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Notice

Pure Magnesium and Alloy Magnesium from Canada: Preliminary Results of Countervailing Duty Administrative Reviews and Intent to Rescind

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Information about this document as published in the Federal Register.

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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.

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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.

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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 Start Printed Page 39668Metallurgy 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 Québec (“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 Québec 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 Québec Industrial Development Corporation (“SDI”)

SDI (Société de Développement Industriel du Québec) 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 Québec. 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 Start Printed Page 39669determined 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-Québec Manpower Training Program
  • St. Lawrence River Environment Technology Development Program
  • Program for Export Market Development
  • The Export Development Corporation
  • Canada-Québec Subsidiary Agreement on the Economic Development of the Regions of Québec
  • 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 Start Printed Page 39670publication 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.

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Dated: July 6, 2006.

David M. Spooner,

Assistant Secretary for Import Administration.

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[FR Doc. E6-11063 Filed 7-12-06; 8:45 am]

BILLING CODE 3510-DS-S