Common menu bar links
ARCHIVED - STATEMENT OF REASONS
This page has been archived.
Archived Content
Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
OTTAWA, April 29, 2005
RR-2004-006
4237-14/4237-53
Concerning a determination under paragraph 76.03(7)(a) of theSpecial Import Measures Act respecting
WHOLE POTATOES ORIGINATING IN OR EXPORTED FROM
THE UNITED STATES OF AMERICA
FOR USE OR CONSUMPTION IN
THE PROVINCE OF BRITISH COLUMBIA
DECISION
On April 14, 2005, pursuant to paragraph 76.03(7)(a) of the Special Import Measures Act, the President of the Canada Border Services Agency determined that the expiry of the Order made by the Canadian International Trade Tribunal on September 13, 2000, in Review No. RR-99-005, concerning whole potatoes, excluding seed potatoes and excluding imports during the period from May 1 to July 31, inclusive, of each calendar year, imported from the United States of America, for use or consumption in the Province of British Columbia, is likely to result in the continuation or resumption of dumping into British Columbia.
This statement of reasons is also available in French. Cet énoncé des motifs est également disponible en français.
TABLE OF CONTENTS
INFORMATION USED BY THE PRESIDENT
- Parties Contending that Resumed or Continued Dumping is Likely
- Position of the British Columbia Vegetable Marketing Commission
- Rebuttal by the Washington State Potato Commission Regarding the British Columbia Vegetable Marketing Commission's Position
- Parties Contending that Resumed or Continued Dumping is not Likely
- Position of the Washington State Potato Commission
- Rebuttal by the British Columbia Vegetable Marketing Commission Regarding the Washington State Potato Commission's Position
- Parties that did not Express an Opinion on the Likelihood of Resumed or Continued Dumping
- Position of Loblaws Inc., an Importer of the Subject Goods
[1] On December 15, 2004, 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 Order made on September 13, 2000, in Review No. RR-99-005 (Order). The Order concerns whole potatoes, excluding seed potatoes and excluding imports during the period from May 1 to July 31, inclusive, of each calendar year, imported from the United States of America (United States), for use or consumption in the Province of British Columbia. The Order is scheduled to expire on September 14, 2005.
[2] The Canada Border Services Agency (CBSA) initiated an expiry review investigation on December 16, 2004, to determine whether the expiry of the Order is likely to result in the continuation or resumption of dumping of the subject goods.
[3] On April 14, 2005, the President of the CBSA determined, pursuant to paragraph 76.03(7)(a) of SIMA, that the expiry of the Order is likely to result in the continuation or resumption of dumping of the goods into British Columbia.
[4] This case was originally two separate anti-dumping investigations concerning whole potatoes. The first case was initiated on September 30, 1983, following a complaint filed by the British Columbia Vegetable Marketing Commission (BCVMC). A preliminary determination of dumping was made on March 5, 1984. On June 4, 1984, the Anti-dumping Tribunal (subsequently known as the Canadian International Trade Tribunal) issued an injury finding with respect to whole potatoes with netted or russeted skin, excluding seed potatoes, in non-size A, from the state of Washington, for use or consumption in the Province of British Columbia. A final determination of dumping was made by the Deputy Minister of National Revenue for Customs and Excise on October 12, 1984. (At that time, the legislation required the Tribunal to render its final decision regarding injury prior to the final determination of dumping.)
[5] A second investigation was initiated on October 18, 1985, followed by a preliminary determination of dumping on December 20, 1985, and a final determination of dumping on March 20, 1986, with regard to whole potatoes from the United States, for use or consumption in the Province of British Columbia, excluding seed potatoes and excluding those potatoes covered by the previous finding. The Tribunal issued an injury finding on April 18, 1986.
[6] There have been three expiry reviews concerning this case. The Order issued by the Tribunal at the conclusion of the first review on September 14, 1990, in Review No. RR-89-010, continued the two findings without amendments. On September 14, 1995, in Review No. RR-94-007, the Order was continued but excluded imports during the period from May 1 to July 31, inclusive, of each calendar year. On September 13, 2000, in Review No. RR-99-005, the 1995 Order was continued without amendments.
[7] On October 26, 2004, the Tribunal issued a notice of expiry of the September 13, 2000 Order, and invited comments from all interested parties. Based on the available information and the information submitted by the interested parties, the Tribunal decided that an expiry review of the Order was warranted and on December 15, 2004, the Tribunal initiated an expiry review, No. RR-2004-006.
[8] On December 16, 2004, the CBSA initiated an expiry review investigation to determine whether the expiry of the Order is likely to result in the continuation or resumption of dumping.
[9] The goods under review are defined as "whole potatoes, excluding seed potatoes and excluding imports during the period from May 1 to July 31, inclusive, of each calendar year, originating in or exported from the United States of America, for use or consumption in the Province of British Columbia."
[10] Whole potatoes are properly imported into Canada under the Harmonized System classification number 0701.90.00.00.
[11] The CBSA's period of review (POR) for the expiry review covers the August 1 to April 30 period for the 2001-2002, 2002-2003 and 2003-2004 crop years, as well as the period from August 1 to December 31, 2004.
[12] The Order relates to potatoes imported into a regional market, namely, the Province of British Columbia.
