SM 2018 ER
Certain Silicon Metal
Statement of Reasons

[1] On October 16, 2018, the Canadian International Trade Tribunal (CITT), pursuant to subsection 76.03(3) of the Special Import Measures Act (SIMA), initiated an expiry review of its finding made on November 19, 2013, in Inquiry No. NQ-2013-003, concerning the dumping and subsidizing of certain silicon metal originating in or exported from China.

[2] As a result of the CITT’s notice of the expiry review, on October 17, 2018, the Canada Border Services Agency (CBSA) initiated an expiry review investigation to determine, pursuant to paragraph 76.03(7)(a) of SIMA, whether the expiry of the finding is likely to result in the continuation or resumption of dumping and/or subsidizing of the subject goods.

[3] The CBSA received a response to its Canadian Producer Expiry Review Questionnaire (ERQ) from Québec Silicon Limited Partnership (“QSLP”) and QSIP Canada ULC (“QSIP Canada”), collectively referred to as Quebec Silicon^{Footnote 1}. Quebec Silicon is the only Canadian producer of silicon metal in Canada and may also be referred to as “the Canadian producer” in this report. The submissions made by the Canadian producer included information supporting its position that continued or resumed dumping and subsidizing of certain silicon metal from China is likely if the CITT’s finding is rescinded.

[4] The CBSA received one response to the Importer ERQ from Rio Tinto Alcan Inc. (RTA)^{Footnote 2}. In the ERQ response, RTA expressed an opinion that the dumping and subsidizing of subject goods from China will not resume if the CITT’s finding is rescinded.

[5] In addition to responding to the ERQ, Quebec Silicon^{Footnote 3} submitted supplementary information prior to the closing of the record. The CBSA also received case briefs from the Canadian producer, Quebec Silicon^{Footnote 4}, and one importer, RTA^{Footnote 5}. The case brief submitted by the Canadian producer included information supporting its position that continued or resumed dumping and subsidizing of certain silicon metal from China is likely if the CITT’s finding is rescinded. The case brief submitted by the importer included information supporting its position that dumping and subsidizing of certain silicon metal from China will not resume if the CITT’s finding is rescinded.

[6] Both Quebec Silicon^{Footnote 6} and RTA^{Footnote 7} also filed reply submissions in response to the information and arguments made by the other interested party in their respective case briefs.

[7] The CBSA did not receive any responses to the Exporter ERQ from any exporters, nor did any exporters provide a case brief or reply submission.

[8] The CBSA did not receive a response to the Foreign Government ERQ from the Government of China (GOC), nor did the GOC provide a case brief or reply submission.

[9] Analysis of information on the administrative record in respect of the excess production capacity for silicon metal in China; China’s volume of production and its reliance on exports to address the oversupply of silicon metal in the Chinese market; recent pricing data which suggests that Chinese exporters are selling at low and potentially dumped prices in other markets and well below Canadian import prices; negligible volumes of subject imports into Canada despite cooperative exporters having normal values based on market pricing; and anti-dumping measures in place in Canada and in other jurisdictions on silicon metal from China, indicates a likelihood of continued or resumed dumping into Canada of certain silicon metal originating in or exported from China should the CITT’s finding be rescinded.

[10] In addition, analysis of information on the administrative record in respect of the continued availability of subsidy programs for silicon metal producers and exporters in China and a propensity of the GOC to subsidize silicon metal produced in China and exported to other markets as well as a variety of other goods imported into Canada, indicates a likelihood of continued or resumed subsidizing of certain silicon metal originating in or exported from China should the CITT’s finding be rescinded.

[11] For the forgoing reasons, the CBSA, having considered the relevant information on the administrative record, determined on March 15, 2019, under paragraph 76.03(7)(a) of SIMA that:

1. the expiry of the finding in respect of certain silicon metal originating in or exported from China is likely to result in the continuation or resumption of dumping of the goods into Canada; and
2. the expiry of the finding in respect of certain silicon metal originating in or exported from China is likely to result in the continuation or resumption of subsidizing of the goods exported to Canada.

