Statement of reasons—Expiry review determination: Unitized Wall Modules (UWM 2024 ER)

Decision

Ottawa, October 25, 2024

On October 10, 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 July 3, 2019, in Expiry Review No. RR-2018-002:

• 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 May 13, 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 July 3, 2019, in Expiry Review No. RR-2018-002, concerning the dumping and subsidizing of unitized wall modules (UWM), 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 May 14, 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 goods.

[3] The CBSA received responses to the Canadian producer expiry review questionnaire (ERQ) from Inland Glass & Aluminum Ltd. and Aluminum Curtainwall Systems Inc.;^{Footnote 1} BVGlazing Systems Ltd.;^{Footnote 2} Flynn Canada Ltd.;^{Footnote 3} Harmon Facades ULC;^{Footnote 4} Quest Window Systems Inc.;^{Footnote 5} Starline Windows Ltd.;^{Footnote 6} State Window Corporation;^{Footnote 7} and Toro Aluminum and Toro Glasswall Inc^{Footnote 8} (hereinafter the ‘Canadian producers’). The submissions made by the Canadian producers included information supporting their position that continued or resumed dumping and subsidizing of UWM from China is likely if the CITT’s order expires.

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

[5] In addition to responding to the ERQ, the Canadian producers submitted supplementary information prior to the closing of the record and a joint case brief.^{Footnote 9} The case brief submitted by the Canadian producers included arguments supporting their position that continued or resumed dumping and subsidizing of UWM from China is likely if the CITT’s order expires. No other parties provided a case brief to the CBSA and no party provided a reply submission in response to the Canadian producers’ case brief.

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

• Weakening market conditions in China
• Oversupply in China
• Chinese producers are increasingly export-focused
• Attractiveness of the Canadian market to Chinese producers
• Propensity of Chinese exporters to undercut Canadian prices

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

• Continued availability of subsidy programs for UWM exporters in China
• Subsidizing of primary aluminum in China and other government intervention
• Countervailing measures against Chinese aluminum products in Canada and in other jurisdictions

[8] For the foregoing factors, the CBSA, having considered the relevant information on the record, determined on October 10, 2024, pursuant to paragraph 76.03(7)(a) of SIMA that the expiry of the order in respect of UWM is likely to result in the continuation or resumption of dumping and subsidizing of the goods from China.

Background

[9] On March 4, 2013, following a complaint filed by Allan Window Technologies (now BVGlazing Systems); Ferguson Neudorf Glass Inc.; Flynn Canada Ltd.; Inland Glass & Aluminum Ltd./Aluminum Curtainwall Systems Inc.; Oldcastle Building Envelope; Sota Glazing Inc.; Starline Architectural Windows Ltd.; State Windows Corporation; Toro Aluminum/Toro Glasswall Inc.; and Windsor Glass Company (1992) Ltd. (now Contract Glaziers Inc.), (hereinafter the ‘complainants’), the CBSA initiated investigations pursuant to subsection 31(1) of SIMA, into the alleged dumping and subsidizing of UWM originating in or exported from China.

[10] On October 10, 2013, pursuant to subsection 41(1) of SIMA, the CBSA made final determinations respecting the dumping and subsidizing of UWM from China.

[11] On November 12, 2013, pursuant to subsection 43(1) of SIMA, the CITT found that the dumping and subsidizing of UWM originating in or exported from China had not caused injury but was threatening to cause injury to the domestic industry in Canada.

[12] On May 26, 2014, the CBSA concluded a re-investigation to update the normal values and export prices of UWM from China.

[13] On July 3, 2019, 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-2013-002.

[14] On May 13, 2024, the CITT initiated an expiry review of its order pursuant to subsection 76.03(1) of SIMA.

