DEPARTMENT OF COMMERCE



International Trade Administration

[C-122-815]





Pure and Alloy Magnesium From Canada; Final Results of the Fourth

(1995) Countervailing Duty Administrative Reviews



AGENCY: Import Administration, International Trade Administration,

Department of Commerce.



ACTION: Notice of final results of countervailing duty administrative

reviews.



SUMMARY: On May 12, 1997, the Department of Commerce (the Department)

published in the Federal Register its preliminary results of

administrative reviews of the countervailing duty orders on pure and

alloy magnesium from Canada for the period January 1, 1995 through

December 31, 1995 (see Pure Magnesium and Alloy Magnesium From Canada;

Preliminary Results of Countervailing Duty Administrative Reviews

(Preliminary Results), 62 FR 25924). We have completed these reviews

and determine the net subsidy in each to be 3.18 percent ad valorem for

Norsk Hydro Canada, Inc. (NHCI). We will instruct the U.S. Customs

Service to assess countervailing duties as indicated above.



EFFECTIVE DATE: September 17, 1997.



FOR FURTHER INFORMATION CONTACT: Marian Wells or Hong-Anh Tran, Office

1, Group 1, AD/CVD Enforcement, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-

6309 or (202) 482-0176, respectively.



SUPPLEMENTARY INFORMATION:



Background



    In accordance with 19 C.F.R. 355.22(a), these reviews cover only

those producers or exporters of the subject merchandise for which

reviews were specifically requested. Accordingly, these reviews cover

only NHCI, a producer of the subject merchandise which exported pure

and alloy magnesium to the United States during the review period.

    On May 12, 1997, the Department published in the Federal Register

the Preliminary Results of its administrative reviews of the

countervailing duty orders on pure and alloy magnesium from Canada (62

FR 25924). We invited interested parties to comment on the Preliminary

Results. On June 10, 1997, case briefs were submitted by NHCI, a

producer of the subject merchandise which exported pure and alloy

magnesium to the United States during the review period, and the

Government of Quebec (GOQ). At the request of the GOQ, the Department

held a public hearing on June 17, 1997.

    These reviews cover the period January 1, 1995 through December 31,

1995 (the period of review or POR). The reviews involve one company

(NHCI) and the following programs: Exemption from Payment of Water

Bills, Article 7 Grants from the Quebec Industrial Development

Corporation (SDI), 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.



Applicable Statute



    Unless otherwise indicated, all citations to the statute are in

reference to the provisions of the Tariff Act of 1930, as amended by

the Uruguay Round Agreements Act (URAA) effective January 1, 1995 (the

Act). The Department is conducting these administrative reviews in

accordance with section 751(a) of the Act.



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.

Pure and alloy magnesium are currently classifiable under 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 description of the scope

of this proceeding is dispositive.

    Secondary and granular magnesium are not included in the scopes of

these orders. Our reasons for excluding granular magnesium are

summarized in the Preliminary Determination of Sales at Less Than Fair

Value: Pure and Alloy Magnesium From Canada (57 FR 6094, February 20,

1992).



Analysis of Programs



    Based upon our analysis of the questionnaire responses and written

comments from the interested parties, we determine the following:



I. Programs Conferring Subsidies



A. Exemption from Payment of Water Bills

    In the Preliminary Results, we found that this program conferred

countervailable benefits on the subject merchandise. Our analysis of

the comments submitted by the interested parties, summarized below, has

not led us to change our findings from the Preliminary Results. On this

basis, the net subsidy rate for this program is as follows:



------------------------------------------------------------------------

                                                                 Rate

                   Manufacturer/exporter                      (percent)

------------------------------------------------------------------------

NHCI.......................................................         0.50

------------------------------------------------------------------------



B. Article 7 Grants from the Quebec Industrial Development Corporation

    In the Preliminary Results, we found that this program conferred

countervailable benefits on the subject merchandise. Our analysis of

the comments submitted by the interested parties, summarized below, has

not led us to change our findings from the Preliminary Results. On this

basis, the net subsidy rate for this program is as follows:



------------------------------------------------------------------------

                                                                 Rate

                   Manufacturer/exporter                      (percent)

------------------------------------------------------------------------

NHCI.......................................................         2.68

------------------------------------------------------------------------



II. Programs Found Not To Be Used



    In the Preliminary Results, we found that NHCI did not apply for or

receive benefits under the following programs:



---- page 48813 ----



· St. Lawrence River Environment Technology Development Program

· Program for Export Market Development

· 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

· Transportation Research and Development Assistance Program.



