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Final Determination - Fresh Garlic

OTTAWA, February 19, 1997

4237-82

AD/1144

STATEMENT OF REASONS

FINAL DETERMINATION OF DUMPING OF FRESH GARLIC, ORIGINATING IN OR EXPORTED FROM THE PEOPLE'S REPUBLIC OF CHINA

DECISION

Pursuant to paragraph 41(1)(a) of the Special Import Measures Act, the Deputy Minister of National Revenue has today made a final determination of dumping respecting fresh garlic, originating in or exported from the People's Republic of China.

This Statement of Reasons is also available in French.

Cet énoncé des motifs est également disponible en français.

STATEMENT OF REASONS

Summary

On August 23, 1996, the Deputy Minister of National Revenue caused an investigation to be initiated respecting the alleged injurious dumping of fresh garlic, originating in or exported from the People's Republic of China (China). The investigation was initiated in response to a complaint filed by the Garlic Growers' Association of Ontario.

As a result of the investigation, the Deputy Minister is satisfied that the subject goods have been dumped, that the margin of dumping is not insignificant and that the volume of dumped goods is not negligible. Accordingly, the Deputy Minister has made a final determination of dumping in accordance with paragraph 41(1)(a) of the Special Import Measures Act (SIMA).

Interested parties

Complainant

The complaint was filed by the Garlic Growers' Association of Ontario (GGAO). Its address is:

38 Centre Street

Stratford, Ontario

N5A 1E3

Exporters and Importers

The names and addresses of the exporters and importers are contained in Appendix I and Appendix II, respectively.

Background

A complaint was submitted by the GGAO on July 10, 1996, alleging the injurious dumping of fresh garlic from China. On July 31, 1996, the Department notified the GGAO that the complaint was properly documented. The Department initiated an investigation into the alleged dumping on August 23, 1996, and on November 21, 1996, the Deputy Minister made a preliminary determination of dumping pursuant to subsection 38(1) of SIMA.

Product

Product Definition

For the purposes of this investigation, the subject goods are defined as:

Fresh garlic, originating in or exported from the People's Republic of China.

Product Information

The subject goods are various unnamed strains of garlic, of both the ophioscorodon ("hardneck") and sativum ("softneck") subspecies, which are grown in China. Fresh garlic is used principally as a food product and for seasoning. Garlic offered for sale in Canada is graded according to size, however, there is no standardized Canadian grading system.

Fresh garlic may be exported to Canada as whole garlic bulbs that have been cured, trimmed and cleaned, or as individual cloves, whether peeled or not. The definition does not include dehydrated garlic, garlic flakes, garlic powder, garlic paste or similar processed garlic products.

Classification of imports

Garlic is specifically provided for in subheading 0703.20.00.00 of the Harmonized Tariff System. The MFN rate of duty, applicable to imports from China, is 2.5 per cent ad valorem.

Canadian industry

Garlic is grown commercially in all provinces except Newfoundland. The major production area is in southwestern Ontario. The GGAO has 74 members who are full-time farmers and who grow garlic as part of their selection of crops.

The GGAO is the only organized garlic producer association in Canada. Based on surveys of 1996 production conducted by the GGAO, the GGAO represents producers who account for over 60 per cent of total Canadian production.

Canadian market

The apparent Canadian market for fresh garlic has increased steadily and markedly in recent years, from an estimate of less than six million kilograms in 1992, to approximately 10 million kilograms in 1995. It is estimated that the domestic producers' share of the Canadian market is under 10 per cent and the Chinese imports' share of the Canadian market is over 60 per cent. Garlic imported primarily from the United States, Mexico and Argentina, accounts for the remainder.

Results of the investigation

The dumping investigation covered all shipments of the subject goods to Canada from July 1, 1995, to June 30, 1996, which is referred to as the period of investigation (POI).

At the time of initiation of the investigation, Requests for Information (RFI) were sent to the known exporters and to the Government of China. As explained in the Statement of Reasons for the preliminary determination of dumping, neither the exporters nor the Government of China provided information in response to the RFI's and the Department concluded that it must regard China as a non-market economy country for the purposes of this investigation. The investigation was continued for the final determination decision on the same basis. On February 12, 1997, the Department received a submission from the Ministry of Foreign Trade & Economic Cooperation of the Government of China through its Canadian counsel. The information included explanations of certain laws governing Chinese corporations. The information was extensive and it could not be fully analysed prior to the legislated deadline for the final determination. The information will be reviewed and considered in any subsequent proceedings in this investigation.

Normal Value

Normal values are generally based on the domestic selling prices of the goods in the country of export, or on the basis of the full cost of the goods plus an amount for profit.

In the case of a non-market economy, normal values are normally determined on the basis of profitable domestic sales or the full cost of the goods plus an amount for profit in a country with a market economy.

