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Final Determination - Polyisocyanurate Thermal Insulation Board

OTTAWA, March 7, 1997

4240-47

AD/1149

STATEMENT OF REASONS

FINAL DETERMINATION OF DUMPING OF FACED RIGID CELLULAR POLYURETHANE-MODIFIED POLYISOCYANURATE THERMAL INSULATION BOARD ORIGINATING IN OR EXPORTED FROM THE UNITED STATES OF AMERICA

DECISION

Pursuant to paragraph 41(1)(a) of the Special Import Measures Act, the Deputy Minister of National Revenue has, on this date, made a final determination of dumping respecting faced rigid cellular polyurethane-modified polyisocyanurate thermal insulation board originating in or exported from the United States of America.

This Statement of Reasons is also available in French.

Cet énoncé des motifs est également disponible en français.

STATEMENT OF REASONS

Summary

On September 13, 1996, the Deputy Minister of National Revenue initiated an investigation respecting the alleged injurious dumping of faced rigid cellular polyurethane-modified polyisocyanurate thermal insulation board from the United States of America.

The investigation was initiated in response to a complaint filed by Exeltherm Inc. (Exeltherm) of Cornwall, Ontario.

As a result of this investigation, the

Deputy Minister is satisfied that the subject goods have been dumped, that the margins of dumping are not insignificant, and that the actual 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

Exeltherm Inc.

3330 Marleau Street

Cornwall, Ontario

K6H 6B5

Exporters and Importers

The names and addresses of the exporters and importers are listed in Appendices A and B, respectively.

Background

On July 25, 1996, Exeltherm submitted a written complaint concerning the alleged injurious dumping of faced rigid cellular polyurethane-modified polyisocyanurate thermal insulation board ("polyiso insulation board") originating in or exported from the United States of America.

An investigation was initiated on September 13, 1996, into the alleged injurious dumping. On December 12, 1996, the Deputy Minister made a preliminary determination of dumping and determined that there was evidence disclosing a reasonable indication that the dumping had caused injury to the Canadian industry.

Product information

Definition

The product definition of the goods subject to this investigation is:

"Faced rigid cellular polyurethane-modified polyisocyanurate thermal insulation board originating in or exported from the United States of America".

Information

Polyiso insulation board has developed into the primary insulation product for commercial roof and wall applications because of its resistance to high temperatures and corresponding low combustibility.

Generally, polyiso insulation board has the same physical foam properties whether it is used for roofing or wall applications. Differences between the two applications usually relate only to thickness, type of facers (facing material bonded to both sides of the foam core), and board dimensions.

Polyiso roof insulation board is generally offered in sizes of 3'x4', 4'x4', and 4'x8' and can be produced in a range of thicknesses from 1" to 4". Custom sizes and thicknesses are also available. These boards are generally used in the commercial construction sector. The product is also available in tapered boards which are used in pre-engineered slope insulated roof systems to provide positive drainage.

Polyiso wall insulation board is generally offered in 4'x8' and 4'x9' sizes and can be produced in thicknesses from 0.5" to 4.0". As with roofing boards, custom sizes and thicknesses are available. Generally, polyiso wall insulation board refers to polyiso insulation board for commercial wall applications and sheathing for residential wall systems.

Appendix C contains additional product information as well as a description of the production process.

Classification of imports

During the course of the investigation, a review of customs' entry documents revealed that the polyiso insulation board products have generally been imported into Canada under Section VII, Chapter 39 ("Plastics and articles thereof"), Sub-chapter 21 ("Other plates, sheets, film, foil and strip, of plastics"), Heading 13 ("Of polyurethanes") of the Harmonized System (H.S.).

Specifically, the goods have been entered under the following four classification numbers:

- 3921.13.10.00 ("containing not more than 70% by weight of plastics and combined with textile materials in which man-made fibers predominate by weight over any other single textile fiber")

- 3921.13.90.10 ("other - polyisocyanurate insulation")

- 3921.13.90.91 ("other - other - rigid")

- 3921.13.90.99 ("other - other - other")

These same four classification numbers also include importations of goods other than polyiso insulation board.

Canadian industry

Exeltherm accounts for the major proportion of Canadian production. Three other Canadian producers share a smaller portion of total domestic production. The companies are: ISOX of Cocagne,

New Brunswick, Polytherm of Saint-Côme, Beauce, Québec, and Enerlab of Boucherville, Québec. There have been no changes in the structure of the Canadian industry since the Department initiated its investigation.

Canadian market

The evolution of the Canadian market, up to 1995, can be found in both the Statement of Reasons issued for the initiation and the preliminary determination on

September 13, 1996, and December 12,

1996 respectively.

The apparent Canadian market in 1995 was estimated to be 207 million board feet.

In its pre-hearing staff report, the Canadian International Trade Tribunal estimated apparent Canadian consumption in 1996 to be 244 million board feet. This is an annualized figure based on information from Canadian producers, U.S. exporters, and Statistics Canada data for the first nine months of 1996.