[13] In accordance with subsection 2(1.1) of SIMA, the following two conditions must be met for the existence of a regional market:
- the producers in the market sell all or almost all of their production of like goods in the market; and
- the demand in the market is not to any substantial degree supplied by producers of like goods located elsewhere in Canada.
[14] On November 30, 2004, in its submission to the Tribunal prior to the initiation of the expiry review investigation, the BCVMC submitted that British Columbia remains a regional market because almost all of the potatoes grown in British Columbia are sold in the B.C. market.1 More specifically, it detailed that its producers market approximately 92% of their total potato sales within their regional market and approximately 97% of their Russet variety of potatoes within the same market. (Russet potatoes are the most common potatoes grown by B.C. producers and the most common potatoes imported into their market.) 2
[15] Further, the Tribunal concluded in its last Order issued on September 13, 2000, that producers located elsewhere in Canada do not, to any substantial degree, supply the demand for potatoes in the B.C. market, nor were they likely to do so in the foreseeable future.3
[16] The Tribunal will give further consideration to the issue of regional market in its inquiry.
[17] There are approximately 58 potato producers in British Columbia. The producers are represented by four marketing agencies, namely, the Lower Mainland Vegetable Distributors Inc., the Interior Vegetable Marketing Agency Ltd., the Island Vegetable Co-operative Association and the Vancouver Island Produce, all of which are producer-owned and financed. The four agencies provide producers with sales outlets for their products throughout the B.C. market. They derive over 90% of their revenue from the marketing of eight storage crops, of which potatoes account for over 70%.4
[18] The BCVMC is a commission established under the Natural Products Marketing (B.C.) Act, to regulate the production and marketing of vegetables grown in British Columbia, and to co-ordinate the four marketing agencies. The BCVMC is under the direction of eight commissioners who are elected by the growers of the regulated vegetables.
[19] Unlike virtually all other potato producing regions in North America, British Columbia does not have a potato processing industry. As a result, B.C. potato producers rely solely on access to the fresh potato market, i.e. the table potato and food service market.5 In contrast, well over 80% of the potato production in Washington, Idaho and Oregon is sold to the potato processing industry, with the remaining portion sold to the fresh potato market.6
[20] The apparent B.C. market7 for whole potatoes is shown below:
APPARENT BRITISH COLUMBIA MARKET IN METRIC TONNES
Source |
2001-2002 Crop Year* |
2002-2003 Crop Year* |
2003-2004 Crop Year* |
B.C. Production Sales |
38,453 |
37,195 |
37,653 |
Import from the U.S. |
|||
|
4,183 |
5,255 |
4,061 |
|
1,283 |
628 |
596 |
|
2,420 |
5,029 |
2,262 |
|
39,571 |
65,346 |
32,821 |
|
551 |
162 |
222 |
Total Imports from the U.S. |
48,008 |
76,420 |
39,962 |
Imports from all other Countries |
0 |
0 |
1 |
Apparent B.C. Market |
86,461 |
113,615 |
77,616 |
* The import statistics are provided for the nine-month period, from August 1 to April 30, each year. This coincides with the period specified in the Order.
[21] The current normal values have been in effect since 1995 and are determined by means of a ministerial specification pursuant to section 29 of SIMA. The normal values are based on the total costs and expenses associated with growing and harvesting potatoes, using published cost data plus an amount for profit and an estimated amount for packing charges which includes costs and expenses related to packing and selling the goods.
[22] The export prices are also determined by means of a ministerial specification pursuant to section 29 of SIMA. They are determined on a weekly basis and are based on the preponderant selling price, referred to as the "mostly" price, as reported in the National Potato and Onion Report (Market News) published by the Federal-State Market News Service, United States Department of Agriculture (USDA). In the absence of a "preponderant selling price", the export price is specified as the straight average of the price range quoted in the National Potato and Onion Report. These prices are largely based on the current Columbia Basin prices in the State of Washington from where the bulk of potatoes exported to Canada are grown.
[23] Anti-dumping duties are determined by comparing the normal values to the export prices on a weekly basis. If the export price is lower than the normal value, the anti-dumping duty payable is equal to the difference between the export price and the normal value.
[24] Two normal value reviews have occurred since 1995, however, no changes have been made to the normal values in effect. During the course of the most recent review, which concluded in October 2004, in consultation with counsel for the Washington State Potato Commission (WSPC), it was agreed that a selected group of exporters would provide a response to the CBSA's Request for Information. As well, other concerned parties were invited to provide information relevant to the review. The information requested by the CBSA from the exporters was not provided and the normal values were not changed from previous levels. The CBSA is satisfied that the normal values currently in place are appropriate.
[25] During the POR, approximately $1.1 million of anti-dumping duty was collected on imports of subject goods. The annual breakdown is provided in the following table:
ANTI-DUMPING DUTIES COLLECTED
IN CDN $
Source |
2001-2002 Crop Year* |
2002-2003 Crop Year* |
2003-2004 Crop Year* |
Aug. 1- Dec. 31, 2004 |
California |
$0.00 |
$1,954.60 |
$16,837.15 |
$6,444.55 |
Idaho |
$0.00 |
$5,046.31 |
$44,687.79 |
$7,896.25 |
Oregon |
$0.00 |
$15,278.50 |
$47,361.12 |
$1,232.27 |
Washington |
$6.66 |
$285,530.26 |
$513,746.53 |
$214,589.67 |
All other States |
$0.00 |
$0.00 |
$1036.90 |
$389.00 |
Total SIMA Duties Collected |
$6.66** |
$307,809.67 |
$623,669.49 |
$230,551.74 |
* The statistics are provided for the nine-month period, from August 1 to April 30, each year. This coincides with the period in which the Order was in effect.
