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Expiration - Residential Steel Storage Buildings

OTTAWA, December 4, 1997

4258-98

AD/1089

STATEMENT OF REASONS

IN THE MATTER concerning a review of an undertaking pursuant to subsection 53(1) of the Special Import Measures Act in respect of

RESIDENTIAL STEEL STORAGE BUILDINGS UNDER 200 SQUARE FEET IN AREA, ASSEMBLED OR UNASSEMBLED, ORIGINATING IN OR EXPORTED FROM THE UNITED STATES OF AMERICA AND MANUFACTURED BY OR ON BEHALF OF ARROW GROUP INDUSTRIES, INC., OF POMPTON PLAINS, NEW JERSEY, ITS SUCCESSORS AND ASSIGNS

DECISION

On this date, the Deputy Minister of National Revenue, having reviewed the undertaking from Arrow Group Industries, Inc., originally accepted on December 7, 1994, determined that the undertaking with respect to the above-mentioned goods no longer serves the purpose for which it was intended.

Therefore, the undertaking in question will expire on December 7, 1997, in accordance with subsection 53(2) of the Special Import Measures Act. This terminates all proceedings under the Act respecting the above-mentioned goods.

This document is also available in French.

Cet énoncé des motifs est également disponible en français.

STATEMENT OF REASONS

SUMMARY

On September 5, 1997, the Department of National Revenue, initiated a review of the undertaking accepted from Arrow Group Industries, Inc., with respect to certain residential steel storage buildings.

The Deputy Minister of National Revenue is satisfied that the undertaking no longer serves the purpose for which it was intended and that the present circumstances do not require the undertaking to be renewed. Accordingly, the undertaking will expire on December 7, 1997.

INTERESTED PARTIES

Complainant

The complainant, Spacemaker Limited (Spacemaker) is the sole Canadian producer of residential steel storage buildings under 200 square feet in area. Spacemaker is located in Mississauga, Ontario, and its full mailing address is listed in the attached Appendix.

Exporter

Arrow Group Industries, Inc., (Arrow) is located in Pompton Plains, New Jersey. The company's full mailing address is listed in the attached Appendix.

Importers

The names of importers of the subject goods are listed in the attached Appendix.

BACKGROUND

A dumping investigation was initiated on September 9, 1994, following a complaint filed by Spacemaker. The investigation concerned certain residential steel storage buildings produced by or on behalf of Arrow.

The investigation was suspended on December 7, 1994, when a price undertaking eliminating the margin of dumping was accepted by the Deputy Minister. At the time of acceptance of the undertaking, the weighted average margin of dumping was estimated to be 21.9 per cent.

According to the terms of the undertaking, Arrow agreed to increase the selling price of the subject goods to Canadian purchasers to eliminate the margin of dumping determined during the investigation.

Under the revised SIMA, which came into effect on January 1, 1995, undertakings must be reviewed every five years. However, the transitional rules require that undertakings accepted prior to the implementation of the new Act fall under the provisions of the old Act, i.e., they must continue to be reviewed within three years. This undertaking was accepted under the old Act.

Accordingly, on September 5, 1997, the Department of National Revenue initiated a review of the undertaking, as the undertaking agreement is due to expire on December 7, 1997.

PRODUCT

Product Definition

The goods subject to the undertaking are defined as follows:

residential steel storage buildings under 200 square feet in area, assembled or unassembled, originating in or exported from the United States of America and manufactured by or on behalf of Arrow Group Industries, Inc., of Pompton Plains, New Jersey, its successors and assigns.

Product Information

Residential steel storage buildings, commonly called storage or garden sheds are fabricated primarily from painted light gauge galvanized steel, with wall and roof panel material in thicknesses generally ranging from .0075" to .015". They vary in size, from approximately 8 square feet up to 200 square feet in area. The units are intended for use by the home consumer for outdoor storage purposes and are usually shipped in a knocked down condition for assembly by the consumer.

