Statement of reasons—Expiry review determination: Thermoelectric Containers (TC 2024 ER)

Decision

Ottawa, January 8, 2025

On December 24, 2024 pursuant to paragraph 76.03(7)(a) of the Special Import Measures Act, the Canada Border Services Agency determined that the expiry of the Canadian International Trade Tribunal’s order made on September 5, 2019, in Expiry Review No. RR-2018-004:

• is likely to result in the continuation or resumption of dumping of such goods originating in or exported from China and
• is likely to result in the continuation or resumption of subsidizing of such goods originating in or exported from China

Executive summary

[1] On July 29, 2024, the Canadian International Trade Tribunal (CITT), pursuant to subsection 76.03(1) of the Special Import Measures Act (SIMA), initiated an expiry review of its order made on September 5, 2019, in Expiry Review No. RR-2018-004, concerning the dumping and subsidizing of thermoelectric containers that provide cooling and/or warming with the use of a passive heat sink and a thermoelectric module, excluding liquid dispensers (certain thermoelectric containers) originating in or exported from the People’s Republic of China (China).

[2] As a result of the CITT’s notice of expiry review, the Canada Border Services Agency (CBSA), on July 30, 2024, initiated an investigation to determine, pursuant to paragraph 76.03(7)(a) of SIMA, whether the expiry of the order 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 the Canadian producer expiry review questionnaire (ERQ) from Koolatron Corporation (“Koolatron”).^{Footnote 1} The submissions made by Koolatron expressed an opinion that the continued or resumed dumping and subsidizing of certain thermoelectric containers from China is likely if the CITT’s order expires.

[4] The CBSA received a response to the Canadian importer ERQ from Whaleco Canada Inc. (“Whaleco”), an e-commerce company doing business under the brand name “Temu”.^{Footnote 2} Whaleco did not express an opinion on the likelihood of continued or resumed dumping and/or subsidizing of subject goods.

[5] The CBSA did not receive any responses to the exporter ERQ or the foreign government ERQ.

[6] Koolatron provided a case brief to the CBSA in support of their position that continued or resumed dumping and subsidizing of certain thermoelectric containers from China is likely if the CITT’s order expires.^{Footnote 3} No other party provided a case brief to the CBSA and no party provided a reply submission in response to Koolatron’s case brief.

[7] The analysis of information on the administrative record indicates a likelihood of continued or resumed dumping into Canada of certain thermoelectric containers from China should the CITT’s order expire. This analysis relied upon the following factors:

• Continued dumping of subject goods from China while the order was in effect;
• Import patterns of subject goods from China;
• Low barriers to entry and price sensitivity in the Canadian market;
• Weak consumer demand in the Chinese economy;
• Attractiveness of the Canadian market;
• Competitive retail environment in Canada;
• Export orientation of thermoelectric container production in China;
• Potential for a Chinese producer to produce the goods in a facility that is currently used to produce other goods; and
• Excess capacity of thermoelectric container production in China relative to Chinese domestic demand.

[8] The analysis of information on the administrative record indicates a likelihood of continued or resumed subsidizing into Canada of certain thermoelectric containers from China should the CITT’s order expire. This analysis relied upon the following factors:

• Continued availability of subsidy programs for producers and exporters of thermoelectric containers in China; and
• The volume of subsidized goods imported into Canada during the period of review (POR).

[9] For the foregoing factors, the CBSA, having considered the relevant information on the record, determined on December 24, 2024, pursuant to paragraph 76.03(7)(a) of SIMA that the expiry of the order in respect of certain thermoelectric containers is likely to result in the continuation or resumption of dumping and subsidizing of the goods from China.

Background

[10] On May 15, 2008, following a complaint filed by Koolatron Corporation of Brantford, Ontario, the CBSA initiated investigations, pursuant to subsection 31(1) of SIMA, respecting the dumping and subsidizing of certain thermoelectric containers originating in or exported from China.

[11] On November 10, 2008, the CBSA made final determinations of dumping and subsidizing, in accordance with paragraph 41(1)(a), in respect of certain thermoelectric containers from China.

[12] On December 11, 2008, pursuant to subsection 43(1) of SIMA, the CITT found that the dumping and subsidizing of certain thermoelectric containers from China had caused injury to the Canadian domestic industry.

[13] On November 25, 2010, the CBSA concluded a re-investigation to update the normal values, export prices, and amounts of subsidy in respect of certain thermoelectric containers from China.

[14] On March 1, 2012, the CBSA concluded a re-investigation to update the normal values, export prices, and amounts of subsidy in respect of certain thermoelectric containers from China.

[15] On December 9, 2013, the CITT determined that the expiry of its finding would cause material injury to the domestic industry. Therefore, the CITT continued its finding made in Inquiry No. NQ-2008-002.

[16] On July 30, 2014, the CBSA concluded a re-investigation to update the normal values, export prices, and amounts of subsidy in respect of certain thermoelectric containers from China.

[17] On September 5, 2019, the CITT determined that the expiry of its order would cause material injury to the domestic industry. Therefore, the CITT continued its order made in Expiry Review No. RR-2012-004.

[18] On July 29, 2024, the CITT initiated an expiry review of its order made in Expiry Review No. RR-2018-004, pursuant to subsection 76.03(1) of SIMA.

[19] On July 30, 2024, the CBSA initiated an expiry review investigation to determine whether the expiry of the order is likely to result in continued or resumed dumping and/or subsidizing of the subject goods.

Product definition

[20] The subject goods, referred to as “certain thermoelectric containers”, are defined as:

[21] For purposes of this expiry review investigation, “thermoelectric containers” refer to goods that meet the above product definition, irrespective of the country of origin or export. For example, “thermoelectric containers” also refer to goods produced domestically in Canada that meet the above product definition.

Exclusion

[22] The exclusion of liquid dispensers from the definition is intended to exclude such products as water coolers, cream dispensers and milk dispensers.

Production process

[29] Thermoelectric containers are not manufactured to any industry-wide specification for quality, performance or otherwise.

[30] Thermoelectric containers are composed of an insulated box and a heat pump along with electronics. The box consists of an inner and outer shell with two-part polyurethane foam insulation injected between the inner and outer wall. The shells can be made of plastic, metal, cardboard or fabric.

[31] The plastic shells are manufactured by using either injection moulding, vacuum forming or by using rotationally moulded parts. Metal, fabric and cardboard shells are fabricated, which does not require moulds.

[32] Lids and doors are constructed in a similar manner. Solid plastic and metal lids are comprised of an inner and outer shell, with polyurethane foam sandwiched between the inner and outer shell. For coolers with a clear plastic or glass lid or door, the inner and outer shell is made of either clear plastic or a solid plastic, with part of the plastic lid being cut out and replaced with clear plastic or glass.

[33] The heat pump consists of a heat sink on the outside and a cold plate on the inside of the cooler, which are joined together by an extender block. The thermoelectric module is placed between the heat sink and the extender block. A fan motor (or motors) blows air on the cold plate and the heat sink. Depending on the use of the container, various types of controllers are added.

