Statement of reasons—Expiry review determination: Dry wheat pasta (DWP 2023 ER)

Decision

Ottawa, October 27, 2023

On October 12, 2023 pursuant to paragraph 76.03(7)(a) of the Special Import Measures Act, the Canada Border Services Agency determined that the expiry of the Canadian International Trade Tribunal’s finding made on July 26, 2018, in inquiry NQ-2017-005:

• is likely to result in the continuation or resumption of dumping of the goods from Türkiye and
• is likely to result in the continuation or resumption of subsidizing of the goods from Türkiye

Executive summary

[1] On May 15, 2023, the Canadian International Trade Tribunal (CITT), pursuant to subsection 76.03(1) of the Special Import Measures Act (SIMA), initiated an expiry review of its finding made on July 26, 2018, in inquiry NQ-2017-005, concerning the dumping and subsidizing of dry wheat pasta originating in or exported from the Republic of Türkiye (Türkiye).

[2] As a result of the CITT’s notice of expiry review, on May 16, 2023, 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 finding is likely to result in the continuation or resumption of dumping and/or subsidizing of the subject goods from Türkiye.

[3] The CBSA received responses to the Canadian producer expiry review questionnaire (ERQ) from Grisspasta Products Limited (Grisspasta)^{Footnote 1}, Primo Foods Inc. (Primo)^{Footnote 2}, Barilla (collective response from Catelli Montreal Inc. (Catelli), Barilla Canada Inc. (BCI), and Barilla America, Inc. (BAI))^{Footnote 3}, the Canadian Pasta Manufacturers Association (CPMA)^{Footnote 4}, and Italpasta Limited (Italpasta)^{Footnote 5}. The submissions made by Grisspasta, Primo, Barilla, the CPMA, and Italpasta included information supporting their position that continued or resumed dumping and subsidizing of dry wheat pasta from Türkiye is likely if the CITT’s finding expires.

[4] The CBSA received a response to the importer ERQ from Barilla.^{Footnote 6}

[5] The CBSA did not receive a response to the exporter ERQ or to the foreign government ERQ from the Government of Türkiye (GOT).

[6] Barilla and the CPMA provided supplemental information prior to the closing of the record^{Footnote 7}, as well as case briefs^{Footnote 8} to the CBSA in support of their position that continued or resumed dumping and subsidizing of dry wheat pasta from Türkiye is likely if the CITT’s finding expires. No other party provided a case brief to the CBSA and no party provided a reply submission in response to the Barilla and CPMA case briefs.

[7] Analysis of information on the administrative record indicates a likelihood of continued or resumed dumping into Canada of dry wheat pasta from Türkiye should the CITT’s finding expire. This analysis relied upon the following factors:

• Price-sensitive nature of dry wheat pasta
• Attractive stable market conditions in Canada
• Growth of private label and value brand products in Canada
• Continued interest of Turkish dry wheat pasta exporters in the Canadian market
• Large number of export-oriented pasta producers with excess capacity in Türkiye
• Uncertain and turbulent market conditions in Türkiye
• Imposition of anti-dumping measures concerning Turkish pasta in the United States and South Africa
• Imposition of trade barriers concerning Turkish pasta in the European Union and Iraq and
• Oversupplied global pasta market

[8] In addition, analysis of information on the administrative record indicates a likelihood of continued or resumed subsidizing of dry wheat pasta from Türkiye should the CITT’s finding expire. This analysis relied upon the following factors:

• Continued subsidizing of dry wheat pasta from Türkiye while the finding was in effect
• Large number of export-oriented pasta producers with excess capacity in Türkiye
• Uncertain and turbulent market conditions in Türkiye and
• Imposition of countervailing measures concerning Turkish pasta in the United States

[9] For the forgoing reasons, the CBSA, having considered the relevant information on the record, determined on October 12, 2023, pursuant to paragraph 76.03(7)(a) of SIMA, that the expiry of the finding in respect of dry wheat pasta:

1. is likely to result in the continuation or resumption of dumping of the goods from Türkiye and
2. is likely to result in the continuation or resumption of subsidizing of the goods from Türkiye

