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Final Determination - Corrosion-resistant Steel Sheet Products

OTTAWA, June 4, 2001

4218-11/CV92
4258-113/AD-1258

STATEMENT OF REASONS

Concerning the making of a final determination with respect to

THE DUMPING OF CERTAIN CORROSION-RESISTANT STEEL SHEET ORIGINATING IN OR EXPORTED FROM THE PEOPLE'S REPUBLIC OF CHINA, INDIA, MALAYSIA, THE RUSSIAN FEDERATION, SOUTH AFRICA AND CHINESE TAIPEI

and the making of a final determination with respect to

THE SUBSIDIZING OF CERTAIN CORROSION-RESISTANT STEEL SHEET ORIGINATING IN OR EXPORTED FROM INDIA

DECISION

Pursuant to paragraph 41(1)(a) of the Special Import Measures Act, the Commissioner of Customs and Revenue has today made a final determination concerning the dumping of certain corrosion-resistant steel sheet originating in or exported from the People's Republic of China, India, Malaysia, the Russian Federation, South Africa and Chinese Taipei and the subsidizing of certain corrosion-resistant steel sheet originating in or exported from India.

This Statement of Reasons is also available in French.
Cet énoncé des motifs est également disponible en français

SUMMARY

On December 4, 2000, the Commissioner of Customs and Revenue (Commissioner) initiated an investigation respecting the alleged injurious dumping into Canada of certain corrosion-resistant steel sheet originating in or exported from the People's Republic of China (China), India, Malaysia, Portugal, the Russian Federation (Russia), South Africa and Chinese Taipei, and the alleged injurious subsidizing of certain corrosion-resistant steel sheet originating in or exported from India. The investigation was initiated in response to a complaint filed by Dofasco Inc., of Hamilton, Ontario.

On February 2, 2001, the Canadian International Trade Tribunal (Tribunal) made a preliminary determination that the evidence disclosed a reasonable indication that the alleged dumping and subsidizing of the subject goods have caused injury to the domestic industry. The Canada Customs and Revenue Agency (CCRA) subsequently made a preliminary determination of dumping and subsidizing on March 5, 2001. On the same date the Commissioner terminated the investigation with respect to Portugal as the volume of the dumped goods from Portugal was less than three per cent of the total volume of goods released into Canada from all countries that are of the same description as the dumped goods.

Based on the results of the CCRA's investigation, the Commissioner is satisfied that the subject goods have been dumped and subsidized and that the margins of dumping and amounts of subsidy are not insignificant. Accordingly on June 4, 2001, the Commissioner has made a final determination of dumping and subsidizing in accordance with paragraph 41(1)(a) of the Special Import Measures Act (SIMA).

The Tribunal's inquiry concerning the question of injury to the Canadian industry is continuing. Provisional duties for the subject goods originating in or exported from China, India, Malaysia, Russia, South Africa and Chinese Taipei will continue to be assessed until the Tribunal issues its finding.

INTERESTED PARTIES

Complainant

The complainant, Dofasco, is the largest producer of corrosion-resistant steel sheet in Canada. The other producers in Canada are: Stelco Inc. of Hamilton, Ontario, Sorevco Inc. of Coteau du Lac, Quebec, and Continuous Colour Coat Limited of Rexdale, Ontario; all have expressed their support for the complaint in letters to the CCRA.

Exporters

The CCRA has identified 18 exporters of subject goods and 24 vendors of the subject goods during the period of investigation.

Importers

The CCRA investigation revealed that 25 importers imported the subject goods during the period of investigation.

BACKGROUND

The CCRA is currently enforcing an injury finding of the Tribunal concerning dumped

corrosion-resistant steel sheet originating in or exported from Brazil, the Federal Republic of Germany, Japan, the Republic of Korea and the United States of America.

In the current investigation, the complaint was filed by Dofasco on October 13, 2000, following discussions and meetings with the CCRA.

On November 3, 2000, the CCRA informed Dofasco that the complaint was properly documented, notified the governments of the named countries that a properly documented complaint had been filed and provided the High Commissioner of India with the sections of the non-confidential version of the complaint that related to subsidies and the allegations of injury. On December 4, 2000, the Commissioner initiated the investigation and notified the Tribunal of that decision. The Tribunal subsequently initiated a preliminary injury inquiry into whether the evidence discloses a reasonable indication of injury or threat of injury caused by the dumping of the goods.

On February 2, 2001, the Tribunal concluded that the evidence disclosed a reasonable indication that the alleged dumping and subsidizing have caused injury. On
March 5, 2001, the Commissioner made a preliminary determination of dumping and subsidizing with respect to the subject goods and provisional duties have been in place since that date. On the same date the Commissioner terminated the investigation with respect to Portugal as the volume of the dumped goods from Portugal was less than 3 per cent of the total volume of goods released into Canada from all countries that are of the same description as the dumped goods.

PRODUCT INFORMATION

Definition

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

Flat-rolled steel sheet products of a thickness not exceeding 0.176 in. (4.47 mm), coated or plated with zinc or an alloy wherein zinc and iron are the predominant metals, excluding corrosion-resistant steel sheet products for use in the manufacture of passenger automobiles, buses, trucks, ambulances or hearses or chassis therefor, or parts, accessories or parts thereof, for which the proper Harmonized System tariff item is 9959.00.00, originating in or exported from the People's Republic of China, India, Malaysia, the Russian Federation, South Africa and Chinese Taipei.

The products are commonly referred to as galvanized (free zinc coating) or galvannealed (zinc-iron alloy coating) steel sheet. The products include corrosion-resistant steel sheet in cut lengths and coils (wound successively in superimposed layers or spirally oscillated coils) whether the coating or plating is applied by the hot-dip galvanizing or electrogalvanizing process.

Corrosion-resistant steel sheet is usually produced from cold-rolled carbon steel sheet and sometimes from hot-rolled carbon steel sheet. However, minor additions of certain elements, such as titanium or boron, during the steel making process enable the steel to be classified as an alloy steel. Therefore, corrosion-resistant steel sheet produced from either carbon steel or alloy steel are included in the definition of subject goods.

