Federal Register / Vol. 62, No. 56 / Monday, March 24, 1997 / Notices 13857

account for differences in credit

expenses associated with the U.S. and

home market sales.

In addition, the petitioners alleged

that sales in the home market were

made at prices below the fully allocated

COP and requested that the Department

conduct a sales below cost investigation.

Therefore, the petitioners constructed a

normal value for sales in Venezuela. To

calculate CV, petitioners based COM for

SIDOR based on publicly available data

and their own production experience,

adjusted for known differences between

costs incurred to produce SWR in the

United States and costs incurred for

producing the subject merchandise in

Venezuela. To calculate SG&A and

financing expenses, the petitioners

relied on the most recent companyspecific data available to the public. To

calculate profit for CV, the petitioners

relied on the most recent profitability

data for a Venezuelan steel

manufacturer available to the public.

The dumping margins in the petition

based on price-to-price comparisons

range from 15.46 percent to 34.06

percent. The dumping margins in the

petition based on price-to-CV

comparisons range from 40.99 percent

to 66.75 percent.

Initiation of Cost Investigations

Pursuant to section 773(b) of the Act,

petitioners alleged that sales in the

home markets of Canada, Germany,

Trinidad and Tobago, and Venezuela

were made at prices below the fully

allocated COP and, accordingly,

requested that the Department conduct

a country-wide sales below COP

investigation in each of these

petitioned-for antidumping

investigations. The Statement of

Administrative Action (‘‘SAA’’),

submitted to the Congress in connection

with the interpretation and application

of the Uruguay Round Agreements,

states that an allegation of sales below

COP need not be specific to individual

exporters or producers. SAA, H.R. Doc.

No. 316, 103d Cong., 2d Sess., at 833

(1994). The SAA, at 833, states that

‘‘Commerce will consider allegations of

below-cost sales in the aggregate for a

foreign country, just as Commerce

currently considers allegations of sales

at less than fair value on a country-wide

basis for purposes of initiating an

antidumping investigation.’’

Further, the SAA provides that ‘‘new

section 773(b)(2)(A) retains the current

requirement that Commerce have

‘reasonable grounds to believe or

suspect’ that below cost sales have

occurred before initiating such an

investigation. ‘Reasonable grounds’

* * * exist when an interested party

provides specific factual information on

costs and prices, observed or

constructed, indicating that sales in the

foreign market in question are at belowcost prices.’’ Id. Based upon the

comparison of the adjusted prices from

the petition of the foreign like products

in their respective home markets to their

costs of production, we find the

existence of ‘‘reasonable grounds to

believe or suspect’’ that sales of these

foreign like products were made below

their respective COPs within the

meaning of section 773(b)(2)(A)(i) of the

Act. Accordingly, the Department is

initiating the requested country-wide

cost investigations.

Fair Value Comparisons

Based on the data provided by

petitioners, there is reason to believe

that imports of SWR from Canada,

Germany, Trinidad and Tobago, and

Venezuela are being, or are likely to be,

sold at less than fair value.

Initiation of Antidumping Investigations

We have examined the petition on

SWR and have found that it meets the

requirements of section 732 of the Act,

including the requirements concerning

allegations of the material injury or

threat of material injury to the domestic

producers of a domestic like product by

reason of the subject imports, allegedly

sold at less than fair value. Therefore,

we are initiating antidumping duty

investigations to determine whether

imports of SWR from Canada, Germany,

Trinidad and Tobago, and Venezuela are

being, or are likely to be, sold in the

United States at less than fair value.

Unless extended, we will make our

preliminary determinations by August

5, 1997.

Distribution of Copies of the Petitions

In accordance with section

732(b)(3)(A) of the Act, a copy of the

public version of each petition has been

provided to the representatives of the

governments of Canada, Germany,

Trinidad and Tobago, and Venezuela.

We will attempt to provide a copy of the

public version of each petition to each

exporter named in the petition (as

appropriate).

International Trade Commission

Notification

We have notified the ITC of our

initiations, as required by section 732(d)

of the Act.