[34] The production process generally begins with the inner and outer shell being treated with electro treatment. The inner and outer shell are then assembled and conveyed through a heat tunnel to a foam insulation station. Two-part polyurethane is injected between the shells that are then placed in foaming fixtures. The inner and outer shell containing the foam are held in these fixtures for up to six minutes, while the two-part polyurethane foam expands through a chemical reaction. Once the foamed boxes and lids are removed from the foaming fixtures they are placed on the main production line.

[35] The assembly of the heat pump consists of a heat sink, a thermoelectric module and an extender block. In order to reduce heat receptivity, silicon grease is applied on all surfaces which are in contact with each other. The thermoelectric module is generally a small device (of matchbook size) made-up of a number of pairs of bismuth telluride crystals sandwiched between ceramic plates. In order to obtain proper contacts, without breaking the ceramic, the thermoelectric module is carefully sandwiched between the heat sink and cold plate. The heat pump is assembled and placed on the outside of the box and on the inside a cold plate is attached to the extender block. As the box travels down the main assembly line, a fan motor is added and wired, fan blades on the inside and outside are attached, a cold plate shroud is fitted and finally lids and latches are installed.

[36] Thermoelectric containers require no special packaging or approvals. They are easily distributed by national retailers and wholesalers. They are generally sold fully assembled and ready to use, packaged in protective boxes for shipping and ease of palletizing.

Classification of imports

[37] The importation of the subject goods are usually classified under the following tariff classification numbers:

1. 8418.61.00.00
2. 8418.50.10.00
3. 8418.50.29.00
4. 8418.69.90.90
5. 8418.99.90.90

[38] The subject goods may also be imported under the following tariff classification numbers:

1. 8418.29.00.00
2. 8418.69.90.80

[39] This listing of tariff classification numbers is for convenience of reference only. Refer to the product definition for authoritative details regarding the subject goods.

Period of review

[40] The period of review (POR) for the CBSA’s expiry review investigation is from January 1, 2021 to June 30, 2024.

Canadian industry

[41] Koolatron Corporation of Brantford, Ontario, is the only known domestic producer of thermoelectric containers in Canada. MTL Technologies, Inc. of Chambly, Quebec, previously produced thermoelectric containers in small quantities but did not produce any during the POR.

Koolatron Corporation

[42] A response to the Canadian Producer ERQ for the thermoelectric containers expiry review investigation was received from Koolatron Corporation (“Koolatron”). Koolatron produces thermoelectric containers ranging from 4 to 100 litres of internal volume capacity. They produce thermoelectric containers marketed for travel-use, home-use, wine storage, display, commercial, and medical uses.

[43] Koolatron, a privately held company, started in the business of thermoelectric cooling and warming in 1976. Koolatron's current manufacturing facilities for the production of thermoelectric containers are located in Brantford, Ontario. Koolatron’s Brantford facility currently employs approximately 60 full time workers. The production of thermoelectric containers represents approximately 90% of the total production at Koolatron’s Brantford plant.

[44] In addition to producing and selling thermoelectric containers, Koolatron is also a manufacturer of various other products as well as an importer and reseller of consumer products for which it has obtained distributor licenses.^{Footnote 4}

[45] Koolatron accounts for all total known domestic production of thermoelectric containers in Canada and is thus considered representative of the entire Canadian industry.

MTL Technologies, Inc.

[46] The only other known Canadian producer was MTL Technologies, Inc., located in Chambly, Quebec. MTL Technologies, Inc. was a niche producer dealing in small volumes of customized retail display coolers.^{Footnote 5}

Canadian market

[47] The CBSA cannot release specific quantitative data regarding the value and volume of Canadian production of thermoelectric containers sold for domestic consumption as it would lead to the disclosure of confidential information from Koolatron, the only Canadian producer of thermoelectric containers. Therefore, only the imports of thermoelectric containers during the POR are presented.

[48] The imports into Canada of thermoelectric containers during the POR are presented by volume and value in Table 1 and by percentage in Table 2 below.

[49] Based on confidential information on the administrative record, during the POR, the Canadian producer’s market share fluctuated, and ultimately experienced a very minor change in market share, in terms of both value and volume.^{Footnote 7}

[50] Based on confidential information on the administrative record, during the POR, the share of the apparent Canadian market by subject goods from China increased, in terms of value and volume.^{Footnote 8}

[51] Based on confidential information on the administrative record, during the POR, the share of the apparent Canadian market by imports from other countries decreased, in terms of value and volume.^{Footnote 9}

Enforcement data

[52] In the enforcement of the CITT’s order during the POR, as detailed in Table 3 below, the CBSA assessed a total amount of anti-dumping and countervailing duties of $3,923,168 on subject goods imported from China. The total value for duty of subject goods imports during the POR from China was approximately $19,580,004. As a percentage of the total value for duty, the combined anti-dumping and countervailing duties assessed during the POR were equal to 20.0%. The total quantity of subject goods, on which anti-dumping and countervailing duties were assessed was approximately 208,939 units.

Information considered by the CBSA

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

[61] For purposes of an expiry review investigation, the CBSA sets a date after which no new information submitted by interested parties will be placed on the administrative record or considered as part of the CBSA’s investigation. This is referred to as the “closing of the record date” and is set to allow participants time to prepare their case briefs and reply submissions based on the information that is on the administrative record as of the closing of the record date. For this investigation, the administrative record closed on September 18, 2024, at noon Eastern Time.

Position of the parties: Dumping

Consideration and analysis: Dumping

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

[90] Guided by these aforementioned factors, the CBSA conducted its review based on the documentation submitted by the various participants and its own research, all of which can be found on the administrative record. The following list represents a summary of the CBSA’s analysis conducted in this expiry review investigation with respect to dumping:

• Continued dumping of subject goods from China while the order was in effect
• Import patterns of subject goods from China
• Low barriers to entry and price sensitivity in the Canadian market
• Weak consumer demand in the Chinese economy
• Attractiveness of the Canadian market
• Competitive retail environment in Canada
• Export orientation of thermoelectric container production in China
• Potential for a Chinese producer to produce the goods in a facility that is currently used to produce other goods and
• Excess capacity of thermoelectric container production in China relative to Chinese domestic demand

Continued dumping of subject goods from China while the order was in effect

[91] As detailed in Table 3, the CBSA assessed a total amount of anti-dumping and countervailing duties of $3,923,168 on subject good imports from China during the POR. The total value for duty of subject good imports from China was approximately $19,580,004. Thus, the average SIMA duty collected on subject goods during the POR was 20.04%.^{Footnote 44} This 20.04% average of SIMA duty collected during the POR includes duty assessed on exports by both the sole cooperative exporter, Dometic Asia Co., Ltd. / Dometic (Shenzhen) Electronics Co., Ltd. (“Dometic”), who has been issued model-specific normal values, and by all other exporters from China.^{Footnote 45}

[92] It is therefore evident from the CBSA’s enforcement data that importations of Chinese thermoelectric containers at dumped prices have occurred during the POR.

