ARCHIVED - Statement of Reasons

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OTTAWA, November 21, 2001

4366-5
AD/1144

Concerning a determination pursuant to subsection 76.03(7) of the Special Import Measures Act regarding

FRESH GARLIC ORIGINATING IN OR EXPORTED FROM THE PEOPLE'S REPUBLIC OF CHINA

Decision

On November 6, 2001, pursuant to subsection 76.03(7) of the Special Import Measures Act, the Commissioner of Customs and Revenue determined that the expiry of the finding of the Canadian International Trade Tribunal made on March 21, 1997, in Inquiry No. NQ-96-002, concerning fresh garlic originating in or exported from the People's Republic of China, imported into Canada from July 1 to December 31 of each calendar year, is likely to result in the continuation or resumption of dumping of the goods.

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

Statement of Reasons

Summary

On July 9, 2001, the Canadian International Trade Tribunal (Tribunal), pursuant to subsection 76.03(3) of the Special Import Measures Act (SIMA), initiated an expiry review of its finding made on March 21, 1997, in Inquiry No. NQ-96-002, concerning fresh garlic originating in or exported from the People's Republic of China (PRC), imported into Canada from July 1 to December 31 of each calendar year. The purpose of the expiry review is to determine whether the finding should be continued or rescinded.

As a result, the Commissioner of the Canada Customs and Revenue Agency (Commissioner) commenced an investigation on July 10, 2001, to determine whether the expiry of the aforementioned finding is likely to result in the continuation or resumption of dumping of the goods. On the basis of the information available, the Commissioner determined on November 6, 2001, that the expiry of the aforementioned finding is likely to result in the continuation or resumption of dumping of the goods.

The Tribunal will now conduct an inquiry to determine whether the expiry of the finding in respect of the goods is likely to result in injury or retardation to the domestic industry and will make an order by March 20, 2002. If the Tribunal determines that the expiry of the order is likely to result in injury or retardation, the finding will be continued, with or without amendment. If the Tribunal determines that the expiry of the finding is unlikely to result in injury or retardation, the finding will be rescinded.

Background

On March 21, 1997, the Tribunal found that the dumping in Canada of fresh garlic originating in or exported from the PRC had caused material injury to the domestic industry. The finding only applied to fresh garlic imported into Canada from July 1 to December 31 of each calendar year.

Injury findings expire five years from the date of the finding unless an expiry review has been initiated. On May 18, 2001, the Tribunal issued a notice of expiry of finding indicating that the above-mentioned finding was scheduled to expire. The notice of expiry of finding invited opinions from persons or governments requesting or opposing the initiation of an expiry review. On July 9, 2001, the Tribunal initiated a review of the above-mentioned finding as it was of the opinion that such a review was warranted and provided notice to the Commissioner.

On July 10, 2001, the Commissioner initiated an investigation to determine whether the expiry of the finding is likely to result in the continuation or resumption of dumping of the goods. In accordance with the Anti-dumping and Countervailing Directorate's administrative guidelines on the conduct of expiry review investigations pursuant to the Special Import Measures Act (SIMA), any person, including the Canadian producers, importers, exporters, foreign governments, and other interested persons, were allowed to provide information they considered relevant to the decision.

Product Information

Definition

The goods subject to the finding being reviewed are defined as "Fresh garlic, originating in or exported from the People's Republic of China."

Description

Garlic is grown in order to harvest the bulb, which develops underground in much the same way as an onion does. A garlic bulb is made up of numerous layers of skin wrapped around a number of individual segments called cloves, which usually number from four to fifteen. Fresh garlic is used principally as a food product and for seasoning.

The product definition includes all strains of garlic, both ophioscorodon ("hard neck") and sativum ("soft neck"), which are grown in the People's Republic of China (PRC) and are imported into Canada. Such garlic may be in the form of whole bulbs or individual cloves, unpeeled or peeled and may also be cured, trimmed, cleaned and graded. Garlic delivered in cold storage (chilled garlic) is considered "fresh garlic". Dehydrated garlic and processed garlic are not included in the product definition.

Classification of Imports

Garlic is specifically provided for in subheading 0703.20.00.00 of the Harmonized System tariff classification.

