ARCHIVED - Statement of Reasons

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OTTAWA, February 27, 2002

4366-7
AD/1155

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

CONCRETE PANELS, REINFORCED WITH FIBERGLASS MESH, ORIGINATING IN OR EXPORTED FROM THE UNITED STATES OF AMERICA

Decision

On February 12, 2002, 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 June 27, 1997, in Inquiry No. NQ-96-004, concerning concrete panels, reinforced with fiberglass mesh, originating in or exported from the United States of America and produced by or on behalf of Custom Building Products, its successors or assigns, for use or consumption in the province of British Columbia or Alberta, 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.

Summary

On October 15, 2001, the Canadian International Trade Tribunal (Tribunal), initiated an expiry review of its finding made on June 27, 1997, in Inquiry No. NQ-96-004, concerning concrete panels, reinforced with fiberglass mesh, originating in or exported from the United States of America and produced by or on behalf of Custom Building Products, its successors or assigns, for use or consumption in the province of British Columbia or Alberta.

As a result of the Tribunal's action, the Commissioner of Customs and Revenue (Commissioner) commenced an investigation on October 16, 2001, to determine whether the expiry of the Tribunal's finding is likely to result in the continuation or resumption of dumping of the subject goods. On the basis of the information available, the Commissioner determined, on February 12, 2002, that the expiry of the 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. The Tribunal will make a decision on this matter by June 26, 2002. If the Tribunal determines that the expiry of the order is likely to result in injury or retardation, the finding will be continued. If the Tribunal determines that the expiry of the finding is unlikely to result in injury or retardation, the finding will be rescinded.

Background

A dumping investigation was initiated on November 29, 1996, following a complaint filed by Bed-Roc Industries Limited (Bed-Roc). Although another United States producer, USG Corporation, was exporting concrete panels to Canada, only Custom Building Products was accused of dumping subject goods and causing injury to the complainant. Thus, only Custom Building Products was involved in the anti-dumping investigation.

At the time the complaint was filed, there were two Canadian producers of concrete panels reinforced with fibreglass mesh. The complainant was located in Surrey, British Columbia, while the other producer, Unifix Inc. (Unifix), was located in Bromont, Quebec. Unifix was not interested in filing a dumping complaint against Custom Building Products.

Under the Special Import Measures Act (SIMA), the territory of Canada may, for the purpose of determining the production of any goods, be divided into two or more regional markets, and the domestic producers of the goods may be considered a separate domestic industry provided certain requirements are met. That is, the producers in that region sell all or almost all of their production of like goods in that market and the demand in the market is not to any substantial degree supplied by producers located elsewhere in Canada. Prior to the initiation of the anti-dumping investigation, it was confirmed that all of the criteria required for a "regional market" had been met, and that British Columbia and Alberta form one regional market.

On June 27, 1997, the Tribunal found that the dumping in Canada of certain concrete panels originating in or exported from the United States had caused material injury to the domestic industry. The finding applied only to exports by Custom Building Products, its successors or assigns, for use or consumption in the regional market of British Columbia and Alberta.

Injury findings expire five years from the date of the finding unless an expiry review has been initiated. On August 24, 2001, the Tribunal issued a notice indicating that the above-mentioned finding was scheduled to expire. The notice invited submissions from persons or governments requesting or opposing the initiation of an expiry review. On October 15, 2001, the Tribunal initiated a review of the above-mentioned finding as it was of the opinion that such a review was warranted. Notice of this decision was provided to the Commissioner.

On October 16, 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 administrative guidelines on the conduct of expiry review investigations pursuant to SIMA, interested parties, including the Canadian producers, importers, exporters, foreign governments, and other interested persons, were requested to provide information they considered relevant to the Commissioner's investigation.

Product Information

Definition

The goods subject to this investigation are defined as concrete panels, reinforced with fiberglass mesh, originating in or exported from the United States of America and produced by or on behalf of Custom Building Products, its successors or assigns, for use or consumption in the province of British Columbia or Alberta.