For greater clarity, the following products do not form part of the product definition:

• Steel sheet that is coated or plated with zinc in combination with nickel, silicon or aluminum;
• Galvanized products that have been pre-painted or coated with other finishes, such as lacquers or varnishes; and,
• Galvanized armouring tape, which is narrow flat steel tape of 3 in. or less, that has been coated by a final operation with zinc by either the hot-dip galvanizing or the electrogalvanizing process so that all surfaces, including the edges, are coated.

General

The subject goods are normally made to two ASTM (American Society for Testing and Materials) specifications. One of the specifications determines the quality of the steel (chemical composition, minimum tolerance, dimensions, flatness, etc.) and the second specification determines the coating weight (minimum average coating mass-ounces per square foot or grams per square meter).

ASTM A653 is the most common specification for the subject corrosion-resistant steel sheet. The more common qualities of corrosion-resistant steel sheet include:

• Commercial Steel also termed Commercial Quality or Lock Forming Quality-is suitable for simple bending and moderate forming applications and in fabricating products where the materials are subject to machine locking forming;
• Helical Quality Culvert-is used to fabricate helical corrugated steel pipe also known as lock-formed spiral pipe or culverts;
• Forming Steel also termed Drawing Quality (DQ)-has a greater degree of ductility and is more consistent in performance than Commercial Steel;
• Deep Drawing Steel also termed Deep Drawing Quality-Special Killed (DDQSK)-is used in fabricating parts where the draw or formation is more difficult and where aging is a hazard; and
• Extra Deep Drawing Steel also termed Extra Deep Drawing Quality-Special Killed (EDDQSK)-is used for applications requiring extra deep drawing or severe forming.

Besides specifying the quality of the steel, the ASTM coating designation must be specified. Coating designations fall into three general categories:

i) in-ground applications (Z600/Z700);
ii) exterior applications (G90/Z275); and,
iii) less severe exterior applications and interior applications (G60/G001).

The most commonly ordered ASTM coating designation for galvanized is G90/Z275. However, both lighter coatings such as G01, G40, G60, and heavier coatings such as G115 and Z600 are ordered. Typical ASTM coating designations for galvanneal are A01/ZF001 and A25/ZF75.

Production Process

Corrosion-resistant steel sheet is usually produced from cold-rolled carbon steel sheet and sometimes from hot-rolled carbon steel sheet. The steel sheet to be galvanized is referred to as steel substrate. Two processes can be used to apply the coating to the steel substrate: the hot-dip galvanizing process and the electrogalvanizing process.

Hot-Dip Galvanizing Process

In the hot-dip galvanizing process, the steel substrate is cleaned and fed into a continuous annealing furnace where it is heated to the temperature necessary to develop the desired metallurgical properties of the final product. The substrate is then transferred to a molten zinc-coating bath. As the steel emerges from the bath, an air, nitrogen or steam wipe is used to control the thickness of the zinc coating. The galvanized steel is then cooled in a cooling tower.

In some cases, the galvanized steel is further processed into galvannealed steel sheet. For galvanealed sheet, the thickness of the zinc coating is reduced in the wipe stage. It then passes through a galvannealing furnace, where the heat combines the steel sheet with the zinc coating, giving the sheet a thin zinc-iron alloy coating. The thinner coating on galvannealed steel sheet results in a product that is easier to weld and paint than galvanized steel sheet.

Electrogalvanizing Process

In the electrogalvanizing process, as the charged steel passes through a plating bath, the opposite electrical charges cause the zinc solution to coat the steel. Cold-rolled steel coils are batch annealed in multi-stack furnaces or in off-line continuous annealing processes, often skin-passing on a temper mill, before being electrogalvanized with a thin coating of zinc.

Product Application

The corrosion-resistant steel sheet that is the subject of this complaint is commonly used in the production of farm buildings, grain bins, culverts, garden sheds, roofing material, siding, floor decks, roof decks, wall studs, drywall corner beads, doors, door frames, ducting (and other heating and cooling applications), flashing, hardware products and appliance components. Electrogalvanized products are also used in construction applications.

CLASSIFICATION OF IMPORTS

The subject corrosion-resistant steel sheet is properly classified under the following Harmonized System classification numbers:

7210.30.00.00
7212.20.00.00
7226.93.00.00
7210.49.00.10
7212.30.00.00
7226.94.00.00
7210.49.00.20
7225.91.00.00
7210.49.00.30
7225.92.00.00

THE CANADIAN INDUSTRY

There are four Canadian producers of corrosion-resistant steel sheet. Dofasco, Stelco Inc. and Sorevco Inc. produce corrosion-resistant steel sheet products using hot-dip galvanizing lines. Continuous Colour Coat Limited uses the electrogalvanizing process in producing corrosion-resistant steel sheet.

There have been no significant changes in the structure of the Canadian industry since the CCRA initiated this investigation.

THE CANADIAN MARKET

In its complaint, Dofasco provided information on the Canadian market from all countries for 1996, 1997, 1998, 1999 and 2000 (based on the first 8 months). The estimates were compiled from Statistics Canada information and Department of Foreign Affairs and International Trade import permit records. Dofasco also provided an estimate of the domestic shipments of all Canadian producers.

The CCRA substantiated the information on imports supplied by the complainant from its own internal information system, customs documentation and importer and exporter submissions. Appendix 1 details the percentage of dumped imports for the period of investigation.

VOLUMES OF DUMPED OR SUBSIDIZED IMPORTS

For purposes of the preliminary determination of dumping or subsidizing, the Commissioner has responsibility for determining whether the actual and potential volume of dumped or subsidized goods is negligible. After a preliminary determination of dumping or subsidizing, the Tribunal assumes this responsibility. In accordance with subsection 42(4.1) of SIMA, the Tribunal is required to terminate its inquiry in respect of any goods if the Tribunal determines that the volume of dumped or subsidized goods from a country is negligible.

RESULTS OF THE INVESTIGATION

During the investigation, the identified exporters, vendors and importers were requested to provide the information necessary to determine normal values and export prices of the subject goods. In addition, information was requested from the government of India to determine whether or not the steel industry had benefited from countervailable subsidies. Exporters from India were also requested to provide information concerning the benefits, if any, conferred by any subsidy program.

The dumping and subsidy investigation covered all subject goods released into Canada during the period of investigation, January 1 to August 31, 2000, that originated in or were exported from the named countries.

