71 FR 39667, July 13, 2006
DEPARTMENT OF COMMERCE
International Trade Administration
C-122-815
Pure Magnesium and Alloy Magnesium from Canada: Preliminary
Results of Countervailing Duty Administrative Reviews and Intent to
Rescind
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, 2004, through December
31, 2004. We preliminarily find that a producer/exporter has 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: July 13, 2006.
FOR FURTHER INFORMATION CONTACT: Andrew McAllister or Steve Williams,
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
or (202) 482-4619, respectively.
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 (July 13, 1992) (``Magnesium Investigation'').
On August 1, 2005, 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, 70 FR
44085). We received timely requests for review from Norsk Hydro Canada,
Inc. (``NHCI'') and from the petitioner, US Magnesium LLC (``US
Magnesium'') for reviews of NHCI and Magnola
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Metallurgy Inc. (``Magnola''). NHCI also requested that the Department
revoke the countervailing duty orders with respect to NHCI. On
September 16, 2005, we received comments from US Magnesium arguing that
NHCI's revocation request was without merit. On September 23, 2005,
NHCI submitted a rebuttal to the September 16, 2005, submission by US
Magnesium. On September 28, 2005, 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, 70 FR 56631).
On October 5, 2005, NHCI requested that the Department continue the
suspension of liquidation for NHCI's subject merchandise during this
POR until final disposition of a dispute settlement proceeding under
NAFTA (USA-CDA-00-1904-09 (panel)). On June 23, 2006, the Department
granted NHCI's request to continue suspension of liquidation of its
subject merchandise entries during this POR.
On November 2, 2005, we issued countervailing duty questionnaires
to NHCI, Magnola, Government of Qu[eacute]bec (``GOQ''), and the
Government of Canada (``GOC''). On November 14, 2005, Magnola notified
the Department that it had ceased operations and had no shipments of
the subject merchandise during the POR. We received questionnaire
responses from GOQ and GOC on December 9, 2005, and from NHCI on
December 16, 2005.
On January 13, 2006, we received additional information from NHCI
regarding its revocation request. On June 12, 2006, NHCI withdrew its
request for revocation.
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).
Intent to Rescind
As noted above, the Department was notified by Magnola that it
ceased operations and had no shipments of subject merchandise during
the POR. The Department confirmed, using CBP data, that Magnola did not
ship subject merchandise to the United States during the POR.
Therefore, pursuant to 19 CFR 351.213(d)(3), we are preliminarily
rescinding the administrative review of the countervailing duty order
on alloy magnesium with respect to Magnola.
Period of Review
The period of review (``POR'') for which we are measuring subsidies
is January 1, 2004, through December 31, 2004.
Subsidies Valuation Information
Discount rate: As noted below, the Department preliminarily finds that
NHCI 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.
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 19 CFR
351.524(d)(2), 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 these reviews, 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 19 CFR 351.524(b)(2). 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.
The grant was disbursed in 1990 and 1991. 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
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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 19 CFR
351.524(d) 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 0.51 percent ad valorem for NHCI.
II. Programs Preliminarily Determined To Be Not Used
We examined the following programs and preliminarily determine that
NHCI did not apply for or receive benefits under these programs during
the POR:
Emploi-Qu[eacute]bec Manpower Training Program
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
Financial Assistance Program for Research Formation and for
the Improvement of the Recycling Industry
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 January 13, 2006, submission, NHCI contends that the
Department should set NHCI's cash deposit rate to zero for pure
magnesium and alloy magnesium at the final results of these
administrative reviews. NHCI asserts that, as of that date, the only
subsidy at issue for NHCI (i.e., the Article 7 grant) will have been
fully amortized, and there will be no basis or need for collecting cash
deposits from NHCI. In support of its argument, NHCI cites to Stainless
Steel Sheet and Strip in Coils from France: Final Results of
Countervailing Duty Administrative Review, 68 FR 53963 (September 15,
2003) (``SSSSC from France'') and Final Results of Countervailing Duty
Administrative Reviews: Low Enriched Uranium From Germany, the
Netherlands, and the United Kingdom, 69 FR 40869 (July 7, 2004)
(``Uranium'').
In its December 9, 2005, submission, GOC supported NHCI's arguments
for setting the cash deposit rate at zero.
As discussed below under the ``Cash Deposit Instructions'' section,
we do not intend to issue cash deposit instructions as a result of
these reviews. Therefore, NHCI's argument is moot.
Preliminary Results of Reviews
In accordance with 19 CFR 351.221(b)(4)(i), we calculated an
individual subsidy rate for the producer/exporter subject to these
administrative reviews. For the period January 1, 2004, through
December 31, 2004, we preliminarily find the net subsidy rate for NHCI
to be 0.51 percent. 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 this net subsidy rate. We will disclose our calculations to
the interested parties in accordance with 19 CFR 351.224(b).
Cash Deposit Instructions
On June 26, 2006, the ITC voted in favor of revoking the
countervailing duty orders on pure magnesium and alloy magnesium from
Canada (see Pure and Alloy Magnesium from Canada, 71 FR 36359 (June 26,
2006)). The effective date of the revocations is August 16, 2005. As a
result of the ITC's determination, we do not intend to issue cash
deposit instructions.
However, were the Department to issue cash deposit instructions, we
preliminarily determine that the estimated net subsidy for future NHCI
imports would be zero. Consequently, no cash deposits of estimated
countervailing duties would be required on shipments of the subject
merchandise from the reviewed entity, entered, or withdrawn from
warehouse, for consumption on or after the date of publication of the
final results of these reviews.
Liquidation Instructions
Pursuant to 19 U.S.C. 1516a(g)(5)(C)(i), the Department will not
order the liquidation of entries of pure magnesium or alloy magnesium
from Canada exported by NHCI on or after January 1, 2004, through
December 31, 2004, pending final disposition of a dispute settlement
proceeding under NAFTA (USA-CDA-00-1904-09 (panel)) with respect to
Pure and Alloy Magnesium From Canada; Final Results of Full Sunset
Review, 65 FR 41436 (July 5, 2000). Liquidation of NHCI entries will
occur at the rates described in these final results of reviews, if
appropriate, following the final disposition of the previously
mentioned NAFTA dispute settlement proceedings.
Public Comment
Pursuant to 19 CFR 351.310(c), any interested party may request a
hearing within 30 days of publication of this notice. Any hearing, if
requested, will be held 42 days after the publication of this notice,
or the first workday thereafter. Issues raised in the hearing will be
limited to those raised in the case and rebuttal briefs. Pursuant to 19
CFR 351.309(c), interested parties may submit case briefs within 30
days of the date of publication of this notice. Rebuttal briefs, which
must be limited to issues raised in the case briefs, may be filed not
later than 35 days after the date of publication of this notice. See 19
CFR 351.309(d). Parties who submit case briefs or rebuttal briefs in
this proceeding are requested to submit with each argument (1) a
statement of the issue and (2) a brief summary of the argument with an
electronic version included.
The Department will issue the final results of this administrative
review, including the results of its analysis of issues raised in any
such written briefs or hearing, within 120 days of
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publication of these preliminary results. See section 751(a)(3) of the
Act.
We are issuing and publishing these results in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: July 6, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-11063 Filed 7-12-06; 8:45 am]
BILLING CODE 3510-DS-S