[93] Imports of subject goods from China have in fact increased substantially since the last expiry review investigation in 2018, despite the continued presence of SIMA duties. From 2015 to 2017, the average annual imports of subject goods from China was 38,743 units with a value of $2,953,726.^{Footnote 46} From 2021 to 2023, the average annual imports of subject goods from China was 59,858 units with a value of $5,527,345.^{Footnote 47} Thus, comparing a similar three-year period between 2015-2017 and 2021-2023 reveals that the average annual imports of subject goods from China increased by 54.5% in volume.

[94] Moreover, the average SIMA duty collected on subject goods increased from 8.74% during the POR of the previous 2018 expiry review investigation,^{Footnote 48} to 20.04% in the current POR,^{Footnote 49} representing a 11.3 percentage point increase in SIMA duties collected, despite the fact that normal values have remained unchanged since the last re-investigation which concluded in July 2014.^{Footnote 50} Hence, the dumping of subject goods from China not only occurred during the current POR, but has in fact increased since the previous expiry review investigation in 2018.

[95] The continued dumping of thermoelectric containers from China during the POR while the CITT order was in effect may suggest an inability for certain Chinese exporters to cooperate with the CBSA in obtaining model-specific normal values or to price their goods above their normal values.

[96] Conversely, the large volume of thermoelectric containers imported during the POR from China, which represents the single largest source of imported thermoelectric containers into Canada,^{Footnote 51} may imply an ability by Chinese producers and exporters to continue exports to the Canadian market at dumped prices despite the applicable SIMA duties.

[97] Furthermore, the CBSA concurs with Koolatron’s submission that the historical import patterns exhibited prior to the original 2008 CITT finding, where Chinese imports exhibited opportunistic behaviour and surged to account for 95% of all imported thermoelectric containers to the point of almost eliminating Canadian and U.S. thermoelectric containers from the Canadian market, is evidence of the likely large volumes of dumped subject goods that would be imported into Canada if the CITT order expires.^{Footnote 52}

[98] Thus, the continued dumping of thermoelectric containers from China into the Canadian market while the CITT order was in effect, as shown in the CBSA’s import and enforcement data, may increase the likelihood of continued or resumed dumping should the CITT order expire.

Import patterns of subject goods from China

[99] The Canadian market for imported thermoelectric containers during the POR is indicated by volume and average unit price in Table 4 below:

[100] Furthermore, the percentage changes in volume and average unit prices of imported thermoelectric containers in the Canadian market, and the rate of inflation and GDP growth in Canada, for the full years of the POR are indicated in Table 5 below:

[101] The above Table 5 shows that the pricing and import patterns during the POR of subject goods from China experienced the highest levels of volatility compared to thermoelectric containers from other countries.

[102] During the period between 2021 and 2022, Canada experienced an inflation rate of around 6.8%, marking the country’s highest rate of inflation since 1991.^{Footnote 58} Table 5 shows that during this time, exporters from foreign countries other than China increased their prices of thermoelectric containers by 7.0%. On the other hand, Chinese exporters decreased their export prices of thermoelectric containers on average by 11.5%. Simultaneously, Chinese exporters had increased their import volumes to Canada by 69.3%, despite the Canadian economy having only grown by 3.8% during the same period. The pricing and import behaviour of Chinese subject goods during the POR are in contrast to the pricing and volumes of thermoelectric containers imported or sold by other foreign exporters, which showed annual changes which were more stable and more aligned with the general rate of economic growth and inflation in Canada.

[103] Pricing and import volumes which diverge significantly from market conditions in Canada, such as the general rate of economic growth and inflation, could suggest that economic or other factors outside of Canada, such as the exporters’ domestic market in China or other international export markets, may have influenced pricing and import decisions by Chinese exporters of thermoelectric containers.

[104] During the period between 2021 and 2022, when volumes of subject good imports from China increased by 69.3% and the average price for those same goods decreased by 11.5%,^{Footnote 59} the Chinese economy was experiencing a considerable slowdown in growth, with GDP growth slowing from 8.4% in 2021 to 3.0% in 2022.^{Footnote 60} During the next annual period between 2022 and 2023, when the Chinese economy improved with an increased GDP growth of 5.3%,^{Footnote 61} the volume of Chinese thermoelectric containers imported into Canada decreased by 53.4% along with a minor average price decrease of 1.2%.^{Footnote 62}

[105] In fact, after a surge of importations in 2022, the volume of subject goods imports from China in 2023 had decreased below its 2021 levels.^{Footnote 63} When also considering the fact that 2022 experienced the highest levels of SIMA duties collected during the POR, with $2,093,540 in SIMA duties assessed in 2022 compared to $851,119 in 2021 and $741,050 in 2023,^{Footnote 64} the CBSA’s enforcement data could suggest that Chinese exporters of thermoelectric containers had oversupplied the Canadian market in 2022 with large imported volumes of subject goods at dumped prices.

[106] Furthermore, the surge in imported subject goods from China in 2022 cannot be easily explained by any apparent limitations by either the Canadian producer^{Footnote 65} or other foreign exporters to supply the Canadian market. Imports from countries other than China, which as shown in Table 4 were imported at comparable volumes and price to subject goods from China in 2021, decreased by 30.9% in volume in 2022 despite having only increased in price by 7.0% which closely tracked the general rate of inflation in Canada of 6.8%.^{Footnote 66} The pricing and import volume patterns exhibited by subject goods from China during the POR appear to show a crowding out effect on imports from other countries, as the volume of imports from other countries has continued a downward trend in the following year in 2023, and has not recovered to 2021 levels.^{Footnote 67}

[107] The CBSA believes that sufficient evidence is presented to suggest a correlation between a sudden and large surge in volumes of Chinese subject goods into Canada at dumped prices, and the period of time in 2022 when the Chinese economy experienced a slowdown. Likewise, a correlation appears to exist between a sudden and large decrease in volumes of imported Chinese subject goods into Canada, and the period of time in 2023 when the Chinese economy experienced a recovery. Although the CBSA cannot be definitive in determining a causation between these factors due in part to the lack of cooperation from exporters in China, the available information on the record suggests that during the POR, the pricing and import patterns of subject goods from China may have been influenced by factors outside the Canadian market, such as the exporter’s own domestic economic situation in China.

[108] As such, if Chinese exporters of subject goods do not hold a demand-oriented view of the Canadian market in which local market conditions, including but not limited to rate of inflation and economic growth, dictate pricing and import volume decisions, but instead potentially view the Canadian market for purposes of absorbing any excess supply of inventory in China without regard for the actual quantity of Canadian demand, the Canadian market may face an increased likelihood of continued or resumed dumping should the CITT order expire.

Low barriers to entry and price sensitivity in the Canadian market

[109] In general, a market with low barriers to entry is characterized by low economies of scale, low product differentiation, low capital requirements, low switching costs for buyers, easy access to distribution channels, low incumbent cost advantages, and low regulation. Low barriers to entry facilitate new entrants into a market whilst typically increasing competition and reducing prices.^{Footnote 68}

[110] The Canadian market for thermoelectric containers exhibits a majority of the characteristics which define a market with low barriers to entry, with exception to a characteristic of low economies of scale. The characteristics such as low product differentiation, low switching costs for buyers, easy access to distribution channels, and low regulation, are evident in the Canadian market for thermoelectric containers.

