70 FR 24530, May 10, 2005
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.
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, 2003, through December
31, 2003. 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 U.S. 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 10, 2005.
FOR FURTHER INFORMATION CONTACT: Andrew McAllister, AD/CVD Operations,
Office 1, Import Administration, International Trade Administration,
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington DC 20230; telephone (202) 482-1174.
SUPPLEMENTARY INFORMATION:
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 (``Magnesium Investigation'')). On August 3,
2004, the Department published a notice of ``Opportunity to Request
Administrative Review'' of these countervailing duty orders (see
Antidumping or Countervailing Duty Order, Finding, or Suspended
Investigation; Opportunity to Request Administrative Review, 69 FR
46496). We received timely requests for review from Norsk Hydro Canada,
Inc. (``NHCI'') and from the petitioner, U.S. Magnesium, LLC for
reviews of NHCI and Magnola Metallurgy, Inc. (``Magnola''). On
September 1, 2004, we received a request for review from Magnola. On
September 7, 2004, we asked Magnola to explain the circumstances which
led to its late filing. On September 10, 2004, Magnola responded to the
Department's request and explained its circumstances. On September 16,
2004, the Department rejected Magnola's September 1, 2004, request for
review, but the review with respect to Magnola continued based on the
request of the petitioner. On September 22, 2004, we initiated these
reviews covering shipments of subject merchandise from NHCI and Magnola
(see Initiation of Antidumping and Countervailing Duty Administrative
Reviews and Request for Revocation in Part, 69 FR 56745).
On October 6, 2004, 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 GOQ on November 8, 2004, from GOC and Magnola on November 12,
2004, and from NHCI on December 22, 2004.
Scope of the Orders
The products covered by these orders 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 the orders 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).
[[Page 24531]]
Period of Review
The period of review (``POR'') for which we are measuring subsidies
is January 1, 2003, through December 31, 2003.
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 any debt that can be used
as an appropriate basis for 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 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 treatment of these grants in previous
administrative reviews, 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 section 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 section 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 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 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 ``Allocation period''
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 section
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 1.21 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
[[Page 24532]]
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. The assistance is 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 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
``Allocation period'' 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 section 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 5.40 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
Adjustment of Countervailing Duty Cash Deposit Rate
In its December 3, 2004, submission, NHCI contends that the
Department should set the countervailing duty cash deposit rate to zero
for pure and alloy magnesium produced by NHCI in Canada and entered on
or after January 1, 2005. NHCI asserts that, as of that date, the only
subsidy at issue for NHCI will have been fully amortized, and there
will be no legal basis or need for collecting cash deposits from NHCI.
On December 9, 2004, the GOQ made a submission supporting NHCI's
arguments. On December 14, 2004, the petitioner argued that the
Department should deny NHCI's request and complete the administrative
review before setting future cash deposit rates.
On December 14, 2004, the Department responded to NHCI's request by
stating that we do not have the authority to modify deposit rates
outside of the administrative review process. Therefore, we are not
changing the deposit rate for NHCI effective January 1, 2005.
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, 2003, through
December 31, 2003, we preliminarily find 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 U.S.
Customs and Border Protection (``CBP'') to assess countervailing duties
at these net subsidy rates. We will disclose our calculations to the
interested parties in accordance with section 351.224(b) of the
Department's regulations.
Net Subsidy Rate: Pure Magnesium
------------------------------------------------------------------------
Manufacturer/Exporter Percent
------------------------------------------------------------------------
Norsk Hydro Canada, Inc............................. 1.21 percent
Magnola Metallurgy, Inc............................. 5.40 percent
------------------------------------------------------------------------
Net Subsidy Rate: Alloy Magnesium
------------------------------------------------------------------------
Manufacturer/Exporter Percent
------------------------------------------------------------------------
Norsk Hydro Canada, Inc............................. 1.21 percent
Magnola Metallurgy, Inc............................. 5.40 percent
------------------------------------------------------------------------
Cash Deposit Instructions
The Department also intends to instruct 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 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 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 not later
than five days after the date of filing the case briefs. Parties who
submit briefs in this proceeding 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).
Interested parties may request a hearing within 30 days after the
date of
[[Page 24533]]
publication of this notice. Any hearing, if requested, will be held two
days after the scheduled date for submission of rebuttal briefs. The
Department will publish a notice of the final results of these
administrative reviews within 120 days from the publication of these
preliminary results.
We are issuing and publishing these results in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: May 3, 2005.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. E5-2296 Filed 5-9-05; 8:45 am]