Normal values are usually based on overall profitable sales in the exporter's home market, or in the absence of such sales, on the basis of the cost of production of the goods, selling, administrative and all other costs, and a reasonable amount for profit. In the absence of such data, the Minister of National Revenue must specify the manner for the determination of the normal values.

The export price of goods shipped to Canada is the lesser of the exporter's selling price or the importer's purchase price, less all costs, charges and expenses resulting from the exportation of the goods. Normally, the export price is the exporter's selling price.

When the export price is less than the normal value, the difference is the margin of dumping. In this section, margins of dumping are expressed as both a percentage of normal value and of export price.

With respect to China, the CCRA also sent a request for information to the government of this country to obtain information necessary to determine whether the conditions of section 20 of SIMA are applicable to the steel sector in China. Section 20 applies where the government of the country of export has a monopoly of its export trade and it substantially determines domestic prices in respect of the goods under investigation. No responses were received from exporters located in China or from the government of China.

Responses to the requests for information were received from two exporters located in India, one in Malaysia, one in Russia, one in South Africa, and from four exporters located in Chinese Taipei. All of these exporters were also the manufacturers of the goods. In addition, submissions respecting subsidy programs were received from the government of India and the two exporters located in India.

The determinations of normal value, export price, margins of dumping and amounts of subsidy are discussed below.

THE DUMPING INVESTIGATION

1. China

In the current investigation, information was requested from the government of China and the exporters located in China in order to form an opinion as to whether or not the conditions of section 20 of SIMA exist in respect of the steel sector. No response was received from the government of China and no information was provided by exporters located in China.

(a) Normal Value

As a result of the decision by these parties not to furnish the information requested, normal values were determined pursuant to a ministerial specification based on the highest margin of dumping, excluding anomalies, determined for a cooperative exporter in this investigation.

(b) Export Price

Export prices were determined pursuant to a ministerial specification under section 29 of SIMA on the basis of the importer's declared purchase price.

(c) Margin of Dumping

During the period of investigation, 100 per cent of the subject goods imported into Canada from China were found to have been dumped. The weighted average margin of dumping was 37.2 per cent expressed as a percentage of normal value, or 59.2 per cent when expressed as a percentage of export price.

1.1 Country Summary

In summary, 100 per cent of the goods imported into Canada from China during the period of investigation were dumped by a weighted average margin of dumping of 37.2 per cent when expressed as a percentage of normal value or 59.2 per cent when expressed as a percentage of export price.

2. India

Submissions were received from two exporters located in India - Jindal Iron & Steel Co., Ltd. (Jindal) and Lloyds Steel Industries Ltd. (Lloyds).

2.1 Jindal Iron & Steel Co., Ltd.

(a) Normal Value

Normal values were determined pursuant to section 15 of SIMA on the basis of the weighted average selling price of overall profitable domestic sales of like goods. Adjustments to domestic selling prices were made to account for differences in quality pursuant to paragraph 5(a) of the Special Import Measures Regulations (SIMR).

(b) Export Price

Export prices were determined pursuant to section 24 of SIMA on the basis of the lesser of the exporter's selling price and the importer's purchase price. In all cases, the exporter's selling price was the lower of the two prices.

(c) Margin of Dumping

All the goods imported into Canada during the period of investigation were found to be dumped and the margins of dumping ranged from 9.2 per cent to 37.2 per cent expressed as a percentage of normal value. The weighted average margin of dumping was 23.3 per cent, expressed as a percentage of normal value or 30.4 per cent when expressed as a percentage of export price.

2.2 Lloyds Steel Industries Ltd.

(a) Normal Value

Lloyds had sales of like goods in its domestic market. However, there were insufficient domestic sales which satisfied the conditions of section 15 of SIMA in order to determine normal values under that section. Consequently, normal values were determined pursuant to paragraph 19(b) of SIMA on the basis of the cost of production of the goods, selling, administrative and all other costs, and a reasonable amount for profit. The profit amount was determined pursuant to paragraph 11(1)(b) of the SIMR, using the overall profit from domestic sales of like goods.

(b) Export Price

Export prices were determined pursuant to section 24 of SIMA on the basis of the lesser of the exporter's selling price and the importer's purchase price. In all cases, the exporter's selling price was the lower of the two prices.

(c) Margin of Dumping

All the goods imported into Canada during the period of investigation were found to be dumped and the margins of dumping ranged from 11.4 per cent to 21.8 per cent expressed as a percentage of normal value. The weighted average margin of dumping was 18.3 per cent, expressed as a percentage of normal value or 22.4 per cent when expressed as a percentage of export price.

2.3 Country Summary

In summary, 100 per cent of the goods imported into Canada from India during the period of investigation were dumped by a weighted average margin of dumping of 22.7 per cent when expressed as a percentage of normal value or 29.6 per cent when expressed as a percentage of export price.

3. Malaysia

A submission was received prior to the preliminary determination of dumping from one exporter located in Malaysia - Group Steel Corporation (M) Sdn. Bhd. (Group Steel). However Group Steel officials could not accommodate on-site verification of its submission prior to the preliminary determination of dumping. Verification meetings were conducted at the premises of Group Steel subsequent to the preliminary determination.

3.1 Group Steel Corporation

(a) Normal Value

Normal values were determined pursuant to section 15 of SIMA on the basis of the weighted average selling price of overall profitable domestic sales of like goods. Adjustments to domestic selling prices were made to account for delivery costs pursuant to section 7 of the SIMR and for differences in quality pursuant to paragraph 5(a) of the SIMR.

(b) Export Price

Export prices were determined pursuant to section 24 of SIMA on the basis of the lesser of the exporter's selling price and the importer's purchase price. In all cases, the exporter's selling price was the lower of the two prices.

(c) Margin of Dumping

During the period of investigation, 77.9 per cent of the goods imported into Canada were found to be dumped and the margins of dumping ranged from 0.1 per cent to 11.8 per cent when expressed as a percentage of normal value. The weighted average margin of dumping was 3.2 per cent, expressed as a percentage of normal value or 3.3 per cent when expressed as a percentage of export price.

3.2 Other Exporters of Malaysian Goods

No other exporter of Malaysian goods provided a response to the CCRA's request for information. Details on the calculation of normal value, export price and the margin of dumping of these goods are contained in section 7 below.