Background

[10] On December 28, 2017, following a complaint filed by the CPMA of Ottawa, Ontario, the CBSA initiated an investigation pursuant to subsection 31(1) of SIMA regarding the dumping and subsidizing of dry wheat pasta from Türkiye.^{Footnote 9}

[11] On June 26, 2018, the CBSA made final determinations of dumping and subsidizing, in accordance with paragraph 41(1)(b) of SIMA, in respect of dry wheat pasta from Türkiye.^{Footnote 10}

[12] On July 26, 2018, the CITT found, pursuant to subsection 43(1) of SIMA in inquiry NQ-2017-005, that the dumping and subsidizing of dry wheat pasta from Türkiye had caused injury to the domestic industry.^{Footnote 11}

[13] On March 24, 2021, the CBSA concluded a re-investigation to update the normal values, export prices, and amounts of subsidy of dry wheat pasta from Türkiye.^{Footnote 12} Durum Gida Sanayi ve Ticaret A.Ş. (Durum Gida) participated in the re-investigation and received updated normal values and an amount of subsidy.

[14] On May 15, 2023, the CITT, pursuant to subsection 76.03(1) of SIMA, initiated an expiry review of its finding made on July 26, 2018, in inquiry NQ-2017-005.^{Footnote 13}

[15] On May 16, 2023, the CBSA initiated an expiry review investigation to determine whether the expiry of the finding is likely to result in the continuation or resumption of dumping and/or subsidizing of dry wheat pasta from Türkiye.

Product definition

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

Classification of imports

[20] The subject goods are normally imported into Canada under the following tariff classification numbers:

• 1902.19.21.30
• 1902.19.22.30
• 1902.19.23.30
• 1902.19.29.30
• 1902.19.91.00
• 1902.19.92.30
• 1902.19.93.00
• 1902.19.99.30

[21] These tariff classification numbers may also include non-subject goods, and subject goods may also fall under additional tariff classification numbers.

Period of review

[22] The Period of Review (POR) for the CBSA’s expiry review investigation is January 1, 2020 to March 31, 2023.

Canadian industry

[23] The Canadian industry is comprised of the CPMA, and five other Canadian producers of dry wheat pasta.

Canadian market

[31] The apparent Canadian market for dry wheat pasta during the POR is indicated by volume and value in Table 1 below.

[32] Production data for one of the Canadian producers who responded was not available for 2020 and January 2021. To ensure data comparability from 2020 to 2023, an estimation was made for their Canadian production. The estimation involved calculating their 2020 production using the growth percentage observed among other Canadian producers between 2020 and 2021. For their January 2021 production, an extrapolation was performed based on available production data for the last 11 months of 2021.

[33] Based on information on the administrative record, the total apparent Canadian market, decreased in volume and increased in value between 2020 and 2022.

[34] The Canadian producers’ share of the apparent Canadian market remained relatively stable from 2020 to 2022, with a decrease in volume and an increase in value.

[35] The market share of imports from Türkiye also remained relatively stable from 2020 to 2022, with a decrease in volume and an increase in value.

Enforcement data

[36] In the enforcement of the CITT’s finding during the POR, as detailed in Table 2 below, the CBSA assessed $222,078 of anti-dumping and countervailing duties on subject imports from Türkiye. The total value for duty of subject imports during the POR from Türkiye was approximately $43.7 million. As a percentage of the total value for duty, the combined anti-dumping and countervailing duties assessed during the POR were equal to 0.5%.

Parties to the proceedings

[37] On May 16, 2023, the CBSA sent notices concerning the initiation of the expiry review investigation and ERQs were sent to the known Canadian producers, importers and exporters. The GOT was also sent a foreign government ERQ relating to subsidy.

[38] 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).

[39] Grisspasta, Primo, Barilla, the CPMA, and Italpasta responded to the Canadian producer ERQ. Barilla also provided a response to the importer ERQ.

[40] No exporter or foreign producer provided a response to the exporter ERQ. The GOT did not respond to the foreign government ERQ.

