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Final Determination - Steel Structural Tubing

OTTAWA, December 2, 2003

4258-122
AD1303

STATEMENT OF REASONS

Concerning the final determination of dumping pursuant to paragraph 41(1)(a) of the Special Import Measures Act regarding

CERTAIN STEEL STRUCTURAL TUBING KNOWN AS HOLLOW STRUCTURAL SECTIONS (HSS), ORIGINATING IN OR EXPORTED FROM THE REPUBLIC OF KOREA, SOUTH AFRICA AND TURKEY

DECISION

On November 17, 2003, pursuant to paragraph 41(1)(a) of the Special Import Measures Act, the Commissioner of Customs and Revenue made a final determination of dumping regarding structural tubing known as hollow structural sections (HSS), made of carbon and alloy steel, welded, in sizes up to and including 16.0 inches (406.4 mm) in outside diameter (O.D.) for round products and up to and including 48.0 inches (1219.2 mm) in periphery for rectangular and square products, commonly but not exclusively made to ASTM A500, ASTM A513, CSA G.40.21-87-50W and comparable specifications, originating in or exported from the Republic of Korea, South Africa and Turkey.

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• Summary of Events
• Period of Investigation
• Interested Parties

• Complainants
• Exporters
• Importers

• Product Information

• Product Definition
• Product Applications
• The Manufacturing Process
• Classification of Imports

• Canadian Industry
• Canadian Market
• The Investigation

• South Africa
• Turkey
• South Korea

• Summary of Results of the Investigation
• Decision
• Future Action
• Publication
• Information
• APPENDIX 1
  • Volumes of Dumping by Country for Hollow Structural Sections (HSS)
• APPENDIX 2
  • Margins of Dumping by Exporter/Country

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Summary of Events

[1] Following a number of discussions and meetings with the Canada Customs and Revenue Agency (CCRA), a formal complaint was submitted on behalf of Atlas Tube Inc. (Atlas), Copperweld Corporation (Copperweld), and Welded Tube of Canada Ltd. (Welded Tube of Canada), on April 7, 2003. The complaint alleged the injurious dumping into Canada of certain steel structural tubing known as hollow structural sections (HSS), originating in or exported from the Republic of Korea (South Korea), South Africa and Turkey.

[2] The CCRA informed the complainants on April 28, 2003, that the complaint was properly documented. The CCRA also notified the governments of South Korea, South Africa, and Turkey.

[3] On May 21, 2003, the Commissioner of Customs and Revenue (Commissioner) initiated an investigation respecting the alleged injurious dumping of certain steel structural tubing known as hollow structural sections (HSS), originating in or exported from South Korea, South Africa and Turkey.

[4] On receiving notice of the investigation, the Canadian International Trade Tribunal (Tribunal) started its preliminary injury inquiry. On July 21, 2003, 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. The CCRA subsequently made a preliminary determination of dumping on August 19, 2003, and levied provisional duty.

[5] The CCRA has now completed its investigation. The Commissioner is satisfied that the subject goods have been dumped and that the margins of dumping are not insignificant. Accordingly, on November 17, 2003, the Commissioner made a final determination of dumping in accordance with paragraph 41(1)(a) of the Special Import Measures Act (SIMA).

[6] The Tribunal's inquiry concerning the question of injury to the Canadian industry is continuing. Provisional duties will continue to be levied on importations of the subject goods from the named countries until the Tribunal issues its finding.

Period of Investigation

[7] The CCRA's dumping investigation examined imports of subject goods into Canada during the period of April 1, 2002 to March 31, 2003. This period is referred to as the period of investigation (POI).

Interested Parties

Complainants

[8] Atlas, Copperweld and Welded Tube of Canada, which are located in Ontario, represent three of the seven Canadian producers of the subject goods and account for approximately 74% of HSS production in Canada.

Exporters

[9] The CCRA's investigation confirmed that there were 20 exporters of subject goods during the POI.

Importers

[10] The CCRA's investigation confirmed that there were 14 importers of subject goods during the POI.