** A decline in production during the 2001-2002 crop year resulted in an increase in selling prices and consequently, virtually no anti-dumping duties were collected.
[26] On December 15, 2004, the Tribunal's expiry review notice was sent to all known B.C. producers, importers, exporters and interested parties.
[27] Parties wishing to submit information were provided with an Expiry Review Questionnaire (ERQ). The ERQs requested information necessary for the President to consider when evaluating the factors, as listed in subsection 37.2(1) of the Special Import Measures Regulations (Regulations), to determine whether the expiry of the Order is likely to result in continued or resumed dumping of the goods. Any person or government having an interest in this investigation was also invited to provide a submission.
[28] The four B.C. marketing agencies and the BCVMC provided responses to the producer ERQ. Case arguments8 and a reply submission9 (counter-arguments to the position of the WSPC) were also received from the BCVMC claiming that the dumping of the goods would likely continue or resume should the Order be allowed to expire.
[29] Only one importer, Loblaws Inc., provided a response to the importer ERQ. Loblaws Inc. did not provide case arguments or a reply submission.
[30] No exporter submission was received in response to the exporter ERQ, although the WSPC did submit information pertinent to its position. Case arguments10 and a reply submission11 (counter-arguments to the position of the BCVMC) were also provided by the WSPC claiming that the expiry of the Order is not likely to result in the continuation or resumption of dumping of the goods.
INFORMATION USED BY THE PRESIDENT
[31] The information to be used and considered by the President for purposes of this expiry review proceeding is contained on the administrative record. The administrative record includes the exhibits listed on the CBSA's Exhibit Listing, which is comprised of the Tribunal's administrative record at initiation of the expiry review, CBSA exhibits, responses to the ERQs submitted by domestic producers, importers and exporters and information submitted by interested persons, including information which they believe is relevant to the decision as to whether dumping is likely to continue or resume. This information may consist of expert analysts' reports, excerpts from trade magazines and newspapers, orders and findings issued by authorities of Canada or of another country.
[32] For purposes of an expiry review, the CBSA sets a date after which no "new" information may be placed on the administrative record. This is referred to as the "closing of the record date". For this expiry review, the administrative record closed on February 3, 2005. This allowed participants time to prepare their case arguments based on the information that was on the administrative record as of the closing of the record date.
Parties Contending that Resumed or Continued Dumping is Likely
Position of the British Columbia Vegetable Marketing Commission
[33] The BCVMC presented case arguments on behalf of the four marketing agencies and the B.C. producers in support of its position that anti-dumping measures should remain in place.
[34] Its position is based on the following arguments:
- that the subject goods were dumped during the POR and that the margin of dumping was significant;
- that there has been a decline in the demand for fresh potatoes coupled with an increase in the production and inventory levels;
- that U.S. selling prices have declined during the POR;
- the proximity of major U.S. producers to the B.C. market and their dependency on export markets;
- the capacity of production in the United States and long-term potential to overproduce; and
- the United States government support programs for potato producers.
[35] The BCVMC stated that during four of the five years that the Order has been in place, the majority of the subject goods have been dumped from the United States to the B.C. market,12 showing evidence that dumping existed during 72.5% of the five-year period. For the 5/10 lb pack size bags of Russet potatoes, the most common variety of potatoes representing the major portion of all imports, the BCVMC reported the margin of dumping ranged from 10% to 108% during the five-year period.13 The only anomaly that took place during this period was during the 2001-2002 crop year when a decline in production increased the selling prices to Canada.14 The BCVMC claimed that the dumping is still occurring today and will likely continue in the future.15
[36] The BCVMC argued that there has been a significant decline in the demand for fresh potatoes during the POR. The main contributing factor appears to be a change in consumer preferences and the introduction of the low carbohydrate diets.16 During this same period, however, it noted that the U.S. production of potatoes increased by 10%.17 This has resulted in an over-supply of potatoes18 and an increase in inventory levels in the United States.19 They further added that the decline in demand for fresh potatoes and processing potatoes in the United States, coupled with an increase in overall production, has increased the volume of fresh potatoes available for export to Canada, and put pressure on the U.S. producers to further dump potatoes into Canada.20
[37] The BCVMC provided evidence showing a decline in the selling prices of potatoes in the United States, and stated that there is a direct relationship between selling prices and production levels.21 When production goes up, as it did during the POR, the selling prices go down.
[38] The BCVMC noted that the U.S. potato processing industry is comparatively stable relative to the fresh potato industry.22 However, it cautioned that when a surplus arises, the fresh market becomes the dumping ground,23 and even the slightest decrease in demand for processed potatoes has an adverse effect on the price of fresh potatoes.
[39] The BCVMC explained that the B.C. potato producers are "price takers"24 in that their domestic selling prices are determined by the landed in Vancouver price of U.S. potatoes. Therefore, the returns to B.C. producers are directly linked to the prevailing prices for potatoes in the United States.
