Federal Register / Vol. 63, No. 91 /Tuesday, May 12, 1998 / Notices 26147

reimbursement of antidumping duties

occurred and the subsequent assessment

of double antidumping duties.

This notice also serves as the only

reminder to parties subject to

administrative protective order (APO) of

their responsibility concerning the

disposition of proprietary information

disclosed under APO in accordance

with section 353.34(d) of the

Department’s regulations. Timely

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)(B) of the Act (19 U.S.C.

1675(a)(1)) and 19 CFR 353.22.

Dated: May 5, 1998.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 98–12446 Filed 5–11–98; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–122–814]

Pure Magnesium From Canada;

Preliminary Results of Antidumping

Administrative Review and Notice of

Intent Not To Revoke Order in Part

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of

antidumping duty administrative review

and notice of intent not to revoke order

in part of pure magnesium from Canada.

SUMMARY: The Department of Commerce

is conducting an administrative review

of the antidumping duty order on pure

magnesium from Canada. The period of

review is August 1, 1996 through July

31, 1997. This review covers imports of

pure magnesium from one producer/

exporter.

We have preliminarily found that

sales of subject merchandise have not

been made below normal value. Further,

we intend not to revoke the order with

respect to pure magnesium from Canada

produced by Norsk Hydro Canada Inc.

If these preliminary results are adopted

in our final results, we will instruct the

Customs Service not to assess

antidumping duties.

Interested parties are invited to

comment on these preliminary results.

We will issue the final results not later

than 120 days from the date of

publication of this notice.

EFFECTIVE DATE: May 12, 1998.

FOR FURTHER INFORMATION CONTACT: Zak

Smith, Import Administration,

International Trade Administration,

U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W.,

Washington D.C. 20230; telephone (202)

482–1279.

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 of Commerce’s (‘‘the

Department’s’’) regulations refer to the

regulations, codified at 19 CFR part 351

(62 FR 27399, May 19, 1997).

Background

The Department published an

antidumping duty order on pure

magnesium from Canada on August 31,

1992 (57 FR 39390). On August 4, 1997,

the Department published a notice of

‘‘Opportunity to Request an

Administrative Review’’ of the

antidumping duty order on pure

magnesium from Canada (62 FR 41925).

On August 29, 1997, a producer/

exporter, Norsk Hydro Canada Inc.

(‘‘NHCI’’) requested an administrative

review of its exports of the subject

merchandise to the United States for the

period of review August 1, 1996,

through July 31, 1997. In accordance

with 19 CFR 351.221, we initiated the

review on September 25, 1997. The

Department is now conducting this

administrative review in accordance

with section 751 of the Act.

Scope of Review

The product covered by this review is

pure magnesium. Pure unwrought

magnesium contains at least 99.8

percent magnesium by weight and is

sold in various slab and ingot forms and

sizes. Granular and secondary

magnesium are excluded from the scope

currently classifiable under subheading

8104.11.0000 of the Harmonized Tariff

Schedule (‘‘HTS’’). The HTS item

number is provided for convenience and

for customs purposes. The written

description remains dispositive.

Verification

As provided in section 751(d) of the

Act, we verified information provided

by the respondent, NHCI, by using our

standard verification procedures,

including on-site examination of

relevant sales and financial records.

Export Price

For sales to the United States, we

used export price (‘‘EP’’) as defined in

section 772(a) of the Act because the

merchandise was sold directly to the

first unaffiliated purchaser in the United

States prior to importation. The use of

constructed export prices was not

warranted based on the facts of the

record. EP was based on the packed

delivered, duties unpaid price to

unaffiliated purchasers in the United

States. We made a deduction for

movement expenses in accordance with

section 772(c)(2)(A) of the Act; this

included the foreign and U.S. inland

freight expense.

Normal Value

We compared the aggregate quantity

of home market and U.S. sales and

determined that the quantity of the

company’s sales in its home market was

more than five percent of the quantity

of its sales to the U.S. market.

Consequently, pursuant to section

773(a)(1)(B) of the Act, we based normal

value (‘‘NV’’) on home market sales.

We made adjustments for differences

in packing in accordance with sections

773(a)(6)(A), B(i) of the Act. We also

made adjustments for movement

expenses, consistent with section

773(a)(6)(B)(ii) of the Act, for inland

freight. In addition, we made

adjustments for differences in

circumstances of sale (‘‘COS’’) in

accordance with section 773(a)(6)(C)(iii)

of the Act and 19 CFR 351.410. We

made COS adjustments by deducting

direct selling expenses incurred on

home market sales (credit expenses) and

adding U.S. direct selling expenses

(credit expenses).