Preliminary Determinations by the ITC

The ITC will determine by April 14,

1997, whether there is a reasonable

indication that imports of SWR from

Canada, Germany, Trinidad and Tobago,

and Venezuela are causing material

injury, or threatening to cause material

injury, to a U.S. industry. Negative ITC

determinations will result in the

particular investigations being

terminated; otherwise, the

investigations will proceed according to

statutory and regulatory time limits.

Dated: March 18, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–7357 Filed 3–21–97; 8:45 am]

BILLING CODE 3510–DS–P

[C–122–815]

Pure and Alloy Magnesium From

Canada: Final Results of the First

(1992) 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 March 19, 1996, the

Department of Commerce (the

Department) published in the Federal

Register its preliminary results of

administrative review of the

countervailing duty orders on pure and

alloy magnesium from Canada for the

period December 6, 1991 through

December 31, 1992 (see Preliminary

Results of First Countervailing Duty

Administrative Reviews: Pure

Magnesium and Alloy Magnesium From

Canada (Preliminary Results), 61 FR

11186 (March 19, 1996)). We have

completed these reviews and determine

the net subsidy to be 9.86 percent ad

valorem for Norsk Hydro Canada, Inc.

and all other producers/exporters except

Timminco Limited, which has been

excluded from these orders. We will

instruct the U.S. Customs Service to

assess countervailing duties as indicated

above.

EFFECTIVE DATE: March 24, 1997.

FOR FURTHER INFORMATION CONTACT:

Cynthia Thirumalai, 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) 482–4087.

SUPPLEMENTARY INFORMATION:

Background

On March 19, 1996, the Department

published in the Federal Register the

Preliminary Results of its administrative
13858 Federal Register / Vol. 62, No. 56 / Monday, March 24, 1997 / Notices

reviews of the countervailing duty

orders on pure and alloy magnesium

from Canada (61 FR 11186). The

Department has now completed these

administrative reviews in accordance

with section 751 of the Tariff Act of

1930, as amended (the Act).

We invited interested parties to

comment on the Preliminary Results. On

April 18 and 25, 1996, case briefs and

rebuttals were submitted by Norsk

Hydro Canada, Inc. (NHCI), a producer

of the subject merchandise which

exported pure and alloy magnesium to

the United States during the review

period, the Government of Que ́bec

(GOQ), and the Magnesium Corporation

of America (petitioner). At the request of

respondents, the Department held a

public hearing on May 2, 1996.

Period of Review

The reviews cover the period

December 6, 1991 through December 31,

1992. The reviews involve one company

and the following programs: Exemption

from Payment of Water Bills, Article 7

Grants from the Que ́bec Industrial

Development Corporation (SDI), St.

Lawrence River Environment

Technology Development Program,

Program for Export Market

Development, the Export Development

Corporation, Canada-Que ́bec Subsidiary

Agreement on the Economic

Development of the Regions of Que ́bec,

Opportunities to Stimulate Technology

Programs, Development Assistance

Program, Industrial Feasibility Study

Assistance Program, Export Promotion

Assistance Program, Creation of

Scientific Jobs in Industries, Business

Investment Assistance Program,

Business Financing Program, Research

and Innovation Activities Program,

Export Assistance Program, Energy

Technologies Development Program,

and Transportation Research and

Development Assistance Program.

Applicable Statute and Regulations

The Department is conducting these

administrative reviews in accordance

with section 751(a) of the Act. Unless

otherwise indicated, all citations to the

statute and to the Department’s

regulations are in reference to the

provisions as they existed on December

31, 1994. However, references to the

Department’s Countervailing Duties;

Notice of Proposed Rulemaking and

Request for Public Comments, 54 FR

23366 (May 31, 1989) (Proposed

Regulations), are provided solely for

further explanation of the Department’s

countervailing duty practice. Although

the Department has withdrawn the

particular rulemaking proceeding

pursuant to which the Proposed

Regulations were issued, the subject

matter of these regulations is being

considered in connection with an

ongoing rulemaking proceeding which,

among other things, is intended to

conform the Department’s regulations to

the Uruguay Round Agreements Act.

(See 60 FR 80 (Jan. 3, 1995)).

Scopes 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. Secondary and granular

magnesium are not included in the

scope of the orders. Pure and alloy

magnesium are currently provided for in

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).