[41] The Canadian producers, Barilla and the CPMA (on behalf of its members, Italpasta, Primo, and Grisspasta), provided supplemental information prior to the closing of the record and case briefs to the CBSA in support of their position that continued or resumed dumping and subsidizing of dry wheat pasta from Türkiye is likely if the CITT’s finding expires.

[42] No other party provided a case brief or reply submission.

Information considered by the CBSA

[43] 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 CBSA 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, importers and governments.

[44] 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 investigation, the administrative record closed on July 5, 2023.

Position of the parties: Dumping

Consideration and analysis: Dumping

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

[83] Guided by these aforementioned factors, the CBSA conducted its review based on the documentation submitted by the various participants and its own research, all of which can be found 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:

• Price-sensitive nature of dry wheat pasta
• Attractive stable market conditions in Canada
• Growth of private label and value brand products in Canada
• Continued interest of Turkish dry wheat pasta exporters in the Canadian market
• Large number of export-oriented pasta producers with excess capacity in Türkiye
• Uncertain and turbulent market conditions in Türkiye
• Imposition of anti-dumping measures concerning Turkish pasta in the United States and South Africa
• Imposition of trade barriers concerning Turkish pasta in the European Union and Iraq and
• Oversupplied global pasta market

The CBSA's analysis

Price-sensitive nature of dry wheat pasta

[84] Generally, dry wheat pasta consists of two primary ingredients: semolina flour, which is milled from durum wheat, and water. The price of dry wheat pasta is directly influenced by the cost of semolina flour which, in turn, is linked to the price of durum wheat.

[85] Producers employ essentially the same production technology for dry wheat pasta, making it generally substitutable whether it’s produced by a Canadian or foreign manufacturer, although there may be some consumer perceptions of quality differences.

[86] The CITT notes that dry wheat pasta, being a consumer staple, faces intense competition driven by price sensitivity. This is particularly true for plain, mass-produced and mass-consumed traditional shapes and cuts of dry wheat pasta.^{Footnote 59}

[87] Given the substitutability and price-sensitive nature of dry wheat pasta, purchasers will typically seek the lowest prices available in the market. As such, should the CITT’s finding expire, the price-sensitive nature of the subject goods increases the likelihood of continued or resumed dumping of dry wheat pasta.

Attractive stable market conditions in Canada

[88] In Canada, dry wheat pasta is a consumer staple and as there are already high levels of consumption, there is little room for growth in demand. Canadian demand is generally stable, inelastic, and flat from year to year, with only modest growth. As a steady market, Canada’s dry wheat pasta market is relatively attractive globally.^{Footnote 60}

[89] In 2020 and 2021, during the COVID-19 pandemic, consumers ate at home more due to the public health restrictions. Households also began to stock their pantries with pasta, a non-perishable and inexpensive food. As a result, demand for pasta increased. Consumption surged to unexpected levels, but has since returned to normal levels experienced prior to 2020, as COVID-19 restrictions were eased.^{Footnote 61}

[90] In 2022, Canada experienced a significant 6.8% increase in consumer prices.^{Footnote 62} In an effort to counter inflation, the Bank of Canada took unprecedented action, increasing interest rates by 425 basis points, at the fastest pace in a quarter-century,^{Footnote 63} As of June 2023, economists are still forecasting the possibility of additional interest rate increases.^{Footnote 64} This continuous rise in inflation and interest rates has eroded consumers’ household purchasing power, leading them to adopt a more cautious and price-conscious approach to spending.^{Footnote 65} Consequently, inflation has increased demand for pasta, which is known as an affordable meal.^{Footnote 66}

[91] As a result of the steady dry wheat pasta market, along with the modest growth in demand, the Canadian market is increasingly attractive to exporters of dry wheat pasta. As such, should the CITT finding expire, Turkish pasta exporters are likely to export to Canada and lower their prices to compete for market share, which increases the likelihood of continued or resumed dumping of dry wheat pasta.