[40] The BCVMC argued that the proximity of the major U.S. potato producers to the B.C. market is a significant factor that must be considered.25 In particular, the State of Washington poses a considerable threat to B.C. potato producers should anti-dumping measures be removed.
[41] It further pointed out that these U.S. producers are very dependent on the export market.26 Washington alone, British Columbia's closest neighbour, ships approximately 90% of its potatoes out of state. The BCVMC contends that this dependency could have devastating effects on the B.C. potato producers should anti-dumping measures be allowed to expire.
[42] The BCVMC explained that the potato production in the United States is immense compared to that of British Columbia. While the production of potatoes in Washington, Idaho, Oregon and California is approximately 250 times that of British Columbia's, Washington's production by itself is approximately 100 times that of British Columbia.27
[43] The BCVMC noted that the production capacity of U.S. producers, as compared to the B.C. market size, was a significant consideration in proving the continuation or resumption of dumping into Canada in previous anti-dumping cases. It is noted that a major factor suggesting resumption or continuation of dumping was production capacity in circumstances where production capacity and excess capacity could supply the entire Canadian market. It further stated that excess capacity in the United States could supply the entire B.C. market at dumped prices.28
[44] The BCVMC further stated that the United States has vast amounts of agricultural land that have yet to be developed, particularly in the state of Washington.29 This increases the potential for further long-term over-production.30 Currently, in Washington alone, there are over 500,000 acres in the Columbia Basin that have been developed into highly productive agricultural land, with another 500,000 acres still untouched.
[45] The BCVMC indicated that the United States government provides assistance programs to its potato producers to divert large quantities of potatoes out of the competitive marketplace and buffer it from the effects of over-production. Specifically, the government purchases surplus processed potato products and donates them to food assistance programs. The BCVMC alleges that these purchases are made to alleviate the economic pressures experienced by U.S. potato producers as a result of over-production and the low prices that subsequently follow.31
Rebuttal by the Washington State Potato Commission Regarding the British Columbia Vegetable Marketing Commission's Position
[46] In response to the BCVMC's statement that the light demand in the United States indicates a propensity to dump, the WSPC attests that the "Low-Carb Diet Fad" and the cyclical nature of agricultural products are responsible for the light demand. The WSPC asserts that this trend is reversing itself and is not an indication of propensity to resume or continue dumping.32
[47] The WSPC has responded to the BCVMC's assertion that Washington producers of certain potatoes are targeting the B.C. market. The WSPC responds that the B.C. producers are actually drawing Washington potatoes into the market through their inability to meet British Columbia's potato demand.33
[48] The WSPC questions the logic of the BCVMC assertion that the United States and B.C. markets are declining. The WSPC asserts that an exporter would not seek a declining market with higher transportation costs as an economy into which they would dump potatoes.34
Parties Contending that Resumed or Continued Dumping is not Likely
Position of the Washington State Potato Commission
[49] The WSPC's position that resumed or continued dumping of the goods is not likely is based on the following factors:
- the extent of the dumping while the Order was in place;
- the current and future performance of exporters and foreign producers;
- the absence of anti-dumping measures by authorities of a country other than Canada; and
- the absence of the diversion of dumped goods into Canada due to measures taken by authorities of a country other than Canada.
[50] The WSPC is of the opinion that the information contained in the CBSA's record indicates a lack of propensity to dump. It believes that the normal values and the export prices currently in place with respect to whole potatoes from the United States are flawed and have caused artificial or technical dumping where none actually exists.35
[51] The WSPC raised the fact that the CBSA may determine the question of propensity to dump in reference to "any" goods and not necessarily all of the goods.36 The WSPC requested the CBSA to exclude the subject goods imported during the period from August 1 to December 31 of each calendar year (thereby extending the current May 1 to July 31 exclusion period) and as well all imports of Yukon Gold, Red and round White potato varieties, from a determination of a likelihood of resumed or continued dumping of the goods, claiming that the goods are not dumped.
[52] The WSPC indicated that its producers have in the past and will continue in the future to play a vital role in the B.C. potato market.37 At times, the WSPC producers have satisfied more than 50% of the B.C. demand for potatoes. This pattern of supply will not change in the foreseeable future. Its producers have consistently expanded production and this would not have been possible had they been selling below their actual costs of production. The WSPC contends that, in reality, its producers actual costs are lower than those assigned by the CBSA.
[53] The WSPC pointed out that there are no other anti-dumping measures in place on potatoes by any country other than Canada and that there is no diversion of dumped goods into the country due to measures taken by authorities of any other country. It contends that this supports its position that there is a lack of propensity to continue or resume dumping.38
Rebuttal by the British Columbia Vegetable Marketing Commission Regarding the Washington State Potato Commission's Position
[54] In reply to the WSPC's case arguments, the BCVMC indicated that there is an abundance of reliable data on the CBSA's record that supports the conclusion that the U.S. potato producers will continue to dump the subject goods to Canada. It believes that the margin of dumping has not been skewed by the current normal values and export prices in effect and more importantly, it contends that this is not the forum in which the WSPC can challenge the legality of the cost and pricing data used.39
[55] The BCVMC pointed out that the normal values currently in place for whole potatoes were originally developed using only the Russet variety of potato40 because this is the most common variety both produced in the United States and shipped to Canada. They claim that the Russet variety yields the highest quantities per acre, resulting in lower production costs and consequently, lower normal values. Since other less common varieties, such as the Yukon Gold, Red and round White potatoes, all have lower yields, they generally cost more to produce. Had the CBSA determined specific normal values for each of these other varieties, it would follow that their normal values would be higher and the resulting margin of dumping would have increased.