[111] Furthermore, in the context of dumping, a market with high capital requirements and high incumbent cost advantages which would normally increase barriers to entry become much less relevant for consideration, as dumping is by definition an action in which goods are priced below their normal values that would normally take into consideration fixed and variable costs.

[112] Thermoelectric containers rely on a principle called the Peltier effect to pump heat electronically, and as such, do not contain gasses, pipes, coils or compressors. The only moving part is a 12 volt fan(s). Thermoelectric containers are not manufactured to any industry-wide specification for quality, performance or otherwise. Moreover, thermoelectric containers require no special packaging or approvals. They are easily distributed by national retailers and wholesalers. They are generally sold fully assembled and ready to use, packaged in protective boxes for shipping and ease of palletizing.^{Footnote 69}

[113] Based on a sampling of current product offerings from five major Canadian retailers of thermoelectric containers previously identified in the 2018 expiry review^{Footnote 70} and certain manufacturers^{Footnote 71}, the CBSA observes that product differentiation, for both imported and Canadian-made goods, remains limited. The limited degree of product differentiation appears in the Canadian market through the offering of different product sizes, minor functional features, artistic design including different brand partnerships, or the potential addition of “smart” technology such as remote control of the container with a mobile phone.^{Footnote 72} However, the CBSA observes that the core function of the goods – providing cooling or warming – remains substantially the same between different brands or models, with the container size being the single most significant functional difference between product models.

[114] Switching costs for buyers of thermoelectric containers are generally low and can range from zero for new buyers up to, at most, the remaining value of a previously purchased like good. Given that the purchase price of a new thermoelectric container is already at a very low starting point relative to the average Canadian consumer’s income,^{Footnote 73} there may be even less psychological considerations by consumers regarding any theoretical economic switching cost.

[115] All of the above noted characteristics, suggest that there are low barriers to entry into the Canadian market for any producer of thermoelectric containers - given low product differentiation, low switching costs for buyers, easy access to distribution channels, and lack of industry standards that would otherwise require changes in the physical or other characteristics of the product by foreign producers when selling their goods to the Canadian market.

[116] The low barriers to entry into Canada for thermoelectric containers may lead to a higher likelihood of continued or resumed dumping should the CITT order expire, by more easily facilitating the entry into the Canadian market of a large volume of subject goods at potentially dumped prices.

[117] As well, the CITT found in its original 2008 finding and in each of its subsequent orders that “thermoelectric containers are very price sensitive”.^{Footnote 74} In particular, the CITT concluded in its original finding that while “price is not the only factor considered by purchasers”, its evidence clearly indicated that “price is an important factor in the purchase decision”. In its 2013 expiry review proceeding, the CITT stated that: “[in] the Tribunal’s view, given that low pricing is not unimportant for Canadian Tire to attract new customers to thermoelectric containers with its “high-low” strategy, then low pricing must be of paramount importance for other “big box” retailers, as they seek to attract new customers with “every day low prices””.^{Footnote 75}

[118] While it would be reasonable to expect some Canadian customers of thermoelectric containers, and generally of any consumer good, to show some loyalty or preference for one manufacturer over another, the CBSA is of the view that customers will likely only exhibit such discretionary preferences when prices between different manufacturers are similar, and will seek the lowest prices available in the market if inter-manufacturer prices diverge significantly, due to the general interchangeability of the goods from different manufacturers.

[119] As previously discussed, the CBSA’s analysis of the Canadian thermoelectric containers market appears to show that goods in this market tend to lack significant inter-brand or intra-manufacturer product differentiation and that barriers to entry by foreign competitors into this market are low. Combined with the fact that thermoelectric containers are generally priced from a low starting price point to attract new customers, all of the above noted characteristics suggest that thermoelectric containers in the Canadian market are price sensitive. To the extent for which it is possible as a consumer good, thermoelectric containers would also appear to have certain commodity-like characteristics, in which price may have a strong determining role in customers’ purchase decisions for a thermoelectric container of a given size.

[120] Hence, the low barriers to entry and high price-sensitivity of thermoelectric containers can increase competition in the Canadian market on the basis of price, and as a result may increase the likelihood of continued or resumed dumping should the CITT order expire.

Weak consumer demand in the Chinese economy

[121] Publicly available research on the thermoelectric containers market in China or internationally is limited due to the small size of the sector and a lack of responses from any foreign exporters in this present expiry review investigation. Nevertheless, the product uses of thermoelectric containers^{Footnote 76} would suggest that thermoelectric containers are predominantly a consumer discretionary good.

[122] This general classification for thermoelectric containers is confirmed by various sources, including the Canadian producer’s ERQ response which states that “a large portion of TEC [thermoelectric containers] are designed for recreational use during travel and outdoor activity”^{Footnote 77} and by the exporter Dometic which classifies the market for “passive cooling boxes and drinkware” as a “low ticket discretionary spend”.^{Footnote 78} Hence, for purposes of this expiry review investigation, the CBSA will consider demand patterns for “consumer discretionary goods” to be reasonably reflective of demand patterns for thermoelectric containers.

[123] Unlike consumer staple goods, consumer discretionary goods are more sensitive to the economic cycle as customers may reduce, delay or avoid purchases of these goods when financially-constrained. As such, consumer discretionary goods have a tendency to experience noticeably higher sales during periods of economic growth, and vice-versa.^{Footnote 79}

[124] The International Monetary Fund (IMF) World Economic Update published in July 2024 forecasts that compared to China’s recorded growth rate in 2023 of 5.2%, China’s real GDP growth is expected to decelerate to 5.0% in 2024 and 4.5% in 2025.^{Footnote 80} Similarly, the World Bank in a June 2024 report forecasts that compared to a growth rate in 2023 of 5.2%, China’s economic growth is expected to decelerate to 4.8% in 2024, 4.1% in 2025, and 4.0% in 2026.^{Footnote 81} As such, it is clear that China’s economy is expected to weaken in the next few years.

[125] Economic indicators in 2024, such as new bank loans falling to a 15-year low, slowing export growth, slowing factory activity,^{Footnote 82} as well as decisions by the GOC to cut major short and long-term interest rates^{Footnote 83}, also signal that continued economic weakness is expected to continue in China in the near future.

[126] The cause of the current and projected continued weakness in China’s economy has been attributed in particular to problems with China’s real estate sector and weak consumer demand.