Participants

At the onset of the review, the Tribunal provided a notice of the initiation of the expiry review and an expiry review schedule to approximately 175 persons including importers, exporters, associations, Canadian producers, and to the Government of the PRC. Any person or government having an interest in the Commissioner's investigation could provide a submission to the Commissioner containing information that they deemed relevant to the issue. Submissions were received from the following:

• One potential exporter to Canada, Cangshan County Beidouxing Co., Ltd. (Cangshan). It should be noted that the (PRC) Ministry of Foreign Trade & Economic Co-operation provided information on behalf of Cangshan.
• The China Chamber of Commerce for Import & Export of Foodstuffs, Native Produce and Animal By-Products (the Chamber). The Chamber's submission contained general information regarding Chinese exporters, general commercial and marketing information but no proprietary information concerning specific exporters.
• The Garlic Growers Association of Ontario (GGAO). The GGAO submission included an "overall" response from the GGAO as well as submissions from 24 producers containing proprietary confidential data.
• Two importers (Loblaw Brands Limited and Everyday Produce IMP. Exp. Inc.) that responded by the August 15, 2001 deadline indicated in the expiry review schedule. Note: While a response was received on August 30, 2001 from a third importer (Monco Produce Inc.), the response was not taken into consideration by the Commissioner due to its late submission.

Case Arguments

The process regarding the Commissioner's investigation permits all parties to the proceeding and interested persons to submit arguments in writing to the Commissioner regarding the likelihood of continued or resumed dumping if the finding is permitted to expire. As well, all parties to the proceeding and interested persons may make reply submissions in response to case arguments made by other parties to the proceeding and other interested persons. Arguments and reply submissions must be based on the information that was before the Commissioner on the date the record closed (August 29, 2001).

Case arguments and reply submissions were received from Cangshan, the Chamber and the GGAO. Any portion of the arguments or reply submissions not based on information before the Commissioner at the time the record closed could not be taken into consideration and the person presenting the argument or reply submission was advised accordingly. Copies of the confidential versions of case arguments and reply submissions, including the identification of those portions which could not be taken into consideration, were made available to all persons or parties whose disclosure undertakings had been accepted. Public versions of these documents were made available to any party or person requesting a copy.

Consideration and Analysis

Subsection 76.03(7) the SIMA, requires the Commissioner to determine whether the expiry of a finding in respect of goods of a country or countries is likely to result in the continuation or resumption of dumping of the goods. Pursuant to section 37.2 of the Special Import Measures Regulations, the Commissioner, in making the determination, may consider any factor specifically identified in paragraphs (a) to (i) of that regulation as well as any other factors that are relevant in the circumstances. The following factors were of particular relevance in this review:

• Dumping of subject goods while the finding in respect of fresh garlic imported from July to December of each calendar year is in effect;
• The imposition of other anti-dumping measures in Canada in respect of fresh garlic imported from the PRC from January to June of each calendar year;
• The normal value of the subject goods;
• The potential for a "shift" in import patterns due to the anti-dumping measures in Canada in respect of fresh garlic imported from January to June of each calendar year;
• The imposition of anti-dumping measures by authorities of a country other than Canada in respect of garlic from the PRC;
• The imposition of trade restrictions, other than anti-dumping measures, by authorities of a country other than Canada in respect of garlic from the PRC; and
• The potential for the diversion of dumped goods into Canada resulting from all trade measures in respect of PRC garlic taken by the authorities of a country other than Canada.

An analysis of each factor follows. The analysis was based on the information that was before the Commissioner on the date the record closed.

Dumping of subject goods while the finding in respect of fresh garlic imported from July to December of each calendar year is in effect

• The following table compares the average price of imports of PRC garlic, based on Statistics Canada data, and the normal value for the corresponding period.

Year (July 1 - Dec 31)	Average price of imported PRC garlic ($/kg)	Normal valueduring the period ($/kg)	Avg. Price / N.V. (%)
1997	$1.81	$1.91	94.8 %
1998	$1.20	$1.91	62.8 %
1999	$0.92	$1.91	48.2 %
2000	$1.02	$1.91	53.4 %

With respect to 1997, the data indicates that the average price was equal to approximately 95 % of the normal value. However, as explained in Customs Notice N-230, Fresh Garlic From the People's Republic of China, evidence was found of false declarations of selling prices that lead to widespread avoidance of anti-dumping duties. As explained in the Notice, reliable evidence collected from alternative sources indicated the average selling price to be $0.92 / kg (48.2 % of the appropriate normal value). With respect to the remaining years, it can be seen that the average price of imports is also significantly lower than the applicable normal value.