Product Information

Product Definition

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

Product Applications

[12] The goods are used in general construction for structural elements in buildings and bridges, as protective structures on heavy equipment and for other purposes such as highway railings and barriers and outdoor lighting. The goods may also be applied to non-structural uses in manufactured products, such as agricultural implements, trailers and racking and storage systems.

[13] The subject goods are not used for such things as automotive tubing for exhaust systems, bumpers and the like, which are typically made from tubing produced to specialized automotive specifications.

The Manufacturing Process

[14] Common to all welded HSS production is the transformation of hot-rolled sheet or strip into round, rectangular or square sections by a series of operations that include forming, welding and sizing. HSS is manufactured by moving hot-rolled sheet through a series of rolls into a round form. The rounded form is then welded, either by electrical-resistance welding (ERW) or continuous welding (CW) and left in either a round shape or is cold formed into a square or rectangular shape.

Classification of Imports

[15] The subject goods are properly classified under the following Harmonized System classification numbers:

7306.30.10.23   7306.30.10.33   7306.30.90.23
7306.30.90.29   7306.30.90.33   7306.50.00.30
7306.60.90.12   7306.60.90.22   7306.60.90.29

Canadian Industry

[16] There have been no changes in the structure of the Canadian industry since the investigation was initiated. The initial complainants, Atlas, Copperweld and Welded Tube of Canada represent three of the seven Canadian producers of the subject goods. However, during the preliminary injury inquiry conducted by the Tribunal, Novamerican Steel Inc. filed a notice of participation and has joined the other three producers in support for the complaint. The other HSS producers in Canada are: Bull Moose Tube Company, IPSCO Tubulars Inc., and Prudential Steel Ltd.

Canadian Market

[17] The Canadian producers sell HSS to steel service centres and fabricators. Steel service centres distribute HSS to building supply dealers and small construction companies. HSS producers also sell their products to fabricators, which cut, bend and install HSS on the construction site. The majority of the sales of HSS in the domestic market are attributable to purchases by service centres.

[18] The apparent Canadian market, consisting of domestic consumption of Canadian produced HSS and imports, has exceeded 500,000 tonnes in each of the last three years. The value of the apparent HSS market in Canada exceeds $300 million annually.

[19] In order to determine the Canadian import volumes, the CCRA reviewed customs entry documents for the subject goods to determine the value and volume of imports. For the POI, imports of South Korean, South African and Turkish origin accounted for 24.8 per cent of the total volume of HSS released into Canada from all countries.

The Investigation

[20] In conducting its investigation, the CCRA requested identified exporters and importers to respond to the CCRA's Request for Information (RFI) questionnaire. The RFI provides sales and costing information necessary for the CCRA to determine the normal values and export prices of the subject goods.

[21] Normal values are generally based on the domestic selling prices of the goods in the country of export or on the total cost of the goods (cost of production, administrative, selling and all other costs) plus an amount for profit. The export price of goods shipped to Canada is generally 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.

[22] The dumping investigation covered all subject goods released into Canada during the POI of April 1, 2002 to March 31, 2003.

[23] Two exporters located in Turkey and one exporter located in South Africa provided complete submissions in response to the RFI. The CCRA did not verify these submissions on-site prior to the preliminary determination, as they were considered to be an adequate basis for estimating the margins of dumping for this decision. Following the preliminary determination of dumping, CCRA officers conducted on-site verifications of the information previously submitted by the three exporters.

[24] In the case of South Korea, none of the exporters responded to the RFI. Since no information was received for the preliminary determination, the CCRA estimated the margin of dumping for the South Korean exporters to be the highest margin of dumping found on a sale of a product among the other exporters who co-operated in the investigation. Following the preliminary determination, the CCRA still received no information from the South Korean exporters, nor did any of the exporters express an interest in cooperating with the investigation. Accordingly, the margin of dumping for South Korean exporters was based on the highest margin of dumping found on a sale of a product at the final determination of dumping among the exporters who cooperated in the investigation.