Revocation

Pursuant to 19 CFR 351.222(b)(2),

NHCI requested revocation of the

antidumping duty order in part. In

accordance with 19 CFR 351.222(e), the

request was accompanied by

certifications that NHCI had not sold the

subject merchandise at less than normal

value during the current period of

review and would not do so in the

future. NHCI further certified that it sold

the subject merchandise to the United

States in commercial quantities for a

period of at least three consecutive

years. NHCI also agreed to immediate

reinstatement of the antidumping duty

order, as long as any exporter or

producer is subject to the order, if the

Department concludes that NHCI,

subsequent to the revocation, sold the
26148 Federal Register / Vol. 63, No. 91 /Tuesday, May 12, 1998 / Notices

subject merchandise at less than normal

value.

On October 22 and November 6, 1997,

the petitioner submitted argumentation

opposing NHCI’s revocation request. On

February 12, 1998, the Department

established a process for the submission

of factual information and argument

pertaining to the issue of likelihood of

future dumping.

Interested Party Comments on Whether

Future Dumping Is Likely

On April 2 and April 9, 1998, NHCI

and the petitioner submitted comments

and rebuttals, respectively, on the issue

of whether it is likely that NHCI would

resume dumping if the Department

granted NHCI’s revocation request.

Petitioner’s Arguments: The petitioner

contends that NHCI did not make sales

in commercial quantities during the last

three consecutive review periods, and

thus has not fulfilled one of the

revocation requirements under the new

regulations. In this case, the petitioner

states that although one sale during a

one-year period may be sufficient for the

calculation of an antidumping margin, it

does not constitute commercial

quantities for the relevant product and

industry. The petitioner also argues that

the dramatic decline in NHCI’s sales

after the imposition of the order is

indicative of NHCI’s inability to make

sales in the United States without

dumping.

The petitioner made comments as to

the condition of the pure magnesium

market as well. The petitioner argues

that the likelihood that NHCI will

resume dumping is all the greater

because of the substantial fall and

continuing decline in magnesium prices

that has occurred over the past two

years, which is due to a fundamental

oversupply in the global market.

According to the petitioner, this

oversupply will be exacerbated in

coming years as new production

facilities come on line in Canada

(unrelated to NHCI) and in third

countries. Furthermore, NHCI has plans

to increase its own production capacity,

which, according to the petitioner, will

contribute to the oversupply in the

global market and thus, likely lead to a

resumption of dumping. In response to

NHCI’s argument that it is focusing on

the alloy market, the petitioner states

that greater competition in magnesium

products along with supply exceeding

demand will pressure NHCI to engage

the U.S. pure magnesium market.

Furthermore, according to the

petitioner, if NHCI vigorously enters the

U.S. pure magnesium market it will be

facing a situation where pure

magnesium prices are actually on the

decline, making dumping more likely.

Respondent’s Arguments: NHCI

argues that it has met all the procedural

requirements for revocation. It has made

the proper submissions and

certifications, has a record of three years

of U.S. sales at not less than normal

value, and will continue to trade fairly

and abide by trade laws in all markets.

In response to the petitioner’s

allegations with respect to commercial

quantities, NHCI argues that the

Department has stated in past cases that

there has been no substantive change of

the revocation policy pursuant to the

new regulations, and thus no additional

revocation threshold in the form of the

certification of sales in commercial

quantities has been created. Rather,

NHCI states that the Department should

give great weight to the fact that it has

met the Department’s requirement of

three consecutive years without

dumping, all based on bona fide sales.

With respect to the likelihood of

future dumping, NHCI argues that it has

no incentive to engage in dumping in

the U.S. pure magnesium market

because it has a stable customer base in

Canada and third countries.

Additionally, it has no incentive to shift

production from alloy magnesium to

pure magnesium, given the growth in

the alloy magnesium market. While

NHCI’s planned plant expansion may

give it the ability to produce more pure

magnesium for sale in the U.S. market,

the company contends that the planned

expansion is for the alloy magnesium

market, and that any increases in

production are not necessarily targeted

for the United States. Even if some of

the new production capacity were for

pure magnesium, NHCI states that there

has been growth in all magnesium

markets, not just alloy. NHCI notes that

such market conditions do not lend

themselves to dumping.