CLASSIFICATION OF IMPORTS

The Harmonized System (H.S.) provides two specific classification numbers under which the subject steel storage buildings may be imported into Canada:

9406.00.99.20

9406.00.99.90

CANADIAN INDUSTRY

Spacemaker is the sole Canadian manufacturer of residential steel storage buildings under 200 square feet in area.

CANADIAN MARKET

A review of import data from 1994 through to early 1997 indicates that in 1995 import volumes of subject goods fell from the previous year's levels. The downward trend in import volumes of the subject goods continued throughout 1996 and into early 1997.

The undertaking had an impact on the Canadian residential steel storage building market. Over the course of the undertaking period, several Canadian retailers who previously carried Arrow shed models, or both Arrow and Spacemaker sheds in their product lines, switched to offering only the Spacemaker models.

THE UNDERTAKING REVIEW

On initiation of this review, the complainant and the exporter were requested to provide relevant information with respect to the renewal or expiration of the undertaking. Importers were requested to contact the Department if they had comments concerning the undertaking.

In their response to the Department, both the complainant, Spacemaker, and the exporter, Arrow, requested that the undertaking be permitted to expire. In June 1997, Spacemaker was purchased by Arrow. In these circumstances, it was indicated that the undertaking had ceased to serve its original purpose. According to a June 1997 press release, the acquisition of Spacemaker provided Arrow with expanded distribution and manufacturing capacity. In the purchase transaction, Arrow also acquired Spacemaker's patented free-standing metal shelving products line.

No Canadian importers of the subject goods made representations to the Department.

CONSIDERATION AND ANALYSIS

When determining whether an undertaking should be renewed, the Deputy Minister must be satisfied that there is no longer a need for the undertaking and that there is no reason to terminate the agreement and make a preliminary determination.

In conducting its analysis, the Department gave consideration to the fact that, during the period of the undertaking there was never any need to terminate the undertaking and make a preliminary determination. Arrow adhered to the terms and conditions of the undertaking and supplied information to the Department on a monthly and quarterly basis with no violations of the undertaking. Furthermore, Arrow cooperated with the Department in supplying information for annual updates to the undertaking price grids.

The review also revealed that the present circumstances facing Spacemaker are quite different from the conditions that prevailed when the undertaking was accepted. Both Spacemaker and its parent company, Arrow, have requested that the undertaking be permitted to expire as the undertaking has ceased to serve its original purpose. As Arrow is now Spacemaker's parent company, Spacemaker no longer views Arrow as a serious threat in the market and has indicated that it no longer considers the undertaking as necessary.

CONCLUSION

On the basis of the above, the Deputy Minister is of the opinion that the undertaking accepted on December 7, 1994, no longer serves the purpose for which it was intended. Accordingly, pursuant to subsection 53(2) of SIMA, this undertaking will not be renewed and will expire on

December 7, 1997.

FUTURE ACTION

In accordance with subsection 53(3) of SIMA, the expiration of the undertaking terminates all proceedings under the Act in regard to certain residential steel storage buildings from Arrow Group Industries, Inc., of the United States.

PUBLICATION

Notice of the expiration of the undertaking is being published in the Canada Gazette pursuant to subsection 53(4) of the Special Import Measures Act.

INFORMATION

For further information, please contact:

Barbara Chouinard
Senior Program Officer
Telephone:(613) 954-7399
Telefax: (613) 941-2612

or at the following address:

Revenue Canada
Anti-dumping and Countervailing Directorate
191 Laurier Avenue West
Ottawa, Ontario
K1A 0L5

R.A. S‚guin
Interim Director General
Anti-dumping and Countervailing Directorate

OTTAWA, December 4, 1997

APPENDIX

Complainant

Spacemaker Limited
3069 Wolfedale Road
Mississauga, Ontario
L5C 1V9

Exporter

Arrow Group Industries, Inc.
1680 Route 23 North
P.O. Box 928
Wayne, New Jersey 07474-0928