Calculation Methodology for

Assessment and Cash Deposit Purposes

Since NHCI is the only known

producer/exporter subject to these

orders, we used its ad valorem subsidy

rate to determine the country-wide ad

valorem subsidy rate. This ad valorem

subsidy rate does not apply to

Timminco Limited because it has been

excluded from these orders.

Analysis of Programs

Based upon our analysis of our

questionnaire responses and written

comments from the interested parties

we determine the following:

I. Programs Conferring Subsidies

1. 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:

Manufacturer/exporter Rate

(percent)

NHCI and All Other Producers/

Exporters except Timminco

Ltd ......................................... 1.31

2. Article 7 Grants From the Que ́bec

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 for this program is as

follows:

Manufacturer/exporter Rate

(percent)

NHCI and All Other Producers/

Exporters except Timminco

Ltd ......................................... 8.55

II. Programs Found Not To Be Used

In the preliminary results we found

that the producers and/or exporters of

the subject merchandise did not apply

for or receive benefits under the

following programs:

• St. Lawrence River Environment

Technology Development Program.

• Program for Export Market

Development.

• Export Development Corporation.

• Canada-Que ́bec Subsidiary

Agreement on the Economic

Development of the Regions of Que ́bec.

• Opportunities to Stimulate

Technology Programs.

• Development Assistance Program.

• Industrial Feasibility Study

Assistance Program.

• Export Promotion Assistance

Program.

• Creation of Scientific Jobs in

Industries.

• Business Investment Assistance

Program.

• Business Financing Program.

• Research and Innovation Activities

Program.

• Export Assistance Program.

• Energy Technologies Development

Program.

• 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.
Federal Register / Vol. 62, No. 56 / Monday, March 24, 1997 / Notices 13859

Analysis of Comments

Comment 1: Countervailability of the

Exemption From Payment of Water Bills

Respondents argue that the NHCI’s

contract with its supplier of water, La

Societe ́ du Parc Industriel et Portuaire

de Be ́cancour (‘‘Industrial Park’’), was

inextricably linked with the credit it

received from the GOQ to offset its

water bills. If the water credit had not

been received, respondents state that a

different billing arrangement would

have been made. Therefore, in

determining the amount of the benefit

conferred by the credit, the Department

should look to what NHCI would have

paid absent the water credit and the

contract compared to what it paid with

the credit and the contract. To calculate

what NHCI would have paid absent the

credit and the contract, respondents

argue that the closest approximation is

the amount NHCI would have paid

under its present contract based on

actual water consumption rather than

forecasted consumption.

Petitioner states that under the terms

of the contract between NHCI and the

Industrial Park, the amount invoiced is

based, in part, on forecasted

consumption and this amount is what

NHCI would have paid in the absence

of the water credit. By countervailing

the portion of the water invoice that was

offset by the water credit and, hence,

not paid by NHCI, petitioner states that

the Department correctly calculated the

countervailable benefit in the

Preliminary Results. Even if the

Department were to consider what NHCI

would pay in the absence of the credit

and existing contract, petitioner points

out that other Industrial Park customers

also are obligated to pay an amount

based, in part, on forecasted

consumption although they are allowed

to change their forecasted consumption

levels yearly. Hence, forecasted

consumption cannot be ignored as an

element of the charge for water.

Petitioner also points out that, in

addition to requiring the Industrial Park

to supply the actual amount of water

used by NHCI, the contract also bound

the Industrial Park to certain other

potential obligations upon the request of

NHCI. According to petitioner, the

contract was structured to compensate

the Industrial Park for any costs it might

incur in meeting those other potential

obligations.

DOC Response: We disagree with

respondents that 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 to

measure the benefit conferred by the

credit. The position put forward by

NHCI is analogous to a situation where

a company received a low-interest loan

from a government and argues to the

Department that because of the low

interest rate, it borrowed more than it

otherwise would have. Therefore, the

company would contend, to calculate

the benefit conferred by the low-interest

loan, the Department should compare

the actual amount of interest paid on the

low-interest loan with the actual

amount of interest the company would

have paid on a smaller loan at a higher

benchmark interest rate. In this loan

situation, we would not enter into a

hypothetical calculation of what amount

the company would have borrowed

absent the low-interest loan. Instead,

consistent with section 771(5)(A)(II)(c)

of the Act, we would simply countervail

the difference in the two interest rates

without regard to what effect the

interest rate has on the other terms of

the loan, i.e., the amount borrowed.