[127] The World Bank stated in its June 2024 report that: “growth in China picked up in early 2024, supported by an acceleration in exports that helped offset continued weakness in the real estate sector marked by falling property prices and sales. Following a robust performance in 2023 driven by the release of pent-up demand, consumption was subdued in early 2024, with retail sales expanding below the pre-pandemic average pace as consumer confidence remained weak.”^{Footnote 84}

[128] The Government of China (GOC) has itself signaled that it would give greater consideration to and focus stimulus at consumers rather than infrastructure and manufacturing, with the GOC stating in July 2024 that it raised 150 billion yuan though special debt issuances to subsidize a consumer goods trade-in programme.^{Footnote 85} However, weak consumer demand in China continues to persist as Chinese consumers have mostly failed to respond to the GOC’s stimulus measures. Instead, economic data in July 2024 shows that Chinese consumers have primarily used their household savings to repay debt and buy wealth preserving assets such as bonds, as opposed to spending more on personal consumption. The risk-adverse financial behaviour shown by Chinese consumers in 2024 suggest that their fears of continued property price decreases and job insecurity remain strong.^{Footnote 86}

[129] Despite certain public assertions by the GOC that “consumer demand continued to recover, as policies to expand domestic demand and promote consumption gained traction",^{Footnote 87} the CBSA is of the view that the fears of continued weakness in Chinese consumer demand in the near future, as evidenced through the risk-adverse actions taken by Chinese consumers, is supported by economic data. In particular, as reported by Reuters, consumer spending has continued to be affected by a property sector downturn in China that has lasted for three years and where approximately 70% of Chinese household wealth is held in real estate, which at its peak accounted for a quarter of the Chinese economy. In fact, China’s new home prices in July 2024 fell at the fastest pace in nine years.^{Footnote 88}

[130] The evidence submitted by Koolatron which showed a decline in Chinese automotive sales and luxury good spending during the POR would further corroborate indications of reduced domestic Chinese demand for consumer discretionary goods, such as thermoelectric containers.^{Footnote 89}

[131] Furthermore, China’s youth unemployment rate soared to 17.1% in July 2024, increasing from 13.2% in June 2024.^{Footnote 90} There have also been reports of widespread layoffs in China in sectors including finance, technology and government, along with underemployment and poor employment prospects for new graduates.^{Footnote 91} China’s high youth unemployment may be indicative of an economy struggling to grow and is likely to further contribute to continued weak consumer demand in the Chinese economy.

[132] In summary, the information analyzed by the CBSA suggests that the economy in China will continue to face weak consumer demand in the near future, caused by factors including but not limited to the projected weakness in the general Chinese economy, a sustained downturn in the economically important real estate sector which directly affects the wealth of Chinese consumers, a weak labour market, and fears of worsening future economic conditions.

[133] Given that thermoelectric containers are mainly a consumer discretionary good, weak consumer demand in China is likely to lead to even weaker domestic Chinese demand for thermoelectric containers as consumers may reduce, delay or entirely avoid purchases of these mostly non-essential goods when financially-constrained.

[134] As a result of weak domestic demand in China, producers of thermoelectric containers in China may rely heavily on export markets, such as Canada, to maintain sales and production levels, and as such, may increase the likelihood of continued or resumed dumping should the CITT order expire.

Attractiveness of the Canadian market

[135] The IMF World Economic Update published in July 2024 forecasts that compared to Canada’s recorded growth rate in 2023 of 1.2%, Canada’s real GDP growth is expected to accelerate slightly to 1.3% in 2024 and 1.4% in 2025.^{Footnote 92}

[136] In particular, domestic consumption by Canadian consumers is expected to grow in the near future. The Royal Bank of Canada (RBC) forecasts that compared to a recorded growth rate of 1.7% in 2023, household consumption in Canada is expected to accelerate to 2.1% in both 2024 and 2025.^{Footnote 93} Similarly, the Toronto-Dominion Bank’s long-term economic outlook forecasts that consumer expenditure growth in Canada will be relatively stable in the next five years and predicts a growth rate of 1.8% in 2029.^{Footnote 94} As such, economic forecasts suggest that Canada’s domestic consumption will grow slightly and remain stable in the foreseeable future.

[137] However, the CBSA notes that consumer spending data collected by RBC shows that, after years of strong spending following the COVID-19 pandemic, Canadian consumers decreased their spending on discretionary goods during the first half and summer of 2024. Of particular note, RBC reports that Canadians have embarked on fewer road trips during the first half and summer of 2024.^{Footnote 95} As previously described, coolers and warmer containers for travel use are a major source of demand for thermoelectric containers.^{Footnote 96}

[138] RBC expects that domestic consumption in Canada will remain soft over the second half of 2024 before consumption growth accelerates in 2025 as the Bank of Canada eases monetary policy through interest rate cuts.^{Footnote 97} As such, the CBSA believes that given the currently weaker consumer spending in the Canadian economy and the economic forecasts which expect a future acceleration in consumer spending in the next few years, the current demand for thermoelectric containers in Canada will not remain stagnant and may grow at an accelerating pace in the near future.

[139] An expected growth, and thus a relative strength, in Canadian consumer demand in the near future is likely to make the Canadian market increasingly attractive to Chinese exporters of thermoelectric containers and may increase the likelihood of continued or resumed dumping should the CITT order expire.

[140] The perception of Canada as an attractive export market for thermoelectric containers is also evidenced by the CBSA’s import and enforcement data. Table 1 and Table 3 show that importations of thermoelectric containers from foreign exporters have continued throughout the POR, including importations of subject goods from China at dumped prices, demonstrating a continued interest in the Canadian market by Chinese and other foreign exporters.

[141] The ongoing relationships of thermoelectric container producers and exporters in China with Canadian importers, as demonstrated by their continued importations of subject goods during the POR, further increases the potential attractiveness of the Canadian market by facilitating importations of subject goods using existing logistical networks.

[142] Despite a lack of participation from foreign exporters in the present expiry review investigation, public statements made by foreign exporters provide further evidence of sustained and strong interest in Canada as an export market for thermoelectric containers.

[143] For example, Dometic Group AB, a Swedish multinational corporation and parent company of the Chinese exporter “Dometic” Asia Co., Ltd. / Dometic (Shenzhen) Electronics Co., Ltd.”, stated during its 2021 acquisition of Igloo, which sells thermoelectric containers^{Footnote 98} and is the largest U.S. manufacturer of “passive cooling boxes and drinkware products”, that “North America is the largest market for cooling boxes and outdoor products”.^{Footnote 99} As well, Dometic’s acquisition of Igloo for 677 million USD, which has 92% of its net sales in the U.S., demonstrates a strong continued interest in the North American market for cooler products which includes thermoelectric containers.^{Footnote 100}

[144] In addition, evidence presented by Koolatron shows that many Chinese producers explicitly list North America as one of their main export destinations. For example, the AliBaba page by the Chinese exporter, Guangdong Candor, indicates that 45% of its exports are directed towards North America.^{Footnote 101}

[145] Last but not least, Koolatron contends that Section 301 Tariffs on certain Chinese imports and Section 232 Tariffs on steel and aluminum products imposed by the U.S. starting in 2018 affect at least a subset of the subject goods, including several HS codes related to thermoelectric containers and their parts.^{Footnote 102} The CBSA agrees that the implementation of trade measures in the U.S. may potentially divert Chinese thermoelectric containers originally intended for the U.S. market to the Canadian market.

[146] The relative strength of Canadian consumer demand expected in the near future and the strong continued interest by foreign exporters in the Canadian market, are likely to make the Canadian market increasingly attractive to Chinese exporters of thermoelectric containers, and thus may increase the likelihood of continued or resumed dumping should the CITT order expire.

