HP 2020 IN: Heavy plate
Statement of Reasons—final determination

Decision

Ottawa, January 22, 2021

On January 7, 2021, pursuant to paragraph 41(1)(a) of the Special Import Measures Act (SIMA), the Canada Border Services Agency (CBSA) terminated the dumping investigation in respect of certain hot-rolled carbon steel heavy plate and high-strength low-alloy heavy plate exported to Canada from the Republic of Turkey by Ereğli Demir ve Çelik Fabrikaları T.A.Ş.

On the same date, pursuant to paragraph 41(1)(b) of SIMA, the CBSA made a final determination of dumping of certain hot-rolled carbon steel heavy plate and high-strength low-alloy heavy steel plate from the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei) and the Federal Republic of Germany.

Summary of events

[1] On April 6, 2020, the Canada Border Services Agency (CBSA) received a written complaint from Algoma Steel Inc. (Algoma) (hereinafter, “the complainant”), alleging that imports of certain hot-rolled carbon steel heavy plate and high-strength low-alloy heavy steel plate (heavy plate) from the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), the Federal Republic of Germany (Germany), the Republic of Korea (South Korea), the Federation of Malaysia (Malaysia), and the Republic of Turkey (Turkey) (hereafter “the named sources”) are being dumped. The complainant alleged that the dumping has caused injury and is threatening to cause injury to the Canadian industry producing like goods.

[2] On April 27, 2020, pursuant to paragraph 32(1)(a) of the Special Import Measures Act (SIMA), the CBSA informed the complainant that the complaint was properly documented. The CBSA also notified the governments of Chinese Taipei, Germany, Malaysia, South Korea and Turkey that a properly documented complaint had been received.

[3] The complainant provided evidence to support the allegations that heavy plate from the named sources has been dumped. The evidence also discloses a reasonable indication that the dumping has caused injury and is threatening to cause injury to the Canadian industry producing like goods.

[4] On May 27, 2020, pursuant to subsection 31(1) of SIMA, the CBSA initiated an investigation respecting the dumping of heavy plate from Chinese Taipei, Germany, Malaysia, South Korea, and Turkey.

[5] Upon receiving notice of the initiation of the investigation, the Canadian International Trade Tribunal (CITT) commenced a preliminary injury inquiry, pursuant to subsection 34(2) of SIMA, into whether the evidence discloses a reasonable indication that the alleged dumping of the above-mentioned goods has caused injury or retardation or is threatening to cause injury to the Canadian industry producing the like goods.

[6] On July 27, 2020, pursuant to subsection 37.1(1) of SIMA, the CITT made a preliminary determination that there is evidence that discloses a reasonable indication that the dumping of heavy plate from the named sources has caused injury or retardation or is threatening to cause injury to the domestic industry.

[7] On August 18, 2020 the CBSA notified interested parties that the preliminary stage of the investigation will be extended pursuant to subsection 39(1) of SIMA.

[8] On October 9, 2020, as a result of the CBSA’s preliminary investigation and pursuant to subsection 38(1) of SIMA, the CBSA made a preliminary determination of dumping of heavy plate from Chinese Taipei, Germany, and Turkey.

[9] On October 9, 2020, pursuant to paragraph 35(2)(a) of SIMA, the CBSA terminated the dumping investigation with respect to heavy plate originating in or exported from Malaysia and South Korea. The volume of subject goods imported during the period of investigation from Malaysia and South Korea were found to be negligible for the purposes of SIMA (i.e. less than 3% of volume of imported goods).

[10] On October 9, 2020, pursuant to subsection 8(1) of SIMA, provisional duty was imposed on imports of dumped goods that are of the same description as any goods to which the preliminary determination applies, and that are released during the period commencing on the day the preliminary determination was made and ending on the earlier of the day on which the CBSA causes the investigation in respect of any goods to be terminated pursuant to subsection 41(1) of SIMA or the day the CITT makes an order or finding pursuant to subsection 43(1) of SIMA.

[11] On October 13, 2020, the CITT initiated an inquiry pursuant to section 42 of SIMA to determine whether the dumping of the above-mentioned goods has caused injury or retardation or is threatening to cause injury to the Canadian industry.

[12] Based on the available evidence, the CBSA is satisfied that heavy plate originating in or exported from Turkey by Ereğli Demir ve Çelik Fabrikaları T.A.Ş. (Erdemir) has not been dumped. As a result, on January 7, 2021, the CBSA terminated the dumping investigation in respect of the goods of this exporter pursuant to paragraph 41(1)(a) of SIMA.

[13] Based on the available evidence, the CBSA is satisfied that heavy plate originating in or exported from Chinese Taipei and Germany has been dumped. Therefore, on January 7, 2021 the CBSA made a final determination of dumping pursuant to paragraph 41(1)(b) of SIMA in respect of those goods.