During the preliminary phase of the investigation, several Mexican garlic producers indicated a willingness to provide information, but no submission was received in time to estimate a margin of dumping. The normal value was thus estimated pursuant to subparagraph 20(c)(i) of SIMA on the basis of domestic selling prices of fresh garlic in Mexico, as published by Servicio Nacional de Información de Mercados (SNIM). This national market news service gathers and publishes, amongst other things, selling price data for garlic in Mexico on a daily, weekly and monthly basis.

Subsequent to the preliminary determination, a meeting was held with a representative of SNIM to obtain clarification on how this market news service collects information. In addition, the Department contacted several major Mexican garlic producers to request information. The following three producers submitted complete responses to the Department's RFI and allowed on-site verification of the data submitted:

Arnime, S.A. de C.V.
Av. Hidalgo No. 1119
Celaya, Guanajuato

Ranchos Villaverde y Huizache
Av. Mexico-Japon 144
Cd. Industrial
Celaya, Guanajuato

Los Rancheros "Hnos. Narvaez Avila"
V. Gómez Farias No. 31
Pabellón de Arteaga, Aguascalientes

All three producers have large scale operations and extensive sales in their domestic market. These producers are engaged in the growing, packing and marketing of agricultural products, and sell to the domestic and foreign markets. Generally, they own several farms and grow a variety of vegetables and grains. Their combined acreage sown to garlic is larger than the total acreage of garlic grown in Canada.

The producers provided information to the Department on a courtesy basis relating to sales in the Mexican market, and growing and packing costs. Departmental officers verified the information submitted by these growers located in the states of Guanajuato and Aguascalientes, the dominant garlic producing areas in Mexico. On-site visits were conducted during the week of January 27, 1997. The producers co-operated fully with the verification exercise.

A review of the growers' information indicated that their domestic market sales were profitable during the POI. Accordingly, the normal value was established pursuant to subparagraph 20(c)(i) of SIMA on the basis of the weighted average domestic market selling prices of these growers. No further adjustments relating to price comparability were required. For the purposes of the final determination, the normal value is thereby determined to be $1.91 CDN per kilogram.

Export Price

The export prices for the subject goods were determined in accordance with paragraph 24(a) of SIMA on the basis of the Chinese exporters' selling prices to importers in Canada less any applicable costs, charges and expenses incurred for the exportation and shipment of the goods to Canada. The Department relied on actual import data obtained from its automated entry system and based the export prices on the actual declared value for duty of imports during the POI.

Margin of Dumping

During the POI, over six million kilograms of the subject goods were imported from China at an average selling price of $0.58 CDN per kilogram. The weighted average normal value is $1.91 CDN per kilogram. A comparison of the normal value and the export prices revealed that 96 per cent of the subject goods imported during the POI were dumped. The margins of dumping ranged up to 91 per cent with a weighted average margin of 70 per cent, when expressed as a percentage of the normal value.

Undertaking proposal

One Chinese exporter offered an undertaking, to the effect that sales to importers would be not less than a specified price. However, the Department concluded that the price level proposed in the undertaking would not eliminate the dumping or the injury caused by the dumping. As well, the undertaking did not cover all or substantially all the exports of the dumped goods to Canada. Accordingly, the Department informed the exporter that for these reasons the undertaking would not be accepted.

Decision

The investigation revealed that 96 per cent of imports from China were dumped, by a weighted average margin of dumping of 70 per cent. Hence, the margin of dumping is not insignificant. As well, the volume of dumped imports was not negligible. Accordingly, on this date, pursuant to paragraph 41(1)(a) of SIMA, a final determination of dumping was made with respect to the subject goods.

Future action

The Canadian International Trade Tribunal's inquiry concerning the question of injury to production in Canada is continuing and an order or finding will be made by March 21, 1997. Subject goods which are released from customs' possession will continue to be assessed provisional duty as determined at the time of the preliminary determination, until the date of the Tribunal's decision.

If the Tribunal finds that the dumping has caused injury, subject goods released from customs' possession after the date of the finding will be subject to anti-dumping duty determined in accordance with the final determination of dumping, and in that event, such duty is hereby demanded. Any subject goods released from customs' possession during the provisional period will be subject to a determination pursuant to section 55 of SIMA to establish the final amount of anti-dumping duty payable. If provisional duties were paid in excess of the amount finally determined, the difference will be refunded.

If the Tribunal finds that no injury has been caused or is threatened by dumped imports, all proceedings relating to this investigation will be terminated. In such a case, imports will not be subject to anti-dumping duty and all provisional duty paid or security posted by importers will be returned.

Publication

Notice of this final determination is being published in the Canada Gazette, pursuant to paragraph 41(3)(a) of SIMA.

Information

A copy of this Statement of Reasons has been provided to persons directly interested in these proceedings. A free copy is available on request. For further information please contact:

Department of National Revenue

Anti-dumping and Countervailing
Directorate

191 Laurier Avenue West

Ottawa, Ontario

K1A 0L5

• Hélène Bernier Phone: (613) 954-7259
• Audrey Kelly Phone: (613) 954-7173

Fax: (613) 954-2510

R.A. Séguin
A/Director General
Anti-dumping and Countervailing Directorate