[15] On May 14, 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

[16] For purposes of this expiry review investigation “UWM” is defined as:

Classification of imports

[32] The subject goods are normally imported into Canada under the following tariff classification numbers:

1. 7610.10.00.20
2. 7610.10.00.10
3. 7610.90.90.90
4. 7008.00.00.00
5. 7308.30.00.21
6. 7610.90.90.30

[33] Prior to January 1, 2022, the subject goods would have been normally imported into Canada under the following tariff classification numbers:

1. 7610.10.00.20
2. 7610.90.90.90
3. 7008.00.00.00
4. 7308.30.00.21
5. 7604.29.20.30
6. 7610.10.00.10

[34] These tariff classification numbers may also include non-subject goods, and subject goods may also fall under additional tariff classification numbers.

Period of review

[35] The period of review (POR) for the CBSA’s expiry review investigation is from January 1, 2021 to March 31, 2024.

Canadian industry

[36] The Canadian industry for UWM is comprised of 25 known producers, as listed below.

[37] At the time of the original investigation, the CBSA was satisfied that the complainants accounted for a major proportion of domestic production of like goods and that the complainants and the supporting producers collectively represented a large majority of the total domestic production of like goods. This CBSA is satisfied that this situation remains the same.

[38] As mentioned, responses to the Canadian producers ERQ were received from the eight following producers:

Inland Glass & Aluminum Ltd. / Aluminum Curtainwall Systems Inc.

[39] Inland Glass & Aluminum Ltd. (IGA), of Kamloops, British Columbia, has been producing custom architectural aluminum unitized curtain wall products since its incorporation on January 21, 1974. The firm operates within both Canada and the United States. IGA’s products generally comprise of custom unitized curtain wall modules but the company offers a larger range of other products, including: aluminum stick system (site glazed), skylights, sunshades, storefronts/entrances and windows.^{Footnote 10}

BVGlazing Systems Ltd.

[40] BVGlazing Systems Ltd. (BVG) was founded in 1958. Their window wall and curtain wall production facilities are located in Concord and Niagara Falls, Ontario, with regional offices in British Columbia and Cornwall, New York. The company sells UWM to customers across Canada and the United States.^{Footnote 11}

Flynn Canada Ltd.

[41] Flynn Canada Ltd. (Flynn), of Mississauga, Ontario, is a privately-owned company that originated as a Winnipeg based roofing company, incorporated in 1978. Growth and expansion through various acquisitions has led the company to become a total building envelope contractor. UWM production, marketing and installation was added to the company’s offering in 2006. Flynn produces UWM at its production facility in Surrey, British Columbia.^{Footnote 12}

Harmon Facades ULC

[42] Harmon Facades ULC (Harmon Canada) operates Sotawall Inc.’s former facilities in Brampton, Ontario. Harmon Canada manufactures unitized curtain walls for multi-story buildings in Canadian and the United States. Harmon Canada also provides preconstruction, engineering, design and installation services, whether directly or through affiliated companies.^{Footnote 13}

Quest Window Systems Inc.

[43] Quest Window Systems Inc. (Quest), a producer based in Mississauga, Ontario, has manufactured window walls since 2000. The company was founded as a window and glass products manufacturer catering to hi-rise condominium developers and constructors in Canada. In 2017, Quest was purchased by Exchange Income Corporation, of Winnipeg, Manitoba.^{Footnote 14}

Starline Windows Ltd.

[44] Starline Windows Ltd. (Starline) was incorporated in 2001 in British Columbia. From its inception, Starline has manufactured UWM’s for the hi-rise market in Western Canada and the Western United States.^{Footnote 15}

State Window Corporation

[45] State Window Corporation (State Window), of Vaughan, Ontario, was incorporated on July 15, 2002. The company began producing unitized window walls in 2006. The company mainly supplies to and installs for domestic clients, but has also supplied goods to the United States. The company also shares facilities with a related entity from which it receives sealed glass units in relation to the manufacturing of its window wall.^{Footnote 16}

Toro Aluminum / Toro Glasswall Inc.

[46] Toro Aluminum / Toro Glasswall Inc. (Toro) produces UWM from its facilities in Concord and Vaughan, Ontario. Established in 1979, Toro Aluminum has become the window wall and door supplier for high-rise condominiums, office buildings and hotels across Canada and the United States. Established in 2008, Toro Glasswall has become the curtain wall supplier for high-rise condominiums, office buildings and hotels across Canada and the United States.^{Footnote 17}

Canadian market

[47] The apparent Canadian market for UWM over the POR, which includes Canadian production, is indicated in Table 2 below.