    We received no comments on these programs from the interested

parties; therefore, we have not changed our findings from the

Preliminary Results.

Analysis of Comments

    Comment 1: Countervailability of the Exemption from Payment of

Water Bills NHCI argues that, in calculating the countervailable

benefit under this program, the Department has in its Preliminary

Results overstated the benefit by using the amount NHCI would have paid

for water during the POR instead of NHCI's actual water consumption

amount during the POR. NHCI claims that absent the credit from its

supplier of water, La Societe du Parc Industriel et Portuaire de

Becancour (``Industrial Park''), NHCI would have been subject to a

different billing arrangement based on actual water consumption which

was the billing basis for all of the other Industrial Park customers.

Thus, to calculate the amount of the benefit it received under this

program, NHCI argues that the Department should use the amount NHCI

would have paid based on its actual water consumption.

    NHCI claims that this issue is analogous to the question of what

commercial interest rate benchmark should be used where a company is

benefitting from a preferential interest rate. As such, NHCI states

that the appropriate benchmark to measure the amount of benefit, in

this case, is the commercial water rate available to all the other

Industrial Park's customers. By using the rate associated with NHCI's

credit agreement as opposed to the commercially available rate, NHCI

claims that the Department has unlawfully overstated the amount of its

benefit.

    DOC Position: We disagree with NHCI that in order to measure the

benefit conferred by the credit, we are required to hypothesize what

NHCI would have paid for its water in the absence of the credit and the

contract it entered into. In these reviews, the terms of the contract

between NHCI and the Industrial Park state that NHCI is required to pay

an amount based, in part, on forecasted consumption. To the extent that

the water credit relieved NHCI from paying its water bills, a

countervailable benefit existed without regard to whether NHCI would

have received different terms under an alternative arrangement.

Therefore, we determine that the benefit is the full amount of the

credit (see also Final Results of the First Countervailing Duty

Administrative Reviews: Pure Magnesium and Alloy Magnesium From Canada,

(Final Results of First Magnesium Reviews), 62 FR 13857 (March 24,

1997), and Final Results of the Third Countervailing Duty

Administrative Reviews: Pure Magnesium and Alloy Magnesium From Canada,

(Final Results of Third Magnesium Reviews), 62 FR 18749 (April 17,

1997)).

    Comment 2: Article 7 Assistance under the SDI Act: NHCI argues that

the Department erroneously stated that the Article 7 assistance was

provided to cover a large percentage of the cost of certain

environmental protection equipment. Instead, NHCI maintains that, based

on the SDI agreement, NHCI was required to satisfy two prerequisites

before it could receive any financial assistance from SDI.

    NHCI further argues that the Department improperly applied its

grant methodology to the Article 7 assistance provided to NHCI.

According to NHCI, the Department should have used its loan methodology

to calculate the benefits from virtually all of the SDI financial

assistance received because NHCI knew at the time it undertook the

borrowings that the interest paid on those borrowings would be

reimbursed. NHCI states that this would be consistent with the

Department's interest rebate methodology, i.e., interest rebates should

be considered as reductions in the cost of borrowing if the company

knew that it would receive the interest rebates at the time it received

the loan (e.g., Final Affirmative Countervailing Duty Determination;

Certain Steel Products From the United Kingdom (UK Steel), 58 FR 37393,

37397 (July 9, 1993)).

