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OTTAWA, August 18, 2004
4264-62
AD/1298
STATEMENT OF REASONS
Concerning the final determination of dumping pursuant to
paragraph 41(1)(a) of the Special Import Measures Act regarding
CERTAIN STEEL FUEL TANKS
ORIGINATING IN OR EXPORTED FROM
THE PEOPLE'S REPUBLIC OF CHINA AND CHINESE TAIPEI
DECISION
On August 3, 2004, pursuant to paragraph 41(1)(a) of the Special Import Measures Act, the President of the Canada Border Services Agency made a final determination of dumping respecting new steel fuel tanks, gasoline or diesel, for passenger cars and light trucks, for the replacement market, originating in or exported from the People's Republic of China and Chinese Taipei.
Cet énoncé des motifs est également disponible en français. Veuillez vous reporter à la section "Renseignements".
This Statement of Reasons is also available in French. Please refer to the "Information" section.
TABLE OF CONTENTS
REPRESENTATIONS CONCERNING THE INVESTIGATION
- Summary of Margins of Dumping
[1] On December 19, 2003, the President of the Canada Border Services Agency (President) initiated an investigation into the alleged injurious dumping of certain steel fuel tanks originating in or exported from the People's Republic of China (China) and Chinese Taipei. The investigation was initiated in response to a complaint filed by Spectra Premium Industries Inc. (SPI). Upon receiving notice of the initiation of the investigation, the Canadian International Trade Tribunal (Tribunal) started its preliminary injury inquiry.
[2] On February 17, 2004, the Tribunal made a preliminary determination that the evidence disclosed a reasonable indication that the dumping of the subject goods had caused injury to the Canadian industry.
[3] On March 16, 2004, the President made a decision to extend the 90-day period for making a preliminary decision in the investigation to 135 days, due to the complexity of the issues presented by the investigation.
[4] As a result of the Canada Border Services Agency's (CBSA) preliminary investigation, on May 3, 2004, the President made a preliminary determination of dumping respecting certain steel fuel tanks originating in or exported from China and Chinese Taipei, pursuant to subsection 38(1) of the Special Import Measures Act (SIMA).
[5] The CBSA continued its investigation and, on the basis of the results, the President is satisfied that the subject goods have been dumped and that the margins of dumping are not insignificant. Consequently, on August 3, 2004, the President made a final determination of dumping pursuant to paragraph 41(1)(a) of SIMA.
[6] The Tribunal's inquiry into the question of injury to the Canadian industry is continuing. Provisional duty will continue to be levied on importations of the subject goods until the Tribunal renders its decision. The Tribunal will issue its finding by August 31, 2004.
[7] The investigation covered all subject goods that were released into Canada during the period of investigation (POI), from September 1, 2002 to August 31, 2003.
[8] The name and address of the complainant is:
Spectra Premium Industries Inc.
1421 Ampère Street
Boucherville, Quebec
J4B 5Z5
[9] The CBSA's investigation confirmed that four exporters were involved in exporting subject goods to Canada during the POI. Responses to the CBSA's requests for information (RFI) were received from one Chinese exporter and two exporters in Chinese Taipei. However, of the three exporters that submitted a response, only the exporter in China, Zhongshan Tianyi Auto Parts and Hardware Works (Tianyi), provided one that was timely and complete. The fourth exporter, a United States (U.S.) vendor of goods that originated in Chinese Taipei, did not respond to the CBSA's questionnaire.
[10] The CBSA's investigation confirmed that there were 14 importers of the subject goods into Canada during the POI. In the preliminary phase of the investigation, seven importers had provided a response to the CBSA's RFI. No additional responses were received after the preliminary determination.
[11] For the purpose of this investigation, the subject goods were defined as:
New steel fuel tanks, gasoline or diesel, for passenger cars and light trucks, for the replacement market, originating in or exported from the People's Republic of China and Chinese Taipei.
[12] For purposes of this investigation, passenger cars and light trucks include such vehicles as sport utility vehicles, minivans and pick-up trucks.
[13] For purposes of this investigation, "replacement market" excludes fuel tanks for the original equipment manufacturer (OEM) market, which in this case refers to automobile manufacturers.
[14] Fuel tanks for the replacement market and the OEM market are manufactured using different processes and standards. For example, manufacturing steel fuel tanks for OEMs requires QS9000 certification, special welding equipment, and a very low defect rate. Steel fuel tanks made for the replacement market are not subject to those standards.