Importers

Marchands Unis Inc.
915, Rue Paradis
Parc Industrial
Duberger, Quebec
G1N 4E3

Revelstoke Home Centre
1711 Springfield Road
Kelowna, B.C.
V1Y 5V5

Revelstoke Home Centre
5403 44th Street S.E.
Calgary, Alberta
T2C 2T6

Homecare Building Centre
6470 Viscount Road
Mississauga, Ontario
L4V 1H5

Revelstoke Home Centre
10450 42nd Ave. NW
Edmonton, Alberta
T6J 6X4

Revelstoke Home Centre
90 Crowfoot Way NW
Calgary, Alberta
T3G 4C8

Cotter Canada Hardware
1530 Gamble Place
Winnipeg, Manitoba
R3T 1N6

Bonhomme Lt‚e
243 Mont‚e Paiement
Gatineau, Qu‚bec
J8B 6M7

Copp Builders' Supply Co.
45 York Street
London, Ontario
N6A 1A4

Revelstoke Home Centre
9630 MacLeod Trail
Calgary, Alberta
T2J 0P7

Can-Save Insulation
RR #5 14 Truman Road
Barrie, ON
L4M 4S7

Kent Building Supply
Bayers Lake Business Park
Halifax, Nova Scotia
B3S 1B3

Livingston Distribution Center
Horner Ave. Warehouse
137 Horner Ave.
Toronto, ON
M8Z 4Y1

Revy Home & Garden
17303 100 Ave.
Edmonton, AL
T5S 2G5

United Lumber
520 Bayfield Street North
Barrie, Ontario
L4M 5A2

Home Hardware
34 Henry Street
St. Jacobs, Ontario
N0B 2N0

Canadian Tire Corporation Limited
P.O. Box 770 Station K
Toronto, Ontario
M4P 2V8

Costco Langley
19890 92A Ave.
Langley, B.C.
V3A 4P8

Milwork and Building Supplies Ltd.
1279 Simcoe Street North
Oshawa, Ontario
L1G 4X1

Revelstoke Home Centre
19550 92nd Avenue
Surrey, B.C.
V4N 4G7

Revelstoke Home Centre
17303 100th Avenue
Edmonton, Alberta
T5S 2G5

Revelstoke Home Centre
2727E 12th Avenue
Vancouver, B.C.
V5M 4T8

Turkstra Lumber Co., Ltd.
1141 King Rd.,
Burlington, Ontario
L7R 3X5

Saieco International Corp.
518 - 80th Ave. S.E.
Calgary, Alberta
T2C 2X3

Woodland Home Centre
449 Logan Avenue
Toronto, Ontario
M4M 2P3

Le Groupe Rona
1250 Nobel
Boucherville, Qu‚bec
J4B 5K1

Quincaillerie Napierville
459 Rue St. Jacques
Napierville, Qu‚bec
J0L 1J0

J & H Builders Warehouse
2505 Ave. C North
Saskatoon, Saskatchewan
S7L 6A6

Soo Mill Buildall
539 Great Northern R
Sault Ste. Marie, Ontario
P6B 5A1

Amway of Canada Head Office
P.O. Box 5706
3697 Exeter Road
London, Ontario
N6E 2Z3

Farr Lumber
4425 First Avenue
Niagara Falls, Ontario
L2E 4G1

Beaver Lumber
7303 Warden Ave.
Markham, Ontario
L3R 6Y3

Francois Lesp‚rance Inc.
531 Arthur Sauve Blvd.
St. Eustache, Qu‚bec
J70 4X4

Rigney Building Supplies Ltd.
5 Terry Fox Drive
P.O. Box 756
Kingston, Ontario
K7L 4X6

Builders Warehouse
3636 Innes Road
Box 130, RR#2
Orleans, Ontario
K1C 1T1

Castle Building Centres
6375 Dixie Road
Suite 400
Mississauga, Ontario
L5T 2E7