[12] On April 22, 2013, following a complaint filed by Québec Silicon Limited Partnership and its affiliate QSIP Canada ULC of Bécancour, Quebec, the CBSA initiated investigations pursuant to subsection 31(1) of SIMA, respecting the dumping and subsidizing of certain silicon metal originating in or exported from China.

[13] On October 21, 2013, pursuant to subsection 41(1) of SIMA, the CBSA made final determinations of dumping and subsidizing in respect of the subject goods from China.^{Footnote 8}

[14] On November 19, 2013 pursuant to subsection 43(1) of SIMA, the CITT found that the dumping and subsiding of silicon metal originating in or exported from China were threatening to cause injury to the domestic industry in Canada.^{Footnote 9}

[15] On August 27, 2018, pursuant to subsection 76.03(2) of SIMA, the CITT issued a notice concerning the expiry of its finding, which was scheduled to occur on November 18, 2018. Based on the information filed during the expiry process, the CITT decided that a review of the finding was warranted.

[16] On October 16, 2018, the CITT initiated an expiry review of its finding pursuant to subsection 76.03(3) of SIMA.^{Footnote 10}

[17] On October 17, 2018, the CBSA initiated an expiry review investigation to determine whether the expiry of the finding is likely to result in continued or resumed dumping and/or subsidizing of the subject goods.

[18] The goods subject to the finding under review are defined as:

[28] The subject goods are normally classified under the following tariff classification number:

1. 2804.69.00.00

[29] This tariff classification number is for convenience of reference only. The tariff classification number provided may include goods that are not subject goods and subject goods may be imported into Canada under tariff classification numbers other than those provided. Refer to the product definition for authoritative details regarding the subject goods.

[30] The period of review (POR) for the CBSA’s expiry review investigation is from January 1, 2015 and July 31, 2018.

[31] In the CITT’s original Inquiry (NQ-2013-003), the CITT found that domestically produced silicon metal and the subject goods of the same description were like goods. The CITT also found that the subject goods and the like goods comprised a single class of goods.

[32] The Canadian industry for silicon metal is comprised of a single corporate group that is responsible for the production and the sales of like goods. The single corporate group is comprised of Québec Silicon Limited Partnership (“QSLP”) and QSIP Canada ULC (“QSIP Canada”), which are collectively referred to as Quebec Silicon.

[33] QSLP is responsible for the production of silicon metal, which is produced at its facility located in Bécancour, Quebec. QSIP Canada is responsible for the sale of silicon metal produced by QSLP.

[34] QSIP Canada is wholly owned by Ferroglobe PLC. QSLP is 50.99% owned by QSIP Canada; 49% owned by Dow Corning Corporation (DOW); and 0.01% owned by the Quebec Silicon General Partnership Inc. (General Partnership). The General Partnership manages QSLP by virtue of power of attorney and is 51% owned by QSIP Canada and 49% owned by Dow Switzerland Holding GmbH. Based on this structure, Ferroglobe has majority ownership and control over QSLP and complete ownership and control of QSIP Canada.^{Footnote 11}

[35] Prior to June 2012, Ferroglobe’s interests in Quebec Silicon were owned by Bécancour Silicon Inc., an unaffiliated third party. From July 2012 until late 2015, Quebec Silicon was owned by Globe Specialty Metals (Globe). In late 2015, Globe merged with Grupo FerroAtlantica to form Ferroglobe.^{Footnote 12}

[36] Quebec Silicon sells the silicon metal it produces to both end users and to a distributor who then re-sells it to end users. It should be noted that as a result of its ownership stake, Dow is entitled to 49% of the silicon metal produced by QSLP, while QSIP Canada is entitled to the remaining 51% of production. QSIP Canada is responsible for managing the production operations at the Bécancour facility with input from Dow with regards to production planning. All of the silicon metal sold to Dow is exported and Dow does not re-sell any of the silicon metal back into the Canadian market.^{Footnote 13}

[37] Since 2015, Quebec Silicon has increased its capacity to produce silicon metal in Canada. The increase in capacity is primarily the result of achieving higher operating times, improved performance, greater efficiency, and the rebuilding of two furnaces which increased power capacity.^{Footnote 14}

[38] The Canadian production and the apparent Canadian market for silicon metal cannot be disclosed as the total value and volume of Canadian production of silicon metal during the POR was based on confidential information filed by the sole Canadian silicon metal producer (i.e. Quebec Silicon). The imports of silicon metal from China and all other countries are presented in Table 1 and Table 2 below.