[15] In addition, OEM fuel tanks are usually manufactured for the current model year. Fuel tanks for the replacement market are made for earlier model years (the average age of replacement for a fuel tank is 10 years) and may not fit and function on the same make and model of car for more current model years.
[16] New steel fuel tanks for the replacement market are used to replace damaged fuel tanks on used vehicles, and are available in many different models. The complainant produces more than 500 models of fuel tanks for the replacement market. Each model of fuel tank is designed to fit inside a specific make and model of passenger car or light truck.
[17] In addition to a steel fuel container, a steel fuel tank usually includes the following components: filler neck, baffle, bowl and vent. For the North American market, the steel used in fuel tanks may have a corrosion-resistant characteristic.
[18] The production of fuel tanks for the replacement market begins with the development of product specifications. For the vast majority of these fuel tanks, the producer does not have the original vehicle manufacturer's specifications. The Canadian producer, SPI, must develop specifications for a replacement fuel tank based on its analysis of the original fuel tank that was installed in a new vehicle.
[19] The steel sheets used in production of fuel tanks for the replacement market are ordered as pre-cut sheets according to the specifications of each model. The manufacturing process begins with the pressing of a half-tank pre-cut sheet (upper and bottom) using specially designed moulds for each model in the presser. Holes are then punched in the steel, which permits components to be inserted. The two half-tanks are assembled together using a manual spot welding process, and certain components are soldered to the fuel tanks.
[20] Finally, a bending machine is used to give the fuel tanks a final shape. Afterward, each tank is tested, boxed and placed in the warehouse ready for distribution.
[21] The following is the specific 10-digit Harmonized System classification number under which the subject goods are properly classified:
8708.99.93.90
[22] The above classification number includes the subject goods, but it is not specific to the subject goods. As this classification number also includes other parts for automobiles, it is not possible for Statistics Canada to produce electronic data specific to the subject goods. Therefore, no public information is available with regard to imports of subject goods.
[23] There has been no change in the structure of the Canadian industry since the initiation of this investigation. SPI is the only known Canadian producer of new steel fuel tanks, gasoline or diesel, for passenger cars and light trucks, for the replacement market.
[24] Like goods, in relation to any other goods, are goods that are identical in all respects to the other goods. In the absence of identical goods, like goods are goods for which the uses and characteristics closely resemble those of the other goods.
[25] The CBSA is unable to release specific market figures for sales of like goods in Canada, as this would result in the release of confidential information with regard to the sole Canadian producer.
[26] In order to determine the Canadian import volumes, the CBSA reviewed customs entry documents for the subject goods to determine the value and volume of imports. The CBSA is unable to release specific import figures, as this would result in the release of confidential information relating to the sole Chinese exporter and the two exporters located in Chinese Taipei.
[27] In conducting its investigation, the CBSA requested identified exporters and importers to provide sales and cost information necessary to determine normal values and export prices for the subject goods. This information was requested through questionnaires issued by the CBSA. The deadline for receipt of complete responses to these questionnaires was January 26, 2004.
[28] The investigation involved all of the subject goods released into Canada from customs control during the POI.
[29] A response to the CBSA's questionnaire was received from Sparkle Developments Limited (Sparkle) on January 26, 2004. Sparkle acts as a vendor and sales agent of subject goods originating in China.
[30] The response from Sparkle included information pertaining to three other companies, as detailed below:
|
Company Name |
Location |
|---|---|
|
Zhongshan Tianyi Auto Parts and Hardware Works |
China |
|
Mintar International Corporation |
Chinese Taipei |
|
Mintar Auto Industries Company Limited |
Hong Kong |
[31] Together, Sparkle and the three companies listed above, are hereinafter collectively referred to as the "Mintar Group". Within the Mintar Group, Tianyi operated as the manufacturer and exporter of the subject goods to Canada. The two remaining companies were involved in the production and sale of the subject goods.
[32] On February 10, 2004, the CBSA informed the Mintar Group that its questionnaire response was incomplete, and provided a list of deficiencies. The outstanding information was subsequently provided. Verification of this information was conducted at the Mintar Group's premises in Hong Kong and Zhongshan, China, between March 26 and April 1, 2004.