[25] Where information submitted to the CCRA by exporters was verified and found to be reliable, such information was used in the calculating the margins of dumping. Margins of dumping were calculated for each separate product shipped to Canada by each exporter 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.

[26] In respect of each exporter, the overall margin of dumping of 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.

[27] In calculating the weighted average margin of dumping of a country, the overall margins of dumping found in respect of each exporter were weighted according to the volume of subject goods exported to Canada in the POI.

[28] Further details regarding the normal values, export prices and margins of dumping are discussed below.

[29] 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.

[30] The Commissioner recognizes South Africa and Turkey as developing countries for purposes of actions taken pursuant to the SIMA. In this particular investigation, this obligation was met by providing the opportunity for exporters to submit price undertakings. The CCRA did not receive any proposals for undertakings from any of the identified exporters prior to the final determination.

South Africa

[31] Barloworld Robor (Proprietary) Limited (Robor Tube) was the only company in South Africa to export subject goods to Canada during the POI. The company replied to the CCRA's Request for Information (RFI) and verification meetings were held at the company's premises in Johannesburg, South Africa, in September 2003.

Robor Tube

[32] Normal Value - Robor Tube provided a complete response to the CCRA's RFI and the company cooperated fully with the CCRA during the verification meetings and provided all information that was requested in a timely manner.

[33] Robor Tube provided the CCRA with information on all sales of like goods which were sold to more than one unrelated domestic customer, which were sold to the same trade level as the importer in Canada, and which were sold in substantially the same quantities as the quantities sold to the importer in Canada. Based on an analysis of these domestic sales, it was determined that, for a number of products in its domestic market, Robor Tube had a sufficient number of profitable sales to determine normal values pursuant to section 15 of SIMA. Normal values were based on the weighted average domestic selling prices of the like goods during the sixty-day periods adjacent to each sale made to Canada during the POI and included adjustments under the Special Import Measures Regulations (SIMR). These adjustments were made to the domestic selling prices in order to reflect quantity discounts pursuant to section 3 of the SIMR, differences in product characteristics pursuant to paragraph 5(a), trade discounts and settlement discounts pursuant to section 6, and delivery costs pursuant to section 8.

[34] For those products where there were not a sufficient number of acceptable sales of like goods in the domestic market, normal values were determined in accordance with paragraph 19(b) of SIMA, using the cost of production of the goods, an amount for administrative, selling, and all other costs, plus a reasonable amount for profit. An amount for profit was calculated in accordance with subparagraph 11(1)(b)(ii) of the SIMR, based on sales of goods in the domestic market that were of the same general category as the goods sold to the importer in Canada. Approximately 35 per cent of the normal values for Robor Tube products were determined using this method.

[35] Export Price - As the goods were sold to an unrelated importer in Canada, export prices were determined in accordance with section 24 of SIMA on the basis of the exporter's selling price to Canadian customers less all costs, charges and expenses resulting from the exportation of the goods to Canada.

[36] Margin of Dumping - During the POI, 100 per cent of the goods shipped to Canada by Robor Tube were found to be dumped by a weighted average margin of dumping of 52.6 per cent, expressed as a percentage of export price. The margins of dumping for the dumped goods range from 9.5 per cent to 88.7 per cent.

Summary

[37] In summary, 100 per cent of the goods imported into Canada from South Africa during the POI were found to be dumped by a weighted average margin of dumping of 55.4¹ per cent when expressed as a percentage of export price.

Turkey

[38] Submissions were received from two exporters located in Turkey - Goktas Yassi Hadde Mamulleri Sanayi ve Ticaret A.S. (Goktas) and MMZ Onur Boru Profil Uretim San. Ve Tic. A.S. (MMZ). Subsequent to the preliminary determination, verification meetings were held at both companies on their premises during September 2003 in Istanbul, Turkey.

Goktas

[39] Normal Value - Goktas provided a complete response to the CCRA's RFI and the company cooperated fully with the CCRA during the verification meetings and provided all information that was requested in a timely manner.