*This data cannot be disclosed without revealing confidential information.

*This data cannot be disclosed without revealing confidential information.

[43] As shown in Table 3 below, the total amount of anti-dumping and countervailing duties assessed on imports of subject goods from China between 2015 and 2017 equalled $14,451. This amount is reflective of the minimal amount of subject goods exported to Canada during the POR, as noted in the previous section.

*Enforcement data for this period was not available as of the close of record.

[44] On October 17, 2018, a notice concerning the CBSA’s initiation of the expiry review investigation was sent to the Canadian producer and potential importers and exporters of silicon metal, as well as to the GOC. All of these parties were also sent an ERQ.

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

[46] The only Canadian producer, Quebec Silicon, participated in the expiry review investigation and provided an ERQ response. One importer, RTA, also participated in the expiry review investigation and provided an ERQ response. None of the exporters contacted for purposes of the expiry review investigation provided a response to the ERQs.

[47] Case briefs and reply submissions were received from counsel on behalf of Quebec Silicon and RTA. No other case briefs or reply submissions were received by the CBSA from any other parties notified by the CBSA at the initiation of the expiry review investigation.

[48] The GOC did not provide a response to the CBSA’s ERQ, nor did it submit a case brief or reply submission.

Administrative Record

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

[50] For purposes of an expiry review investigation, the CBSA sets a date after which no new information submitted by interested parties may be placed on the administrative record or considered as part of the CBSA’s investigation. This is referred to as the closing of the record date. This allows participants time to prepare their case briefs and reply submissions based on the information that is on the administrative record as of the date the record closed. For this expiry review investigation, the administrative record closed on December 18, 2018.

Likelihood of Continued or Resumed Dumping

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

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

• excess production capacity for silicon metal in China;
• China’s volume of production and its reliance on exports to address the oversupply of silicon metal in the Chinese market;
• recent pricing data which suggests that Chinese exporters are selling at low and potentially dumped prices in other markets and well below Canadian import prices;
• negligible volumes of subject imports into Canada despite cooperative exporters having normal values based on market pricing; and
• anti-dumping measures in place in other jurisdictions against silicon metal from China.

[100] As mentioned earlier in this report, the CBSA received ERQ responses from the sole Canadian producer (Quebec Silicon) and one importer (RTA). In addition to ERQ responses, the Canadian producer and the importer also submitted case briefs and reply submissions.

[101] The CBSA relied on information submitted by these parties, as well as other information on the administrative record for purposes of this expiry review investigation.

Excess production capacity for silicon metal in China

[102] While information regarding annual Chinese production capacity for silicon metal is limited, information on the administrative record shows that Chinese silicon metal capacity far exceeds capacity in the rest of the world and that much of that capacity remains underutilized.

[103] According to a report by Roskill, China accounted for 75% of global capacity and 65% of the world’s total production of silicon metal in 2016. It also noted that global silicon metal capacity utilization was estimated to be 51% in 2016, which “reflects the overcapacity and low utilization rate which characterises the Chinese silicon metal industry.” Roskill estimated that world silicon metal production reached 2.7 million MT in 2016. Using its estimated utilization rate, this suggests that world capacity in 2016 would have been around 5.3 million MT, meaning China’s silicon metal capacity would have been almost 4 million MT. At 65% of world production, Roskill’s numbers suggest that China would have produced approximately 1.8 million MT, resulting in an excess capacity of just over 2 million MT. Based on import data and Canadian sales data collected by the CBSA, excess Chinese capacity would be equal to more than 60 times the entire size of the Canadian market.^{Footnote 66}

[104] According to Quebec Silicon, the available CRU data only provides information covering the global and Chinese capacity for silicon metal in 2017. Based on that information, China accounted for more than three-quarters of the total global silicon metal production capacity in 2017 and was operating at a very low capacity utilization rate when comparing capacity with actual production. Further, the CRU data indicates that a very significant amount of excess capacity for silicon metal existed in China in 2017. In comparing CBSA data on the total apparent Canadian market in 2017 with Chinese excess capacity data from CRU in the same year, Chinese excess capacity would have been more than 150 times the size of the entire Canadian market.^{Footnote 67}

