the Department's antidumping 
questionnaire and the Department attempted to verify this information 
at the facilities of Taiyuan and its supplier in May 1997.

Scope of Review

    The product covered by this review is pure primary magnesium 
regardless of chemistry, form or size, unless expressly excluded from 
the scope of this investigation. Primary magnesium is a metal or alloy 
containing by weight primarily the element magnesium and produced by 
decomposing raw materials into magnesium metal. Pure primary magnesium 
is used primarily as a chemical in the aluminum alloying, 
desulfurization, and chemical reduction industries. In addition, pure 
primary magnesium is used as an input in producing magnesium alloy.
    Pure primary magnesium encompasses:

    (1) Products that contain at least 99.95% primary magnesium, by 
weight (generally referred to as ``ultra-pure'' magnesium);
    (2) Products containing less than 99.95% but not less than 99.8% 
primary magnesium, by weight (generally referred to as ``pure'' 
magnesium); and
    (3) Products (generally referred to as ``off-specification 
pure'' magnesium) that contain 50% or greater, but less than 99.8% 
primary magnesium, by weight, and that do not conform to ASTM 
specifications for alloy magnesium.

    ``Off-specification pure'' magnesium is pure primary magnesium 
containing magnesium scrap, secondary magnesium, oxidized magnesium or 
impurities (whether or not intentionally added) that cause the primary 
magnesium content to fall below 99.8% by weight. It generally does not 
contain, individually or in combination, 1.5% or more, by weight, of 
the following alloying elements: aluminum, manganese, zinc, silicon, 
thorium, zirconium and rare earths.
    Excluded from the scope of this investigation are alloy primary 
magnesium (that meets as specifications for alloy magnesium), primary 
magnesium anodes, granular primary magnesium (including turnings, chips 
and powder), having a maximum physical dimension (i.e., length or 
diameter) of one inch or less, secondary magnesium (which has pure 
primary magnesium content or less than 50% by weight), an remelted 
magnesium whose pure primary magnesium content is less than 50% by 
weight.
    Pure magnesium products covered by this order are currently 
classifiable under Harmonized Tariff Schedule of the United States 
(HTSUS) subheadings 8104.11.00, 8104.19.00, 8104.20.00, 8104.30.00, 
8104.90.00, 3824.90.11, 3824.90.19 and 9817.00.90. Although the HTSUS 
subheadings are provided for convenience and customs purposes, our 
written description of the scope is dispositive.

Separate Rates

    In proceedings involving non-market-economy (``NME'') countries, 
the Department begins with a rebuttable presumption that all companies 
within the country are subject to government control and thus should be 
assessed a single antidumping duty deposit rate. To establish whether a 
firm is sufficiently independent from government control to be entitled 
to a separate rate, the Department analyzes each exporting entity under 
a test arising out of the Final Determination of Sales at Less Than 
Fair Value: Sparklers from the People's Republic of China (56 FR 20588, 
May 6, 1991) and amplified in Final Determination of Sales at Less Than 
Fair Value: Silicon Carbide from the People's Republic of China (59 FR 
22585, May 2, 1994) (``Silicon Carbide''). Under the separate rates 
criteria, the Department assigns separate rates in nonmarket economy 
cases only if the respondent can demonstrate the absence of both de 
jure and de facto governmental control over export activities.

1. De Jure Control

    Taiyuan has placed on the administrative record documents to 
demonstrate absence of de jure control; the ``Law of the People's 
Republic of China on Industrial Enterprises Owned by the Whole 
People,'' adopted on April 13, 1988, (the Industrial Enterprises Law), 
and the 1992 regulations that supplemented it, ``Regulations for 
Transformation of Operational Mechanisms of State-Owned Industrial 
Enterprises'' (Business Operation Provisions). We have analyzed these 
laws in previous cases and have found them to sufficiently establish an 
absence of de jure control of companies ``owned by the whole people,'' 
such as Taiyuan. (See, e.g., Final Determination of Sales at Less than 
Fair Value: Furfuryl Alcohol from the People's Republic of China 
(``Furfuryl Alcohol'') 60 FR 22544 (May 8, 1995)). The Industrial 
Enterprises Law provides that enterprises owned by ``the whole people'' 
shall make their own management decisions, be responsible for their own 
profits and losses, choose their own suppliers, and purchase their own 
goods and materials. The Business Operation Provisions confer upon 
state-owned enterprises the responsibility for making investment 
decisions, the right to dispose of retained capital and assets, and the 
authority to form joint ventures and to merge with other enterprises. 
Taiyuan also states that pure magnesium does not appear on any 
government lists regarding export

[[Page 55217]]

provisions or export licensing, and that no quotas are imposed on pure 
magnesium. In sum, in prior cases, the Department examined both the 
Industrial Enterprises Law and the Business Operations Provisions, and 
found that they establish an absence of de jure control. We have no new 
information in this proceedings which would cause us to reconsider this 
determination with regard to Taiyuan.

