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OTTAWA, December 24, 2004

4243-38
4218-17
AD/1308
CVD/103

STATEMENT OF REASONS

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

CERTAIN CARBON STEEL AND STAINLESS STEEL FASTENERS
ORIGINATING IN OR EXPORTED FROM
THE PEOPLE’S REPUBLIC OF CHINA AND CHINESE TAIPEI

and the making of a final determination with respect to the subsidizing of

CERTAIN CARBON STEEL AND STAINLESS STEEL FASTENERS
ORIGINATING IN OR EXPORTED
FROM THE PEOPLE’S REPUBLIC OF CHINA

and the termination of the investigation with respect to the subsidizing of

CERTAIN CARBON STEEL AND STAINLESS STEEL FASTENERS
ORIGINATING IN OR EXPORTED FROM CHINESE TAIPEI

DECISION

On December 9, 2004, pursuant to subsection 41(1)(a) of the Special Import Measures Act (SIMA), the President of the Canada Border Services Agency made a final determination of dumping respecting carbon steel and stainless steel fasteners, i.e. screws, nuts and bolts of carbon steel or stainless steel that are used to mechanically join two or more elements, excluding fasteners specifically designed for application in the automotive or aerospace industry, originating in or exported from the People’s Republic of China and Chinese Taipei, and made a final determination of subsidizing of such product originating in or exported from the People’s Republic of China. On the same date, the President terminated the subsidy investigation of such product originating in or exported from Chinese Taipei, pursuant to paragraph 41(1)(b) of SIMA.

Cet énoncé des motifs est également disponible en français.
This Statement of Reasons is also available in French.


TABLE OF CONTENTS

SUMMARY OF EVENTS

PERIOD OF INVESTIGATION

INTERESTED PARTIES

Complainant

Exporters

Importers

PRODUCT DEFINITION

ADDITIONAL PRODUCT INFORMATION

Classification of Imports

CANADIAN INDUSTRY

IMPORTS INTO CANADA

INVESTIGATION PROCESS

DUMPING INVESTIGATION

Summary of the Results of the Dumping Investigation

SUBSIDY INVESTIGATION

China

Chinese Taipei

Summary of Results of the Subsidy Investigation

REPRESENTATIONS AND OTHER ISSUES

DECISION

FUTURE ACTION

RETROACTIVE DUTY ON MASSIVE IMPORTATIONS

PUBLICATION

INFORMATION

APPENDIX 1

APPENDIX 2

APPENDIX 3

APPENDIX 4

APPENDIX 5

APPENDIX 6

APPENDIX 7


Summary of Events

[1] On April 28, 2004, the President of the Canada Border Services Agency (CBSA) initiated an investigation into the alleged injurious dumping and subsidizing of certain carbon steel and stainless steel fasteners originating in or exported from the People’s Republic of China and Chinese Taipei. For details regarding the basis of the initiation, consult the Statement of Reasons issued on May 13, 2004, which is available on the CBSA Web site at www.cbsa-asfc.gc.ca/sima-lmsi/menu-eng.html.

[2] Upon receiving notice of the initiation of the investigation, the Canadian International Trade Tribunal (Tribunal) started its preliminary injury inquiry. On June 28, 2004, the Tribunal made a preliminary determination that the evidence disclosed a reasonable indication that the dumping and subsidizing of carbon steel and stainless steel fasteners have caused injury to the Canadian industry.

[3] On July 9, 2004, pursuant to paragraphs 39(1)(a) and (b) of the Special Import Measures Act (SIMA), the President of the CBSA (President) made the decision to extend the 90-day period for making a preliminary decision in the investigation to 135 days, due to the complexity and novelty of the issues presented and the number of persons involved in the investigation.

[4] On September 10, 2004, as a result of the CBSA’s preliminary investigation and pursuant to subsection 38(1) of SIMA, the President made a preliminary determination of dumping respecting certain carbon steel and stainless steel fasteners originating in or exported from the People’s Republic of China and Chinese Taipei, and made a preliminary determination of subsidizing of such product originating in or exported from the People’s Republic of China and Chinese Taipei. For details regarding the basis of the preliminary determination, consult the Statement of Reasons issued on September 24, 2004, which is available on the CBSA Web site at www.cbsa-asfc.gc.ca/sima-lmsi/menu-eng.html.

[5] The CBSA continued its investigation and, on the basis of the results, the President is satisfied that certain carbon steel and stainless steel fasteners originating in or exported from the People’s Republic of China and Chinese Taipei have been dumped and that the margins of dumping are not insignificant. Consequently, on December 9, 2004, the President made a final determination of dumping pursuant to paragraph 41(1)(a) of SIMA.

[6] Similarly, the President is satisfied that certain carbon steel and stainless steel fasteners originating in or exported from the People’s Republic of China have been subsidized and that the amount of subsidy is not insignificant. As a result, on December 9, 2004, the President also made a final determination of subsidizing pursuant to paragraph 41(1)(a) of SIMA.

[7] On the same date, pursuant to paragraph 41(1)(b) of SIMA, the President terminated the investigation regarding the subsidization of certain carbon steel and stainless steel fasteners originating in or exported from Chinese Taipei.

[8] The Tribunal’s inquiry into the question of injury to the Canadian industry is continuing. Provisional duty will continue to be imposed on the subject goods until the Tribunal renders its decision. The Tribunal will issue its finding by January 7, 2005.

[9] As the People’s Republic of China (China) is listed under Part I of the DAC List of Aid Recipients1 maintained by the Organization for Economic Co-operation and Development, the CBSA has extended developing country status to China for purposes of this investigation.

Period of Investigation

[10] The dumping investigation covered all subject goods released into Canada during the period of investigation (POI), that is, from January 1, 2003 to December 31, 2003. The subsidy investigation encompassed the period from January 1, 2003 to March 31, 2004.

Interested Parties

Complainant

[11] The complainant, Leland, is one of the largest Canadian producers of carbon steel and stainless steel fasteners. The complainant’s headquarters and factory are located at 95 Commander Boulevard in Toronto, Ontario.

Exporters

[12] At the time of the initiation of the investigation, the CBSA had identified 2,857 known or possible exporters of the subject goods. During the investigation, the CBSA has conducted further analysis of customs documentation and other available information, with the refined data indicating that there are 2,709 identified exporters or possible exporters of the subject goods.

[13] Given the unusually large number of exporters, the CBSA relied upon paragraph 30.3(1)(a) of SIMA, which provides that margins of dumping may be determined in relation to the largest percentage of goods that can reasonably be investigated if it is determined that it would be impracticable to determine a margin of dumping in relation to all goods because of the number of exporters, producers or importers.

[14] During the investigation, it was found that the majority of exporters shipped in very small quantities, making it impracticable to request and analyze information from all exporters. Therefore, further to an analysis of the importation data and consultations with the complainant, it was decided that only annual shipments valued at $100,000 or more should be regarded as commercial quantities, and that information would be requested only from exporters who shipped in such quantities. During the POI, 184 exporters were found to have potentially shipped subject goods to Canada in commercial quantities. Shipments from these exporters accounted for over 90% of the value and over 50% of the quantity of all subject fastener imports into Canada from China and Chinese Taipei during that period. All references to sampled exporters refer to these 184 exporters, which the CBSA decided it could reasonably investigate, and the additional 7 responses to the exporter Request for Information (RFI), which were submitted voluntarily from exporters that were not included in the sample originally but were added due to the receipt of the voluntary responses.

[15] The CBSA sent a dumping RFI to all sampled exporters, some of whom exported subject goods of Chinese or Chinese Taipei origin through other countries or territories such as the United States of America (U.S.A.) or Hong Kong, China. The CBSA also sent a Subsidy RFI to all sampled exporters located in either China or Chinese Taipei, as well as to the governments of China and Chinese Taipei.

Importers

[16] When the investigation was initiated, the CBSA identified 2,571 known or possible importers of the subject goods, of whom 156 imported in commercial quantities as defined in the above section. Further analysis after initiation indicated that in total there were 2,520 identified importers or possible importers of the subject goods. Similarly as for the exporters, an RFI was sent to all identified commercial importers. All references to sampled importers refer to these 156 importers. Submissions were received from 37 importers, 3 of whom are related to U.S.A. exporters, and one that is related to an exporter in China. An additional 19 importer replies were received stating that the respondent had not imported subject goods during the POI.

Product Definition

[17] For the purpose of this investigation, the subject goods are defined as:

Carbon steel and stainless steel fasteners, i.e. screws, nuts and bolts of carbon steel or stainless steel that are used to mechanically join two or more elements, excluding fasteners specifically designed for application in the automotive or aerospace industry, originating in or exported from the People’s Republic of China and Chinese Taipei.

Additional Product Information

Technical Information

[18] Screws, nuts and bolts are the subject of this investigation, while fastener products other than screws, nuts and bolts are excluded from the product definition. Also excluded are all non-steel fasteners and fasteners destined for specific applications in the automotive and aerospace industries.

[19] A fastener is a mechanical device designed specifically to hold, join, couple, assemble, or maintain equilibrium of two or multiple components. The resulting assembly may function dynamically or statically as a primary or secondary component of a mechanism or structure. Based on the intended application, a fastener is produced with varying degrees of built-in precision and engineering capability, ensuring adequate, sound service under planned, pre-established environmental conditions.

[20] Screws, nuts, bolts, washers, rivets, pins, studs and custom formed parts are all items that are included in the general product family of fasteners. For the purposes of this complaint however, only the three identified fastener products – screws, nuts and bolts - are the subject products under consideration.

[21] A screw is a headed and externally threaded mechanical device possessing capabilities which permit it to be inserted into holes in assembled parts, to be mated with a pre-formed internal thread or to form its own thread, and to be tightened or released by torquing its head. Screws are fastener products with an external threading on the shank. Screws include machine screws, wood screws (including deck screws), self-drilling, self-tapping, thread forming, and sheet metal screws. For example, they can either be used without any other part and fixed into wood (wood screws) or metal sheets (self-tapping screws) or be combined with a nut and washers to form a bolt. Screws may have a variety of head shapes (round, flat, hexagonal etc.), drives (slot, socket, square, phillips, etc.), shank lengths and diameters. The shank may be totally or partially threaded.

[22] A nut is a perforated block (usually of metal) possessing an internal thread for the purpose of tightening or holding two or more bodies in definite relating positions. A nut is usually used in conjunction with a bolt or a machine screw.

[23] A bolt is a headed and externally threaded mechanical device designed for insertion through holes in assembled parts to mate with a nut and is normally intended to be tightened or released by turning that nut.

[24] There are many types of fasteners, each one being defined by its specific physical and technical characteristics, the type of material from which they are made (e.g. brass, plastic, steel etc.) and the grade of the material (e.g. carbon steel: grade 2 or grade 8 etc.). Fasteners are used in a wide range of final applications and depending on the usage, they may be un-hardened or heat-treated, either bare or plated, with or without extra corrosion protection, shipped and distributed in bulk or custom packaged and labelled.

Production Process

[25] Fasteners are produced from round wire either by cold forming or by machining operations. The cold forming process starts with round wire, which, through a series of dies and punches, is formed into the desired shape with certain characteristics. A variety of metal materials are used, with carbon steel and stainless steel being the more common material used. Cold forming is generally scrapless compared to machining. Machining produces tighter tolerances, but is significantly slower and generates scrap because it involves the removal of material. Currently, cold forming is more prevalent and machining is not commonly used.

[26] Threads are also either formed or cut. A thread rolling operation forms thread on the part by feeding the headed blank into a thread-rolling machine. Rolled threads are stronger than cut threads. Steel fasteners can be un-hardened or hardened; the latter is achieved by heat-treating the steel. Hardening can be accomplished through straight hardening, which is designed to uniformly harden the part; or case hardening where the process is used to give the surface of the part a higher hardness than its core. In both cases the hardening process affects the whole part.

[27] There are various types of finishing processes such as electroplating (most commonly with zinc, nickel or chromium), and phosphate conversion coating, with the selection of finish being influenced by factors such as a requirement for corrosion protection. Certain types of paint provide extra corrosion protection. Some fasteners are also painted (powder or wet) for cosmetic reasons.

[28] Various bodies including, among others, ANSI/ASME, SAE, IFI, DIN and ISO, have issued industry standards for fasteners.2

Product Application

[29] Fasteners are used by a variety of user industries and in a wide range of final applications. Three broad categories of user industries include general industrial, automobile related industries and the aerospace industry. General industrial fasteners, the subject of this complaint, are the most wide ranging in terms of end-use. The wide variety of fastener applications in general industry includes rural buildings, grain bins, machinery and equipment, and household furniture. Automotive and aerospace fasteners are specialized products that meet the requirements for distinct use in the respective industries.

Classification of Imports

[30] The subject fasteners are properly classified under the following Harmonized System (HS) classification numbers:

7318.11.00.00

7318.12.00.00

7318.14.00.00

7318.15.90.11

7318.15.90.12

7318.15.90.21

7318.15.90.29

7318.15.90.31

7318.15.90.32

7318.15.90.39

7318.15.90.41

7318.15.90.42

7318.15.90.43

7318.15.90.44

7318.15.90.45

7318.15.90.49

7318.16.00.10

7318.16.00.20

7318.16.00.30

7318.16.00.90

Canadian Industry

[31] Leland is one of the major Canadian producers of like carbon steel and stainless steel fasteners. The goods are produced at its manufacturing plant in Toronto, Ontario. Leland maintains four warehouses in Canada, two warehouses in the U.S.A. and also has associated sales representatives in Canada and the U.S.A..

[32] Prior to initiation, the CBSA confirmed that Leland met the standing requirements of subsection 31(2) of SIMA. There has been no change in the structure of the Canadian industry since the initiation of the investigation.

Imports into Canada

[33] During the preliminary phase of the investigation, the CBSA further refined its estimates of the volume of imports from all sources. For this purpose, the CBSA utilized its internal information system, reviewed customs accounting documents and examined information received during the investigation from importers and exporters. This additional analysis enabled the CBSA to improve its estimates as to the proportion of non-subject fasteners (i.e. primarily fasteners for use in the automotive and aerospace industries) imported under the relevant HS classification numbers. During the final phase of the investigation, no further changes were made to the data.

[34] The CBSA’s estimates of importations of subject goods are presented in the following table:

Apparent Canadian Imports (2003)

Imports into Canada

Volume (kilograms)

Market Share (%)

China

39,241,532

4.2%

Chinese Taipei

132,664,862

14.1%

All Other Countries

771,590,695

81.8%

Total Imports

943,497,089

100%

Investigation Process

[35] At the time of the initiation of the investigation, Requests for Information (RFIs) respecting dumping were sent to 19 exporters in China, 88 exporters in Chinese Taipei, 67 exporters in the U.S.A., as well as 10 additional exporters located in other countries. All RFIs included instructions indicating that exporters who were not also manufacturers were to forward the RFIs to the manufacturers of the goods in China or Chinese Taipei.

[36] RFIs respecting subsidy were sent to 19 exporters in China and 88 exporters in Chinese Taipei, as well as to the Government of China (GOC) via its local embassy in Ottawa, and the Government of Chinese Taipei (GOCT) through its representatives in Canada. Information concerning export prices and import volumes was requested from 156 importers. Subsequent to the initiation, it was determined that several exporters had been sent more than one RFI due to having exported under several different corporate titles or from several different addresses.

[37] Complete responses to the RFIs on dumping were received and were used in making the final determination from 5 exporters and 5 non-exporting producers located in China, all of whom also submitted complete responses to the subsidy RFIs, 18 exporters and 2 non-exporting producers located in Chinese Taipei, 17 of whom submitted complete responses to the subsidy RFI, and 3 exporters located in the U.S.A. The CBSA received another 8 complete responses to the dumping RFI from exporters located in Chinese Taipei, one additional response to the dumping RFI from an exporter located in China, and one additional response to the dumping RFI from an exporter located in the U.S.A. but was unable to verify the information submitted by these exporters prior to the final determination. During the investigation, the CBSA confirmed that 10 of the possible commercial exporters did not export subject goods during the POI. In addition, a complete response was received from the Government of Chinese Taipei.