[105] Despite the lack of capacity data for 2018, information on the administrative record indicates that Chinese production capacity is expected to continue to increase in the near term. According to a September 2017 article by S&P Global Platts, CNIA data indicated that 1.77 million MT of new silicon metal capacity was planned, mainly in Xinjiang, over the next two to three years. However, the article did caution that the CNIA expected delays in the construction of the new capacity. In an outlook on the 2018 silicon metal market, Roskill noted that while Chinese ferrosilicon production has been subject to increasingly stringent government controls on overcapacity and emissions, silicon metal capacity and output has been permitted to increase further.^{Footnote 68}

[106] Information available in CRU’s October 2018 Outlook report supports the articles referenced in the paragraph above. While providing greater detail and specifying particular capacity expansion projects in specific regions, CRU also noted that certain projects had been suspended or stopped. However, despite the delays and possible cancellations of certain projects, CRU data still showed that a large amount of new capacity had been constructed and, in some cases, was already in operation. The new capacity, which has been added despite the low capacity utilization rates noted above, is so large that it is more than 30 times the entire size of the Canadian market in 2017.^{Footnote 69}

[107] Information from CRU shows that most of the actual and planned silicon metal capacity expansions in China are focused on the northwestern province of Xinjiang and that most of the silicon metal in China is now produced in Xinjiang. The main reason for additional capacity being added to Xinjiang, as well as it being the largest silicon metal producing province, is that the cost of production is substantially lower in Xinjiang due to significantly lower electricity costs. This is due to the fact that silicon metal producers in Yunnan and Sichuan only have access to less expensive electricity during the rainy season. In fact, electricity costs are so much higher during the dry season (i.e. from November to April) in southern China, that silicon metal producers in Yunnan and Sichuan traditionally partially or fully halt production until lower hydroelectricity costs become available in the rainy season. Conversely, lower electricity rates in Xinjiang are available year-round and are lower than even the lowest rates available in Yunnan and Sichuan during the rainy season.^{Footnote 70}

[108] Given the advantage of lower costs in Xinjiang, it is not surprising that the province went from being the second largest producer of silicon metal in China, behind Yunnan, to becoming the largest producer in the first-half of 2018. According to CNIA data, in the first-half of 2018, Xinjiang accounted for 47.4% of Chinese production of silicon metal, while Yunnan accounted for 16% and Sichuan 11%. CRU projections show that this trend will only continue as we move towards 2023, with the gap between Xinjiang and China’s other two main silicon metal producing provinces widening even further. By 2023, CRU projects that Xinjiang will account for the vast majority of total Chinese production of silicon metal.^{Footnote 71}

[109] Given the immense excess Chinese production capacity for silicon metal that existed in 2016 and 2017; the significant increases in Chinese capacity in the near term combined with already low capacity utilization rates prior to those increases; Chinese exporters of silicon metal would have the ability to significantly and easily increase production and resume exporting significant volumes to Canada and could certainly supply the entire Canadian market absent the CITT’s finding.

China’s volume of production and its reliance on exports to address the oversupply of silicon metal in the Chinese market

[110] According to CRU data, from 2015 to 2018, China’s production volume of silicon metal continually increased and China accounted for the majority of total global production during that period. Looking forward, China’s production volume is expected to continue to increase each year after 2018. While China’s share of total world production is projected to decrease slightly over the period, Chinese production of silicon metal is projected to remain well above half of the total global production in each of the next five years.^{Footnote 72}

[111] With respect to domestic demand for silicon metal in China, from 2015 to 2018, China’s consumption continually increased during the period. Further, Chinese domestic demand for silicon metal is projected to continue rising over the next five years.^{Footnote 73}

[112] In 2015, Chinese production significantly exceeded domestic demand and by 2017, the gap between production and domestic demand widened further. The gap between Chinese production and Chinese demand is projected to narrow incrementally over the next five years until 2023. While the increases in domestic demand in China are forecasted to exceed projected increases in production over the 2019-2023 period, the 10-year trend of Chinese silicon metal production vastly exceeding Chinese demand will continue in the near future.^{Footnote 74}