3.3 Country Summary

In summary, 78.5 per cent of the goods imported into Canada from Malaysia during the period of investigation were dumped by a weighted average margin of dumping of 4.1 per cent when expressed as a percentage of normal value or 4.8 per cent when expressed as a percentage of export price.

4. Russia

A submission was received from JSC Severstal (Severstal) after the due date for filing of submissions. For this reason, the information in the submission was not taken into consideration in making the preliminary determination of dumping. The submission was analyzed and found to be incomplete. The CCRA requested additional information at the time of the preliminary determination of dumping.

Severstal provided additional information within the timeframes stipulated by the CCRA. However, the additional information was still not complete. The CCRA sent Severstal another questionnaire, requesting the outstanding information and also requesting additional information in order to verify the information already provided. In response Severstal provided some of the requested information within the timeframes stipulated by the CCRA, but information remains outstanding.

4.1 JSC Severstal

(a) Normal Value

Without complete information, the CCRA cannot be satisfied that the costs provided by Severstal are complete and accurate. Accordingly, Severstal's domestic selling prices and costs cannot be used to determine normal values. Although the information provided by Severstal is incomplete, and is insufficient to determine normal values, consideration has been given to the degree of cooperation and the amount of information provided by Severstal in this investigation. Consequently, normal values for Severstal have been determined pursuant to a ministerial specification under subsection 29(1) of SIMA and are based on the average normal value of like goods for other exporters who cooperated during the investigation.

(b) Export Price

Export prices were determined pursuant to section 24 of SIMA on the basis of the lesser of the exporter's selling price and the importer's purchase price. In all cases, the exporter's selling price was the lower of the two prices.

(c) Margin of Dumping

During the period of investigation, 100 per cent of the goods imported into Canada were found to be dumped and the margins of dumping ranged from 9.1 per cent to 23.9 per cent expressed as a percentage of normal value. The weighted average margin of dumping was 15.9 per cent, expressed as a percentage of normal value or 18.9 per cent when expressed as a percentage of export price.

4.2 Other Exporters of Russian Goods

No other exporter of Russian goods provided a response to the CCRA's request for information. Details on the calculation of normal value, export price and the margin of dumping of these goods are contained in section 7 below.

4.3 Country Summary

In summary, 100 per cent of the goods imported into Canada from Russia during the period of investigation were dumped by a weighted average margin of dumping of 16.7 per cent when expressed as a percentage of normal value or 20.5 per cent when expressed as a percentage of export price.

5. South Africa

Iscor Limited (Iscor) was the sole exporter in South Africa of subject goods imported during the period of investigation. A submission was received from Iscor after the due date for filing of submissions. For this reason, the information in the submission was not taken into consideration in making the preliminary determination of dumping. Verification meetings were conducted at the premises of Iscor subsequent to the preliminary determination.

5.1 Iscor Limited

(a) Normal Value

Where there were sufficient domestic sales of like goods which satisfied the conditions of section 15 of SIMA, normal values were determined on the basis of the weighted average selling price of these overall profitable domestic sales pursuant to that section. An adjustment to domestic selling prices was made for prompt payment discounts pursuant to section 6 of the SIMR.

Where there were insufficient domestic sales of like goods in the domestic market, normal values were determined pursuant to paragraph 19(b) of SIMA, on the basis of the cost of production of the goods, selling, administrative and all other costs, and a reasonable amount for profit. The profit amount was determined pursuant to paragraph 11(1)(b) of the SIMR, using the overall profit from domestic sales of like goods.

(b) Export Price

Export prices were determined pursuant to section 24 of SIMA on the basis of the lesser of the exporter's selling price and the importer's purchase price. In all cases, the exporter's selling price was the lower of the two prices.

(c) Margin of Dumping

During the period of investigation, 100 per cent of the goods imported into Canada were found to be dumped and the margins of dumping ranged from 1.1 per cent to 47.1 per cent expressed as a percentage of normal value. The weighted average margin of dumping was 22.4 per cent, expressed as a percentage of normal value or 28.9 per cent when expressed as a percentage of export price.

5.2 Country Summary

In summary, 100 per cent of the goods imported into Canada from South Africa during the period of investigation were dumped by a weighted average margin of dumping of 22.4 per cent when expressed as a percentage of normal value or 28.9 per cent when expressed as a percentage of export price.

6. Chinese Taipei

Submissions were received from four exporters located in Chinese Taipei - China Steel Corp. (CSC), Kao Hsing Chang Iron & Steel Corporation (KHC), Sheng Yu Steel Co. Ltd. (Sysco), and Yieh Phui Enterprise Co. Ltd. (Yieh Phui).

Due to the Chinese New Year Holiday, Sysco and Yieh Phui were unable to schedule verification meetings until February 2001. Verification meetings were conducted with Sysco and Yieh Phui from February 7 to 20, 2001. Consequently there was insufficient time for the CCRA to analyze the information received at verification and to use the companies' information to estimate normal values and margins of dumping for the preliminary determination. The information was analyzed for purposes of the final decision.

6.1 China Steel Corp

(a) Normal Value

Normal values were determined pursuant to section 15 of SIMA on the basis of the weighted average selling price of overall profitable domestic sales of like goods. An adjustment to the domestic selling prices was made to account for differences in quality pursuant to paragraph 5(a) of the SIMR.

(b) Export Price

Export prices were determined pursuant to section 24 of SIMA on the basis of the lesser of the exporter's selling price and the importer's purchase price. In all cases, the exporter's selling price was the lower of the two prices.

(c) Margin of Dumping

During the period of investigation, 92.5 per cent of the subject goods imported into Canada from CSC were found to have been dumped and the margins of dumping ranged from 0.5 per cent to 12.2 per cent expressed as a percentage of normal value. The weighted average margin of dumping was 6.9 per cent, expressed as a percentage of normal value or 7.5 per cent when expressed as a percentage of export price.

6.2 Kao Hsing Chang Iron & Steel Corporation

A submission was received from KHC after the due date for filing of submissions. For this reason, the information in the submission was not taken into consideration in making the preliminary determination of dumping. The submission was found to be incomplete and the CCRA requested additional information at the time of the preliminary determination of dumping.

