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Final Determination - Fresh Tomatoes

OTTAWA, June 24, 2002

4237-92
AD/1274

STATEMENT OF REASONS

Concerning the making of a final determination of dumping with respect to

FRESH TOMATOES, ORIGINATING IN OR EXPORTED FROM THE UNITED STATES OF AMERICA, EXCLUDING TOMATOES FOR PROCESSING

DECISION

Pursuant to paragraph 41(1)(a) of the Special Import Measures Act, the Commissioner of Customs and Revenue has today made a final determination of dumping concerning fresh tomatoes, originating in or exported from the United States of America, excluding tomatoes for processing.

 

This Statement of Reasons is also available in French. Please refer to the "Information" section.
Cet énoncé des motifs est également disponible en français. Veuillez vous reporter la section <<Information>>.

TABLE OF CONTENTS

Summary

Interested Parties
Complainant
Exporters
Importers

Background

Product
Product Definition
Additional Product Information
Classification of Imports

Canadian Industry

Canadian Market
Total Domestic Production for Domestic Consumption

The Investigation
Initiation
Preliminary Determination of Dumping
Final Determination of Dumping
Normal Value
Export Price
Margins of Dumping
Volume of Dumped Imports
Representations concerning the Investigation

Decision

Future Action

Publication

Information

Appendix 1
Margin of Dumping by Exporter

Summary

On November 9, 2001, the Commissioner of Customs and Revenue (Commissioner) initiated an investigation into the alleged injurious dumping of fresh tomatoes, originating in or exported from the United States of America, excluding tomatoes for processing.

A preliminary determination of dumping with respect to the subject goods was made on March 25, 2002. The investigation continued after the preliminary determination and the Commissioner is satisfied that the margins of dumping are not insignificant. Accordingly, the Commissioner has, on this date, made a final determination of dumping in accordance with paragraph 41(1)(a) of the Special Import Measures Act (SIMA).

The inquiry by the Canadian international Trade Tribunal (Tribunal) concerning the question of injury to the Canadian industry is continuing. Provisional duties will continue to be assessed on importations of the subject goods until the Tribunal issues its finding.

Interested Parties

Complainant

The Canadian Tomato Trade Alliance filed this complaint on behalf of its members. The Canadian Tomato Trade Alliance is an ad hoc alliance formed by greenhouse producers of fresh tomatoes in Canada, representing approximately 82 per cent of the fresh tomato producers in Canada.

Exporters

The Canada Customs and Revenue Agency (CCRA) identified 133 companies that may be exporting the subject goods to Canada.

Importers

The CCRA identified 227 importers that may be importing the subject goods.

Background

On September 28, 2001, the Canadian Tomato Trade Alliance filed a formal complaint with the CCRA alleging that its members were being injured as a result of dumped imports of fresh tomatoes, originating in or exported from the United States of America, excluding tomatoes for processing.

On October 19, 2001, the CCRA informed the Canadian Tomato Trade Alliance that this complaint was properly documented and notified the government of the United States that a properly documented complaint had been filed.

On November 9, 2001, the Commissioner initiated a dumping investigation and notified the Tribunal of that decision. The Tribunal subsequently initiated a preliminary injury inquiry into whether the evidence disclosed a reasonable indication of injury, retardation or threat of injury caused by the alleged dumping of the goods. On January 8, 2002, the Tribunal concluded that the evidence disclosed a reasonable indication that the alleged dumping has caused injury.

On February 1, 2002, the Commissioner extended the time period for completing the preliminary investigation to 135 days. On March 25, 2002, the Commissioner made a preliminary determination of dumping with respect to the subject goods.

On April 15, 2002, proposals for an undertaking by various California and Florida exporters were submitted to the Commissioner. The undertakings contained an offer intended to eliminate the injury. The undertakings pertained to mature green field grown tomatoes imported into Canada between June 1 and September 30 of each year by Canadian retailers and purchased directly from United States packer exporters. Minimum point of direct shipment prices for these subject goods were stipulated. The undertakings were not accepted by the CCRA, as the Commissioner was not of the opinion that the undertakings would eliminate the injury, retardation or threat of injury being caused by the dumping.