NHCI maintains that the growth in the

alloy magnesium market accounts for

the drop off in NHCI’s U.S. sales of pure

magnesium. In support of its position,

NHCI argues that the Norsk Hydro group

produces the subject merchandise in

both Canada and Norway, yet sales from

Norway also declined during the same

period, despite the absence of

antidumping duties applicable to

Norwegian imports. NHCI explains that

the controlling factor for these

marketing decisions has been the

growth of the alloy magnesium market.

Department Analysis

Section 351.222(b)(2) of the

Department’s regulations states that the

Secretary may revoke an order in part if

the Secretary concludes that: (i) the

exporter or producer has sold the

merchandise at not less than normal

value for a period of three consecutive

years; (ii) it is not likely that the person

will in the future sell the merchandise

at less than normal value; and (iii) the

person agrees in writing to its

immediate reinstatement in the order if

the Secretary concludes that dumping

has resumed (see, 19 CFR 351.222(b)

(1998)). If these preliminary results are

adopted as final results, NHCI will have

met the first criterion. NHCI’s agreement

to its immediate reinstatement in the

order if the Secretary concludes that

dumping has resumed meets the third

criterion. Thus, the issue is whether the

evidence supports a finding that it is not

likely that NHCI will in the future sell

the merchandise at less than normal

value.

When making this determination, the

Department looks at all relevant

information on the record (see, Brass

Sheet and Strip from Canada:

Preliminary Results of Antidumping

Duty Administrative Review and Notice

of Intent To Revoke Order in Part (63 FR

6519, 6523, February 9, 1998)

(‘‘Canadian Brass Sheet’’)). When

assessing whether a company is not

likely to sell at less than normal value

in the future, the lack of dumping over

the course of three years can be

predictive of future behavior in the

absence of contrary evidence. Where, as

was done here, the petitioner makes a

compelling argument that dumping may

occur in the future if the order is

revoked, the Department may request

and consider additional relevant

evidence in making its revocation

decision. As we stated in Canadian

Brass Sheet, ‘‘the Department has

considered, in addition to the

respondent’s prices and margins in the

preceding periods, such other factors as

conditions and trends in the domestic

and home market industries, currency

movements, and the ability of the

foreign entity to compete in the U.S.

marketplace without sales at less than

normal value.’’ Id. See also, Brass Sheet

and Strip from Germany; Final Results

of Antidumping Duty Administrative

Review and Determination Not to

Revoke in Part (61 FR 49727, 49730,

September 23, 1996) (‘‘German Brass

Sheet’’).

Following the general practice

discussed above, we closely examined

NHCI’s ability to compete in the U.S.

market without sales at less than normal

value. We based this particular analysis

on NHCI’s historical sales behavior,

examining in particular its behavior

prior to and after the issuance of the

antidumping duty order. We also

analyzed trends and conditions in the
Federal Register / Vol. 63, No. 91 /Tuesday, May 12, 1998 / Notices 26149

U.S. and Canadian magnesium markets.

(For a further discussion of the factual

background to our decision, see,

Memorandum to Gary Taverman dated

May 4, 1998.) As discussed below, we

preliminarily find that the evidence on

the record does not support a

conclusion that the standard for

revocation has been met in this case.

An examination of the history of

NHCI’s U.S. pure magnesium sales

behavior reveals that prior to the

antidumping order NHCI had numerous

U.S. pure magnesium customers and

sold very large quantities of pure

magnesium. Yet, after the investigation,

in which the Department found that

NHCI was making sales at less than

normal value, imports of pure

magnesium into the United States

essentially stopped. In the two years

after the imposition of the antidumping

order, NHCI made no sales of pure

magnesium into the United States.

Furthermore, in the succeeding three

years sales were negligible (i.e., for each

year, sales were less than one-half of

one percent of the sales volume made in

the last completed fiscal year prior to

the order). The severe and abrupt dropoff in sales by NHCI after the order is

a strong indicator that the company is

unable to sell in the United States

without engaging in dumping. As noted

in German Brass Sheet, ‘‘the sharp

decrease in volume after imposition of

the order . . . suggest[s] that [the

respondent] has difficulty selling [the

subject merchandise] above fair value’’

(at 61 FR 49731). Thus, based on the

virtual abandonment of the U.S. pure

magnesium market by NHCI, it is

reasonable to assume that the company

has difficulty selling pure magnesium in

the United States at or above normal

value.