Growth of private label and value brand products in Canada

[92] The Canadian dry wheat pasta market is divided into three major segments: retail, food services and industrial. The retail segment is the largest. As noted by the CITT, the retail segment of the market is mature and competition is intense.^{Footnote 67}

[93] In the retail segment, producers sell their production to national or regional grocery chains. In grocery chains, dry wheat pasta is marketed to consumers in two ways, under a recognized national brand label (e.g. Italpasta, Primo, Catelli, etc.), or retailers’ own private label. Each of the four major Canadian retailers (Loblaws, Metro, Walmart, and Sobeys) have their own private label brands: No Name for Loblaws, Selection for Metro, Great Value for Walmart, and Compliments for Sobeys.^{Footnote 68}

[94] National brand and private label dry wheat pasta compete directly with one another. Historically, national brand label pasta had a premium of 10-25%, primarily due to brand equity. However, brand equity has eroded in the last decade.^{Footnote 69}

[95] As consumers increasingly focus on price due to high inflation and rising interest rates, market share has shifted away from premium national brands, toward private label and value brand products.^{Footnote 70}

[96] Private label and value brand pasta is a more price-sensitive segment of the market. This change in consumer focus makes Canadian branded pasta manufacturers more vulnerable to low-priced imports from Türkiye than before.

[97] As Canadian real GDP growth is expected to slow from 3.4% in 2022 to 1.5% in 2023,^{Footnote 71} financial stress will continue to weigh on Canadian consumers, and the trend of focusing on price and private label or value brand pasta is likely to continue.

[98] The CITT noted that after Durum Gida won the private label contract with Loblaws as a provider of dry wheat pasta at an aggressively low price, other retailers took notice. The CITT states that “this caused a race to the bottom in terms of pricing as retailers sought to maintain or increase their sales of this staple product.”^{Footnote 72}

[99] If the finding expires, it is likely that this “race to the bottom” would continue as other Canadian retailers seek aggressively low-priced pasta for their own private label brands. As a result, this increases the likelihood of continued or resumed dumping of dry wheat pasta in Canada.

Continued interest of Turkish dry wheat pasta exporters in the Canadian market

[100] On June 26, 2018, the CBSA made final determinations with respect to the dumping and subsidizing of dry wheat pasta from Türkiye. Three exporters, including Durum Gida, participated in the investigation. Durum Gida was the only exporter that received normal values.^{Footnote 73}

[101] On March 24, 2021, the CBSA concluded a re-investigation of the normal values, export prices and amount of subsidy of dry wheat pasta from Türkiye. Five exporters, including Durum Gida, participated in the re-investigation. Durum Gida was the only exporter that received normal values.^{Footnote 74}

[102] Although other exporters did not receive normal values in the original investigation and subsequent re-investigation, the participation of these exporters in recent proceedings suggests that there is a continued interest in the Canadian market.

[103] During the POR, Turkish imports accounted for approximately 8.4% by volume and 4.2% by value of the apparent Canadian market. Turkish imports accounted for approximately 20.2% by volume and 11.6% by value of imports of dry wheat pasta from all countries.^{Footnote 75} Turkish imports of dry wheat pasta have continued to have a strong presence in Canada.

[104] Information on anti-dumping duties assessed during the POR is presented in the Enforcement data section. A total of 50 million kilograms (or 50,000 MT) of dry wheat pasta valued at approximately $43.7 million from Türkiye entered the Canadian market during the POR. Importations of dry wheat pasta from Türkiye resulted in the assessment of anti-dumping and countervailing duties of $222,078 during the POR, with the majority of the duties being countervailing duties. Most of the imports were imported at or above established normal values.^{Footnote 76}

[105] Given the large amount of pasta from Türkiye and the relatively small amount of duties assessed, the bulk of the importations are from Durum Gida, the only exporter with normal values in place. As such, the anti-dumping duties for all other exporters appears to be restricting other exporters’ access to the Canadian market.

[106] When comparing the average price per kilogram for imported pasta, the price of dry wheat pasta from Türkiye was significantly lower at approximately $1.14/kg, as compared to imports from other countries at $2.48/kg.^{Footnote 77}

[107] If the finding expires, other Turkish exporters may enter the market to compete with Durum Gida’s already low-priced imports. In order to maintain or secure additional market share, Durum Gida would likely continue or resume dumping in Canada. As such, should the CITT finding expire, the continued interest of Turkish dry wheat pasta exporters in the Canadian market increases the likelihood of continued or resumed dumping of dry wheat pasta.

