[Federal Register Volume 69, Number 91 (Tuesday, May 11, 2004)]
[Notices]
[Pages 26069-26072]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-1071]


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DEPARTMENT OF COMMERCE

International Trade Administration

[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 is conducting administrative 
reviews of the countervailing duty orders on pure magnesium and alloy 
magnesium from Canada for the period January 1, 2002, through December 
31, 2002. We preliminarily find that certain producers/exporters have 
received countervailable subsidies during the period of review. If the 
final results remain the same as these preliminary results, we will 
instruct the U.S. Bureau of Customs and Border Protection to assess 
countervailing duties as detailed in the ``Preliminary Results of 
Reviews'' section of this notice. Interested parties are invited to 
comment on these preliminary results (see the Public Comment section of 
this notice).

EFFECTIVE DATE: May 11, 2004.

FOR FURTHER INFORMATION CONTACT: Melanie Brown, AD/CVD Enforcement, 
Group I, Office 1, Import Administration, U.S. Department of Commerce, 
14th Street and Constitution Avenue, NW., Washington, DC 20230, 
telephone: (202) 482-4987.

Case History

    On August 31, 1992, the Department of Commerce (``the Department'') 
published in the Federal Register the countervailing duty orders on 
pure magnesium and alloy magnesium from Canada (see Final Affirmative 
Countervailing Duty Determinations: Pure Magnesium and Alloy Magnesium 
from Canada, 57 FR 39392 (July 13, 1992)). On August 1, 2003, the 
Department published a notice of ``Opportunity to Request 
Administrative Review'' of these countervailing duty orders (see 
Antidumping or Countervailing Duty Order, Finding, or

[[Page 26070]]

Suspended Investigation; Opportunity to Request Administrative Review, 
68 FR 45218). We received timely requests for review from Norsk Hydro 
Canada, Inc. (``NHCI''), Magnola Metallurgy, Inc. (``Magnola'') and 
from the petitioner, U.S. Magnesium, LLC. On September 30, 2003, we 
initiated these reviews covering shipments of subject merchandise from 
NHCI and Magnola (see Initiation of Antidumping and Countervailing Duty 
Administrative Reviews, Request for Revocation in Part and Deferral of 
Administrative Review, 68 FR 56262).
    On November 13, 2003, we issued countervailing duty questionnaires 
to NHCI, Magnola, the Government of Qu[eacute]bec (``GOQ''), and the 
Government of Canada (``GOC''). We received questionnaire responses 
from NHCI and Magnola on December 19, 2003, and from the GOQ and the 
GOC on December 22, 2003. A supplemental questionnaire was issued to 
Magnola on January 15, 2004. We received Magnola's supplemental 
questionnaire response on January 27, 2004.

Scope of the Reviews

    The products covered by these reviews are shipments of 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.
    The pure and alloy magnesium subject to review is currently 
classifiable under items 8104.11.0000 and 8104.19.0000, respectively, 
of the Harmonized Tariff Schedule of the United States (``HTSUS''). 
Although the HTSUS subheadings are provided for convenience and customs 
purposes, the written descriptions of the merchandise subject to the 
orders are dispositive.
    Secondary and granular magnesium are not included in the scope of 
these orders. Our reasons for excluding granular magnesium are 
summarized in Preliminary Determination of Sales at Less Than Fair 
Value: Pure and Alloy Magnesium From Canada, 57 FR 6094 (February 20, 
1992).

Period of Review

    The period of review (``POR'') for which we are measuring subsidies 
is January 1, 2002 through December 31, 2002.

