[Federal Register Volume 62, Number 180 (Wednesday, September 17, 1997)]
[Notices]
[Pages 48812-48817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24710]


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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.

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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]]


<bullet> St. Lawrence River Environment Technology Development Program
<bullet> Program for Export Market Development
<bullet> Export Development Corporation
<bullet> Canada-Quebec Subsidiary Agreement on the Economic Development 
of the Regions of Quebec
<bullet> Opportunities to Stimulate Technology Programs
<bullet> Development Assistance Program
<bullet> Industrial Feasibility Study Assistance Program
<bullet> Export Promotion Assistance Program
<bullet> Creation of Scientific Jobs in Industries
<bullet> Business Investment Assistance Program
<bullet> Business Financing Program
<bullet> Research and Innovation Activities Program
<bullet> Export Assistance Program
<bullet> Energy Technologies Development Program
<bullet> 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