[Federal Register Volume 65, Number 220 (Tuesday, November 14, 2000)]
[Notices]
[Pages 68126-68128]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29080]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-508-810]


Notice of Initiation of Countervailing Duty Investigation: Pure 
Magnesium From Israel

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: November 14, 2000.

FOR FURTHER INFORMATION CONTACT: Marian Wells, Blanche Ziv, or Ryan 
Langan, Office of CVD/AD Enforcement I, Import Administration, 
International Trade Administration, U.S. Department of Commerce, Room 
1870, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230, telephone (202) 482-6309, (202) 482-4207, or (202) 482-1279, 
respectively.

Initiation of Investigation

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (``the Act'') by 
the Uruguay Round Agreements Act (``URAA''). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to the regulations codified at 19 CFR Part 351 (2000).

The Petition

    On October 17, 2000, the Department of Commerce (``the 
Department'') received a petition filed in proper form by the Magnesium 
Corporation of America (``Magcorp'') and the United Steel Workers of 
America, Local 8319. On October 26, 2000, the petitioners amended the 
petition to include the United Steelworkers of America, Local 482, as 
co-petitioners. (Collectively, these entities are hereinafter referred 
to as ``the petitioners.'') The Department received information 
supplementing the petition throughout the initiation period.
    On November 3 and November 6, 2000, we received a submission from 
producers of granular pure magnesium. On November 6, 2000, petitioners 
filed a response. The Department has taken these submissions into 
consideration in making the initiation determination.
    In accordance with section 702(b)(1) of the Act, the petitioners 
allege that manufacturers, producers, or exporters of the subject 
merchandise from Israel receive countervailable subsidies within the 
meaning of section 701 of the Act.
    The petitioners state that they have standing to file the petition 
because they are interested parties, as defined under sections 
771(9)(C) and (D) of the Act. See Determination of Industry Support for 
the Petition section below.

Scope of the Investigation

    The scope of this investigation includes imports of pure magnesium 
products, regardless of chemistry, form, or size, including, without 
limitation, ingots, raspings, granules, turnings, chips, powder, and 
briquettes.
    Pure magnesium includes: (1) Products that contain at least 99.95 
percent primary magnesium, by weight (generally referred to as ``ultra-
pure'' magnesium); (2) products that contain less than 99.95 percent 
but not less than 99.8 percent primary magnesium, by weight (generally 
referred to as ``pure'' magnesium); and (3) products that contain 50 
percent or greater, but less than 99.8 percent primary magnesium, by 
weight, and that do not conform to an ``ASTM Specification for 
Magnesium Alloy'' \1\ (generally referred to as ``off-specification 
pure'' magnesium).
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    \1\ The meaning of this term is the same as that used by the 
American Society for Testing and Materials in its Annual Book of 
ASTM Standards: Volume 01.02 Aluminum and Magnesium Alloys.
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    The merchandise subject to this investigation is classifiable under 
8104.11.00, 8104.19.00, and 8104.30.00 of the Harmonized Tariff 
Schedule of the United States (``HTSUS''). Although the HTSUS 
subheading is provided for convenience and customs purposes, the 
written description of the merchandise under investigation is 
dispositive.
    During our review of the petition, we discussed the scope with the 
petitioners to ensure that the scope in the petition accurately 
reflects the product for which the domestic industry is seeking relief. 
Moreover, as discussed in the preamble to the Department's regulations 
(Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27323 (May 19, 1997)), we are setting aside a period for parties to 
raise issues regarding product coverage. The Department encourages all 
parties to submit such comments within 20 calendar days of publication 
of this notice. Comments should be addressed to Import Administration's 
Central Records Unit at Room 1870, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, D.C. 20230. The period 
of scope consultations is intended to provide the Department with ample 
opportunity to consider all comments and consult with parties prior to 
the issuance of the preliminary determination.

[[Page 68127]]

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the Government of Israel (``GOI'') for 
consultations with respect to the petition filed. The Department held 
consultations with the GOI on October 31, 2000. (See the October 31, 
2000 memorandum to the File regarding these consultations.)