Large number of export-oriented pasta producers with excess capacity in Türkiye

[108] In consideration of the lack of participation from Turkish producers and exporters of dry wheat pasta, the CBSA relied on publically available information regarding the production capacity of Turkish exporters.

[109] According to BBM Magazine, Türkiye had 24 pasta producers in 2019.^{Footnote 78} By 2023, Barilla identified 31 pasta producers, indicating a growing amount of Turkish pasta producers.^{Footnote 79}

[110] In 2020, Turkish pasta producers had a combined production capacity of approximately 2 million MT. By 2022, this capacity has surged to approximately 3 million MT. This production capacity surpasses annual Turkish pasta consumption of approximately 800,000 MT.^{Footnote 80} These figures demonstrate that Türkiye’s pasta production is primarily intended to meet demand in international export markets.

[111] With Canada’s estimated pasta consumption at approximately 216,000 MT, Turkish pasta producers have sufficient excess production capacity to supply the Canadian market many times over.^{Footnote 81}

[112] Major Turkish pasta producers including Oba Makarna, Durum Gida and Arbella, Nuh’un Ankara, Mutlu, Tat, Doga, Besler, Hak Makarna, Banetti, PastaVilla, and Berrak emphasize on their websites that they are export-oriented, citing a large number of countries that they export to.^{Footnote 82}

[113] This demonstrates that Turkish pasta producers are export-oriented and continue to strengthen their position in the world pasta market. Türkiye produces more pasta than their domestic market needs and sells the excess pasta abroad, exporting pasta to nearly 160 countries.^{Footnote 83}

[114] If the finding expires, it would be beneficial for Turkish pasta producers to leverage their excess production capacity and start exporting to Canada at low prices to obtain market share. As such, should the CITT finding expire, the large number of export-oriented pasta producers with excess capacity in Türkiye increases the likelihood of continued or resumed dumping of dry wheat pasta.

Uncertain and turbulent market conditions in Türkiye

[115] As of June 2023, the Turkish Lira plunged 7% to a record low since a historical 2021 crash. In 2023 alone, the Turkish Lira has decreased by more than 19%.^{Footnote 84} A potential sharp interest rate hike could grind the Turkish economy to a standstill or tip it into a recession.^{Footnote 85}

[116] The 2021 crash of the Turkish Lira sent inflation to a 24-year high above 85%.^{Footnote 86} The Turkish Statistical Institute reported that in October 2022, food prices were 99% higher than the previous year. The domestic producer price index showed a 158% increase annually.^{Footnote 87}

[117] Inflation in Türkiye is expected to decline but remain above 40%, eroding household purchasing power. Analysts expect inflation to climb back towards 50%, or potentially snap back to the peak levels of 2022.^{Footnote 88}

[118] Due to the uncertain and turbulent economic outlook in Türkiye, combined with the weak Turkish Lira, Turkish pasta producers may rely heavily on export markets, which could flood the Canadian market with low-priced pasta. As such, should the CITT finding expire, the uncertain and turbulent market conditions in Türkiye increases the likelihood of continued or resumed dumping of dry wheat pasta.

Imposition of anti-dumping measures concerning Turkish pasta in the United States and South Africa

[119] The United States and South Africa currently have anti-dumping measures in place against pasta from Türkiye.

[120] In the United States, anti-dumping duties have been imposed on Turkish pasta since 1996.^{Footnote 89} These measures limit Turkish pasta producers’ access to the United States, the largest import market for pasta globally.^{Footnote 90} Due to Canada’s close proximity to the United States, Turkish pasta can easily be diverted to Canada.

[121] On November 28, 2018, the USDOC determined that the revocation of the orders would likely lead to continuation or recurrence of dumping, and that the magnitude of the margins of dumping likely to prevail would be up to the weighted-average margin of dumping of 63% for Türkiye.^{Footnote 91}

[122] With the continuation of the anti-dumping measures in the United States, Canada is exposed to diversion risk for the large available volumes of Turkish pasta.