[33] The CBSA also received a questionnaire response from Jesse Lai Incorporation (Jesse Lai) of Chinese Taipei on March 4, 2004. Jesse Lai is a vendor and sales agent of subject goods originating in Chinese Taipei.
[34] On April 13, 2004, a submission was received from Chyuan Chang Industrial Co., Ltd. (Chyuan Chang) of Chinese Taipei. Chyuan Chang is the producer and exporter of the goods sold by Jesse Lai. Chyuan Chang's response was not received in time for analysis and verification prior to the preliminary determination. Subsequent to the preliminary determination, the CBSA continued to correspond with representatives for Chyuan Chang in order to obtain the information necessary to be taken into consideration for the final phase of the investigation. However, the information provided by Chyuan Chang was deemed to be incomplete, and therefore, could not be verified or considered for the purpose of making a final determination.
[35] A limited response to the CBSA's questionnaire was received from Golden Legion Automotive Corp. of Chinese Taipei on January 30, 2004. The CBSA has deemed this response to be incomplete, and no further information has been provided. In addition, the producer of the goods involved, Lioho Machine Work, Ltd., declined to provide a detailed response to the questionnaire. As such, this information could not be considered for the purpose of this investigation.
[36] The U.S. exporter of goods originating in Chinese Taipei did not respond to the CBSA's questionnaire.
[37] Responses to the CBSA's questionnaire were also received from seven importers of subject goods, as follows:
|
Importer Name |
Location |
|---|---|
|
Cancore Industries |
Hamilton, Ontario |
|
Capital & Dominion Radiator |
Ottawa, Ontario |
|
Cross Canada Auto Body Supply |
Windsor, Ontario |
|
Kingdom Auto Parts |
Stittsville, Ontario |
|
MCL Heat Transfer Products Inc. |
Milton, Ontario |
|
Raco Management Co. Ltd. |
Truro, Nova Scotia |
|
Spectra Premium Industries Inc. |
Boucherville, Quebec |
[38] Under Article 15 of the WTO Anti-dumping Agreement, developed countries are to give regard to the special situation of developing country members when considering the application of anti-dumping measures under the Agreement. Possibilities of constructive remedies provided for under the Agreement are to be explored before applying anti-dumping duty where they would affect the essential interests of developing country members.
[39] As China is listed under Part 1 of the DAC List of Aid Recipients1 maintained by the Organization for Economic Co-operation and Development (OECD), the President recognizes China as a developing country for purposes of actions taken pursuant to SIMA. In this particular investigation, this obligation was met by providing the opportunity for exporters to submit price undertakings. The CBSA did not receive any proposals for undertakings from any of the identified exporters prior to the final determination.
[40] Normal values are generally based on the domestic selling price of the goods in the country of export or on the full cost of the goods plus a reasonable amount for profits. The export price is generally the lesser of the importer's purchase price and the exporter's selling price to Canada less all charges and expenses resulting from the exportation of the goods. When the export price is less than the normal value, the difference is the margin of dumping. Further details regarding the normal values, export prices and margins of dumping are discussed below.
Zhongshan Tianyi Auto Parts and Hardware Works
[41] The information submitted to the CBSA by Tianyi, the only exporter to submit a timely and complete response, was verified and used to calculate margins of dumping for each product shipped to Canada by Tianyi. All subject goods originating in China were produced at and shipped to Canada from Tianyi's production facility in Zhongshan City, China.
[42] Margins of dumping for each of the products exported by Tianyi were determined by subtracting the total export price from the total normal value of all of the sales made to Canada. As such, any sales made at undumped prices reduced the overall margin of dumping found for that particular product.
[43] In respect of Tianyi, the overall margin of dumping for all of the products was calculated by weighting the margins found for each product according to the volume exported to Canada. In making this calculation, the margin of dumping for any product that was not dumped (that had an overall negative margin of dumping) was set to zero.
Normal Value
[44] Neither Tianyi or any of the three aforementioned companies comprising the
Mintar Group had sales of goods for use in the Chinese domestic market. As a result, normal values were determined using the method set out in paragraph 19(b) of SIMA, based on the aggregate of (i) the cost of production of the goods, (ii) a reasonable amount for administrative, selling and all other costs, and (iii) a reasonable amount for profits.
[45] The cost of production of the goods and amounts for administrative, selling and all other costs were determined based on costing information submitted by the Mintar Group. Adjustments were made by the CBSA where warranted.