[48] As shown in Table 2, the Canadian producers’ share of the apparent market decreased from 2021 to 2022. However, from 2022 to 2023, their market share exceeded 2021 levels. Additionally, their apparent market share remained approximately the same in the first quarter of 2024 as their apparent market share in 2021.

[49] During the POR, no subject goods were present in the Canadian market until 2023. During 2023, imports of subject goods from China represented less than 1% of total imports. Further, no subject goods were imported in the first quarter of 2024.

Enforcement data

[50] 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 $68,937 on subject imports from China. The total value for duty of subject imports during the POR from China was approximately $766. As a percentage of the total value for duty, the combined anti-dumping and countervailing duties assessed during the POR were equal to 8,999.6%.

Information considered by the CBSA

Administrative record

[56] 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.

[57] 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 July 3, 2024.

Procedural issues

[58] The CBSA will normally not consider any new information submitted by participants subsequent to the closing of the record date. However, in certain exceptional circumstances, it may be necessary to permit new information to be submitted. The CBSA will consider the following factors in deciding whether to accept new information submitted after the closing of the record date:

1. the nature, relevance, materiality and volume of the information
2. the difficulties encountered by the participant in obtaining or submitting the information by the date specified (for example, the availability of the information or emergence of new or unforeseen issues)
3. whether the information can reasonably be taken into consideration by the CBSA for purposes of the proceedings including whether there is sufficient time to verify the information
4. whether other parties are likely to be prejudiced if the information is used (for example, the opportunity for other participants to respond to the information)
5. whether acceptance of the information would compromise the ability of the CBSA to conduct the proceedings expeditiously and
6. any other factors that are relevant in the circumstances

[59] On July 12, 2024, the Canadian producers submitted a revision of their close of record documents as an incorrect file had been inadvertently attached to the document “United States Department of Commerce, Issues and Decision Memorandum for the Final Results of the 2022 Expedited Second Sunset Review of the Antidumping Duty Order on Aluminum Extrusions from the People’s Republic of China”. The revised version contained the correct attachment. The information was considered relevant and could easily be taken into consideration without compromising the timelines of the process. As such, the CBSA accepted the information.^{Footnote 20}

[60] Furthermore, on August 6, 2024, the CBSA reopened the record to revise the import and compliance statistics - day 50 (exhibit 030 and 031) and provided the opportunity for interested parties to file case briefs by August 13, 2024 and reply submissions by August 20, 2024, with respect to the revised data only. The CBSA received a case brief from the Canadian producers in regards to the new exhibit.

Position of the parties: Dumping

Consideration and analysis: Dumping

[82] 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 factors identified in subsection 37.2(1) of the SIMR, as well as any other factors relevant in the circumstances.

[83] 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:

• Weakening market conditions in China
• Oversupply in China
• Chinese producers are increasingly export-focused
• Attractiveness of the Canadian market to Chinese producers
• Propensity of Chinese exporters to undercut Canadian prices

Weakening market conditions in China

[84] The UWM industry depends heavily on the performance of the construction industry and the real estate market. During the POR, China experienced a significant downturn in its construction market. According to the National Bureau of Statistics of China, from 2022 to 2024, China’s residential and commercial building construction starts experienced significant year-over-year declines.^{Footnote 45} In 2022, new starts for residential buildings were down 39.8%, while office buildings were down 39.1% and other commercial construction was down 41.9%, compared to 2021. In 2023, new starts for residential buildings were down 20.9%, office buildings were down 18.5%, and other commercial construction was down 20.4%, compared to 2022. From January to May 2024, new starts for residential buildings were down by 25%, office buildings were down 24.9%, and other commercial construction was down 27%, over the same period in 2023.^{Footnote 46} The IMF reported that by the end of 2023, residential construction starts in China were down by almost 60% compared to 2020.^{Footnote 47} Other evidence on the record shows China’s residential construction starts fell from 1,464 million m² in 2021 to 877 million m² in 2022 and 693 million m² in 2023.^{Footnote 48}