[56] The BCVMC does not support the WSPC's request to exclude certain potatoes from a determination of a likelihood of continued or resumed dumping. In addition to WSPC's statement concerning the application of more specific normal values for each variety of potato (i.e. Red, White, Yukon Gold), the BCVMC noted that previous Tribunal findings have agreed that all subject potatoes are like products and are substitutable. Accordingly, removing anti-dumping duties on any one variety could ultimately result in the dumping of this variety and the circumvention of anti-dumping duties.41
[57] The BCVMC further pointed out that the existence and degree of dumping might be underestimated because the exporters could be repacking product that is subject to anti-dumping duties into sizes and grades where duties have not been established. Therefore, dumped product may be entering into British Columbia duty free.42
Parties that did not Express an Opinion on the Likelihood of Resumed or Continued Dumping
Position of Loblaws Inc., an Importer of the Subject Goods
[58] While Loblaws Inc. provided a response to the importer ERQ, it did not comment on the likelihood of continued or resumed dumping of the goods should the Order be allowed to expire.
[59] Subsection 76.03(7) of SIMA requires the President of the CBSA to determine whether the expiry of the Order is likely to result in the continuation or resumption of dumping of the goods. When making this determination, the President may consider the factors set out in subsection 37.2(1) of the Regulations. Guided by the factors in the Regulations and based on the documentation submitted by the various participants and the consideration of the information on the administrative record, the following is a list of factors considered in this analysis:
- the number of weeks in the POR during which the established normal value exceeded the preponderant selling price of the most common package configurations of potatoes;
- the amount by which the normal value exceeded the preponderant selling price;
- the U.S. potato production/supply and its dependency on the B.C. market; and
- the U.S. demand level for potatoes.
[60] A discussion of these factors is presented below.
[61] The information on the record43 indicates that $1,162,037 of anti-dumping duties was collected on subject goods imported into British Columbia from the United States during the POR. The amount of anti-dumping duty collected represented approximately 20% of the total value for duty (VFD) of the dumped goods ($5,851,424). It has not been possible, however, to calculate the percentage of the volume of goods that were dumped given that the CBSA's database, FIRM, does not provide accurate volume statistics with respect to potatoes. The FIRM statistics indicate that the VFD of the dumped goods accounted for approximately 6.5% of the total VFD of subject goods imported during the POR, ($89,188,376), which does not appear to be a large proportion of the total imports.
[62] However, a comparative analysis of the "mostly" prices as published by the USDA and the normal values of the two most common package configurations sold in the marketplace, the 5/10 lb poly-bag and the 10/5 lb poly-bag , of Russet potatoes was performed and is summarized in the following tables. The Russet variety is the dominant variety of potato in the B.C. marketplace where it accounts for almost 60% of retail potato sales. The analysis indicates what the margin of dumping would have been, had the U.S. producers sold to Canada during the POR at the published USDA prices.
ANALYSIS OF USDA "MOSTLY" PRICES AND NORMAL VALUES
CONFIGUATION: 5/10 LB POLY-BAG, RUSSET VARIETY
Crop Year |
No. of Weeks in Period |
No. of Weeks Goods Dumped |
% of Weeks Goods Dumped |
Margin of Dumping (%) Minimum Maximum Average | ||
2001-2002 |
39 |
0 |
0 |
0 |
0 |
0 |
2002-2003 |
39 |
31 |
79 |
4.11 |
33.86 |
16.73 |
2003-2004 |
38 |
38 |
100 |
33.86 |
108.22 |
81.01 |
2004-2005* |
23 |
22 |
96 |
17.13 |
70.36 |
61.38 |
Total |
139 |
91 |
65 |
Not Applicable | ||
(*) August-December 2004
ANALYSIS OF USDA "MOSTLY" PRICES AND NORMAL VALUES
CONFIGUATION: 10/5 LB POLY-BAG, RUSSET VARIETY
Crop Year |
No. of Weeks in Period |
No. of Weeks Goods Dumped |
% of Weeks Goods Dumped |
Margin of Dumping (%) Minimum Maximum Average | ||
2001-2002 |
39 |
0 |
0 |
0 |
0 |
0 |
2002-2003 |
39 |
22 |
56 |
3.20 |
14.67 |
6.27 |
2003-2004 |
38 |
38 |
100 |
14.67 |
72.00 |
43.83 |
2004-2005* |
23 |
22 |
96 |
3.20 |
37.60 |
31.91 |
Total |
139 |
82 |
59 |
Not Applicable | ||
(*) August-December 2004
[63] While the analysis does not reflect the actual extent of the dumping volumes during the POR, it does indicate that, without the Order in place, the goods in question could have been sold to Canadian buyers at dumped prices approximately 60% to 65% of the period during which the Tribunal finding was in place by average margins, calculated on an annual basis, ranging from approximately 17% to 81% for the 5/10 lb poly-bag configuration and approximately 6% to 44% for the 10/5 lb poly-bag configuration.