[46] The provisions for determining a reasonable amount for profits are set out in the Special Import Measures Regulations (SIMR). The regulations provide a hierarchy of methods for determining a reasonable amount for profits, based on the sale of goods in the exporter's domestic market.
[47] However, for Tianyi, sufficient information is unavailable to determine a reasonable profit amount in this manner, due to the fact that there are no domestic sales of like goods by Tianyi, and substitutable domestic sales and costing information is not available from any other company in China. Consequently, normal values were determined under ministerial specification, in accordance with section 29 of SIMA.
[48] Under the ministerial specification, normal values were determined using the methodology of paragraph 19(b) of SIMA, with the exception of the reasonable amount for profits. The amount for profits used in constructing the normal value was the weighted average net operating profit made by five companies involved in the automotive industry in China, as listed below:
- Shanghai Automotive Co., Ltd.
- Guizhou Guihang Automotive Components Co., Ltd.
- Dongfeng Automobile Co., Ltd.
- Chongqing Changan Automobile Company Limited
- Chang-Chun Faw Sihuan Automobile Co., Ltd.
[49] Information relating to operating profits for these companies was obtained from the public web site of the Shanghai Stock Exchange2. Based on this information, the amount of profit determined for use in calculating normal values for Tianyi was equal to 11.9% of total operating costs.
[50] At the time of the preliminary determination, the CBSA estimated the amount for profit according to subparagraph 11(1)(b)(vi) of the SIMR. The method of calculation was identical to the method presented in paragraphs 48 and 49 above, and the resulting amount for profit was the same as has been calculated for the final determination. However, subsequent to the preliminary determination, it was found that the five companies listed above in paragraph 48 may not exclusively sell in the country of export as is required by paragraph 11(1)(b) of the SIMR. As a result, for purposes of the final determination, the amount for profit was determined using a ministerial specification pursuant to section 29 of SIMA.
[51] Normal values for Tianyi were determined based on the aggregate of Tianyi's cost of production of the goods, including administrative and selling expenses, plus an amount for profits determined under ministerial specification in the manner described above.
Export Price
[52] As the goods were sold to unrelated importers in Canada, export prices were determined pursuant to paragraph 24(a) of SIMA, based on the exporter's selling price.
[53] For each sale to Canada, the exporter's selling price was deemed to be the price of the first sale transaction made by the Mintar Group to the importer in Canada. Amounts for inland freight and port charges in China were deducted from the exporter's selling price, pursuant to subparagraph 24(a)(iii) of SIMA. The calculations made for export prices for the final determination were the same as at the preliminary determination.
Margins of Dumping
[54] During the period of investigation, 96.1% of Tianyi's exports to Canada were dumped by a weighted average margin of dumping of 39.4%, when expressed as a percentage of export price. The margins of dumping range from 0.3% to 83.4%, when expressed as a percentage of export price. The margins of dumping for the final determination were the same as at the preliminary determination.
[55] Before the preliminary determination, exporter Chyuan Chang and its vendor provided a partial response to the questionnaire of the CBSA. Subsequent to the preliminary determination, both companies provided additional information. However, certain necessary cost information was not provided in time to be considered for the final determination.
[56] Subsequent to the preliminary determination, no additional information was provided by either of the other two exporters of Chinese Taipei goods.
[57] In the absence of complete or timely responses from the exporters of subject goods that originated in Chinese Taipei, margins of dumping were determined pursuant to a ministerial specification under section 29 of SIMA. The ministerial specification determines normal values on the basis of an advance over export price, in an amount equal to the highest margin of dumping found for the only cooperative exporter during the investigation. The highest margin of dumping is equal to 83.4%, when expressed as a percentage of export price.
[58] As a result, 100% of the goods sold by the two exporters in Chinese Taipei were dumped by a weighted average margin of dumping of 83.4%, when expressed as a percentage of export price. The margin of dumping of 83.4% also applies to the Chinese Taipei goods that were exported from the U.S. during the POI, due to the fact that this exporter did not provide a response to the CBSA's questionnaire. The margins of dumping at the final determination for goods originating in Chinese Taipei were the same as at the preliminary determination.
[59] The results of the investigation indicate that 98.1% of the subject goods imported into Canada during the period of investigation were dumped by an overall weighted average margin of dumping of 61.7%, when expressed as a percentage of export price. The attached Appendix summarizes the margins of dumping found in the investigation.