In this review, the terms of the

contract between NHCI and the

Industrial Park unambiguously state that

NHCI is required to pay an amount

based, in part, on forecasted

consumption. To the extent the GOQ’s

provision of the 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.

Comment 2: Article 7 Assistance Under

the SDI Act

Petitioner states that the label

‘‘interest rebate’’ placed on the Article 7

assistance provided by the SDI does not

change the nature of the assistance and

that it remains, in substance, a grant.

According to petitioner, the purpose,

amount and disbursement timetable for

the Article 7 assistance was inextricably

linked to NHCI’s purchase of specified

environmental protection equipment.

Petitioner further points out that the

Article 7 assistance was not tied to the

cost of NHCI’s plant, the total amount of

NHCI borrowing, the interest rate paid

by NHCI on its borrowings, or the total

amount of interest incurred by NHCI.

Petitioner argues that the assistance had

the impact of encouraging NHCI to

install specified environmental

protection equipment as opposed to

encouraging NHCI to borrow money that

it otherwise would not have borrowed.

In light of the above, petitioner

concludes that the funding was in the

form of a non-recurring grant. Petitioner

emphasizes that the Department should

not allow respondents to engage in

‘‘subsidy engineering’’ by turning a large

non-recurring capital grant into some

other type of benefit.

Respondents argue that the

Department improperly applied its grant

methodology to the Article 7 assistance

provided to NHCI. According to

respondents, because NHCI knew it

would receive interest rebates from SDI

prior to taking out loans, the

Department should calculate the benefit

using its loan methodology and reduce

the interest rate charged by the amount

of the interest rebated. Respondents

state that this would be consistent with

the Department’s methodology, citing a

number of cases (e.g., Final Affirmative

Countervailing Duty Determination;

Certain Steel Products From the United

Kingdom (UK Steel), 58 FR 37393, 37397

(July 9, 1993)).

Respondents further contend that the

Preliminary Results were based on

significant errors of fact regarding the

interest rebates received by NHCI. First,

respondents argue that the relationship

between the interest rebates and the

underlying loans was not indirect.

Second, the interest rebates received by

NHCI reduced NHCI’s costs of

borrowing for the construction of its

plant, not its costs of purchasing

environmental equipment.

With respect to the first point,

respondents argue that the Department

was incorrect in its assertion that the

Article 7 assistance was more closely

linked to the acquisition of certain

assets than the accumulation of interest

costs. Moreover, respondents maintain

that the SDI assistance was not intended

solely for the purchase of environmental

protection equipment, but was also

intended to facilitate the construction of

NHCI’s facility in Que ́bec. The fact that

the Article 7 assistance was intended to

achieve more than one objective does

not distinguish the Article 7 assistance

from other interest rebate programs

which the Department has treated under

its loan methodology, according to

respondents.

With respect to the second point,

respondents argue that since the

Department wrongly assumed that

Article 7 assistance was provided solely

for the purchase of environmental

equipment, the Department was able to

conclude that the interest rebates

exceeded the interest that would be in

connection with the purchase of the

environmental equipment. Hence, the

Department concluded that the Article 7

assistance should not be treated as an

interest rebate. However, because the

Article 7 assistance was intended to

reduce the cost of financing for the

project as a whole, the assistance was

not excessive in the sense described by

the Department.
13860 Federal Register / Vol. 62, No. 56 / Monday, March 24, 1997 / Notices

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 (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 their brief, respondents argue 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,

respondents conclude, the benefit

should be measured with reference to

the duration of the borrowing for which

the rebate is provided.

