AE 2019 ER
Certain Aluminum Extrusions
Statement of Reasons

[1] On March 8, 2019, the Canadian International Trade Tribunal (CITT), pursuant to subsection 76.03(3) of the Special Import Measures Act (SIMA), initiated an expiry review of its order made on March 17, 2014, in Expiry Review No. RR-2013-003, concerning the dumping and subsidizing of certain aluminum extrusions originating in or exported from the People’s Republic of China (China).

[2] As a result of the CITT’s notice of expiry review, on March 11, 2019, the Canada Border Services Agency (CBSA) initiated an expiry review investigation to determine, pursuant to paragraph 76.03(7)(a) of SIMA, whether the expiry of the order is likely to result in the continuation or resumption of dumping and/or subsidizing of the subject goods.

[3] The CBSA received 10 responses to its Canadian Producer Expiry Review Questionnaire (ERQ): from Almag Aluminum Inc. (Almag)^{Footnote 1}, APEL Extrusions Limited (APEL)^{Footnote 2}, Apex Aluminum Extrusions Ltd. (Apex)^{Footnote 3}, Can Art Aluminum Extrusion Limited Partnership (L.P.) (Can Art)^{Footnote 4}, Dajcor Aluminum Limited (Dajcor)^{Footnote 5}, Extrudex Aluminum Corp.(Extrudex)^{Footnote 6}, Extrudex Aluminum (Quebec) Inc. (Extrudex Quebec)^{Footnote 7}, Hydro Extrusion Canada, Inc. (Hydro)^{Footnote 8}, Metra Aluminum Inc. (Metra)^{Footnote 9}, Spectra Aluminum Products Ltd./Spectra Anodizing Inc. (Spectra)^{Footnote 10}. These companies collectively are referred to as “the Canadian producers” in this report. The submissions made by the Canadian producers included information supporting their position that continued or resumed dumping and subsidizing of certain aluminum extrusions from China is likely if the CITT’s order is rescinded.

[4] The CBSA received four responses to the Importer ERQ: from HFI Pyrotechnics Inc.^{Footnote 11}, Studica Limited^{Footnote 12}, TORYLS Inc.^{Footnote 13}, and TSDC Canada Inc.^{Footnote 14} The importers did not express an opinion as to the likelihood of continued or resumed dumping and subsidizing of certain aluminum extrusions from China is likely if the CITT’s order is rescinded.

[5] The CBSA did not receive any response to the Exporter ERQ nor did it receive a response to the Foreign Government ERQ from the Government of China (GOC).

[6] In addition to responding to the ERQ, the Canadian producers submitted supplementary information^{Footnote 15} prior to the closing of the record. The CBSA also received a joint case brief^{Footnote 16} on behalf of the Canadian producers. The case brief submitted by the Canadian producers included arguments supporting their position that continued or resumed dumping and subsidizing of certain aluminum extrusions from China is likely if the CITT’s order is rescinded.

[7] Analysis of information on the administrative record in respect of the GOC’s involvement in and influence on the aluminum industry – Section 20 conditions; the primary aluminum capacity and production levels in China; the conditions in the aluminum extrusion industry in China; the export orientation of Chinese aluminum extrusion producers; the trade measures in other jurisdictions; the evidence of circumvention of trade remedy measures/ transhipment; the continued presence of Chinese aluminum products in Canada; along with the competitive conditions in the Canadian aluminum extrusions market, indicates a likelihood of continued or resumed dumping into Canada of certain aluminum extrusions originating in or exported from China should the CITT’s order be rescinded.

[8] In addition, analysis of information on the administrative record in respect of the continued subsidizing of the primary aluminum industry in China, the continued subsidizing of aluminum extrusion producers in China and the countervailing measures in Canada and in other jurisdictions, indicates a likelihood of continued or resumed subsidizing of certain aluminum extrusions originating in or exported from China should the CITT’s order be rescinded.

[9] For the foregoing reasons, the CBSA, having considered the information on the record, made a determination on August 2, 2019, pursuant to paragraph 76.03(7)(a) of SIMA that:

• the expiry of the order in respect of certain aluminum extrusions originating in or exported from China is likely to result in the continuation or resumption of dumping of the goods exported to Canada; and
• the expiry of the order in respect of certain aluminum extrusions originating in or exported from China is likely to result in the continuation or resumption of subsidizing of the goods exported to Canada.

[10] On August 18, 2008, pursuant to subsection 31(1) of SIMA, the CBSA initiated investigations respecting the dumping and subsidizing of aluminum extrusions from China following a properly documented complaint received from Almag Aluminum Inc., Apel Extrusions Limited, Can Art Aluminum, METRA Aluminium Inc., Signature Aluminum Canada Inc., Spectra Aluminum Products Ltd. and Spectra Anodizing Inc.

[11] On February 16, 2009, the CBSA made final determinations^{Footnote 17} of dumping and subsidizing in accordance with subsection 41(1) of SIMA in respect of aluminum extrusions originating in or exported from China.

[12] On March 17, 2009, the CITT found that the dumping and subsidizing of the goods originating in or exported from China had caused injury to the Canadian domestic industry for aluminum extrusions pursuant to subsection 43(1) of SIMA^{Footnote 18}.

[13] On February 10, 2011, the Tribunal determined^{Footnote 19} that MAAX Bath Inc. was entitled to the product exclusions that it had requested, at the time of the original inquiry, for certain aluminum extrusions used in the assembly of shower enclosures.

[14] On September 19, 2011, the CBSA initiated a re-investigation of certain aluminum extrusions to update the normal values and amounts of subsidy. The CBSA received cooperation from four exporters, and issued them company-specific normal values and amounts of subsidy at the conclusion of the re-investigation on February 20, 2012.^{Footnote 20} The GOC did not cooperate during the re-investigation.

[15] On June 5, 2013, the CITT, pursuant to subsection 76.03(3) of SIMA, initiated an expiry review of its findings made on March 17, 2009, in Inquiry No. NQ-2008-003, and as amended on February 10, 2011, in Inquiry No. NQ-2008-003R, concerning the dumping and subsidizing of certain aluminum extrusions originating in or exported from China. As a result of the Tribunal’s Notice of Expiry Review, on June 6, 2013, the CBSA commenced an investigation to determine whether the expiry of the findings is likely to result in the continuation or resumption of dumping and/or subsidizing of the goods from China.

[16] On October 3, 2013, pursuant to paragraph 76.03(7)(a) of SIMA, the CBSA determined that the expiry of the finding was likely to result in the continuation or resumption of dumping and subsidizing of these goods into Canada.^{Footnote 21}

[17] On March 17, 2014, in Expiry Review No. RR-2013-003, the CITT continued its findings without amendment made on March 17, 2009, in Inquiry No. NQ-2008-003, as amended by its determination made on February 10, 2011, in Inquiry No. NQ-2008-003R, concerning the dumping and subsidizing of certain aluminum extrusions originating in or exported from China.^{Footnote 22}

[18] On January 17, 2019, pursuant to subsection 76.03(2) of SIMA, the CITT issued a notice^{Footnote 23} concerning the expiry of its order, which was scheduled to occur on March 16, 2019. Based on the information filed during the expiry process, the CITT decided that a review of the order was warranted. On March 8, 2019, the CITT initiated an expiry review of its order pursuant to subsection 76.03(3) of SIMA.^{Footnote 24}

[19] On March 11, 2019, the CBSA commenced an expiry review investigation to determine whether the expiry of the order is likely to result in continued or resumed dumping and/or subsidizing of the goods from China.

Product Definition

[20] The goods subject to this expiry review investigation are defined as:

“Aluminum extrusions produced via an extrusion process of alloys having metallic elements falling within the alloy designations published by The Aluminum Association commencing with 1, 2, 3, 5, 6 or 7 (or proprietary or other certifying body equivalents), with the finish being as extruded (mill), mechanical, anodized or painted or otherwise coated, whether or not worked, having a wall thickness greater than 0.5 mm, with a maximum weight per metre of 22 kg and a profile or cross-section which fits within a circle having a diameter of 254 mm, originating in or exported from the People’s Republic of China.”

Products excluded from the Tribunal’s Order

• aluminum extrusions produced from either a 6063 or a 6005 alloy type with a T6 temper designation, in various lengths, with a powder coat finish on both the interior and the exterior surfaces of the extrusion, which finish is certified to meet the American Architectural Manufacturers Association AAMA 2603 standard, "Voluntary Specification, Performance Requirements and Test Procedures for Pigmented Organic Coatings on Aluminum Extrusions and Panels", for use in exterior railing systems;
• aluminum extrusions produced from a 6063 alloy type with a T5 temper designation, having a length of 3.66 m, with a powder coat finish, which finish is certified to meet the American Architectural Manufacturers Association AAMA 2603 standard, "Voluntary Specification, Performance Requirements and Test Procedures for Pigmented Organic Coatings on Aluminum Extrusions and Panels", for use as head rails and bottom rails in fabric window shades and blinds where the fabric has a cross-sectional honeycomb or "cellular" construction;
• aluminum extrusions produced from a 6063 alloy type with a T5 temper designation and forming part of the Vario System™ 20, 30, 40, 45 and 60 series line of profiles, or equivalent, having a length of either 4.5 or 5.8 m and a straightness tolerance of +/-1.5 mm or less per 6.0 m of length, for use in those parts of mechanical systems and automated machinery, such as gantry systems and conveyors, where precise linear movement is required;
• aluminum extrusions produced from either a 6063 or a 6463 alloy type, having a length of 3 m, with a hand-applied gold and silver leaf finish, for use as picture frame mouldings;
• aluminum extrusions produced from a 6063 alloy type with either a T5 or a T6 temper designation, having a length of between 20 and 33 ft. (between 6.10 and 10.06 m), with a powder coat finish, which finish is certified to meet the American Architectural Manufacturers Association AAMA 2603 standard ("Voluntary Specification, Performance Requirements and Test Procedures for Pigmented Organic Coatings on Aluminum Extrusions and Panels"), for use in window frames;
• heat sinks imported under tariff item No. 8473.30.90 and weighing 700 g or less; and
• aluminum extrusions produced by China Square Industrial Ltd. from either a 6063 or a 6463 alloy type with a T5 temper designation, with a profile or cross-section which fits within a circle having a diameter of 100 mm, for use by MAAX Bath Inc. in the assembly of its shower enclosures, specifically identified in the Appendix of the Determination and reasons issued by the Canadian International Trade Tribunal on February 10, 2011, in Inquiry No. NQ-2008-003R. The list of these excluded products can be found in the Appendix at the following link: http://www.citt.gc.ca/en/dumping/inquirie/findings/archive_nq2i003r_e#P166_42819

Additional Product Information^{Footnote 25}

[21] Extrusion is the process of shaping heated material by forcing it through a shaped opening in a die with the material emerging as an elongated piece with the same profile as the die cavity. For greater clarity, the subject goods do not include goods made by the process of impact extrusion or cold extrusion. Impact (or cold) extrusion is commonly used to make collapsible tubes such as toothpaste tubes or cans usually using soft materials such as aluminum, lead and tin. Usually a small shot of solid material is placed in the die and is impacted by a ram, which causes cold flow in the material. Impact (or cold) extrusion is not performed by the same machinery or using the same inputs as the extrusion operations of the complainants.