[113] Given the significant gap between Chinese production and domestic demand, Chinese silicon metal producers have had to rely on export markets to consume more than a third of their production between 2015 and 2018. While exports as a percentage of total production in China have decreased over the 2015-2018 period, the actual volume of Chinese silicon metal exports has increased. While Chinese exports as a percentage of Chinese production are projected to continually decrease between 2019 and 2023, the volume of silicon metal exports from China will remain significantly higher than 500,000 MT during the five-year forecast period.^{Footnote 75}

[114] Data from CRU shows that world production has exceeded world demand since 2013 and will continue to do so through to the end of the forecast period in 2023. In both 2015 and 2016, the volume of global production in excess of global demand remained flat. In 2017, excess global production fell by half, only to rise markedly in 2018 and reach more than double the amount of excess production reported in the 2015-2016 period. CRU projects that global production will continue to exceed global demand by an amount comparable to the 2015-2016 period in each year throughout the forecast period of 2019-2023.^{Footnote 76}

[115] Despite excess global production, China has continued to significantly increase capacity, as noted earlier, as well as actual production. During the period of 2015 and 2018, the total increase in Chinese production volume was greater than the volume in which global production exceeded global demand for silicon metal. Going forward, this trend will continue as global production is projected to continue to exceed global demand between 2019 and 2023 while Chinese production is forecasted to increase by an even greater amount over the same period.^{Footnote 77}

[116] Based on the CRU data regarding global production exceeding demand and the increases in Chinese silicon metal production, the volume of excess global production has been and continues to be driven by significant increases in Chinese capacity and production volumes. Moving forward towards 2023, the total volume of excess global production is forecasted by CRU to be greater than the entire size of the Canadian apparent market.^{Footnote 78}

[117] Based on the information above, it is apparent that there will be more than enough Chinese produced silicon metal in excess of Chinese domestic demand that, combined with projected global excess production, could be used to easily supply the entire Canadian market going forward to 2023. The paragraphs above demonstrate that based on current and projected volumes of silicon metal production in China through to 2023, Chinese exporters will have to continue to rely on export markets to absorb more than a quarter of all silicon metal produced in China. This is in addition to the fact that producers are already operating at low capacity utilization rates and additional capacity continues to be added.

Recent pricing data which suggests that Chinese exporters are selling at low and potentially dumped prices in other markets and well below Canadian import prices

[118] In reviewing the pricing data available on the administrative record, the information suggests that exports of silicon metal from China to other markets in certain recent periods could be below domestic selling prices in China, making them potentially dumped prices. The information also shows that in certain periods, Chinese export prices of certain grades of silicon metal appear to fall below average net operating costs in China.

[119] According to CRU data, Chinese silicon metal has accounted for almost all silicon metal imports into Japan and Japan has been China’s largest export market during the 2015-2017 period.^{Footnote 79} In looking at the most recent quarterly pricing data published by CRU Bulk Ferroalloys Monitor (BFA) in December 2018, Japanese import pricing of Chinese origin silicon metal in Grade 553 in each of the first three quarters of 2018 is at or below the reported Chinese domestic selling price for Grade 553. Monthly CRU BFA pricing data also shows that in the most recent period, November 2018, the Chinese domestic price is higher than the Japanese import price of China origin silicon metal.^{Footnote 80}

[120] In examining recent export pricing information for Grade 553, available from Metal Bulletin, and comparing it to Chinese domestic pricing reported by CRU BFA, it appears that Chinese export prices in the first seven months of 2018 are below domestic selling prices in China and well below prices for Grade 553 in Europe. The difference in these prices suggests that the Chinese export price during the period could possibly be dumped. It should be noted that the Chinese domestic prices reported by CRU BFA are delivered-at-place (DAP), meaning the goods are delivered to the location of the buyer in China. The export prices reported by Metal Bulletin are free-on-board (FOB), which means the exporter delivers them to the port and loads them onto the vessel. As such, the direct comparability of the CRU BFA and Metal Bulletin prices would depend on how far the Chinese buyer is from the producer versus how far the producer is from the port, but in any event prices should be similar.^{Footnote 81}