Product

Product Definition

For the purpose of this investigation the subject goods are defined as:

  • fresh tomatoes, originating in or exported from the United States of America, excluding tomatoes for processing.

Additional Product Information

Tomatoes are grown commercially for two general purposes:

  • "fresh market tomatoes" or "fresh tomatoes", for consumption as a fresh product; or
  • "processing tomatoes", for further processing into such products as paste, sauce and juice.

The fresh tomatoes covered by the scope of this investigation include those imported for consumption as fresh product, which are not further processed. They may be chilled or not.

Processing is defined to include preserving by any commercial process, such as canning, dehydrating, drying or the addition of chemical substances, or converting the tomato product into juices, sauces or purées.

Common types of commercially grown fresh market tomatoes include: round or "beefsteak"; roma or "plum" or "pear"; cherry; and grape tomatoes. In the United States tomatoes are generally grown in fields, but are also grown in greenhouses.

The above types of fresh market tomatoes can be further divided into two other characteristics, depending on the stage of maturation when they are harvested. "Mature green" tomatoes are harvested when they are fully mature in size but still entirely green in colour, which are then degreened at some point in the distribution, through the use of ethylene gas. "Vine ripe" or red tomatoes are allowed to ripen to a moderate colour on the vine, prior to harvest.

At the point of sale to the consumer, fresh market round, roma, cherry or grape tomatoes (whether field or greenhouse produced, whether mature green or vine ripe) are a red ripe fruit that may be sliced or cut up for salads, sandwiches or salsas, or as an ingredient in various recipes. Roma tomatoes differ from round, cherry and grape tomatoes in that they have a more oval shape, otherwise, they share the same characteristics and end-uses.

The subject goods are typically shipped to Canada in 25 pound boxes, but this may vary depending on the type of tomato.

Classification of Imports

The subject tomatoes are classified under the following Harmonized System classification numbers:

0702.00 Tomatoes, fresh or chilled

  • 0702.00.99.10 ----- Cherry
  • 0702.00.99.20 ----- Roma
  • 0702.00.99.90 ----- Other

The rate of duty applicable to imports of fresh tomatoes from the United States is zero per cent.

Canadian Industry

Fresh market tomatoes come from two sources, greenhouse production and field production. Greenhouse tomatoes are destined for the fresh market, while production of field tomatoes is allocated between the fresh market and processing industries. Evidence has shown that greenhouse production in Canada is increasing, while overall field production of fresh market tomatoes has been declining. The majority of field grown tomatoes are specifically grown for processing, which are excluded from this complaint.

Canadian Market

The total market of the subject goods has increased steadily in the last four years, from 257,716 metric tonnes in 1998 to 304,107 metric tonnes in 2001.

Apparent Canadian Fresh Tomato Market from 1998 to 2001
(metric tonnes)
Product Source

1998

1999

2000

2001

Greenhouse Production

115,970

158,042

182,736

210,686

Field Production

47,628

30,099

26,012

26,718

Total Production

163,598

188,141

208,748

237,404

Less Exports

61,765

79,567

101,472

105,751

Total Domestic Production for Domestic Consumption

101,833

108,484

107,726

131,653

Total Imports

155,883

162,205

170,724

172,454

Apparent Canadian Market

257,716

270,689

278,000

304,107

Source: Statistics Canada

The Investigation

The dumping investigation covered subject goods from the United States, shipped to Canada during the period of investigation, from October 1, 2000 to September 30, 2001.

Initiation

All known importers were contacted at the time of the initiation of the investigation and were requested to respond to a Request for Information concerning subject goods imported into Canada during the period of investigation.