Description

Concrete panels, commonly referred to as tile backer board, are used mainly in the construction industry as a backing board for ceramic tile installations around showers, tubs and other wet areas and as an underlayment for ceramic tile, slate and marble floors and countertops. Such goods are also used for exterior sheathing and for wall shields and floor protectors around fireplaces, wood stoves and heaters.

There are several producers of concrete panels, reinforced with fiberglass mesh, in the United States that export to the regional markets of British Columbia and Alberta. However, only concrete panels produced by Custom Building Products are subject to the Tribunal's injury finding of June 27, 1997.

The subject goods produced by Custom Building Products may be described as an aggregated portland cement-based board, reinforced with a fiberglass mesh embedded in both surfaces. The imported goods are sold under the trade names The Original WonderBoard, Multi+WonderBoard and Floor+WonderBoard. The three types of WonderBoard are available in a variety of sizes including 48", 60" and 90" lengths. All boards are sold in 36" widths. Concrete panels reinforced with fiberglass mesh are sold by the complainant, Bed-Roc, and the other Canadian producer, Unifix, under the tradenames Super Panel and Unipan. USG Incorporated, another major producer in the United States, sells its product under the tradenames Durock and Duracrete.

Classification of Imports

When imported into Canada, the subject goods are properly classified under the Harmonized System classification number 6810.19.00.00.

Participants

Questionnaires were sent to the complainant (Bed-Roc), the exporter (Custom Building Products), the importer (Custom Building Products of Canada) and to the other Canadian producer (Unifix). Questionnaires were also sent to a Canadian distributor of Unifix products (Westroc Industries), to other producers in the United States that may be exporters (USG Corporation, Eternit, Inc. and Fin Pan Incorporated), and to other companies that may be importers (CGC Inc., Olympia Tile). Finally, questionnaires were sent to companies in the United States that make products which can be substituted for concrete panels and may be exported into the regional market of British Columbia and Alberta (Georgia Pacific Corp. and James Hardie Building Products).

Questionnaires were sent to exporters of substitutable products at the request of the Tribunal. This information was requested primarily to address the question of resumed injury, should the Commissioner make a positive determination on the likelihood of resumed dumping.

Submissions were received from Bed-Roc, USG Corporation and its related importer, CGC Inc. Submissions were also received from Westroc Industries and Eternit, Inc. The Westroc Industries' submission contained statistical information related to that company's sales of subject goods into the regional market of British Columbia and Alberta. Eternit, Inc. responded that it neither produces the subject goods nor exports them to Canada. No other responses were received.

Participants are divided into two broad classes, "parties to the proceeding" and "interested persons". Both groups are allowed to file any information that they feel pertinent and may file case arguments and reply submissions. The main difference between the two groups is that the "interested persons" are not permitted access to confidential or protected information.

A person is regarded as a "party to the proceeding" if the person has a direct interest in the outcome of the proceeding and actively participates in the proceeding. In dumping expiry reviews, only exporters, importers and Canadian producers may be considered parties to the proceeding.

In this expiry review, only Bed-Roc, USG Corporation and CGC Inc. were considered parties to the proceeding, as these companies have a direct interest in the outcome of the proceeding and actively participated in the proceeding by providing a complete response to the Commissioner's request for information. Custom Building Products did not provide a response to the Commissioner's request for information. As it did not actively participate in the proceeding, Custom Building Products was considered an interested party. Counsel for Custom Building Products was informed of this decision and was invited to access non-confidential information and to file case arguments and reply submissions. No case arguments or submissions were received.

Case Arguments

In the Commissioner's investigation, all parties may present case arguments and rebuttals. In this case, case arguments were submitted by Bed-Roc and USG Corporation. No rebuttals were received.

Both of the briefs received by the Commissioner supported the position that the expiry of the Tribunal's finding would result in the continuation or resumption of dumping of the subject goods into the regional market of British Columbia and Alberta.

Copies of the confidential versions of case arguments were made available to all counsel for parties to the proceeding that submitted valid disclosure undertakings. Public versions of these documents were made available to any party or person requesting a copy.