[123] While Turkish pasta producers have experienced export growth to rapidly urbanizing sub-Saharan African countries, which account for 55% of the country’s international sales,^{Footnote 92} in 2021, the International Trade Administration Commission of South Africa imposed anti-dumping duties of 367% against Turkish pasta.^{Footnote 93}

[124] As a result of the imposition of anti-dumping duties in South Africa, Turkish pasta exporters will have to divert their significant production of pasta to other markets.

[125] Consequently, the imposition and continuation of anti-dumping measures against Turkish pasta in other jurisdictions increases the likelihood of continued or resumed dumping of dry wheat pasta, should the CITT finding expire.

Imposition of trade barriers concerning Turkish pasta in the European Union and Iraq

[126] In addition to the anti-dumping measures in place against Turkish pasta in other jurisdictions, there are trade barriers in place in both the European Union and Iraq.

[127] The European Union currently has an annual quota of 20,000 MT of Turkish pasta imports. Turkish pasta producers have urged the European Union to lift the export quota.^{Footnote 94} Any volumes above the quota are subject to the MFN rate of duties. The MFN duties significantly limit Türkiye’s access to the second and third largest pasta importers in the world, Germany and France, respectively.^{Footnote 95}

[128] In 2019, Iraq, one of the most important markets for Turkish food products, banned pasta and noodle imports from Türkiye.^{Footnote 96} Iraq’s import ban adversely affects Turkish pasta exporters.

[129] As one of the largest sources of pasta production and export, Turkish pasta producers’ restricted access to the European Union and Iraq will likely cause them to seek out other export markets, including Canada. As such, should the CITT finding expire, the imposition of trade barriers concerning Turkish pasta in the European Union and Iraq increases the likelihood of continued or resumed dumping of dry wheat pasta.

Oversupplied global pasta market

[130] Between 2017 and 2021, global pasta production increased by 13.0%, from approximately 14.6 million MT to 16.5 million MT. During the same period, global pasta consumption increased by 11.5%, from approximately 12.2 million MT to 13.6 million.^{Footnote 97} Global pasta supply has outpaced demand, resulting in a global oversupply of pasta.

[131] In addition, several pasta producers in the United States, European Union, and Africa have expanded or will expand their production capacities.^{Footnote 98} As previously mentioned, Turkish pasta producers have also expanded capacity or have existing plans to expand capacity.

[132] The additional global supply increases competition in the pasta market. This makes Turkish pasta producers more likely to sell at lower prices. As such, should the CITT finding expire, the oversupply of the global pasta market increases the likelihood of continued or resumed dumping of dry wheat pasta.

Determination regarding likelihood of continued or resumed dumping

[133] Based on the information on the record in respect of the: price-sensitive nature of dry wheat pasta; attractive stable market conditions in Canada; growth of private label and value brand products in Canada; continued interest of Turkish dry wheat pasta exporters in the Canadian market; large number of export-oriented pasta producers with excess capacity in Türkiye; uncertain and turbulent market conditions in Türkiye; imposition of anti-dumping measures concerning Turkish pasta in the United States and South Africa; imposition of trade barriers concerning Turkish pasta in the European Union and Iraq; and oversupplied global pasta market, the CBSA has determined that the expiry of the finding is likely to result in the continuation or resumption of dumping of dry wheat pasta from Türkiye.

Position of the parties: Subsidizing

Consideration and analysis: Subsidizing

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

[149] Guided by the aforementioned regulations and having examined the information on the administrative record, the following is a list of the factors considered in the analysis with respect to the likelihood of continued or resumed subsidizing:

• Continued subsidizing of dry wheat pasta from Türkiye while the finding was in effect
• Large number of export-oriented pasta producers with excess capacity in Türkiye
• Uncertain and turbulent market conditions in Türkiye and
• Imposition of countervailing measures concerning Turkish pasta in the United States

The CBSA’s analysis

Continued subsidizing of dry wheat pasta from Türkiye while the finding is in effect

[150] In consideration of the lack of participation from Turkish producers and exporters of dry wheat pasta and the GOT in this expiry review, the CBSA relied on information from the original investigation, subsequent re-investigation, and pertinent information on the record in assessing the likelihood of continued or resumed subsidization, should the CITT’s finding expire.