[85] The slowdown in the construction and real estate market and its negative impact on the Chinese UWM market resulted in poor financial results for several Chinese UWM producers.^{Footnote 49} Hainan Development Holdings Nanhai Co., Ltd.’s (Hainan) earnings before income tax were negative in four of the six years over the period of 2018 to 2023.^{Footnote 50} Hainan also had to file for bankruptcy on behalf of one of its Chinese curtain wall subsidiaries according to its 2022 annual report.^{Footnote 51} Further, Yuanda China Holdings Limited (Yuanda) also experienced significant net income losses in 2020 and 2021 and marginal net income in 2022 and 2023. Over the period of 2020 to 2023, Yuanda incurred a net income loss of 12%.^{Footnote 52}

[86] The information on the record demonstrates that China’s economy is currently slowing down. Given the weak domestic demand for UWM, Chinese producers will need to find opportunities overseas to sell their goods. As a result, this increases the likelihood of resumed or continued dumping of UWM into Canada if the order expires.

Oversupply in China

[87] Specific supply and demand data for the Chinese UWM market is limited. Nevertheless, evidence on the record suggests that the Chinese curtain wall industry expanded significantly in the recent past (pre-2022), both in terms of demand for UWM and in terms of output. However, currently, the Chinese curtain wall industry, which is characterized as being highly fragmented with fierce domestic competition, is currently operating in a weakening construction market, with evidence of an oversupply condition.

[88] Evidence on the record suggests that total production of curtain walls in China has risen from 140 million m² in 2015 to just over 195 million m² in 2021, although, it dropped to approximately 182.5 million m² in 2022,^{Footnote 53} it then increased 15% to 209.1 million m² in 2023.^{Footnote 54} This equates to a 49% increase in Chinese production between 2015 and 2023.

[89] Information on the record demonstrates that there are 13 Chinese UWM producers with a combined capacity of nearly 23.5 million m².^{Footnote 55} Although a portion of that capacity may be used for non-subject goods, such as stick systems, the capacity to produce UWM remains substantial. Out of these producers, four have production capacity in excess of the entire Canadian market. For example, as stated above, if Yuanda exported a small portion of their production capacity, they could take the Canadian producers’ entire market share. Additionally, China Fangda Group’s production capacity of 5 million m² is larger than all of the Canadian producers’ 2023 domestic sales. Further, Anhui New Horizon Doors, Windows and Curtain Wall Engineering Co., Ltd., which reports a production capacity of 2 million m², is also significantly larger than the size of the Canadian producers’ 2023 domestic sales. Lastly, Shandong Huada Doors, Windows and Curtain Wall Co., Ltd. has a production capacity of 1.5 million m², which is also larger than the size of the Canadian producers’ 2023 domestic sales.

[90] The Chinese curtain wall industry is known to be fragmented and highly competitive. According to the CITT, at the time of the finding, there were allegedly as many as 200 producers of UWM in China.^{Footnote 56} During the POR, several Chinese unitized curtain wall producers described the competition in China’s UWM market as fierce^{Footnote 57}, intense^{Footnote 58} and challenging.^{Footnote 59}

[91] With UWM producers increasing capacity in recent years and facing high domestic competition, causing them to have reduced UWM sales domestically, it is clear that Canada will be on the radar as a potential market. There will be pressure on the Chinese UWM producers to maintain capacity utilization rates. To achieve this, they will need to increase exports. All of these factors together increases the likelihood of continued or resumed dumping of UWM into Canada, should the CITT’s order expire.

Chinese producers are increasingly export-focused

[92] Evidence demonstrates that Chinese UWM producers are increasingly turning to the export market to cope with their domestic market difficulties.