[22] Alloys are metals composed of more than one metallic element. Alloys used in aluminum extrusions contain small amounts (usually less than five percent) of elements such as copper, manganese, silicon, magnesium, or zinc which enable characteristics such as corrosion resistance, increased strength or improved formability to be imparted to the major metallic element, aluminum. Aluminum alloys are produced to specifications in “International Alloy Designations and Chemical Composition Limits for Wrought Aluminum and Wrought Aluminum Alloys” published by The Aluminum Association. These specifications have equivalent designations issued by other certifying bodies such as the International Standards Organization (ISO).

[23] All aluminum extrusions are produced as either hollow or solid profiles. Hollow profile extrusions generally cost more to produce and obtain higher prices than solid profile extrusions. Extrusions are often produced in standard shapes such as bars, rods, pipes and tubes, angles, channels and tees but they are also produced in customized shapes.

[24] In addition to “as extruded” or mill finish, extrusions can be finished mechanically by polishing, buffing or tumbling. Extrusions can have anodized finishes applied by means of an electro-chemical process that forms a durable, porous oxide film on the surface of the aluminum. Also, they can be finished with liquid or powder paint coatings utilizing an electrostatic application process.

[25] The ability to produce the full range of profiles is determined by the extrusion and ancillary equipment. The complainants cannot produce extrusions having a wall thickness less than 0.5 mm or a weight greater than 22 kilogram (kg) per metre or a cross-section larger than would be enclosed within a 254 mm diameter circle.

[26] Working or fabricating extrusions includes any operation performed other than mechanical, anodized, painted or other finishing, prior to utilization of the extrusion in a finished product. These can include precision cutting, machining, punching and drilling.

[27] Aluminum extrusions are widely used in many end-use applications that span numerous market sectors. The main end-use sectors for aluminum extrusions are building and construction, transportation, and engineered products. Uses for aluminum extrusions in the building and construction industry cover a wide range of products, including windows, doors, railings, bridges, light poles, high-rise curtainwalls, framing members, and other various structures. Uses for aluminum extrusions in the transportation industry include parts for automobiles, buses, trucks, trailers, rail cars, mass transit vehicles, recreational vehicles, aircraft, and aerospace. Aluminum extrusions are also used in many consumer and commercial products, including, air conditioners, appliances, furniture, lighting, sports equipment, electrical power units, heat sinks, machinery and equipment, food displays, refrigeration, medical equipment, and laboratory equipment.

[28] In its findings, the Tribunal had separated the subject goods into two classes of goods: standard-shaped and custom-shaped aluminum extrusions. In this Statement of Reasons, the term "aluminum extrusions” refers to both classes of goods as a whole.

[29] The information provided in the ERQ responses did not differentiate between the two classes of goods. In addition, the information gathered by the CBSA in its statistical and other research did not reveal any differentiation within the industry regarding the two classes of goods, with news articles and analyses consistently referring to aluminum extrusions as a whole.

[30] Therefore, unless stated otherwise, the analysis respecting the likelihood of continued or resumed dumping and subsidizing applies to both classes of goods as defined by the Tribunal.

[31] The subject goods are usually classified under the following tariff classification numbers:

1. 7604.10.00.30
2. 7604.10.00.40
3. 7604.21.00.10
4. 7604.21.00.90
5. 7604.29.00.11
6. 7604.29.00.19
7. 7604.29.00.21
8. 7604.29.00.29
9. 7604.29.00.30
10. 7608.10.00.10
11. 7608.10.00.90
12. 7608.20.00.00
13. 7610.10.00.10
14. 7610.10.00.20
15. 7610.10.00.30
16. 7610.90.10.00
17. 7610.90.90.10
18. 7610.90.90.20
19. 7610.90.90.30
20. 7610.90.90.90

[32] This listing of tariff classification numbers is for convenience of reference only. The tariff classification number provided may include goods that are not subject goods and subject goods may be imported into Canada under tariff classification numbers other than those provided.

[33] The period of review (POR) for the CBSA’s expiry review investigation is from January 1, 2016 to December 31, 2018.

[34] Submissions to the Expiry Review Questionnaire (ERQ) for the aluminum extrusions expiry review investigation were received from 10 domestic producers, which represent the majority of the Canadian industry. These producers estimated their combine production at approximately 70-85% of the total Canadian production of like goods.^{Footnote 26} Other known producers are Signature Aluminum Canada Inc. (Signature); Kawneer Company Canada Ltd. (Kawneer); Kaiser Aluminum Corporations (Kaiser), Kromet International Inc. (Kromet) and Pexal Tecalum Canada (Pexal).^{Footnote 27}

Almag Aluminum Inc.

[35] Almag was founded in 1953 as Almag Aluminum & Magnesium Ltd., manufacturing ornamental doors in Etobicoke, Ontario. In 1959, an extrusion press was purchased and the company began producing aluminum extrusions. In 1993, the son of the founder purchased the assets of Almag Aluminum Ltd and continued operating the business as Almag Aluminum Inc. In 2005 the ownership was re-structured such that Almag Aluminum Inc. is now owned by Jedmar Holdings ltd., a Holding Company controlled by the Founder’s son, who is the CEO of Almag. Almag now operates one extrusion and fabrication facility in Brampton, Ontario and through an associated company Almag Aluminum Corp., a warehouse and fabrication facility in Alabama. Almag remains a family-owned business: operated and controlled by the son of the founder.^{Footnote 28}

APEL Extrusion Limited

[36] APEL began operations with a 4-inch extrusion press in Winnipeg, Manitoba in 1972. The company was established as a joint venture with Alcan Aluminum Ltd. (Alcan) to manufacture and market aluminum extrusions in the prairie provinces and acts as Alcan’s sales agent for larger extrusions.

[37] A second extrusion operation was opened in Calgary, Alberta to service the growing Western Canadian market. Upgrades to the 6-inch press in Calgary and the installation of a new paint line allowed for the consolidation of operations into the Calgary facility, resulting in the closure of the Winnipeg operation in 1990.

[38] Alcan largely exited its extrusion business in North America in the late 1970's, selling its interest in APEL to the current private ownership group. Continuous upgrades to its equipment, expansion of its premises and the installation of a new 7-inch press in 2001 has allowed APEL to grow its operations and become a supplier of preference in western Canada.

[39] Further equipment enhancements and a major upgrade to its horizontal paint line in 2005 allowed APEL to further improve its capabilities and meet the American Architectural Manufacturers Association (AAMA) paint standard (AAMA2603, 2604, 2605), which facilitated growth for the years to come. A new modern anodizing line and waste water handling system was installed in 2008 to replace the existing, outdated, 20-year-old equipment.

[40] APEL purchased the assets of Postle Aluminum – Oregon in 2010. APEL acquired a 3-year-old UBE press and a leased manufacturing facility in Springfield, Oregon. With this addition, APEL began to market its extrusions and expand its business dealings through the US West Coast. Upgrades to its paint line in Calgary, Canada allowed APEL to begin Powder Coating operations later that same year. Continuing to upgrade its capabilities in 2011, APEL replaced its 40-year-old 6-inch press in Calgary with modern UBE press, complete with Granco Clark ancillaries.

[41] In 2014 APEL purchased a 135,000 square foot building in Coburg Oregon and moved its 7 inch press from Springfield Oregon (leased facility) to Coburg Oregon. In the same year APEL installed a new 9-inch Press in the Coburg Oregon Facility. In 2018 APEL expanded the Coburg Oregon facility by 65,000 square feet and added a new 7-inch press to its current fleet of presses (now five).^{Footnote 29}

Apex Aluminum Extrusions Ltd.

[42] Apex was founded in 2009. Production began in 2011 and Apex Aluminum was soon delivering product throughout Western Canada. The company produces custom shapes, Standard Tube, Structural Channels, Architectural Angles, Bar and Pipe up to 10 inch by 2 inch in size.^{Footnote 30}

Can Art Aluminum Extrusion Inc.

[43] Can Art (formerly Daymond Aluminum) was incorporated April 28, 1989. Can Art initially operated one press line at a location in Mississauga, Ontario before relocating to Brampton, Ontario, in 1996 to a larger facility where a second press line was added. In 2001, a new facility in Lakeshore was established housing two new press lines. In 2008, the Lakeshore plant was expanded and a third press line added. In 2012 an anodizing facility was completed in Mississauga, Ontario In 2018, the Brampton facility was expanded and a third press line added. All six press lines can produce the full range of aluminum extrusions subject to this enquiry. The operations at all three plants are now under the ownership of Can Art Aluminum Extrusion L.P. and are part of one corporate entity.^{Footnote 31}

Dajcor Aluminum Limited

[44] Dajcor was incorporated under the laws of Ontario in April 2010. It began production on June 1, 2010 at its Chatham Ontario facility. The company produces aluminum extrusions, performs fabrication, including CNC machining, cutting, notching, mitring, deburring, bending, brushing and polishing. The company also does anodizing all under one roof at its 200,000 sq. ft. facility. The company is locally owned.^{Footnote 32}

Extrudex Aluminum Corp.

[45] Extrudex Aluminum was founded in 1980 with a determination to manufacture quality aluminum extrusions and provide superior service.

[46] The Company has expanded several times since its inception. In 1984, Extrudex Aluminum moved from its original facility to a larger building; in 1994, a manufacturing operation was purchased in Quebec; in 1998, a new site was constructed in Ohio; and in the year 2000, a new head office and plant was built in Woodbridge, Ontario.

[47] The Extrudex Aluminum group covers over 500,000 sq.ft. with an annual output capacity in excess of 80,000 metric tonnes. The company’s extrusion presses range in container size from 7 inch through 13 inch.

[48] A wide variety of surface finishes and colours are available. From basic mill finish (as extruded) to clear and coloured anodizing as well as a wide variety of paint colours in both wet and powder.^{Footnote 33}

Extrudex Aluminium (Quebec) Inc.

[49] Extrudex Quebec, a separately-incorporated subsidiary of Extrudex, is a producer of aluminum extrusions located in St-Nicolas, Quebec. The company was established in 1994.^{Footnote 34}

Hydro Extrusions Canada, Inc.

[50] The Hydro Canada operations (originally owned by Indalex) were founded in the early 1960s in Canada as the core business for the North American downstream metals and building products subsidiary of RTC Corp., the world’s largest mining and metal company at that time, according to the company. At its peak in the 1990s and early 2000s, four locations existed across Canada, making Indalex the market leader in custom and standard extrusions. In 2009, Sapa Group acquired certain assets of Indalex, in the United States and Canada as part of a bankruptcy sale. Locations in Calgary, Alberta, and Port Coquitlam, British Columbia, were subsequently closed. In 2013, Norsk Hydro and Orkla (Sapa’s parent company) entered into a global joint venture, combining both aluminum extrusion businesses. In 2017, Norsk Hydro became a 100% owner of the joint venture.^{Footnote 35}

METRA Aluminium Inc.

[51] METRA is a privately-owned company located in Laval, Québec. The company started its operations in 1994 following the acquisition of the current plant and equipment from Alcan. METRA has two extrusion presses producing custom shapes and one liquid paint line. METRA is a subsidiary of METRA Holding, of Italy.^{Footnote 36}

Spectra Aluminum Products Ltd./Spectra Anodizing Inc.