[38] As well, 10 exporters located in Chinese Taipei and 2 exporters in the U.S.A. provided incomplete responses that were inadequate for making determinations on dumping, and 8 exporters located in Chinese Taipei provided incomplete responses that were inadequate for making determinations on subsidizing. The GOC also provided a response that was found to be incomplete, as described in more detail in the subsidy investigation section.

[39] Thus, 26 exporters, who accounted for approximately 25% of the CBSA’s sampled subject imports originating in Chinese Taipei and 28% of the CBSA’s sampled subject imports originating in China, supplied complete submissions which were verified for the dumping investigation. Similarly, 22 exporters, for approximately 13% of the CBSA’s sampled subject imports originating in Chinese Taipei and 28% of the CBSA’s sampled subject imports originating in China, supplied complete submissions with regards to the subsidy investigation.

[40] Submissions were also received from 37 importers, three of whom are related to U.S.A. exporters, and one that is related to an exporter in China. An additional 19 importer replies were received stating that the respondent had not imported subject goods during the POI.

[41] CBSA officers carried out on-site verifications of the information provided by one of the U.S.A. exporters prior to the preliminary determination in mid-July, 2004. On-site verifications involving two exporters located in Chinese Taipei, and verification meetings with government officials in Chinese Taipei took place following the preliminary determination during the latter half of September 2004.

Dumping Investigation

[42] In conducting its investigation, the CBSA requested that sampled exporters provide sales and cost information necessary to determine the normal values and export prices of the subject goods.

[43] Normal values are generally based on the domestic selling prices of the goods in the country of export, pursuant to section 15 of SIMA and related Special Import Measures Regulations (SIM Regulations), or on the total cost of the goods (cost of production, administrative, selling and all other costs) plus an amount for profit, pursuant to paragraph 19(b) of SIMA and related SIM Regulations.

[44] The export price of goods shipped to Canada is generally the lesser of the exporter's selling price or the importer's purchase price, pursuant to section 24 of SIMA. When the export price is less than the normal value, the difference is the margin of dumping.

[45] Where information submitted to the CBSA by exporters was found to be substantially complete, such information was used in determining the margins of dumping. However, due to the large number of exporters and the complex nature of the case, the CBSA has been precluded from verifying the information submitted within 10 of these complete exporter submissions.

[46] With respect to each of those exporters whose company-specific information was verified and used for the final determination (“verified exporters”), margins of dumping were determined for each separate product shipped to Canada by each of the exporters by subtracting the total export price from the total normal value of all of the sales made to Canada. As such, any sales made at undumped prices reduced the overall margin of dumping found for that particular product.

[47] In respect of each verified exporter, the overall margin of dumping of all of the products was determined by weighting the margins of dumping found for each product according to the volume exported to Canada. In making this calculation, the margin of dumping for any product that was not dumped (i.e. that had an overall negative margin of dumping) was set to zero.

[48] In determining the weighted average margin of dumping of a country, the overall margins of dumping found in respect of all exporters were weighted according to the volume of subject goods exported to Canada during the POI.

[49] Under Article 15 of the WTO Anti-dumping Agreement, developed countries are to give regard to the special situation of developing country members when considering the application of anti-dumping measures under the Agreement. Possibilities of constructive remedies provided for, under the Agreement, are to be explored before applying anti-dumping duty where they would affect the essential interests of developing country members.

[50] As China is listed under Part I of the DAC List of Aid Recipients3 maintained by the Organization for Economic Co-operation and Development, the President recognizes China as a developing country for purposes of actions taken pursuant to SIMA. In this particular investigation, this obligation was met by providing the opportunity for exporters to submit price undertakings. The CBSA did not receive any proposals for undertakings from any of the identified exporters.

[51] For exporters of goods originating in China who supplied a substantially complete response to the dumping RFI, which was not verified prior to the final determination, the normal values and export prices of the goods were determined pursuant to a ministerial specification under section 29 of SIMA. According to the ministerial specification, normal values were based on the export price of the goods plus an advance of 27.49%, representing the weighted average margin of dumping found for subject goods originating in China for those cooperative exporters whose information was used for purposes of making the final determination. This treatment is similar to that given to exporters of Chinese origin goods who were not sampled, as detailed below. At the time of the final determination, these exporters were sent supplemental questionnaires in order to obtain the information that was still required. Provided that an adequate response to these supplemental questionnaires is submitted, the CBSA will determine a specific weighted average margin of dumping for that exporter over the POI, and, in the event of a finding by the Tribunal, will have normal values established by advancing the export price by the specific weighted average margin of dumping. In cases where an adequate response to the supplemental questionnaires is not submitted, normal values for these exporters will be established by advancing the export price by 170%.

[52] For exporters of goods originating in China who were not sampled and were not forwarded an RFI, the margin of dumping found for subject goods was determined under section 30.3(3) of SIMA, and was determined to be 27.49%. This represents the weighted average margin of dumping found for subject goods originating in China for those cooperative exporters whose information was used for purposes of making the final determination.

[53] For exporters of goods originating in Chinese Taipei who supplied a substantially complete response to the dumping RFI, which was not verified prior to the final determination, the normal values and export prices of the goods were determined pursuant to a ministerial specification under section 29 of SIMA. According to the ministerial specification, normal values were based on the export price of the goods plus an advance of 17.05%, representing the weighted average margin of dumping found for subject goods originating in Chinese Taipei for those cooperative exporters whose information was used for purposes of making the final determination. This treatment is similar to that given to exporters of Chinese Taipei origin goods who were not sampled, as detailed below. At the time of the final determination, these exporters were sent supplemental questionnaires in order to obtain the information that was still required. Provided that an adequate response to these supplemental questionnaires is submitted, the CBSA will determine a specific weighted average margin of dumping for that exporter over the POI, and, in the event of a finding by the Tribunal, will have normal values established by advancing the export price by the specific weighted average margin of dumping. In cases where an adequate response to the supplemental questionnaires is not submitted, normal values for these exporters will be established by advancing the export price by 170%.

[54] For exporters of goods originating in Chinese Taipei who were not sampled and were not forwarded an RFI, the margin of dumping found for subject goods was determined under subsection 30.3(3) of SIMA, and was determined to be 17.05%. This represents the weighted average margin of dumping found for subject goods originating in Chinese Taipei for those cooperative exporters whose information was used for purposes of making the final determination.

[55] For exporters of subject goods who were included within the CBSA’s sample and were forwarded an RFI, but did not provide a complete response to the RFI, the normal values and export prices of the goods were determined pursuant to a ministerial specification under section 29 of SIMA. According to the ministerial specification, normal values were based on the export price of the goods plus an advance of 170%, representing the highest margin of dumping (excluding anomalies) found for a cooperative exporter of subject goods during the investigation.

[56] Further details regarding the normal values, export prices and margins of dumping of individual exporters are contained in Appendix 1.

Summary of the Results of the Dumping Investigation

Country

Volume of Importations (Kilograms)

Dumped Goods as Percentage of Country Imports

Weighted Average Margin of Dumping *

Country

Imports as a

Percentage of

Total Imports

Dumped Goods as a Percentage of Total Imports

China

39,241,532

98.23%

71.95%

4.2%

4.1%

Chinese Taipei

132,664,862

97.58%

68.94%

14.1%

13.7%

* as a percentage of export price

[57] In making a final determination of dumping in relation to goods imported from a country in the investigation, the President must be satisfied that the subject goods have been dumped and that the margin of dumping is not insignificant. Subsection 2(1) of SIMA defines insignificant as being less than 2% of the export price of the goods. The table above indicates that the margin of dumping is not insignificant.

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

[59] Details regarding the margins of dumping determined by exporter and country/territory are provided in Appendix 2.

Subsidy Investigation

[60] In accordance with SIMA, a subsidy exists if there is a financial contribution by a government of a country other than Canada that confers a benefit on persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of goods. A subsidy also exists in respect of any form of income or price support within the meaning of Article XVI of the General Agreement on Tariffs and Trade, 1994, being part of Annex 1A to the World Trade Organisation (WTO) Agreement, that confers a benefit.

[61] Pursuant to subsection 2(1.6) of SIMA, a financial contribution by a government of a country other than Canada exists in cases where:

a) practices of the government involve the direct transfer of funds or liabilities or the contingent transfer of funds or liabilities;

b) amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due to the government are forgiven or not collected;

c) the government provides goods or services, other than general governmental infrastructure, or purchases goods; or

d) the government permits or directs a non-governmental body to do any thing referred to in any of paragraphs (a) to (c) where the right or obligation to do the thing is normally vested in the government and the manner in which the non-governmental body does the thing does not differ in a meaningful way from the manner in which the government would do it.

[62] If a subsidy is found to exist, it may be subject to countervailing measures if it is specific. A subsidy is considered to be specific when it is limited, in law, to a particular enterprise or is a prohibited subsidy. An “enterprise” is defined under SIMA as also including a “group of enterprises, an industry and a group of industries”. A prohibited subsidy includes an export subsidy which is contingent, in whole or in part, on export performance or a subsidy or portion of a subsidy that is contingent, in whole or in part, on the use of goods that are produced or that originate in the country of export.

[63] Notwithstanding that a subsidy is not specific in law, a subsidy may also be considered specific having regard as to whether:

a) there is exclusive use of the subsidy by a limited number of enterprises;

b) there is predominant use of the subsidy by a particular enterprise;

c) disproportionately large amounts of the subsidy are granted to a limited number of enterprises; and

d) the manner in which discretion is exercised by the granting authority indicates that the subsidy is not generally available.

[64] For purposes of a countervailing duty investigation, the CBSA refers to a subsidy that has been found to be specific as an “actionable subsidy”, meaning that it is subject to countervailing measures if the imported goods under investigation have benefited from the subsidy.

[65] In conducting its investigation, the CBSA sent questionnaires to all sampled exporters located in China and Chinese Taipei, and to the Governments of China and of Chinese Taipei. These questionnaires requested information necessary to establish whether there had been financial contributions made by any level of government and, if so, to establish if a benefit had been conferred on persons engaged in the production, manufacture, processing, purchase, distribution, transportation, sale, export or import of the subject goods; and whether any resulting subsidy was specific in nature. The governments of both China and Chinese Taipei were also requested to forward the questionnaires to all subordinate levels of government within their respective countries that had jurisdiction over the sampled exporters.

China

Alleged Subsidies

[66] For purposes of this investigation, “Government of China” refers to all levels of government, including federal, central, provincial/state, regional, municipal, city, township, village, local, legislative, administrative or judicial levels. Benefits provided by state-owned enterprises operating under the direct or indirect control or influence of the GOC may also be considered to be provided by the GOC for purposes of this investigation.

[67] Prior to the initiation of the investigation, the complainant submitted allegations that the subject goods from China are eligible for government programs that may constitute actionable subsidies.

[68] In support of its allegations, the complainant provided a number of documents detailing support offered by the GOC, primarily to exporting enterprises and to those operating in Special Economic Areas (SEAs). Reference was also made within the complaint to the fact that there is a lack of information available with regard to potential subsidies granted by the GOC.

[69] In reviewing the information found in the various reports and articles that were provided by the complainant, the CBSA developed the following list of general types of programs that may be provided to manufacturers of subject fasteners in China:

1. Special Economic Area Incentives

2. Grants Provided for Export Performance and Employing Common Workers

3. Preferential Loans

4. Loan Guarantees by the GOC

5. Income Tax Credits, Refunds and Exemptions:

(a) Reduced Corporate Tax Rate for Export-Oriented Enterprises

(b) Exemption/Reduction of Corporate Income Tax during Designated Start-up Period

(c) Income Tax Refund of Amounts Further Invested in Special Economic Areas

(d) Exemption/Reduction in Local Income tax for Special Economic Area Enterprises

6. Relief from Duties and Taxes on Inputs

7. Reductions in Land Use Fees

8. Purchase of Goods from State-owned Enterprises

[70]Appendix 3 provides further details regarding the potential subsidy programs that were identified upon initiation of the investigation.

[71] The GOC provided a response to the subsidy RFI that was issued by the CBSA at the initiation of the investigation. The CBSA then sent five supplemental questionnaires to the GOC between June and October of 2004. These questionnaires were sent to obtain clarification and request completion of the information provided in the GOC’s initial response, as well as for information to resolve apparent inconsistencies. Appendix 4 provides a detailed timeline of the subsidy investigation regarding China.

[72] The GOC was provided with a list of the 18 exporters selected by the CBSA as exporters to be sampled as part of the Request for Information (RFI) sent on April 28, 2004. This list contained all of the contact information available to the CBSA at that time, essentially the exporter addresses available through customs documentation. The GOC submitted in its initial response, received June 16, 2004, a list of five exporters (all previously identified by the CBSA and included in the list provided within the RFI), which the GOC stated were all the producers of which it was aware and to which its response pertained.4

[73] At that time, the CBSA had received subsidy submissions from three of the companies on the GOC’s list of five companies, from two additional exporters, and from five domestic producers which sold exclusively to a trading company (which was itself one of the responding exporters). As a result of these responses, an additional exporter was added to the sample, bringing the number of exporters sampled to 19.

[74] The CBSA’s Third Supplemental RFI reiterated its request that the GOC provide information regarding the additional companies included within the CBSA’s sample. Counsel for the GOC had previously been provided with contact information available to the CBSA through the individual company responses in addition to that provided at initiation (this additional information primarily consisted of telephone and telefax numbers and the names of designated company contact persons). The GOC stated in its response that it was unable to locate additional exporters beyond the five it had already identified, and listed as a primary reason for this inability the fact that the CBSA had not provided the Chinese corporate names of any additional exporters, only the English names. The GOC maintained that any additional companies were likely either traders and/or producers not specializing in the production of subject fasteners, neither of which the GOC had any knowledge.5

[75] In addition, many of the GOC’s responses were the result of the GOC directly contacting the exporters it had identified, inquiring as to whether any of the companies took advantage of a given program or policy, and then relaying the results of these enquiries to the CBSA.

[76] The GOC had also made reference to the fact that information required to answer some of the CBSA’s questions was only available at lower levels of government (lower being defined as being below the national level of government), and used this lack of availability at the national government level as reason to rely on the results of enquiries of individual exporters.6 In the original RFI, the CBSA clearly defined the term “Government of China” as referring to “all levels of government, i.e. federal, central, provincial/state, regional, city, municipal, township, village, local, legislative, administrative or judicial, singular, collective, elected or appointed. It also includes any person, agency, state-owned enterprise, or institution acting for, on behalf of, or under the authority of any law passed by, the government of that country or that provincial, state or municipal or other local or regional government.”7 The CBSA relied on the definition of government set out in paragraph 2 (1) of SIMA in preparing this definition of the “Government of China”.

[77] The GOC’s response to all questions asked within the original RFI and the various supplemental RFIs was expected to be a comprehensive response encompassing all parties covered by the above definition of “Government of China”, and not to be restricted solely to the national level of government. The failure to provide this information rendered incomplete any response that the GOC made prior to the preliminary determination with regards to alleged subsidies that it may or may not have made available to exporters of subject goods during the POI.

[78] On August 30, 2004, a letter was sent to the GOC, which included a comprehensive list of the deficiencies within the GOC’s submissions (designated by the GOC in its response as the “Sixth Supplemental RFI”, a designation subsequently used by the CBSA), and requested that this information be provided as soon as possible in order for the CBSA to be able to use the information in the ongoing investigation. No response had yet been received at the time of the preliminary determination on September 10, 2004. Consequently, the information submitted by the GOC in response to the original and supplemental questionnaires was deemed to be incomplete and unusable for purposes of making the preliminary determination.

[79] On September 13, 2004, a response was received from the GOC to the Sixth Supplemental RFI, and this response was augmented by a series of five updates to this response, received over the period from September 27, 2004 to October 20, 2004.