[93] For example, Jangho Group Co., Ltd. (“Jangho”) identified foreign sales as a key objective in its 2023 annual report. In particular, Jangho listed the export of curtain wall to America as a target.^{Footnote 60} Furthermore, China Fangda Group indicated that they would increase efforts in exploring overseas markets in order to address domestic market competition risks. In its 2023 annual report, they attributed year-over-year growth in newly secured orders to the company’s expansion in overseas sales.^{Footnote 61}

[94] Similarly, Yuanda made significant year-on-year gains in its export business in 2023 as overseas contracts increased from approximately 30% of its newly awarded projects in 2022 to 54% in 2023. Since Yuanda generated more revenue from export sales than domestic sales in 2021, 2022 and 2023, this additional growth in overseas markets demonstrates that Yuanda is focusing more and more on export markets.^{Footnote 62}

[95] Likewise, Hainan stated that they aimed to expand its overseas market in its 2022 annual report.^{Footnote 63}

[96] Given Chinese UWM producers’ export orientation due to high domestic market competition risks, if the CITT’s order expires, there is an increased likelihood that UWM from China would continue or resumed to be sold into Canada at dumped prices.

Attractiveness of the Canadian market to Chinese producers

[97] Since significant volumes of contracts were obtained by Chinese UWM exporters offering UWM at dumped prices prior to the finding being put in place, the CBSA believes that several Chinese UWM producers would be able to quickly re-enter the Canadian market if the order expired as they already have market knowledge and had previously established a strong foothold.^{Footnote 64}

[98] Additionally, with Chinese UWM producers increasingly turning to export markets, if the order were to expire, they would be provided with a new market that they have been unable to penetrate by selling UWM at dumped prices.^{Footnote 65}

[99] Despite UWM demand in Canada being soft, the evidence supports that the Canadian market would be attractive to Chinese UWM producers if the order expires, increasing the likelihood of continued or resumed dumping of UWM into Canada.

Propensity of Chinese exporters to undercut Canadian prices

[100] In the original UWM inquiry, the CITT acknowledged that while UWM are not commodities, price is nonetheless of considerable importance. As stated by the CITT, “[l]ate delivery poses a significant risk to general contractors as purchasers of UWM, having regards to the financial penalties that they may incur, should the project fall behind schedule, and the potential damage to the general contractor’s reputation.”^{Footnote 66} Nevertheless, although the domestic industry has a significant advantage in delivery time,^{Footnote 67} many purchasers seemed willing to assume this risk (i.e. of importing from abroad) if a price quotation is low enough.^{Footnote 68} On this matter, the Canadian producers argued that the major determining factor between bids is price, but that contractors and owners will consider the risk associated with delivery or quality.^{Footnote 69} The CITT estimated that the lower risk associated with sourcing domestically allowed like goods to command a risk mitigation premium over the price of the subject goods.^{Footnote 70} The CITT also noted the significance of the price undercutting of subject goods, which ranged, at the time, between 38% and 49% for unitized curtain wall modules and between 16% and 28% for unitized window wall modules.^{Footnote 71}

[101] The CBSA believes that the risk involved with supplying UWM from China remains the same as it was at the time of the original investigation, and that for this reason, a Chinese supplier is likely to be selected to supply UWM only if the price is sufficiently low to justify the added risk. During the period of investigation for the original investigation, a time when market conditions in China for UWM were much stronger than they are today, the CBSA determined margins of dumping ranging between 15.7% and 49.3% for the two cooperating exporters. Considering the weakening market conditions in China and the increasing oversupply in that market, the CBSA expects that Chinese UWM producers are likely to undercut Canadian producers by significant margins in order to re-enter the market and re-gain market share. The CBSA believes that Chinese UWM producers are likely to export UWM to Canada at prices that are insufficient to recover their full cost plus a reasonable amount for profit, and hence at a dumped price. If they were able to sell at un-dumped prices, they would have sought normal values during the POR.

[102] Evidence on the record also suggests that the magnitude of UWM production capacity in China is such that a significant volume of dumped UWM is likely to be exported to Canada if the order expires.

[103] Given Chinese UWM producers’ propensity to undercut Canadian prices, if the CITT’s order expires, there is an increased likelihood that UWM from China would continue or resumed to be sold into Canada at dumped prices.