[52] Spectra is a privately-owned company incorporated in June 1978 that provides aluminum extrusion, fabrication, polishing and other value-added services in Canada to customers in Canada, the United States and Europe.^{Footnote 37}

Other Known Producers:

Kaiser Aluminum Corporation

[53] Kaiser, a United States based producer, has a production facility in London, Ontario. The Canadian producers believes that the production from this company is primarily for the United States market, although this may have changed due to the trade measures imposed by the United States.^{Footnote 38}

Kawneer Company Canada Ltd.

[54] Kawneer is a part of Arconic's Building and Construction Systems business and is a leading supplier of architectural systems and products.^{Footnote 39} The company’s North American headquarters are located in Norcross, Georgia, United States. Kawneer has an aluminum extrusions production facility in Lethbridge, Alberta.

Kromet International Inc.

[55] Kromet has a manufacturing facility located in Cambridge, Ontario. The company manufactures finished metal components and assemblies for the appliance, furniture, automotive, urban transit and LED lighting marketplaces.^{Footnote 40} Kromet also manufactures aluminum extrusions in its Chinese production facility.

Signature Aluminum Canada Inc.

[56] Signature is a producer of aluminum extrusions located in Pickering, Ontario. According to the Canadian producers, Signature Aluminum Canada is owned by Global Aluminum (USA), who is, in turn, a subsidiary of China Zhongwang, the largest producer of aluminum extrusion in China.^{Footnote 41}

Pexal Tecalum Canada

[57] Pexal, located in Alma, Quebec, is a Canadian enterprise stemming out of an international partnership with Tecalum, an entreprise located in Spain. Tecalum has been manufacturing aluminum extrusions for more than 40 years.^{Footnote 42}

[58] The apparent Canadian market for aluminum extrusions over the POR is indicated in Table 1 and Table 2 below. Table 1 reports the sales volume of the apparent Canadian market, while Table 2 reports the corresponding sales value in Canadian Dollars (CAD).

[59] Based on the apparent Canadian market figures in Table 1 and 2 above, the total Canadian market increased by 26% between 2016 and 2018 in terms of value, and by 10% in terms of volume.^{Footnote 46} The increase mostly occurred in 2018, with an increase of 15% in terms of value and 8% in terms of volume, when compared to 2017. The tables above also suggest that the average unit price of aluminum extrusions in the Canadian market also increased significantly over the POR, with an increase of over 14% in the value per kg for the total market, when comparing 2018 data with 2016.

[60] Consistent with the increase in the total market, the Canadian producers’ domestic sales from domestic production increased by 28% between 2016 and 2018 in terms of value, and by 7% in terms of volume. The increase was most pronounced in 2018. The Canadian producers also enjoyed a large increase in their average domestic selling price, with an increase of 20% between 2016 and 2018. Throughout the POR, however, the domestic producers lost some share of the market, based on volume. While the domestic producers’ share of the total market was 62.2% in 2016, it was 61.4% in 2017 and 60.7% in 2018.

[61] Total imports also followed a similar pattern during the POR, with an increase of over 22% between 2016 and 2018 in terms of value, and by 14% in terms of volume. Total imports captured an additional 1.5% of market share during this period. Subject imports, on the other hand, dropped by over 70% in terms of value and almost 73% in terms of volume. As such, the increase in imports was evidently from other countries. While the total imports’ share of the market increased from 37.8% to 39.3% during the POR, China’s share dropped from 2% to 0.5% of the Canadian market in terms of volume. This indicates that imports from countries other than China captured an additional 3% of the total market during the POR, at the expense of both China and the Canadian industry.

[62] Since the finding was made by the CITT, subject imports dropped by over 95% in terms of volume, from 33,500,000 kg in 2007^{Footnote 47} to just over 1,500,000 kg in 2018. This is despite an increase of 52% in the size of the apparent market between 2007 and 2018^{Footnote 48}.

Imports - China

[63] As mentioned above, the volume of subject imports dropped by over 95% between 2007 (i.e. prior to the finding) and 2018. Subject imports also dropped significantly during the POR, with a reduction of 70% between 2016 and 2018. In terms of market share, subject imports represented 16.4% of the Canadian market in 2007, prior to the finding.^{Footnote 49} The Chinese extruders’ market share was reduced to 2.1% of the market in 2016 and further reduced to 0.5% of the market in 2018.

[64] As shown in Table 3 below, the total amount of anti-dumping and countervailing duties collected on imports of subject goods from China during the POR was just over $11.4 million, consisting of $6.3 million in anti-dumping duty and $5.1 million in countervailing duty. As a percentage of the total value for duty, the anti-dumping and countervailing duties assessed during the POR were equal to 14.2% and 11.5%, respectively.

Table 3
Enforcement Data – Imports of Subject Goods from China
Quantity, and Anti-dumping and Countervailing Duties Collected during the POR^{Footnote 50}
(Volume in kg and Values in CAD)*

	2015	2016	2017
Quantity	5,818,312	2,077,878	1,577,250
Value	26,290,483	10,389,320	7,771,250
Anti-dumping Duty	2,258,387	3,193,791	872,907
Countervailing Duty	2,638,983	1,800,487	662,004
Total Duties	4,897,370	4,994,278	1,534,911

Imports – Other Countries

[65] Imports from other countries increased faster than the market increase during the POR. In this regard, imports from countries other than China increased by 19.2% between 2016 and 2018 in terms of volume (vs 9.8% for the total market), and by 26.3% in terms of value (vs 25.6% for the total market).

[66] Several producers flagged, in their ERQ responses, an increase in low-priced imports from other Asian non-subject countries such as Malaysia, South Korea, Indonesia, Thailand and Vietnam, which are allegedly resulting in a downward pressure on prices^{Footnote 51}. Some producers raised concerns with the possibility that some of these imports may be the result of transhipment or circumvention, and also the result of displacement of Chinese production to other countries.^{Footnote 52}

Market Projections

Demand:

[67] Generally speaking, most Canadian producers are expecting relatively stable/flat demand in the foreseeable future, with growth to be in line with GDP growth.^{Footnote 53} Some see volatility due to the current trade environment, particularly with respect to tariffs.^{Footnote 54}

[68] While aluminum extrusions are used in such segments as construction, general industries and automotive, stronger growth is expected in the automotive segment.^{Footnote 55} Due to environmental regulations aiming at lowering the weight of vehicles in order to lower emissions, the use of aluminum extrusions in vehicle manufacturing is expected to increase significantly.

Supply:

[69] On the supply side, the CBSA expects increased competition in the foreseeable future. As mentioned above, several producers flagged, in their ERQ responses, an increase in low-priced imports from Asian countries, other than China, which are allegedly resulting in a downward pressure on prices.

[70] Further, on the basis of the CBSA’s compilation of the producers’ data, the domestic industry has been expanding during the POR. Overall domestic capacity increased by 10.5% between 2016 and 2018, with most of the increase occurring between 2017 and 2018. The CBSA notes, however, that the increase in capacity has not resulted in an increase in available capacity during the POR, as production increased at a slightly higher rate of 11.6%.

[71] Overall, all things being equal (i.e. including the CITT’s order on aluminum extrusions remaining in place), the CBSA expects the market balance to remain relatively stable in the foreseeable future.

[72] On March 11, 2019, a notice concerning the CBSA’s initiation of the expiry review investigation was sent to Canadian producers and potential importers and exporters of aluminum extrusions, as well as to the GOC. All of these parties were also sent an ERQ.

[73] The ERQs requested information relevant to the CBSA’s consideration of the expiry review factors, as listed in subsection 37.2(1) of the Special Import Measures Regulations (SIMR).

[74] Ten Canadian producers: Almag, APEL, Apex, Can Art, Dajcor, Extrudex, Extrudex Quebec, Hydro, Metra, and Spectra, participated in the expiry review investigation and provided ERQ responses. Additional documents were also filed on behalf of the Canadian producers prior to the closing of the record. Four importers; HFI Pyrotechnics Inc., Studica Limited, TORYLS Inc., and TSDC Canada Inc. also participated in the expiry review investigation and provided an ERQ response.

[75] A case brief was received from counsel on behalf of the Canadian producers. No Reply submissions were filed.

[76] No exporter provided a response to the ERQ or otherwise participated in the expiry review. The GOC did not provide a response to the CBSA’s ERQ nor did it submit a case brief or reply submission.

Administrative Record

[77] The information considered by the CBSA for purposes of this expiry review investigation is contained in the administrative record. The administrative record includes the information on the CBSA’s exhibit listing, which is comprised of the CITT’s administrative record relating to the initiation of the expiry review, the CBSA’s exhibits and information submitted by interested parties, including information which the interested parties feel is relevant to the decision as to whether dumping and subsidizing are likely to continue or resume absent the CITT finding. This information may consist of expert analysts’ reports, excerpts from trade magazines and newspapers, orders and findings issued by authorities of Canada or of a country other than Canada, documents from international trade organizations such as the World Trade Organization (WTO) and responses to the ERQs submitted by Canadian producers, exporters, and importers.

[78] For purposes of an expiry review investigation, the CBSA sets a date after which no new information submitted by interested parties will be placed on the administrative record or considered as part of the CBSA’s investigation. This is referred to as the “closing of the record date” and is set to allow participants time to prepare their case briefs and reply submissions based on the information that is on the administrative record as of the closing of the record date. For this expiry review investigation, the administrative record closed on May 1, 2019.

Procedural Issues

[79] As mentioned above, normally, the CBSA does not consider any new information submitted by participants subsequent to the closing of the record date (i.e., May 1, 2019). However, in certain exceptional circumstances, it may be necessary to permit new information to be submitted. The CBSA considers the following factors in deciding whether to accept new information submitted after the closing of the record date:

1. the availability of the information prior to the closing of the record date;
2. the emergence of new or unforeseen issues;
3. the relevance and materiality of the information;
4. the opportunity for other participants to respond to the new information; and
5. whether the new information can reasonably be taken into consideration by the CBSA in making the determination.

[80] Participants wishing to file new information after the closing of the record date, either separately or in case arguments or reply submissions, must identify this information so that the CBSA can decide whether it will be included in the record for purposes of the determination.

[81] New information was submitted on behalf of the Canadian producers on May 21, 2019, three weeks past the closing of the record date, requesting that the CBSA accept this information for filing and inclusion to the record for this proceeding. The Canadian producers contended that this information was not available before the closing of the record. It consisted of the United States Department of Commerce’s Preliminary Determination Decision Memorandum published on May 17, 2019, which indicated that aluminum extrusions originating in China were circumventing the aluminum extrusions finding in the United States by transhipping through Vietnam. This information was meant to support allegations made in the producers’ responses to the RFI and case brief.

[82] In this case, while the CBSA acknowledges that the information regarding the preliminary outcome of the United States Department of Commerce’s investigation on this matter was only published after the closing of the record, in considering the materiality of the information and the inability of other participants to respond to the new information, the CBSA declined to add this information to the record, and did not consider the information for the purposes of this expiry review.

Parties Contending that Continued or Resumed Dumping is Likely

[83] The participating Canadian producers made representations in their ERQ responses and in their case brief supporting their position that dumping of certain aluminum extrusions from China is likely to continue or resume should the CITT’s order expire. Therefore, they argued that the anti-dumping measures should remain in place.