• With respect to the selling price for the July to December 2001 period, price offers from two Chinese exporters of fresh garlic were included in the submission from the GGAO. The prices included in one offer range from $0.46 / kg to $0.61 / kg, while prices in the second offer range from $0.77 / kg to $0.81 / kg. A comparison of the quoted selling price with the normal value currently in place yields substantial margins of dumping.
• Information collected from CCRA enforcement data is summarized in the following table.

Year (July 1 - Dec 31)	Volume imported (kg)	Volume dumped (kg)	Percentage Volume dumped
1997	2,011,225	690,847	34.3 %
1998	1,498,395	1,495,514	99.8 %
1999	383,437	359,421	93.7 %
2000	194,040	186,503	96.1 %

With respect to 1997, the data indicates that approximately 34 % of the goods imported into Canada were dumped. While this is a significant proportion, it should be noted that, as previously explained, an investigation revealed evidence of false declarations of selling prices leading to widespread avoidance of anti-dumping duties during that period. While it was not possible to calculate the resulting difference in the proportion of dumped goods, it can be estimated that, in view of the substantial difference between the declared average price ($1.81/kg) and the revised average price ($0.92), the difference would be significant. With respect to the remaining years, it can be seen that almost all the subject goods were assessed anti-dumping duties. [Administrative Note: The "percentage volume dumped" is actually 100%, given that the export price determined by ministerial specification ($0.92) is lower than the applicable normal value, ($1.91). However a discrepancy will occur due to the difference between the date of accounting, on which the statistics are based, and the date of release, on which the application of anti-dumping duties is based. For example, a shipment could have been released from Customs possession on June 30, 2000, but not accounted for until July 2, 2000. While the shipment would have been included in the July to December statistics, given its date of accounting, the shipment would not have been assessed anti-dumping duties because the 1997 finding only applied to shipments released from Customs possession on or after July 1.]

Analysis: The above information indicates that imports of fresh garlic continued to be dumped during the period in which the Tribunal finding was in effect and that they would likely continue to be dumped if the finding was allowed to expire.

The imposition of anti-dumping measures in Canada in respect of fresh garlic imported from the PRC from January to June of each calendar year, and the price of subject imports from January to June 2001

• On April 2, 2001, the Commissioner made a final determination of dumping regarding, inter alia, fresh garlic originating in or exported from the PRC and released from Customs' possession from January 1 to June 30 of each calendar year. The CCRA's analysis of imports from the PRC during the period January 1, 2000 to June 30, 2000, revealed that 99.5 % of the subject goods were dumped. The margins of dumping ranged from 2.6 % to 92.7 %, expressed as a percentage of normal value. The weighted average margin of dumping was 68.1%, expressed as a percentage of normal value or 213.4 % expressed as a percentage of export price. On May 2, 2001, the Tribunal issued a finding of injury with respect to the goods subject to the second anti-dumping investigation.
• The estimated normal value used for the purposes of the preliminary determination was $2.27 / kg. The normal value of the subject goods imported after the provisional period, that is, after the May 2, 2001 Tribunal finding was determined to be $2.50 / kg.
• CCRA information on the record indicates that the average price for PRC fresh garlic imported January 1 - June 15, 2001 was $0.86 / kg (figures for June 16 - 30 were not available).
• CCRA information on the record indicates that the weighted average price of imported PRC garlic from May 1, 2001 to June 15, 2001 was $1.08/ kg (figures for June 16-30 were not available).
• The information regarding the weighted average import prices for the first two quarters of 2001, provided by two importers in their response to the questionnaire that was forwarded to importers at the beginning of the expiry review investigation, was also taken into consideration.

Analysis: In essence, the goods, exporters and importers involved in the 2001 Tribunal finding (relating to the January to June imports) are the same as those involved in the 1997 Tribunal finding (relating to July to December imports). The facts that a final determination of dumping was made with respect to the fresh PRC garlic imported from January to June and that the price of the subject goods imported during this period is significantly lower than the normal value, are indicative of exporters' tendency to dump as well as the likelihood of continued dumping should the Tribunal finding be allowed to expire.