Subsidies Valuation Information

    Discount Rate: As noted below, the Department preliminarily finds 
that NHCI and Magnola benefitted from countervailable subsidies during 
the POR. In accordance with 19 CFR 351.524(d)(3), it is the 
Department's preference to use a company's long-term, fixed-rate cost 
of borrowing in the same year a grant was approved as the discount 
rate. However, where a company does not have a loan that can be used as 
a discount rate, the Department's next preference is to use the average 
cost of long-term fixed-rate loans in the country in question. In the 
investigation and previous reviews, the Department determined that NHCI 
received and benefitted from countervailable subsidies from the Article 
7 grant from the Qu[eacute]bec Industrial Development Corporation 
(``Article 7 grant''). (See e.g., Final Affirmative Countervailing Duty 
Determinations: Pure Magnesium and Alloy Magnesium from Canada, 57 FR 
30946 (July 13, 1992) (``Magnesium Investigation'')). In line with the 
Department's practice, we used NHCI's cost of long-term, fixed-rate 
debt in the year in which the Article 7 grant was approved as the 
discount rate for purposes of calculating the benefit pertaining to the 
POR.
    In the Final Results of Pure Magnesium from Canada: Notice of Final 
Results of Countervailing Duty New Shipper Review (``New Shipper 
Review''), 68 FR 22359 (April 28, 2003), we found that Magnola 
benefitted from grants under the Emploi-Qu[eacute]bec Manpower Training 
Measure Program (``MTM Program''). Magnola did not have any long-term 
fixed rate debt during the years the grants were approved. Therefore, 
consistent with our previous decision, we continue to use long-term 
commercial bond rates for purposes of calculating the benefit 
attributable to the POR.
    Allocation Period: In the investigations and previous 
administrative reviews of these cases, the Department used as the 
allocation period for non-recurring subsidies the average useful life 
(``AUL'') of renewable physical assets in the magnesium industry as 
recorded in the Internal Revenue Service's 1977 Class Life Asset 
Depreciation Range System (``the IRS tables''), i.e., 14 years. 
Pursuant to Sec.  351.524(d)(2) of the Department's regulations, we use 
the AUL in the IRS tables as the allocation period unless a party can 
show that the IRS tables do not reasonably reflect either the company-
specific or country-wide AUL for the industry. During this review, none 
of the parties contested using the AUL reported for the magnesium 
industry in the IRS tables. Therefore, we continue to allocate non-
recurring benefits over 14 years.
    For non-recurring subsidies, we applied the ``0.5 percent expense 
test'' described in Sec.  351.524(b)(2) of the Department's 
regulations. In this test, we compare the amount of subsidies approved 
under a given program in a particular year to sales (total or export, 
as appropriate) in that year. If the amount of the subsidies is less 
than 0.5 percent of sales, the benefits are expensed in their entirety, 
in the year of receipt, rather than allocated over the AUL period.

Analysis of Programs

I. Programs Preliminarily Determined To Confer Countervailable 
Subsidies

A. Article 7 Grant From the Qu[eacute]bec Industrial Development 
Corporation (``SDI'')
    SDI (Soci[eacute]t[eacute] de D[eacute]veloppement Industriel du 
Qu[eacute]bec) 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 is provided for projects 
that are capable of having a major impact upon the economy of 
Qu[eacute]bec. 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 Investigation, 
57 FR at 30948.)
    In 1988, NHCI was awarded a grant under Article 7 to cover a large 
percentage of the cost of certain environmental protection equipment. 
In the Magnesium Investigation, the Department determined the Article 7 
grant confers a countervailable subsidy within the meaning of section 
771(5) of the Tariff Act of 1930, as amended (``the Act''). The grant 
is a direct transfer of funds from the GOQ bestowing a benefit in the 
amount of the grant. We previously determined that NHCI received a 
disproportionately large share of assistance under this program, and on 
this basis, we determined that the Article 7 grant was limited to a 
specific enterprise or industry, or group of enterprises or industries, 
within the meaning of section 771(5A)(D)(iv) of the Act. In these 
reviews, neither the GOQ nor NHCI has provided new information

[[Page 26071]]