[84] The main arguments made by the Canadian producers can be summarized as follows:

• Primary Aluminum Production Levels and Overcapacity in China
• Vast Production Capacity for Aluminum Extrusions in China
• Deceasing Demand for Aluminum Extrusions and Other Aluminum Products
• Reduced Growth Rate and Slowdown in Downstream Industries
• Export Orientation of Chinese Aluminum Extrusion Producers
• Lower Pricing due to Non-Market Conditions
• Trade Remedy Measures in Other Jurisdictions
• Circumvention of Trade Remedy Measures / Transhipment
• Continued Presence in Canada, Low-Priced Import Competition and Expected Pricing of Subject Goods

Primary Aluminum Production Levels and Overcapacity in China

[85] The Canadian producers alleged that the global aluminum overcapacity has been driven mainly by Chinese producers, who have invested heavily since the year 2000 to increase primary aluminum smelting capacity. The Canadian producers provided evidence that Chinese producers almost tripled their aluminum production since the finding was made by the CITT, to account for about 57% of global output in 2018.^{Footnote 56} For example, according to the producers, Chalco, a Chinese State-Owned Enterprise (SOE), increased its capacity by 16% in 2018 alone, to become the second largest aluminum producers in the world.^{Footnote 57}

[86] The Canadian producers also provided evidence that Chinese aluminum producers were still expanding their production capacity as well as their output, all while North American producers were decreasing theirs.^{Footnote 58} The producers alleged that evidence on the record also suggested that the Chinese aluminum producers were projected to further expand their capacity and their production between 2018 and 2021.^{Footnote 59}

[87] The Canadian producers argued that this planned expansion was “…heavily supported by the Government of China with the involvement of state-owned enterprises, investments in the form of low-interest loans, preferential access to inputs and other mechanisms.”^{Footnote 60} The producers cited a number of reports and analysis on this matter, including a report published in early 2019 by the Organization for Economic Co-operation and Development (OECD) regarding the measurement of distortions in international markets in the aluminum value chain.^{Footnote 61}

[88] The Canadian producers claimed that the expansion of Chinese aluminum production capacity led to a significant and growing overcapacity in China, a reduction in capacity utilization rates for smelters and increasing aluminum inventories.^{Footnote 62}

[89] The Canadian producers contended that the global aluminum overcapacity has a direct impact on the propensity of Chinese extruders to dump aluminum extrusions.^{Footnote 63}

Vast Production Capacity for Aluminum Extrusions in China

[90] The Canadian producers argued that the overcapacity in primary aluminum production has spilled over into downstream aluminum products, including aluminum extrusions.^{Footnote 64}

[91] The Canadian producers described a Chinese aluminum extrusion industry that is highly fragmented, with as many as 850 producers according to some reports.^{Footnote 65} The Canadian producers alleged that information on the record indicate that these producers have significant excess capacity to produce aluminum extrusions in China, along with low production utilization rate.^{Footnote 66} They also claimed that the record demonstrates that production and excess capacity are still increasing, and that aluminum extrusions exports from China are also on the rise.^{Footnote 67} The producers alleged that the available data suggest that Chinese excess capacity is equal to a significant proportion of the total world demand, excluding China, and that its excess production is several times the total apparent Canadian market.^{Footnote 68}

[92] The Canadian producers contended that this situation will only be exacerbated by slowing demand growth in China.^{Footnote 69}

Deceasing Demand for Aluminum Extrusions and Other Aluminum Products

[93] The Canadian producers argued that China continues to expand capacity at a time when demand is declining.^{Footnote 70}

[94] The Canadian producers contended that China’s compounded annual growth rate for aluminum extrusions demand is forecasted to sharply decline from 2018 and 2028, compared to the previous ten-year period.^{Footnote 71} The producers also suggested that the projected trend is very similar for manufactured aluminum products in general, and also similar to the projected slowdown in industries that consume such aluminum products.^{Footnote 72}

Reduced Growth Rate and Slowdown in Downstream Industries

[95] The Canadian producers contended that the data regarding decreasing demand in China for aluminum extrusions and other semi-fabricated aluminum products was consistent with recent report from China regarding its slowing economy.^{Footnote 73}

[96] The producers argued that there were signs of weakness in industries such as automotive and construction in China, which are linked to weakening demand for primary aluminum and aluminum extrusions.^{Footnote 74}

[97] As part of its support for its allegations, the Canadian producers quoted the 2018 Annual Report of PanAsialum Holdings Company Limited, a major Chinese aluminum extrusions producer, which stated that it was having difficulty expanding into different domestic market segments on the basis that “the persisting unfavorable macro factors, including the volatility in each of the market the Group operates and uncertainty over the economic condition in China, has dampened the consumer sentiment and reduced the demand of the Group’s products.”^{Footnote 75} The industry also provided economic projection data from the IMF World Economic Outlook, as well as publically available media publications.^{Footnote 76}

[98] The Canadian producers argued that it was reasonable to infer that a slowdown in manufacturing and construction would also translate into decreased demand in China for aluminum extrusions, as forecasted by several analysts.^{Footnote 77}

Export Orientation of Chinese Aluminum Extrusion Producers

[99] The Canadian producers alleged that there were several reports and articles on the record regarding China’s increasing reliance on export markets for its aluminum products.^{Footnote 78}

[100] The producers argued that the GOC implemented measures to discourage exports of primary aluminum and their input, with the aim of promoting exports of higher added-value aluminum products, including aluminum extrusions.^{Footnote 79} In particular, they referred to the GOC’s VAT policy, which provides VAT rebates to downstream aluminum products, but not on primary aluminum and aluminum scrap. The Canadian producers contended that such policy has the effect of depressing the prices of primary aluminum in the Chinese domestic market, providing a significant price advantage to Chinese producers of processed aluminum products. They claimed that such policies have been confirmed by the European Commission in several investigations into aluminum products from China, as well as be other investigating authorities.^{Footnote 80}

[101] The Canadian producers claimed that because of such policies, and in the context of excess production capacities for both aluminum and aluminum extrusions, Chinese aluminum extrusion producers have remained export-oriented and have become even more so in recent years in order to absorb their excess capacity in light of declining domestic demand.^{Footnote 81}

Lower Pricing due to Non-Market Conditions

[102] The Canadian producers noted that in its final determination, the CBSA was of the opinion that domestic prices in the aluminum extrusion sector in China are substantially determined by the GOC and that there is sufficient reason to believe that prices are not substantially the same as they would be in a competitive market. They further alleged that as confirmed by American and Australian authorities, and as set out in GOC policies, the GOC continues to be involved in the aluminum industry such that prices are not substantially the same as they would be in a competitive market.^{Footnote 82}

[103] The Canadian producers referred to studies comparing the spread adjusted between aluminum prices in China and international prices and with respect to the reported prices paid by aluminum extrusion producers. They alleged that Chinese aluminum extrusion producers continue to benefit from the cheap input prices which are the result of the distortions caused by the GOC’s policies.^{Footnote 83}

[104] The producers alleged that evidence on the record links the pricing difference between domestic and international aluminum prices with a steep pick up in Chinese exports of semi-manufactured aluminum products such as the subject goods.^{Footnote 84} They also claimed that export data shows that the apparent average Chinese export price of aluminum extrusions is lower than the average price from other countries. The producers claimed that their price advantage is as much as 15% over the other exporting countries.^{Footnote 85}

Trade Remedy Measures in Other Jurisdictions

[105] The Canadian producers noted that there were anti-dumping and countervailing measures with respect to aluminum extrusions from China in Australia and in the United States, which have both been renewed, as well as anti-dumping measures on several aluminum products from China, in several jurisdictions.^{Footnote 86} They also noted that in addition to the already existing measures on aluminum extrusions, the Americans have also recently imposed a tariff of 10% on all imports of aluminum products, including those from China.^{Footnote 87} The Canadian producers alleged that these barriers to importation of aluminum extrusions from China increase the potential for diversion of subject goods to Canada.^{Footnote 88}

Circumvention of Trade Remedy Measures / Transhipment

[106] The Canadian producers alleged that producers of subject goods from China have been accused of, and in some instance, found to be, engaging in circumvention and transhipment of aluminum extrusions.^{Footnote 89} In particular, they referred to instances where American and Australian authorities found that Chinese producers were circumventing the aluminum extrusion measures.

[107] The Canadian producers claimed that these reports and findings are indications that producers of subject goods are facing worsening conditions in China and are looking to export their excess production by whatever means available.^{Footnote 90}

Continued Presence in Canada, Low-Priced Import Competition and Expected Pricing of Subject Goods

[108] The Canadian producers contended that Chinese aluminum extruders continue to have a strong presence in the Canadian market, when considering both subject goods and non-subject aluminum extrusions. They claimed that the Chinese producers’ imports have been in the range of 10% of all imports and have maintained a 5% market share of the Canadian market.^{Footnote 91} The producers also indicated that the data on the record also confirmed a continued presence of subject goods.^{Footnote 92}

[109] The Canadian producers argued, however, that subject goods are losing market share to other low-priced Asian sources, such as Malaysia, Thailand and Vietnam. They argued that to regain market share, the subject goods will have to compete with these low-priced offshore sources.^{Footnote 93}

[110] The Canadian producers contended that the price of aluminum is a major component of the price at which domestic producers sell their goods. They reiterated that the price of aluminum in China is deeply affected by the various government policies and other influence, as well as by the effect of excessive production and capacity. On that basis, the producers are expecting that the subject goods will be priced at levels that reflect such non-market price considerations and will undercut those offered by the domestic producers.^{Footnote 94}

Parties Contending that Continued or Resumed Dumping is Unlikely

[111] None of the parties contended that continued or resumed dumping of subject goods from China is unlikely if the order is rescinded.

[112] In making a determination under paragraph 76.03(7)(a) of SIMA whether the expiry of the order is likely to result in the continuation or resumption of dumping of the goods, the CBSA may consider factors identified in subsection 37.2(1) of the SIMR, as well as any other factors relevant in the circumstances.

[113] Guided by the aforementioned factors and having considered the information on the administrative record, the following list represents a summary of the CBSA’s analysis conducted in this expiry review investigation with respect to dumping:

• GOC’s Involvement in and Influence on the Aluminum Industry – Section 20 Conditions
• Primary Aluminum Capacity and Production Levels in China
• Conditions in the Aluminum Extrusion Industry in China
• Export Orientation of Chinese Aluminum Extrusion Producers
• Trade Remedy Measures in Other Jurisdictions
• Evidence of Circumvention of Trade Remedy Measures / Transhipment
• Continued Presence of Chinese Aluminum Products in Canada
• Competitive Conditions in the Canadian Aluminum Extrusion Market

[114] As previously mentioned, the CBSA received ERQ responses from 10 Canadian producers and from four importers. In addition to responding to the ERQ, the Canadian producers submitted supplementary information prior to the closing of the record as well as a joint case brief. The CBSA relied on the information submitted by these parties, as well as the other information on the administrative record for purposes of this expiry review investigation.

GOC’s Involvement in and Influence on the Aluminum Industry – Section 20 Conditions

[115] Section 20 of SIMA may be applied to determine the normal value of goods where certain conditions prevail in the domestic market of the exporting country. In the case of a prescribed country, under paragraph 20(1)(a) of SIMA, it is applied where, in the opinion of the CBSA, domestic prices are substantially determined by the government of that country and there is sufficient reason to believe that they are not substantially the same as they would be if they were determined in a competitive market. Where section 20 is applicable, the normal value of goods is not determined based on domestic prices or costs in that country.