Consideration and Analysis

Subsection 76.03(7)(a) of SIMA, requires the Commissioner to determine whether the expiry of the order or 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 considered in this investigation:

1. Whether there has been dumping of goods while a finding or order in respect of the goods is in effect and, if applicable, (i) the period during which the dumping occurred, (ii) the volume and prices of the dumped and non-dumped goods, (iii) the margin of dumping, and (iv) for non-dumped goods, the amount by which the export prices exceed the normal values of the goods.

Although there has been no dumping of the subject goods into the regional market of British Columbia and Alberta while the finding has been in effect, neither have there been any exports of the subject goods into the regional market by Custom Building Products. The absence of exports is considered significant and is discussed further under the last criteria listed in subsection 37.2(1) of the Special Import Measures Regulations, i.e. "any other factors that are relevant in the circumstances".

1. The performance of the exporters, foreign producers, brokers and traders including, where applicable, in respect of production, capacity utilization, costs, sales volumes, prices, inventories, market share, exports and profits.

With respect to the performance of the exporter, it is Bed-Roc's understanding that since the Tribunal's finding of June 27, 1997, Custom Building Products has opened additional manufacturing facilities in the United States which provide increased capacity to export concrete panels into the regional market of British Columbia and Alberta.

This statement was supported by Westroc Inc. which listed Frankfort, Indiana, as a production facility for subject goods produced by Custom Building Products. Previously, Custom Building Products had identified production facilities in Bakersfield, California, Bridgeport, New Jersey and Lithia Springs, Georgia.

1. Changes in market conditions domestically or internationally, including changes in the supply of and demand for the goods, in sources of imports into Canada, and in prices, market share and inventories.

Bed-Roc noted that the market for concrete panels is dependent on construction activity. With respect to current market conditions for concrete panels and forecasts for the short term, Bed-Roc suggests that, since 1998, the value of residential construction permits has declined in British Columbia and Alberta. A review of industry statistics developed by the Canadian Construction Association and data compiled by Statistics Canada supports Bed-Roc's observations. Going forward, Bed-Roc's view is that Alberta is expected to experience a significant contraction in construction activity. In this regard, Bed-Roc made no comments concerning future market size in British Columbia.

The above-mentioned evidence suggests a softening of the market for concrete panels in British Columbia and Alberta in the near term. Bed-Roc submits that, under such conditions, there will be a climate in which the expiry of the finding would likely result in the continuation or resumption of dumping of concrete panels in the regional market of British Columbia and Alberta.

CGC Inc. appears to support this view. In its submission, CGC Inc. stated that the demand for concrete panels is weakening in traditional markets due to the additional costs to install cement board as opposed to gypsum-based alternatives. Unions are negotiating premiums to install cement board in some metropolitan markets. In the long term, there will be a stable level of growth with a potential for a slight slowdown in the next couple of years.

1. Other factors that are relevant in the circumstances.

Bed-Roc submits that the import statistics compiled by the Commissioner and the absence of a normal value review since the Tribunal's finding indicate that Custom Building Products was unable to compete in the regional market of British Columbia and Alberta at undumped prices. It follows that, if the finding is rescinded, exports of subject goods by Custom Building Products are likely to re-appear in that market at dumped prices.

Under the former expiry review regime, the Tribunal found that the cessation of imports following a positive injury finding is a strong indicator that dumping will continue or resume if an order is rescinded.

Paint Brushes Using Natural Hog Bristle As The Filament Material, And The Components Thereof Known As "Heads," Originating In Or Exported From The People's Republic Of China Review No.: RR-98-002

Since the responsibility for the question of the likelihood of continued or resumed dumping was transferred from the Tribunal to the Canada Customs and Revenue Agency, the CCRA as continued to attach considerable weight to the absence of imports following an injury finding. For example, in Certain Carbon Steel Welded Pipe Originating in or Exported From Argentina, Brazil, Chinese Taipei, India, Romania, Thailand and Venezuela AD/922/774 (March 23, 2001) the Commissioner stated the following:

For all intents and purposes, exporters from the named countries have not exported subject goods to Canada nor applied to the CCRA for normal values that would allow them to participate in the Canadian market at undumped prices. This absence of imports indicates that exporters either could not participate in the Canadian market at undumped prices or they chose not to participate because of other reasons, i.e., strong domestic demand, export markets closer to their home market or access to the United States market. It should be noted that there are two companies that have had normal values since 1994 and neither company has attempted to establish a presence in the Canadian market. This indicates that they may not be able to compete in the Canadian market at prices equal to the normal value.