which would warrant reconsideration of this determination.
    In the Magnesium Investigation, the Department determined that the 
Article 7 assistance received by NHCI constituted a non-recurring grant 
because it represented a one-time provision of funds. In the 
Preliminary Results of First Countervailing Duty Administrative 
Reviews: Pure Magnesium and Alloy Magnesium From Canada, 61 FR 11186, 
11187 (March 19, 1996), we found this determination to be consistent 
with the principles enunciated in the Allocation section of the General 
Issues Appendix (``GIA'') appended to the Final Countervailing Duty 
Determination; Certain Steel Products from Austria, 58 FR 37225, 37226 
(July 9, 1993). In the current reviews, no new information has been 
placed on the record that would cause us to depart from this treatment. 
To calculate the benefit, we performed the expense test, as explained 
in the AUL section above, and found that the benefits approved were 
more than 0.5 percent of NHCI's total sales. Therefore, we allocated 
the benefits over time. We used the grant methodology as described in 
Sec.  351.524(d) of the Department's regulations to calculate the 
amount of benefit allocable to the POR. We then divided the benefit 
attributable to the POR by NHCI's total sales of Canadian-manufactured 
products in the POR. On this basis, we preliminarily determine the 
countervailable subsidy from the Article 7 grant to be 1.07 percent ad 
valorem for NHCI.
B. Emploi-Qu[eacute]bec Manpower Training Program
    The MTM Program is a labor-focused program designed to improve and 
develop the labor market in the region of Qu[eacute]bec. It is 
implemented by the Emploi-Qu[eacute]bec (``E-Q''), a labor unit within 
Qu[eacute]bec's Ministry of Employment and Solidarity (Minist[eacute]re 
de L'Emploi et de la Solidarit[eacute] sociale), and funded by the GOQ. 
The Program provides grants to companies in Qu[eacute]bec that have 
training programs approved by the E-Q. Up to 50 percent of a company's 
training expenses, normally over a period of 24 months, are reimbursed 
under the MTM program if the training programs satisfy the E-Q's five 
policy objectives of job preparation, job integration, job management, 
job stabilization, and job creation.
    Once the five objectives are met, companies with small-scale 
projects are eligible to receive reimbursement of 50 percent of their 
labor training expenses, up to a maximum reimbursement of $100,000. 
Major economic projects are required to: (1) Create either 50 jobs or 
100 jobs in 24 months, depending on whether the company is a new 
company or a company that has been in operation; (2) have the approval 
of the Ministry's Commission des partenaires du marche du travail; and 
(3) agree to close monitoring by the E-Q. The $100,000 reimbursement 
limit does not apply to major economic projects. (See New Shipper 
Review and accompanying Issues and Decision Memorandum at ``Analysis of 
Programs.'')
    In 1998 and 2000, the E-Q approved grants to reimburse 50 percent 
of Magnola's training expenses. Magnola received the MTM grants in 
1999, 2000 and 2001. In the New Shipper Review, the Department found 
that the MTM program assistance received by Magnola, constituted 
countervailable benefits within the meaning of section 771(5) of the 
Act. They are a direct transfer of funds from the GOQ bestowing a 
benefit in the amount of the grants. We also found Magnola received a 
disproportionately large share of assistance under the MTM program and, 
on this basis, we found the grants to be limited to a specific 
enterprise or industry, or group of enterprises or industries, within 
the meaning of section 771(5A)(D)(iv) of the Act. In these reviews, 
neither the GOQ nor Magnola has provided new information which would 
warrant reconsideration of this determination.
    In accordance with 19 CFR 351.524(c)(1) and (2), we treated the 
grants as non-recurring. In the current reviews, no new information has 
been provided that would warrant reconsideration of these 
determinations. To calculate the benefit, we performed the expense 
test, as explained in the AUL section above, and found that the 
benefits approved were more than 0.5 percent of Magnola's total sales. 
Therefore, we allocated the benefits over time. We used the grant 
methodology as described in Sec.  351.524(d) of the Department's 
regulations to calculate the amount of benefit allocable to the POR. We 
then divided the benefit attributable to the POR by Magnola's total 
sales in the POR. On this basis, we preliminarily find the net subsidy 
rate from the MTM program to be 1.84 percent ad valorem for Magnola.

II. Programs Preliminarily Determined To Be Not Used

    We examined the following programs and preliminarily determine that 
neither NHCI nor Magnola applied for or received benefits under these 
programs during the POR:
    St. Lawrence River Environment Technology Development Program.
    Program for Export Market Development.
    The Export Development Corporation.
    Canada-Qu[eacute]bec Subsidiary Agreement on the Economic 
Development of the Regions of Qu[eacute]bec.
    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.
    Transportation Research and Development Assistance Program.

III. Program Previously Determined To Be Terminated

    Exemption from Payment of Water Bills.