[40] During the verification meetings, it was revealed that there were a number of inconsistencies in the information submitted in response to the RFI. Notwithstanding the full cooperation of the company in the investigation, the factual information obtained during the verification indicated that the CCRA could not rely on submitted costs and sales data related to the domestic sales of like goods. As such, normal values could not be determined under sections 15 or 19 of SIMA. Therefore, the normal values for the subject good shipments during the POI were determined under a ministerial specification pursuant to section 29 of SIMA. In view of the fact that Goktas cooperated fully with the CCRA and provided all the requested information in a timely manner, the ministerial specification represents an advance over export price based on the average of the weighted average dumping margins of like goods as determined for the other cooperating exporters in the investigation.

[41] Export Price - As the goods were sold to unrelated importers in Canada, export prices were determined in accordance with section 24 of SIMA on the basis of the exporter's selling price to the Canadian customers less all costs, charges and expenses resulting from the exportation of the goods to Canada.

[42] Margin of Dumping - For the goods shipped to Canada by Goktas during the POI, the CCRA determined that 100 per cent of the goods were dumped by margin of dumping of 30 per cent, expressed as a percentage of export price.

MMZ

[43] Normal Value - MMZ provided a complete response to the CCRA's RFI and the company cooperated fully with the CCRA during the verification meetings and provided all information that was requested in a timely manner.

[44] MMZ provided the CCRA with information on all sales of like goods which were sold to more than one unrelated domestic customer, which were sold to the same trade level as the importers in Canada, and which were sold in substantially the same quantities as the quantities sold to the importers in Canada. Based on an analysis of these domestic sales, it was determined that, for a number of products, MMZ had a sufficient number of profitable sales to determine normal values pursuant to section 15 of SIMA. Normal values were based on the weighted average domestic selling prices for the like goods during the sixty-day periods adjacent to each sale made to Canada during the POI, and included an adjustment under paragraph 5(a) of SIMR for differences in product characteristics.

[45] For those products where there were not a sufficient number of acceptable sales of like goods in the domestic market, normal values were determined in accordance with paragraph 19(b) of SIMA, using the cost of production of the goods, an amount for administrative, selling, and all other costs, plus a reasonable amount for profit. An amount for profit was calculated in accordance with subparagraph 11(1)(b)(ii) of the SIMR based on sales of goods in the domestic market that are of the same general category as the goods sold to the importer in Canada. Nearly three-quarters of the normal values for MMZ products were determined under this method.

[46] Export Price - As the goods were sold to unrelated importers in Canada, export prices were determined in accordance with section 24 of SIMA on the basis of the exporter's selling price to the Canadian customers less all costs, charges and expenses resulting from the exportation of the goods to Canada.

[47] Margin of Dumping - During the POI, 41 per cent of the goods shipped to Canada by MMZ were found to be dumped by a weighted average margin of dumping of 6.9 per cent, expressed as a percentage of export price. The margins of dumping for the dumped goods range from 0.9 per cent to 43.3 per cent.

Summary

[48] In summary, 67.9 per cent of the goods imported into Canada from Turkey during the POI were dumped by a weighted average margin of dumping of 17.5² per cent expressed as a percentage of export price.

South Korea

[49] No submissions were received from any of the exporters located in South Korea prior to or following the preliminary determination of dumping. For subject goods shipped during the POI, originating in or exported from South Korea, the normal values were determined under a ministerial specification pursuant to section 29 of SIMA and represent an advance over export price based the highest margin of dumping found on a sale of a product exported to Canada by a cooperating exporter during the POI. The export prices for South Korean shipments during the POI were based on the declared selling prices found on the customs entry documentation. The CCRA determined that 100 per cent of the goods were dumped by margin of dumping of 89 per cent, expressed as a percentage of export price.

Summary of Results of the Investigation

[50] During the POI, 90.2 per cent of all subject goods imported into Canada were determined to have been dumped. The weighted average margin of dumping for all subject goods is 57.7 per cent when expressed as a percentage of export price. The volume of dumped goods per country can be seen in Appendix 1.