KHC did not provide a response to the CCRA's supplemental request for information and consequently it was not possible to determine normal values based on information submitted by KHC.

(a) Normal Value

Since KHC did not respond to the CCRA's supplemental request for information, normal values were determined on the basis of an advance over export price based on the highest margin of dumping, excluding anomalies, found for a cooperative exporter during the investigation.

(b) Export Price

Export prices were determined pursuant to a ministerial specification under section 29 of SIMA on the basis of the importer's declared purchase price.

(c) Margin of Dumping

During the period of investigation, 100 per cent of the subject goods imported into Canada from KHC were found to have been dumped. The weighted average margin of dumping was 37.2 per cent, expressed as a percentage of normal value or 59.2 per cent when expressed as a percentage of export price.

6.3 Sheng Yu Steel Co. Ltd.

(a) Normal Value

Where there were overall profitable domestic sales of like goods, normal values were determined pursuant to section 15 of SIMA on the basis of the weighted average selling price of these sales. Adjustments to domestic selling prices were made to account for quantity discounts pursuant to section 3 of the SIMR, for differences in quality pursuant to paragraph 5(a) of the SIMR, and for domestic discounts pursuant to section 6 of the SIMR.

Where there were insufficient domestic sales of like goods in the domestic market, normal values were determined pursuant to paragraph 19(b) of SIMA, on the basis of the cost of production of the goods, selling, administrative and all other costs, and a reasonable amount for profit. The profit amount was determined pursuant to paragraph 11(1)(b) of the SIMR based on domestic sales of like goods, or in their absence on domestic sales of goods of the same general category or, in their absence, on domestic sales of the group of goods that was next largest to the general category of goods.

(b) Export Price

Export prices were determined pursuant to section 24 of SIMA on the basis of the lesser of the exporter's selling price and the importer's purchase price. In all cases, the exporter's selling price was the lower of the two prices.

(c) Margin of Dumping

During the period of investigation, 34.2 per cent of the subject goods imported into Canada from Sysco were found to have been dumped and the margins of dumping ranged from .03 per cent to 21.2 per cent expressed as a percentage of normal value. The weighted average margin of dumping was 1.2 per cent, expressed as a percentage of normal value or 1.3 per cent when expressed as a percentage of export price.

6.4 Yieh Phui Enterprise Co. Ltd.

(a) Normal Value

Where there were overall profitable domestic sales of like goods, normal values were determined pursuant to section 15 of SIMA on the basis of the weighted average selling price of these sales. Adjustments to domestic selling prices were made to account for delivery costs pursuant to section 7 of the SIMR and for quantity discounts pursuant to section 3 of the SIMR.

Where there were insufficient domestic sales of like goods in the domestic market, normal values were determined pursuant to paragraph 19(b) of SIMA, on the basis of the cost of production of the goods, selling, administrative and all other costs, and a reasonable amount for profit. The profit amount was based on domestic sales of like goods pursuant to 11(1)(b) of the SIMR.

(b) Export Price

Export prices were determined pursuant to section 24 of SIMA on the basis of the lesser of the exporter's selling price and the importer's purchase price. In all cases, the exporter's selling price was the lower of the two prices.

(c) Margin of Dumping

During the period of investigation, 30 per cent of the goods imported into Canada were found to be dumped and the margins of dumping ranged from 0.2 per cent to 13.5 per cent expressed as a percentage of normal value. The weighted average margin of dumping was 0.84 per cent, expressed as a percentage of normal value or 0.82 per cent when expressed as a percentage of export price.

6.5 Other Exporters of Chinese Taipei Goods

No other exporter of Chinese Taipei goods provided a response to the CCRA's request for information. Details on the calculation of normal value, export price and the margin of dumping of these goods are contained in section 7 below.

Country Summary

In summary 45.8 per cent of the goods imported into Canada from Chinese Taipei during the period of investigation were dumped by a weighted average margin of dumping of 8 per cent when expressed as a percentage of normal value or 12.3 per cent when expressed as a percentage of export price.

7. Other Exporters

(a) Normal Value

For exporters that did not cooperate or did not provide a complete response to the request for information, the normal values were determined by ministerial specification and are based on the export price advanced by 59.2 per cent. This advance is based on the highest margin of dumping, excluding anomalies, found in this investigation for a co-operative exporter.

(b) Export Price

Export prices were determined pursuant to a ministerial specification under section 29 of SIMA on the basis of the importer's declared purchase price.

(c) Margin of Dumping

During the period of investigation, 100 per cent of the subject goods imported into Canada were found to have been dumped. The weighted average margin of dumping was 37.2 per cent when expressed as a percentage of normal value or 59.2 per cent when expressed as a percentage of export price.

Summary of Results - Dumping

In making a final determination of dumping, the Commissioner must be satisfied that the goods have been dumped and that the margin of dumping is not insignificant. SIMA stipulates that a margin of dumping that is less than 2 per cent of the export price of the goods for each country is insignificant. As demonstrated in Appendix 2, the margin of dumping for each country is above the 2 per cent threshold level. The Commissioner is satisfied that the margins of dumping are not insignificant.

THE SUBSIDY INVESTIGATION

The subsidy portion of the investigation covered all shipments of the subject goods originating in or exported from India and released into Canada during the period of investigation of January 1 to August 31, 2000. A Request for Information - Subsidy (Subsidy RFI) was sent to the government of India and to the possible exporters in India. Responses to the Subsidy RFI were received from the government of India and two exporters in India. A third exporter did not respond to the Subsidy RFI.

In determining whether a program results in a subsidy, the CCRA considered whether: (1) there was a financial contribution by a government of a country other than Canada; and (2) whether there was a benefit conferred to persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of goods.

Under SIMA, there is a financial contribution by a government of a country other than Canada where:

• practices of the government involve the direct transfer of funds or liabilities or the contingent transfer of funds or liabilities;

• amounts that would otherwise be owing and due to the government are exempted or deducted; or amounts that are owing and due to the government are forgiven or not collected;

• the government provides goods or services, other than general governmental infrastructure, or purchases goods; or

• the government permits or directs a non-governmental body to do any thing referred to in any of paragraphs (a) to (c) where the right or obligation to do the thing is normally vested in the government and the manner in which the non-governmental body does the thing, does not differ in a meaningful way from the manner in which the government would do it.