    DOC Position: The issue presented by this case is whether the

Article 7 assistance received by NHCI should be treated as an interest

rebate or as a grant. If it is treated as an interest rebate, then

under the methodology adopted by the Department in the 1993 steel

cases, the benefit of the Article 7 assistance would be countervailed

according to our loan methodology (e.g., Final Affirmative

Countervailing Duty Determinations: Certain Steel Products From

Belgium, (Belgium Steel) 58 FR 37273, 37276 (July 9, 1993)). However,

if treated as a grant, the benefits would be allocated over a period

corresponding to the life of the company's assets.

    In its brief, NHCI argues that the interest rebate methodology

reflects the fact that companies face a choice between debt and equity

financing. If a company knows that the government is willing to rebate

interest charges before the company takes out a loan, the government is

encouraging the company to borrow rather than sell equity. Hence, NHCI

concludes, the benefit should be measured with reference to the

duration of the borrowing for which the rebate is provided.

    We disagree with NHCI's contention that the Department's interest

rebate methodology was intended to reflect the choice between equity

and loan financing. In the 1993 steel cases, (see e.g., Belgium Steel),

we examined a particular type of subsidy, (i.e., interest rebates), and

determined which of our valuation methodologies was most appropriate.

The possible choices were between the grant and loan methodologies.

Where the company had knowledge prior to taking the loan out that it

would receive an interest rebate, we decided that the loan methodology

was most appropriate because there is virtually no difference between

the government offering a loan at five percent interest (which would be

countervailed according to the loan methodology) and offering to rebate

half of the interest paid on a ten percent loan from a commercial bank

each time the company makes an interest payment. Hence, we were seeking

the closest methodological fit for different types of interest rebates.

    However, the interest rebate methodology described in the 1993

steel cases was never intended to dictate that the Department should

apply the loan methodology in every situation in which a government

makes contributions towards a company's interest obligations. The

appropriate methodology depends on the nature of the subsidy. For

example, assume that the government told a company that it would make

all interest payments on all



---- page 48814 ----



construction loans the company took out during the next year up to $6

million. This type of ``interest rebate'' operates essentially like a

$6 million grant restricted to a specific purpose. Whether the purpose

is to pay interest expenses or buy a piece of equipment does not change

the nature of the subsidy. In contrast, the interest rebate methodology

is appropriate for the type of interest rebate programs investigated in

the 1993 steel cases, i.e., partial interest rebates paid over a period

of years on particular long-term loans.

    As we did in the 1993 steel cases, the Department in these reviews

is seeking the most appropriate methodology for the Article 7

assistance. We erred in our Preliminary Results of First Countervailing

Duty Administrative Reviews: Pure Magnesium and Alloy Magnesium From

Canada, 61 FR 11186 (March 19, 1996), in stating that the primary

purpose of the Article 7 assistance was to underwrite the purchase of

environmental equipment. However, it cannot be disputed that the

environmental equipment played a crucial role in the agreement between

SDI and NHCI. Most importantly, the aggregate amount of assistance to

be provided was determined by reference to the cost of environmental

equipment to be purchased. In this respect, the Article 7 assistance is

like a grant for capital equipment.

    Further, the assistance provided by SDI is distinguishable from the

interest rebates addressed in the 1993 steel cases in that the interest

payments in the steel cases rebated a portion of the interest paid on

particular long-term loans. Here, although the disbursement of Article

7 assistance was contingent, inter alia, on NHCI making interest

payments, the disbursements were not tied to the amount borrowed, the

number of loans taken out or the interest rates charged on those loans.

Instead, the disbursements were tied to NHCI meeting specific

investment targets and generally to NHCI having incurred interest costs

on borrowing related to the construction of its facility.

    Therefore, while we recognize that NHCI had to borrow and pay

interest in order to receive individual disbursements of the Article 7

assistance, we do not agree that this fact is dispositive of whether

the interest rebate methodology used in the 1993 steel cases is

appropriate. We believe this program more closely resembles the

scenario described above where the government agrees to pay all

interest incurred on construction loans taken out by a company over the

next year up to a specified amount. Because, in this case, the amount

of assistance is calculated by reference to capital equipment purchases

(something extraneous to the interest on the loan) and the

reimbursements do not relate to particular loans, we determine that the

Article 7 assistance should be treated as a grant.