[121] In comparing Metal Bulletin’s monthly average pricing for Chinese export sales of silicon metal for the period of October 2017 to September 2018 to the Chinese average net operating cost for 2017 and 2018, as reported by CRU in its November 2018 cost report, it was found that the monthly average Chinese export price fell below cost in July 2018 and remained below cost through September 2018. This suggests that Chinese silicon metal prices for export markets may have been dumped during the most recent period in which there is pricing information on the administrative record.^{Footnote 82}

[122] The average annual Chinese export prices as reported by CRU for the two most common grades of silicon metal, Grades 553 and 441, were also compared to the annual weighted average import price for all silicon metal imported into Canada during the POR. The comparison showed that the annual average export prices from China for both grades fell well below the weighted average Canadian import price for silicon metal throughout the POR.^{Footnote 83}

[123] Based on the pricing analysis above, recent pricing information suggests that Chinese export prices are well below recent Canadian import prices and that Chinese exporters are selling at very low and potentially dumped prices in other markets, including China’s largest export market. In the event that the current finding were to expire, it is therefore likely that silicon metal exported from China to Canada would be at substantially lower prices than current imports into Canada and that those prices would likely be dumped.

Negligible volumes of subject imports into Canada despite cooperative exporters having normal values based on market pricing

[124] As noted by both RTA and Quebec Silicon and confirmed by CBSA import statistics, imports of subject goods into Canada since the finding, including during the POR, have essentially been non-existent. While the Canadian producer contended that this was due to Chinese exporters’ inability to export at prices at or above normal values, RTA contended that it was specifically due to the normal values calculated by the CBSA because the normal values are a technical result of China's non-cooperation in the CBSA’s 2013 investigation.

[125] It should be noted that the CBSA did not determine the existence of section 20 conditions based on the lack of cooperation of the GOC and Chinese exporters. As detailed in the Statement of Reasons (SOR) issued at the final determination, an analysis of factors including: GOC export control measures; state-ownership in the Chinese silicon metal sector; government influence on the price of inputs used in the production of silicon metal; government purchases of silicon metal; government policies and regulations directed at production levels and participants; government restrictions on the use and supply of inputs; and Chinese domestic silicon metal prices, led to the CBSA determining that domestic prices were substantially determined by the GOC, and that there was sufficient reason to believe that the domestic prices of silicon metal were not substantially the same as they would have been in a competitive market.^{Footnote 84}

[126] It should be noted that six Chinese exporters fully cooperated with the CBSA’s investigation and received normal values. The SOR explains that normal values were determined under section 29 of SIMA pursuant to ministerial specification due to the fact that insufficient information was received from surrogate producers located outside of China, which prevented the CBSA from being able to determine normal values pursuant to paragraph 20(1)(c) of SIMA. As a result, normal values for the six cooperative exporters of subject goods were determined under section 29, based on prices for Grade 553 published by Metal Bulletin that were adjusted to remove an amount for freight. For grades other than 553, the published prices were adjusted to reflect pricing premiums for higher grades of silicon metal.^{Footnote 85}

[127] The CBSA notes that while Japan and Korea represent China’s two largest export markets over the POR, recent Chinese export prices are still well below pricing in both the European and U.S. market.^{Footnote 86}

[128] Based on the above, it appears that Chinese exporters choose not to export to Canada while continuing to export to other markets at prices substantially lower than prices reported in the European and U.S. markets. Further, as noted in the preceding section, prices to China’s largest export market are not only lower than prices to other markets, they are substantially lower than prices of Canadian imports and potentially below Chinese domestic selling prices and Chinese net operating costs in certain periods. As such, in the event that the CITT’s finding were to expire, pricing data strongly suggests that export prices to Canada would be substantially below current Canadian import prices and prices in other comparable markets.

Anti-dumping measures in place in other jurisdictions against silicon metal from China

[129] As noted earlier in the report, anti-dumping measures are currently in place against Chinese silicon metal in the U.S., EU, and Australia.