We disagree 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,

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 5 percent

interest (which would be countervailed

according to the loan methodology) and

offering to rebate half of the interest

paid on a 10 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. 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 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 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) attached

to the Final Affirmative Countervailing

Duty Determination: Certain Steel

Products from Austria 58 FR 37217,

37254 (July 9, 1993), we developed a

hierarchy for determining whether socalled ‘‘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: Re-Examination of

Specificity of Article 7 Assistance

In the event the Department continues

to treat Article 7 assistance as a nonrecurring grant, respondents state that

the Department is obliged to make a

finding that the Article 7 assistance

conferred a subsidy to NHCI during the

POR. The Department may not, as it has

here, rely on a factual finding of

disproportionality during a different

time period and different amounts of

assistance. Respondents state that a

finding of de facto specificity requires a

case-by-case analysis, citing PPG

Industries, Inc. v. United States, Geneva

Steel v. United States, and Certain Steel

Products from Brazil to support their

reasoning. Respondents also cite the

sixth administrative review of Live

Swine from Canada; Final Results of

Countervailing Duty Administrative

Review (Live Swine) (59 FR 12243

(March 16, 1994)) as an example where

the Department reexamined the
Federal Register / Vol. 62, No. 56 / Monday, March 24, 1997 / Notices 13861

countervailability of benefits found to

be de facto specific in prior reviews.

Respondents maintain 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 period of

investigation. Respondents then present

a methodology they believe should be

employed whereby the Department

would compare the portion of NHCI’s

original grant allocated to the POR,

based on the Department’s standard

allocation methodology, and the

portions of benefits allocated to the POR

for all assistance bestowed to all other

enterprises receiving SDI assistance to

determine whether NHCI received a

disproportionate share of benefits.

Respondents state that the Department

had a responsibility to gather the

information necessary to make the

specificity determination they have

described. Since the Department has not

gathered the information required for

their proposed methodology,

respondents conclude that a

determination of de facto specificity

during the POR is not possible.

Petitioner counters that since the

Article 7 assistance was in the form of

a non-recurring grant, the Department

properly looked at the time period when

the government granted the assistance to

make the specificity finding. According

to petitioner, the provision of the

assistance was, and always will be,

specific regardless of how the GOQ

administers the program in future

years—even if it were to abolish the

program. In other words, petitioner

states that no future action by the GOQ

could retroactively make the subsidy

non-specific. Simply because the

Department’s grant calculation

methodology assigns an amortized

portion of the assistance to this review

period, it does not mean that the GOQ

is granting a new subsidy worthy of a

new specificity analysis. Indeed, states

petitioner, if a new subsidy were being

analyzed, the Department’s specificity

analysis would not take into account

portions of old subsidies amortized into

the period being examined.

DOC Position: It is the Department’s

policy not to revisit specificity

determinations 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). In this review, no new facts or

evidence have been presented which

would lead us to question that

determination. We address respondents’

arguments in favor of making a PORspecific determination below.

Respondents refer to the various

reviews of the countervailing duty order

on live swine from Canada as

demonstrating that the Department has,

as a matter of course, revisited its de

facto specificity determinations from

one segment of a proceeding to another.

While distinct de facto specificity

determinations were made with respect

to the Tripartite program in the fourth,

fifth and sixth reviews, these were not

done as a matter of course. The

Department reexamined specificity in

these reviews of live swine only as a

result of an adverse decision by the

Binational Panel. Because the Binational

Panel overturned the Department’s

finding of specificity regarding the

Tripartite program in the fourth review

of live swine for lack of evidence (and

eventually rejected its analysis

regarding specificity in the fifth review

but upheld its decision), the Department

continued to collect information in the

sixth review, which was running

concurrently with the Binational

proceedings. In explaining its actions in

the sixth review, the Department

recognized that it does not routinely

revisit specificity determinations, as

respondents would have us believe, in

stating the following:

Although our practice is not to reexamine a

specificity determination (affirmative or

negative) made in the investigation or in a

review absent new facts or evidence of

changed circumstances, the record in the

prior reviews did not contain all of the

information we consider necessary to define

the agricultural universe in Canada.

(See Live Swine.) As can be seen from

the foregoing, the facts surrounding the

live swine reviews do not correspond to

the situation presented here. In

particular, the issue of specificity had

not been conclusively settled in the live

swine reviews and was in the process of

litigation, and different information was

available; unlike this case in which a

definitive specificity determination had

already been established.