Alleged Over-Assessment of Countervailing Duties

    In its December 22, 2003 questionnaire response, NHCI revisits an 
argument it previously raised in the 2001 administrative reviews. NHCI 
contends that the Department should adjust the assessment rate applied 
to the value of entries made during the current POR in order to avoid 
alleged over-countervailing in connection with cash deposits retained 
on 1997 entries. NHCI states that the Department issued appropriate 
liquidation instructions to the U.S. Bureau of Customs and Border 
Protection (``CBP'') following the completion of the 1997 
administrative reviews, but that the CBP erroneously liquidated 
hundreds of NHCI entries at the cash deposit rate at the time of entry, 
rather than at the rate established in the final results of the 1997 
administrative reviews.
    In the 2001 administrative reviews, the Department determined that 
it does not have the statutory authority to address what is properly a 
customs protest issue concerning entries from a prior, completed review 
in the context of a subsequent administrative review. (See Pure 
Magnesium and Alloy Magnesium from Canada: Final Results of 
Countervailing Duty Administrative Reviews, 68 FR 53962 (September 15, 
2003) (``Final Results''), and accompanying Issues and Decision 
Memorandum, at Comment (1). We note that NHCI has challenged this

[[Page 26072]]

determination at the Court of International Trade. No new information 
or argument has been presented in these reviews which would warrant 
reconsideration of this determination. Therefore, for the reasons 
stated in the Final Results of the 2001 administrative reviews, we 
continue to find that the Department does not have the statutory 
authority to adjust the assessment rate as requested by NHCI.

Preliminary Results of Reviews

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated an 
individual subsidy rate for each producer/exporter subject to these 
administrative reviews. For the period January 1, 2002, through 
December 31, 2002, we preliminarily determine the net subsidy rates for 
producers/exporters under review to be those specified in the chart 
shown below. If the final results of these reviews remain the same as 
these preliminary results, the Department intends to instruct the CBP 
to assess countervailing duties at these net subsidy rates. We will 
disclose our calculations to the interested parties in accordance with 
Sec.  351.224(b) of the Department's regulations.

------------------------------------------------------------------------
                                                              Ad valorem
                          Company                                rate
                                                              (percent)
------------------------------------------------------------------------
Norsk Hydro Canada, Inc....................................         1.07
Magnola Metallurgy, Inc....................................         1.84
------------------------------------------------------------------------

Cash Deposit Instructions

    The Department also intends to instruct the CBP to collect cash 
deposits of estimated countervailing duties at the rate specified on 
the f.o.b. value of all shipments 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.
    We will instruct the CBP to continue to collect cash deposits for 
non-reviewed companies (except Timminco Limited which was excluded from 
the orders during the investigations) at the most recent company-
specific or country-wide rate applicable to the company. Accordingly, 
the cash deposit rate that will be applied to non-reviewed companies 
covered by these orders is that established in Pure and Alloy Magnesium 
From Canada; Final Results of the Second (1993) Countervailing Duty 
Administrative Reviews, 62 FR 48607 (September 16, 1997) or the 
company-specific rate published in the most recent final results of an 
administrative review in which a company participated. These rates 
shall apply to all non-reviewed companies until a review of a company 
assigned these rates is requested.

Public Comment

    Interested parties may request a hearing within 30 days of the date 
of publication of this notice. Any hearing, if requested, will be held 
two days after the scheduled date for submission of rebuttal briefs 
(see below). Interested parties may submit written arguments in case 
briefs within 30 days of the date of publication of this notice. 
Rebuttal briefs, limited to issues raised in case briefs, may be filed 
no later than five days after the date of filing the case briefs. 
Parties who submit briefs in these proceedings should provide a summary 
of the arguments not to exceed five pages and a table of statutes, 
regulations, and cases cited. Copies of case briefs and rebuttal briefs 
must be served on interested parties in accordance with 19 CFR 
351.303(f).
    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 351.309(c)(1)(ii), are due.
    The Department will publish a notice of the final results of these 
administrative reviews within 120 days from the publication of these 
preliminary results.
    These administrative reviews and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: May 3, 2004.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. E4-1071 Filed 5-10-04; 8:45 am]
BILLING CODE 3510-DS-P