[Federal Register Volume 63, Number 91 (Tuesday, May 12, 1998)]
[Notices]
[Pages 26147-26149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12595]


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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.

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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

[[Page 26148]]

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

[[Page 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 drop-
off 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