As for respondents’ arguments that de

facto specificity determinations should

be done on a case-by-case basis, we

agree. However, we disagree with

respondents as to what ‘‘case-by-case’’

means. In each of the citations

respondents refer to, ‘‘case’’ referred not

to a separate segment of the same

proceeding (e.g., the first review of an

order distinct from the second review),

but to a separate investigation or review

of different products (e.g., an

investigation of carbon black from

Mexico as opposed to an investigation

of steel products from Brazil) . It is this

latter definition of ‘‘case’’ we find to be

the proper basis for examination of de

facto specificity determinations. Since a

separate de facto specificity

determination was made in the

investigations of pure and alloy

magnesium, we find that the analysis

was properly conducted.

In proposing that the Department base

a POR-specific de facto specificity

finding on the portions of non-recurring

grants allocated to the POR, the

respondents appear to be confusing the

initial specificity determination based

on the action of the granting authority

at the time of bestowal with the

allocation of the benefit over time.

These are two separate processes. The

portions of grants 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. We

agree with petitioner that the

determination of whether a nonrecurring subsidy was specific (or not)

at the time of bestowal then becomes

attached to the subsidy.

Based on all of the arguments above,

we find that the bases of the original

specificity determination are still valid.

Since no new evidence has been

presented which would cause us to

revisit the original specificity

determination, we continue to find

assistance under Article 7 of the SDI Act

to be specific and, therefore,

countervailable.

Comment 4: Appropriate Denominator

Respondents state 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,

respondents argue 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. Respondents

additionally state that the Department

both failed 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,

respondents claim the Department

denied NHCI due process by preventing

it from rebutting the presumption and
13862 Federal Register / Vol. 62, No. 56 / Monday, March 24, 1997 / Notices

from responding to the rationale the

Department used to support its decision

to tie the subsidies to domestic

production. In support of their assertion

that the subsidies NHCI received are

tied to its domestic operations,

respondents state that any funds

received benefited all employmentrelated activities in Canada (e.g., sales of

all products) and that these activities are

related to both domestic and foreign

production. Respondents elaborate

further that the denominator policy

used by the Department in this case is

a deviation from the fungibility of

money principle.

Respondents also cite British Steel plc

v. United States (British Steel) (479 F.

Supp. 1254, 1371) 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.

Petitioner states that there is nothing

on the record indicating that the GOQ

intended the funds it provided to NHCI

to benefit production in another

country. Therefore, the Department

should continue to allocate the

subsidies received over sales of

merchandise produced in Canada.

DOC Response: Respondents cite

British Steel in an attempt 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 finaldetermination 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. 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 respondents of the

use of the rebuttable presumption.

We also note that the use of a

denominator based only on

domestically produced merchandise did

not come as a surprise to respondents.

To begin, 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 have

respondents 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

was used as the denominator in the

Preliminary Results. As can be seen

from the foregoing, respondents were

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.

Respondents also argue 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 respondents’ 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 factfinder 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

Issue 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, respondents’

arguments have not risen to the level of

evidence that would convince us that

the GOQ intended that the subsidies it

bestowed on NHCI were to benefit more

than just domestic production.

Therefore, respondents have failed to

rebut the presumption that the subsidies

received by NHCI 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’’

[emphasis added] (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

respondents’ 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.

Comment 5: Suspension of Liquidation

for the Period April 4, 1992 to August

31, 1992

Respondents argue that since the

Department terminated suspension of

liquidation for entries on or after April

4, 1992 to August 31, 1992,
Federal Register / Vol. 62, No. 56 / Monday, March 24, 1997 / Notices 13863

countervailing duties cannot be

reassessed for that period.

DOC Position: We agree with

respondents.

Final Results of Review

For the period December 6, 1991

through December 31, 1992, we

determine the net subsidy to be 9.86

percent ad valorem for Norsk Hydro

Canada Inc. and all other companies

except Timminco Limited, which has

been excluded from these orders. This

rate corrects the rate of 9.87 found in the

Preliminary Results which arose from a

rounding error.

The Department will instruct the U.S.