Competitive retail environment in Canada

[147] The CITT’s reasons in both its 2008 finding and subsequent expiry reviews including RR-2018-004 found that:

[148] In NQ-2008-002, the CITT found that the market dominance of the mass merchandisers “pulls down retail prices generally and, consequently, affects the price at which retailers and importers seek to purchase thermoelectric containers.”^{Footnote 104}

[149] In its submission, Koolatron referenced the findings by both the CBSA and CITT from their respective 2018 expiry reviews which found that the growing popularity of e-commerce creates more competition and increases pressure on Canadian retailers of thermoelectric containers to lower prices. Koolatron argues that the growth of e-commerce increases the relative importance of low-prices and steep discounts for sales of thermoelectric containers.^{Footnote 105}

[150] Koolatron submitted evidence from Statistics Canada and the Bank of Canada showing that online prices tend to be more volatile than brick-and-mortar pricing as e-commerce retailers have fewer barriers to adjusting prices quickly. Koolatron also points to Whaleco Canada Inc.’s response to the Importer ERQ, which describes a range of pricing strategies used, to support their argument. Koolatron argues that the strategies used by e-commerce retailers place further pressure on an existing hyper-competitive retail market for thermoelectric containers as brick-and-mortar retailers are forced to price match with volatile e-commerce pricing, both on retailers’ own online platforms and in-store, to secure sales to consumers that have an increasing ability to compare prices online.^{Footnote 106}

[151] The CBSA notes that the continued presence of the large e-commerce retailer, Amazon, and the recent entry of Whaleco Canada Inc., doing business as “Temu”, into the Canadian retail market in February 2023 with its commitment “to offering affordable products” including but not limited to the subject goods,^{Footnote 107} show a continued interest by e-commerce retailers to compete in the Canadian market.

[152] Koolatron stated that a major shift in consumer preferences towards e-commerce accelerated during the COVID-19 pandemic and has led online sales of thermoelectric containers to remain well above pre-pandemic levels.^{Footnote 108} It stated that “online sales have become one of the most important distribution channels for Koolatron during the period of review”.^{Footnote 109}

[153] Koolatron contends that the growth in e-commerce has made thermoelectric containers more accessible to consumers by providing increased distribution options for all producers of thermoelectric containers, including for Chinese producers that now rely mainly on e-commerce platforms to sell subject goods directly to Canadian consumers. Koolatron argues that growth in e-commerce puts further competitive pressure on existing Canadian brick-and-mortar retailers and increases the availability of Chinese subject goods in the Canadian market.^{Footnote 110}

[154] The CBSA concurs with Koolatron’s submission which contends that a price-focused retail dynamic makes the Canadian domestic market attractive to dumped and subsidized goods by reinforcing price’s role as the primary factor in securing sales to seize market share and with e-commerce now providing Chinese producers easier access to the Canadian market.^{Footnote 111}

[155] The competitive retail environment in Canada for thermoelectric containers, along with the expected increase in e-commerce which may further lower the barriers to entry for foreign products, suggest that strong price-based competition amongst retailers may lead to foreign exporters to price their goods below their normal values in large quantities to capture market share in Canada. As such, the competitive retail environment in Canada may increase the likelihood of continued or resumed dumping should the CITT order expire.

Export orientation of thermoelectric container production in China

[156] Evidence on the record suggests that Chinese producers of thermoelectric containers have an export orientation and must therefore generate revenue and fund their production costs using export sales to supplement limited domestic sales and/or as part of an export-oriented business model.

[157] As an example, Zhongshan Yousheng Electric Appliances Co., Ltd, a wine cooler manufacturer in China, stated that “in 2019, the number of orders for export is twice that for domestic sales”.^{Footnote 112}

[158] Koolatron also referenced in its submission the fact that many Chinese producers explicitly list North America as a main export destination, citing for example Guangdong Candor’s AliBaba page indicating that 45% of its exports are directed towards North America.^{Footnote 113}

[159] Koolatron further referenced a Financial Times article about the GOC’s focus to increase production and exports to overcome the negative effects of sluggish domestic demand, which is reflected by economic data in the first quarter of 2024 showing Chinese export volumes rising 14% year over year even as the price index for those exports fell 12%. The article quotes the chief China economist at Morgan Stanley, Robin Xing, stating that “Chinese exporters are providing huge price discounts on their exports because of domestic overcapacity”.^{Footnote 114}

[160] The export orientation of thermoelectric container production in China suggests that certain Chinese producers may heavily depend on export sales, which in turn, may increase the likelihood of continued or resumed dumping should the CITT order expire.

Potential for a Chinese producer to produce the goods in a facility that is currently used to produce other goods

[161] Evidence from the CBSA’s previous 2018 expiry review provided information about a Chinese producer who has the potential to produce subject goods in a facility that is currently used to produce other goods.^{Footnote 115}

[162] In August 2018, a manufacturer in China contacted the CBSA in order to obtain specific normal values for certain thermoelectric containers that it intended to produce at a factory that currently does not produce the subject goods. This factory had not been used for the purposes of producing subject goods for the Canadian market since the CITT’s finding in 2008. If these models were produced and sold to the Canadian market, these imported goods would have been assessed an anti dumping duty of 37% of their export price upon entering Canada.^{Footnote 116}

[163] Ultimately, as of the closing of the record of this present expiry review, no additional normal values were issued to any exporter since 2014.^{Footnote 117} Nevertheless, the information presented to the CBSA in 2018 shows that subject goods have the potential to be produced at existing manufacturing facilities that do not currently produce any thermoelectric containers.

[164] Thermoelectric containers are composed of an insulated box and a heat pump along with electronics, without the use of compressors, coils and gases. Thermoelectric containers are also not manufactured to any industry-wide specification for quality, performance or otherwise.^{Footnote 118} Conversely, a basic traditional top-freezer refrigerator requiring a compressor has a relatively more complicated manufacturing process and any such North American-bound products must also be tested for compliance with various standards.^{Footnote 119}

[165] Hence, it would conceivably be easier to convert an existing production line intended for other types of more complex refrigeration containers, such as traditional household refrigerators, into the production of thermoelectric containers than vice-versa. Similarly, given that thermoelectric containers are composed of an insulated box and a heat pump along with electronics, it would be conceivably easier for a manufacturer of insulated boxes used for cooling or warming, to enter into the production of thermoelectric containers by adding a heat pump along with electronics, compared to entering into the production of more complex refrigeration products. For example, Dometic’s subsidiary Mobicool, is a producer of non-subject coolers using compressor technology that is also able to make thermoelectric containers and non-subject insulated cooler boxes.^{Footnote 120}

[166] As such, the potential for a manufacturer to produce thermoelectric ccontainers at facilities in China that are currently utilized for the production of other goods, increases the theoretical amount of production capacity available for thermoelectric containers in China, and thus may increase the likelihood of continued or resumed dumping should the CITT order expire.

Excess capacity of thermoelectric container production in China relative to Chinese domestic demand

[167] Due to a lack of responses from exporters in China, the CBSA must use the best available information on the record when assessing the total capacity and capacity utilization of thermoelectric container production in China.

[168] Based on the information on the record, the CBSA collected the following information, in Table 7 below, on a few known producers of thermoelectric containers in China for which information could be publicly found:

[169] Table 7 only includes data from producers where positive evidence on the record showing production of thermoelectric containers could be identified.

[170] As such, the CBSA views Table 7 as a likely substantial underestimate of the true capacity of thermoelectric container production in China. For instance, Table 7 excludes information from the following parties :

• All known producers of thermoelectric containers for which production capacity data could not be found. In total, the CBSA identified 61 past or known exporters or producers of thermoelectric containers at the initiation of the present expiry review investigation.^{Footnote 127} As a result, Table 7 provides information on only 5 out of 61 potential producers, representing only an 8% sample of the entire thermoelectric container industry in China.
• All potential producers of thermoelectric containers, either which the CBSA could not identify using public sources, or as previously discussed, any Chinese producers currently producing other goods that have the potential capacity to begin production of the subject goods.^{Footnote 128}

[171] Thus, it is the CBSA’s view that the true total production capacity of thermoelectric containers in China may be substantially higher than 10,870,000 units per year when including the production capacity from the majority of producers in China that were omitted from Table 7. Moreover, even if not all of the 10,870,000 units per year in stated production capacity is dedicated to thermoelectric containers, the CBSA views it as unlikely that this estimated total is too high due to the fact that this total amount only accounts for an estimated 8% sample of the thermoelectric container industry in China.

[172] Hence, even a likely unrepresentative sample from only five Chinese producers of thermoelectric containers shows that the capacity of thermoelectric container production in China is immense in comparison to the Canadian market.

[173] Compared to the volume of all imported thermoelectric containers into the Canadian market as shown in Table 1, which averaged from 2021 to 2023 at 93,861 units per year (including imports from China), Table 7 shows that producers in China of thermoelectric containers have a production capacity that is at least 115.8 times the average volume of all imported thermoelectric containers into the Canadian market.

[174] The remarkable disparity between the production capacity of producers in China and the Canadian market for imported thermoelectric containers is highlighted by the fact that even the smallest individual Chinese producer on Table 7, Ningbo Jiayuan Electronic Co., Ltd. (Evercool), has 200 employees in a 25,000 square metre factory and an annual production capacity of 720,000 units^{Footnote 129}, which is many times larger than the entire Canadian market for imported thermoelectric containers. By comparison, the Canadian producer Koolatron currently employs 60 workers in a 5,574 square metre (60,000 square feet) factory.^{Footnote 130}

[175] Subsequently, given a lack of exporter responses and the very limited amount of third-party research regarding the industry for thermoelectric containers, the CBSA estimated a total amount for domestic thermoelectric container demand in China. An estimate of Chinese domestic demand allows the CBSA to assess the amount of any excess capacity of thermoelectric container production in China that must be exported to foreign markets such as Canada, which in turn, may increase the likelihood of continued or resumed dumping.

[176] Table 8 below, presents one estimate of the potential size of domestic demand for thermoelectric containers in China:

[177] A second estimate was also used by the CBSA for consideration and analysis in this present expiry review. The second estimate provided a very similar amount to Estimate #1 in Table 8. However, the second estimate’s methodology uses confidential information that is not publicly available. As such, due to confidentiality, only one estimate is presented in this Statement of Reasons.

[178] The CBSA notes that both of its estimates, due to their respective calculation methodologies, may overestimate the actual amount of China’s domestic demand for thermoelectric containers.

[179] For example, Estimate #1 in Table 8 multiplies two unknown amounts together; both the total production capacity in China and the percentage of production that is intended for domestic customers are estimates and their true amounts remain uncertain. Both amounts used to calculate the estimate could vary significantly. For instance, Zhongshan Yousheng Electric Appliances Co., Ltd, a wine cooler manufacturer in China, stated that “in 2019, the number of orders for export is twice that for domestic sales”,^{Footnote 131} which would imply a 33% allocation of production to domestic sales rather than the 50% ratio used for Estimate #1, and therefore significantly decrease the estimated amount of domestic demand in China.

[180] Using the information from Table 7 and Table 8, the CBSA estimates approximately 5,435,000 units per year of overcapacity in China of thermoelectric container production that is in excess of Chinese domestic demand. The CBSA’s estimate implies an annual excess export capacity by Chinese producers relative to their domestic market demand that is 57.9 times larger than the annual volume of all imported thermoelectric containers into Canada.^{Footnote 132}

[181] Similarly, the excess export capacity by Chinese producers of the subject goods relative to their domestic market demand, as estimated by the CBSA, is significantly larger than the entire apparent Canadian market for thermoelectric containers, which includes Canadian production and all imports.^{Footnote 133}

[182] The CBSA’s estimate of excess capacity in China relative to domestic Chinese demand is based on the CBSA’s analysis using the best available information on the record and was derived from the following calculation: 10,870,000 units of annual capacity of certain producers of thermoelectric containers in China^{Footnote 134} minus 5,435,000 units of annual domestic demand in China.^{Footnote 135}

[183] The CBSA notes that excess production capacity relative to China’s domestic market demand would be a conceivable consequence of the export orientation adopted by many Chinese producers, as discussed in more detail in a previous section of this report.^{Footnote 136}

[184] In summary, given that the immense excess production capacity by producers of thermoelectric containers in China, relative to the domestic demand for thermoelectric containers in China, is significantly larger than the entire size of the Canadian market, the Canadian market may face an increased risk of dumping as producers and exporters in China may be incentivized to export to a relatively more attractive market such Canada to increase sales and reduce excess export capacity. As such, the excess capacity of thermoelectric container production in China relative to the comparatively smaller size of China’s domestic market, may increase the likelihood of continued or resumed dumping should the CITT order expire.

Determination regarding likelihood of continued or resumed dumping

[185] Based on the information on the record with respect to the: continued dumping of subject goods from China while the order was in effect; import patterns of subject goods from China; low barriers to entry and price sensitivity in the Canadian market; weak consumer demand in the Chinese economy; attractiveness of the Canadian market; competitive retail environment in Canada; export orientation of thermoelectric container production in China; potential for a Chinese producer to produce the goods in a facility that is currently used to produce other goods; and excess capacity of thermoelectric container production in China relative to Chinese domestic demand, the CBSA has determined that the expiry of the CITT order is likely to result in the continuation or resumption of dumping into Canada of certain thermoelectric containers originating in or exported from China.

Position of the parties: Subsidizing

Consideration and analysis: Subsidizing

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

[198] Guided by these aforementioned factors, the CBSA conducted its review based on the documentation submitted by the various participants and its own research, all of which can be found on the administrative record. The following list represents a summary of the CBSA’s analysis conducted in this expiry review investigation with respect to subsidy:

• Continued availability of subsidy programs for producers and exporters of thermoelectric containers in China and
• The volume of subsidized goods imported into Canada during the POR

Continued availability of subsidy programs for producers and exporters of thermoelectric containers in China

[199] During the original subsidy investigation in 2008, the CBSA found three actionable subsidy programs that were used by Dometic, the sole cooperative exporter, and 35 additional potentially actionable subsidy programs that were not used by the cooperative exporter.^{Footnote 145}

[200] A list of the programs found actionable that were used by Dometic at the time of the final determination is as follows:^{Footnote 146}

• Program 1: Preferential Tax Policies for Enterprises with Foreign Investment Established in Special Economic Zones (Excluding Shanghai New Pudong Area)
• Program 2: Preferential Tax Policies for Foreign Invested Enterprises and Foreign Enterprises in China and are engaged in production or business operations purchasing domestically produced equipment and
• Program 3: Government Interest Subsidy of Shenzhen Foreign Trade Development Fund