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that the Department's industry support determination, which is 
to be made before the initiation of the investigation, be based on 
whether a minimum percentage of the relevant industry supports the 
petition. A petition meets this requirement if the domestic producers 
or workers who support the petition account for: (1) At least 25 
percent of the total production of the domestic like product; and (2) 
more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. Moreover, section 702(c)(4)(D) provides 
that, if the petition does not establish support of domestic producers 
or workers accounting for more than 50 percent of the total production 
of the domestic like product, the Department shall either poll the 
industry or rely on other information in order to determine if there is 
support for the petition.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who produce the domestic 
like product. The International Trade Commission (``ITC''), which is 
responsible for determining whether or not ``the domestic industry'' 
has been injured, must also determine what constitutes a domestic like 
product in order to define the industry. While both the Department and 
the ITC must apply the same statutory definition regarding the domestic 
like product (section 771(10) of the Act), they do so for different 
purposes and pursuant to separate and distinct authority. In addition, 
the Department's determination is subject to limitations of time and 
information. Although this may result in different definitions of the 
like product, such differences do not render the decision of either 
agency contrary to the law.\2\
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    \2\ See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass from Japan: Final Determination; Rescission of 
Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-
81 (July 16, 1991).
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    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this subtitle.'' Thus, the reference point from which the 
domestic like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
    The domestic like product described in the petitions is pure 
magnesium in all forms. Based upon our review of petitioners' claims we 
concur that there is a single domestic like product: pure magnesium, 
regardless of chemistry, form, or size, including, without limitation, 
ingots, raspings, granules, turnings, chips, powder, and briquettes. 
Moreover, because the Department specifically excluded granular 
magnesium from earlier proceedings covering pure magnesium (see 
Preliminary Determination of Sales at Less than Fair Value; Pure and 
Alloy Magnesium from Canada, 57 FR 6094, 6095 (February 20, 1992), 
which was upheld in the final determination), we have examined whether 
conditions in the magnesium industry have changed to an extent that it 
is now appropriate to include both forms in this proceeding. Based on 
our review of the information provided in the petition, we have 
concluded that conditions have changed and that we should include both 
granular magnesium and magnesium in ingot form in the same proceeding. 
See the Memorandum from the team to Richard W. Moreland, Deputy 
Assistant Secretary, Office of AD/CVD Enforcement, Group I entitled 
``Like Product and Industry Support Determinations in the Antidumping 
Duty Investigations of Pure Magnesium from Israel, the People's 
Republic of China, and the Russian Federation and the Countervailing 
Duty Investigation of Pure Magnesium from Israel,'' dated November 6, 
2000 (``Like Product/Industry Support Memo'').
    Concerning industry support, the petitioners established industry 
support by demonstrating that they account for over 25 percent of total 
production of the domestic like product (see Initiation Checklist, 
dated November 6, 2000 (Initiation Checklist) and the Like Product/
Industry Support Memo), thereby meeting the first requirement under 
section 702(c)(4)(A) of the Act. On October 30, 2000, the Department 
obtained information from another significant producer of pure 
magnesium indicating that this company is neutral with respect to the 
petition (see November 2, 2000, memorandum to the file regarding 
submission of additional domestic production data). Since those parties 
expressing an opinion support the petition, the second requirement 
under section 702(c)(4)(A) of the Act is also met.
    Because the petitioners represent less than 50 percent of the 
domestic industry we have additionally examined industry support as 
required by section 702(c)(4)(D) of the Act. We find that based on 
other information, there is sufficient support for the petition. 
Specifically, the vast majority of the industry has officially stated 
its position for the record, as either supportive or neutral, meaning 
that any potential opposition could not represent over 50 percent of 
the industry that has support or opposition to the petition. 
Accordingly, we determine that the petition is filed on behalf of the 
domestic industry within the meaning of section 702(c)(4)(A) of the 
Act. (See Like Product/Industry Support Memo.)

Injury Test

    Because Israel is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) applies to this 
investigation. Accordingly, the ITC must determine whether imports of 
the subject merchandise from Israel materially injure, or threaten 
material injury to, a U.S. industry.

Allegations and Evidence of Material Injury and Causation

    The petition alleges that the U.S. industry producing the domestic 
like product is being materially injured, or is threatened with 
material injury, by reason of the imports of the subject merchandise. 
The petitioner contends that the industry's injured condition is 
evident in the declining trends in net operating profits, net sales 
volumes, profit to sales ratios, and capacity utilization. The 
allegations of injury and causation are supported by relevant evidence 
including U.S. Customs import data, lost sales, and pricing 
information. We have assessed the allegations and supporting evidence 
regarding material injury and causation, and have determined that these 
allegations are properly supported by accurate and adequate evidence, 
and meet the statutory requirements for initiation (see Initiation 
Checklist).