    The Department has in past cases classified subsidies according to

their characteristics. For example, in the General Issues Appendix

(GIA) appended to Final Countervailing Duty Determination; Certain

Steel Products from Austria (58 FR 37217, 37226, (July 9, 1993)), we

developed a hierarchy for determining whether so-called ``hybrid

instruments'' should be countervailed according to our loan, grant or

equity methodologies. In short, we were asking whether the details of

particular government ``contributions'' made them more like a loan, a

grant or an equity infusion. Similarly, when a company receives a

grant, we look to the nature of the grant to determine whether the

grant should be treated as recurring or non-recurring. In these

reviews, we have undertaken the same type of analysis, i.e.,

determining an appropriate calculation methodology based on the nature

of the subsidy in question. As with hybrid instruments and recurring/

non-recurring grants, it is appropriate to determine which methodology

is most appropriate based on the specific facts of the Article 7

assistance. Although the Article 7 assistance exhibits characteristics

of both an interest rebate and a grant, based on an overview of the

contract under which the assistance was provided, we determine that the

weight of the evidence in this case supports our treatment of the

Article 7 assistance as a grant.

    Comment 3: Obligation of Department to Re-examine Specificity of

Article 7 Assistance: In the event the Department continues to treat

the Article 7 assistance as a nonrecurring grant, the GOQ argues that

the Department must re-examine whether the assistance was specific. In

particular, the Department is obliged to evaluate, according to the

GOQ, in each administrative review the countervailability of a program

previously determined to be de facto specific, regardless of whether

the parties have provided new information. The Department may not rely,

as it did in the Preliminary Results, on a de facto specificity

determination made in the original investigations.

    DOC Position: Just as it does not revisit prior determinations that

a program is not specific, it is the Department's policy not to revisit

prior determinations that a program is specific, absent the

presentation of new facts or evidence (see e.g., Carbon Steel Wire Rod

From Saudi Arabia; Final Results of Countervailing Duty Administrative

Review and Revocation of Countervailing Duty Order, 59 FR 58814

(November 15, 1994), Final Results of First Magnesium Reviews, and

Final Results of Third Magnesium Reviews). In the present reviews, no

new facts or evidence, have been presented which would lead us to

question our original specificity determination for the POI.

    Comment 4: Alternative Methodology for Determining Specificity of

Article 7 Assistance: The GOQ continues to argue, as it has in previous

reviews, that the Department should take an entirely different approach

to the question of how to determine if a nonrecurring grant is

disproportionately large, and therefore, specific. Rather than base its

analysis on the entire amount of the grant at the time of bestowal, the

GOQ maintains that the Department must instead examine only the portion

of the benefit allocated--in accordance with the Department's standard

allocation methodology--to the POR. It is this amount, in relationship

to the portions of benefits allocated to the POR for all assistance

bestowed under the program to all other enterprises, that must be

determined to be disproportionate. Because the benefit attributable to

the POR is the subsidy at issue, it is that amount, according to the

GOQ, that must be found specific before it may be countervailed.

    DOC Position: As we have explained in previous final results (see

Final Results of First Magnesium Reviews, and Final Results of Third

Magnesium Reviews, the GOQ is confusing the determination of

specificity with the measurement of the subsidy. Tellingly, the GOQ is

unable to cite a single determination by the Department or any other

legal authority to support its argument.

    The specificity determination and the measurement of the subsidy

are two separate and distinct processes. The question of whether a

nonrecurring grant is disproportionately large is based on an

examination of the entire amount of the grant at the time of bestowal.