[60] For purposes of the preliminary determination of dumping, the President has responsibility for determining whether the actual or 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 injury inquiry in respect of any goods if the Tribunal determines that the volume of dumped goods from a country is negligible.
[61] In making a final determination of dumping, the President 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% of the export price of the goods. As illustrated in the attached Appendix, the subject goods originating in or exported from the two named countries were dumped and the margins of dumping were not insignificant.
REPRESENTATIONS CONCERNING THE INVESTIGATION
[62] In response to the CBSA's preliminary determination, counsel for Tianyi and its related companies submitted case arguments to the CBSA on June 9, 2004. In it's submission, Tianyi argues that the calculated dumping margins need to be revised downwards in the final determination. It presents six arguments to support this revision.
[63] However, there is no information on the investigation record to support these arguments. The information before the CBSA supports the calculations presented at the preliminary determination. Consequently, the calculated dumping margins will not be adjusted.
[64] It should also be noted that on June 21, 2004, the CBSA received a submission from the complainant refuting all six arguments.
[65] Based on the results of the investigation, the President is satisfied that certain steel fuel tanks originating in or exported from the People's Republic of China and Chinese Taipei have been dumped, and that the margins of dumping are not insignificant. Accordingly, on August 3, 2004, the President made a final determination of dumping pursuant to paragraph 41(1)(a) of SIMA.
[66] The Tribunal's inquiry concerning the question of injury to the domestic industry is continuing. The Tribunal will issue its decision by August 31, 2004.
[67] The provisional period began on May 3, 2004, and will end on the date the Tribunal issues it's finding. 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. For further details on the application of provisional duty, refer to the Statement of Reasons issued for the preliminary determination of dumping, which is available on the CBSA Web site at www.cbsa-asfc.gc.ca/sima-lmsi/menu-eng.html.
[68] If the Tribunal finds that the dumped goods have not caused injury and do not threaten to cause injury, all proceedings relating to this investigation will be terminated. In this situation, all provisional duty paid or security posted by importers will be returned.
[69] If the Tribunal finds that the dumped goods have caused injury, the anti-dumping duty payable on subject goods released from customs possession during the provisional period will be finalized, pursuant to section 55 of SIMA. 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. In that event, the importer in Canada shall pay all such duty. If the importers of such goods do not indicate the required SIMA code or do not correctly describe the goods in the customs documents, an administrative monetary penalty could be imposed. The provisions of the Customs Act apply with respect to the payment, collection or refund of any duty collected under SIMA. As a result, failure to pay duties within the prescribed time will result in the application of interest.
[70] A notice of this final determination of dumping is being published in the Canada Gazette pursuant to paragraph 41(3)(a) of SIMA.
[71] This Statement of Reasons has been posted on the Directorate's Web site at the address below. For further information, please contact Jody Grantham or Hugh Marcil, as follows:
|
|
Canada Border Services Agency |
|---|---|
|
Telephone |
Jody Grantham (613) 954-7405 Hugh Marcil (613) 941-6340 |
|
Fax |
(613) 941-2612 |
|
|
Jody.Grantham@ccra-adrc.gc.ca Hugues.Marcil@ccra-adrc.gc.ca |
Web site www.cbsa-asfc.gc.ca/sima
Suzanne Parent
Director General
Anti-Dumping and Countervailing Directorate
Summary of Margins of Dumping
(from September 1, 2002 to August 31, 2003)
|
Country |
% of Goods Dumped |
Range of Margins of Dumping (% of Export Price) |
Weighted Average Margin of Dumping (% of Export Price) |
|---|---|---|---|
|
People's Republic of China - Zhongshan Tianyi Auto Parts and Hardware Works |
96.1% |
0.3% - 83.4% |
39.4% |
|
Chinese Taipei - Chyuan Chang Industrial Co. Ltd. |
100% |
83.4% |
|
|
Chinese Taipei - Golden Legion Automotive Corp. |
100% |
83.4% |
|
|
Chinese Taipei - Merchants Auto Parts |
100% |
83.4% |
|
|
Total |
98.1% |
61.7% |
1 OECD, DAC List of Aid Recipients - As at 1 January 2003, online: http://www.oecd.org/dataoecd/35/9/2488552.pdf
2 Shanghai Stock Exchange, online: http://www.sse.com.cn/sseportal/ps/zhs/home.shtml