[80] In its response to the Sixth Supplemental RFI, the GOC identified 7 of the 19 sampled exporters as “irrelevant” in that 4 did not export subject goods during the POI, 2 were only offices of off-shore companies and thus not “Chinese companies”, and one had not existed since 1999. All of the 19 exporters sampled by the CBSA exported over $100,000 of subject goods to Canada during the POI, according to Canadian customs documentation and supported by individual exporter submissions. Given the fact that all of the 19 exporters appear to have had continuing and significant exports of subject goods to Canada during the POI according to Canadian customs information, the CBSA required a response from the GOC regarding all of the 19 exporters in the sample in order to have a complete submission, regardless of whether the GOC’s records identified the companies as having exported.

[81] In addition, the Sixth Supplemental RFI requested information from the GOC relating to levels of government below the national level, in order to determine whether any provincial, municipal, county, or other levels of government had made a financial contribution that might be considered an actionable subsidy to one or more of the sampled exporters. While a limited amount of information was submitted, other documents requested from the GOC regarding local governments were not provided.

[82] Please refer to Appendix 5 for a more detailed overview of the GOC’s responses.

Amount of Subsidy

[83] Due to the incomplete nature of the GOC ’s responses, as described above and in Appendix 5, the CBSA has determined that sufficient information has not been provided to determine an amount of subsidy in the prescribed manner for subject goods exported from China, based on information provided by exporters and the GOC.

[84] Therefore, the amount of subsidy has been determined according to a ministerial specification pursuant to subsection 30.4(2) of SIMA. The amount of subsidy is equal to 1.25 Chinese Renminbi per kilogram of subject goods, which is the amount by which the raw material and processing costs, as estimated by the CBSA at its initiation of the investigation, exceed the average export price of the subject goods, as determined by the CBSA for the POI. The amount of subsidy represents 31.53% of the export price of the goods, as determined by the CBSA through its Customs database.

Chinese Taipei

Alleged Subsidies

[85] Prior to the initiation of the investigation, the complainant submitted allegations that the subject goods from Chinese Taipei are eligible for government programs that may constitute actionable subsidies.

[86] In support of its allegations, the complainant submitted documents providing details on a number of programs made available by the Government of Chinese Taipei to exporters of fasteners.

[87] In reviewing the information found in the various documents that were provided by the complainant, the CBSA developed the following list of general types of programs that may be provided to manufacturers of subject fasteners in Chinese Taipei:

1. Economic Processing Zone Incentives

2. Grants and Financial Assistance Provided by the Government of Chinese Taipei

3. Preferential Loans

4. Income Tax Credits, Refunds and Exemptions:

(a) Reduced Corporate Tax Rate for Exporters

(b) Exemption/Reduction/Credit/Refund of Corporate Income Tax for Designated Investments

(c) Income Tax Refund/Exemption for Companies Located or Investing in Economic Processing Zones and Other Designated Zones and Areas

5. Exemption/Reduction in Duties and Taxes:

(a) Exemption/Reduction in Duties and Taxes for Companies Located or Investing in Economic Processing Zones and Other Designated Zones and Areas

(b) Exemption/Reduction in Duties and Taxes for Companies Not Located in the Designated Areas Above

6. Exemption/Reduction in Contract and Commercial Housing Taxes

7. Purchase of Goods from State-owned Enterprises

[88]Appendix 6 provides further details regarding the potential subsidy programs that were identified upon initiation of the investigation.

[89] The Government of Chinese Taipei (GOCT) responded to the CBSA's RFI and to four supplementary RFIs. The GOCT's Bureau of Foreign Trade (BOFT) of the Ministry of Economic Affairs (MOEA) coordinated the responses from the various governmental departments and agencies involved. CBSA officials conducted verification meetings at the BOFT in Taipei on

September 27, 29 and 30, 2004. As well, CBSA officials visited the offices of the Export Processing Zones Administration, MOEA, in Kaohsiung, on September 16, 2004, and of the Administration Department of Southern Industrial Parks, Industrial Development Bureau, MOEA, in Tainan, on September 24, 2004.

[90] The two largest exporters in terms of value shipped to Canada were selected for on-site verification. CBSA officials visited Tong Hwei Enterprise Co., Ltd., an exporter of stainless steel screws and bolts located in Kaohsiung, from September 13 to 17, 2004, and San Shing Fastech Corp., an exporter of carbon steel nuts located in Tainan, from September 20 to 24, 2004. Information submitted by the additional 15 exporters who cooperated in the subsidy investigation was also analysed.

[91] The investigation found two actionable subsidies, (1) excessive drawback and (2) a tax deduction contingent on the use of equipment made in Chinese Taipei. The other investigated allegations were either subsidies used but not actionable, programs not used or programs not found to exist. Appendix 7 contains a summary of the results of the investigation of all alleged subsidy programs.

[92] Based on the review of the 17 complete responses, it was found that one exporter benefited from both actionable subsidies, 3 exporters benefited from only one and 5 benefited from only the other; the other 8 exporters did not use these programs.

Summary of quantities and values in period of subsidy investigation
January 1, 2003, to March 31, 2004

Exporter Group

Export Price

Kilograms

Percentage of Volume (kilograms)

Included in sample, cooperative and

subsidized (9 exporters)

$21,953,798

13,873,578

7.4%

Included in sample, cooperative and unsubsidized (8 exporters)

$16,245,725

11,135,468

6.0%

Included in sample and uncooperative

(64 exporters)

$42,402,186

37,148,605

20.0%

Not included in sample (1,862 exporters)

$83,741,552

124,629,632

66.6%

Total subject goods (all exporters)

$164,343,161

186,787,283

100.0%

[93] Pursuant to subsection 30.4(2) of SIMA, where, in the opinion of the Minister, sufficient information has not been provided or is not otherwise available to enable the determination of the amount of subsidy, it shall be determined in such manner as the Minister may specify. For purposes of this investigation, the Minister has specified that:

in respect of exporters who were required to provide a complete response to the CBSA's questionnaires and failed to do so, the amount of subsidy is NT$0.12 per kg, being the total of the highest amount of subsidy found for each program; and

in respect of exporters who were not required to provide a complete response to the CBSA's questionnaires, the amount of subsidy is NT$0.08 per kg, being the total of the weighted average amount of subsidy found for each program.

Summary of subsidy amounts in New Taiwan dollars per kilogram:

Subsidy

Lowest

Highest

Weighted average

1. Excessive refund of import duty on imported raw materials (4 exporters)

0.0243

0.0961

0.0692

2. Tax deduction for purchase of domestic-made equipment higher than for foreign-made equipment (6 exporters)

0.0019

0.0206

0.0072

Total for uncooperative exporters

 

0.1167

 

Total for unsampled exporters

   

0.0764

Summary of subsidy amounts expressed as a percentage of export price:

Exporter Group

Percentage Subsidy Over Export Price

Included in sample, cooperative and

subsidized (9 exporters)

Range 0.0044% to 0.0348%

Included in sample, cooperative and unsubsidized (8 exporters)

0.0000%

Included in sample and uncooperative

(64 exporters)

0.4205%

Not included in sample (1,862 exporters) (*)

0.4762%

Country average (all exporters)

0.3707%

(*) Note: the percentage subsidy rate for the unsampled exporters is higher than that for the uncooperative exporters, even though the amount of subsidy per kilogram is lower for the unsampled exporters, because their average export price is lower than that of the uncooperative exporters.

Amount of Subsidy

[94] The weighted average amount of subsidy is equal to 0.3707% of the export price of the goods, as determined by the CBSA through the analysis of information provided by exporters and through the Customs database.

Summary of Results of the Subsidy Investigation

Country

Subsidized Goods as a Percentage of Total Subject Goods Imported

Amount of Subsidy as a Percentage of Export Price

Country

Imports as a

Percentage of

Total Imports

Subsidized Goods as a Percentage of Total Imports from all Countries

China

100.0%

31.53%

4.2%

4.2%

Chinese Taipei

94.0%

0.37 %

14.1%

13.2%

[95] In making a final determination of subsidy under subsection 41(1) of SIMA, the President must be satisfied that the subject goods have been subsidized and that the amount of subsidy on the goods of a country is not insignificant. According to subsection 2(1) of SIMA, an amount of subsidy that is less than 1% of the export price of the goods is considered insignificant.

[96] However, section 41.2 of SIMA directs the President to take into account the provisions of Article 27 of the Subsidies Agreement when conducting subsidy investigations, and these provisions stipulate that any investigation involving a developing country must be terminated as soon as the President determines that the total amount of subsidy for a developing country does not exceed 2% of the export price of the goods.

[97] The CBSA normally makes reference to Part I of the DAC List of Aid Recipients, maintained by the Organization for Economic Co-operation and Development, to determine eligibility for the differential amounts for developing countries in subsidy investigations. According to this list, China is eligible for the higher insignificance thresholds, whereas Chinese Taipei is not.

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

[99] As the table illustrates, the amount of subsidy respecting China is not insignificant. However, the amount of subsidy respecting Chinese Taipei is 0.37% of the export price and is therefore insignificant. As a result, the subsidy investigation was terminated respecting imports from Chinese Taipei under paragraph 41(1)(b) of SIMA.

REPRESENTATIONS AND OTHER ISSUES

[100] Following the preliminary determination of dumping and subsidizing, the CBSA received written representations from Gem-Year Industrial Co. Ltd. (Gem-Year) regarding the CBSA’s method of determining the overall margin of dumping of all of the products exported to Canada by individual exporters. Specifically, Gem-Year contended that, as the CBSA had treated all subject fasteners as comprising a single class of goods, the margin of dumping for any product that was not dumped (i.e. that had an overall negative margin of dumping) should be allowed to reduce the overall margin of dumping found for that exporter, rather than being set to zero.

[101] The CBSA’s method of estimating the overall margin of dumping of all of the products exported to Canada by individual exporters at the time of the preliminary determination is consistent with past practice and with current CBSA policy. As such, no change in the methodology was made for purposes of making the final determination.

[102] The CBSA also received written representations from Wurth Service Supply, a distributor located in the U.S.A. and identified as an exporter of the subject goods during the POI and included within the CBSA’s sample. Wurth Service Supply maintained within their submission that it had no sales activities to Canada prior to 2004 (i.e. after the end of the dumping POI), and thus could only provide a partial response to the exporter RFI. Information obtained through the Canada Customs database and related documentation has indicated that Wurth Service Supply did export subject goods during the POI, and as such the response submitted by the exporter could not be considered complete.

[103] After a preliminary determination of dumping, exporters may give a written undertaking to revise selling prices to Canada so that the margin of dumping or the injury caused by the dumping is eliminated. Similarly, after a preliminary determination of subsidizing, the government of a country may give a written undertaking to eliminate the subsidy on the goods or to eliminate the injurious effect of the subsidy by limiting the amount of the subsidy or the quantity of goods exported to Canada. Exporters, with the consent of their government, may also undertake to revise their selling prices so that the injurious effect of the subsidy is eliminated. The CBSA did not receive any proposals for undertakings from any of the identified exporters, from the GOC, or from the GOCT prior to the final determination.

Decision

[104] On the basis of the results of the investigation, the President is satisfied that certain carbon steel and stainless steel fasteners originating in or exported from the People’s Republic of China and Chinese Taipei have been dumped and that the margins of dumping are not insignificant. Consequently, on December 9, 2004, the President made a final determination of dumping pursuant to paragraph 41(1)(a) of SIMA.

[105] Similarly, the President is satisfied that certain carbon steel and stainless steel fasteners originating in or exported from the People’s Republic of China have been subsidized and that the amounts of subsidy are not insignificant. As a result, on December 9, 2004, the President also made a final determination of subsidizing pursuant to paragraph 41(1)(a) of SIMA.

[106] Finally, the President is satisfied that certain carbon steel and stainless steel fasteners originating in or exported from the Chinese Taipei have been subsidized but that the amounts of subsidy are insignificant. As a result, on December 9, 2004, the President caused this portion of the investigation to be terminated pursuant to paragraph 41(1)(b) of SIMA.

Future Action

The Canada Border Services Agency

[107] The provisional period began on September 10, 2004, and will end on the date the Tribunal issues its finding. The Tribunal is expected to issue its decision by January 7, 2005. 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 only change being that the 7% provisional amount of subsidy collected on goods from Chinese Taipei will no longer be collected as of December 10, 2004. The provisional amount of subsidy that has been collected on goods from Chinese Taipei will be returned to the importers in accordance with subsection 8(2) of SIMA. For further details on the application of provisional duty, refer to the Statement of Reasons issued for the preliminary determination of dumping, which is available on the CBSA Web site at

www.cbsa-asfc.gc.ca/sima-lmsi/menu-eng.html.

[108] On December 1, 2004, the Tribunal announced that it had determined that the like goods should be divided into four classes, namely: 1) carbon steel screws; 2) carbon steel nuts and bolts; 3) stainless steel screws; and 4) stainless steel nuts and bolts. The Tribunal will conduct its injury analysis on the basis of these four classes of goods.

[109] If the Tribunal finds that the dumped and/or subsidized goods have not caused injury and do not threaten to cause injury, all proceedings relating to this investigation will be terminated. In this situation, all provisional duty paid or security posted by importers will be returned.

[110] If the Tribunal finds that the dumped and/or subsidized goods have caused injury, the anti-dumping and/or countervailing duty payable on subject goods released from customs during the provisional period will be finalized, pursuant to section 55 of SIMA. Imports released from customs after the date of the Tribunal’s finding will be subject to anti-dumping duty equal to the margin of dumping and/or countervailing duty equal to the amount of subsidy. In that event, the importer in Canada shall pay all such duty. If the importers of such goods do not indicate the required SIMA code or do not correctly describe the goods in the customs documents, an administrative monetary penalty could be imposed. The provisions of the Customs Act apply with respect to the payment, collection or refund of any duty collected under SIMA. As a result, failure to pay duty within the prescribed time will result in the application of interest.

[111] Due to the large number of exporters, the high volume of shipments and the multitude of variations of fasteners exported, which are estimated to be in excess of 10,000 different fasteners, it was determined that a methodology was required to address normal values for future importations. In the event that the Tribunal issues an affirmative injury finding, cooperating exporters will have normal values established by advancing the export price by their specific weighted average margin of dumping as reported in the current investigation. This will come into effect the day after the date of the injury finding. Exporters who were not included within the CBSA’s sample will have normal values established by advancing the export price by the overall weighted average margin of dumping for the subject goods exported by the cooperating exporters originating in a given subject country, as reported in the current investigation. Exporters who were included within the CBSA’s sample but who are not considered to have cooperated with the current investigation will have normal values established by advancing the export price by 170%.

[112] Given the unusually large number of exporters, the CBSA relied upon paragraph 30.3(1)(a) of SIMA, which provides that margins of dumping may be determined in relation to the largest percentage of goods that can reasonably be investigated if it is determined that it would be impracticable to determine a margin of dumping in relation to all goods because of the number of exporters, producers or importers. However, the number of exporters and the complex nature of the case have precluded the CBSA from verifying 10 of the complete exporter responses to the dumping RFI. At the time of the final determination, these exporters were sent supplemental questionnaires in order to obtain the information that was still required. Provided that a complete response to these supplemental questionnaires is submitted, the CBSA will determine a specific weighted average margin of dumping for that exporter over the POI, and, in the event of a finding by the Tribunal, will have normal values established by advancing the export price by the specific weighted average margin of dumping. In cases where a complete response to the supplemental questionnaires is not submitted, normal values for these exporters will be established by advancing the export price by 170%.

[113] In the event of an affirmative injury finding by the Tribunal, a countervailing duty amount of 1.25 Chinese Renminbi per kilogram will be payable on imports of subject goods originating in China.

Retroactive Duty on Massive Importations

[114] Under certain circumstances, anti-dumping and countervailing duty can be imposed retroactively on subject goods imported into Canada. When the Tribunal conducts its inquiry on material injury to the Canadian industry, it may consider if dumped and/or subsidized goods that were imported close to or after the initiation of the investigation constitute massive importations over a relatively short period of time and have caused injury to the Canadian industry. Should the Tribunal issue a finding that there were recent massive importations of dumped and/or subsidized goods that caused injury, imports of subject goods released by the CBSA in the 90 days preceding the day of the preliminary determination could be subject to anti-dumping and/or countervailing duty.