Similarly, in Oil And Gas Well Casing Originating in or Exported From The Republic Of Korea and The United States Of America AD/683 (March 2, 2001), the Commissioner reasoned as follows:

In summary, Korea has not exported subject goods to Canada since 1989 indicating an inability to compete in Canada at undumped prices, has significant production capacity coupled with no domestic market, and has a history of dumping subject and similar goods in Canada and in foreign markets. For these reasons, the Commissioner has determined that the expiry of the order with respect to Korea is likely to result in the continuation or resumption of dumping.

Bed-Roc noted that the Commissioner's analysis in the cases noted above is consistent with the approach typically taken by the U.S. Department of Commerce in the conduct of its five-year reviews. Specifically, Policy Bulletin 98:3 (April 10, 1998), states that:

Existence of dumping margins after the order, or the cessation of imports after the order, is highly probative of the likelihood of continuation or recurrence of dumping...If imports cease after the order is issued, it is reasonable to assume that the exporters could not sell in the United states without dumping and that, to reenter the U.S. market, they would have to resume dumping. Therefore, the Department normally will determine that revocation of an antidumping order or termination of a suspended dumping investigation is likely to lead to continuation or recurrence of dumping where - ... 
(b) imports of the subject merchandise ceased after issuance of the order or the suspension agreement, as applicable...(emphasis added).

Bed-Roc's arguments were supported by the case arguments filed by USG Corporation. Specifically, it was stated that Custom Building Products and Custom Building Products of Canada have competed on the basis of price and caused injury to Bed-Roc during the period 1994 to 1996 and have failed to demonstrate an ability to export to Canada without dumping during the five-year period subsequent to the making of the Tribunal's finding. Indeed, Custom Building Products has not exported to the regional market since the finding and, therefore, has not shown, by way of positive evidence, that it is able to participate in that market without dumping.

USG Corporation noted that a comparison of market conditions and other factors prior to and subsequent to the finding would be useful in deciding whether expiry of the Tribunal's finding is likely to result in the continuation or resumption of dumping of the goods. However, this analysis was not possible as Custom Building Products refused to provide information in response to the Commissioner's request for information. In USG's view, Custom Building Products has shown a clear disregard of the processes and procedures of the SIMA. Thus, Custom Building Products has not provided any arguments that would support the contention that if the finding were allowed to expire, Custom Building Products would not resume the dumping of subject goods into the regional market.

Summary of Analysis

Bed-Roc and USG Corporation have presented convincing arguments to support their contention that the expiry of the Tribunal's finding would likely result in the continued or resumed dumping of subject goods into the regional market. No arguments were presented by Custom Building Products that the expiry of the finding will not result in the continued or resumed dumping of subject goods into the regional market.

A detailed analysis of some of the other factors outlined in section 37.2 of SIMA was not possible as a number of parties did not respond to the Commissioner's request for information, including, most importantly, Custom Building Products.

Conclusion

On the basis of the information made available during the course of the review, the Commissioner has determined that the expiry of the Tribunal finding concerning concrete panels, reinforced with fiberglass mesh, originating in or exported from the United States of America and produced by or on behalf of Custom Building Products, its successors or assigns, for use or consumption in the province of British Columbia or Alberta, 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 subject goods where appropriate.

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 after the date of the Tribunal's order rescinding the finding.

Information

This Statement of Reasons has been provided to persons directly interested in these proceedings. A free copy may be obtained upon request or from the CCRA's Web site at the address below. For further information, please contact Mr. Jan Smith or Mr. Peter Dupuis as follows:

Mail

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

Telephone
Jan Smith: (613) 954-7409
Peter Dupuis: (613) 954-7341

Telefax
(613) 941-2510

Web site
www.cbsa-asfc.gc.ca/sima-lmsi/

Denis Lefebvre
Assistant Commissioner Customs Branch