2. De Facto Control

    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) Whether the EPs are set by or subject to the 
approval of a governmental authority; (2) whether the respondent has 
authority to negotiate and sign contracts and other agreements; (3) 
whether the respondent has autonomy from the government in making 
decisions regarding the selection of management; and (4) whether the 
respondent retains the proceeds of its export sales and makes 
independent decisions regarding disposition of profits or financing of 
losses (see Silicon Carbide and Furfuryl Alcohol).
    Taiyuan asserted the following: (1) It establishes its own EPs; (2) 
it negotiates contracts, without guidance from any governmental 
entities or organizations; (3) it makes its own personnel decisions; 
and (4) it retains the proceeds of its export sales, uses profits 
according to its business needs and has the authority to sell its 
assets and to obtain loans. During verification proceedings, Department 
officials viewed such evidence as sales documents that showed Taiyuan 
sales prices were negotiated solely by Taiyuan and its customer. In 
addition, the Department generally noted no significant indication of 
government involvement in Taiyuan's business operations. Taiyuan 
officials are appointed by a bureau of the provincial government, not 
the central government and there are no other known exporters under the 
control of the provincial government. Sales documents reviewed 
indicated that Taiyuan sales prices were negotiated solely by Taiyuan 
and its customer. In addition, the Department reviewed sales payments, 
bank statements and accounting documentation that provided evidence 
that Taiyuan received payment in U.S. dollars, which was deposited into 
its bank account after being converted to RMB (see Taiyuan Sales 
Verification Report at pg 7). This information, taken in its entirety, 
supports a finding that there is de facto an absence of governmental 
control of export functions. Consequently, we have preliminarily 
determined that Taiyuan has met the criteria for the application of 
separate rates (see Notice of Final Determination at Less Than Fair 
Value: Persulfates from the Peoples Republic of China, 62 FR 27222, May 
19, 1997).

Fair Value Comparisons

    To determine whether sales of the subject merchandise by Taiyuan to 
the United States were made at less than fair value, we compared the EP 
to the NV, as described in the ``Export Price and Constructed Export 
Price'' and ``Normal Value'' sections of this notice, below.

Export Price and Constructed Export Price

    The Department used EP, in accordance with section 772(a) of the 
Act, because the subject merchandise was sold directly by the PRC 
exporter to unrelated parties in the United States prior to importation 
into the United States and the constructed EP methodology was not 
warranted based on the facts of record.
    We calculated EP based on packed, FOB foreign-port prices to 
unrelated purchasers in the United States. We made deductions for 
foreign inland freight, loading, and port handling expenses, valued in 
a surrogate country. To value freight, we used Indonesia freight rates 
from a 1991 cable from the U.S. Embassy in Jakarta (see Preliminary 
Determination of Sales at Less Than Fair Value: Certain Carbon Steel 
Butt-Weld Pipe Fittings from the PRC, 56 FR 66831, December 26, 1991). 
We selected India as the primary surrogate country for reasons 
explained in the ``Normal Value'' section below.

Normal Value

    In every case conducted by the Department involving the PRC, the 
PRC has been treated as an non-market economy (``NME'') country. None 
of the parties to this proceeding has contested such treatment. 
Accordingly, we calculated NV in accordance with section 773(c) of the 
Act, which applies to non-market economy countries. In accordance with 
section 773(c)(4) of the Act, we must, to the extent possible, value 
the factors of production in one or more market economy countries that 
(1) are at a level of economic development comparable to that of the 
non-market economy country, and (2) are significant producers of 
comparable merchandise. We first determined that India, Pakistan, 
Egypt, Sri Lanka and Indonesia are each at a level of economic 
development comparable to the PRC in terms of per capita gross national 
product (``GNP''), the growth rate in per capita income, and the 
national distribution of labor. However, none of the countries are 
significant producers of the subject merchandise. Accordingly, we 
considered whether any of the potential surrogates produce comparable 
merchandise. As stated in previous cases, the material inputs used to 
produce magnesium and aluminum are different. However, according to 
both U.S. Bureau of Mines and Department of Commerce experts, both (1) 
are light metals in terms of molecular weight; (2) are produced using 
an electrolytic process, and (3) share some common end uses (e.g., dye 
casting) (see Notice of Final Determination: Pure and Alloy Magnesium 
from the Peoples Republic of China (60 FR 16437,16440, March 30, 1995) 
(``the PRC Magnesium Investigation'')). Therefore, in this 
administrative review, we have determined that aluminum constitutes 
comparable merchandise in the context of surrogate selection.
    The Department has determined that Indonesia and India are the 
countries most comparable to the PRC in terms of overall economic 
development and both are significant producers of comparable 
merchandise (aluminum) (see the PRC Magnesium Investigation). We have 
selected India as a reasonable surrogate country because it meets the 
Department's criteria for surrogate country selection. Where we could 
not find surrogate values from India, we valued those factors using 
values from Indonesia.
    Petitioner and respondent submitted publicly available information 
on surrogate values for the Department's consideration. The factors 
used to produce pure magnesium include materials, labor, and energy. To 
calculate NV, the reported factor quantities were multiplied by the 
appropriate surrogate values from India for the different inputs. To 
value each factor of production, we used, where possible, publicly 
available information. We have preliminarily accepted Taiyuan's 
reporting of its suppliers' factors of production based on its entire 
fiscal year rather than the POR because POR production was limited. For 
purposes of calculating NV, we valued reported PRC factors of 
production (adjusted based on verification findings) as follows, in 
accordance with section 773(c) of the Act:
    The factors of production for which we used surrogate values 
included: raw materials, packing materials, labor, diesel fuel, 
electricity, truck freight, factory overhead, selling, general and 
administrative and profit we used