The normal value of the subject goods

• Cangshan, with the support of the Chamber, has submitted that:
  • the April 2, 2001 normal value is flawed in that it is greater than domestic prices obtained in the PRC and in that it is greater than the price of Mexican garlic imported into Canada. (Note: The April 2, 2001 normal value applies to both the final determination of dumping concerning the goods imported in the January to June period as well as to the reinvestigation of the normal value of goods imported in the July to December period.);
  • the selection of the surrogate country used in establishing the normal value is flawed;
  • the normal value is fictitious in that it is not based on facts gathered in the PRC;
  • as part of an expiry review proceeding concerning an order or finding against a country that the Commissioner previously determined to be a non-market economy, the Commissioner must undertake an investigation regarding the country's economy with respect to the goods at issue before reaffirming the previous position; and
  • with respect to Cangshan, the normal value should be recalculated based on new information it is willing to provide.
• On August 28, 2001, the (PRC) Ministry of Foreign Trade and Economic Co-operation (MOFTEC) provided information describing the economic environment in the PRC as well as various laws in the PRC. The purpose of this information is to demonstrate that the garlic industry in the PRC is operating under market economy conditions and that consequently, the normal values should be based on the domestic selling price (i.e., section 15 of SIMA) or the cost of production in the PRC (i.e., section 19 of SIMA) rather than in a surrogate country (i.e., section 20 of SIMA).

By way of background information, normal value reinvestigations are undertaken by the CCRA in order to update the normal values to be used in the calculation of the amount of anti-dumping duty to be paid. Reinvestigations are conducted in accordance with detailed administrative guidelines and generally require four to six months to complete. They normally involve on-site verifications in respect of the information provided by participating exporters. In cases involving countries that have been traditionally considered to be non-market economies, an additional step has been included in the process, by which foreign governments and exporters are afforded the opportunity to provide information they consider would alter the Commissioner's opinion regarding the nature of the economic environment in which the foreign industry is operating. This information is also subject to a thorough analysis and ultimately, an on-site verification, providing all the requested information has been submitted.

The most recent reinvestigation of the garlic subject to the finding under review was initiated October 31, 2000 and concluded April 2, 2001. At the time of the initiation, the Government of the PRC was provided the opportunity to furnish the CCRA with the above-mentioned information. It declined to do so at that time. Had the information been supplied to the CCRA, it would have been analyzed, the appropriate follow-up details would have been requested and ultimately an on-site verification may have been undertaken.

Similarly, the other objections regarding the calculation of the normal value that have been presented by Cangshan and the Chamber should have been discussed and resolved within the context of the normal value reinvestigation.

It is also important to stress that the fact that Cangshan, a potential exporter of whom the CCRA had no knowledge, was not provided the opportunity to present its point of view in the reinvestigation is not a reason to discount the results of the recent reinvestigation. Other producers that are members of the Chamber and who have exported to Canada, as well as the Government of the PRC, could have made the above-mentioned allegations within the reinvestigation process

• The normal value calculated at the time of the recent reinvestigation was established pursuant to SIMA after due process; a process in which the Government of the PRC, all known exporters and importers were invited to participate.

Analysis: The April 2, 2001 normal value resulting from the reinvestigation was established in conformity with SIMA after due process; a process in which the Government of the PRC, all known exporters and importers were invited to participate. Given that the information contained in the MOFTEC submission does not demonstrate that there have been significant changes in the economic environment (with respect to PRC garlic), since that date, the April 2, 2001 normal value is still applicable.

The potential for a "shift" in import patterns should the 1997 Tribunal finding be allowed to expire

• There are currently two Tribunal findings in place regarding fresh garlic originating in or exported from the PRC. The 1997 finding includes imports from July to December of each calendar year while the 2001 finding includes those imports from January to June of each calendar year. The GGAO has raised its concern that if the "July to December" finding is allowed to expire, the importing community will shift its importing pattern in order to avoid the application of anti-dumping duties, that is, the bulk of the garlic would be imported in the July to December period.