[64] The WSPC has stated its opposition to the normal values currently in place. The WSPC and its members had the opportunity in the last two normal value reviews to provide information and data for the purpose of updating normal values. The information requested by the CBSA from the exporters was not provided and the normal values were not changed from previous levels. The CBSA is satisfied that the normal values currently in place are appropriate. Further, the CBSA maintains that the expiry review process is not the venue to conduct a review of the normal values.
[65] The increasing average margin of dumping for each configuration, over the three full crop years, 2001-2002, 2002-2003, 2003-2004, demonstrated in the above tables, is supported by a decreasing average VFD per metric tonne (MT), as demonstrated in the following table. The partial 2004-2005 crop has not been included in this analysis as the December-April data is not available and could have a significant effect on the average VFD for the crop year.
VALUE FOR DUTY
IN METRIC TONNES
Crop Year (August 1-April 30) |
Average VFD Per MT (Can$) |
% Decline |
2001-2002 |
$567.43 |
|
2002-2003 |
$481.98 |
15.06 |
2003-2004 |
$404.76 |
16.02 |
2001-2004 |
28.67 |
[66] The United States has an enormous potato production capacity and indications are that production will continue at high levels. British Columbia competes primarily with the U.S. production area classified as "fall states". This area is comprised of 15 states that plant potatoes in the spring, harvest from July to October and market throughout the year up until the next harvest. Of the 15 "fall states", those of concern to British Columbia are Idaho, Oregon, California, and particularly Washington.
[67] While overall acreage in the "fall states" has declined from 1992 to 2004 by approximately 9%, acreage in Washington has increased over the same period by about 21%. Production has increased by 7% in the "fall states" for the same period while in Washington, production has increased by 35%.44
[68] Taking a much shorter time period into consideration, average yields have increased by approximately 6% in the "fall states" from 2003 to 2004. In Washington, the average yield has increased by 3% for the same period.45 As well, Washington production has increased by approximately 2% from 2002 to 2004.46
[69] As previously noted, evidence on the record shows that the current scale of production in Washington is approximately 100 times the volume of B.C. potato production. The volume of Washington, Idaho and Oregon potato production is approximately 250 times the volume of B.C. production. (Of the total shipments to British Columbia from the States of Idaho, Oregon and Washington, Washington represents approximately 92% of imports into British Columbia, while Idaho and Oregon account for 8%.) Indeed, the annual Washington shipping volume of fresh market potatoes is approximately equivalent to a five-year supply for the total B.C. marketplace.47 The Tribunal, in its 2000 decision regarding whole potatoes, made similar statements.48 While approximately 80% to 85% of the potatoes are destined for the processing industry, the remainder, going to the fresh market, remains significant. At the same time, a decrease in the volume of potatoes used by the processing industry has led in some years, to an oversupply or overcapacity in the fresh market. This phenomenon was observed in 2002 when approximately 5% of the processed potato crop was diverted to the fresh market due to a cutback by processors.49
[70] While production levels have been increasing, the demand for fresh potatoes appears to be declining due to changing consumer preferences and the introduction of low carbohydrate diets.50 A graph prepared by the National Agricultural Statistics Service (NASS), USDA, indicates a decrease of approximately 3% between the 2000 and forecasted 2004 demand levels of fresh potatoes, following a 6% decline in demand levels from 1991 to 2000.51
[71] In a recent press release by the U.S. Potato Board at the Potato Industry Outlook Summit, it was emphasized that current productivity is growing faster than demand. An industry analyst stated: "It is imperative growers put their heads together to develop new products for consumers." He further added, "An imbalance between productivity and demand growth is causing the industry to contract."52
[72] Information published by the NASS, USDA, indicates that in the 15 major "fall producing states", the 2005 storage stocks were up 2% over 2004 and 3% above 2003. Potatoes placed in storage accounted for 59% of the "fall states' production", 1% above last year. Processors usage in nine major states was down by 2% from 2004 and 7% from 2003. Dehydrating usage was also down 8% from 2004.53
[73] In view of the increasing production volumes and the decreasing levels in demand, it is likely that producers in the State of Washington or other U.S. states will remain aggressive in their marketing efforts, including their efforts to export potatoes to British Columbia. The B.C. market continues to be an important market to U.S. suppliers. The data on record shows that during the POR, U.S. potato imports accounted for 51% to 67% of the B.C. market.54 These figures have increased since the last Tribunal review in 2000, which detailed that U.S. potato imports accounted for 40% to 60% of the B.C. market over the previous decade.55
[74] The CBSA may also take anti-dumping or other trade measures by other jurisdictions into consideration when determining the likelihood of continued or resumed dumping. There are no anti-dumping measures in place regarding potatoes from the United States in other jurisdictions. The WSPC claims that the lack of anti-dumping measures in other jurisdictions suggests that exporters do not have a propensity to dump. While the CBSA believes that anti-dumping measures in other jurisdictions that include the subject goods may be indicative of the likelihood of continued or resumed dumping, it does not concur with the WSPC position that the inverse is correct. Exporters may not be exporting significant volumes to other jurisdictions or other jurisdictions may not have a domestic industry that would complain of the dumping. Information on the record indicates that the largest volumes of fresh potatoes exported from the United States are to Canada (84%) and Mexico (8%), both countries being in close proximity to the United States.56 U.S. exports of fresh potatoes to other countries are minimal compared to exports to Canada.