[130] Most recently, the USITC completed its fourth review of the anti-dumping measures in place against Chinese silicon metal in May 2018 and determined that the measures should continue. The original anti-dumping duty order issued by the US Department of Commerce dates back to June 1991, demonstrating a long history of dumping and likelihood of continued or resumed dumping by Chinese exporters. The highest amount of U.S. anti-dumping duty currently in place against Chinese silicon metal equals 139.49%.^{Footnote 87}

[131] The EU also recently conducted a review of its anti-dumping measures in place against Chinese silicon metal and in July 2016 determined that the measures should continue. The rates of anti-dumping duty that apply to Chinese subject goods range from 16.3% to 16.8%. It should be also noted that since EU anti-dumping measures were originally put in place in December 1995, the EU has conducted two anti-circumvention investigations and found that exporters located in both Korea and Taiwan had circumvented the finding against Chinese silicon metal.^{Footnote 88}

[132] In addition to the recent reviews and continuations of existing anti-dumping measures in both the U.S. and the EU, Australia recently conducted an original investigation and determined in June 2015 that Chinese silicon metal was both dumped and subsidized. Combined anti-dumping and countervailing duties currently in place against Chinese silicon metal range from 14.1% to 53.6%.^{Footnote 89}

[133] Based on the information on the administrative record, as summarized above, there is a long history of anti-dumping measures in jurisdictions other than Canada, which demonstrates a propensity of Chinese exporters to dump silicon metal into international markets across multiple continents. The recent decisions in the U.S., the EU and Australia all suggest that there is a strong likelihood that Chinese exporters of silicon metal would resume dumping subject goods into Canada should the CITT let the current finding expire.

Determination Regarding Likelihood of Continued or Resumed Dumping

[134] Based on the information on the administrative record demonstrating that: Chinese silicon metal producers have significant excess production capacity; Chinese producers continue to produce large volumes of silicon metal in excess of Chinese demand and rely on exports to address oversupply in the Chinese market; recent pricing data shows that Chinese exporters are selling at low and potentially dumped prices in other markets and well below Canadian import prices; the volume of Chinese exports of silicon metal to Canada have been negligible since the finding despite cooperative exporters having normal values based on market pricing; and anti-dumping measures in place in Canada and in other jurisdictions demonstrate that Chinese silicon metal exporters have a propensity to dump into export markets, the CBSA determined that the expiry of the finding is likely to result in the continuation or resumption of dumping into Canada of certain silicon metal originating in or exported from China.

Likelihood of Continued or Resumed Subsidizing

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

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

• the continued availability of subsidy programs for silicon metal producers and exporters in China; and
• a propensity of the Government of China to subsidize silicon metal produced in China and exported to other markets as well as a variety of other goods imported into Canada.

The continued availability of subsidy programs for silicon metal producers and exporters in China

[145] At the time of the conclusion of the CBSA’s original subsidy investigation in 2013, the CBSA had identified 91 subsidy programs and had found that 6 of the 91 identified programs had conferred benefits to the cooperative exporters. The CBSA determined that 100% of the subject goods exported from China were subsidized and that the weighted average amount of subsidy, expressed as a percentage of the export price, was equal to 21.1%. The amounts of subsidy found for the cooperative exporters ranged from 1,460.5 to 1,934.5 Renminbi (RMB) per MT. For all other exporters, the amount of subsidy was determined under Ministerial Specification pursuant to subsection 30.4(2) of SIMA. The amount of subsidy determined for non-cooperative exporters was equal to 1,945.0 RMB/MT.^{Footnote 95}

[146] Detailed descriptions of the programs and explanations as to why they were regarded as countervailable subsidies are contained in the CBSA’s Statement of Reasons issued at the final determination.^{Footnote 96}

[147] In reviewing China’s most recent subsidy notification filed with the WTO in July of 2018^{Footnote 97}, the CBSA noted that some of the programs available during the original investigation period appear to remain available and that there are new programs that have been added since 2013, which could potentially be used by silicon metal producers and exporters. While the names used by the GOC for the programs can differ from those used by the CBSA, the following list of programs highlights some of the programs included in the notification that are identical or similar to programs included in the original investigation and that could be potentially available to Chinese silicon metal producers and exporters. The list below is only meant to provide some examples of the continued availability of subsidy programs in China, which could potentially be used by Chinese silicon metal producers and is not meant to be exhaustive.^{Footnote 98}