The fact that the timing of imports of fresh garlic can be shifted was established by the facts after the 1997 finding. As stated in the Tribunal statement of reasons concerning the 2001 finding:

"The seasonal distribution of imports from China has changed since the 1997 finding which resulted in anti-dumping duties being applied for the six-month period between July and December. In the last full year before the 1997 finding, approximately 92 percent of the fresh garlic imported from China entered Canada between July 1 and December 31. After the 1997 finding, the pattern of the imports reversed. In 1998, approximately 70 percent of the fresh garlic imports from China entered Canada between January 1 and June 30, the six-month period that falls outside of the 1997 finding. By 2000, approximately 98 percent of the fresh garlic imported from China entered Canada in the first half of the year and 50 percent of the annual import volume entered in the months of May and June."¹

In response to the GGAO's claim, Cangshan and the Chamber argued that there were already significant volumes of PRC garlic imported during the first half of 2001, a period in which provisional duties and anti-dumping duties were in place. While this statement may be true, it must also be noted that the alternative of waiting until the second-half of 2001 did not offer much relief to importers. If they chose to delay their imports to the second half of the year, anti-dumping duties would still be applicable in view of the 1997 finding. As well, given that imports in the second half of 2000 had been kept at relatively low levels, due to the application of the 1997 finding, importers would presumably be anxious to obtain fresh supplies in the first half of 2001.

It has also been argued that there will always be imports of garlic in the first half of the year (i.e. there will be no shift of imports from the first half to the second half of the year), given that there is no Canadian garlic available in the first six months. This argument is contrary to the importing pattern prior to the first finding, which demonstrated that 92% of the garlic came into Canada in the July to December period. As well, given that garlic can be stored for long periods of time in temperature-controlled conditions, nothing would prevent importers from bringing in the PRC garlic in late December and distributing it in the first six months of the following year. This would seem to parallel the high volume May-June imports mentioned in the Tribunal's statement of reasons.

Analysis: Importers have clearly demonstrated that they are able to shift their importing patterns from one half of the calendar year to the other. Therefore if the 1997 finding were allowed to expire there would most likely be a reversal of the change in import pattern that occurred after the 1997 Tribunal finding; that is, dumped imports from the PRC would shift back to the July to December period. Therefore, not only is there a likelihood of continued dumping, there is also a likelihood of increased volume of dumped goods in the July to December period.

The imposition of anti-dumping measures by authorities of a country other than Canada in respect of garlic from the PRC

• Information on the record indicates that two other administrations, the United States of America (USA) and South Africa, have anti-dumping measures in place concerning fresh garlic from the PRC.
• With respect to the anti-dumping measures in place in the USA, on July 5, 2000 the Import Administration of the Department of Commerce (DOC) issued its notice of final results of an expedited sunset review concerning fresh garlic from the PRC. The results of the review indicated that the revocation of the anti-dumping duty order would be likely to lead to a continuation or recurrence of dumping at a weighted average margin of 376.67 % (PRC wide). It should also be noted that various anti-dumping administrative reviews, a process somewhat similar in principle to the Canadian normal value reinvestigations, have been undertaken by the USA administration with respect to imports during specific periods or by specific exporters. Information on the record indicates that the 376.67 % average margin of dumping has been maintained in the various decisions issued by the DOC.

Cangshan has argued that the USA decision regarding the sunset review is not relevant given that Cangshan did not participate in the review and that the USA authorities did not have the information that Cangshan submitted to the Canadian authorities. They have argued that the DOC decision should not influence the CCRA, who should conduct an independent review of the evidence. In its arguments, Cangshan also stated that it was a well-known fact that political will and domestic interested groups can influence the DOC. Cangshan offered seven examples of complaints under the WTO Dispute Settlement Understanding against the USA in respect of decisions rendered by the DOC.

• With respect to the anti-dumping measures in place in South Africa, on October 20, 2000, the Board on Tariffs and Trade (the Board) issued its final determination regarding the investigation into the alleged dumping of garlic originating in or imported from the PRC. The Board determined that the subject goods were being dumped, the domestic industry suffered material injury, and there was a causal link between the dumping of the subject goods and the material injury. The Board recommended to the Minister of Trade and Industry that anti-dumping duties be imposed on the subject goods in the amount of R 6.07 / kg (approximately $ 1.02 / kg) and that the duties be retroactive to March 24, 2000.
• In Cangshan's Submission of Arguments, supported by the Chamber, Cangshan argues that the anti-dumping duties imposed against PRC garlic by the USA and South Africa are protectionist trade-restrictive measures that are contrary to the WTO Agreements and are imposed by countries that have taken advantage of the fact that the PRC is not a member of the WTO.