[116] For the purposes of the final determination^{Footnote 95}, and again further to the subsequent re-investigation^{Footnote 96}, the CBSA was of the opinion that domestic prices in the aluminum extrusions sector in China are substantially determined by the GOC and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market.

[117] When section 20 conditions are found to exist, the CBSA normally determines normal values using the selling price, or the total cost and profit, of like goods sold by producers in a surrogate country designated by the CBSA pursuant to paragraph 20(1)(c) of SIMA. Alternately, normal values may be determined under paragraph 20(1)(d) of SIMA, on a deductive basis starting with an examination of the prices of imported goods sold in Canada, from a surrogate country designated by the CBSA. During the investigation, none of the producers from any of the surrogate countries provided information. Furthermore, suitable information on imported goods sold in Canada from a surrogate country was not provided in the importers’ responses to the questionnaires. Therefore, sufficient information was not available to the CBSA in order to determine normal values using either of these two methods.

[118] As a result, throughout the enforcement period, the normal values for the exporters that provided a complete and reliable response to the questionnaires have been determined using an alternate methodology under a Ministerial Specification, pursuant to section 29 of SIMA.^{Footnote 97} The methodology set out in the Ministerial Specification is a surrogate constructed cost methodology based on the monthly average settlement price of primary aluminum as reported on the London Metal Exchange (LME) for the month preceding the date of sale to Canada, plus the cost to convert the aluminum into a finished aluminum extrusion product, plus an amount for administrative, selling and all other costs, plus an amount for profit. These conversion costs and profit amounts were determined based on public information from extruders in India. The normal values determined under the Ministerial Specification also have separate conversion costs to account for cost differences relating to products that are “mill finished” and products that undergo additional finishing, such as anodizing or painting.

[119] The administrative record contains evidence that the domestic prices in the aluminum extrusions sector in China are still substantially determined by the GOC and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market. The government influence resulting in lower cost and prices is a relevant factor in the assessment of the likelihood of continued or resumed dumping by the Chinese aluminum extruders. As set out below, the GOC’s policies are believed to result in artificially lowering the costs and prices of aluminum extrusions in China, increasing their output, and promoting an export orientation within Chinese extruders. As mentioned, the normal values for subject goods are currently not based on Chinese domestic prices of like goods or on their costs of production. Considering the evidence that the conditions of section 20 of SIMA are still applicable to the aluminum extrusions sector in China, the normal values for subject goods for the foreseeable future are still likely to be based on prices or costs in a surrogate country. As such, the normal values should reflect costs and prices in a market where competitive conditions exist. The Chinese extruders are believed to be more likely to be competing on the basis of their artificially lower cost and price structures (their cost advantage), while their export prices need to meet a level that is not based on these non-competitive conditions, in order to be selling at a fair non-dumped value.

[120] The principal manner by which the GOC appear to be influencing the price of aluminum extrusions relates to government policies affecting the primary aluminum industry. Primary aluminum is said to account for about 75-86% of the total cost of production for semis^{Footnote 98}, which, as stated by the OECD, “makes competitiveness in the semis segment largely dependent on the cost of procuring raw aluminum.”^{Footnote 99} As noted in a research paper on market distortions in the Chinese non-ferrous metals industry, “While the markets for finished goods and services have been widely liberalized and scarcity-based pricing – not government policy – is guiding the allocation of available resources, the markets for production factors remain subject to substantial state intervention.”^{Footnote 100} As detailed below, in the case of the primary aluminum industry, such government interventions include taxation and tariff policies, the subsidizing of inputs and other types of government subsidies, development plans and policy documents, and the GOC’s stockpiling policy.

[121] Among the GOC policies affecting the primary aluminum industries as well as the downstream industries are taxation and tariff policies. In this regard, China employs a regime of export taxes, in combination to an incomplete VAT rebate policy^{Footnote 101} for exporters as a mean of discouraging exports of primary aluminum while encouraging exports of semi-fabricated aluminum products such as aluminum extrusions. Specifically, China combines a 15% export tax with zero VAT rebates, which together result in a de facto export tax on primary aluminum exceeding 30%, according to the OECD.^{Footnote 102} Such trade policies discourages exports of primary aluminum, and provides an incentive for smelters to sell their production to domestic semis producers, who benefit from a larger supply at lower prices for their principal input. The policy also encourages exports of downstream products, such as the subject goods, given that exporters of semis are eligible for the VAT refund. As discussed in the section below, China is by far the largest producer of primary aluminum accounting for almost 60% of global production.^{Footnote 103} Considering that it is also known to have significant excess capacity, the impact of its trade policy is visible when considering that the country accounts for only about 2% of global exports of primary aluminum.^{Footnote 104} Again, this results in artificially increasing the supply of primary aluminum in the domestic market and in artificially lowering the costs for downstream producers.

[122] Another manner by which the GOC influences the primary aluminum industry pricing is by providing significant energy subsidies to smelters. The administrative record contains numerous reports of energy subsidies provided to Chinese smelters. For example, significant amounts of electricity subsidies to smelters were reported by the Australian Anti-Dumping Commission^{Footnote 105}, the European Commission^{Footnote 106}, the OECD^{Footnote 107}, a report submitted to the U.S. – China Economic and Security Review by Capital Trade Incorporated^{Footnote 108}, and others^{Footnote 109}. Considering that electricity account for about 40% of the cost of smelting, energy subsidies take on a particular importance on the aluminum value chain.^{Footnote 110} Chinese smelters also benefit from the purchase of coal at below-market prices, either directly through government ownership of most coal producers, or indirectly through the provision of finance by policy banks or through regulations.^{Footnote 111}

[123] In addition to energy subsidies, evidence on the record suggests that the GOC is also providing significant subsidies in other forms to smelters, as well as to downstream producers, including aluminum extrusion producers. Such subsidies include financial subsidies (e.g. loans at preferential rates, loan guarantees), tax subsidies and grants. For example, in an analysis, the OECD estimated that substantial amount of benefits were provided through the financial system to such enterprises as China Hongqiao Group, the world’s largest aluminum producer, the Aluminum Corporation of China Limited (Chalco), the world’s second largest Aluminum producer, the State Power Investment Corporation (SPIC), an aluminum smelter and also one of the major electricity generation company in China, Qinghai Provincial Investment Group Ltd (QPIG), another Chinese smelter, and several others. The OECD estimated that these four companies received as much as USD 4.480 billion, USD 8.302 billion, USD 33.791 billion and USD 2.149 billion, respectively, in financial subsidies provided through the financial system over a five year period.^{Footnote 112Footnote 113} Similarly, the OECD estimated that China Zongwang Holdings Limited (China Zongwang), China’s largest producer of aluminum extrusions, received USD 2.554 billion in financial subsidies provided through the financial system between 2013 and 2017.^{Footnote 114} By offering loan interest subsidies, loan guarantees and other means of reducing capital costs, government organisations seek to direct investment into key projects and industries.^{Footnote 115}

[124] The OECD report, along with other reports, also provides evidence of tax concessions, such as lower tax rates under China’s Western Development Strategy.^{Footnote 116} Such tax concessions are specifically reported to have provided significant benefits to major smelters like Chalco, who has two subsidiaries in Western China.^{Footnote 117} It is also reported that China Zongwang is subject to preferential tax rates in light of its “High and New Technology Enterprise” status from the Liaoning Province.^{Footnote 118} Further, as discussed in the subsidy section of this report, the record also contains evidence of numerous government grants programs benefiting aluminum extrusion producers.

[125] Overall, according to the OECD study, the total average annual amount of government subsidy to China Hongqiao Group, Chalco, SPIC and QPIG was approximately USD 1.6 billion, USD 1.8 billion, USD 7.1 billion and USD 464 million, annually during the 5-year measurement period.^{Footnote 119} Meanwhile, China Zongwang benefited from about USD 586 million in annual subsidies. A THINK!DESK study noted that not only are subsidies mostly provided to SOEs, a large share of the subsidies is provided contingent on compliance with GOC directives.^{Footnote 120} This is therefore indicative that the SOEs may be considered as public bodies, and, considering the lower aluminum prices in China than on the international market^{Footnote 121}, may be indicative that there is a benefit being passed on to users of these inputs, such as aluminum extrusion producers.

[126] The GOC also influences the primary aluminum industry through a number of development plans and policy documents, including the Non-ferrous Metals Industry Development Plan (2016-2020) and the Made in China 2025 initiative. Regarding the Non-ferrous Metals Industry Development Plan (2016-2020), it is written that “As supporting measures, the Plan calls for coordinating fiscal, taxation, financial, and trade policies with industrial policy, promoting bank-enterprise cooperation, increasing financing support to backbone enterprises and major international cooperation projects, adequately utilizing existing government funds, encouraging local governments and social funds to increase input, implementing preferential tax policies for mines, M&A, and restructurings, and establishing insurance compensation systems for new material development.”^{Footnote 122} The Made in China 2025 initiative is another type of development plan providing guidance and support and targeting the role of technology for economic development. One research group wrote that “The roadmap instructs government departments on all levels to deploy the resources at their disposal to support the development in priority areas. Importantly, the roadmap also guides financial institutions and other supporting service sectors to focus support on corporate activities in the priority areas.”^{Footnote 123} They also noted that “The cultivation of a group of national champion enterprises also raises concerns regarding the competitive fairness and market conformity of such an effort.”^{Footnote 124} According to the OECD, the Made in China 2025 Plan lists ten priority industries, of which several rely on aluminium semis as inputs, and which are to be encouraged by means of dedicated funding and state direction.^{Footnote 125} The OECD also noted that the “Announcement on Implementing the Made in China 2025 Strategy in Binzhou City, published in September 2017, further encourages the gradual expansion of local aluminium firms into aluminium deep processing (semis) and finished products.”^{Footnote 126}

[127] Further, the notice of the State Council on “Further Strengthening the Elimination of Backward Production Capabilities and Guidelines” include mechanisms to address non-compliance such as i) revoking of pollutant discharge permit; ii) restrictions on financial institutions providing new credit support; iii) restrictions on examination and approval of new investment projects; iv) restrictions on approval of new land for use by the enterprise, and v) restrictions on issuing of new, and cancelling of existing, production licence.^{Footnote 127} Australian authorities noted that “The Guidelines state that enterprises that do not conform to the industrial policy shall not be provided financial support by financial departments.”^{Footnote 128} They also noted that the the central role of the National Development and Reform Commission (NDRC) in both the development of directives and the provision of project approvals was also relevant to the question of government influence in the aluminum sector.