If such a grant is found to be disproportionately large, it is

determined to be specific. (As a grant specifically provided, it is

also at this point that the statutory requirements for countervailing

the grant are met. See section 771(5) of the Act.) The separate and

distinct second step is the measurement of the benefit. This step

involves allocating portions of the grant over time. It is these

portions of the grant which then provide the basis for the calculation

of the ad valorem rate of



---- page 48815 ----



subsidization. The portions of subsidies allocated to periods of time

using the Department's standard allocation methodology are irrelevant

to an examination of the actual distribution of benefits by the

granting government at the time of bestowal.

    Comment 5: Appropriate Time of Specificity Determination:

``Bestowal'' or Disbursement: The GOQ argues that although the

Department concluded in the Final Results of First Magnesium Reviews

and the Final Results of Third Magnesium that the proper time period

for a specificity determination is the time of bestowal, the Department

did not examine specificity in the original period of investigation

(POI) at the time of bestowal. Rather, the Department examined

specificity at the time of approval of the funds. The GOQ argues that

the time of bestowal for the purpose of a specificity determination

should refer to the time of actual disbursement of funds, and should

not refer to the time funds are approved by the granting authority.

    DOC Position: We disagree with the GOQ's assertion that the

Department's specificity analysis during the original investigations

should have been conducted based on the time of actual disbursement of

funds. We acknowledge that the specificity determination in the

original investigations was based on the action of the granting

authority, i.e., the GOQ, at the time of approval. However, we note

that the Department uses the terms ``approval'' and ``bestowal''

interchangeably in this context. The time of bestowal or approval is

the appropriate basis for the specificity determination because it most

directly demonstrates whether a government has limited benefits to an

enterprise or industry, or group thereof.

    Comment 6: Relevance of New Information: The GOQ maintains that

given the Department's responsibility to make a finding of specificity

and countervailability based on the information relevant to the POR,

the Department should consider any new assistance provided by SDI since

the end of the original POI. To this end, the GOQ provided information

on the Article 7 assistance extended up to, and including, the POR in a

submission dated January 15, 1997. According to the GOQ, this new

factual information was apparently ignored by the Department when it

concluded during the Preliminary Results for these reviews that neither

the GOQ nor NHCI provided new information which would warrant

reconsideration of this determination.

    DOC Position: As stated above, the proper time period for a

specificity determination is the time of bestowal. Therefore,

information submitted by the GOQ concerning assistance that was

provided subsequent to the time of bestowal of the assistance granted

to NHCI under Article 7 of the SDI Act is not relevant to the

specificity determination. The remaining information presented by the

GOQ on the Article 7 assistance granted prior to and including the time

of bestowal of NHCI's Article 7 benefits is nearly identical to that

utilized by the Department in its original specificity determination.

Differences between the updated information on Article 7 provided by

the GOQ and information used in the original specificity determination

are sufficiently small so as not to compromise the original specificity

determination.

    Comment 7: Relevance of Article 9 Information: The GOQ argues that

assistance under Article 9 should be included in the Article 7

specificity analysis because Article 9 was the predecessor of Article 7

and the provisions of Article 9 functioned basically the same as those

of Article 7.

    DOC Position: We disagree. The GOQ did not provide any information

which would allow us to make a determination on whether Article 9 and

Article 7 should be considered integrally linked or otherwise

considered a single program for purposes of our specificity analysis.

Information on the record in these proceedings with respect to Article

9 consists only of a statement by the GOQ in its case brief that

Article 9 was the predecessor of Article 7. This is an insufficient

basis to determine that the two programs should be treated as one.