[115] In respect of importations of subsidized goods that have caused injury, however, this provision is only applicable where the President has determined that the whole or any part of the subsidy on the goods is a prohibited subsidy. In such a case, the amount of countervailing duty applied on a retroactive basis will equal the amount of subsidy on the goods that is a prohibited subsidy. As the President has not determined that any part of the subsidy on the goods is a prohibited subsidy, countervailing duty will not be imposed retroactively on subject goods imported into Canada.

Publication

[116] A notice of this final determination of dumping and subsidizing in respect of China and final determination of dumping in respect of Chinese Taipei will be published in the Canada Gazette pursuant to paragraph 41(3)(a) of SIMA. A notice of the termination of the subsidy investigation in respect of Chinese Taipei will be published in the Canada Gazette pursuant to paragraph 41(4)(a) of SIMA.

Information

[117] This Statement of Reasons has been provided to persons directly interested in these proceedings. It is also posted on the CBSA Web site at the address below. For further information, please contact Jean-Louis Lapratte, Bob Becker, Alex Lawton, Robert Wright, or Matthew Lerette as follows:

Mail

Canada Border Services Agency
Anti-Dumping and Countervailing Directorate
100 Metcalfe Street, 11th Floor
Ottawa, Ontario
K1A 0L8
Canada

Telephone

Jean-Louis Lapratte (613) 954-7375

Bob Becker (613) 954-7246

Alex Lawton (613) 954-7410

Robert Wright (613) 954-1643

Matthew Lerette (613) 954-7398

Fax

(613) 948-4844

Email

Jean-Louis.Lapratte@cbsa-asfc.gc.ca

Bob.Becker@cbsa-asfc.gc.ca

Alexander.Lawton@cbsa-asfc.gc.ca

Robert.Wright@cbsa-asfc.gc.ca

Matthew.Lerette@cbsa-asfc.gc.ca

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

Suzanne Parent
Director General
Anti-dumping and Countervailing Directorate


Appendix 1

Normal Value, Export Price and Margins of Dumping Details
Per Exporter

CHINA

Gem-Year Industrial Co. Ltd.

Company – Gem-Year Industrial Co. Ltd. (Gem-Year) is a Chinese producer of subject fasteners.

Normal Values – Normal values were primarily determined pursuant to section 15 of SIMA, with paragraph 19(b) used where there were insufficient sales meeting the required criteria. The amount for profit was determined pursuant to SIM Regulation 11(1)(b)(ii) as the weighted average profit made on acceptable sales of goods of the same general category by the exporter. Where applicable, adjustments were made using SIM Regulations 5(d), 7, and 10, with an additional adjustment using SIM Regulation 5(a) performed in determining some normal values. These adjustments were made to account for the conditions of sale, freight, duties and taxes, and quality of the goods, respectively.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 93.70% of the goods exported were dumped by a weighted average margin of dumping of 30.99%, expressed as a percentage of export price.

Robertson Jiaxing Inc. (Robertson)

Company – Robertson is a producer and exporter of the subject goods. The goods shipped covered a variety of carbon steel screws of different sizes and dimensions.

Normal Values – Robertson did not have domestic sales of like goods. Normal values were determined under section 29 of SIMA, using a paragraph 19(b) cost methodology, plus an amount for profit based on the weighted average profit earned on sales of goods of the same general category by other producers in China as per ministerial specification.

Export Price – One of the importers, Robertson Inc. is related to the exporter. Therefore, a reliability test of the transfer price between the two related companies was conducted, pursuant to section 25 of SIMA. As a result, the reviewed sales were found to meet the CBSA’s policy directives for reliability. Consequently, export prices were determined for all goods reviewed pursuant to section 24 of SIMA on the basis of the lesser of the exporter’s sale price or the importer’s purchase price.

Margin of Dumping – It was found that 86.9% of the goods exported were dumped by a weighted average margin of dumping of 17.3%, expressed as a percentage of export price.

Shandong Welltrade Knitwears & Home Textiles Imp. & Exp. Co. Ltd. (Shandong)

Company – Shandong is a state-owned export trading company, regarded as the exporter for SIMA purposes. The company purchases subject fasteners from Chinese manufacturers strictly for export. Shandong was the largest exporter of subject goods during the POI.

Normal Values – As the company had no domestic sales of like goods, normal values were determined pursuant to section 29 of SIMA, using a paragraph 19(b) methodology, based on acquisition costs, general selling and administrative costs, plus an amount for profit based on the weighted average profit earned on sales of goods of the same general category by other producers in China as per ministerial specification.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 95.2 % of the goods exported were dumped by a weighted average margin of dumping of 31.7%, expressed as a percentage of export price.

Shanghai Ben Yuan Metal Products Co.

Company – Exporter produces subject fasteners solely for export.

Normal Values – As the company had no domestic sales of like goods, normal values were determined pursuant to section 29 of SIMA, using a paragraph 19(b) cost methodology, plus an amount for profit based on the weighted average profit earned on sales of goods of the same general category by other producers in China as per ministerial specification.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of DumpingIt was found that 55.42% of the goods exported were dumped by a weighted average margin of dumping of 6.29%, expressed as a percentage of export price.

Tapoo Metal Products (Shanghai) Co. Ltd.

Company – Tapoo Metal Products (Shanghai) Co. Ltd. is a wholly owned foreign enterprise that produces and exports screws. The company sent a late response to the RFI and additional information was necessary before the information could be used. A supplementary RFI was sent to the company along with the ruling letter.

Normal Values – The normal value of the goods has been established under section 29 of SIMA as the export price plus an advance of 27.49%. This value represents the weighted average margin of dumping (expressed as a percentage of the export price) found for subject goods originating in China for those cooperative exporters analyzed during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of DumpingIt was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 27.49%, expressed as a percentage of export price.

Tong Ming Enterprise (Jiaxing) Co. Ltd. (Tong Ming)

Company – Tong Ming is the producer and the exporter of the subject goods. The goods shipped consisted of stainless steel nuts and cap screws of different sizes and dimensions, sold to numerous unrelated importers.

Normal Values – Normal values were computed on the basis of a revised sales database which covered a much larger base of like goods compared to the preliminary determination. In light of the limited number of sales on a model specific basis (database used for the preliminary determination), the selection of like goods was made on a product category basis. A profitability analysis of the domestic sales performed pursuant to paragraph 16(2)(b) of SIMA revealed that all sales met the criteria for profitability. On that basis, normal value was determined pursuant to section 15 of SIMA for all goods reviewed. Where applicable, normal value adjustments were made pursuant to sections 7 and 10 of the SIM Regulations to account for delivery charges and duties and taxes respectively.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of DumpingIt was found that 81% of the goods exported were dumped by a weighted average margin of dumping of 9.27%, expressed as a percentage of export price.

CHINESE TAIPEI

Andrews International Co. Ltd.

Company – Andrews International Co. Ltd., provided only a brief two-page RFI and supplemental RFI response. The response to the requested information was considered incomplete.

Normal Values – Accordingly, normal values were determined pursuant to section 29 of SIMA on the basis of an advance of 170% over the export price of the subject goods, representing the highest margin of dumping found during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 170%, expressed as a percentage of export price.

Chan Liang Enterprise Co. Ltd. (Chan Liang)

Company – Chan Liang was established in 1986 as a producer and exporter of fasteners. Chan Liang is a non-sampled company that provided a voluntary response to the RFI. The company did not have any domestic sales of like goods during the POI.

Normal Values – As there were no sales of like goods in the domestic market, the normal values were determined based on paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit is based on the weighted average profit made on domestic sales of goods of the same general category by other cooperative Chinese Taipei producers, pursuant to subparagraph 11(1)(b)(iv) of the SIM Regulations.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 81% of the goods exported were dumped by a weighted average margin of dumping of 12.15%, expressed as a percentage of export price.

Chite Enterprises Co. Ltd. (Chite)

Company – Chite was established in 1994 as a trading company for fasteners. They do not produce and do not have any domestic sales of fasteners. Three of Chite’s producers were cooperative exporters with the investigation. The respective sales from those producers were determined to have been exported by the producer and not by Chite. Chite was sent a supplemental RFI on October 12, 2004 and did not respond. The best information available on Chite’s remaining sales is that Chite is the exporter.

Normal Values – The exporter was uncooperative due to a nil response to the supplemental RFI. Accordingly, normal values were determined pursuant to section 29 of SIMA on the basis of an advance of 170% over the export price of the subject goods, representing the highest margin of dumping found during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of DumpingIt was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 170%, expressed as a percentage of export price.

Chun Yu Work & Co. Ltd.

Company – Chun Yu Work & Co. Ltd. is a publicly traded producer of carbon steel screws, nuts and bolts for both the domestic and export market.

Normal Values – The exporter was uncooperative due to a nil response to a supplementary RFI. Accordingly, normal values were determined pursuant to section 29 of SIMA on the basis of an advance of 170% over the export price of the subject goods, representing the highest margin of dumping found during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of DumpingIt was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 170%, expressed as a percentage of export price.

CLC Industrial Co. Ltd.

CompanyCLC Industrial Co. Ltd. is a small manufacturer of nuts that does not sell the subject goods into the domestic market and as such, 100% of goods were for export. The company provided a substantially complete submission that requires additional clarifications. A supplemental RFI was sent out with the ruling letter at the final determination.

Normal ValuesThe normal value of the goods has been established under section 29 of SIMA as the export price plus an advance of 17.05%. This value represents the weighted average margin of dumping (expressed as a percentage of the export price) found for subject goods from Chinese Taipei for those cooperative exporters analyzed during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of DumpingIt was found that 100% of the goods were dumped by a weighted average margin of dumping of 17.05%, expressed as a percentage of export price.

CPC Fasteners International Co. Ltd.

CompanyCPC Fasteners International Co. Ltd. is a trading company specializing in the sales of carbon steel screws and 100% of goods were for export.

Normal Values – As there were no sales of like goods in the domestic market, the normal values were determined based on paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit is based on the weighted average profit made on domestic sales of goods of the same general category by other cooperative Chinese Taipei producers, pursuant to subparagraph 11(1)(b)(iv) of the SIM Regulations.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of DumpingIt was found that 96.8% of the goods exported were dumped by a weighted average margin of dumping of 28.3%, expressed as a percentage of export price.

Dragon Iron Factory Co. Ltd.

Company – Dragon Iron Factory Co. Ltd. is a fastener manufacturer with no domestic sales during the POI.

Normal Values – As there were no sales of like goods in the domestic market, the normal values were determined based on paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit is based on the weighted average profit made on domestic sales of goods of the same general category by other cooperative Chinese Taipei producers, pursuant to subparagraph 11(1)(b)(iv) of the SIM Regulations.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 13.3% of the goods exported were dumped by a weighted average margin of dumping of 1.53%, expressed as a percentage of export price.

Easylink Industrial Co.

Company – Easylink Industrial Co. exports 100% of its goods. The company identified four subsidiaries, one in Chinese Taipei and three in the British Virgin Islands. The company did not respond to an October 21, 2004 supplemental RFI.

Normal Values – Accordingly, normal values were determined pursuant to section 29 of SIMA on the basis of an advance of 170% over the export price of the subject goods, representing the highest margin of dumping found during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of DumpingIt was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 170%, expressed as a percentage of export price.

Homn Reen Enterprise Co. Ltd.

Company – Homn Reen Enterprise Co. Ltd. is a producer of the subject goods for domestic consumption and for export.

Normal Values – Normal values were determined under section 15, using domestic sales of like goods, and paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit is based on the weighted average profit made on domestic sales of goods of the same general category by other cooperative Chinese Taipei producers, pursuant to subparagraph 11(1)(b)(iv) of the SIM Regulations.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 73.8% of the goods exported were dumped by a weighted average margin of dumping of 21.6%, expressed as a percentage of export price.

Honor Best Company Ltd.

Company – Honor Best Company Ltd. produces fasteners for the export market and has no domestic sales of like goods. For purposes of the final determination, they supplied a substantially complete response to the dumping RFI; however, their company-specific information requires further clarifications.

Normal Values – The normal value of the goods has been established pursuant to section 29 of SIMA as the export price plus an advance of 17.05%. This value represents the weighted average margin of dumping (expressed as a percentage of the export price) found for subject goods from Chinese Taipei for those cooperative exporters analyzed during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 17.05%, expressed as a percentage of export price.

Jau Yeaou Industry Co. Ltd.

Company – Jau Yeaou Industry Co. Ltd. is an exporter and a manufacturer. 100% of the company’s sales are exports, and the only subject fasteners exported to Canada were screws. The company produces all of the carbon steel screws it sells. The company purchases stainless steel screws from two sources.

Normal Values – As there were no sales of like goods in the domestic market, the normal values were determined pursuant to paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit is based on the weighted average profit made on domestic sales of goods of the same general category by other cooperative Chinese Taipei producers, pursuant to subparagraph 11(1)(b)(iv) of the SIM Regulations.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of DumpingIt was found that 76.35% of the goods exported were dumped by a weighted average margin of dumping of 10.71%, expressed as a percentage of export price.

Kind Auspice Industrial Co. Ltd. (Kind Auspice)

Company – Kind Auspice produces fasteners for the export market and has no domestic sales of like goods. Kind Auspice supplied information and data pertaining to the manufacturing costs of subject goods exported to Canada during the POI.

Normal Values – As there were no sales of like goods in the domestic market, the normal values were determined pursuant to paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit is based on the weighted average profit made on domestic sales of goods of the same general category by other cooperative Chinese Taipei producers, pursuant to subparagraph 11(1)(b)(iv) of the SIM Regulations.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 99.09% of the goods exported by Kind Auspice were dumped by a weighted average margin of dumping of 14.86%, expressed as a percentage of export price.

Knight Kingdom Co. Ltd. (Knight Kingdom)

Company – Knight Kingdom is a privately owned trading company that exports the subject goods to Canada. Carbon steel screws accounted for 91% of the export volumes to Canada with stainless steel screws making up the remainder.

Normal Values – As there were no sales of like goods in the domestic market, the normal values were determined pursuant to paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit is based on the weighted average profit made on domestic sales of goods of the same general category by other cooperative Chinese Taipei producers, pursuant to subparagraph 11(1)(b)(iv) of the SIM Regulations.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100% of the goods exported by Knight Kingdom were dumped by a weighted average margin of dumping of 31.12%, expressed as a percentage of export price.

Leawo Corporation

Company – Leawo Corporation is a privately owned trading company that exports the subject goods to Canada. A closer review of the company’s submission revealed that additional information was required to enable computation of normal values. The CBSA has requested supplementary information from Leawo Corporation.

Normal ValuesThe normal value of the goods has been established pursuant to section 29 of SIMA as the export price plus an advance of 17.05%. This value represents the weighted average margin of dumping (expressed as a percentage of the export price) found for subject goods from Chinese Taipei for those cooperative exporters analyzed during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100% of the goods were dumped by a weighted average margin of dumping of 17.05%, expressed as a percentage of export price.

Loyal International Co. (Loyal)

Company – Loyal is considered an “overseas business unit,” while Taiwan CMC, its sister firm with which it made a joint submission, is a distributor/trading company. Neither company produces goods nor has any domestic sales. Subject fasteners are purchased from a local supplier strictly for export.

Normal Values – As there were no sales of like goods in the domestic market, the normal values were determined pursuant to paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit is based on the weighted average profit made on domestic sales of goods of the same general category by other cooperative Chinese Taipei producers, pursuant to subparagraph 11(1)(b)(iv) of the SIM Regulations.

Export PriceAll sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 94% of the goods exported were dumped by a weighted average margin of dumping of 10.9%, expressed as a percentage of export price.

Lu Chu Shin Yee

Company – Lu Chu Shin Yee shipped the subject goods to Canada. The company could not provide costs that reasonably reflected the costs associated with the production and sale of subject and like goods.

Normal Values – Since the company did not provide the required cost information, normal value has been determined pursuant to section 29 of SIMA, based on the export price plus an advance of 170%. This value represents the highest margin of dumping (expressed as a percentage of the export price) found during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 170%, expressed as a percentage of export price.

Midas Trading Union Co. Ltd.

Company – Midas Trading Union Co. Ltd. exports screws, nuts and bolts but does not manufacture.

Normal Values – Normal values were determined under section 15 and paragraph 19(b) of SIMA. Adjustments to normal value were made pursuant to SIM Regulation 7.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that for goods originating in Chinese Taipei, 98.11% of the goods were dumped by a weighted average margin of dumping of 16.06%, expressed as a percentage of export price. For good originating in China, it was found that 37.23% of the goods were dumped by a weighted average margin of dumping of 3.46%, expressed as a percentage of export price.

Min Hwei Enterprise Co. Ltd. (Min Hwei)

Company – Min Hwei is a manufacturer and exporter of the subject goods. The company also sells the same goods in its domestic market.

Normal Values – Where there existed a sufficient number of profitable domestic market sales of like goods made to non-associated customers in Chinese Taipei, the normal values were calculated on the basis of the weighted average prices for these sales, as per the provisions in sections

15 and 16 of SIMA. In the absence of domestic sales meeting these conditions, normal values were determined under section 19 based on the total cost of the goods (cost of production, administrative, selling and all other costs) plus an amount for profit. The amount for profit was based on Min Hwei’s weighted average profit on domestic market sales of goods of the same general category as the goods sold to Canada, as per subparagraph 11(1)(b)(ii) of the SIM Regulations.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 94.9% of the goods exported were dumped by a weighted average margin of dumping of 24.9%, expressed as a percentage of export price.

Newfast Co. Ltd. (Newfast)

Company – Newfast is a trader for the export market only of nuts, bolts and screws. The company provided a complete submission, however, some of the information must be re-submitted subsequent to the final determination.

Normal Values – The normal value of the goods has been established pursuant to section 29 of SIMA as the export price plus an advance of 17.05%. This value represents the weighted average margin of dumping (expressed as a percentage of the export price) found for subject goods from Chinese Taipei for those cooperative exporters analyzed during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 17.05%, expressed as a percentage of export price.

OTTS International Co. Ltd. (OTTS)

Company – OTTS, a subsidiary of Kind Auspice, specializes in tapping screws for the export market and has no domestic sales of like goods. OTTS supplied information and data pertaining to the manufacturing costs of subject goods exported to Canada during the POI.

Normal Values – As there were no sales of like goods in the domestic market, the normal values were determined pursuant to paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit is based on the weighted average profit made on domestic sales of goods of the same general category by other cooperative Chinese Taipei producers, pursuant to subparagraph 11(1)(b)(iv) of the SIM Regulations.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100% of the goods exported by OTTS were dumped by a weighted average margin of dumping of 17.79%, expressed as a percentage of export price.

QST International Inc. (QST)

Company – QST’s core business focuses on Automotive and OEM specially designed parts. They produce their own goods and also source from other manufacturers. QST is a major trading/sales export company with manufacturing and distribution capability. The margin was calculated based on the goods shipped that were subject, as they also shipped non-subject goods during the POI. QST did not have domestic sales of like goods.

Normal Values – Normal values were determined pursuant to paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit is based on the weighted average profit made on domestic sales of goods of the same general category by other cooperative Chinese Taipei producers, pursuant to subparagraph 11(1)(b)(iv) of the SIM Regulations.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of DumpingIt was found that 77.33% of the goods exported were dumped by a weighted average margin of dumping of 21.09%, expressed as a percentage of export price.

Ray Fu Enterprise Co. Ltd. (Ray Fu)/Chen Nan Iron Wire Co. Ltd.

Company – Ray Fu a trading company, is considered the exporter of the subject goods sold to Canada. Ray Fu is associated with Chen Nan Iron Wire Co. Ltd. its main supplier. The company provided a substantially complete submission that requires additional clarifications. A supplemental RFI was sent out with the ruling letter at the final determination.

Normal ValuesThe normal value of the goods has been established pursuant to section 29 of SIMA as the export price plus an advance of 17.05%. This value represents the weighted average margin of dumping (expressed as a percentage of the export price) found for subject goods from Chinese Taipei for those cooperative exporters analyzed during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100% of the goods were dumped by a weighted average margin of dumping of 17.05%, expressed as a percentage of export price.

San Shing Fastech Corp. (San Shing)

Company – San Shing is a large producer of carbon steel nuts. San Shing’s submitted information was verified on-site in September 2004.

Normal Values – San Shing’s information was found to be unreliable and unusable for determining company-specific margins. Normal values were therefore established pursuant to section 29 of SIMA, on the basis of an advance of 170% over the export price of the subject goods, representing the highest margin of dumping found during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 170%, expressed as a percentage of export price.

Schencho Industries Co. Ltd. (Schencho)

Company – Schencho is a producer of fasteners exported by their related company, Ticho Industries Ltd.

Normal Values – A supplemental questionnaire was sent to Schencho but the company did not reply. Normal values were therefore established pursuant to section 29 of SIMA, on the basis of an advance of 170% over the export price of the subject goods, representing the highest margin of dumping found during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100 % of the goods exported were dumped by a weighted average margin of dumping of 170%, expressed as a percentage of export price.

Shih Hsang Ywa Industrial Inc.

Company – Shih Hsang Ywa Industrial Inc. is a producer of carbon steel nuts and bolts for the domestic and export market.

Normal Values – Normal values were determined under section 15, using domestic sales of like goods, and paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit was determined pursuant to SIM Regulation 11(1)(b)(ii) as the weighted average profit made on acceptable sales of goods of the same general category by the exporter.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 71% of the goods exported were dumped by a weighted average margin of dumping of 6.3%, expressed as a percentage of export price.

Shin Jaan Works Co. Ltd. (Shin Jaan)

Company – Shin Jaan is a manufacturer and exporter of subject fasteners.

Normal Values – Normal values were determined under section 15, using domestic sales of like goods, and paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit was determined pursuant to SIM Regulation 11(1)(b)(ii) as the weighted average profit made on acceptable sales of goods of the same general category by the exporter.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 97.22% of the goods exported were dumped by a weighted average margin of dumping of 25.48%, expressed as a percentage of export price.

Sumeeko Industries Co. Ltd.

Company – Sumeeko Industries Co. Ltd. is the producer of a portion of the fasteners exported by them to Canada. Subject exported goods consisted of a variety of screws, nuts and bolts made of carbon and stainless steel sold to numerous non-related importers.

Normal Values – This exporter was not reviewed for purposes of the preliminary determination. A review of their submission for the purposes of the final determination revealed that additional information and clarification would be required. Accordingly, the normal value of the goods has been established pursuant to section 29 of SIMA as the export price plus an advance of 17.05%. This value represents the weighted average margin of dumping (expressed as a percentage of the export price) found for subject goods from Chinese Taipei for those cooperative exporters analyzed during the investigation.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 17.05%, expressed as a percentage of export price.

Super Cheng Industrial Co. Ltd.

Company – Super Cheng Industrial Co. Ltd. is a producer of carbon and stainless steel nuts for the export market.

Normal values – Normal values were determined pursuant to paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit is based on the weighted average profit made on domestic sales of goods of the same general category by other cooperative Chinese Taipei producers, pursuant to subparagraph 11(1)(b)(iv) of the SIM Regulations.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 60.20% of the goods exported were dumped by a weighted average margin of dumping of 6.53%, expressed as a percentage of export price.

Taiwan Shan Yin Int’l Co. Ltd.

Company – Taiwan Shan Yin Int’l Co. Ltd. is a manufacturer of screws and an export oriented company.

Normal Values – Normal values were determined pursuant to paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit was based on the weighted average profit made on domestic sales of goods of the same general category by other cooperative Chinese Taipei producers, pursuant to subparagraph 11(1)(b)(iv) of the SIM Regulations.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 67.2% of the goods exported were dumped by a weighted average margin of dumping of 2.1%, expressed as a percentage of export price.

Tong Hwei Enterprise Co. Ltd. (Tong Hwei)

Company – Tong Hwei is a producer and exporter of stainless steel screws and bolts. The company has a large volume of export sales and also sells like goods domestically. Tong Hwei’s submitted information was verified on site in September 2004.

Normal Values – Normal values were determined pursuant to section 15 and paragraph 19(b) of SIMA. SIM Regulations 5(d), 7, and 10 were applied to normal value to adjust for differing credit terms, inland freight and duty drawback, respectively. The amount for profit was calculated based on weighting domestic sales of identical and similar goods that were acceptable for section 15 purposes and met the most conditions outlined. Therefore, the amount for profit was calculated pursuant to SIM Regulation 11(1)(b)(ii) as the weighted average profit made on acceptable sales of goods of the same general category by the exporter.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of DumpingIt was found that 46% of the goods exported were dumped by a weighted average margin of dumping of 1.39%, expressed as a percentage of export price.

Yow Chern Corporation Ltd.

Company – Yow Chern Corporation Ltd. shipped the subject goods to Canada during the POI. The company did not respond to supplemental questions.

Normal Values – Normal values were established pursuant to section 29, on the basis of an advance of 170% over the export price of the subject goods, representing the highest margin of dumping found during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of DumpingIt was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 170%, expressed as a percentage of export price.

Yu Chi Taiwan Enterprise Co. Ltd.

Company – Yu Chi Taiwan Enterprise Co. Ltd. is a manufacturer and exporter of the subject goods. They are export oriented and reported no domestic sales.

Normal Values – No submission was made by the exporter in response to the CBSA supplemental RFI, issued October 1, 2004. Accordingly, as the company did not provide sufficient information, normal values were determined pursuant to section 29 of SIMA on the basis of an advance of 170% over the export price of the subject goods, representing the highest margin of dumping found during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 170%, expressed as a percentage of export price.

Zyh Yin Enterprise Co. Ltd.

Company – Zyh Yin Enterprise Co. Ltd. produces fasteners for both the export and domestic market, and has sales of like goods to customers in Chinese Taipei. However, there were insufficient sales of like goods in the domestic market to allow the establishment of normal values under section 15 of SIMA.

Normal Values – Accordingly, normal values were determined pursuant to paragraph 19(b) of SIMA, using the cost of production of the goods, selling, administrative and all other costs, and an amount for profit. The amount for profit is based on the weighted average profit made on domestic sales of goods of the same general category by other cooperative Chinese Taipei producers, pursuant to subparagraph 11(1)(b)(iv) of the SIM Regulations.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 65.5%% of the goods exported by Zyh Yin Enterprise Co. Ltd. were dumped by a weighted average margin of dumping of 10.3%, expressed as a percentage of export price.

UNITED STATES OF AMERICA

American Bolt & Screw

Company – American Bolt & Screw imports subject fasteners from Chinese Taipei, which it sells domestically and exports to a single unrelated customer in Canada. All domestic and export sales are to end-user manufacturers.

Normal Values – This exporter was not reviewed for purposes of the preliminary determination. A review of their submission for the purposes of the final determination revealed that additional information and clarification would be required. Accordingly, the normal value of the goods has been established pursuant to section 29 of SIMA as the export price plus an advance of 17.05%. This value represents the weighted average margin of dumping (expressed as a percentage of the export price) found for subject goods originating in Chinese Taipei for those cooperative exporters analyzed during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 17.05%, expressed as a percentage of export price.

Fastenal Company (FC)

Company – FC is a publicly traded distributor company on the NASDAQ. It has 11 distribution centres and over 1,200 branches in the U.S.A. All branches and distribution centres are wholly owned by FC. The company imports the subject goods from both Chinese Taipei and China and sells them domestically as well as for export. The company sources from over 30 different vendors/manufacturers in these countries. The company also reports nearly $US 1 billion in total net sales, a gross profit of $489,067,000 and net earnings of $84,120,000. Threaded fasteners accounted for approximately 45% of the company’s consolidated sales in 2003. Sales to Canada comprise approximately 4% of the company’s net sales.

Normal Values – Sales and costing information provided by the company was deemed unreliable and was not used for the purposes of determining normal values. Accordingly, normal values were determined pursuant to section 29 of SIMA on the basis of an advance of 170% over the export price of the subject goods, representing the highest margin of dumping found during the investigation.

Export Price – Export prices were established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 100% of the goods exported were dumped by a weighted average margin of dumping of 170%, expressed as a percentage of export price.

Hilti Inc. (Hilti)

Company – Hilti sells fasteners as well as other fastening equipment in the U.S.A. and Canadian market. The company exports the subject goods to a related importer, Hilti Canada. Hilti does not manufacture the subject goods.

Normal Values – Normal values were determined under section 15 and paragraph 19(b) of SIMA, and SIM Regulations 7, 9, and 10 were applied, while the amount for profit was determined pursuant to SIM Regulation 11(1)(b)(ii) as the weighted average profit made on acceptable sales of goods of the same general category by the exporter.

Export Price –The importer of the subject goods exported by Hilti is related to the exporter. Therefore, a reliability test of the transfer price between the two related companies was conducted, pursuant to section 25 of SIMA. As a result, export prices determined under section 24 of SIMA were found to be unreliable. Consequently, export prices were determined pursuant to paragraph 25(1)(c) of SIMA on the basis of the importer’s selling price to an unrelated party, less an amount equal to the costs incurred by the importer on or after the importation of the goods, an amount for profit by the importer, and the costs arising from the shipment of the goods to Canada.

Margin of Dumping – It was found that 100% of the subject goods exported were dumped by a weighted average margin of dumping of 111.95% for goods originating in Chinese Taipei and 115.45% for goods originating in China, expressed as a percentage of export price.

Senco Products Inc.

Company – Senco Products Inc. is a trading company located in the U.S.A. that sources the subject goods from Chinese Taipei.

Normal Values – Normal values were established under sections 15 and paragraph 19(b) of SIMA. The amount for profit was determined pursuant to SIM Regulation 11(1)(b)(ii) as the weighted average profit made on acceptable sales of goods of the same general category by the exporter.

Export Price – All sales to Canada were made to unrelated importers and export prices were accordingly established pursuant to section 24 of SIMA.

Margin of Dumping – It was found that 25.7% of the goods exported were dumped by a weighted average margin of dumping of 2.6%, expressed as a percentage of export price.

Star Stainless Screw Co.

Company – Star Stainless Screw Co. is a distributor located within the U.S.A., which exported subject goods from Chinese Taipei to a related importer in Canada, as well as to several unrelated importers.

Normal Values – Normal values were determined under section 15 and paragraph 19(b) of SIMA, with an amount for profit established pursuant to SIM Regulation 11(1)(b)(ii) as the weighted average profit made on acceptable sales of goods of the same general category by the exporter.

Export Price – One of the importers is related to the exporter. Therefore, a reliability test of the transfer price between the two related companies was conducted, pursuant to section 25 of SIMA. As a result, export prices determined under section 24 of SIMA were found to be unreliable. Consequently, export prices were determined pursuant to paragraph 25(1)(c) of SIMA on the basis of the importer’s selling price to an unrelated party, less an amount equal to the costs incurred by the importer on or after the importation of the goods, an amount for profit by the importer, and the costs arising from the shipment of the goods to Canada.

Margin of Dumping – It was found that 95% of the goods were dumped by a weighted average margin of dumping of 54.81%, expressed as a percentage of export price.

Appendix 2

CERTAIN CARBON STEEL AND STAINLESS STEEL FASTENERS

MARGINS OF DUMPING BY EXPORTER/COUNTRY

Country of Origin/Exporter

Percentage of Goods Dumped

Range of Margins of Dumping for Dumped Imports 1

Weighted Average Margin of Dumping 1

People’s Republic of China

     

Gem-Year Industrial Co. Ltd.

93.70%

0.04%-114%

30.99%

Midas Union Trading Co. Ltd. (Chinese Taipei)

37.23%

2.15%-22%

3.46%

Robertson Jiaxing Inc.

86.94%

0.05%-181%

17.30%

Shandong Welltrade Knitwears & Home Textiles Imp. & Exp. Co. Ltd.

95.16%

0.93%-187%

31.70%

Shanghai Ben Yuan Metal Products

55.42%

0.09%-54%

6.29%

Tong Ming Enterprise Co.

81.05%

0.58%-20%

9.27%

Hilti Inc. (U.S.A.)

100%

54.00%-347%

115.45%

Companies Not Sampled/or Analysis not Completed2

100%

-

27.49%

Non-Cooperative Companies3

100%

 

170%

China Total/Average

98.23%

-

71.95%

1 As a percentage of export price.

2 Weighted average margin calculated for co-operating exporters whose information was utilized for the final determination.

3 Margin based on highest margin of dumping (excluding anomalies) for the final determination.

Appendix 2 (cont’d)

Country of Origin/Exporter

Percentage of Goods Dumped

Range of Margins of Dumping for Dumped Imports 1

Weighted Average Margin of Dumping 1

Chinese Taipei

     

Chan Liang Enterprise Co., Ltd.

81.43%

0.79%-23%

12.15%

CPC Fasteners Industrial Co., Ltd.

96.83%

0.90%-105%

28.30%

Dragon Iron Factory

13.32%

6.10%-13%

1.53%

Homn Reen Co., Ltd.

73.80%

0.20%-170%

21.60%

Jau Yeou Industry Co., Ltd.

76.35%

0.21%-44%

10.71%

Kind Auspice Industrial Co., Ltd.

99.09%

0.15%-16%

14.86%

Knight Kingdom Co., Ltd.

100%

0.48%-49%

31.12%

Loyal International Co., Ltd.

94.02%

0.50%-58%

10.88%

Midas Union Trading Co., Ltd.

98.11%

0.95%-71%

16.06%

Min Hwei Enterprise Co., Ltd.

94.93%

0.04%-127%

24.86%

OTTS International Co., Ltd.

100%

7.34%-260%

17.79%

QST International Corp.

77.33%

2.66%-37%

21.09%

Shih Hsang Ywa Industrial Co.

71.00%

0.10%-44%

6.30%

Shin Jaan Works Co., Ltd.

97.22%

0.05%-82%

25.48%

Super Cheng Industrial Co., Ltd.

60.20%

0.10%-138%

6.53%

Taiwan Shan Yin International Co., Ltd.

67.21%

0.10%-44%

2.10%

Tong Hwei Enterprise Co.

46.45%

0.10%-65%

1.39%

Zyh Yin Enterprise Co., Ltd.

65.50%

0.03%-216%

10.30%

Hilti Inc. (U.S.A.)

100%

6.00%-322%

111.95%

Senco Products Inc. (U.S.A.)

25.75%

5.10%-21%

2.60%

Star Stainless Screw Co. (U.S.A.)

95.17%

0.77%-178%

54.81%

Companies Not Sampled/or Analysis not Completed2

100%

-

17.05%

Non-Cooperative Companies3

100%

-

170%

Chinese Taipei Total/Average

97.58%

 

68.94%

1 As a percentage of export price.

2 Weighted average margin calculated for co-operating exporters whose information was utilized for the final determination.

3 Margin based on highest margin of dumping (excluding anomalies) for the final determination.

Appendix 3

CHINA

Description of Identified Programs and Incentives at Initiation

1. Special Economic Area (SEA) Incentives – Available to manufacturers operating in specified regions such as economic and technical development zones, export processing zones, bonded zones and high technology industrial development zones. Benefits either granted outright or contingent on export performance, in the form of:

A7 Tariff exemptions on imported materials

A7 Rebated corporate income tax

A7 VAT exemptions

A7 Rebates on investment costs

A7 Special land tax and land use exemptions

A7 Preferential costs of services and infrastructure provided by government bodies or state-owned enterprises

2. Grants Provided for Export Performance and Employing Common Workers – Benefits provided by Government of China in the form of direct grants to enterprises satisfying specified export criteria, or to assist in expanding export sales.

3. Preferential Loans – Preferential interest rates and financing terms provided, either directly by the Government of China or indirectly through financial institutions, to companies satisfying specified export-contingent criteria.

4. Loan Guarantees by the Government of China – Loans provided to certain manufacturers satisfying export-contingent or other criteria guaranteed by the Government of China or by financial institutions operating under the direct or indirect control or influence of the Government of China.

5. Income Tax Credits, Refunds and Exemptions:

(a) Reduced Corporate Tax Rate for Export-Oriented Enterprises – Reduced rate of tax on corporate income for those companies that have a significant volume of export sales.

(b) Exemption/Reduction of Corporate Income Tax during Designated Start-up Periods – Exemption from and further reduction of income tax for companies operating in special economic areas during a designated start-up period (usually five years). The result is that export profits are exempt from corporate income tax.

(c) Income Tax Refund of Amounts Further Invested in SEAs – Certain qualifying companies located in SEAs eligible for rebate of corporate income tax paid when profits are re-invested within the SEA.

(d) Exemption/Reduction in Local Income Tax for SEA Enterprises – Certain foreign invested enterprises located in SEAs granted an exemption or reduction in sub-provincial income taxes.

6. Relief from Duties and Taxes on Inputs – Certain qualifying companies located in SEAs permitted to import machinery and other inputs for use in the production of subject goods exempt from applicable duties and taxes.

7. Reductions in Land Use Fees – Certain qualifying companies located in SEAs pay reduced long-term land-use fees for land on which factories are located.

8. Purchase of Goods from State-owned Enterprises – Entities operating under the direct or indirect control or influence of the Government of China provide goods, such as raw materials, chemicals, metallurgy and semi-manufactured inputs, and services, such as utilities, natural gas and hydroelectric power, to manufacturers at below-market prices.

Appendix 4

CHINA

Detailed Timeline of Subsidy Investigation

March 29, 2004 Date of Properly Documented Complaint, copy of the subsidy portion of the non-confidential complaint sent to the Government of China (GOC)

April 23, 2004 Consultations between the Government of Canada and the GOC in accordance with Article 13.1 of the WTO Subsidies Agreement

April 28, 2004 Initiation Date, Request for Information (RFI) sent to the GOC

June 14, 2004 Received response to RFI by GOC

June 16, 2004 1st Supplemental Request for Information (SRFI) sent to the GOC

June 23, 2004 Received response to 1st SRFI by GOC

June 23, 2004 2nd SRFI sent to the GOC

June 23, 2004 Consultations between the Government of Canada and the GOC in accordance with Article 13.2 of the WTO Subsidies Agreement

June 25, 2004 Received first update to the response to the 1st SRFI by GOC

June 28, 2004 Received second update to the response to the 1st SRFI by GOC

June 28, 2004 Received third update to the response to the 1st SRFI by GOC

June 29, 2004 Received 2002 and 2003 Customs Import and Export Tariff of the People's Republic of China from the GOC

June 29, 2004 Meeting held at Chinese Embassy to get a High-level overview of Chinese economy from embassy officials

June 30, 2004 Received fourth update to the response to the 1st SRFI by GOC

July 2, 2004 Received response to 2nd SRFI by GOC

July 3, 2004 Received fifth update to the response to the 1st SRFI by GOC

July 14, 2004 3rd SRFI sent to the GOC

July 21, 2004 4th SRFI sent to the GOC

August 4, 2004 Received response to 3rd SRFI by GOC

August 4, 2004 Received response to 4th SRFI by GOC

August 16, 2004 Received additional response to 3rd SRFI by GOC

August 30, 2004 6th SRFI sent to the GOC8

September 1, 2004 Meeting with Counsel for the GOC to discuss 6th SRFI

September 10, 2004 Received response to 5th SRFI by GOC 9

September 10, 2004 Date of the Preliminary Determination

September 13, 2004 Received response to 6th SRFI by GOC

September 22, 2004 Meeting held at the Anti-Dumping and Countervailing Directorate with various GOC officials to discuss response and outstanding information

September 27, 2004 Received First Update to the response to the 6th SRFI

October 4, 2004 Received Second Update to the response to the 6th SRFI

October 8, 2004 Received Revised Second Update to the response to the 6th SRFI

October 8, 2004 Received Third Update to the response to the 6th SRFI

October 13, 2004 Received Fourth Update to the response to the 6th SRFI

October 13, 2004 Received Chinese documents corresponding to translated versions submitted as part of the Second Update to the response to the 6th SRFI

October 20, 2004 Received Fifth Update to the response to the 6th SRFI

October 20, 2004 Received Non-Confidential version of the Fourth Update to the response to the 6th SRFI

October 22, 2004 Letter sent to GOC concerning the fact that the CBSA would not be conducting on-site verification

October 26, 2004 Sent clarification questions to GOC

October 27, 2004 Sent additional clarification question to GOC

Appendix 5

CHINA

Summary of the CBSA Analysis of the Information Submitted in Response to the Subsidy Investigation Regarding the People’s Republic of China

Special Economic Area Incentives

After reviewing the information provided by the Government of the People’s Republic of China (GOC) and by the sampled exporters who provided responses and who were located in Special Economic Areas (SEAs), it would appear that not all of the information requested by the CBSA was submitted by the GOC.

The lists of economic benefits available in SEAs that were provided by the GOC do not necessarily appear to be complete, based on the information provided by exporters. In addition, some of the information submitted by the GOC (notably the documents identified as various SEA budgets) lacks sufficient detail and context, such that questions remain regarding the existence of any potentially countervailable benefits.

The CBSA is unable to determine whether the potential benefits available to exporters of subject goods located in SEAs exist, and whether any of these potential benefits, if they do exist, are actionable, given the GOC’s responses to the Request for Information (RFI) and various supplemental RFIs (SRFIs).

Grants Provided for Export Performance and Employing Common Workers

After reviewing the information provided by the GOC and by the sampled exporters who had responded, it would appear that not all of the information requested by the CBSA was submitted by the GOC.

The GOC’s initial response only applied to those specific exporters identified by the GOC in its response to the original RFI, and no revised response was provided regarding all of the additional exporters the CBSA selected as part of its sample. The GOC did not provide a sufficient response to a request for local government budgets, as the documents identified as such and submitted by the GOC for a limited number of jurisdictions cannot be considered proper budgets, nor do they contain sufficient detail to ascertain whether local governments are providing grants to exporters of subject goods. Information within these documents does, however, contain indications that grants based on export performance may exist, although the lack of detail prevents any definitive conclusion.

Information obtained from exporters has indicated that such grants do exist, and that these appear to be linked to either past or future export performance. The exporter submissions have also suggested that many of these grants are obtained from local (municipal or provincial) governments, so that the requested budget documents are necessary to confirm their existence and determine their actionability.

The CBSA is unable to determine whether any potential benefits are available to exporters of subject goods through the dispensation of export grants, and whether any of these potential benefits, if they do exist, are actionable, given the GOC’s responses to the RFI and various SRFIs.

Preferential Loans

After reviewing the information provided by the GOC and by the sampled exporters who had responded, it would appear that not all of the information requested by the CBSA was submitted by the GOC.

The GOC did not respond to the questions contained within the original RFI regarding all of the sampled exporters, instead restricting its initial response to the five exporters it originally identified as having exported subject goods, and later expanding its response to all twelve sampled exporters it considered relevant to the investigation. Provincial budget documents submitted by the GOC also indicate that low-interest or discount loans may be available in China to companies based on their export activities.

In addition, exporters have provided information indicating that preferential loans were available to and were obtained by exporters of subject goods during the POI. The GOC did not respond to requests for the details of the program(s) through which these loans appeared to be obtained, nor did it provide the legislation related to these program(s).

The CBSA is unable to determine whether any potential benefits are available to exporters of subject goods through the dispensation of discount loans, and whether any of these potential benefits, if they do exist, are actionable, given the GOC’s responses to the RFI and various SRFIs, in conjunction with the responses received from the various exporters of subject goods.

Loan Guarantees by the Government of China

The GOC stated that no part of the GOC had guaranteed any loans, and provided legislation supporting this statement. However, the GOC also submitted budget documents describing a provincial government’s efforts to set up a system during the POI designed to guarantee loans to private enterprises.

The GOC had been requested, as part of the Sixth SRFI, to respond to all questions within the original RFI and all subsequent SRFIs as they applied to all of the sampled exporters, rather than the five it had originally identified. No revised response encompassing all nineteen sampled exporters was received by the CBSA, leaving open the possibility that some of the sampled exporters who did not respond to the RFI did in fact receive loans that were guaranteed by the GOC.

The CBSA is unable to determine whether any potential benefits are available to exporters of subject goods through the guaranteeing of loans, and whether any of these potential benefits, if they do exist, are actionable, given the GOC’s responses to the RFI and various SRFIs.

Income Tax Credits, Refunds and Exemptions

The GOC provided documentation apparently confirming that income tax reductions and/or exemptions do exist and were available to at least those exporters that are foreign-invested enterprises (FIEs). These apparent income tax reductions/exemptions consisted of reduced tax rates for export-oriented enterprises, exemptions or reductions of income tax during a designated start-up period, income tax refunds of amounts further invested in SEAs, and exemptions or reductions in the local income tax rate for enterprises in SEA. However, the CBSA requested the “Complete Income Tax Law and all relevant guides” but only appears to have received complete tax legislation for FIEs, although there were sampled exporters that were domestic-invested enterprises (DIEs).

The CBSA also requested all local income tax legislation, regulations, etc. for the jurisdictions where the sampled exporters were located but received documents that did not entirely appear to be tax-related pieces of legislation and which were very general in nature. Although the GOC implied that these local documents are the only income tax provisions promulgated by the local governments, exporters have submitted information indicating that there are additional tax-related decrees, regulations, or other documents promulgated.

In light of the limited amount of information submitted by the GOC to the CBSA’s requests (dealing primarily with the income taxes levied by the national level of government on one specific set of exporters), the CBSA is unable to determine whether any potential benefits are available to exporters of subject goods through the reduction and /or exemption of income taxes by the GOC, and whether any of these potential benefits, if they do exist, are actionable, given the GOC’s responses to the RFI and various SRFIs.

Relief from Duties and Taxes on Inputs

After reviewing the information provided by the GOC and by the sampled exporters who had responded, it would appear that not all of the information requested by the CBSA was submitted by the GOC.

The GOC did not provide any documentation regarding information that was gathered or audits that were performed by China Customs on the sampled exporters during the POI, while indications have been received from the exporters that such audits did take place.

In light of the limited information that has been provided, the CBSA is unable to determine whether any potential benefits are available to exporters of subject goods through the relief of duties and taxes on imported inputs, and whether any of these potential benefits, if they do exist, are actionable, given the GOC’s responses to the RFI and various SRFIs, in conjunction with the responses received from the various exporters of subject goods.

Reductions in Land Use Fees

After reviewing the information provided by the GOC and by the sampled exporters who had responded, it would appear that not all of the information requested by the CBSA was submitted by the GOC.

The GOC provided information regarding the land-related fees paid by those sampled exporters which it considered relevant to the CBSA’s investigation, rather than for all of the sample selected by the CBSA. In addition, information provided by the GOC has included indications that reductions in land-related fees are available in at least some of the jurisdictions where sampled exporters are located.

As the local (i.e. provincial) governments within the GOC appear to receive the bulk of the proceeds received from land use fees, local government legislation, regulations, and decrees dealing with land-related fees would presumably be the most relevant to the investigation. However, other than the limited amount of information available from the provincial land-use fee schedules, no local government documentation regarding land use fee determination was submitted by the GOC.

Information obtained from exporters has indicated that reductions and refunds in land use fees do exist, although the legislative basis upon which these reductions and/or refunds were granted is not apparent.

The CBSA is unable to determine whether any potential benefits are available to exporters of subject goods through the reduction or refund of land-related fees by the GOC and whether any of these potential benefits, if they do exist, are actionable, given the GOC’s responses to the RFI and various SRFIs.

Purchase of Goods from State-owned Enterprises

After reviewing the information provided by the GOC and by the sampled exporters who had responded, it would appear that not all of the information requested by the CBSA was submitted by the GOC.

Initially, the GOC maintained that the provision of raw materials to exporters of subject goods by SOEs was a moot point as no SOE had supplied the sampled exporters with raw materials. After it became apparent, through exporter responses, that SOEs had supplied the sampled exporters, the GOC stated that it maintained no operational control of SOEs and therefore had no means of influencing pricing, and no means of providing any of the information requested regarding SOEs. No corroborating documentation was provided to support the separation between government and SOEs described by the GOC.

The information obtained from the exporter responses has indicated that sampled exporters purchased raw materials from SOEs, and that these raw materials may have been purchased at a lower than market price.

The CBSA is unable to determine whether any potential benefits are available to exporters of subject goods through the provision of raw materials by the GOC (in its capacity as the owner of various SOEs) and whether any of these potential benefits, if they do exist, are actionable, given the GOC’s responses to the RFI and various SRFIs.

Appendix 6

CHINESE TAIPEI

Description of Identified Programs and Incentives at Initiation

1. Economic Processing Zone (EPZ) Incentives - Available to manufacturers operating in specified regions such as EPZs, Export Processing Zone, Environment Technology Park, Science-based Industrial Park, Industrial Estate, Mixed Industrial/Commercial Zone or any other designated area. Benefits either granted outright or contingent on export performance, in the form of:

o Import duties exemptions on imported materials

o Commodity taxes and business taxes exemptions on machinery and materials

o Export taxes and contract taxes exemptions

o Five-year income tax exemptions for companies in "newly emerging and strategic industries"

o Preferential housing tax rates

2. Grants and Financial Assistance Provided by the Government of Chinese Taipei - Benefits provided by Government of Chinese Taipei in the form of direct government investment/equity participation, reimbursement of costs of anti-dumping or subsidy proceedings, financial assistance for Research and Development (R&D) under several programs.

3. Preferential Loans - Preferential interest rates and financing terms provided, either directly by the Government of Chinese Taipei or indirectly through financial institutions, to companies satisfying specified criteria under various programs involving the Development Fund of the Executive Yuan, Export/Import Bank of the Republic of China (EXIM) and the Board of Foreign Trade (BOFT).

4. Income Tax Credits, Refunds and Exemptions:

a. Reduced Corporate Tax Rate for Exporters - Reduced rate of tax on corporate income for those companies that have a significant volume of export sales.

b. Exemption/Reduction /Credit/Refund of Corporate Income Tax for Designated Investments - For companies investing in "emerging, important and strategic industries", new companies or expansions, automated equipment and technology, and outward (foreign) investments and/or technical cooperation projects.

c. Income Tax Refund/Exemption for Companies Located or Investing in EPZs and Other Designated Zones and Areas - Certain qualifying companies located and/or investing in SEZs and other designated Parks, Estates and Regions are eligible for corporate income tax exemptions and/or deductions.

5. Exemption/Reduction in Duties and Taxes

a. For Companies Located or Investing in EPZs and Other Designated Zones and Areas - Certain qualifying companies are permitted to import machinery and other inputs for use in production of subject goods exempt from applicable duties and taxes.

b. For Companies Not Located in Designated Areas Above - Certain qualifying companies receive a reduction in import duties with respect to inputs used in production of subject goods.

6. Exemption/Reduction in Contract and Commercial Housing Taxes - Companies located in EPZs and other Designated Zones and Areas are exempt from contract tax and are allowed reductions in commercial housing tax.

7. Purchase of Goods from State-owned Enterprises - Entities operating under the direct or indirect control or influence of the Government of Chinese Taipei may have provided raw material input (steel wire) used in the production of the subject goods, to manufacturers/exporters in Chinese Taipei at preferential prices.

Appendix 7

CHINESE TAIPEI

Summary of Investigation of Alleged Subsidy Programs

Programs used by exporters of fasteners and found to be actionable subsidies:

1. Excessive refund of import duty on imported raw materials

The complainant has alleged that exporters in Chinese Taipei receive excessive duty drawback from the Government of Chinese Taipei (GOCT) in relation to the imported materials incorporated into the exported fasteners.

Subsection 35.01(1) of the SIM Regulations covers excessive relief of duties and taxes on inputs. The amount of subsidy is the amount by which the refund exceeds the duty levied on inputs (raw materials) "consumed in the production of the exported goods".

Guidelines for determining the amount of a particular input that is consumed in the production of an exported product are contained in Annex II of the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures (Subsidies Agreement). Procedures for investigating excess drawback are contained in Annex II and Annex III of the Subsidies Agreement, which were followed in this investigation. Annex III covers substitution drawback systems.

The legal instrument for drawback is the GOCT's Regulations Governing the Offsetting or Refund of Duties and Taxes on Raw Materials for Exported Products. The Industrial Development Bureau of the Ministry of Economic Affairs is responsible for the establishment of standard input-output criteria for refunding or offsetting import duties on imported raw materials used to produce goods that are exported. The Department of Customs Administrations of the Ministry of Finance is responsible for administering such refund or offset.

In the case of fasteners, the GOCT uses a type of substitution drawback system, which allows a domestic input to be substituted for an imported input if it has the same quality and characteristics. When applying for refund of duty, the companies document actual importations but do not necessarily have to prove that they were used to produce the exported goods that are documented in the refund claim. The CBSA has determined that the GOCT has in place and applies a procedure to verify that imported steel wire and exported fasteners conform to standards established by the GOCT. The CBSA has verified with two exporters that the procedures are being effectively applied. The exporters maintain internal worksheets as part of the procedure to track imports and duties as well as amounts subsequently refunded or offset.

The CBSA has also examined the GOCT's system used to confirm which inputs are consumed in the production of the exported product and in what amounts, in connection with any particular refund claim. The CBSA has found that the GOCT relies on information provided by the Taiwan Industrial Fasteners Institute (TIFI) but has never verified it. The GOCT publishes standards by which an exporter declares the weight of an exported shipment of a particular type of fastener and the theoretical weight of input steel wire based on the standard; refund of duty levied on steel wire importations of equivalent weight is then granted. As the GOCT did not verify the input-output ratios provided by TIFI, the CBSA examined the actual input content of fasteners exported by the two exporters selected for on-site verification. In one case the standard was insignificantly higher than actual, in the other case it was significantly higher. In both cases the exporters sold all of the scrap resulting from production.

Annex II of the Subsidies Agreement permits a "normal allowance for waste" to be included in the amount of input consumed in production, but not "that portion ... which ... is ... sold" (Annex II part II paragraph 4). The CBSA has determined that the amount for waste in the GOCT's standards, intended to be included in a duty refund application, has not been reasonably calculated. The GOCT has allowed all the scrap, less a small amount reflecting the value of sold scrap, which is contrary to the guideline at Annex II. The allowable weight of input steel wire eligible for duty refund should be the same weight of the exported fasteners, not the weight of exported fasteners increased by the factor stipulated in the standard. The refund or offset of duty levied on that portion of imported steel wire that is sold as scrap is a subsidy. It was verified that the exporters obtained refunds or offsets of all duties levied.

Based on information received from the two exporters visited on-site and from two additional exporters, the amounts of excess duty refunds or offsets, less fees charged by Taiwan Customs, distributed over all exports to all countries, were found to vary from 0.0243 New Taiwan dollars (NT$) per kilogram (kg) to NT$0.0961 per kg. These amounts represented 0.0596 % to 0.3088 % of the export price of the goods exported to Canada.

Conclusion

The portion of the amounts of duty refunds or offsets on imported steel wire based on the GOCT's allowance for waste is considered to be an actionable subsidy. The GOCT's financial contribution is established under paragraph 2(1.6)(b) of the Special Import Measures Act (SIMA) as amounts of duty that would otherwise be owing and due to the GOCT that have been exempted or deducted, or amounts that are owing and due to the GOCT that have been forgiven or not collected. The benefits to the exporters are the amounts of duties refunded or offset, which are calculated on a factor for scrap, disallowed under the Subsidies Agreement and therefore excessive. The excess relief of duties is a specific subsidy under paragraph 2(7.2)(b) of SIMA for the reason that it is a prohibited subsidy as defined in subsection 2(1) of SIMA, because it is contingent on export performance. In order to determine the amount of subsidy under subsection 35.01(1) of the SIMR, the amounts per kilogram of excess duty deducted (refunded) or not collected (offset), less fees charged by Taiwan Customs for processing refunds, were distributed over the quantity of fasteners exported in the period of investigation by exporters verified to have received duty refunds or offsets.

2. Tax deduction for purchase of domestic-made automation equipment higher than tax deduction for purchase of foreign-made equipment

The complainant alleged that the GOCT allows companies to deduct from income tax between 5% and 25% of the cost of investing in automated equipment and technology, a deduction only available to companies whose activities lend themselves to automation.

Under Article 6 of the GOCT's Statute for Upgrading Industries, a company may credit 5% to 25% of the amount of funds invested in equipment for automation of production, or in production technology, against the amount of income tax payable, claimable in the year of purchase or next four years. The definition of the equipment and the percentage tax credit rate is prescribed in the Measures Governing Application for Tax Credit for Investment in Purchasing Equipment or Technology by Internet Enterprises, Manufacturing Enterprises and Technical Services Enterprises (Measures).

From July 12, 2000, to April 23, 2002, the tax credit rate was 20% for domestic-made equipment and 10% for foreign-made equipment. The favouring of domestic over imported goods constitutes a prohibited subsidy. The Measures were amended on April 24, 2002, to conform to rules of the WTO, which Chinese Taipei joined on January 1, 2002. The amended Measures no longer make a distinction between domestic-made and foreign-made equipment, and changed the rate to 13% of the cost of equipment from any source; the rate was decreased to 11 % on July 14, 2004. The amended Measures do not constitute actionable subsidies, as discussed further in the section "Programs used by exporters of fasteners but found to be non-actionable".

During verification, tax returns were examined and discussed with officials of the two visited exporters and of the GOCT Department of Taxation. The responses by 15 other exporters to the subsidy questionnaire were also reviewed. One of the visited exporters and five other exporters took the 20% tax deduction in 2003. The other reviewed exporters either took the 13% non-actionable deduction or made no claim under this tax provision.

For each exporter who took the 20% tax deduction, the deducted amount times the 25% income tax rate resulted in the tax saving, which was the benefit of this program to the exporters. The benefit was divided by the 8-year service life prescribed by the GOCT for this type of capital equipment. The resultant annualized benefit was allocated to all fasteners sold based on quantity. The amount of subsidy ranged from NT$0.0019 per kg to NT$0.0206 per kg. This subsidy represented 0.0044% to 0.0446% of the export price of fasteners exported to Canada in the period of investigation.

Conclusion

The tax saving derived from the 20% tax credit on investments in domestic-made automated equipment is considered to be an actionable subsidy. The GOCT's financial contribution is established under paragraph 2(1.6)(b) of SIMA as amounts of tax that would otherwise be owing and due to the GOCT that have been deducted. This tax deduction constitutes a specific subsidy under paragraph 2(7.2) (b) of SIMA for the reason that it is a prohibited subsidy as defined in subsection 2(1) of SIMA by virtue of being a subsidy that is contingent on the use of goods that are produced or that originate in the country of export. Under subsection 27.1(2) of the SIM Regulations, the amount of subsidy in respect of any amount otherwise due to a government that is deducted shall be treated as a grant under section 27 of the SIM Regulations. The amount of subsidy was determined by multiplying the tax deduction by the relevant tax rate and dividing this figure by the total quantity of goods sold in the year the deduction was made.

Programs used by exporters of fasteners but found to be non-actionable:

3. Tax deduction for purchase of automation equipment and technology

The investigation of an alleged countervailable tax deduction found that the pertinent tax provision was amended, with the effect of no longer conferring actionable benefits subsequent to the amendment, as discussed in the previous section.

Under Article 6 of the GOCT's Statute for Upgrading Industries, a company may credit 5% to 25% of the amount of funds invested in equipment for automation of production, or in production technology, against the amount of income tax payable, claimable in the year of purchase or next four years. The definition of the equipment and of the technology, and the corresponding percentage tax credit rates, are prescribed in the Measures Governing Application for Tax Credit for Investment in Purchasing Equipment or Technology by Internet Enterprises, Manufacturing Enterprises and Technical Services Enterprises (Measures).

From July 12, 2000, to April 23, 2002, the tax credit rate was 20% for domestic-made equipment and 10% for foreign-made equipment; the favouring of domestic over imported goods constitutes a prohibited subsidy, as discussed earlier. The Measures were amended on April 24, 2002, to conform to rules of the WTO, which Chinese Taipei joined on January 1, 2002. The amended Measures no longer make a distinction between domestic-made and foreign-made equipment, and changed the rate to 13% of the cost of equipment from any source; the rate was decreased to 11 % on July 14, 2004. There is a similar provision for deducting 10% of the cost of qualifying technology, which has remained unchanged under the amended Measures.

A review of responses by 17 exporters revealed that some took these tax deductions in 2003 and others did not. The benefits of the 10% deduction for foreign-made equipment and those under the revised Measures are generally available in law. The question of whether they have been generally granted in fact was not pursued because the GOCT has no discretion to disallow a claim once the particular equipment or technology qualifies. As such, this subsidy is not considered an actionable subsidy because it is not specific pursuant to subsection 2(7.1) of SIMA.

4. Exemption or reduction of import duties and indirect taxes on imported materials not directly incorporated into exported products granted to exporters not located in Economic Processing Zones or other designated areas

The payment of duties and taxes on imported machinery by the verified exporter not located in any designated zone or area was examined to identify any exemption or reduction that might have been granted by the GOCT. Duties and taxes were paid at the normal rates except for two importations of machinery, in 1999 and in 2002. The company applied for and was granted permission to import machinery exempt of the 5 % import duty applicable at that time. As the machinery may be capitalized over 8 years as prescribed by the GOCT, the benefit of duty exemption thus extended into the subsidy POI. The exemptions were allowed under Chapter 84 of the GOCT's Customs Tariff for certain machinery, equipment and instruments "which have not yet been manufactured locally". In this situation, the CBSA considers the duty exemption comparable to the setting of the rate of duty in respect of a particular tariff item. Since the setting of a tariff rate does not constitute foregone revenue, the CBSA does not consider this “exemption” to constitute a financial contribution by the government pursuant to subsection 2(1.6) of SIMA and is, therefore, not a subsidy. No evidence of any other import duty or tax exemption or reduction was found in reviewing the responses provided by other exporters of fasteners subject to this investigation.

5. Small Business Innovation Research Program (grants)

Under Article 22-1 of the GOCT's Statute for Upgrading Industries and Articles 3.2 and 6 of the Ministry of Economic Affairs Regulations on Motivating the Development of Industrial Technology by Enterprises, small and medium enterprises may apply for grants to cover part of costs of innovative research or industrial technology. The granting authority is the Department of Industrial Technology of the Ministry of Economic Affairs. The investigation found one exporter of fasteners having received benefits under this program. The investigation found this program to be generally available in law. The CBSA examined the participation in this program with the view to determine whether the program is actionable as a specific subsidy in fact pursuant to subsection 2(7.3) of SIMA, and found no evidence that the fasteners industry is, in fact, a favoured benefactor of this program. As such, this subsidy is not considered an actionable subsidy because it is not specific pursuant to subsection 2(7.1) of SIMA.

6. Information Technology Applications Promotion Project Program (grants)

Under Article 22-1 of the GOCT's Statute for Upgrading Industries and Articles 3.3 and 7 of the Ministry of Economic Affairs Regulations on Motivating the Development of Industrial Technology by Enterprises, companies may apply for grants to cover part of research and development costs to apply information technology. The granting authority is the Department of Industrial Technology of the Ministry of Economic Affairs. The investigation found one exporter of fasteners having received benefits under this program. The investigation found this program to be generally available in law. The CBSA examined the participation in this program with the view to determine whether the program is actionable as a specific subsidy in fact pursuant to subsection 2(7.3) of SIMA, and found no evidence that the fasteners industry is, in fact, a favoured benefactor of this program. As such, this subsidy is not considered an actionable subsidy because it is not specific pursuant to subsection 2(7.1) of SIMA.

7. Loans to Assist in the Upgrading of Small and Medium Enterprises

Article 21 of the GOCT's Statute for Upgrading Industries provides for the establishment of a development fund for use in investing in certain enterprises, cooperating in certain projects, as well as providing financial facilities and loans. The GOCT provided the official instrument setting out terms and conditions, the Key Points for Loans to Assist in the Upgrading of Small and Medium Enterprises. The GOCT also provided information about loans under this program to three of the sampled exporters, one of whom was found to have exported non-subject fasteners. The interest rates charged to the other two exporters were not preferential when compared to rates charged for similar capital loans by private banks under no GOCT program to one of the visited exporters, and to rates available from public sources. No other evidence of use of this program was found in respect of exporters of fasteners subject to this investigation. This loan program was not found to constitute a subsidy because there is no financial contribution by the GOCT pursuant to subsection 2(1.6) of SIMA.

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8. Loans for Purchases of Automated Machinery and Equipment

Article 21 of the GOCT's Statute for Upgrading Industries provides for the establishment of a development fund for use in investing in certain enterprises, cooperating in certain projects, as well as providing financial facilities and loans. The GOCT provided the official instrument setting out terms and conditions, the Key Points for Loans for Purchases of Automated Machinery and Equipment. The GOCT also provided information about loans under this program to two of the sampled exporters. The interest rates charged were not preferential when compared to rates charged for similar capital loans by private banks under no GOCT program to one of the visited exporters, and to rates available from public sources. No other evidence of use of this program was found in respect of exporters of fasteners subject to this investigation. This loan program was not found to constitute a subsidy because there is no financial contribution by the GOCT pursuant to subsection 2(1.6) of SIMA.

9. Assisting SMEs under the Medium and Long-term Capital Loan Plan

The GOCT's Council for Economic Planning and Development governs this loan program. The GOCT provided the official instrument setting out terms and conditions, the Criteria for Assisting SMEs under the Medium and Long-term Capital Loan Plan. The GOCT also provided information about loans under this program to one of the sampled exporters. The interest rate charged was not preferential when compared to rates charged for similar capital loans by private banks under no GOCT program to one of the visited exporters, and to rates available from public sources. No other evidence of use of this program was found in respect of exporters of fasteners subject to this investigation. This loan program was not found to constitute a subsidy because there is no financial contribution by the GOCT pursuant to subsection 2(1.6) of SIMA.

Programs found to exist but not used by exporters of fasteners:

10. Industrial Technology Development Program (grants)

Under Article 22-1 of the GOCT's Statute for Upgrading Industries and Articles 3.1 and 5 of the Ministry of Economic Affairs Regulations on Motivating the Development of Industrial Technology by Enterprises, companies may apply for grants to cover part of forward-looking industrial technology development costs. The granting authority is the Department of Industrial Technology of the Ministry of Economic Affairs. The investigation found no evidence of use of this program by exporters of fasteners subject to this investigation.

11. Pilot Research Promotion Program for Research and Development Alliances (grants)

Also under Article 22-1 of the GOCT's Statute for Upgrading Industries and Articles 3.1 and 5 of the Ministry of Economic Affairs Regulations on Motivating the Development of Industrial Technology by Enterprises, companies may form an alliance and apply for grants to cover part of the alliance's costs of development of technology aiming at integration. The granting authority is the Department of Industrial Technology of the Ministry of Economic Affairs. The investigation found no evidence of use of this program by exporters of fasteners subject to this investigation.

12. Strategic Service-oriented Research and Development Program (grants)

Under Article 22-1 of the GOCT's Statute for Upgrading Industries and Articles 3.4 and 8 of the Ministry of Economic Affairs Regulations on Motivating the Development of Industrial Technology by Enterprises, companies may apply for grants to cover part of service-oriented research and development costs. The granting authority is the Department of Industrial Technology of the Ministry of Economic Affairs The investigation found no evidence of use of this program by exporters of fasteners subject to this investigation.

13. Program for Encouragement of the Establishment of Industrial Technology Innovation Centers in Taiwan by Domestic Enterprises (grants)

Under Article 22-1 of the GOCT's Statute for Upgrading Industries and Article 9.4 of the Ministry of Economic Affairs Regulations on Motivating the Development of Industrial Technology by Enterprises, companies located in Chinese Taipei may apply for grants to cover part of research and development coststo establish industrial technology innovation centers in Chinese Taipei. The granting authority is the Department of Industrial Technology of the Ministry of Economic Affairs. The investigation found no evidence of use of this program by exporters of fasteners subject to this investigation.

14. Direct capital investment by the GOCT of up to 49 % of the cost of investments in specific projects in ten emerging industries (grants)

Article 21 of the GOCT's Statute for Upgrading Industries provides for the establishment and use of a development fund. Under Article 21.1 the GOCT may participate in the investment in enterprises or projects relating to industrial upgrading improvement of industrial structure. The investigation found no evidence of use of this program by exporters of fasteners subject to this investigation.

15. Exemption of import duty, commodity tax and business tax on inputs and machinery, exemption of business tax on exported goods, exemption from deed tax (contract tax) and reduction in house tax for companies located in Export Processing Zones, Economic Processing Zones, Mixed Industrial / Commercial Zones and Science Parks.

The GOCT provided information about the operation and residents of Export Processing Zones, Economic Processing Zones, Mixed Industrial / Commercial Zones and Science Parks. CBSA officers visited on-site the office of the Export Processing Zones Administration in Kaohsiung and met with GOCT administrators of Mixed Industrial / Commercial Zones. The investigation found no evidence of exporters of fasteners subject to this investigation located in any of these designated areas.

16. Financial assistance to cover part of costs of participating in anti-dumping or subsidy-countervailing investigations

The GOCT Bureau of Foreign Trade (BOFT) may provide funds up to a certain limit to cover part of any industry's costs for legal and financial counselling to respond to anti-dumping and subsidy-countervailing investigations. The authority is Article 5.6 of the Regulations Governing Revenue, Expenditure, Custody and Use of the Trade Promotion Fund. This fund is established under Chapter 3 Article 21 of the Foreign Trade Act from a trade promotion service fee collected on exported and imported goods. No exporters or associations of fasteners have indicated that they have applied for nor received such financial assistance with regard to this investigation, and BOFT officials also said that none have inquired nor applied.

17. Loans for product marketing, overseas investment and overseas construction projects

This program is established under the Statute for Development of Small and Medium Enterprises, Articles 9, 15 and 16, Procedure for Income Expenditure, Safeguarding and Utilization of the SME Development Fund. The granting authority is the Small and Medium Enterprise Administration of the Ministry of Economic Affairs. Loans from this fund are provided by the GOCT's Export-Import Bank. The investigation found no evidence of use of this program by exporters of fasteners subject to this investigation.

18. Financing from the Export-Import Bank

The GOCT's Export-Import Bank (EXIM) provides medium and long-term export credits to exporters in Chinese Taipei and to their foreign buyers. Information in this regard was requested of the GOCT, the EXIM, the sampled exporters and their importers. The investigation found no evidence of use of this program by exporters or importers of fasteners subject to this investigation.

19. Five-year tax exemption for newly emerging, important and strategic industries

Under Article 9 of the Statute for Upgrading Industries, qualifying companies are granted a five-year tax exemption. Fasteners do not fall within the scope of products and industries defined in the appurtenant Regulations for Encouragement of Manufacturing Enterprises and Technical Services Enterprises in the Newly Emerging, Important and Strategic Industries.

20. Five-year tax exemption for manufacturing industries newly incorporated or expanding during the period January 1, 2002, to December 31, 2003

Under Article 9-2 of the Statute for Upgrading Industries, qualifying companies newly incorporated or expanding during the period January 1, 2002, to December 31, 2003, are granted a five-year tax exemption. The investigation found no evidence of use of this program by exporters of fasteners subject to this investigation.

21. Tax credit for companies located in resource-poor or lesser developed rural areas

Under Article 7 of the Statute for Upgrading Industries, qualifying companies located in an "area with scanty natural resources or with slow development" are granted an income tax credit of up to 20% of the investment in such an area. The GOCT provided a copy of the public notice by the Ministry of Economic Affairs listing the geographical areas eligible in 2003 under Article 2 of the Regulations Governing Application of Tax Credit to Company Investment in Township with Scanty Natural Resources or Slow Development. The GOCT stated that one of the sampled exporters is located in such an area but has not applied for any tax credit under this provision. The investigation found no evidence of use of this program by exporters of fasteners subject to this investigation.

22. Tax reserve against loss in foreign investment

Under Article 12 of the Statute for Upgrading Industries, a company with an approved foreign investment may set aside up to 20% of the investment as a reserve to cover any investment loss. The investigation found no evidence of use of this program by exporters of fasteners subject to this investigation.

23. Export insurance from the GOCT Bureau of Foreign Trade and the Export-Import Bank

Both the GOCT's Bureau of Foreign Trade and Export-Import Bank provide export insurance. The investigation found no evidence of use of such export insurance by exporters of fasteners subject to this investigation.

Programs found not to exist:

24. Development Fund for grants toward upgrading important enterprises or projects

Article 21 of the GOCT's Statute for Upgrading Industries provides for the establishment of a development fund for use in investing in certain enterprises, cooperating in certain projects, as well as providing financial facilities and loans. The investigation found no evidence to support the complainant's allegation that this fund was used to "disburse grants" to exporters of fasteners subject to this investigation.

25. Exemption of import duty, commodity tax and business tax on inputs and machinery, exemption of business tax on exported goods, exemption from deed tax (contract tax) and reduction in house tax for companies located in Industrial Estates

The GOCT provided information about the operation and residents of Industrial Estates, also referred to as Industrial Parks or Industrial Districts. CBSA officers visited on-site the office of the Administration Department of Southern Industrial Parks in Tainan, and met with GOCT officials of the Department of Taxation. One of the visited exporters is located in such a designated area, the Yung An Industrial District. It was confirmed that another sampled exporter of subject goods is located in the Ping-Nan Industrial District. It appears that yet another sampled exporter is located in another Industrial Park based on its address; however, this exporter did not respond to the CBSA's questionnaire. Other producers of fasteners were identified in some of these Districts or Parks, but it was not established whether they are exporters of subject goods.

The investigation found no evidence of the availability of exemption or reduction of duties and taxes for residents of Industrial Estates, Parks or Districts. The visited exporter did not receive any exemption or reduction of duties or taxes by reason of being located in the Industrial District. The company claimed and received duty drawback, as addressed in the first section of this appendix. Commodity tax is not applicable to fasteners, only to the commodities listed in the Commodity Tax Act. Business tax was paid on all transactions at the normal rate according to the Value-added and Non-value-added Business Tax Act. Deed tax (sometimes referred to as contract tax) was paid according to the Tax Guide for Deed Tax. House tax is paid annually according to the Tax Guide for House Tax; it is noted that the reduction to half the rate for factory buildings is applicable to all factory buildings regardless of location, as confirmed with the other exporter verified on-site who is not located in any designated zone or district.

26. Low-interest loans to exporters from the GOCT Bureau of Foreign Trade

The complainant has alleged that the BOFT provides low-interest loans to exporters, based on the BOFT's website. The website refers to a request by the BOFT that the Small and Medium Enterprise (SME) Credit Fund allocate 30 million New Taiwan dollars in funding for loans to SMEs to enable them to develop their export business. BOFT officials explained that the BOFT does not provide loans, that the website item was inaccurate and was deleted in July 2004. Furthermore, the Chairman & President of the Small and Medium Business Credit Guarantee Fund provided a letter stating that no loans are extended from this fund. The investigation found no evidence of BOFT loans to exporters of fasteners subject to this investigation.

27. Expansion of financing by the GOCT Bureau of Foreign Trade

The complainant has alleged that the BOFT has expanded export financing, based on the BOFT's website. BOFT officials explained that their activities in promoting trade include informing exporters of available programs but that the BOFT itself does not provide loans. The investigation found no evidence of BOFT loans to exporters of fasteners subject to this investigation.

28. Export loss reserve

Under Article 31 of the Statute for Encouragement of Investment (SEI), repealed on

January 30, 1991, companies could set aside an export loss reserve of up to one per cent of export sales and claim that amount as a tax deduction. The SEI was superseded and replaced with the Statute for Upgrading Industries (SUI). The GOCT provided a copy of the notice of repeal, which includes a clause that the SUI replaced the SEI. The SUI does not contain any provision equivalent to former SEI Article 31.

29. Preferential income tax ceiling

Under Article 15 of the SEI, repealed on January 30, 1991, certain companies were permitted to pay income tax at the rate of 25% instead of the 35% applicable at that time. The SEI was superseded and replaced with the SUI. The GOCT provided a copy of the notice of repeal, which includes a clause that the SUI replaced the SEI. The SUI does not contain any provision equivalent to former SEI Article 15.

30. Purchase of steel wire from partially GOCT-owned China Steel Corporation by exporters at lower prices than charged if fasteners are intended to be sold on the domestic market

The complainant has alleged that China Steel Corporation (CSC), a partially GOCT-owned steel company, maintains two separate price lists for its domestic customers, one of which is for those customers who sell on the domestic market, and a lower price list for those domestic companies who export their products. Under section 36 of the SIM Regulations, a subsidy exists if a government directs a body to provide goods at less than their fair market value in the territory of the government.

The United States Department of Commerce had investigated a similar allegation in two cases, in 1985 and 1986, and found the existence of a dual price system at CSC, with lower prices for exporters; prices were lower because they were based on duty-free imported steel, and higher when sold to customers who produced for the domestic market because price was based on duty-paid imported steel; the prices were not found to be below world market prices and therefore not conferring a subsidy. As well, the WTO Working Party on the Accession of Chinese Taipei noted in 2001 that CSC's two-tier pricing policy, the higher price based on duty-paid steel and the lower based on duty-free steel, was abolished in 1994, and since then CSC's prices were found to be determined according to market conditions with no state intervention.10

In this investigation, the GOCT explained that it owned 23% of CSC's shares in 2003 and that four of the eleven directors of CSC were nominated by the GOCT, three of whom including the Chairman of the Board are current or former GOCT officials, and must confer with the GOCT before voting on important proposals. CSC explained that a discount for exporters was applied for a time but that this practice was terminated in July 1993. The CBSA reviewed prices of steel wire charged in 2003 by CSC and other suppliers to sampled exporters, some of whom also sell on the home market, and the value for duty of steel wire imported into Chinese Taipei in 2003. The investigation found no evidence of preferential pricing by CSC in supplying steel wire to exporters, nor any evidence of supplying steel wire below fair market value.


1 OECD, DAC List of Aid Recipients – As at 1 January 2003, online: http://www.oecd.org/dataoecd/35/9/248852.pdf

2 The American National Standards Institute/American Society of Mechanical Engineers, Society of Automotive Engineers, Industrial Fastener Institute, Deutsches Institut fr Normung e.V., and International Organisation for Standardization, respectively.

3 OECD, DAC List of Aid Recipients – As at 1 January 2003, online: http://www.oecd.org/dataoecd/35/9/248852.pdf

4 Government of China’s Non-Confidential Response to the Original RFI, Response D.2

5 Government of China’s Response to Supplementary RFI #3, Non-Confidential Response to Question #4

6 Most explicitly in the Government of China’s Response to Supplementary RFI #3, Non-Confidential Response to Question 4 (b)

7 Original RFI, Part C, p.11

8 The “5th SRFI” was solely in relation to the concurrent investigation regarding the alleged subsidizing of outdoor barbeques originating in or exported from the People’s Republic of China. However, the GOC provided a response to this SRFI to the investigations regarding both fasteners and barbeques, designating it the 5th SRFI.

9 ibid

10 Non-confidential CBSA Exhibit S379: WTO, Report of the Working Party on the Accession of Chinese Taipei, WT/ACC/TPKM/18, October 5, 2001, pages 34 and 35; United States Department of Commerce, International Trade Administration, Import Administration, Final Negative Countervailing Duty Determination, Oil Country Tubular Goods from Taiwan, May 30, 1986, and Final Negative Countervailing Duty Determination, Welded Carbon Steel Line Pipe from Taiwan, December 31, 1985.