[128] The extent of the productive capacity accounted for by Chinese SOEs in the primary aluminum industry is also an indication of the GOC’s direct involvement in the industry. According to information on the record, SOEs account for more than 50% of the total primary aluminum output in China.^{Footnote 129} There is also evidence that the extent of government ownership may be growing not only via capacity addition, but also via debt-equity swaps, whereby an SOE acting on behalf of the government converts the debt of highly leveraged firms into shares, thus increasing the government ownership in the economy,^{Footnote 130} and not entirely based on market principle.^{Footnote 131}

[129] The extent of government ownership in the aluminum industry can have a distorting effect on the industry. In fact, SOEs are said to be the greatest recipients and providers of government support, especially in the area of financing and in the provision of inputs at less than adequate remunerations.^{Footnote 132} Further, evidence on the record suggest that the GOC maintains a “…porous and fluid relationship […] with companies, including through the appointment of key personnel and the day-to-day operations of firms.”^{Footnote 133} For example, the OECD noted that SPIC mentioned in its 2016 prospectus that “the Group’s Chairman and President is appointed by the State Council, Directors are accredited by SASAC, the Chairman of Board of Supervision is appointed by the State Council directly and the Vice President is appointed by SASAC.”^{Footnote 134} Similarly, an investigation by THINK!DESK into the individual background of members of the board of directors and supervisory councils of 65 major enterprises in the non-ferrous market revealed that a large majority of them are closely tied to the GOC.^{Footnote 135} The EU also noted that “[in] 2017, a Chinese state-owned aluminium producer, China Aluminum International Engineering Corporation Limited (Chalieco), amended its Articles of Association giving more prominence to the role of party cells within the company […]. It included a whole chapter on the Party Committee, and Article 113 thereof states: ‘In deciding major corporate issues, the Board shall consult the Party Committee of the Company in advance.’”^{Footnote 136} As noted by Australian authorities, the SOEs are more likely to be responsive to the directives of the broader GOC.^{Footnote 137} They also identified several GOC document and guidelines which emphasizes the importance and role of the SOEs in the aluminum industries, such as with respect to the elimination of backward capacity, the control of production levels, the encouragement of mergers, restructuring and relocation, etc.^{Footnote 138}

[130] Furthermore, there is evidence of stockpiling of aluminum by the GOC, which also has distorting effect on the industry. For example, stockpiling is said to have allowed production to be maintained during the global financial crisis and avoided the potential closure of some aluminium manufacturers.^{Footnote 139} The Australian Anti-Dumping Commission has seen reports that continuing stockpiling of aluminium, financed by interest payments from the Strategic Reserves Bureau, occurred in 2016, with as much as one million tonnes of aluminium being purchased at prices above market price. As per Australian authorities, “The likely effect of this market intervention is to ease the pressure on the Chinese aluminium industry to reduce excess capacity and to avoid rationalising the higher-cost manufacturing facilities.”^{Footnote 140} The EU also noted instances where the government purchased aluminum at above market price with the purpose of stabilizing the price of aluminum and mitigating excess capacity.^{Footnote 141} The EU also noted that provisions for the continuation of the stockpiling policy are included in the 13th Five Year Plan for Non-Ferrous Metals.^{Footnote 142}

[131] Finally, Australian authorities recently issued a report^{Footnote 143} regarding the Chinese aluminum extrusion market in which it concluded that Chinese domestic prices of aluminum extrusions are substantially determined by the government of that country and there is sufficient reason to believe that they are not substantially the same as they would be if they were determined in a competitive market.

[132] For the reasons discussed above, the CBSA has reason to believe that the GOC is involved in and has influence on the aluminum industry (such that section 20 conditions would apply). Considering that the cost of primary aluminum accounts for 75-86% of the total cost of production for semis, the strong government influences which are artificially depressing the domestic price of aluminum, are having a strong impact on the pricing of the aluminum extrusions, providing an artificial cost advantage to the extruders. Considering the likelihood of the exporters to compete on the export market on the basis of their lower cost structure, in the opinion of the CBSA, they are likely to be exporting at prices that are lower than the prices in a surrogate country where competitive conditions exist, and thus, more likely to be selling at dumped prices, especially in an overcapacity situation.

Primary Aluminum Capacity and Production Level in China

[133] China is the largest global producer of primary aluminum, by far. Data on the record shows that China possesses almost 60% of the world’s aluminum production capacity and is responsible for close to 57% of global production. These figures also suggest that China has a total excess capacity equal to 25% of its total capacity.^{Footnote 144}

[134] The Chinese aluminum industry has been growing in size at a rapid pace since the early 2000’s, at which time China accounted for about 10% of global capacity, and especially in recent years.^{Footnote 145} This rapid growth in China’s capacity and production is partly explained by the rapid growth of its economy and the expansion of its manufacturing base, requiring large quantities of aluminum. In fact, China’s massive production is almost entirely consumed domestically.^{Footnote 146} However, studies also suggest that non-market forces, especially with respect to government support, are explaining some of the rapid capacity increase. For example, the OECD has suggested that “Non market forces encompasses a wide variety of government interventions that might help explain the persistence of excess capacity in the aluminum industry. […] Subsidies and subsidized bank loans in particular, have been shown, for example, to prevent the exit of less productive firms hit by unfavorable shocks, turning them into “zombies” that distort competition throughout the rest of the economy.”^{Footnote 147} The EU has also noted the role of the GOC’s subsidizing of energy cost as a contributor of the increase in production capacity.^{Footnote 148}

[135] It seems that while the growth in the Chinese economy and the related growth in the consumption of aluminum has slowed significantly, the expansion of aluminum capacity is continuing at a higher rate. Thus, overcapacity is expanding and is forecasted to continue to expand.

[136] Between 2008 (at the time of the CITT’s finding) and 2015, Chinese capacity is said to have doubled.^{Footnote 149} Between 2015 and the end of 2018, capacity grew by another 26%.^{Footnote 150} Indications are that capacity is still growing. Reported projects under construction plus those that are expected would increase capacity by another 20% (although this does not consider any capacity that may be shut down).^{Footnote 151}

[137] Production is also increasing. For instance, Chalco, the world’s second largest aluminum producer, an SOE, is said to have boosted its production by 16% in 2018 alone.^{Footnote 152} Production is projected to continue to increase between 2018 and 2020.^{Footnote 153} Further, production in December 2018 was reported to be up by 11.3% from the same period a year earlier, due to new smelters and a higher utilization rate due to a plunge in the cost of raw material alumina.^{Footnote 154} The same report refers to an expected increase in output in 2019.

[138] Meanwhile, growth in demand for aluminum is slowing. Internationally, demand is reported to be at its weakest in three years, with contraction in Chinese manufacturing over four months in the end of 2018 and early 2019, as well as contraction in Europe, Japan, South Korea, Taiwan and Turkey.^{Footnote 155} Although China’s economy is still expected to grow at a rate of 6.3% in 2019 and 6.1% in 2020^{Footnote 156}, the concern is that growth in capacity may outpace growth in demand, resulting in increasing the already staggering excess capacity.

[139] The excess capacity of primary aluminum in the Chinese domestic market has a direct implication for aluminum extrusion producers, who benefit from a higher supply of an artificially low-priced major production input. As mentioned earlier, since the cost of primary aluminum accounts for 75-86% of the total cost of production for semis, extruders will continue to benefit from an artificial cost advantage. Considering their own domestic conditions, which are discussed in the section below, Chinese aluminum extruders are more likely to increasingly rely on the export market to sell their goods, and are likely to be competing on the basis of their cost advantage. Given that their own domestic prices or own costs of production are not appropriate benchmarks to determine the normal values of the goods in light of the existence of non-market conditions, competing on the Canadian market on the basis of their artificially lower cost structure, rather than on the basis of prices and costs where competitive conditions exists, increases the likelihood that the goods will be dumped. In fact, the OECD did confirm that “Lower production costs for semis have in turn translated into lower export prices that have made China more competitive in most segments of the semis market.”^{Footnote 157}

Conditions of the Aluminum Extrusions Industry in China

[140] The evidence on the record suggests that the Chinese aluminum extrusion industry has also increased its production dramatically in the past 15 years, fuelled by the country’s infrastructure and housing boom.^{Footnote 158} It was said that by 2015, China accounted for 64% of the total global production of aluminum extrusions.^{Footnote 159} Information on the record suggests an overcapacity in 2018 that is equivalent to about 68% of global demand, excluding China, and 26% of the total global demand.^{Footnote 160}

[141] Based on the data on the record for 2018, China’s overproduction level was almost four times the total Canadian demand and over 10% of the global demand excluding China.^{Footnote 161}

[142] As per information on the record, the growth in domestic demand for extrusions in China is expected to significantly slow in the next 10 years.^{Footnote 162}

[143] Considering the expected slowdown in Chinese demand growth, the existing substantial Chinese overcapacity and excess production may worsen if Chinese capacity growth continues at current rates despite market signals. If Chinese aluminum extrusion producers continue to increase their capacity and production levels at a pace that ignores the shift in growth speed, a distortion between demand and supply will be created in the market, and China will have to heavily rely on export markets to sell their excess production.

Export Orientation of Chinese Aluminum Extrusion Producers

[144] The non-market conditions described above with respect to the Chinese aluminum industry, namely, the policies and vast financial support of the primary aluminum industry, and the trade policies encouraging the exports of downstream aluminum products, have resulted in overcapacity and in a highly export oriented aluminum extrusions market.

[145] In this regard, the OECD has, in a study, linked the government policies to China’s excess supply of primary aluminum benefitting Chinese producers of semis (such as aluminum extrusion producers) through lower input cost and to lower export prices that have made China more competitive on the global market. The OECD also noted that for processed articles of aluminum, “lower unit values on exports have made China the largest net exporter by a wide margin, with rapid growth leading to the country now holding around 20% of the global market share.”^{Footnote 163}

[146] Another study has identified a number of subsidies available and used by producers of aluminum products, that are contingent on export, as a means by which the GOC selectively encourages the exportation of such goods.^{Footnote 164} For example, the study has found that some municipalities will match export revenues with subsidies. Other subsidies will offset domestic transportation cost for export shipments, in order to lower their cost of doing business and increase export trade. The provision of export credit insurance was another form of export subsidy listed by this study.

[147] The record contains evidence that the export orientation of producers of aluminum products has accelerated in recent years. For example, it was reported that from January to November 2018, Chinese global exports were up over 20% from a year earlier, while November exports were up over 41%.^{Footnote 165} The same report also mentioned that the GOC decided to adjust its tax policy to facilitate even more exports of aluminum semis, further raising the VAT rebate on these goods. China’s exports and installed capacity were also forecasted to keep rising in 2019. CRU was also forecasting an increase in export, partly due to the increase in the tax rebate.^{Footnote 166}

Trade Remedy Measures in Canada and Other Jurisdictions

[148] In addition to the Canadian measures, several jurisdictions have imposed anti-dumping and other trade measures with respect to aluminum extrusions from China, as well as other aluminum products from China.^{Footnote 167}

[149] In addition to anti-dumping and countervailing measures in place with respect to aluminum extrusions from China, Australia also has anti-dumping measures on Chinese aluminum road wheels and aluminum zinc coated steel. Similarly, in addition to anti-dumping and countervailing measures in place with respect to aluminum extrusions from China, the United States also has anti-dumping measures on Chinese aluminum foil, aluminum sheet and aluminum oxide. The United States also imposes an additional 10% duties on aluminum products, including aluminum extrusions, pursuant to Section 232 of the Trade Expansion Act of 1962.^{Footnote 168} Colombia has anti-dumping on Chinese extruded aluminum profiles. The European Union maintains anti-dumping measures on Chinese Aluminum foil, aluminum radiators and aluminum road wheels. India has anti-dumping duties on Chinese presensitized positive offset aluminum plates, cast aluminum alloy wheels, aluminum foil and aluminum radiators. Mexico has anti-dumping duties on Chinese aluminum cookware.