In order for the Department to revoke

the antidumping duty order with

respect to NHCI, the record evidence

must support a finding that it is not

likely that the company will sell at less

than normal value in the future. As

noted above, three years of no dumping

is normally probative as to a company’s

future pricing practices. However, this

approach assumes the company

continues to participate meaningfully in

the U.S. market. In this case, the three

years in question are characterized by a

negligible number and volume of sales

by NHCI to the U.S. market and

therefore does not have the same

probative value.

NHCI states that the decline in its U.S.

sales is not due to its inability to make

sales above normal value, but rather due

to its focus on the alloy magnesium

market. We do not accept this

explanation for two reasons. First, while

we recognize the recent and projected

rapid growth rates for alloy magnesium,

we find it extremely difficult to

conclude that NHCI’s abrupt

abandonment of the U.S. market for

pure magnesium was unrelated to the

dumping proceedings.

Second, given the size and

importance of the U.S. pure magnesium

market and NHCI’s continued sales of

pure magnesium in other markets, we

are not convinced that NHCI has

permanently changed its marketing and

sales strategy to focus solely on alloy

magnesium. Although the company

implies that it has little interest in the

U.S. market for pure magnesium, we

note that NHCI maintains significant

sales of pure magnesium in Canada and

third countries. The magnitude of

NHCI’s pure magnesium sales in Canada

reflects the current global reality of a

higher demand for pure than alloy

magnesium. The higher demand for

pure magnesium also exists in the

United States. U.S. consumption of pure

magnesium in 1996, for instance, was

nearly triple that of alloy magnesium

consumption. Given the mix of

magnesium products (alloy versus pure)

in the United States and the fact that the

United States is the largest market in the

world for pure magnesium, it appears

likely that NHCI, in the absence of the

antidumping duty order, would seek to

reestablish itself in the U.S. pure

magnesium market.

Thus, based on the above, we

preliminarily conclude that the

revocation standard has not been met in

this case. Therefore, we have

preliminarily determined not to revoke

the antidumping duty order with

respect to pure magnesium from Canada

produced by NHCI.

Preliminary Results of the Review

As a result of this review, we

preliminarily determine that NHCI’s

margin for the period August 1, 1996,

through July 31, 1997, is zero.

Parties to the proceeding may request

disclosure within five days of the date

of publication of this notice. Interested

parties may also request a hearing

within thirty days of publication. If

requested, a hearing will be held 37

days after publication. Interested parties

may submit case briefs within thirty

days of publication. Rebuttal briefs,

which must be limited to issues raised

in the case briefs, may be filed not later

than five days after the case briefs. The

Department will issue a notice of the

final results of this administrative

review, which will include the results of

its analysis of issues raised in any such

briefs, within 120 days from the

publication of these preliminary results.

Furthermore, the following deposit

requirements will be effective upon

completion of the final results of this

administrative review for all shipments

of pure magnesium from Canada

entered, or withdrawn from warehouse,

for consumption on or after the

publication date of the final results of

this administrative review, as provided

by section 751(a)(1) of the Act: (1) the

cash deposit rate for the reviewed

company will be the rate established in

the final results of this administrative

review (except no cash deposit will be

required for the company if its

weighted-average margin is de minimis,

i.e., less than 0.5 percent); (2) for

merchandise exported by manufacturers

or exporters not covered in this review

but covered in the original less than fair

value investigation or a previous review,

the cash deposit will continue to be the

most recent rate published in the final

determination or final results for which

the manufacturer or exporter received

an individual rate; (3) if the exporter is

not a firm covered in this review, the

previous review, or the original

investigation, but the manufacturer is,

the cash deposit rate will be the rate

established for the most recent period

for the manufacturer of the

merchandise; and (4) if neither the

exporter nor the manufacturer is a firm

covered in this or any previous reviews,

the cash deposit rate will be 21 percent,

the ‘‘all others’’ rate established in Pure

Magnesium from Canada; Amendment

of Final Determination of Sales At Less

Than Fair Value and Order in

Accordance With Decision on Remand

(58 FR 62643, November 29, 1993).

This notice serves as a preliminary

reminder to importers of their

responsibility to file a certificate

regarding the reimbursement of

antidumping duties prior to liquidation

of the relevant entries during this

review period. Failure to comply with

this requirement could result in the

Secretary’s presumption that

reimbursement of antidumping duties

occurred and the subsequent assessment

of double antidumping duties.

This administrative review and notice

are in accordance with sections

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

1675(a)(1)) and 19 CFR section 351.213.

Dated May 4, 1998.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 98–12595 Filed 5–11–98; 8:45 am]

BILLING CODE 3510–DS–P