Analysis: The Commissioner has a responsibility to consider the information that is submitted to the record. Regulation 37.2(1)(f) of the Special Import Measures Regulations specifically provides the Commissioner with the authority to consider evidence of the imposition of anti-dumping measures by the authorities of other jurisdictions. The anti-dumping measures in place in the USA and in South Africa are factual events that are well documented on the record. The information in these documents does indicate that there is a tendency on the part of exporters of PRC garlic to dump the subject goods, albeit in the two aforementioned markets and without the information submitted by Cangshan. The CCRA does not concur with Cangshan's and the Chamber's qualification of these trade actions as being protectionist trade measures.

Cangshan has rightly argued the point that the CCRA must conduct its own investigation into this matter. As previously mentioned, the CCRA recently conducted an investigation regarding the dumping of PRC garlic imported in the first six-month period of the calendar year and a reinvestigation of the normal value of the PRC garlic imported in the second six-month period of the calendar year; both investigations independent of the US investigations.

The imposition of trade restrictions, other than anti-dumping measures, by authorities of a country other than Canada in respect of garlic from the PRC

• Information on the record indicates that PRC garlic can not be imported into Mexico because of a phyto-sanitary ban.
• As well, the information indicates that since June 1, 2000, Korea imposed a safeguard measure concerning garlic. The safeguard measures are scheduled to end December 31, 2002. While the safeguard measures are imposed on all countries, it is apparent from the Korean Trade Commission's (KTC) July 23, 2001 notification to the WTO Committee on Safeguards, following a mid-term review, that PRC garlic is an important consideration in the decision to impose and maintain the safeguard measures. In section 3 of the document (#G/L/457, G/SG/N/13/KOR/2), it is stated that:

"Considering the comparative advantage of China's garlic industry in terms of its supply capacity and price competitiveness, the KTC determined that the withdrawal of the safeguard measures would lead to an increase of imports of garlic, fresh peeled garlic in particular, and again cause serious injury to the domestic garlic industry."

Analysis: Trade restriction measures such as phyto-sanitary bans, import quotas and other safeguard measures, are not proof of dumping. However, these measures may have an influence on the likelihood of continued dumping. This issue will be discussed in the next item.

The potential for the diversion of dumped goods into Canada resulting from all trade measures in respect of PRC garlic taken by the authorities of a country other than Canada

• It has been demonstrated that the USA and South Africa have anti-dumping measures in place regarding fresh garlic from the PRC. It has also been demonstrated that Korea and Mexico have other forms of trade measures in place regarding fresh garlic from the PRC.
• The GGAO has argued that there are substantial barriers to imports from the PRC in other markets that would make Canada an attractive target for dumped imports should the 1997 finding be allowed to expire.
• In their rebuttal arguments, Cangshan and the Chamber have questioned the use of the word "substantial". It argues that the Korean quota for the year 2001 and 2002 is high and that safeguard measures will end December 31, 2002. It further submits that South Africa has been a small market for the PRC (416 MT in 1999 and 353 MT in 2000). While it has also argued that only a small percentage of the garlic produced in the PRC is exported, it should be noted that the PRC is the world's largest producer of garlic, producing approximately 6.5 million MT of the 10 million MT produced worldwide. The PRC produces more than 12 times the amount of garlic than the second largest producing country.
• The Food and Agricultural Organization of the United Nations has compiled the following information regarding PRC garlic production.

Year	Production Qty (MT)	Exported Qty (MT)	Exports/Production %
1996	5,614,198	145,311	2.6 %
1997	5,690,336	163,537	2.9 %
1998	5,814,066	157,567	2.7 %
1999	5,986,289	290,847	4.9 %
2000	6,466,289	N/A	N/A

A review of the above table indicates that the garlic production in the PRC has increased by 10 % between 1997, the year of the Tribunal finding, and 2000. It also appears that in 1999, the rate of growth in the export market has surpassed the rate of growth in the production quantity. The 1998 and 1999 data indicates that approximately 77% of the 172,223 MT increase in production quantity was accounted for by the increase in exported quantity (133,280 MT). If this pattern continued from 1999 to 2000, it would yield an increase of approximately 370,000 MT in exported quantity from the 1999 level. The exported quantity level for 2000 would be approximately 660,000 MT, which is approximately 225 % the size of the 1999 export level.

• Cangshan also argued that Mexico, having had the phyto-sanitary ban in place for several years, does not represent a new possibility of diversion.