[150] The anti-dumping measures in place on numerous aluminum products, in numerous jurisdictions, are indicative of a propensity of Chinese exporters to dump aluminum products. The anti-dumping measures and the other trade measures that are specific to aluminum extrusions increase the likelihood of dumped subject goods being exported to Canada in light of the trade barriers that exist in these jurisdictions, including such a large and geographically close market as the United States. While the anti-dumping and countervailing measures currently in place in Canada with respect to the subject goods have prevented a diversion of Chinese aluminum extrusions to Canada, the removal of these measures is likely to result in an increase of shipments to Canada at dumped prices.

Evidence of Circumvention of Trade Remedy Measures / Transhipment

[151] Canadian producers raised concerns with the possibility of transshipments and mislabeling of subject goods to circumvent the CITT’s order, and provided evidence that authorities in Australia and the United States have investigated and ruled that some parties were engaging in circumvention of their respective aluminum extrusion measures.^{Footnote 169} Similarly, with respect to China, THINK!DESK reported that “[the] trans-shipment of goods through third countries is used to disguise their origin to the customs authorities in target markets that impose anti-dumping and/or countervailing duties.”^{Footnote 170}

[152] The fact that some Chinese aluminum extrusion exporters need to circumvent anti-dumping findings could be an indication that they are unable to export subject goods at non-dumped prices in order to gain market share.

Continued Presence of Chinese Aluminum Products in Canada

[153] As mentioned earlier in this report, the volume of subject imports dropped by over 95% between 2007 (i.e. prior to the finding) and 2018. Subject imports also dropped significantly during the POR, with a reduction of 70% between 2016 and 2018. In terms of market share, subject imports represented 16.4% of the Canadian market in 2007, prior to the finding.^{Footnote 171} The Chinese extruders’ market share was reduced to 2.1% of the market in 2016 and further reduced to 0.5% of the market in 2018. This significant reduction is indicative of the effect of the measures, and the inability for most exporters to maintain sales at normal values.

[154] Despite the significant drop in importation since the finding was put in place, subject goods continue to have a presence in the Canadian market. During the POR, subject goods totaled almost 9.5 million kg, accounting for about 1.1% of the total market volume. In 2018, these goods were imported at a weighted average price per kg that was about 20% lower than the weighted average for the market. Approximately $6.3 million in anti-dumping duty was assessed on subject goods, which suggest that these goods were dumped by a weighted average margin of approximately 14%. Although a difference in product mix can explain part of the lower pricing of Chinese exports, it does appear that the remaining Chinese exporters in the Canadian market are still competing on the basis of their artificial cost advantage in order to maintain a presence in Canada, despite the measures in place. The total amount of dumping duty assessed on those goods suggest that many of the exporters that maintained a presence in Canada while the finding is in place are unable to do so at non-dumped prices.

[155] More so, Statistics Canada data suggests that Chinese exporters of aluminum products which fall under the same HS classification numbers as the subject goods, which may include extrusions that do not meet the product definition, or further processed aluminum products, for example, maintained a weighted average share of import of over 11% during the POR.^{Footnote 172} These exporters, which may include producers of goods that meet the product definition, are maintaining a presence in the Canadian marketplace, and may have the contacts and infrastructure in place to export more subject goods should the measures expire. Considering the discussion above, the pricing for such additional supply of subject goods is likely to be at dumped prices.

Competitive Conditions in the Canadian Aluminum Extrusions Market

[156] Generally speaking, most Canadian producers are expecting relatively stable/flat demand in the foreseeable future, with growth to be in line with GDP growth.^{Footnote 173} Some see volatility due to the current trade environment, particularly with respect to tariff.

[157] On the supply side, the producers expect increased competitive pressure in the foreseeable future^{Footnote 174}. Domestically, it was noted that there was ample capacity available and that the new capacity introduced during the past few years is now fully engaged.^{Footnote 175} Based on the data available, the increase in domestic capacity was in line with the growth in market demand. Competition may also continue to increase due to the effect of the section 232 trade measures in the United States, which may lead to the diversion of aluminum goods into Canada, (the imposition of a 10% surtax on aluminum products) and the general uncertainty caused by the current trade environment.

[158] Several producers noted an increase in low price imports from certain Asian countries, other than China. This trend is confirmed by the CBSA’s statistical data on volume, which shows an increase of 19.2% in imports from countries other than China between 2016 and 2018, twice the pace of the apparent market growth.^{Footnote 176} At the same time, the average value of imports from countries other than China grew at a significantly lower pace than the average value of aluminum extrusion from other sources, which support the reports of increasing price pressure. For instance, while the average unit value of aluminum extrusions sold domestically by the Canadian producers increased by 19.5% between 2016 and 2018, it increased by only 6% for the other countries (excluding China).^{Footnote 177} The CBSA notes that the unit price for imports from countries other than China were the highest in the market during the POR. However, the differential is rapidly decreasing, possibly the result of increased competition from a number of sources.

[159] It was already noted that the Chinese aluminum extrusion producers are increasingly export focused, with ample capacity available and an artificially low cost advantage. As such, if the CITT’s order was no longer in place, it is likely that the Chinese exporters would be competing with the reported new low priced sources of imports on the basis of their cost advantage. It was also established that to the extent that the conditions of section 20 of SIMA continue to apply to the Chinese aluminum extrusions sector in China, the normal values for Chinese extruders are not based on the domestic prices or costing data, but rather on the pricing and costing structure in a surrogate country, where competitive conditions exists. As discussed above, the normal values under section 20 are likely to be higher, and hence, the subject goods are more likely to be dumped.

Determination Regarding Likelihood of Continued or Resumed Dumping

[160] Based on the information on the administrative record in respect of; the GOC’s involvement in and influence on the aluminum industry – Section 20 conditions; the primary aluminum capacity and production levels in China; the conditions of the aluminum extrusions industry in China; the export orientation of Chinese aluminum extrusion producers; the trade measures in Canada and in other jurisdictions; the evidence of circumvention / transhipment; the continued presence of Chinese aluminum products in Canada; and the competitive conditions in the Canadian aluminum extrusion market, the CBSA determined that the expiry of the finding is likely to result in the continuation or resumption of dumping into Canada of certain aluminum extrusions originating in or exported from China.

Parties Contending that Continued or Resumed Subsidizing is Likely

Canadian Producers

[161] The participating Canadian producers contend that the subsidizing of certain aluminum extrusions from China is likely to continue or resume should the CITT’s order expire. Therefore, they argued that the countervailing measures should remain in place.

[162] The main arguments made by the Canadian producers can be summarized as follows:

• China continues to subsidize its primary aluminum industry;
• China continues to subsidize aluminum extruders; and
• Countervailing measures in other jurisdictions

China Continues to Subsidize its Primary Aluminum Industry

[163] The Canadian producers referenced several studies which found that the GOC has heavily subsidized its primary aluminum industry for many years, at the national and sub-national levels.^{Footnote 178} The producers noted that in the context of aluminum extrusions, primary aluminum accounts for 75-86% of the total cost of production, making competitiveness in the semis (i.e. semi-finished products) market largely dependent on the cost of primary aluminum.^{Footnote 179}

[164] One such studies, they claim, is the recently published OECD study titled “Measuring Distortions in International Markets: the Aluminum Value Chain”. The Canadian producers noted that the OECD government financial support in the aluminum industry was very much concentrated in China, where it found significant subsidies in the form of energy subsidies (it was noted that electricity account for about 40% of the cost of smelting), tax incentives and concessions, and grants.^{Footnote 180}

China Continues to Subsidize Aluminum Extruders

[165] The Canadian producers noted that the OECD study determined that the effect of China’s subsidy programs can be found at all levels of the aluminum value chain.^{Footnote 181}

[166] They referred to recently completed reviews in Australia and the U.S, in which both authorities found that China’s aluminum extruders benefited from subsidy programs, including the provision of aluminum at less than adequate remuneration, preferential tax policies, tariff and VAT programs, various loan programs, as well as grants, as indications that China continues to subsidized aluminum extruders.^{Footnote 182}

[167] The producers also referred to other publically available information to confirm that aluminum extrusions producers received subsidies, such as the annual report of Pan Asialum Holdings Company Limited.^{Footnote 183}

Countervailing Measures in Other Jurisdictions

[168] As discussed above, the Canadian producers argued American and Australian authorities also have countervailing measures in place with respect to aluminum extrusions specifically, while several jurisdictions have countervailing measures in place with respect to other aluminum products from China.^{Footnote 184}

Parties Contending that Continued or Resumed Subsidizing is Unlikely

[169] None of the parties contended that continued or resumed subsidizing of subject goods from China is unlikely should the CITT’s order expire.

[170] In making a determination under paragraph 76.03(7)(a) of SIMA as to whether the expiry of the order in respect of goods from China is likely to result in the continuation or resumption of subsidizing of these goods, the CBSA may consider factors identified in subsection 37.2(1) of the SIMR, as well as any other factors relevant in the circumstances.

[171] Guided by the aforementioned factors and having considered the information on the administrative record, the following list represents a summary of the CBSA’s analysis conducted in this expiry review investigation with respect to subsidizing:

• the subsidizing of the primary aluminum industry in China;
• the continued subsidizing of aluminum extrusion producers; and
• the countervailing measures in Canada and in other jurisdictions.

The Subsidizing of the Primary Aluminum Producers in China

[172] Evidence on the record suggests that the primary aluminum industry in China benefits from substantial amount of government subsidies and that such subsidies are being passed through to aluminum extrusions producers. The bulk of the subsidies to smelters are believed to consist of energy subsidy, financial subsidy (i.e. through the banking system) and tax subsidies.

[173] As mentioned earlier in this report, electricity accounts for about 40% of the cost of smelting. As such, the provision of electricity, or coal for captive electricity production, on preferential terms can translate into significant benefit for smelters. Significant amounts of electricity subsidies to smelters were reported by the Australian Anti-Dumping Commission^{Footnote 185}, the European Commission^{Footnote 186}, the OECD^{Footnote 187}, a report submitted to the U.S. – China Economic and Security Review by Capital Trade Incorporated^{Footnote 188}, and others^{Footnote 189}. Chinese smelters also benefit from the purchase of coal at below-market prices, either directly through government ownership of most coal producers, or indirectly through the provision of finance by policy banks or through regulations.^{Footnote 190} In an analysis, the OECD estimated the amount of government support for energy and other intermediate to such enterprises as China Hongqiao Group, the world’s largest aluminum producer, Chalco, the world’s second largest Aluminum producer, SPIC, an aluminum smelter and also one of the major electricity generation company in China, QPIG, another Chinese smelter, and several others. The OECD estimated that these four companies received energy benefits valued at as much as USD 3.552 billion, USD 262 million billion, USD 395 million and USD 583 million respectively, over a five year period.^{Footnote 191Footnote 192} According to the OECD, the GOC may subsidizes energy for smelters in one or several of the following manner: i) direct budgetary transfer (for example, the government may reimburse part of a smelter’s energy cost), ii) tax revenue foregone (taxes normally levied on energy use are reduced or eliminated for specific users), iii) other government revenue foregone (for example, a SOE provides electricity to smelters at below-costs), or induced transfer (e.g. government regulations mandate that energy prices be kept below-market for certain users like aluminum smelters).^{Footnote 193}

[174] The OECD also estimated that substantial amount of benefits were provided to smelters through the financial system. In its report, it indicated that smelters such as China Hongqiao Group, Chalco, SPIC and QPIG resorted to debt as their main source of financing and were very highly leveraged^{Footnote 194}. Being highly leveraged, the ability to obtain financing on concessional terms can translate into significant benefits. In total, the OECD estimated that these four companies received as much as USD 4.480 billion, USD 8.302 billion, USD 33.791 billion and USD 2.149 billion, respectively, in financial subsidies provided through the financial system over a five year period.^{Footnote 195Footnote 196} These companies were identified as benefiting from contractual terms that were better than those being available in private markets, such as preferential rates and longer repayment terms, or by better terms and conditions of private loans through explicit or implicit government guarantees.^{Footnote 197} It was also mentioned that firms such as SPEC and QPIG specifically indicated in bond prospectuses that they benefited from preferential loans from policy banks (which are, by their nature, more likely to be considered as public bodies), among other state-owned banks.