[14] The CITT’s inquiry into the question of injury to the Canadian industry is continuing, and it will issue its decision by February 5, 2021. Provisional duty will continue to be imposed on the subject goods from Chinese Taipei and Germany until the CITT renders its decision. However, provisional anti-dumping duty will no longer be imposed on imports of goods for which the dumping investigation has been terminated. Any provisional duty paid or security posted will be refunded, as appropriate.

Period of investigation

[15] The Period of Investigation (POI) for the dumping investigation is March 1, 2019 to February 29, 2020.

Profitability analysis period

[16] The Profitability Analysis Period (PAP) for the dumping investigation is March 1, 2019 to February 29, 2020.

Interested parties

Product information

Like goods and class of goods

[40] Subsection 2(1) of SIMA defines “like goods” in relation to any other goods as goods that are identical in all respects to the other goods, or in the absence of any identical goods, goods the uses and other characteristics of which closely resemble those of the other goods.

[41] In considering the issue of like goods, the CITT typically looks at a number of factors, including the physical characteristics of the goods, their market characteristics and whether the domestic goods fulfill the same customer needs as the subject goods.

[42] After considering questions of use, physical characteristics and all other relevant factors, the CBSA initiated its investigation under the premise that domestically produced heavy plate is like goods to the subject goods. Further, the CBSA was of the opinion that subject goods and like goods constitute only one class of goods.

[43] In its preliminary injury inquiry for this investigation, the CITT further reviewed the matter of like goods and classes of goods. On August 11, 2020, the CITT issued its preliminary inquiry Statement of Reasons for this investigation, indicating that it would “[…] conduct its analysis on the basis that domestically produced heavy plate that is of the same description as the subject goods are “like goods” in relation to the subject goods” and additionally, “[…] that there is a single class of goods.”^{Footnote 9}

The Canadian industry

[44] The complainant, combined with the other supporting producers, account for the vast majority of the domestic production of like goods.

Imports into Canada

[45] During the final phase of the investigation, the CBSA refined the volume and value of imports based on information from CBSA import entry documentation and other information received from exporters and importers.

[46] The following table presents the results of the CBSA’s analysis of imports of heavy plate for purposes of the final determination:

Investigation process

[47] Regarding the dumping investigation, information was requested from all known and potential exporters, producers, vendors and importers, concerning shipments of heavy plate exported from the named sources and/or imported into Canada during the POI.

[48] Regarding the PMS allegation, information was requested from the GOT. As well, the RFI sent to all potential exporters/producers of subject goods in Turkey included questions related to PMS.

[49] The GOT and the exporters/producers were notified that failure to submit all required information and documentation, including non-confidential versions, failure to comply with all instructions contained in the RFI, failure to permit verification of any information or failure to provide documentation requested during the verification may result in the margins of dumping and the assessment of anti-dumping duties on subject goods being based on facts available to the CBSA. Further, they were notified that a determination on the basis of facts available could be less favorable to them than if complete, verifiable information was made available.^{Footnote 10}

[50] Several parties requested an extension to respond to their respective SRFIs. The CBSA reviewed all requests and all exporters and governments that requested an extension were granted an extension that still provided CBSA adequate time to review their responses for purposes of the preliminary determination of the investigations.

[51] After reviewing the RFI responses, supplemental SRFIs were sent to several responding parties to clarify information provided in the responses and request additional information, where necessary.

[52] Verifications were conducted by way of Verification Questionnaires for one exporter in each Chinese Taipei, Germany and Turkey.

[53] Details pertaining to the information submitted by the exporters in response to the Dumping RFI as well as the results of the CBSA’s dumping investigation, including the PMS, are provided in the Dumping investigation section of this document.

[54] As part of the final phase of the investigation, case arguments were received in the form of additional submissions on the administrative record and/or in case briefs from counsel representing the following parties: the complainant, SSAB, Erdemir, CSC, and Dillinger Hütte. The CBSA received reply submissions on behalf of the complainant, Erdemir, CSC, and Dillinger Hütte. Details of the representations are provided in Appendix 2.

Dumping investigation

Results of the dumping investigation

Decisions

[116] Pursuant to paragraph 41(1)(a) of SIMA, on January 7, 2021, the CBSA terminated the dumping investigation with respect to heavy plate exported to Canada from Turkey by Erdemir. On the same date, pursuant to paragraph 41(1)(b) of SIMA, the CBSA made a final determination of dumping respecting heavy plate from Chinese Taipei and Germany.