Determination regarding likelihood of continued or resumed dumping

[104] Based on the information on the administrative record in respect of : the weakening UWM market conditions in China; the oversupply in China; the increasing export orientation of Chinese producers; the attractiveness of the Canadian market to Chinese producers; and the propensity of Chinese exporters to undercut Canadian prices, the CBSA has determined that the expiry of the order is likely to result in the continuation or resumption of dumping of UWM from China.

Position of the parties: Subsidizing

Consideration and analysis: Subsidizing

[124] In making a determination under paragraph 76.03(7)(a) of SIMA as to whether the expiry of the order 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.

[125] 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:

• The continued availability of subsidy programs for UWM exporters in China
• Subsidizing of primary aluminum in China and other government intervention
• Countervailing measures against Chinese aluminum products in Canada and in other jurisdictions

The continued availability of subsidy programs for UWM exporters in China

[126] At the time of the initiation of the original subsidy investigation in 2013, the CBSA had identified 180 subsidy programs to be investigated. During that investigation, the CBSA found that 33 of the identified programs had conferred benefits to at least one of the two cooperative exporters; Guangzhou Jangho Curtain Wall System Engineering Co., Ltd. (Guangzhou Jangho) and associated companies as well as Shenyang Yuanda.^{Footnote 89}

[127] The 33 programs which were found by the CBSA to be conferring benefits to the cooperating exporters included several direct subsidy programs, such as grants, preferential loans, and preferential tax programs and also pass-through subsidies from the purchase of aluminum extrusion.

[128] Despite the limited information with respect to current subsidy programs specifically applicable to UWM producers and exporters, especially due to the non-participation by the GOC in this expiry review investigation, information on the record provides evidence of the continued availability of subsidy programs for UWM exporters in China.

[129] As mentioned previously, public financial documents for four UWM manufacturers revealed that they received millions of RMB as subsidies in the form of grants over the POR. However, the total amount reported in their financial statements likely represents only a portion of the total amount of subsidy received during the POR. For instance, exporters may have received additional benefits from certain tariff and VAT refunds or exemptions and preferential loans. For example, Jangho’s annual report indicated that where the company received “policy-based preferential loan subsidies”, they would be recorded based on the cost of the loans.^{Footnote 90}

[130] Additionally, their financial statements do not include the value of any subsidy passed-through from the purchase of aluminum extrusions and do not provide information as to the nature of the grants received, which could greatly impact the amount allocated. In addition, the amount of grants indicated in the financial statements does not include any subsidies received by other entities within their corporate structures, which could be allocable to subject and like goods.

[131] Thus, due to the continued availability of subsidy programs for UWM exporters in China, there is an increased likelihood that UWM exported from China to Canada will resume or continue to be subsidized, if the CITT’s order expires.

The subsidizing of primary aluminum in China and other government intervention

[132] The record contains evidence that the Chinese government continues to provide financial benefits to primary aluminum producers. For example, a report by the Organisation for Economic Co-operation and Development (OECD) studied subsidies provided to the world’s 17 largest aluminum producers. It claimed that the top five recipients of subsidies (all Chinese firms) received 85% of the subsidies provided to the 17 companies.^{Footnote 91} Also, it found that the majority of financial support was provided by state-owned enterprises in China to aluminum state-owned enterprises in China.^{Footnote 92}

[133] In addition to directly subsidizing its aluminum industry, a report by the European Commission listed a number of instruments used by the GOC to control and influence its domestic aluminum industry.^{Footnote 93} Such instruments include restrictive export-related measures on bauxite, a key input in aluminum production, with the effect of increasing domestic supply and lowering its costs. The GOC also implemented intervention measures, with minimal effectiveness, to control aluminum production as the industry faces a serious issue with overcapacity. The report also noted that state-owned enterprises are representing an increased proportion of Chinese aluminum producers, accounting for more than 50% of primary aluminum output in China. There are also indications that China’s various taxation policies are resulting in aluminum producers paying reduced tax rates and receiving tax rebates. Finally, the report also identified specific subsidies, in particular, the subsidizing of electricity, preferential financing and government provision of goods and services at less than fair value.^{Footnote 94}

[134] As was the case at the time of the UWM investigation, subsidies provided to aluminum producers are likely passed-through to aluminum extrusion producers and ultimately, in full or in part, to UWM producers. Further, these measures discussed above demonstrate the importance that the GOC has placed on its aluminum industry and the higher-value-added downstream products, including aluminum extrusions and UWM. Thus, due to indirect or pass-through subsidies, if the CITT’s order expire, there is an increased likelihood that UWM from China will resume or continue to be subsidized.