All known exporters were also contacted. In view of the large number of exporters, the CCRA limited the number of exporters to be investigated and a Request for Information was sent to the 40 largest exporters, representing in excess of 70 per cent of the subject goods imported into Canada during the period of investigation. These exporters, as mandatory respondents, were required to respond, while the balance of the exporters were advsied they could ask for a Request for information to make a voluntarily response. Furthermore, in the situation where a mandatory respondent was not the grower or did not grow all the tomatoes it exported to Canada, the CCRA requested them to send a copy of the Request for Information to all of their unrelated producers or suppliers. The CCRA followed up with the mandatory respondents that provided a response to see if they had contacted all of their unrelated suppliers, if applicable. It was recognized this might increase the number of mandatory respondents.

Preliminary Determination of Dumping

A total of 33 submissions were received from mandatory reply exporters and producers. No voluntary submission was received. Of those submissions, 9 were incomplete. Complete submissions were received from 15 exporters and 9 producers who supplied tomatoes to those exporters. These complete submissions were considered for the preliminary decision of dumping. No submissions were verified at the exporters' premises for purposes of the preliminary decision.

Normal values, export prices and margins of dumping were estimated based on the exporters' and producers' information for those who provided a complete submission, covering domestic selling prices, costs, overheads and profits.

Final Determination of Dumping

On-site verifications were conducted just prior to the preliminary determination at the premises of nine exporters in Florida and six exporters in California, for the purpose of the final determination. The information from the nine producers who provided complete submissions was verified at the same time as the respective exporters. No additional on-site verification visits were conducted between the preliminary and final determinations of dumping.

Additional information was requested, prior to the final determination, from the 15 exporters that had their responses verified, in order to clarify sales data provided in their submissions. The additional information was received from 14 of the exporters. One exporter who had a submission that was considered complete for the purpose of the preliminary determination did not provide the additional information requested for the final determination. This exporter is therefore considered as having an incomplete submission for purposes of the final determination.

The CCRA also requested the mandatory reply exporters and producers that had not provided information, or had provided incomplete submissions prior to the preliminary determination, to provide a complete submission or the information missing from their submission. As well, voluntary submissions could also be still made by other exporters, not included in the sample of mandatory respondents.

A total of nine submissions were received from these exporters and producers, for the purpose of the final determination. Eight submissions were from mandatory reply exporters and producers, and one was a voluntary submission. Of these submissions, eight were considered complete, including the voluntary submission.

The CCRA held a disclosure meeting in Ottawa on April 11, 2002, regarding the preliminary determination, with the lawyers representing the exporters who were verified. A second disclosure meeting was held on June 6, 2002, regarding issues that arose from the preliminary determination and on site verification visits.

The results of the investigation with respect to each of the exporters can be found in Appendix 1.

Normal Value

The primary method for determining normal value under SIMA is on the basis of the exporter's domestic selling prices. In the absence of sales of like goods to more than one unrelated customer, normal values are determined on the basis of the sum of the cost of production of the goods, an amount for administrative, selling and all other costs, and an amount for profit.

In this investigation, the majority of normal values for cooperative exporters were based on domestic sales of tomato groupings under section 15 of SIMA, with appropriate adjustments made pursuant to Special Import Measures Regulations 7 for delivery costs. Where an adjusted selling price was negotiated due to market related price reductions, the adjusted selling price was accepted. The groupings for normal value calculations were defined by using as many of the relevant characteristics that were applicable: type; colour; size; packing configuration; and grade. In one case, one other factor, organic and non-organic tomatoes, was also taken into consideration in the groupings for that exporter.

The domestic sales of tomato groupings, in the same groupings as the tomatoes exported to Canada, were analysed for profitability. Section 16 of SIMA concerns the treatment of sales made at prices below full cost. The profitability analysis period was October 1, 2000 to September 30, 2001. The full costs used in the profitability analysis were either verified costs or the costs reviewed in the submissions. Expenses and income that were deemed by the CCRA to be extraordinary in nature were not included in the product costs, that is, expenses and income that are not normally associated with those necessary to grow tomato. Unacceptable sales, those not meeting the conditions set out in section 16 of SIMA, were deleted from the sales used in determining normal values.

The domestic sales that remained after the section 16 analysis were then sorted into 60-day periods. The 60-day periods were chosen by starting on the first day of the first month in which there were sales during the period of investigation. For example, if the first sale to Canada was October 10, the first 60-day period started with October 1. There were no overlapping 60-day periods.

In the absence of domestic sales of like goods of a tomato grouping during a specific 60-day period to establish a normal value, the period was extended back by one month at a time, until a normal value was calculated, if possible.

In the absence of domestic sales of like goods of a tomato grouping, normal values were determined under section 19 of SIMA, on the basis of the sum of the cost of production of the goods, an amount for administrative, selling and all other costs, and an amount for profit. The amount for profit was based first on the profit earned by the exporter for the period of investigation, for that tomato grouping. In the absence of a profit for a tomato grouping, the amount for profit was based on the profit earned by the exporter for the period of investigation, for domestic sales of the type of tomato in that grouping.

Export Price

The export price of subject goods is generally the lesser of the exporter's selling price to the importer in Canada, less all costs, charges and expenses resulting from the exportation of the goods, and the importer's purchase price less all costs, charges and expenses. In this investigation, the CCRA found, for the exporters that were verified, that their selling prices to their importers were reliable. The export prices for exporters that provided complete submissions after the preliminary determination, which have not been verified, have been accepted as reliable.

Therefore, in all cases, export prices have been determined under section 24 of SIMA, based on the selling prices to the importers, with deductions for freight and any other expenses resulting from the exportation of the goods, where warranted.

Margins of Dumping

The margin of dumping is the amount by which the normal value exceeds the export price. For the purpose of the final determination of dumping, the margin of dumping was calculated by comparing the normal values with the export prices.

The CCRA's review of imports from the United States during the period of investigation, from October 1, 2000 to September 30, 2001, reveals that 87 per cent of the volume of subject goods from all exporters was dumped. The margins of dumping of the dumped goods ranged from 0.01 to 1,032 per cent, expressed as a percentage of export price. The weighted average margin of dumping of all goods is 33 per cent, expressed as a percentage of export price. These margins of dumping are not considered to be insignificant, as they are above the 2% threshold as defined in subsection 2 (1) of SIMA.

Individual company weighted average margins of dumping were calculated for each of the exporters required to respond to the CCRA Request for Information, and one voluntary submission exporter, who provided complete submissions.

In calculating the margin of dumping for a normal value grouping, negative margins of dumping offset positive margins of dumping. In calculating the margins of dumping of each cooperative exporter, a negative margin at the grouping level was set at zero. In calculating the weighted average margin of dumping of all respondents with complete submissions, that is, the country weighted average margin of dumping, negative margins were set at zero at the exporter level.

For the mandatory reply exporters that did not cooperate, or provided an incomplete response to the Request for Information, the margin of dumping is the highest weighted average margin of dumping found for a cooperative respondent in the investigation, that is, 70 per cent of the export price.

The highest weighted average margin of dumping, instead of the normal administrative practice of using the highest margin of dumping, was used to establish the margin of dumping for uncooperative exporters. It is recognized by the CCRA that there are certain circumstances where it may be appropriate to use something other than the highest margin of dumping as a basis for dealing with uncooperative exporters. Tomatoes are a price sensitive product and using the highest weighted average margin of dumping of 70 per cent is considered appropriate in this case.

For the exporters that did not have to respond to the request for information and did not provide a voluntary submission, the margin of dumping was established under subsection 30.3(3) of SIMA. In accordance with regulations 25.2(2)(a) and 25.2(3) of the Special Import Measures Regulations, the weighted average margin of dumping found for all cooperative exporters included in the sample is 26 per cent of the export price.

Volume of Dumped Imports

For purposes of the preliminary determination of dumping or subsidizing, the Commissioner has responsibility for determining whether the actual or potential volume of dumped or subsidized goods is negligible. After a preliminary determination of dumping or subsidizing, the Tribunal assumes this responsibility. In accordance with subsection 42(4.1) of SIMA, if the Tribunal determines that the volume of dumped or subsidized goods from a country is negligible, the Tribunal is required to terminate its inquiry in respect of those goods.

Representations concerning the Investigation

The CCRA received a submission, after initiation of the investigation, from the NAFTA Office of Mexico in Canada. Mexican officials were of the opinion that the CCRA has effectively initiated an investigation against Mexican tomatoes, since the majority of Mexican tomatoes are shipped to Canada through United States' distribution channels, with the exception of a small volume of in-bond shipments. Further, the Chief Representative of the NAFTA Office of Mexico in Canada contends that the method of conducting the investigation has denied producers and exporters of Mexican tomatoes their rights under the World Trade Organization.

The CCRA sent a Request for Information to all known mandatory reply producers whose products were exported to Canada, including Mexican growers, to get costing data for the profitability analysis. No costing information was received from Mexican growers.

The investigation involved all tomatoes originating in or exported from the United States. Therefore, tomatoes grown in Mexico and entered into the commerce of the United States before being re-exported from the United States to Canada are subject to the investigation. However, Mexican tomatoes trans-shipped through the United States on a Transit and Export bond are not subject to this investigation and have not been assessed provisional duties.

Decision

Based on the results of the investigation, the Commissioner is satisfied that the subject goods have been dumped and that the margin of dumping is not insignificant.

On this date, pursuant to paragraph 41(1)(a) of SIMA, the Commissioner has made a final determination of dumping with respect to fresh tomatoes, originating in or exported from the United States of America, excluding tomatoes for processing.

Future Action

The Tribunal's inquiry concerning the question of injury to production in Canada is continuing. The Tribunal will issue its finding by July 23, 2002.

Subject goods imported during the provisional period will continue to be assessed provisional duty, as determined at the time of the preliminary determination of dumping. The provisional period began on March 25, 2002 and will end on the date the Tribunal issues its finding. For further details on the application of provisional duties, refer to the Statement of Reasons issued at the preliminary determination of the investigation, which is available on the CCRA internet web site at: http://www.cbsa-asfc.gc.ca/sima-lmsi/menu-eng.html

If the Tribunal finds that the dumped goods have not caused injury and are not threatening to cause injury, all proceedings relating to this investigation will be terminated. In this situation, all provisional duty or security posted by importers will be returned and future imports will not be subject to anti-dumping duties.

If the Tribunal finds that the dumped goods have caused injury, the CCRA will finalize the anti-dumping duty payable on subject goods released from customs' possession during the provisional period, pursuant to section 55 of SIMA. If the provisional duty paid is in excess of the final amount of anti-dumping duty payable, the excess duty paid will be refunded. Imports released from customs' possession after the date of the Tribunal's finding will be subject to anti-dumping duty equal to the margin of dumping.

If the Tribunal finds that the dumped goods have threatened to cause injury, except for the fact that provisional duty was applied, anti-dumping duty will be assessed on the subject goods imported during the provisional period. If the Tribunal finds that the dumped goods threaten to cause injury, and the finding does not cover the provisional period, all provisional duties collected will be refunded and security posted will be discharged. Imports released from customs after the date of the Tribunal's finding will be subject to an anti-dumping duty equal to the margin of dumping.

As of July 1, 2002, the provisions of the Customs Act will apply to the payment and collection of anti-dumping duties levied or returned under SIMA.

Publication

Notice of this final determination of dumping is being published in the Canada Gazette, pursuant to paragraph 41(3)(a) of SIMA.

Information

This Statement of Reasons has been provided to persons directly interested in these proceedings. It is also posted on the Directorate's Website at the address below. For further information, please contact Michel Desmarais, Roger Lyons or Blair Hynes as follows:

  • Mail:
    Canada Customs and Revenue Agency
    Anti-dumping and Countervailing Directorate
    191 Laurier Avenue West, 19th Floor
    Ottawa, ON
    Canada
    K1A 0L5

 

  • Telephone:
    Michel Desmarais: (613) 954-7188
    Roger Lyons: (613) 954-7342
    Blair Hynes: (613) 954-1641

 

  • Fax:
    (613) 954-2510

 

  • E-mail:
    Michel.Desmarais@cbsa-asfc.gc.ca
    Roger.Lyons@cbsa-asfc.gc.ca
    Blair.Hynes@cbsa-asfc.gc.ca

 

  • Web Site:
    www.cbsa-asfc.gc.ca/sima-lmsi/

 

Alice Shields
Director General
Anti-dumping and Countervailing Directorate

Appendix 1

Margin of Dumping by Exporter
FRESH TOMATOES

(October 1, 2000 to September 30, 2001)

Exporter

Volume of Goods Found to be Dumped

Weighted Average Margin of Dumping % of Export Price

Range of Dumping for Dumped Goods
Low High

Cooperative

     

Ace Tomato Growers

74%

11%

0.2% to 67%

Ag-Mart Produce, Inc.

36%

0.26%

0.4% to 10%

DiMare Homestead

100%

45%

3% to 1,032%

DiMare Ruskin, Inc.

79%

2%

1% to 128%

Gargiulo Inc., California

72%

17%

5% to 38%

Gargiulo Inc., Florida

83%

37%

4% to 109%

Gulfstream Tomato Growers, Ltd.

99%

70%

5% to 433%

Harllee Packing Inc.

59%

11%

0.1% to 195%

Live Oak Farms

49%

4%

0.5% to 75%

Nova Produce

78%

42%

2% to 222%

Oceanside

60%

8%

0.3% to 32%

Oxbow - Wheatfield

85%

70%

5% to 123%

Pacific Tomato Growers

99%

33%

11% to 140%

Six L's Packing Co., Inc.

74%

28%

0.1% to 197%

Sobey's Produce Inc.

57%

3%

0.1% to 80%

Sun Pacific

26%

2%

1% to 42%

Taylor & Fulton, Inc., Florida

67%

13%

0.1% to 197%

Taylor & Fulton, Inc., Virginia

78%

15%

0.2% to 376%

The DiMare Company, Newman

100%

16%

7% to 121%

Triple E Produce Group

41%

5%

0.3% to 54%

Ultimate Flavour

65%

9%

81% to 284%

Village Farms

66%

51%

7% to 245%

West Coast Tomato, Inc.

65%

34%

16% to 103%

WholeSale Produce Supply Co.

79%

32%

0.7% to 56%

Un-cooperative *

     

Bianchi & Sons Packing Co.

100%

70%

 

Byrd Foods, Inc.

100%

70%

 

Central California Tomato Growers Inc.

100%

70%

 

East Coast Brokers and Packers

100%

70%

 

Foster Farms

100%

70%

 

Frank's Distributing Inc.

100%

70%

 

Green Valley Farms, Inc.

100%

70%

 

Houwelling Nurseries Ltd.

100%

70%

 

Markon Fresh

100%

70%

 

Mecca Farms

100%

70%

 

Nobles Collier Inc.

100%

70%

 

O.P. Murphy & Son

100%

70%

 

Omega Produce

100%

70%

 

Oxbow Power - NT

100%

70%

 

Ruskin Vegetable Corp.

100%

70%

 

Sunblest Management LLC

100%

70%

 

Tomatoes of Ruskin

100%

70%

 

West Coast Tomato of California L.P.

100%

70%

 

All Others **

 

26%

 

* The highest weighted average margin of dumping found for a cooperative exporter in the investigation.

** The weighted average margin of dumping found for all cooperative exporters in the investigation.