Results of the investigation

The dumping investigation covered all shipments of the subject goods to Canada during the period of investigation (POI) from January 1 to June 30, 1996.

The investigation revealed that 78 companies imported the subject goods in the POI. A list of all these importers is provided in Appendix B.

The investigation also revealed that nine companies accounted for all of the shipments of the subject goods to Canada in the POI. The Department requested information from these nine companies for purposes of the final determination.

Five companies, Apache Products, Celotex Corporation, Firestone Building Products, Jim Walter International Corporation (JWIC), and NRG Barriers Inc., provided sufficient information to the Department for purposes of the final determination. These companies accounted for 59% of the total shipments during the POI.

Three companies, Atlas Roofing Corporation, A.B.C. Supply Co. Inc., and Homasote Company, did not provide sufficient information for purposes of the final determination.

Schuller International Inc. (Schuller) also submitted information to the Department. However, the Department did not consider the company to be an exporter during the POI for SIMA purposes. The Department's rationale in determining who is the exporter is explained in the "Representations Concerning the Investigation" section.

The methods of determining normal values, export prices, and margins of dumping in this investigation are explained below. Appendix D provides a summary of how normal values and export prices were calculated for the exporters involved in this investigation.

Selection of Like Goods

For purposes of determining normal values, like goods means sales in the United States of goods that are identical in all respects, including brand name, to the subject goods exported to Canada. In the absence of identical goods, like goods are goods with the uses and characteristics closely resembling the goods exported to Canada. For purposes of this investigation, closely resembling goods means goods possessing at least the following same attributes as the goods exported to Canada, that is, type (flat, sloped or specialty), top and bottom facers, thickness, and degree of slope.

Normal Value and Adjustments

Normal values were determined according to sections 15, 19, and 29 of SIMA and the relevant regulations in the Special Import Measures Regulations (SIMR).

Section 15:

The primary method of calculating normal values was to use profitable sales of like goods in the United States that were sold to more than one unrelated customer, at the same trade level as the importer, in comparable quantities, and from the same place of direct shipment as the subject goods.

Factors which were taken into account and for which adjustments were made are summarized below.

Regulation 5: Qualitative Differences

In the absence of sales of identical goods, domestic sales of closely resembling goods were used as like goods. Generally, the price and cost differentials between the like goods and the goods exported to Canada were attributable to the variations in board dimensions or differences in the blend of the foam core of the boards. An adjustment was made to the selling price of the like goods to reflect these differences.

Regulation 6: Discounts

Various exporters offered rebates, deferred discounts, or cash discounts for prompt payment. The Department made an adjustment to the selling price of the like goods if the rebate or discount was generally granted on sales of the like goods in the United States and if importers in Canada would have qualified for the same deduction.

Regulation 7: Delivery Costs

Where the selling price of the like goods included delivery charges, an adjustment was made to the selling price in order to calculate normal values, exclusive of delivery charges, at the same place of direct shipment as the export sales to Canada.

Section 19:

In certain instances, normal values could not be determined under section 15 because the domestic sales did not satisfy all of the requirements of that section. In such cases, the normal values were determined under section 19 of SIMA. These normal values were determined using the aggregate of the cost of production of the goods; a reasonable amount for selling, administrative and all other costs; and a reasonable amount for profits.

In calculating a reasonable amount for profits for the goods pursuant to regulation 11 of SIMR, the Department first divided the subject goods into three general categories. These three groups were flat products, tapered products, and specialty products. Profit figures were then calculated for each of these groups for each plant location of each company.

Section 29:

For exporters that did not provide a complete response to the RFI, the normal values of the goods were determined based on the export price of the goods plus an advance equal to the highest margin of dumping found for a cooperating exporter during the investigation.

Export Price

Export prices were determined pursuant to section 24 of SIMA to be the lesser of the exporter's sale price or importer's purchase price, after being adjusted to account for all costs incurred after the point of direct shipment to Canada which were included in the price. Accordingly, deductions were made for insurance and freight costs to Canada, brokerage fees, customs duties and taxes, freight in Canada, and any other costs, where applicable.

Where an intermediary is involved in the export transaction, there may be expenses related to the physical movement of the goods that are incurred by the intermediary instead of the exporter. These amounts were ascertained and deducted in order to arrive at a selling price at the place of direct shipment.

Margins of Dumping

During the POI, 91% of the subject goods were found to have been dumped. The margins of dumping ranged from 0.01% to 72.28% with an overall weighted average margin of dumping of 36% for all goods.

Margins of dumping were determined by calculating the difference between the normal value of the like goods and the export price of the goods shipped to Canada and expressing this difference as a percentage of normal value.

The results of this investigation for each company are shown in Appendix E.

Representations concerning the investigation

During the investigation, representations were received regarding a number of issues.

1. Private Label Goods

Representations were made that the selection of like goods should be based on sales of domestic goods having the same physical characteristics as the exported goods and should not be restricted to identical private label goods where such goods exist. When a private label good is sold to Canada, its like good in the United States is usually sold to only one domestic customer. Sales to a single customer cannot be used to determine normal values under section 15 of SIMA. Some companies stated that this approach was not correct as it meant that profitable sales of domestic goods having the same physical characteristics as the exported goods were not considered by the Department.