[51] For purposes of the preliminary determination of dumping, the Commissioner 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 inquiry in respect of any goods if the Tribunal determines that the volume of dumped goods from a country is negligible.

[52] 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 the SIMA stipulates that the margin of dumping is insignificant if it is less than two per cent of the export price of the goods. As shown in Appendix 2, the margins of dumping exceed the two per cent threshold.

Decision

[53] Based on the results of the investigation, the Commissioner is satisfied that the subject goods imported into Canada originating in or exported from South Korea, South Africa, and Turkey have been dumped and that the margins of dumping are not insignificant.

[54] Accordingly, on November 17, 2003, the Commissioner made a final determination of dumping pursuant to paragraph 41(1)(a) of the SIMA.

Future Action

[55] The Canadian International Trade Tribunal's inquiry concerning the question of injury to the domestic industry is continuing.

[56] 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 duties, refer to the Statement of Reasons issued at the time of the preliminary determination of dumping, on the CCRA internet web site at: www.cbsa-asfc.gc.ca/sima.

[57] The Tribunal will issue its finding on the question of injury by December 23, 2003.

[58] 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 or security posted by importers will be returned.

[59] If the Tribunal finds that the dumped goods have caused injury, the CCRA will finalize the anti-dumping duty payable on 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 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. The Customs Act applies, with any modification that the circumstances require, with respect to the accounting and payment of the anti-dumping duty.

Publication

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

Information

[61] This Statement of Reasons has been provided to persons directly interested in these proceedings. It is also posted at the Directorate's Internet website at the address below. For further information, please contact Pat Mulligan or Matthew Lerette as follows:

Mail:	Canada Customs and Revenue Agency Anti-dumping and Countervailing Directorate 191 Laurier Avenue West, 10th Floor Ottawa, Ontario Canada K1A 0L5
Telephone:	Pat Mulligan: (613) 952-6720 Matthew Lerette: (613) 954-7398
Telefax:	(613) 948-4844
Email:	Pat.Mulligan@cbsa-asfc.gc.ca Matthew.Lerette@cbsa-asfc.gc.ca
Website:	www.cbsa-asfc.gc.ca/sima-lmsi/menu-eng.html

Suzanne Parent
Director General

Anti-dumping and Countervailing Directorate

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APPENDIX 1

Volumes of Dumping by Country for Hollow Structural Sections (HSS)

Country	Percentage of Dumped Goods	Dumped Goods as a Percentage of Total Imports
Republic of Korea	100%	10.2%
South Africa	100%	7.1%
Turkey	67.9%	5.1%
Total - Named Countries	90.2%	22.4%

APPENDIX 2

Margins of Dumping by Exporter/Country

(April 1, 2002 to March 31, 2003)

Country	% of Dumped Goods	Range of Margins of Dumping of Dumped Imports (% of Export Price)	Weighted Average Margin of Dumping (% of Export Price)
Republic of Korea
All Exporters(1)	100%	N/A	89.0%
Country Total/Average	100%		89.0%
South Africa
Barloworld Robor (Pty) Ltd.	100%	9.5% - 88.7%	52.6%
Country Total/Average(2)	100%		55.4%
Turkey
Goktas Yassi Hadde Mamulleri Sanayi ve Tacaret A.S.	100%	N/A	30.0%
MMZ Onur Boru Profil Uretim Sanyii Ve Ticaret	41.0%	0.9% - 43.3%	6.9%
Country Total/Average(2)	67.9%		17.5%
All Subject Countries	90.2%	0.9% - 88.7%	57.7%

⁽¹⁾ Margin of dumping represents the highest margin of dumping found on a sale of a product for a cooperative exporter in this investigation.

⁽²⁾ Country Total/Average figures include goods originating in a subject country but exported from a non-subject country.

1 This figure includes goods that originated in South Africa but that were exported from another, non-subject, country.

2 This figure includes goods that originated in Turkey but that were exported from another, non-subject, country.