Analysis: Regardless of the size of the markets that have measures in place to restrict the importations of PRC garlic, and regardless of the nature of the restriction, the fact remains that exporters in the PRC may very well face a decreasing (or non-existent) sales level in these markets. This, by itself, would indicate a possibility of diversion of dumped goods to Canada should the 1997 finding be allowed to expire. However, the possibility of diversion becomes more significant and probable when coupled with the significant increase in domestic production in the PRC, and what appears to be an increasing level of exports.

Other Issues

Cangshan submitted that the 1997 finding should be rescinded insofar as it applies to Cangshan. It further submitted that this partial rescission of the finding will not likely result in the continuation or resumption of dumping. Cangshan provided information to the CCRA that, in Canshan's opinion, ensured that if it were to ship any garlic to Canada in the future, it would not be considered to be dumping it into the Canadian market. Included in the submission were the allegations of flawed normal values, flawed surrogate country, the claim that the garlic industry in the PRC was operating in market economy conditions and details concerning domestic selling prices. Furthermore Canshan argued that since it had never exported to Canada, and hence never dumped the subject goods into Canada, there could be no likelihood of "continued" or "resumed" dumping since both these terms imply a previous action.

The scope of the 1997 finding which is under review included all fresh garlic originating in or exported from the PRC, regardless of the producer. Cangshan's product falls within the scope of the finding and if Cangshan exports PRC garlic to Canada it would be subject to the anti-dumping measures in place. Cangshan's claim that its goods would not be found to be dumped is based on the premise that its statements regarding a flawed normal value, surrogate country, market economy, etc. are correct. Given that the CCRA has not accepted these claims as being correct, Cangshan's conclusions regarding the dumping margin of its goods can not be accepted.

Conclusion

The following factors are particularly relevant in these proceedings:

• The subject goods continued to be dumped in the July to December period of each calendar year, while the Tribunal finding was in effect;
• On April 2, 2001, the Commissioner made a final determination concerning the fresh garlic from the PRC imported into Canada from January 1 to June 30 of each calendar year;
• The normal value calculated at the time of the recent normal value reinvestigation concerning the goods subject to the finding under review remains valid;
• There exists a potential for a "shift" in imports from the January - June period to the July - December period should the July - December finding be allowed to expire;
• Authorities of other countries have imposed anti-dumping measures in respect of garlic from the PRC;
• There exists a potential for the diversion of dumped goods into Canada resulting from trade measures (dumping or otherwise) imposed by the authorities of other countries in respect of garlic from the PRC.

As a result, the Commissioner has determined that the expiry of the Tribunal finding concerning fresh garlic originating in or exported from the People's Republic of China, imported into Canada from July 1 to December 31 of each calendar year, is likely to result in the continuation or resumption of dumping of the goods.

Future Action

The Tribunal will now consider whether the expiry of the finding is likely to result in injury or retardation to the domestic industry.

If the Tribunal determines that the expiry of the finding is likely to result in injury or retardation, the finding will be continued, with or without amendment. If this is the case, the CCRA will continue to levy anti-dumping duties on importations of the subject goods that are imported into Canada at dumped prices.

If the Tribunal determines that the expiry of the finding is unlikely to result in injury or retardation, the finding will be rescinded. Anti-dumping duties would no longer be levied on importations of the goods in question from the date the finding is rescinded.

Information

For further information, please contact Ms. Kelly McIntyre as follows:

Mail

Canada Customs and Revenue Agency
Anti-dumping and Countervailing Directorate
100 Metcalfe Street, 11^th Floor
Ottawa, Ontario
Canada
K1A 0L8

Telephone
(613) 941-6340

Telefax
(613) 954-2510

e-mail
Kelly.McIntyre@ccra-adrc.gc.ca

Website
www.cbsa-asfc.gc.ca/sima-lmsi/
www.cbsa-asfc.gc.ca/sima-lmsi/

Denis Lefebvre
Assistant Commissioner
Customs Branch
Ottawa, November 21, 2001
File No. 4366-5

NQ-2000-006, Garlic, fresh or frozen, originating in or exported from the People's Republic of China and Vietnam, excluding fresh garlic subject to the finding made in the Canadian International Trade Tribunal Inquiry No.NQ-96-002, May 2, 2001, p. 9-10.