The Act defines like goods to be goods that are either (1) identical in all respects to the goods exported to Canada or (2) in the absence of identical goods, goods with uses and characteristics closely resembling the goods exported to Canada. In this case, the private label of a good is one of the characteristics that determines whether it is identical to the goods exported to Canada. Only in the absence of identical goods can closely resembling goods be considered as like goods.

The Department examined profitable sales of identical goods to determine normal values under section 15 of SIMA. Where these sales were made to only one domestic customer, normal values were determined under section 19 on the basis of the cost of the goods plus a reasonable amount for profit.

2. Non-confidential Submissions

Representations were made that the Department's requirements regarding non-confidential submissions exceeded past practice.

The intent of non-confidential submissions is to provide interested parties with a reasonable understanding of confidential information submitted to the Department.

Over the past year, the Department has reviewed its practices regarding confidential and non-confidential information. From this review, the Department concluded that it needed to make stronger efforts to improve the transparency of the proceedings by improving the form and content of the non-confidential submissions.

3. Determination of the Exporter

Representations were made that the vendor to Canada should be considered as the exporter for purposes of SIMA.

As a general guideline, in the Department's administration of SIMA, the exporter is considered to be the person or firm who is a principal in the transaction, located in the country of export at the point of direct shipment to Canada who gave up responsibility for the goods by knowingly placing them in the hands of a carrier for delivery to Canada. In this case, the manufacturer was a principal in the transaction and knowingly shipped the goods directly to the end user in Canada. Consequently, the manufacturer is considered to be the exporter.

4. Determination of the Importer

Representations were made that the importer of record should be considered as the importer of the goods for the purposes of SIMA.

Section 2 of SIMA states that the "importer, in relation to any goods, means the person who is in reality the importer of the goods". The importer of record may or may not be the importer in reality under SIMA. The following factors were considered in making the determination as to who is the importer:

(a) the substance rather than the form of the transaction;

(b) the initiation of the purchase order and the acceptance of the order; and

(c) to whom the goods were sent.

The evidence indicated that in some instances the importer of record was not the importer for SIMA purposes.

Decision

The investigation revealed that the margins of dumping on the subject goods are not insignificant and that the actual volume of dumped goods is not negligible. Accordingly, on this date, pursuant to paragraph 41(1)(a) of SIMA, a final determination of dumping was made with respect to faced rigid cellular

polyurethane-modified polyisocyanurate thermal insulation board originating in or exported from the United States of America.

Future action

The Canadian International Trade Tribunal's inquiry concerning the question of injury to production in Canada is continuing and the Tribunal will issue its finding by April 11, 1997.

Subject goods imported during the provisional period will continue to be assessed provisional duty as determined at the time of the preliminary determination. This provisional period began on the date of the preliminary determination, December 12, 1996, and will end on the date the Tribunal issues its finding.

If the Tribunal finds that the dumped goods have not caused injury or do not threaten to cause injury, all proceedings relating to this investigation will be terminated. In such a case, all provisional duty paid or security posted by importers will be returned and future importations will not be subject to anti-dumping duty.

If the Tribunal finds that the dumped goods have caused injury, the Department will finalize the anti-dumping duty payable on subject goods released from customs' possession during the provisional period. If the provisional duties paid are in excess of those finally determined during a reinvestigation, the excess duties paid will be refunded. Importations released from customs' possession after the date of the Tribunal's finding will be subject to

anti-dumping duty equal to the margin of

dumping, which is the amount by which the normal value exceeds the export price. If

anti-dumping duty is payable, such duty is hereby demanded under section 11 of SIMA.

If the Tribunal finds that the dumped goods threaten to cause injury, all provisional duty paid or security posted by importers will be returned. However, importations released from customs' possession after the date of the Tribunal's finding will be subject to

anti-dumping duty equal to the margin of dumping, which is the amount by which the normal value exceeds the export price. If anti-dumping duty is payable, such duty is hereby demanded under section 11 of SIMA.

As indicated above, the margin of dumping, in relation to any goods, is the amount by which the normal value exceeds the export price. Specific normal values for the subject goods have been provided to the exporters which submitted complete responses during the investigation. These values will come into effect the day after the Tribunal's injury finding. In cases where specific normal values have not been issued, anti-dumping duties at the rate of 120 per cent of the export price will be payable on importations of the subject goods.

Publication

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

Information

A Statement of Reasons explaining this decision has been provided to persons directly interested in these proceedings. A free copy may be obtained upon request. For further information, please contact the following Revenue Canada officers by telefax at (613) 954-2510 or by telephone at:

• Richard Pragnell (613) 954-0032
• Dan St. Arnaud (613) 954-7373

or at the following address:

Department of National Revenue

Anti-dumping and Countervailing Directorate

191 Laurier Avenue West

Ottawa, ON K1A 0L5

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