    Comment 8: Appropriate Denominator: NHCI states that in the

Preliminary Results the Department deviated from its standard practice

in determining the denominator for companies with multinational

production facilities that fail to rebut the presumption that subsidies

are domestically tied. In particular, NHCI argues that it is the

Department's policy to tie such subsidies to domestic operations, by

allocating benefits to sales by the domestic company regardless of

country of manufacture, as opposed to tying to domestic production, as

was done in the Preliminary Results. NHCI additionally states that the

Department failed both to explain its basis for presuming that the

subsidies were tied to Canadian production and to respond to NHCI's

arguments in favor of allocating the subsidies over sales by NHCI of

subject merchandise regardless of country of manufacture. In so doing,

NHCI claims that the Department has denied it due process by preventing

it from rebutting the presumption and from responding to the rationale

the Department used to support its decision to tie the subsidies to

domestic production. In support of its assertion that the subsidies it

received are tied to its domestic operations, NHCI states that any

funds received benefited all employment-related activities in Canada

(e.g., sales of all products) and that these activities are related to

both domestic and foreign production. NHCI elaborates further that the

denominator policy used by the Department in this case is a deviation

from the fungibility of money principle.

    NHCI also cites British Steel plc v. United States (British Steel)

(879 F. Supp. 1254, 1317) in which the Court reversed and remanded the

Department's determinations because it found that the Department should

have given plaintiffs due notice of its decision to apply the

rebuttable presumption that the subsidies at issue were tied to

domestic production in order to allow plaintiffs the opportunity to

rebut the Department's presumption.

    DOC Position: NHCI cites British Steel to imply that the Department

must inform parties early during the course of each proceeding of its

intent to use the rebuttable presumption that subsidies to companies

with foreign manufacturing operations are tied to domestic production.

However, the facts involved in British Steel are readily

distinguishable. Therefore, the holding in that case does not apply to

the present situation.

    In British Steel, the Court was examining the Department's policy

of using the rebuttable presumption articulated in the GIA. In

particular, the Court took issue with the introduction of the new

policy in the final-determination stage of the investigation, because

the timing prevented parties from both commenting on the methodology

and from presenting evidence rebutting the presumption. It is important

to note that the Department's remand determination, as affirmed by the

Court, upheld the appropriateness of using the rebuttable presumption.

(Id. at 1316). The Department has continued to use the rebuttal

presumption and this policy has become accepted Department practice.

Unlike British Steel, we are not dealing with the introduction of a new

policy late into the course of a proceeding in this case. Therefore,

the Department was not required to forewarn NHCI of the use of the

rebuttable presumption.

    We also note that the use of a denominator based only on



---- page 48816 ----



domestically produced merchandise did not come as a surprise to NHCI.

In the original investigations of these cases (which pre-dated the

rebuttable presumption) the Department used a denominator based only on

sales of domestically produced merchandise (Final Affirmative

Countervailing Duty Determinations: Pure Magnesium and Alloy Magnesium

From Canada, 57 FR 30946 (July 13, 1992)). Since the investigations in

these cases, there has been a changed circumstances review (57 FR 54047

(November 16, 1992)) and a Binational Panel proceeding. In all of the

proceedings, the denominators have included only domestically produced

merchandise and in no case has NHCI objected to those denominators. In

addition, the questionnaire for these reviews requested information on

sales denominators based on domestically produced merchandise. NHCI

provided the requested sales denominator information along with

denominators based on total sales by NHCI and arguments why those based

on total sales should be used. Moreover, sales of domestically produced

merchandise were used as the denominator in the Preliminary Results as

well as every other administrative review of these orders, (see for

example, Final Results of First Magnesium Reviews, and Final Results of

Third Magnesium Reviews). As can be seen from the foregoing, NHCI was

aware as to the possible use of a denominator based on domestically

produced merchandise and did indeed have an opportunity to attempt to

rebut the presumption.

    NHCI also argues that the Department must explain the basis of its

presumption. However, the idea behind the use of a rebuttable

presumption is that the fact presumed--in this case that subsidies

bestowed on companies with foreign manufacturing operations are tied to

domestic production--becomes the default position and does not have to

be explained in each case. As the Department stated in the GIA, ``Thus,

under the Department's refined ``tied'' analysis, the Department will

begin by presuming that a subsidy provided by the government of the

country under investigation is tied to domestic production'' (GIA at

37231). It follows that the Department will find that subsidies are

tied to domestic production in the absence of evidence to the contrary.