If a subsidy is found to exist, it will be subject to countervailing duties if the subsidy is specific. A subsidy is considered specific when it is limited, in law, to a particular enterprise or is a prohibited subsidy. A prohibited subsidy includes an export subsidy which is contingent on export performance. A subsidy is not specific where the criteria or conditions governing eligibility for, and the amount of, the subsidy are:

• objective;
• set out in a legislative, regulatory or administrative instrument or other public document; and
• applied in a manner that does not favour or is not limited to a particular enterprise. Under subsection 2(1) of SIMA, the term "enterprise" is defined to include "a group of enterprises, an industry and a group of industries".

Notwithstanding that a subsidy is not limited in the foregoing manner, the Commissioner may still determine the subsidy to be specific if:

• there is exclusive use of the subsidy by a limited number of enterprises;
• there is predominant use of the subsidy by a particular enterprise;
• disproportionately large amounts of the subsidy are granted to a limited number of enterprises; and
• the manner in which discretion is exercised by the granting authority indicates that the subsidy is not generally available.

The amount of subsidy is calculated on the basis of the total benefits to the recipients and is generally considered to be insignificant if the amount of subsidy attributable to the subsidized imports from a particular country is less than one per cent of the total export price of all subject goods under investigation from that country. However, India is a developing country according to the Organization for Economic Co-operation and Development. When a subsidy investigation involves developing countries, section 41.2 of SIMA requires the authorities to take into account the provisions of paragraphs 10 and 11 of article 27 of the WTO Agreement on Subsidies and Countervailing Measures (Subsidies Agreement). This article will require termination of the countervailing duty portion of the investigation if it is determined that:

the overall level of subsidies granted upon the product in question does not exceed 2 per cent of its value calculated on a per unit basis or 3 per cent of its value calculated on a per unit basis in respect of those developing countries meeting the criteria set out in paragraph 11 of Article 27 of the Subsidies Agreement.

the volume of the subsidized imports represents less than 4 per cent of the total imports of the like product in the importing Member, unless imports from developing country Members whose individual shares of total imports represent less than 4 per cent collectively account for more than 9 per cent of the total imports of the like products in the importing Member.

In this investigation, India is subject to the three per cent level of subsidization as it is included in paragraph 11 of Article 27 as being a developing country Member referred to in Annex VII of the Subsidies Agreement.

RESULTS OF THE SUBSIDY INVESTIGATION

India

Two of the three exporters of subject goods from India submitted information in response to the CCRA's Subsidy RFI, namely Jindal Iron & Steel Co., Ltd. (Jindal) and Lloyds Steel Industries Ltd. (Lloyds).

The following programs named in the properly document complaint were examined in order to establish if there were financial contributions made by any level of government and, if so, to establish if a benefit was conferred on persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of the subject goods:

• Duty Entitlement Pass Book;
• Advance Licences;
• Special Import Licences;
• Export Promotion Capital Goods Licences;
• Export Packing Credit;
• Post-Shipment Export Financial Assistance;
• Loans From The Steel Development Fund;
• Tax Exemption For Export Profits.

The CCRA's Subsidy RFI also requested information about other possible subsidy programs.

1. Jindal Iron & Steel Co., Ltd.

It was determined that Jindal has received countervailable benefits in respect of four of the eight alleged programs, namely Export Promotion Capital Goods Licences, Export Packing Credit, Post-shipment Export Financial Assistance and Tax Exemption for Export Profits. The benefits are all export subsidies because they are based on export performance. The amount of subsidy from the four programs was 381 rupees per metric tonne.

Jindal provided information on proceeds obtained from the sale of unused Special Import Licences. However the amounts received were small and not material in terms of evaluating any countervailable benefit, and were not included in the overall amount of subsidy.

At the preliminary determination of subsidizing, it had been estimated that Jindal had also received countervailable benefits from Duty Entitlement Pass Book Licences and Advance Licences because of excessive exemption of import duty. Supplementary information received has demonstrated that Jindal had not received excessive duty exemption under these programs.

No evidence of benefits was found with regard to the other programs investigated.

2. Lloyds Steel Industries Ltd.

It was determined that Lloyds has received countervailable benefits in respect of one of the eight alleged programs, namely Advance Licences. This program constitutes an export subsidy because it is based on export performance. The amount of subsidy was 3,326 rupees per metric tonne.

Lloyds provided information on proceeds obtained from the sale of unused Special Import Licences. However the amounts received were small and not material in terms of evaluating any countervailable benefit, and were not included in the overall amount of subsidy.

No evidence of benefits was found with regard to the other programs investigated.

3. Other Exporter

A third identified exporter located in India has not responded to the Subsidy RFI. In the circumstances, the amount of subsidy was determined by ministerial specification. The ministerial specification states that, where sufficient information has not been provided or is not otherwise available, the amount of subsidy shall be the aggregate of the highest amount of subsidy per program found in respect of countervailable programs for which sufficient information was available. The amount of subsidy determined in this manner was 3,707 rupees per metric tonne.

Summary of Subsidy Results

The CCRA has determined that:

there is a financial contribution by the government of India that conferred a benefit to exporters under the following programs:

• Advance Licences,
• Export Promotion Capital Goods Licences,
• Export Packing Credit,
• Post-Shipment Export Financial Assistance, and
• Tax Exemption For Export Profits;

these programs are specific subsidies under paragraph 2(7.2)(b) of SIMA for the reason that they are prohibited subsidies as defined in subsection 2(1) of SIMA, because they are contingent upon export performance.

the overall level of subsidies granted on the subject goods exceeds the 3 per cent threshold stipulated in Article 27.11 of the Subsidies Agreement concerning developing countries referred to in section 41.2 of SIMA.

Appendix 3 contains tables showing the volume of subsidized goods, amounts of subsidy and the overall percentage level of subsidy. Appendix 4 contains the rationale used in determining why the programs result in countervailable subsidies in accordance with the legislation.

DECISION

Based on the results of the investigation, the Commissioner is satisfied that the subject goods from China, India, Malaysia, Russia, South Africa and Chinese Taipei have been dumped, and that the margins of dumping are not insignificant. The Commissioner is also satisfied that the subject goods from India have been subsidized, and that the amounts of subsidy are not insignificant.