[175] Finally, the OECD report, along with other reports, also provides evidence of tax concessions, such as lower tax rates under China’s Western Development Strategy.^{Footnote 198} Such tax concessions are specifically reported to have provided significant benefits to major smelters like Chalco, who has two subsidiaries in Western China.^{Footnote 199}

[176] The evidence on the record suggests that at least some of the substantial benefits received by aluminum smelters are being passed on to aluminum extrusions producers. Considering that the cost of primary aluminum accounts for 75-86% of the total cost of production for semis, the total benefit passed through to aluminum extrusion producers can be significant. On one hand, each of the four smelters listed above, which include the two largest aluminum producers in China, are believed to be state-owned. Evidence on the record also suggest that these SOEs are considered public bodies. As such, it can be implied that the benefit provided by the GOC to the state-owned smelters are being passed-through to the aluminum extruders. Further, evidence on the record suggest that state-owned aluminum producers are supplying aluminum to aluminum extrusion producers at less than adequate remuneration, which is further indication of the benefit that is being passed-through from the smelter to the downstream producer. In this regards, at the time of the original investigation, the CBSA determined that SOEs were providing primary aluminum at less than fair market value.^{Footnote 200} More recently, Australian authorities have also determined that aluminum extruders were still benefiting from the provision of aluminum by the GOC at less than adequate remuneration.^{Footnote 201}

[177] A SOE may be considered to constitute “government” for the purposes of subsection 2(1.6) of SIMA if it possesses, exercises, or is vested with governmental authority. Without limiting the generality of the foregoing, the CBSA may consider the following factors as indicative of whether the SOE meets this standard: 1) the SOE is granted or vested with authority by statute; 2) the SOE is performing a government function; 3) the SOE is meaningfully controlled by the government; or some combination thereof.

[178] As discussed previously regarding the evidence of the aluminum sector in China not operating under competitive conditions, the record contains evidence that the state-owned smelters are meaningfully controlled by the government and that they performed a government function. As example of government exerting control, the OECD noted that SPIC mentioned in its 2016 prospectus that “the Group’s Chairman and President is appointed by the State Council, Directors are accredited by SASAC, the Chairman of Board of Supervision is appointed by the State Council directly and the Vice President is appointed by SASAC.”^{Footnote 202} Similarly, an investigation by THINK!DESK into the individual background of members of the board of directors and supervisory councils of 65 major enterprises in the non-ferrous market revealed that a large majority of them are closely tied to the GOC.^{Footnote 203} The EU also noted that “In 2017, a Chinese state-owned aluminium producer, China Aluminum International Engineering Corporation Limited (Chalieco), amended its Articles of Association giving more prominence to the role of Party cells within the company[…]. It included a whole chapter on the Party Committee, and Article 113 thereof states: ‘In deciding major corporate issues, the Board shall consult the Party Committee of the Company in advance.’”^{Footnote 204} As noted by Australian authorities, the SOEs are more likely to be responsive to the directives of the broader GOC.^{Footnote 205} They also identified several GOC documents and guidelines which emphasize the importance and role of the SOEs in aluminum industries, such as with respect to the elimination of backward capacity, the control of production levels, the encouragement of mergers, restructuring and relocation, etc.^{Footnote 206} Australian authorities recently made the same conclusion that the state-owned smelters are meaningfully controlled by the government and that they performed a government function.^{Footnote 207} Further, another study noted that not only are subsidies mostly provided to SOEs, a large share of the subsidies is provided contingent on compliance with GOC directives.^{Footnote 208} This is therefore indicative that the SOEs may be considered as public bodies, and, considering the lower aluminum prices in China than on the international market^{Footnote 209}, may be indicative that there is a benefit being passed on to users of these inputs, such as aluminum extrusion producers.

The Continued Subsidizing of Aluminum Extrusion Producers

[179] At the time of the original subsidy investigation, 56 potential subsidy programs were investigated and 15 of the potential subsidy programs were determined to have conferred benefits to the cooperative exporters. The programs included grants, preferential tax programs, reduction in land use fees and the provision of aluminum at less than fair market value.^{Footnote 210} For purposes of the final determination, the amounts of subsidy for the seven cooperative Chinese exporters ranged from 2.59 Renminbi (RMB) per kg to 3.88 RMB per kg, or from 8% to 16% expressed as a percentage of export price. For the non-cooperative exporters, the amount of subsidy has been determined under a ministerial specification, pursuant to subsection 30.4(2) of SIMA. The total amount of subsidy for the non-cooperative was 15.84 RMB per kg, or 60% as a percentage of export price. The final results indicated that 100% of the subject goods imported into Canada were subsidized. The overall weighted average amount of subsidy was equal to 47% of the export price.^{Footnote 211} On February 20, 2012, the CBSA concluded a dumping and subsidy re-investigation. Four exporters were issued specific amounts of subsidy on the basis of the re-investigation, which ranged from 0.75 to 1.84 RMB/kg.

[180] Despite the limited information with respect to current subsidy programs specifically applicable to aluminum extrusion producers and exporters, especially due to the non-participation by the GOC in this expiry review investigation, information on the record provides evidence of the continued availability of subsidy programs for aluminum extruders in China. For instance, the OECD estimated that China Zongwang, China’s largest producer of aluminum extrusions, received USD 2.554 billion in financial subsidies provided through the financial system between 2013 and 2017.^{Footnote 212} It was also reported that China Zongwang is subject to preferential tax rates in light of its “High and New Technology Enterprise” status from the Liaoning Province.^{Footnote 213} According to a recently published Statement of Essential Facts with respect to a review of its anti-dumping and countervailing on aluminum extrusions from China, Australian authorities determined that the cooperating Chinese exporters received benefits during the period of review under 40 programs^{Footnote 214}, and that another 25 programs were considered countervailable even though benefits were not conferred to the cooperating exporters during the period reviewed.^{Footnote 215} The majority of the programs consisted of grants (60 of the 65 available countervailable programs), with the others consisting of preferential tax programs, a tariff and VAT exemption program, in addition to the provision of primary aluminum at less than adequate remuneration. The 2017 annual report of aluminum extruder PanAsialum Holdings Company Limited also reports government grants from the GOC. For instance, the producer reported the receipt of subsidies from the Economic and Information Commission of Guangdong Province and the Industry and Information Technology Commission of Guangzhou Municipality, in addition to subsidies from the Wolong District Government.^{Footnote 216}

[181] Finally, the record also contains evidence of export subsidies provided to aluminum extrusions producers. For example, a THINK!DESK China Research Consulting study has found that some municipalities will match export revenues with subsidies, while other subsidies will offset domestic transportation cost for export shipments, in order to lower their cost of doing business and increase export trade. The provision of export credit insurance was another form of export subsidy listed by this study.^{Footnote 217}

Countervailing Measures in Other Jurisdictions

[182] The existence of countervailing measures in place in Canada, Australia, the EU and in the US concerning aluminum products from China reinforces the argument that Chinese exporters/producers of aluminum extrusions receive countervailable benefits from the GOC and the GOC has placed a great deal of importance on its aluminum industry and subsidized it accordingly.

[183] Canada currently has countervailing measures in place against Chinese aluminum extrusions and photovoltaic modules and laminates (a product that includes aluminum extrusions as input for the frame).^{Footnote 218} Information on the administrative record indicates that Australia, the EU and the US also have countervailing measures against aluminum products from China. The products that are subject to the Australian countervailing measures include: Aluminum Extrusions, Aluminum road wheels and Aluminum Zinc Coated Steel.^{Footnote 219} The European Union also has countervailing measures against crystalline silicone photovoltaic modules and key components.^{Footnote 220} The products that are subject to the U.S. countervailing measures include: Aluminum Extrusions, certain aluminum foil, crystalline silicone photovoltaic cells, and certain crystalline silicone photovoltaic products.^{Footnote 221}

[184] On the basis of the above, there are strong indications that the GOC will likely continue to subsidize its domestic aluminum extrusion producers in the future, both directly and indirectly by subsidizing primary aluminum producers.

Determination Regarding Likelihood of Continued or Resumed Subsidizing

[185] Based on the information on the administrative record in respect of the continued availability of subsidy programs for primary aluminum producers in China which are benefiting aluminum extrusion producers, the continued availability of subsidy programs for aluminum extruders, and the countervailing measures in other jurisdictions, the CBSA determined that the expiry of the order is likely to result in the continuation or resumption of subsidizing of certain aluminum extrusions originating in or exported from China.

[186] For the purpose of making a determination in this expiry review investigation, the CBSA conducted its analysis within the scope of the factors found under subsection 37.2(1) of the SIMR. Based on the foregoing consideration of pertinent factors and an analysis of the information on the record, on August 2, 2019, the CBSA made a determination pursuant to paragraph 76.03(7)(a) of SIMA that the expiry of the CITT’s order made on March 17, 2014, in Expiry Review No. RR-2013-003, continuing, without amendment, its findings made on March 17, 2009, in Inquiry No. NQ-2008-003, as amended by its determination made on February 10, 2011, in Inquiry No. NQ-2008-003R, in respect of certain aluminum extrusions originating in or exported from China is:

• likely to result in the continuation or resumption of dumping of the goods; and
• likely to result in the continuation or resumption of subsidizing of the goods.

[187] On August 6, 2019, the CITT commenced its inquiry to determine whether the expiry of the order with respect to the dumping and subsidizing of certain aluminum extrusions from China is likely to result in injury. The CITT’s Expiry Review schedule indicates that it will make its decision by January 13, 2020.

[188] If the CITT determines that the expiry of the order with respect to the goods is likely to result in injury, the CITT will make an order continuing the order in respect of those goods, with or without amendment. If this is the case, the CBSA will continue to levy anti-dumping and/or countervailing duties on dumped and/or subsidized importations of the subject goods.

[189] If the CITT determines that the expiry of the order with respect to the goods is not likely to result in injury, the CITT will make an order rescinding the order in respect of those goods. Anti-dumping and/or countervailing duties would then no longer be levied on importations of the subject goods, and any anti-dumping and/or countervailing duties paid in respect of goods that were released after the date that the order was scheduled to expire will be returned to the importer.

[190] For further information, please contact the officer listed below: