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Final Determination - Waterproof Footwear and Waterproof Footwear Bottoms

OTTAWA, December 9, 2002

4261-125
AD1284

STATEMENT OF REASONS

Concerning the making of a final determination of dumping with respect to

CERTAIN WATERPROOF FOOTWEAR AND WATERPROOF FOOTWEAR BOTTOMS, ORIGINATING IN OR EXPORTED FROM HONG KONG, CHINA; MACAO, CHINA; AND VIETNAM

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 of dumping regarding certain waterproof footwear and waterproof footwear bottoms, originating in or exported from Hong Kong, China; Macao, China; and Vietnam.

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

Contents

STATEMENT OF REASONS

SUMMARY

INTERESTED PARTIES
Complainant and the Canadian Industry
Exporters
Importers

BACKGROUND
Product Information
Product - Subject Goods Definition
Product Information
Definitions
Production Processes
Classification of Imports
Canadian Industry
Imports of Subject Goods
Hong Kong Import Volume

THE INVESTIGATION
Importers
Exporters

RESULTS OF THE INVESTIGATION
Vietnam
(a) Section 20 Analysis
(b) Exporters
Macao
Hong Kong
Other Exporters
Summary

DECISION

FUTURE ACTION

PUBLICATION

INFORMATION

Appendix 1

Appendix 2

STATEMENT OF REASONS

SUMMARY

On April 26, 2002, the Commissioner of Customs and Revenue (Commissioner) initiated an investigation respecting the alleged injurious dumping of certain waterproof footwear and waterproof footwear bottoms, originating in or exported from Hong Kong, China; Macao, China; and Vietnam. The investigation was initiated in response to a complaint filed by the Shoe Manufacturers' Association of Canada (SMAC) of Beaconsfield, Quebec.

On receiving notice of the investigation, the Canadian International Trade Tribunal (Tribunal) started its preliminary injury inquiry. On June 25, 2002, the Tribunal made a preliminary determination that the evidence disclosed a reasonable indication that the alleged dumping of the subject goods has caused injury to the domestic industry.

On July 17, 2002, pursuant to paragraph 39(1)(a) of the Special Import Measures Act (SIMA), the Commissioner extended to 135 days the time period for rendering a preliminary determination or for terminating the investigation in whole or in part, due to the complexity and novelty of the issues presented by the investigation. On September 9, 2002, the Commissioner made a preliminary determination of dumping.

The Canada Customs and Revenue Agency (CCRA) continued its investigation and, on the basis of the results, the Commissioner is satisfied that the subject goods have been dumped and that the margins of dumping were not insignificant. Consequently, on December 9, 2002, the Commissioner made a final determination of dumping pursuant to paragraph 41(1)(a) of SIMA.

The Tribunal's inquiry into the question of injury to the Canadian industry is continuing. Until the Tribunal renders its decision, provisional duties will continue to be imposed on the subject goods originating in or exported from Hong Kong, China (hereinafter referred to as Hong Kong, except in the definition of the subject goods); Macao, China (hereinafter referred to as Macao, except in the definition of the subject goods); and Vietnam.

INTERESTED PARTIES

Complainant and the Canadian Industry

The complainant, SMAC, acts as a representative for the footwear manufacturing industry in Canada. The complaint is supported by six producers who are members of SMAC: Acton International Inc. (Acton), Baffin Inc. (Baffin), Genfoot Inc. (Genfoot), Les Chaussures Régence (Régence), Rallye Footwear Inc. (Rallye) and Chaussures Yeti Inc. (Yeti). These six firms account for more than 95 per cent of all Canadian production of the subject goods. The complainant and the supporting producers are listed with their addresses in Appendix 1.

Exporters

The CCRA has identified 77 exporters of the subject goods located not only in the named countries, but in other countries as well. Where there were a large number of exporters in a named country of export, the CCRA limited its examination of dumping to a sampled number of exporters, pursuant to subsection 30.3(1) of SIMA. The sampling was based on exporters whose combined shipments to Canada represent a substantial portion of the subject goods exported from that country, during the calendar year 2001.

Importers

The CCRA identified 57 importers of subject goods. The CCRA also limited its detailed examination of imports to those importers whose combined importations represent a substantial portion of the subject goods imported into Canada during the calendar year 2001.

BACKGROUND

An anti-dumping complaint was filed on behalf of SMAC on March 6, 2002. On March 27, 2002, the CCRA informed SMAC that its complaint was properly documented. At the same time, the governments of Hong Kong, Macao, and Vietnam were notified that a properly documented complaint had been received.

On April 26, 2002, the Commissioner initiated a dumping investigation and notified the Tribunal of that decision. The Tribunal subsequently initiated a preliminary injury inquiry into whether the evidence disclosed a reasonable indication of injury, retardation or threat of injury caused by the dumping of the goods. On June 25, 2002, the Tribunal concluded that the evidence disclosed a reasonable indication that the alleged dumping has caused injury.

On July 17, 2002, pursuant to paragraph 39(1)(a) of SIMA, the Commissioner extended to 135 days the time period for rendering a preliminary determination or for terminating the investigation in whole or in part, due to the complexity and novelty of the issues presented in the investigation. On September 9, 2002, the Commissioner made a preliminary determination of dumping in accordance with subsection 38(1) of SIMA.

There have been two past findings concerning waterproof footwear. The footwear covered by the findings is described in the Tribunal's expiry review inquiry RR-2001-005 (October 19, 2002) and the Tribunal's finding NQ-2000-004 (December 8, 2000). The anti-dumping measures in both cases apply to imports from the People's Republic of China (China). The Tribunal's order in expiry review RR-2001-005 reflects a twenty-year-old finding by the Anti-dumping Tribunal (ADT-2-82) on April 23, 1982, which covered waterproof rubber footwear only, as plastic was not widely used in the manufacture of waterproof footwear at that time. As waterproof footwear items of other materials appeared, the Anti-dumping Tribunal finding could not be broadened to include them. Consequently, pursuant to another anti-dumping investigation, the Tribunal's inquiry (NQ-2000-004) dealt with waterproof plastic footwear and certain items of waterproof rubber footwear that had either been omitted from the original inquiry in 1982 or excluded by the Tribunal's expiry review RR-97-001 in 1997.

Product Information

Product - Subject Goods Definition

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

"waterproof footwear and waterproof footwear bottoms, constructed wholly or in part of rubber or plastic, worn over the foot or shoe, originating in or exported from Hong Kong, China; Macao, China; and Vietnam. The distinctive feature of waterproof footwear is that both the sole portion and a portion of the upper, sufficient to give waterproof protection to the foot, are incorporated in a waterproof component that may be made of rubber or plastic. The goods subject to this investigation include moulded clogs, waterproof safety footwear and waterproof footwear made of waterproof footwear bottoms combined with tops made of leather, textiles or other materials. They may be constructed with or without liners, linings, fasteners or safety features."

Excluded from the definition of subject goods are equestrian riding boots, ski boots and skating boots.

The product information and definitions that follow are an integral part of the description of the goods that are subject to this investigation.

Product Information

Waterproof footwear described as "waterproof rubber footwear" is produced, wholly or in part of natural rubber and/or synthetic rubber, by vulcanization, injection moulding or other processes. The term synthetic rubber includes thermoplastic rubber (TPR).

Waterproof footwear described as "waterproof plastic footwear" is constructed wholly or in part of plastic. It is made from plastic resins by injection moulding or other processes. The term "plastic" includes polyvinyl chloride (PVC), polyurethane (PU) and other plastics. PVC is the plastic most commonly used to date in this class of footwear.

Waterproof rubber footwear and waterproof plastic footwear include footwear worn over the foot or shoe, with or without liners, linings, fasteners or safety features. These include red sole rubber boots, city boots, rain boots, hunting and fishing boots, hip waders and chest waders. In certain styles, such as duck shoes or winter boots, a boat-like (or shell-like) waterproof bottom may have trimmings, attachments, liners, cuffs or tops of nylon or other materials.

The product range of subject goods includes footwear manufactured for men, women, youth, misses and children.

Definitions

The following are specific definitions respecting the footwear that are subject to this investigation.

"Footwear with waterproof bottoms" is characterized by two major components: a "bottom" of plastic or rubber that is waterproof, and a "top". In such footwear, the waterproof bottom comprises the sole and the lower portion of the upper. The term "bottoms" should not be confused with "sole", a portion of footwear that extends from the ground to the sole of the foot. "Top", which comprises the top portion of the upper in certain styles, varies greatly in height and design, and may be made of leather, plastic, fabrics, coated fabrics or other materials. The bottoms and tops of waterproof footwear may be joined by stitching. The tops, which in many instances are assembled by stitching, have seams that may or may not be treated with an adhesive or other substance to inhibit the entry of water. In other cases, waterproof bottoms may be affixed to tops by other means such as direct-injection. Refer to related definition of "Waterproof footwear bottoms" below.

"Moulded clogs" are typically made from plastic or rubber by moulding to produce a clog designed for use in gardening or similar pursuits. Clogs may be open or closed at the heel.

"Thermoplastic rubber" is a thermoplastic elastomer, developed in the 1970s, that has been used in the manufacture of waterproof footwear since the early 1980s. This material has many of the physical properties of rubber but, unlike conventional rubber, it is processed as a thermoplastic material and is not vulcanized. Vulcanization, a thermosetting process, is slow and irreversible. With TPR, the process from molten material to a solid, rubber-like object, which is rapid and reversible, takes place upon cooling.