[75] In conclusion, consideration and analysis of the evidence on the record indicates there is a likelihood of continued or resumed dumping if the Order expires. The key factors supporting the conclusion are, the analysis of the most common variety and package configurations, indicating exporters could have shipped to British Columbia at dumped prices approximately 60% to 65% of the time during the POR at significant margins of dumping, the increasing production levels of potatoes and decreasing demand levels in the United States, and the importance and proximity of the B.C. market to the U.S. potato suppliers.
[76] The WSPC has requested that certain potatoes be excluded from the decision, namely:
- imports during the period from August 1 to December 31 of each calendar year; and
- imports of the Yukon Gold, Red, and round White potato varieties.
[77] The Tribunal Order of September 14, 1995, excluded imports of the subject goods during the period from May 1 to July 31 of each calendar year on the basis that the B.C. industry was unable to supply the local market, especially of the Russet variety, during this period.
[78] In the current expiry review investigation, the WSPC has requested that the period of exclusion be extended to include the period from August 1 to December 31 of each calendar year on the basis that there was no dumping or negligible dumping during this period. The WSPC did not provide any data or information to substantiate its request.
[79] The CBSA notes that a comparative analysis of the "mostly " price as published by the USDA Market News and the normal value of the two most common package configurations sold in the marketplace, the 5/10 lb poly-bag and the 10/5 lb poly bag, of Russet potatoes, is summarized in the following tables:
ANALYSIS OF USDA "MOSTLY" PRICE AND NORMAL VALUE
CONFIGUATION: 5/10 LB POLY-BAG, RUSSET VARIETY
Crop Year |
No. of Weeks in Period |
No. of Weeks Goods Dumped |
% of Weeks Goods Dumped |
Margin of Dumping (%) Minimum Maximum Average | ||
2001 |
22 |
0 |
0 |
0 |
0 |
0 |
2002 |
22 |
14 |
64 |
4.11 |
24.93 |
14.90 |
2003 |
23 |
23 |
100 |
33.86 |
108.22 |
72.32 |
2004 |
23 |
22 |
96 |
17.13 |
70.36 |
61.38 |
Total |
90 |
59 |
66 |
Not Applicable | ||
ANALYSIS OF USDA "MOSTLY" PRICE AND NORMAL VALUE
CONFIGUATION: 10/5 LB POLY-BAG, RUSSET VARIETY
Crop Year |
No. of Weeks in Period |
No. of Weeks Goods Dumped |
% of Weeks Goods Dumped |
Margin of Dumping (%) Minimum Maximum Average | ||
2001 |
22 |
0 |
0 |
0 |
0 |
0 |
2002 |
22 |
9 |
41 |
3.2 |
8.63 |
4.41 |
2003 |
23 |
23 |
100 |
14.67 |
72.00 |
39.08 |
2004 |
23 |
22 |
96 |
3.2 |
37.60 |
31.91 |
Total |
90 |
54 |
60 |
Not applicable | ||
[80] The analysis indicates that during the August to December period of each year during the POR, the goods in question could have been sold to Canadian buyers at dumped prices more than 60% of the time, by average margins ranging from approximately 15% to 72% for the 5/10 lb poly-bag configuration and approximately 4% to 39% for the 10/5 lb poly-bag configuration. Consequently, the CBSA does not concur with the WSPC's request for an extension of the exclusion period.
Exclusion of Certain Varieties
[81] The WSPC has requested that the Yukon Gold, Red and round White potato varieties be excluded from the finding on the basis that these varieties were not dumped during the POR. However, the WSPC has not provided information to substantiate the request.
[82] In view of the fact that most imports of fresh potatoes into British Columbia are from Washington, the exclusion of these varieties from the finding would be tantamount to reverting to the situation which existed following the first finding in 1984 when only certain Russet potatoes from the State of Washington were subject to the finding. Two years later, a second finding was made in order to include all varieties of potatoes from the United States, not included in the first finding. Furthermore the CBSA is concerned that excluding one or more varieties or states from the finding will simply invite exporters to alter their pricing strategies or importers to redirect their potato purchasing.
[83] As well, the CBSA has noted that the normal values currently in place are based on information and data concerning the Russet variety only, which historically has been the most common variety both produced in British Columbia and shipped to British Columbia from the United States. The CBSA has received representations from the BCVMC indicating that the yields for the Russet variety are much higher than for other varieties and that, as yield is a significant factor in calculating production costs, it is likely that if the yields and costs of the non-Russet varieties were used to calculate normal values for the those varieties, the normal values would be much higher and dumping of these goods would occur. The notion that the normal values of non-Russet varieties should be higher than the Russet variety is supported by the higher selling prices of the non-Russet varieties, relative to the Russet variety, reported in the USDA Market News.
[84] Lastly, the CBSA has not received any information demonstrating that the exporters of the non-Russet varieties, who in some cases are the same exporters of the Russet variety, employ different marketing strategies for the non-Russet varieties, or that the other varieties are not subject to the same supply and demand considerations as the Russet variety.
[85] For the above reasons, the CBSA does not agree with the WSPC's request that certain varieties be excluded.
[86] For purposes of making a determination in this expiry review, the CBSA conducted its analysis within the scope of the factors set forth in subsection 37.2(1) of the Regulations. Based on the foregoing consideration of pertinent factors and analysis of evidence on the record, on April 14, 2005, pursuant to paragraph 76.03(7)(a) of SIMA, the President of the CBSA determined that the expiry of the Order made by the Canadian International Trade Tribunal on September 13, 2000, in Review No. RR-99-005, is likely to result in the continuation or resumption of dumping of the goods.
[87] On April 15, 2005, the Tribunal commenced its inquiry to determine whether the expiry of the Order in respect of these goods is likely to result in injury or retardation to the domestic industry. The Tribunal will make its decision by September 12, 2005.
[88] If the Tribunal determines that the expiry of the Order is likely to result in injury or retardation, the Order 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 duty on dumped importations of the subject goods.
[89] If the Tribunal determines that the expiry of the Order is unlikely to result in injury or retardation, the Order will be rescinded in respect of those goods. Anti-dumping duty would no longer be levied on importations of the subject goods.
For further information, please contact Mary Donais or Michel Desmarais at:
Canada Border Services Agency | |
Telephone |
Mary Donais Michel Desmarais |
Telefax |
(613) 948-4844 |
Web site |
Pierre Richard
Vice-President
Admissibility Branch
1 Exhibit 23 (NC) - BCVMC Submission to Tribunal of November 30, 2004, page 24.
2 Exhibit 23 (NC) - BCVMC Submission to Tribunal of November 30, 2004, page 25.
3 Exhibit 12 (NC) - Tribunal Statement of Reasons of September 13, 2000, page 13.
4 Exhibit 23 (NC) - BCVMC Submission to Tribunal of November 30, 2004, page 1.
5 Exhibit 23 (NC) - BCVMC Submission to Tribunal of November 30, 2004, page 17.
6 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 19.
7 Exhibit 68 (NC) - CBSA Apparent British Columbia Market.
8 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005.
9 Exhibit 72 (NC) - BCVMC Reply Submission of February 28, 2005.
10 Exhibit 71 (NC) - WSPC Case Arguments of February 14, 2005.
11 Exhibit 73 (NC) - WSPC Reply Submission of February 28, 2005.
12 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, pages 4-10.
13 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 8.
14 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 4.
15 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, pages 9-10.
16 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, pages 10-11.
17 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 10.
18 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 12.
19 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 22.
20 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 20.
21 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, pages 15-16.
22 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 11.
23 Exhibit 23 (NC) - BCVMC Submission to Tribunal of November 30, 2004, page 9.
24 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 8.
25 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 16.
26 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 17.
27 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 14.
28 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 14.
29 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 20.
30 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 20.
31 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, page 21.
32 Exhibit 73 (NC) - WSPC Case Arguments of February 14, 2005, page 9.
33 Exhibit 73 (NC) - WSPC Case Arguments of February 14, 2005, page 12.
34 Exhibit 73 (NC) - WSPC Case Arguments of February 14, 2005, page 12.
35 Exhibit 71 (NC) - WSPC Case Arguments of February 14, 2005, pages 4-5, 8-11.
36 Exhibit 71 (NC) - WSPC Case Arguments of February 14, 2005, pages 11-13.
37 Exhibit 71 (NC) - WSPC Case Arguments of February 14, 2005, pages 13-14.
38 Exhibit 71 (NC) - WSPC Case Arguments of February 14, 2005, page 14.
39 Exhibit 72 (NC) - BCVMC Reply Submission of February 28, 2005, pages 3-14.
40 Exhibit 72 (NC) - BCVMC Reply Submission of February 28, 2005, page 19.
41 Exhibit 72 (NC) - BCVMC Reply Submission of February 28, 2005, page 3.
42 Exhibit 72 (NC) - BCVMC Reply Submission of February 28, 2005, page 8.
43 Exhibit 67 (NC) - CBSA Import and Enforcement Statistics.
44 Exhibit 51 (NC) - BCVMC Response to ERQ of January 24, 2005, page 3, Tables 1 and 2.
45 Exhibit 32 (NC) - Washington State Agricultural Statistics.
46 Exhibit 32 (NC) - Washington State Agricultural Statistics.
47 Exhibit 69 (NC) - BCVMC Supplementary Submission of February 2, 2005, page 3, paragraphs 8-9.
48 Exhibit 12 (NC) - Tribunal Statement of Reasons of September 13, 2000, pages 16-17.
49 Exhibit 69 (NC) - BCVMC Supplementary Submission of February 2, 2005, page 2 and Appendix A.
50 Exhibit 23 (NC) - BCVMC Submission to Tribunal of November 30, 2004 &
Exhibit 41 (NC) - CBSA - Various Articles from The Vegetable Growers News.
51 Exhibit 70 (NC) - BCVMC Case Arguments of February 14, 2005, pages 10-11.
52 Exhibit 38 (NC) - U.S. National Potato Board.
53 Exhibit 34 (NC) - CBSA - Potato Stocks - January 14, 2005, page 1.
54 Exhibit 68 (NC) - CBSA - Apparent British Columbia Market.
55 Exhibit 12 (NC) - Tribunal Statement of Reasons of September 13, 2000, page 7.