The countervailing measures against Chinese aluminum products in Canada and in other jurisdictions

[135] The existence of countervailing measures in place in Canada, Australia, the European Union (EU) and in the United States concerning aluminum products from China reinforces the argument that Chinese UWM exporters/producers receive countervailable subsidies from the GOC, by way of pass-through subsidies, and that the GOC has continued to place a great deal of importance on its aluminum industry and subsidized it accordingly.

[136] Currently, Canada has two countervailing measures in force against aluminum products from China – aluminum extrusions and photovoltaic modules and laminates (for which aluminum is an input).^{Footnote 95} The products that are subject to the Australian countervailing measures include aluminum extrusions and aluminum zinc coated steel.^{Footnote 96} The EU’s has countervailing measures against aluminum foil.^{Footnote 97} Finally, the products that are subject to the United States countervailing measures include: aluminum extrusions (including the aluminum extrusions that form part of UWM); aluminum lithographic printing plates; certain aluminum foil; common alloy aluminum sheet; aluminum wire and cable; crystalline silicone photovoltaic cells; and certain crystalline silicone photovoltaic products.^{Footnote 98}

[137] In November 2022, in a sunset review of its countervailing order on aluminum extrusions from China originally issued on April 4, 2011, the United States Department of Commerce (US DOC) found that the revocation of its countervailing duty order on aluminum extrusions would likely lead to a continuation or recurrence of countervailable subsidies.^{Footnote 99} It is noted that the aluminum extrusions that form part of UWM are included within the scope of the United States’ measures on aluminum extrusions. The US DOC found that 60 subsidy programs benefited Chinese extruders.^{Footnote 100}

[138] In late 2023, the United States initiated a new subsidy investigation into aluminum extrusions from several countries, in which certain Chinese aluminum extrusions that fell outside the scope of the existing United States trade remedy were included. On March 11, 2024, the US DOC released its preliminary determination on countervailable subsidies. US DOC found 111 subsidy programs, 77 of which were reported by a Chinese aluminum extrusion producer.^{Footnote 101}

[139] In a review of its measures applying to aluminum extrusions, which concluded in October 2020, the Australian authorities found that cooperating exporters benefited from subsidies that had been granted under a total of 77 programs.^{Footnote 102} The subsidy margins varied between 0% and 6.4% of the export price for cooperating exporters.^{Footnote 103}

[140] Further, the Canadian, Australian and United States authorities have all determined that the subsidies to the aluminum extrusion producers/exporters included benefits from the provision of primary aluminum at less than adequate remuneration.

[141] As shown above, there are strong indications that the GOC will likely continue to subsidize its domestic UWM producers in the future, both directly and indirectly by subsidizing aluminum extrusion producers and/or the primary aluminum producers. As such, if the CITT’s order expire, there is an increased likelihood that UWM from China will resume or continue to be subsidized.

Determination regarding likelihood of continued or resumed subsidizing

[142] Based on the information on the record with respect to: the continued availability of subsidy programs for UWM exporters in China; the subsidizing of primary aluminum in China and other government intervention; and the countervailing measures against Chinese aluminum products in Canada and in other jurisdictions, the CBSA has determined that the expiry of the order is likely to result in the continuation or resumption of subsidization of UWM from China.

Conclusion

[143] 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 October 10, 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 July 3, 2019, in Expiry Review No. RR-2018-002 in respect of UWM originating in or exported from China:

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

Future action

[144] 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 March 19, 2025.

[145] 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.

[146] 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

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

• Telephone:
• Manshun Tong: 343-553-1727

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