Accordingly, on June 4, 2001, the Commissioner has made a final determination of dumping and subsidizing pursuant to paragraph 41(1)(a) of SIMA.

FUTURE ACTION

The Canadian International Trade Tribunal's inquiry concerning the question of injury to production in Canada is continuing. The Tribunal will issue its finding by July 3, 2001.

Subject goods imported during the provisional period will continue to be assessed provisional duty as determined at the time of the preliminary determination of dumping and subsidizing. The provisional period began on March 5, 2001, the date of the preliminary determination of dumping and subsidizing, and will end on the date the Tribunal issues its finding. For further details on the application of provisional duties, refer to the Statement of Reasons issued at the time of the preliminary determination, which is available on the CCRA internet web site at: www.cbsa-asfc.gc.ca/sima-lmsi/ 

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

If the Tribunal finds that the dumped and subsidized goods have caused injury, the CCRA will finalize the anti-dumping and countervailing duties payable on subject goods released from customs' possession during the provisional period pursuant to section 55 of SIMA. If the provisional duty was in excess of the final amount of anti-dumping and countervailing duties payable, the excess duty paid will be refunded. Imports 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 and countervailing duty equal to the amount of the subsidy. If anti-dumping and countervailing duties are payable, such duties are hereby demanded pursuant to section 11 of SIMA.

Specific normal values and amounts of subsidy for the subject goods will be provided to the co-operating exporters prior to the Tribunal's decision concerning injury. Should the Tribunal make an injury finding, these normal values and amounts of subsidy will come into effect the day after the date of the injury finding. Where specific normal values have not been issued, anti-dumping duty at a rate of 59.2 per cent of the export price will be payable on imports of the subject goods. Where specific amounts of subsidy have not been issued, a countervailing duty of 3,707 rupees per metric tonne will be payable on imports of the subject goods from India.

In the case of India, both anti-dumping duty and countervailing duty may apply to the same goods. Under section 10 of SIMA, only the amount by which the margin of dumping exceeds the countervailing duty attributable to export subsidies will be levied as anti-dumping duty.

PUBLICATION

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

INFORMATION

This Statement of Reasons has been provided to persons directly interested in these proceedings. A free copy may be obtained upon request or from the CCRA's web site at the following address. For further information, please contact one of the identified officers:

Mail -
Canada Customs and Revenue Agency
Anti-dumping and Countervailing Directorate
191 Laurier Avenue West, 16^th Floor
Ottawa, Ontario
Canada
K1A 0L5

Telephone -
Ken Mcphail 954-9530
Vincent Gaudreau 954-7262
Michael Parnes 954-1643

Telefax -
941-2612

e-mail -
Ken.Mcphail@ccra-adrc.gc.ca
Vincent.Gaudreau@ccra-adrc.gc.ca
Michael.Parnes@ccra-adrc.gc.ca

Website -
www.cbsa-asfc.gc.ca/sima-lmsi/
www.cbsa-asfc.gc.ca/sima-lmsi/

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

Appendix 1

IMPORT VOLUMES

CERTAIN CORROSION-RESISTANT STEEL SHEET

(January 1, 2000 to August 31, 2000) 

Country of Export	Total Volume Imported (MTonnes)	Percent of Total Imports	Percentage of Goods Dumped
China	7,806	5.4%	100%
India	15,981	11.1%	100%
Malaysia	13,605	9.5%	78.5%
Russia	29,452	20.5%	100%
Chinese Taipei	32,904	22.9%	45.8%
South Africa	5,442	3.8%	100%
Total Named Countries	105,189	73.2%	80.3%
Total - Other Countries	38,572	26.8%
TOTAL IMPORTS	143,762	100%

Sources CCRA's internal information systems

Customs documentation

Exporter and importer submissions

APPENDIX 2

MARGINS OF DUMPING BY EXPORTER/COUNTRY

CERTAIN CORROSION-RESISTANT STEEL SHEET

(January 1, 2000, to August 31, 2000) 

	Quantity	Margin of	Weighted	Weighted
Country/Exporter	of Goods Dumped (%)	Dumping Range (% of normal value)	Average Margin of Dumping	Average Margin of Dumping
			(% of normal value)	(% of export price)
China - All exporters	100%	37.2%	37.2%	59.2%
India - Jindal Iron and Steel	100%	9.2%-37.2%	23.3%	30.4%
India - Lloyds Steel	100%	11.4%-21.8%	18.3%	22.4%
India - Country Total	100%		22.7%	29.6%
Malaysia - Group Steel	77.9%	0.1%-11.8%	3.2%	3.3%
Malaysia - Other exporters	100%	37.2%	37.2%	59.2%
Malaysia - Country Total	78.5%		4.1%	4.8%
Russia - JSC Severstal	100%	9.1%-23.9%	15.9%	18.9%
Russia - Other exporters	100%	37.2%	37.2%	59.2%
Russia - Country Total	100%		16.7%	20.5%
Chinese Taipei - China Steel	92.5%	0.5%-12.2%	6.9%	7.5%
Chinese Taipei - Sheng-Yu	34.2%	.03%-21.2%	1.2%	1.3%
Chinese Taipei - Yieh Phui	30%	0.2%-13.5%	0.84%	0.82%
Chinese Taipei - Other Exporters	100%	37.2%	37.2%	59.2%
Chinese Taipei - Country Total	45.8%		8.0%	12.3%
South Africa - Iscor Limited	100%	1.1%-47.1%	22.4%	28.9%
South Africa - Country Total	100%		22.4%	28.9%

APPENDIX 3

SUMMARY OF FINAL DETERMINATION OF SUBSIDIZING

CERTAIN CORROSION-RESISTANT STEEL SHEET FROM INDIA

(January 1, 2000, to August 31, 2000)

VOLUME OF SUBSIDIZED GOODS

Country	Total Imports (Metric Tonnes)	% of Goods Subsidized	Total Imports Subsidized (Metric Tonnes)	Subsidized Imports as a % of Total Imports
India	15,981	100%	15,981	11.1%
All countries	143,762			100.0%

AMOUNT OF SUBSIDY

Exporter	Amount of Subsidy (Rupees per Metric Tonne)	Countervailing Duty (Rupees per Metric Tonne)
Jindal Iron & Steel Co., Ltd.	381	381
Lloyds Steel Industries Ltd.	3,326	3,326
All Other Exporters	3,707	3,707

APPENDIX 4

INDIA - SUBSIDY PROGRAMS

Advance Licences

The Government of India (GOI) explained that an Advance Licence is a type of duty-free licence under its Duty Exemption Scheme. Advance Licences are granted to exporters, who must fulfill a certain export obligation, for the import of inputs which are physically incorporated in the exported product (making normal allowance for wastage), as well as catalysts, required for the manufacture of goods without payment of basic customs duty. For goods subject to additional customs duty (equivalent to excise duty paid on domestic purchases), exporters have the option of either being exempt from paying the additional customs duty or paying it and obtaining a subsequent credit. Unused Advance Licences may be sold after fulfillment of the export obligation.