    As for NHCI's complaint that the Department failed to address its

arguments that the subsidies received by NHCI benefited all of the

company's operations, not just its manufacturing activities, we note

that in the GIA it states, ``A party may rebut this presumption by

presenting evidence tending to show that the subsidy was not tied to

domestic production.'' The phrase, ``tending to show'' means that the

party attempting to rebut the presumption must provide enough evidence

to convince a reasonable fact-finder of the non-existence of the

presumed fact--that subsidies are tied to the recipient firm's domestic

production (Results of Redetermination Pursuant to Court Remand on

General Issues of Sales Denominator: British Steel plc v. United

States, Consol. Ct. No. 93-09-00550-CVD, Slip Op. 95-17 and Order (CIT

Feb. 9, 1995) at 17). The mere absence of evidence limiting the

government's intended scope of the benefit to domestic production is

not sufficient. In this case, NHCI's arguments are unsupported by any

evidence that the subsidies bestowed on NHCI were, in whole or in part,

tied to foreign production. Therefore, NHCI has failed to rebut the

presumption that the subsidies were tied to domestic production.

    The Department's methodology for determining what to include in the

denominator when a company has foreign manufacturing operations is

explained in the GIA: ``If we determine that the subsidy is tied to

domestic production, we will allocate the benefit of the subsidy fully

to sales of domestically produced merchandise'' (GIA at 37231). This

quotation makes it clear that sales of foreign-produced merchandise by

a respondent company would not be included in the denominator. Even if

we were to consider tying the subsidies at issue to domestic

operations, using NHCI's suggestion of a sales denominator based on

total NHCI sales would be improper since such a figure would include

sales of foreign-produced merchandise by NHCI and, therefore, value-

added from operations in other countries. Based on the foregoing

arguments, we have continued to allocate subsidies received by NHCI to

the company's merchandise produced in Canada.



Final Results of Review



    In accordance with 19 CFR Sec. 355.22(c)(4)(ii), we calculated an

individual subsidy rate for each producer/exporter subject to these

administrative reviews. For the period January 1, 1995 through December

31, 1995, we determine the net subsidy for NHCI to be 3.18 percent ad

valorem. We will instruct the U.S. Customs Service to assess

countervailing duties as indicated above. The Department will also

instruct Customs to collect cash deposits of estimated countervailing

duties in the percentages detailed above of the f.o.b. invoice price on

all shipments of subject merchandise from the reviewed company, NHCI,

except from Timminco Limited (which was excluded from the order in the

original investigations), entered, or withdrawn from warehouse, for

consumption on or after the date of publication of the final results of

these reviews.

    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 (19 CFR

355.22(a)). 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 versus 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 cash deposit rates for all companies except those

covered by these reviews will be unchanged by the results of these

reviews.

    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, except from Timminco Limited

(which was excluded from the order in the original investigations).

Accordingly, the cash deposit rates that will be applied to non-

reviewed companies covered by these orders are those established in the

administrative reviews completed for the most recent POR, conducted

pursuant to the statutory provisions that were in effect prior to the

URAA amendments. See Pure and Alloy Magnesium from Canada: Final

Results of the Second (1993) Countervailing Duty Administrative

Reviews. This rate shall apply to all non-reviewed companies until a

review of a company assigned this rate is requested. In addition, for

the period January 1, 1995 through December 31, 1995, the assessment

rates applicable to all non-



---- page 48817 ----



 reviewed companies covered by these orders are the cash deposit rates

in effect at the time of entry.

    This notice serves as a reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 C.F.R. 355.34(d). Timely written notification

of return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations and the terms of an APO is a sanctionable violation.

    These administrative reviews and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)).



    Dated: September 2, 1997.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 97-24710 Filed 9-16-97; 8:45 am]

BILLING CODE 3510-DS-P



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The Contents entry for this article reads as follows:



International Trade Administration

NOTICES

Countervailing duties:

  Pure and alloy magnesium from--

    Canada, 48812



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