Customs Service to assess the following

countervailing duties on entries during

the periods December 6, 1991 to April

3, 1992 and September 1, 1992 to

December 31, 1992:

Manufacturer/exporter Rate

(percent)

Norsk Hydro Canada Inc. and

All Other Companies Except

Timminco Limited (which is

excluded from these orders) 9.86

The Department will also instruct the

U.S. Customs Service to collect a cash

deposit of estimated countervailing

duties of 9.86 percent of the f.o.b.

invoice price on all shipments of the

subject merchandise from Norsk Hydro

Canada Inc. and all other companies

except Timminco Limited (which was

excluded from the order during the

original investigation), entered, or

withdrawn from warehouse, for

consumption on or after the date of

publication of the final results of these

reviews.

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 CFR 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.

This administrative review and notice

are in accordance with section 751(a)(1)

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

CFR 355.22.

Dated: March 12, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–7358 Filed 3–21–97; 8:45 am]

BILLING CODE 3510–DS–P

[C–122–815]

Pure Magnesium and Alloy Magnesium

From Canada; Preliminary Results of

Countervailing Duty Administrative

Reviews

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of

countervailing duty administrative

reviews.

SUMMARY: The Department of Commerce

(the Department) is conducting

administrative reviews of the

countervailing duty orders on pure and

alloy magnesium from Canada for the

period January 1, 1993 through

December 31, 1993. We have completed

these reviews and preliminarily

determine the net subsidy to be 7.13

percent ad valorem for subject

merchandise for Norsk Hydro Canada,

Inc. (NHCI) and all other producers/

exporters from Canada except exports

from Timminco Limited, which

company has been excluded from these

orders. If the final results of these

reviews remain the same as these

preliminary results, the Department will

instruct the U.S. Customs Service to

assess countervailing duties as indicated

above.

EFFECTIVE DATE: March 24, 1997.

FOR FURTHER INFORMATION CONTACT:

Sally Hastings or Cynthia Thirumalai,

AD/CVD Enforcement, Group 1, Office

1, Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, NW., Washington,

DC 20230; telephone: (202) 482–3464 or

482–4087, respectively.

Background

On August 31, 1992, the Department

published in the Federal Register (57

FR 39392) the countervailing duty

orders on pure and alloy magnesium

from Canada. The Department

published a notice of ‘‘Opportunity to

Request an Administrative Review’’ (59

FR 39543) of the countervailing duty

orders on August 3, 1994. We received

timely requests for review from

petitioner, Magnesium Corporation of

America (Magcorp) and respondent,

NHCI. The Department initiated the

administrative reviews, for the period

January 1, 1993 through December 31,

1993, on September 16, 1994 (59 FR

47609).

The Department issued a

questionnaire to the Government of

Canada (GOC) on September 7, 1994. On

October 24, 1994, we received

questionnaire responses from NHCI, the

GOC and the Government of Que ́bec

(GOQ). The Department issued

supplemental questionnaires to the

GOQ on October 11, 1996 and NHCI on

November 5, 1996. We received

supplemental responses from the GOQ

on October 28, 1996 and NHCI on

November 18, 1996.

On October 18, 1994, petitioner

requested that the Department reexamine whether the amended electric

power contract between NHCI and

Hydro Que ́bec is countervailable. On

April 28, 1995, the Department declined

to reinvestigate the amended electric

power contract.

Applicable Statute and Regulations

The Department is conducting these

administrative reviews in accordance

with section 751(a) of the Tariff Act of

1930, as amended (the Act). Unless

otherwise indicated, all citations to the

statute and to the Department’s

regulations are in reference to the

provisions as they existed on December

31, 1994. However, references to the

Department’s Countervailing Duties;

Notice of Proposed Rulemaking and

Request for Public Comments, 54 FR

23366 (May 31, 1989) (Proposed

Regulations), are provided solely for

further explanation of the Department’s

countervailing duty practice. Although

the Department has withdrawn the

particular rulemaking proceeding

pursuant to which the Proposed

Regulations were issued, the subject

matter of these regulations is being

considered in connection with an

ongoing rulemaking proceeding which,

among other things, is intended to

conform the Department’s regulations to

the Uruguay Round Agreements Act.

See 60 FR 80 (January 3, 1995).

Scope of the Reviews

The products covered by these orders

are 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.

Secondary and granular magnesium are

not included. Pure and alloy magnesium

are currently provided for in

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 descriptions of

the scopes of these proceedings are

dispositive.