[[Page 68128]]

Allegations of Subsidies

    Section 702(b) of the Act requires the Department to initiate a 
countervailing duty proceeding whenever an interested party files a 
petition, on behalf of an industry, that (1) alleges the elements 
necessary for an imposition of a duty under section 701(a), and (2) is 
accompanied by information reasonably available to the petitioners 
supporting the allegations.

Initiation of Countervailing Duty Investigation

    The Department has examined the countervailing duty petition on 
pure magnesium from Israel and found that it complies with the 
requirements of section 702(b) of the Act. Therefore, in accordance 
with section 702(b) of the Act, we are initiating a countervailing duty 
investigation to determine whether manufacturers, producers, or 
exporters of pure magnesium from Israel receive countervailable 
subsidies. See Initiation Checklist.

Privatization

    According to the information in the petition and presented at 
consultations, one of the parent companies of the Israeli manufacturer 
of magnesium, Dead Sea Magnesium (``DSM''), was almost entirely 
privatized as of 1998. Since some of the alleged subsidies were 
provided prior to that date, the Department intends to examine whether 
those subsidies continue to benefit the privatized company, in light of 
the Court of Appeals for the Federal Circuit's ruling in Delverde, SRL 
v. United States, 202 F.3d 1360 (Fed. Cir. 2000).

Creditworthiness

    The petitioners allege DSM was uncreditworthy from its inception 
through the end of the POI. This allegation was supported by financial 
ratios for DSM and its parent company. We will investigate DSM's 
creditworthiness in years in which we find that government equity 
infusions, loans or loan guarantees were provided.

Programs

    We are including in our investigation the following programs 
alleged in the petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in Israel:
    1. Encouragement of Capital Investments Law (``ECIL'') Grants.
    2. Reduced Tax Rates under ECIL.
    3. ECIL Preferential Accelerated Depreciation.
    4. Encouragement of Research and Development Law (``EIRD'') Grants.
    5. The Infrastructure Grant Program.
    We are not including in our investigation the following programs 
alleged to be benefitting producers and exporters of the subject 
merchandise in Israel: Subsidies under the Magnesium Research Institute 
and the Consortium Research Programs.
    The petitioners allege that the Magnesium Research Institute 
(``MRI'') and the Consortium Research programs should be investigated 
by the Department to determine whether the Israeli government is 
conferring countervailable subsidies as a result of the involvement of 
public universities in these programs. The petitioners support their 
allegation with documentation from DSM's web page concerning research. 
The petitioners explain that one of the Israeli Ministry of Industry 
and Trade's major goals is to transition from capital investment grants 
to alternative forms of aid, including research and development grants. 
Petitioners request that the Department initiate an investigation to 
determine whether the Israeli government is conferring countervailable 
subsidies by mean of the academic involvement in these programs.
    The petitioners have not provided sufficient evidence regarding the 
nature of the financial contribution or the benefits conferred on DSW/
DSM. Accordingly, we are not including this program in our 
investigation.

Distribution of Copies of the Petition

    In accordance with section 702(b)(4)(A)(i) of the Act, copies of 
the public version of the petition have been provided to the GOI. We 
will attempt to provide copies of the public version of the petition to 
all the exporters named in the petition, as provided for under section 
351.203(c)(2) of the Department's regulations.

ITC Notification

    Pursuant to section 702(d) of the Act, we will notify the ITC of 
this initiation.

Preliminary Determination by the ITC

    The ITC will determine by December 1, 2000, whether there is a 
reasonable indication that an industry in the United States is 
materially injured, or is threatened with material injury, by reason of 
imports of pure magnesium from Israel. A negative ITC determination 
will result in the investigation being terminated; otherwise, the 
investigation will proceed according to statutory and regulatory time 
limits.
    This notice is published pursuant to section 777(i) of the Act.

    Dated: November 6, 2000.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-29080 Filed 11-13-00; 8:45 am]
BILLING CODE 3510-DS-P