[[Page 55218]]

public information from various sources. See October 16, 1997, 
Calculation Memorandum for details. Reported raw materials include: 
ferrosilicon, dolomite, calcinate dolomite, flux (powder), flux (lump), 
sulphuric acid, fluorite powder, sulphur powder, and barium chloride. 
Reported packing materials include: wooden crates, plastic bags, and 
steel straps.
    With regard to labor, the Department has concluded that, while 
wages and per-capita GNP are positively correlated, there is a great 
variation in the wage rates of the market economy countries that the 
Department treats as being economically comparable. As a practical 
matter, this means that the result of an NME case can vary widely 
depending on which of several economically comparable countries is 
selected as the surrogate. In order to eliminate the variability of 
wage rates in countries with similar per capita GNPs, we used a 
regression-based wage rate.
    See October 16, 1997, Calculation Memorandum for details of 
valuation of factors of Production.

Verification

    As provided in section 782(i) of the Act, we verified information 
provided by the respondent by using standard verification procedures, 
including on-site inspection of the respondent's facilities, the 
examination of relevant sales and financial records, and selection of 
original documentation containing relevant information. Our 
verification findings are outlined in the verification report.

Currency Conversion

    We made currency conversions pursuant to section 773A(a) of the Act 
and section 353.60 of the Department's regulations based on the rates 
certified by the Federal Reserve Bank.

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that the 
following margin exists for the period May 1, 1996, through October 31, 
1996:

------------------------------------------------------------------------
                                                                 Percent
                Manufacturer/producer/exporter                   margin 
------------------------------------------------------------------------
Taiyuan Heavy Machinery Import and Export Corporation.........     83.92
------------------------------------------------------------------------

    Interested parties may request disclosure within 5 days of the date 
of publication of this notice and may request a hearing within 10 days 
of publication. Any hearing, if requested, will be held at the earliest 
convenience of the parties but not later than 34 days after the date of 
publication or the first business day thereafter. Case briefs from 
interested parties may be submitted not later than 20 days after the 
date of publication. Rebuttal briefs, limited to issues raised in the 
case briefs, may be filed not later than 27 days after the date of 
publication. The Department will issue the final results of this new 
shipper administrative review, including the results of its analysis of 
issues raised in any such written comments or at a hearing, within 90 
days of issuance of these preliminary results. Upon completion of this 
new shipper review, the Department will issue appraisement instructions 
directly to the Customs Service. The results of this review shall be 
the basis for the assessment of antidumping duties on entries of 
merchandise covered by this review and for future deposits of estimated 
duties.
    Furthermore, upon completion of this review, the posting of a bond 
or security in lieu of a cash deposit, pursuant to section 
751(a)(2)(B)(iii) of the Act and section 353.22(h)(4) of the 
Department's interim regulations, will no longer be permitted and, 
should the final results yield a margin of dumping, a cash deposit will 
be required for each entry of the merchandise.
    The following deposit requirements will be effective upon 
publication of the final results of this new shipper antidumping duty 
administrative review for all shipments of pure magnesium from the PRC 
entered, or withdrawn from warehouse, for consumption on or after the 
publication date, as provided by section 751(a)(1) of the Act: (1) The 
cash deposit rate for the reviewed company will be that established in 
the final results of this new shipper administrative review; (2) the 
cash deposit rate for all other PRC exporters will continue to be 
108.26 percent, the PRC-wide rate established in the LTFV and (3) the 
cash deposit rate for non-PRC exporters of subject merchandise will be 
the rate applicable to the PRC supplier of that exporter. 
investigation.
    These requirements, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 353.36 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 new shipper administrative review and notice are in accordance 
with section 751(a)(2)(B) of the Act (19 U.S.C. 1675(a)(2)(B)) and 
Section 19 CFR 353.22(h) 1996.

    Dated: October 16, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-28154 Filed 10-22-97; 8:45 am]
BILLING CODE 3510-DS-P