1. Preferential tax policies in the western regions: this program is available from 2001-2020 and provides reduced income tax rates and exemptions of value-added tax (VAT) on imported equipment for enterprises in encouraged industries located in specified regions. The regions include the largest silicon metal producing provinces of Sichuan, Yunnan, and Xinjiang.
2. Preferential tax policies for high or new technology enterprises: this program is available from 2008 to the present and provides a reduced income tax rate to high or new technology enterprises.
3. Preferential tax policies for the additional calculation and deduction of research and development expenses: this program is available from 2008 to the present and provides a reduced income tax rate to enterprises for the development of new technologies, new products and new techniques.
4. Preferential tax policies for enterprises transferring technology: this program is available from 2008 to the present and provides an income tax exemptions and/or reductions to resident enterprises who transfer technology.
5. Preferential tax treatment for products produced with integrated utilization of resources: this program is available from 2015 to the present and provides tariff exemptions on imported equipment for projects encouraged by the state.
6. Preferential tax treatment for import of equipment: this program is available from 1998 to the present and provides VAT exemptions and/or reductions to enterprises using specified types of raw materials and energy resources.
7. Fund for development of strategic emerging industries: this program is available from 2012 to the present and provides funding to promote innovation and key technologies for projects in strategic industries.
8. Reward and support fund for restructuring of industrial enterprises: this program is available from 2016 to the present and provides funding allocations based on excessive capacities dissolved in steel, coal and other industries.

[148] Since the final determination of the original investigation, and throughout the period of review, the information available on the administrative record indicates that the GOC continues to have subsidy programs that are available and could potentially be used by Chinese producers and exporters of silicon metal.

A propensity of the Government of China to subsidize silicon metal produced in China and exported to other markets as well as a variety of other goods imported into Canada

[149] As highlighted by the Canadian producer and noted earlier in the report, of the 22 trade measures in Canada currently in place against Chinese goods, 19 of those measures include countervailing duties in addition to anti-dumping duties.^{Footnote 99}

[150] Information on the administrative record also shows that Australia recently conducted an original countervailing investigation respecting Chinese silicon metal and determined that Chinese silicon metal was subsidized. In its determination issued on June 3, 2015, following the completion of the investigation, the Anti-Dumping Commission of Australia found that cooperative exporters had been subsidized by a margin of 6.3% and that all other exporters had been subsidized by a margin of 37.6%.^{Footnote 100}

[151] The existence of numerous countervailing measures in place in Canada against a variety of Chinese goods, including silicon metal, and the countervailing measures recently put in place in Australia on Chinese silicon metal demonstrates that Chinese producers and exporters of silicon metal have received countervailable benefits from the GOC and will likely continue to receive countervailable subsidies in the future.

Determination Regarding Likelihood of Continued or Resumed Subsidizing

[152] Based on the information on the administrative record in respect of the continued availability of subsidy programs for silicon metal producers and exporters in China and a propensity of the Government of China to subsidize silicon metal produced in China and exported to other markets as well as a variety of other goods imported into Canada, the CBSA determined that the expiry of the finding is likely to result in the continuation or resumption of subsidizing of certain silicon metal originating in or exported from China.

[153] For the purpose of making a determination in this expiry review investigation, the CBSA conducted its analysis within the scope of the factors found under subsection 37.2(1) of the SIMR. Based on the foregoing consideration of pertinent factors and analysis of the information on the administrative record, on March 15, 2019, the CBSA made a determination pursuant to paragraph 76.03(7)(a) of SIMA that the expiry of the CITT’s finding made on November 19, 2013, in Inquiry No. NQ-2013-003:

1. in respect of certain silicon metal originating in or exported from China is likely to result in the continuation or resumption of dumping of the goods; and
2. in respect of certain silicon metal originating in or exported from China is likely to result in the continuation or resumption of subsidizing of the goods.

[154] On March 18, 2019, the CITT commenced its inquiry to determine whether the expiry of the finding with respect to the dumping and subsidizing of certain silicon metal from China is likely to result in injury. The CITT’s Expiry Review schedule indicates that it will make its decision by August 22, 2019.

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

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

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