[151] In the 2017 subsidy investigation of dry wheat pasta, eight subsidy programs were considered to be available to all other exporters:

• VAT and Special Consumption Tax Exemption on the Delivery of Diesel Fuel to the Vehicles Carrying Export Goods
• Rediscount Program
• Pre-Shipment Export Credit Program
• Pre-Export Credit Program
• Export-Oriented Working Capital Credit Program
• Post-Shipment Rediscount Credit
• Specific Export Credit Program and
• Short-Term Export Credit Insurance Program

[152] The CBSA determined that Durum Gida received benefits from three programs during the POI:

• Export Subsidy Program for Agricultural Products
• Deduction from Taxable Income for Export Revenue and
• Input Materials Provided by Government at Less than Fair Market Value^{Footnote 110}

[153] Detailed descriptions of the programs and explanation as to why they were determined to be countervailing subsidies are contained in the CBSA’s Statement of reasons issued at the final determination.

[154] During the 2019 re-investigation of dry wheat pasta, the CBSA found that Durum Gida received benefits from four programs during the POI:

• Export Subsidy Program for Agricultural Products
• Deduction from Taxable Income for Export Revenue
• Input Materials Provided by Government at Less than Fair Market Value and
• Support to Offset Costs Related to Trade-Remedy Investigations^{Footnote 111}

[155] As of December 2021, the GOT reported 31 subsidy programs to the WTO, most of which may be applicable to producers and exporters of dry wheat pasta in Türkiye.

[156] For example, the Ministry of Industry and Trade’s Small and Medium Enterprises Development Organization of Türkiye (KOSGEB) provides various subsidies to small and medium enterprises including grants and interest-free or preferential interest rate loans. Turk Eximbank, a state-owned bank acting as the Turkish government’s export credit agency and export incentive instrument, also provides various subsidies to exporters, including export credit programs (loans and loan guarantees) and export credit insurance programs. The GOT also provides an export subsidy program for agricultural products in the form of the deduction of debts.^{Footnote 112}

[157] The United States Department of Agriculture (USDA) indicates that the GOT also has domestic subsidies for wheat and has not reported its domestic support spending for wheat to the WTO, which is capped at 10% of the value of production for developing nations. Wheat was one of the largest recipients of support in previous years. The USDA also indicates that the GOT has export subsidies including the IPR, that encourages exports. In addition to the IPR, the GOT provides freight subsidies for the transportation of wheat flour, including durum wheat.^{Footnote 113} These wheat subsidies are likely to be passed on as an upstream subsidy to dry wheat pasta producers and exporters.

[158] In 2020, the Ministry of Agriculture put in place a special support program to offset the impact of the COVID-19 pandemic on food security. Through the use of the CPIP, the GOT subsidized 75% of seed costs for farmers in 21 agricultural provinces, incentivizing Turkish farmers to plant additional crops. The GOT also opened public lands to be used by farmers to plant additional crops. Of the seeds distributed, wheat was considered a priority.^{Footnote 114} The lower seed and land costs, combined with the greater domestic production of wheat, may cause durum wheat prices to decline, providing an upstream subsidy to dry wheat pasta producers.

[159] There is a long-standing history of subsidies provided to wheat, flour and pasta producers and exporters in Türkiye. As such, based on the continued subsidizing while the finding was in effect, it is likely that exporters from Türkiye will benefit from continued or resumed subsidizing if the finding expires.

Large number of export-oriented pasta producers with excess capacity in Türkiye

[160] As noted in the Consideration and analysis: Dumping section, information on the record indicates a large number of producers and exporters of dry wheat pasta with immense production capacity in Türkiye.

[161] Moreover, information on the record shows that Durum Gida has maintained ongoing relationships with Canadian importers, which demonstrates a continued interest in the Canadian market.