[201] It was found that 100% of the goods exported from China were subsidized. The weighted average amount of subsidy, expressed as a percentage of the export price, was equal to 9.9%. The amount of subsidy found for the sole cooperative exporter was 2.17 Chinese Yuan (CNY) per unit. The amount of subsidy for all other exporters was equal to 53.27 CNY per unit, as determined according to a Ministerial specification pursuant to subsection 30.4(2) of SIMA.^{Footnote 147}

[202] Since the CITT’s original finding, the CBSA has conducted three re-investigations to update the amounts of subsidy for thermoelectric containers, concluding in 2010, 2012 and 2014.^{Footnote 148} In each of the three subsidy re-investigations, Dometic was the sole exporter that participated and it was provided with updated amounts of subsidy. The GOC did not participate in any of the re-investigations.^{Footnote 149}

[203] The results of the conclusion of the 2014 subsidy re-investigation represent the best information available, which is that subsidy programs continue to be available to producers of thermoelectric containers in China.

[204] A list of the programs found actionable that were used by the sole cooperative exporter at the time of the conclusion of the 2014 re-investigation are as follows:^{Footnote 150}

• Program 167: Development Assistance for High and New Technology Enterprises Registered within Futian District of Shenzhen (Futian S&T Fund)
• Program 168: Encourage Measures of the Hi-tech Products Export
• Program 169: Staff Training Grants - Government of Shenzhen
• Program 171: Shenzhen Pengcheng Waste Reduction Initiative
• Program 176: Preferential Tax Policies for the Research and Development of FIEs
• Program 181: Corporate Income Tax Reduction for New High-Technology Enterprises
• Refund of Individual Income Tax Handling Fee
• Reward of China Communist Party Members Contribution in Enterprise

[205] At the conclusion of the 2014 re-investigation, the amount of subsidy found for the sole cooperative exporter was 0.96 CNY per unit.^{Footnote 151}

[206] As previously noted, the GOC did not provide a response to the ERQ for this present expiry review investigation. As a result, the CBSA must use the best available information on the record, such as the results of its most recent re-investigation in 2014.

[207] As well, recent subsidy investigations conducted by the CBSA into other consumer goods from China would suggest that countervailable subsidy programs, whether the same or closely resembling the countervailed programs found at the conclusion of the CBSA’s 2014 re-investigation into the subject goods, continue to be available to Chinese producers and exporters of thermoelectric containers.

[208] As an example, Table 9 below, shows a comparison between the countervailed subsidy programs used by the sole cooperative exporter at the time of the conclusion of the 2014 re-investigation, and potentially identical or similar countervailed subsidy programs that were used by cooperative exporters of other goods from China which were recently investigated by the CBSA.

[209] Hence, the available information on the record would indicate that the GOC has continued to provide subsidies to Chinese producers and exporters, including with subsidy programs that appear identical or similar to the countervailed programs found to be available to Chinese producers and exporters of thermoelectric containers during the CBSA’s most recent re-investigation of the subject goods in 2014.

[210] In addition, the imposition of countervailing measures against Chinese consumer products in other jurisdictions, including but not limited to the U.S. and E.U., further suggests a continued availability of subsidy programs from the GOC to Chinese producers and exporters of consumer goods, which may include thermoelectric containers.^{Footnote 155}

[211] Furthermore, as previously noted in the Consideration and analysis: Dumping section, the economy in China may continue to face weak consumer demand in the near future, caused by factors including but not limited to the projected weakness in the general Chinese economy,^{Footnote 156} a sustained downturn in the economically important real estate sector which directly affects the wealth of Chinese consumers,^{Footnote 157} a weak labour market,^{Footnote 158} and fears of worsening future economic conditions.^{Footnote 159} As well, China’s youth unemployment rate soared to 17.1% in July 2024, increasing from 13.2% in June 2024.^{Footnote 160} There have also been reports of widespread layoffs in China in sectors including finance, technology and government, along with underemployment and poor employment prospects for new graduates.^{Footnote 161}

[212] As a result of a potential desire to address any undesirable social and economic challenges in the near future, the GOC may have increased incentives to support economic activity and the employment of Chinese workers with the use of continued or new subsidy programs to producers in China. The GOC may also be especially incentivized to support producers in industries vulnerable to weak economic conditions, such as a consumer discretionary good like thermoelectric containers, whom may otherwise be forced to curtail production, and thereby reduce input purchases from other Chinese producers and reduce employment levels of Chinese workers. Evidence provided by Koolatron supports this notion, which referenced a Financial Times article about the GOC’s focus to increase production and exports to overcome the negative effects of sluggish domestic demand.^{Footnote 162}

[213] Thus, the continued availability of subsidy programs for thermoelectric container producers and exporters in China may increase the likelihood of continued or resumed subsidizing of the subject goods.

The volume of subsidized goods imported into Canada during the POR

[214] The continued collection of countervailing duties by the CBSA, as shown in Table 1 and Table 3, indicate that subsidized thermoelectric containers were imported at large volumes while the CITT’s order remained in effect throughout the POR.

[215] The large volume of thermoelectric containers imported during the POR from China, which represents the single largest source of imported thermoelectric containers into Canada,^{Footnote 163} may imply an ability, willingness, and sustained interest, by Chinese producers and exporters to continue exports to the Canadian market at dumped and subsidized prices despite the applicable SIMA duties.

[216] The fact that subsidized goods were imported into Canada during the POR and the volume at which they were imported, which also further suggests the continued availability of subsidy programs for Chinese producers and exporters of thermoelectric containers, may increase the likelihood of continued or resumed subsidizing of the subject goods.

Determination Regarding Likelihood of Continued or Resumed Subsidizing

[217] Based on the information on the record with respect to: the continued availability of subsidy programs for producers and exporters of thermoelectric containers in China, and the volume of subsidized goods imported into Canada during the POR, the CBSA has determined that the expiry of the order is likely to result in the continuation or resumption of subsidization of certain thermoelectric containers from China.

Conclusion

[218] For the purpose of making a determination in this expiry review investigation, the CBSA conducted its analysis within the scope of the factors found under subsection 37.2(1) of the SIMR and considered any other factors relevant in the circumstances. Based on the foregoing analysis of pertinent factors and consideration of information on the record, on December 24, 2024, the CBSA made a determination pursuant to paragraph 76.03(7)(a) of SIMA that the expiry of the order made by the CITT on September 5, 2019, in Expiry Review No. RR-2018-004 in respect of certain thermoelectric containers originating in or exported from China:

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

Future action

[219] The CITT has now initiated its expiry review to determine whether the continued or resumed dumping and subsidizing are likely to result in injury. The CITT’s expiry review schedule indicates that it will make its decision by June 2, 2025.

[220] If the CITT determines that the expiry of the order with respect to the goods is likely to result in injury, 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 and/or countervailing duties on dumped and/or subsidized importations of the subject goods.

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

Contact us

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

Contact us

• Telephone:
• Alex Wu: 343-573-2930

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