Information was received from Lloyds Steel Industries Ltd. on the proceeds of the sale of an Advance Licence obtained with regard to exports of subject goods during the period of investigation (POI).

The GOI's financial contribution is established under paragraph 2(1.6)(c) of the Special Import Measures Act (SIMA) as the provision of goods or services other than general governmental infrastructure.

The revenue from the sale of the unused Advance Licence constitutes a benefit to the exporter in the form of a grant in accordance with section 27.1 of the Special Import Measures Regulations (SIMR).

The Advance Licence program is a specific subsidy under paragraph 2(7.1)(b) for the reason that it is a prohibited subsidy as defined in subsection 2(1) of SIMA, because it is contingent upon export performance.

The Advance Licence revenue received during the POI, less the application fee, has been distributed over the quantity of subject goods in order to determine the amount of subsidy.

Export Promotion Capital Goods Licences

The GOI's Export Promotion Capital Goods (EPCG) scheme allows exporters to import capital equipment and components at reduced or nil import duties. Jindal Iron & Steel Co., Ltd. (Jindal), provided information on capital equipment and components imported duty-free under this scheme.

The GOI's financial contribution is established under paragraph 2(1.6)(b) of SIMA as the amount of duties, that would otherwise be owing and due to the GOI, that are exempted. The benefit to the exporter is the amount of duty savings received under this program.

Only exporters are eligible for EPCG licences, thus the EPCG scheme provides a specific subsidy under paragraph 2(7.2)(b) of SIMA for the reason that it is a prohibited subsidy as defined in subsection 2(1) of SIMA, because it is contingent on export performance.

Under section 27.1(2) of the SIMR, the amount of subsidy in respect of any amount owing and due to a government that is exempted is to be treated as a grant under section 27. Accordingly, the amount of subsidy was calculated as the amount of duties applicable at time of importation which Jindal was exempted from paying. The resultant duty saving was amortized over the useful life of the imported capital equipment. The annualized duty saving was distributed over the quantity of exports of subject goods and other steel products exported in order to determine the amount of subsidy.

Export Packing Credit

The Export Packing Credit (EPC) is a program administered by the Reserve Bank of India (RBI). Under this program, banks extend working capital loans ("Packing Credit") to exporters, at ceiling rates set by the RBI, on a pre-shipment basis for such purposes as purchasing raw materials and processing, warehousing, packing, transporting and shipping goods. Jindal provided information on EPC loans for subject goods exported to Canada.

The GOI's financial contribution is established under paragraph 2(1.6)(d) of SIMA where the Government permits or directs a non-governmental body to do any thing referred to in paragraph (a), which refers to practices of the Government involving the direct transfer of funds.

EPC loans constitute a specific subsidy under paragraph 2(7.2)(b) of SIMA. The subsidy is specific for the reason that it is a prohibited subsidy as defined in subsection 2(1) of SIMA, because it is contingent on export performance.

The benefit to the exporter is the present value of the amount by which the interest paid on the EPC loans was lower than the interest that would have been payable on comparable loans from commercial banks, under the SIMR section 28. The amount was distributed over the quantity of the subject goods for which EPC loans were obtained to arrive at the amount of subsidy.

Post-Shipment Financial Assistance

The GOI's Post-Shipment Export Financing program is also administered by the Reserve Bank of India (RBI). Under this program, banks extend loans to exporters, at ceiling rates set by the RBI, for the period from the shipment of the exported goods until the date of realization of export proceeds. Jindal provided information on such loans for subject goods exported to Canada.

The GOI's financial contribution is established under paragraph 2(1.6)(d) of SIMA where the Government permits or directs a non-governmental body to do any thing referred to in paragraph (a), which refers to practices of the Government involving the direct transfer of funds.

Post-Shipment Export Financing loans constitute a specific subsidy under paragraph 2(7.2)(b) of SIMA. The subsidy is specific for the reason that it is a prohibited subsidy as defined in subsection 2(1) of SIMA, because it is contingent on export performance.

The benefit to the exporter is the present value of the amount by which the interest paid on these loans was lower than the interest that would have been payable on comparable loans from commercial banks, under the SIMR section 28. The amount was distributed over the quantity of the subject goods for which Post-Shipment Export Financing loans were obtained to arrive at the amount of subsidy.

Tax Exemption for Export Profits

Under section 80 HHC of the Indian Income Tax Act, exporters may deduct export profit when determining taxable income. Jindal provided pertinent information in this regard. Lloyds has incurred a loss in the fiscal year ending March 31, 2000, and therefore could not claim any deduction.

The GOI's financial contribution is established under paragraph 2(1.6)(b) of SIMA as amounts that would otherwise be owing and due to the Government which are exempted.

The tax exemption on export profits constitutes a specific subsidy under paragraph 2(7.2)(b) of SIMA for the reason that it is a prohibited subsidy as defined in subsection 2(1) of SIMA because it is contingent on export performance.

The CCRA determined the amount of subsidy under the SIMR section 32 for Jindal by multiplying the export profit deduction by the relevant tax rate and dividing this figure by the total quantity of the exports.

Special Import Licences

The GOI explained that Special Import Licences (SILs) are issued to certain categories of exporters to allow the importation of certain restricted goods. SILs do not relieve the payment of import duties. However, unused SILs may be sold to other companies who wish to import restricted goods. The GOI has advised that no SIL benefits shall accrue on exports after April 1, 2000, and that SILs as an instrument shall be abolished on March 31, 2001.