"Waterproof footwear", for the purpose of this investigation, includes most of the footwear classified under the Harmonized System (HS) heading 6401. It also includes certain footwear with waterproof bottoms and tops of any material, assembled by stitching or other means, that are classified in Chapter 64 under subheadings of 6402, 6403 and 6404, and not under HS 6401.

"Waterproof footwear bottoms" for use in the manufacture of subject footwear are classified as incomplete footwear under HS subheading 6401.99, and more specifically, under HS classification numbers 6401.99.21 if rubber or 6401.99.30 if plastic. Waterproof footwear bottoms are boat-like (or shell-like) components that are combined with tops made of leather, nylon, plastic, coated fabrics or other materials to form articles of finished waterproof footwear. The distinctive feature of waterproof bottoms is that both the outer sole portion and a portion of the upper, sufficient in height to give waterproof protection to the foot, are incorporated into a waterproof component. Waterproof footwear bottoms may be made by the traditional process of cutting components from sheets of rubber, assembling by cement and vulcanizing. Alternatively, waterproof footwear bottoms may be made of thermoplastic rubber by injection moulding. Waterproof footwear bottoms may also be made from plastic resins by injection moulding.

"Waterproof plastic footwear" is made of plastic resins by injection moulding or other moulding processes. The external surface may be made entirely of plastic, as in the case of rain boots. In other styles, such as duck shoes, footwear of moulded plastic may be provided with trimmings or attachments of other materials. Waterproof plastic footwear styles, which are frequently designed to resemble rubber footwear, are widely sold and used as substitutes for rubber footwear.

"Waterproof rubber footwear" is made in many instances by the traditional method commonly referred to as "lay-up" or "vulcanized". Alternatively, waterproof rubber footwear can be made of thermoplastic rubber by the injection moulding process.

"Waterproof safety footwear" includes waterproof footwear made with safety features, whether or not it meets established CSA standards. Safety features include any reinforcement made to the footwear either by adding extra layers of material or by incorporating other materials to reinforce the footwear.

Footwear Excluded from this Investigation

The following are specific definitions respecting the footwear that are excluded from this investigation:

"Equestrian riding boots" designed for use in horse riding are excluded from this complaint. They may be made from either rubber or plastic and are classified under the HS classification number 6401.10.11.00 or 6401.91.11.00 if made of rubber and under the HS classification number 6401.91.20.00 if made of plastic.

"Ski boots" are boots designed for use in downhill skiing.

"Skating boots" are designed to be fitted with skate blades and used for ice skating.

Other Industry Definitions

"Sole" refers to that portion of an item of footwear which extends from the ground to the bottom of the foot.

"Top" refers to that component or portion of an upper which is attached to a waterproof footwear bottom by stitching or other means.

"Upper" refers to that part of any footwear that extends upward from the sole to the uppermost part of the finished product. For the purposes of this investigation the relevant definition of "the upper", its constituent material and the terms "rubber" and "plastics" are found in the HS general notes of Section XII, Chapter 64, notes (D) and (E).

Production Processes

The goods subject to this investigation may be manufactured by the traditional lay-up and vulcanization process, by moulding processes such as injection-moulding, by the direct injection process or by other processes.

Waterproof footwear may be produced using the injection-moulding process alone or in combination with the stitched product process. An example of a product made solely by injection-moulding is a PVC rain boot. On the other hand, the injection-moulding process and stitching could be used in combination to produce a rubber-bottom, nylon-top winter boot.

The following provides an overview of various processes which may be used in manufacturing waterproof footwear:

In the vulcanization process (occasionally referred to as "lay-up"), natural and synthetic rubber are compounded with specialty chemicals and formed into sheets. Footwear parts are then cut from the sheets of rubber. The parts are then laid up on forms and secured with rubber cement. The laid-up footwear is then vulcanized in an oven so that the rubber is irreversibly cured.

In the injection moulding process, a granulated chemical compound of either PVC or TPR, is heated and injected into steel moulds installed in moulding machines. Each mould dictates the size, style and number of colours of a moulded item. When the chemical is forwarded to the moulding machine, it is vacuumed into the hopper and pushed into a heated barrel. A screw inside the barrel generates additional heat to melt the compound and then injects it into a mould. The resulting product may consist of an unfinished waterproof bottom or an item of waterproof footwear such as a rain boot. The moulded items are then cooled, extracted and trimmed. Components and markings are added before the finished footwear is packed for shipping.

In the direct injection process, a suitable material such as polyurethane is injected into a mould that is fitted to a lasted footwear upper typically made of leather. The result is that a directly injected waterproof bottom is affixed permanently to the upper without stitching.

Complex waterproof footwear, such as winter boots, consists of waterproof bottoms that are attached by the simple process of stitching to tops that may be made of leather, textiles or other materials.

Classification of Imports

The subject goods in finished form are normally classified under HS headings 6401, 6402, 6403 and 6404.

The following are the 26 specific 10-digit HS classification numbers under which the subject goods are imported:

6401.10.19.00
6401.10.20.00
6401.91.19.00
6401.91.20.00
6401.92.91.10
6401.92.91.90
6401.92.92.90
6401.99.21.00
6401.99.29.00
6401.99.30.10
6401.99.30.90

6402.19.90.90
6402.91.00.10
6402.91.00.91
6402.91.00.92
6402.91.00.93

6403.40.00.10
6403.91.00.10
6403.91.00.91
6403.91.00.92
6403.91.00.93

6404.11.99.90
6404.19.90.20
6404.19.90.91
6404.19.90.92
6404.19.90.93

Canadian Industry

The Canadian industry for the subject footwear is now composed of the six producers listed in Appendix 1. Five years ago this was an industry of nine producers. Since then, four firms have left the industry and one has joined it.

Carlaw Manufacturing Ltd. and Maple Leaf Shoe Company closed in 1998 after years of financial difficulty. Bata Shoe Company Ltd. closed all of its domestic manufacturing operations in the second half of 1999. Kaufman Footwear, a large producer of high-end products that it marketed under the name Sorel, declared bankruptcy in July 2000. Régence, an established producer of women's footwear, acquired certain assets of Maple Leaf Shoe Company and began producing waterproof footwear in 1999.

Imports of Subject Goods

Before making a preliminary determination of dumping, the Commissioner must be satisfied that the actual and potential volume of dumped goods is not negligible. If the volume of dumped goods from a country is less than 3 per cent of the total volume of like goods released into Canada from all countries during the period of investigation, the volume is considered to be negligible.

In its complaint, SMAC identified 26 10-digit HS classification numbers under which subject waterproof footwear may be properly classified (these numbers are listed above). Under the 10-digit classification numbers of headings 6401, 6402, 6403, and 6404, the complainant indicated that broad varieties of subject and non-subject goods may be found within the same 10-digit classification numbers. Accordingly, SMAC compiled and analysed monthly data since January 1998, under each of the 26 10-digit HS classification numbers for Hong Kong, Macao, Vietnam and the rest of the world.

SMAC concluded its examination of imports by focusing closely on the six 10-digit HS classification numbers believed to capture most of the subject imports for men (6402.91.00.91, 6403.91.00.91 and 6404.19.90.91) and for children (6402.91.00.93, 6403.91.00.93 and 6404.19.90.93). Imports from subject countries, as well as from the rest of the world, were also estimated on this basis. Based on a review of the information presented by the complainant and other available information, the CCRA was satisfied at initiation that the complainant's approach in estimating the total volume of imports was reasonable.

In order to further examine the issue of volumes of subject goods, supplementary questionnaires were sent during the preliminary phase of the investigation to all identified importers and exporters of footwear under the 26 10-digit HS classification numbers identified by the complainant. The purpose was to obtain the total volume of goods that are of the same description as the dumped goods that were released into Canada from all countries. The questionnaires asked the importers and exporters to provide the total volume and value of footwear imported from each subject country and from the rest of the world during the period of investigation, and to provide information separately on like goods and non-subject goods.

A limited number of complete submissions were received in response to the supplementary questionnaire. As a result, the CCRA was unable to determine an accurate estimate of the true volume of imports of subject goods based on exporter and importer submissions.

For purposes of the final decision on dumping, import volumes have been calculated based on the information provided by the complainant, and verified by data retrieved from the CCRA's own internal information system, the Facility for Information Retrieval Management (FIRM). The CCRA's analysis was limited to importations under the six 10-digit HS classification numbers mentioned above, that are believed to capture most of the subject goods for men's and children's models.

Hong Kong Import Volume

Prior to the preliminary determination, the Hong Kong government made representations to the CCRA that Hong Kong should not be included in the investigation, as import volumes were negligible.

Verification visits to exporters located in Hong Kong and meetings with Hong Kong government and industry officials were held during July 2002. The government officials and the exporters that were visited by the CCRA provided information respecting shipments of subject goods to Canada. During the verification meetings in Hong Kong, two industry associations, the Hong Kong Leather Shoe and Shoe Material Merchants Association Ltd. and the Hong Kong Rubber and Footwear Manufacturers' Association agreed to petition their members to obtain additional information for the CCRA. That information had not been provided at the time of the CCRA's preliminary determination. As such, for purposes of the preliminary determination of dumping, the volume of imports from Hong Kong was not considered to be negligible.

The CCRA continued to research the matter subsequent to the preliminary determination. A follow-up meeting was held with the Hong Kong Rubber and Footwear Manufacturer's Association in September 2002, during which the association indicated that none its members export subject goods to Canada. However, no written confirmation was provided.

For purposes of the preliminary determination of dumping, the Commissioner has responsibility for determining whether the actual and potential volume of dumped goods is negligible. After a preliminary determination of dumping, 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 goods from a country is negligible.

THE INVESTIGATION

The investigation covered subject goods shipped to Canada during the period of investigation, from January 1, 2001 to March 31, 2002.

Generally, normal values are based on the domestic selling prices of the goods in the country of export, or the total cost of the goods (cost of production, administrative, selling and all other costs), plus an amount for profit. The export price of subject goods shipped to Canada is normally the lesser of the exporter's ex-factory selling price or the importer's purchase price. When the export price is less than the normal value, the difference is the margin of dumping.

Importers

All known importers of subject goods were contacted at the initiation of the investigation and were requested to respond to a questionnaire concerning subject goods imported into Canada during the period of investigation. In response, complete submissions were received from only five importers of subject goods. Based on a lack of response to the initial request for information, the CCRA issued supplementary requests for information to all listed importers. Again, only a limited number of responses were received by the CCRA. As a result, an additional set of requests for information was sent to those importers who had previously failed to submit a complete response to the previous two CCRA requests. This was done in accordance with subsection 78(1) of SIMA, which indicates that in any investigation under SIMA, the Commissioner may require a person to provide the Commissioner, under oath or otherwise, with the evidence requested, for the purpose of facilitating the enforcement or administration of the Act.

Eight importers responded to the questionnaires sent under section 78 of SIMA, but the majority of responses were incomplete or did not provide sufficient information regarding import volumes. Thus, the CCRA was unable to use the information collected from importers of subject goods to further substantiate the import statistics for subject goods calculated at the initiation of this investigation. However, as mentioned previously, the CCRA is satisfied that the import volumes collected from the FIRM system, limited to the six relevant HS classification numbers, are an accurate representation of the actual volume of imports of subject goods.

Exporters

In view of the large number of exporters, the CCRA limited the number of exporters to be investigated pursuant to the sampling provisions outlined in subsection 30.3(1) of SIMA. A questionnaire was sent to those exporters that collectively account for a substantial quantity by volume of subject goods exported to Canada from each of the named countries during the calendar year 2001. The exporters that were sent questionnaires were considered to be mandatory respondents. Further, where a mandatory respondent was not the producer of the goods, the CCRA requested such a respondent to forward a copy of the CCRA's questionnaire to all of their unrelated producers or suppliers.

Other exporters, who were not included in the CCRA's sample, were advised of the initiation of this investigation. These exporters were advised that if they wanted to make a full voluntary submission, they could have done so by requesting a copy of the exporter questionnaire from the CCRA.

For purposes of the final determination, margins of dumping were determined in the following manner, in accordance with the provisions of Special Import Measures Regulations (SIMR) section 25.2:

• for imports from an exporter who was part of the sampling of exporters and was sent a request for information, and who has fully complied with the CCRA's request for information and permitted the verification of the information, the margins of dumping were based on the weighted average margin of dumping determined for that exporter;
• for imports from an exporter who was not part of the sampling and who did not make a submission, the margins of dumping were based on the weighted average margin of dumping for sampled exporters in the same country of export, that cooperated, as outlined in SIMR paragraph 25.2(2)(c);
• for imports from an exporter who was not part of the sampling and who did not make a submission, and who is from a country where no complete submissions were received from sampled exporters in that country, the margin of dumping was based on the weighted average margin of dumping determined for all cooperative exporters in the investigation, as outlined in SIMR paragraph 25.2(2)(c); and,
• where the CCRA was unable to determine margins of dumping because of late submissions, incomplete submissions or lack of cooperation by exporters in the sample in any of the named countries, the margin of dumping was based on the highest margin of dumping determined for the investigation, as specified by the Minister under section 29 of SIMA.

In this investigation, the Government of Vietnam and exporters in Vietnam were given the opportunity to provide information so that the Commissioner could form an opinion concerning the applicability of section 20 of SIMA to exports of subject goods. Section 20 of SIMA provides a methodology to determine normal values in respect of dumping investigations of goods exported to Canada from countries whose governments monopolize export trade and control domestic prices in the market sector being investigated.

The Government of Vietnam provided a response to the questionnaire sent by the CCRA at the initiation of the investigation. In response to the exporter questionnaire, submissions were received from one exporter in Macao, and three exporters in Vietnam. No complete responses to the exporter questionnaire were received from exporters in Hong Kong. Determinations of normal values, export prices and margins of dumping are explained in the next section.

RESULTS OF THE INVESTIGATION

Vietnam

(a) Section 20 Analysis

In the past, the CCRA has considered that the Government of Vietnam retained a monopoly on its export trade and controlled domestic prices. Under such conditions, domestic market selling prices in Vietnam were not a reliable basis for determining normal values in the market sector being investigated. As such, section 20 of SIMA required that normal values be established on a surrogate country basis.

In the last few years, Vietnam has taken a number of measures to reform its economic structure, seeking to liberalize its economy. Accordingly, in this investigation, the CCRA requested information from the Vietnamese government and all exporters involved to determine whether sufficient progress had been made in economic reforms such that there is an absence of government monopoly in the export trade of waterproof footwear, or the absence of control of domestic prices in the footwear sector.

The CCRA received complete responses to its questionnaires from the Vietnamese government and three exporters in Vietnam: Lac Ty Hung Hiep Co. Ltd. (Lac Ty); Pou Yuen Enterprises Ltd. (Pou Yuen); and The General Shoes Company (General Shoes). Following a review of these submissions and publicly available information collected by the CCRA, additional information was requested from the Government of Vietnam and the exporters. As well, verification visits were held with government officials and exporters.

Meetings with the Government of Vietnam included representatives from the Vietnamese Ministry of Finance, the Ministry of Trade, the Ministry of Industry, and the Ministry of Planning and Investment.

Based on an analysis of the responses received from the government and the three cooperative exporters, and from publicly available information collected by the CCRA, as well as on information collected during the verification visits, the Commissioner is of the opinion that the Government of Vietnam does not have a monopoly or substantial monopoly over its export trade in the waterproof footwear industry. Consequently, the CCRA could now determine normal values for Vietnamese subject goods on the basis of the domestic selling prices and full costs of production, plus an amount for profit.

(b) Exporters

Generally, when an exporter provides sufficient information, normal values are based on that exporter's actual domestic market selling prices, under section 15 of SIMA, or on the full cost of production of the goods plus a reasonable amount for profit, under section 19. Export prices are established on the basis of information provided by the exporter and importer.

However, none of the three Vietnamese exporters that cooperated with the CCRA have domestic market sales of subject goods. Therefore, normal values could not be determined on the basis of domestic sales under section 15 of SIMA. For one of the cooperative exporters, Pou Yuen, Vietnam, normal values were calculated under the `cost-plus' provisions of paragraph 19(b) of SIMA. Normal values for the other two Vietnamese exporters, Lac Ty and General Shoes, were determined under ministerial specification. The methodologies used to determine normal values for the three cooperative Vietnamese exporters are outlined below.

Pou Yuen Enterprise Ltd.

Normal Values - For Pou Yuen, normal values were calculated based on the total cost of production of the subject goods, plus a reasonable amount for selling and administrative expenses, plus a reasonable amount for profit, in accordance with paragraph 19(b) of SIMA.

SIMR paragraph 11(b) outlines a hierarchy of methodologies to be used in determining a reasonable amount for profit in calculating normal values under the `cost-plus' provisions of SIMA paragraph 19(b). These methods focus on using profit found for like goods or the next general category of similar goods, which have been sold in the domestic market, by that individual exporter or by another producer. For Pou Yuen, a reasonable amount for profit was found on domestic sales of component footwear parts, the category of goods next largest to the subject goods, in accordance with SIMR subparagraph 11(b)(v).

Export Price - The subject goods were sold to unrelated importers in Canada. Consequently, export prices were determined pursuant to section 24 of SIMA, based on the lesser of the exporter's selling price or importer's purchase price.

Margins of Dumping - Of the goods imported into Canada from Pou Yuen during the period of investigation, 100 per cent were dumped. The weighted average margin of dumping was equal to 10.3 per cent, expressed as a percentage of export price, with margins ranging from 4.1 per cent to 17.1 per cent.

Lac Ty Hung Hghiep Co. Ltd.

Normal Values - Lac Ty did not have sales of like goods in its domestic market on which to base normal values under section 15 of SIMA, or to determine a reasonable amount for profit in calculating normal values under section 19. In such circumstances, where the required information has not been provided or is otherwise not available, section 29 of SIMA provides for the minister to specify the manner in which normal values and export prices are to be calculated. In this case, normal values were determined by ministerial specification under section 29 of SIMA, employing a paragraph 19(b), `cost-plus' approach. Normal values were calculated based on the sum of the cost of production of the goods, plus a reasonable amount for administrative, selling and all other costs, plus a reasonable amount for profit. A reasonable amount for profit was determined to be the company's overall profit on the production and sale of footwear.

Export Price - The subject goods were sold to unrelated importers in Canada. Consequently, export prices were determined pursuant to section 24 of SIMA, based on the lesser of the exporter's selling price or importer's purchase price.

Margins of Dumping - Of the goods imported into Canada from Lac Ty during the period of investigation, 100 per cent were dumped. The weighted average margin of dumping was equal to 34.4 per cent, expressed as a percentage of export price, with margins ranging from 6.5 per cent to 46.3 per cent.

The General Shoes Corporation

Normal Values - General Shoes did not have sales of like goods in its domestic market on which to base normal values under section 15 of SIMA, or to determine a reasonable amount for profit in calculating normal values under section 19. Thus, as with Lac Ty, normal values were determined by ministerial specification under section 29 of SIMA, employing a paragraph 19(b), `cost-plus' approach. Normal values were calculated based on the sum of cost of production of the goods, plus a reasonable amount for administrative, selling and all other costs, plus a reasonable amount for profit. A reasonable amount for profit was determined to be the company's overall profit on the production and sale of footwear.

Export Price - The subject goods were sold to unrelated importers in Canada. Consequently, export prices were determined pursuant to section 24 of SIMA, based on the lesser of the importer's purchase price or exporter's selling price.

Margins of Dumping - Of the goods imported by General Shoes into Canada during the period of investigation, 87.8 per cent were dumped. The weighted average margin of dumping was equal to 9.7 per cent, expressed as a percentage of export price, with margins ranging from 0.4 per cent to 31.9 per cent.

Macao

Sunrise Footwear Ltd. (Sunrise) was the sole exporter from Macao that provided a complete response to the CCRA's requests for information. Verification visits were held at the offices of Sunrise's parent company, Symphony Holdings Ltd., in Hong Kong, as well as at Sunrise's facilities in Macao, during the period of July 15 to July 19, 2002.

Normal Values - As with two of the Vietnamese exporters, Sunrise did not have sales of like goods in its domestic market on which to base normal values under section 15 of SIMA, or to determine a reasonable amount for profit in calculating normal values under section 19. Thus, normal values were determined by ministerial specification under section 29 of SIMA, employing a paragraph 19(b) `cost-plus' approach. Normal values were calculated as the aggregate of cost of production, plus a reasonable amount for administration, selling and all other costs, plus a reasonable amount for profit. The company's overall profit found on the production and sale of footwear was determined to be a reasonable amount for profit.

Export Prices - The subject goods were sold to unrelated importers in Canada. Consequently, export prices were determined pursuant to section 24 of SIMA, based on the lesser of the exporter's selling price or importer's purchase price.

Margins of Dumping - Of the goods imported into Canada from Sunrise during the period of investigation, 100 per cent were dumped. The weighted average margin of dumping was 25.5 per cent, expressed as a percentage of export price, with margins ranging from 10.8 per cent to 60.8 per cent.

Hong Kong

No complete submissions were received from exporters of subject goods located in Hong Kong.

Thus, margins of dumping for exporters of subject goods in Hong Kong were determined based on information received from other exporters during the investigation, following the guidelines of the sampling provisions outlined in section 30.3 of SIMA.

For exporters of subject goods in Hong Kong that were requested to provide a complete response to the request for information, and failed to do so, the margin of dumping is 60.8 per cent. This is equal to the highest margin of dumping found for a cooperative exporter in the investigation, as authorized by the ministerial specification granted under section 29 of SIMA, where the CCRA was unable to determine margins of dumping because of lack of cooperation of sampled exporters in the country.

For exporters in Hong Kong that were not requested to provide a complete response to the request for information, the margins of dumping were based on the weighted average margin of dumping for sampled exporters in the investigation, that cooperated, in accordance with SIMR subsection 25.2(1).

Other Exporters

The treatment of imports of subject goods from exporters in countries other than Hong Kong, including Vietnam and Macao, who did not respond to the CCRA's request for information is also based on section 30.3 of SIMA, which is used to determine margins of dumping for other exporters when sampling techniques are employed. For non-sampled exporters who did not provide a response, margins of dumping are equal to the weighted average margin of dumping for sampled exporters in that country, pursuant to SIMR paragraph 25.2(2)(c).

For non-sampled exporters in a country where no submissions were received in order to determine a weighted average margin of dumping for that country, margins of dumping are equal to the weighted average margin of dumping for sampled exporters in the investigation, that cooperated. This is done in accordance with SIMR subsection 25.2(1).

Summary

During the period of investigation, 100 per cent of the subject goods imported into Canada from Hong Kong were dumped by a weighted average margin of dumping of 51.5 per cent; 100 per cent of the subject goods imported into Canada from Macao were dumped by a weighted average margin of dumping of 25.5 per cent; and 98.4 per cent of the subject goods imported into Canada from Vietnam were dumped by a weighted average margin of dumping of 30.9 per cent. All margins of dumping are expressed as a percentage of export price. Overall, 99.2 per cent of the subject goods imported into Canada during the investigation were dumped by a weighted average margin of dumping of 29.4 per cent, when expressed as a percentage of export price.

In making a final determination of dumping, the Commissioner must be satisfied that the subject goods have been dumped and that the margin of dumping is not insignificant. Subsection 2(1) of SIMA stipulates that the margin of dumping is insignificant if it is less than 2 per cent of the export price of the goods. As indicated in Appendix 2, the margin of dumping for the total imports of subject goods is above the 2 per cent threshold.

DECISION

Based on the results of the investigation, the Commissioner is satisfied that the subject goods originating in or exported from Hong Kong, Macao, and Vietnam have been dumped, and that the margin of dumping is not insignificant.

Accordingly, on December 9, 2002, the Commissioner has made a final determination of dumping pursuant to paragraph 41(1)(a) of SIMA.

FUTURE ACTION

The Tribunal's inquiry concerning the question of injury to production in Canada is continuing. The Tribunal will issue its finding by January 8, 2003.

Subject goods imported during the provisional period will continue to be assessed provisional duty as determined at the time of the preliminary determination. The provisional period began on September 9, 2002, the date of the preliminary determination of dumping, and will end on the date on which the Tribunal issues its finding. Further information on the application of provisional duty is provided in the Statement of Reasons issued at the time of the preliminary determination, which can be found on the CCRA Web site at: www.cbsa-asfc.gc.ca/sima. If the Tribunal finds that the dumped goods have not caused injury or do not threaten to cause injury, all proceedings relating to the investigation will be terminated. In such a case, all provisional duty collected or security posted by importers will be returned and future imports of the subject goods will not be subject to anti-dumping duty.

If the Tribunal finds that the dumped goods have caused injury, the CCRA will finalize the anti-dumping duty payable on the subject goods released from Customs' possession during the provisional period, pursuant to section 55 of SIMA. Imports released from Customs' possession after the date of the Tribunal's findings will be subject to anti-dumping duty equal to the margin of dumping. In that event, the importer in Canada shall pay all such duty.

Specific normal values for the subject goods have been provided to those exporters who cooperated in the CCRA investigation. If the Tribunal makes an injury finding, these normal values will come into effect on the day after the date of the injury finding. Where specific normal values have not been issued, anti-dumping duty equal to the margins of dumping determined under section 30.3 of SIMA, as outlined in the Results of the Investigation section of this document, will be payable on imports 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

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 Web site below. For further information, please contact Mr. Robert Cousineau or Mr. Jody Grantham, as follows:

Canada Customs and Revenue Agency

Anti-dumping and Countervailing Directorate

19th Floor, Sir Richard Scott Building

191 Laurier Avenue West

Ottawa, Ontario K1A 0L5

Canada

Robert Cousineau - (613) 954-7243
Jody Grantham - (613) 954-7405

Fax: (613) 954-2510

Robert.Cousineau@ccra-adrc.gc.ca
Jody.Grantham@ccra-adrc.gc.ca

Web site www.cbsa-asfc.gc.ca/sima-lmsi/

 

Suzanne Parent

Director General
Anti-dumping and Countervailing Directorate

Appendix 1

CANADIAN MANUFACTURERS OF WATERPROOF FOOTWEAR

Association:

Shoe Manufacturers' Association of Canada

PO Box 223

Beaconsfield, QC H9W 5T7

Domestic Producers:

Acton International Inc.

881 Landry Street

Acton Vale, QC

J0H 1A0

Baffin Inc.

346 Arvin Avenue

Stoney Creek, ON

L8E 2M5

Chaussures Yeti Inc.

9935 St. Vital

Montreal-Nord, QC

H1H 4S5

Genfoot Inc.

554 Montée de Liesse

Montreal, QC

H4T 1P2

Les Chaussures Régence Inc.

655 de L'argon Street

Charlesbourg, QC

G2N 2G7

Rallye Footwear Inc.

10310 Ray Lawson Blvd.

Ville D'Anjou, QC

H1J 1M1

Appendix 2

SUMMARY OF FINAL DETERMINATION MARGINS OF DUMPING PER EXPORTER FOR CERTAIN WATERPROOF FOOTWEAR AND WATERPROOF FOOTWEAR BOTTOMS

Exporters	% of Dumped Goods	Range of Margins of Dumped Goods (% of Export Price)	Weighted Average Margin of Dumping (% of Export Price)
Hong Kong
Non-sampled exporters			25.6%
Non-cooperative sampled exporters			60.8%
Macao
Sunrise	100%	10.8% to 60.8%	25.5%
Non-sampled exporters			25.5%
Non-cooperative sampled exporters			60.8%
Vietnam
General Shoes Co. Ltd.	87.8%	0.4% to 31.9%	9.7%
Lac Ty Co. Ltd.	100%	6.5% to 46.3%	34.4%
Pou Yuen Vietnam Enterprise Ltd.	100%	4.1% to 17.1%	10.3%
Non-sampled exporters			25.7%
Non-cooperative sampled exporters			60.8%
All Other Countries
Non-sampled exporters			25.6%