[162] Based on the excess capacity available and export-orientation of producers and exporters of dry wheat pasta in Türkiye, there is significant incentive to pursue export sales to Canada in order to increase capacity utilization. As such, should the CITT’s finding expire, the large number of export-oriented pasta producers with excess capacity in Türkiye increases the likelihood of continued or resumed subsidizing of dry wheat pasta.

Uncertain and turbulent market conditions in Türkiye

[163] As previously mentioned, the crash of the Turkish Lira and hyperinflation are causing significant uncertainty in Türkiye’s economic outlook.

[164] In 2021, the GOT launched a program to stop the fall of the currency. The program includes a government guarantee to make up for any losses that holders of Lira deposits incur should the Lira depreciate.^{Footnote 115}

[165] In 2023, the GOT unveiled a program to offer incentives to swap currency that is earned abroad into Turkish Lira. Under this program, the GOT would provide 2% conversion support if companies pledge not to buy foreign currencies over a set period. This new program is the latest indication of how the GOT is deploying a broad range of tools to prop up the Turkish Lira.^{Footnote 116}

[166] Exporters were already required to convert 40% of their foreign currency income into Turkish Lira based on rules that were announced in 2022.

[167] Due to the uncertain and turbulent economic outlook in Türkiye, combined with the weak Turkish Lira, Turkish pasta producers may rely heavily on export markets, which could flood the Canadian market. As such, should the CITT’s finding expire, the uncertain and turbulent market conditions in Türkiye increases the likelihood of continued or resumed subsidizing of dry wheat pasta.

Imposition of countervailing measures concerning Turkish pasta in the United States

[168] In the United States, countervailing duties have been imposed on Turkish pasta since 1996.^{Footnote 117} These measures limit Turkish pasta producers’ access to the United States, the largest import market for pasta globally.^{Footnote 118} Due to Canada’s close proximity to the United States, Turkish pasta can easily be diverted to Canada.

[169] On November 28, 2018, the USDOC determined that the revocation of the orders would likely lead to continuation or recurrence of subsidization.^{Footnote 119}

[170] With the continuation of the countervailing measures in the United States, Canada is exposed to diversion risk for the large available volumes of subsidized Turkish pasta. As such, should the CITT’s finding expire, the imposition of countervailing measures concerning Turkish pasta in the United States increases the likelihood of continued or resumed subsidizing of dry wheat pasta.

Determination regarding likelihood of continued or resumed subsidizing

[171] Based on the information on the record in respect of the: continued subsidizing of dry wheat pasta from Türkiye while the finding was in effect; large number of export-oriented pasta producers with excess capacity in Türkiye; uncertain and turbulent market conditions in Türkiye; and imposition of countervailing measures concerning Turkish pasta in the United States, the CBSA has determined that the expiry of finding is likely to result in the continuation or resumption of subsidizing of dry wheat pasta from Türkiye.

Conclusion

[172] 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 and considering any other factors relevant in the circumstances. Based on the foregoing analysis of pertinent factors and consideration of information on the record, on October 12, 2023, the CBSA made a determination pursuant to paragraph 76.03(7)(a) of SIMA that the expiry of the finding made by the CITT on July 26, 2018, in inquiry NQ-2017-005 in respect of dry wheat pasta originating in or exported from Türkiye:

1. is likely to result in the continuation or resumption of dumping of the goods from Türkiye and
2. is likely to result in the continuation or resumption of subsidizing of the goods from Türkiye

Future action

[173] The CITT has now initiated its expiry review to determine whether the continued or resumed dumping and subsidizing are likely to result in injury. The CITT’s expiry review schedule indicates that it will make its decision by March 20, 2024.

[174] If the CITT determines that the expiry of the finding with respect to the goods is likely to result in injury, the finding will be continued 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.

[175] If the CITT determines that the expiry of the finding with respect to the goods is not likely to result in injury, the finding will be rescinded 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.

Contact us

[176] For further information, please contact the officers listed below:

• Telephone:
• Gladys Chau: 343-553-1638

Email: simaregistry-depotlmsi@cbsa-asfc.gc.ca