Future action

[117] The provisional period began on October 9, 2020, and will end on the date the CITT issues its finding. The CITT is expected to issue its decision by February 5, 2021. Provisional anti-dumping duty will continue to apply until this date on imports of subject goods from Chinese Taipei and Germany. However, provisional anti-dumping duty will no longer be imposed on imports of heavy plate exported to Canada from Turkey by Erdemir. Any provisional anti-dumping duty paid or security posted in respect of such goods will be returned. For further details on the application of provisional duty, refer to the Statement of Reasons issued for the preliminary determination, which is available through the CBSA’s website.

[118] If the CITT finds that the dumped goods have not caused injury and do not threaten to cause injury, all proceedings will be terminated. In this situation, all provisional duty paid or security posted by importers will be returned.

[119] If the CITT finds that the dumped goods have caused injury, the anti-dumping duty payable on subject goods released by the CBSA during the provisional period will be finalized pursuant to section 55 of SIMA. Imports released by the CBSA after the date of the CITT’s finding will be subject to anti-dumping duty equal to the margin of dumping.

[120] The importer in Canada shall pay all applicable duties. 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 duty within the prescribed time will result in the application of interest.

Retroactive duty on massive importations

[121] Under certain circumstances, anti-dumping duty can be imposed retroactively on subject goods imported into Canada. When the CITT conducts its inquiry on material injury to the Canadian industry, it may consider if dumped goods that were imported close to or after the initiation of the investigation constitute massive importations over a relatively short period of time and have caused injury to the Canadian industry. Should the CITT issue a finding that there were recent massive importations of dumped goods that caused injury, imports of subject goods released by the CBSA in the 90 days preceding the day of the preliminary determination could be subject to anti-dumping duty.

Publication

[122] A notice of this final determination of dumping will be published in the Canada Gazette pursuant to paragraph 41(3)(a) of SIMA.

[123] A notice of the termination of the dumping investigation with respect to heavy plate exported to Canada from Turkey by Erdemir will be published in the Canada Gazette pursuant to paragraph 41(4)(a) of SIMA.

Information

[124] This Statement of Reasons is posted on the CBSA’s website at the address below. For further information, please contact the officers identified as follows:

SIMA Registry and Disclosure Unit
Trade and Anti-dumping Programs Directorate
Canada Border Services Agency
11-100 Metcalfe St
Ottawa ON  K1A 0L8

• Telephone:
• Serena Major: 343-553-2004
• Wayne Tian: 343-553-1583

Email: simaregistry-depotlmsi@cbsa-asfc.gc.ca

Doug Band
Director General
Trade and Anti-dumping Programs Directorate

Appendix 1—summary of margins of dumping

Appendix 2—dumping representations

In the final stage of the investigation, submissions containing case arguments were received on behalf of Ereğli Demir ve Çelik Fabrikaları T.A.Ş. (Erdemir)^{Footnote 22}.

Following the November 16, 2020 closing of the record, case briefs were received on behalf of the following parties: the complainant^{Footnote 23}, Aktien-Gesellschaft der Dillinger Hüttenwerke (Dillinger Hütte)^{Footnote 24}, China Steel Corporation (CSC)^{Footnote 25}, Erdemir^{Footnote 26}, and SSAB Central Inc. (SSAB)^{Footnote 27}.

The CBSA received reply submissions on behalf of the complainant^{Footnote 28}, CSC^{Footnote 29}, Dillinger Hütte^{Footnote 30}, and Erdemir^{Footnote 31}.

Certain details provided in case briefs and reply submissions were designated as confidential information by the submitting counsel. This has restricted the ability of the CBSA to discuss all issues raised in these submissions.

The CBSA has provided responses below to representations that relate to the final determination of dumping. The CBSA will not address representations pertaining to future enforcement in this Statement of Reasons.

The material issues raised by the parties are summarized as follows:

Representations

Accuracy and completeness of submissions

Case briefs

Counsel for the complainant made representations regarding the accuracy, completeness and verifiability of information submitted by all exporters in response to the Dumping RFI and supplemental SRFIs. Counsel stated that in the absence of onsite verifications, the CBSA must be extra vigilant in confirming information provided^{Footnote 32}.

Counsel made specific representations regarding CSC’s submissions, claiming inconsistencies in Appendix 1, and incompleteness of Appendixes 4A and 4B^{Footnote 33}.

Reply submissions

Counsel for CSC responded to the complainant’s arguments, stating that they provided all information required by the CBSA in order to calculate normal values and margins of dumping, including explanations of how appendices were prepared. Counsel further noted that the complainant’s method of comparing amounts between appendices is incorrect^{Footnote 34}.

CBSA’s response

The CBSA has reviewed the responses from the exporters and suppliers to the SRFIs and supplemental SRFIs. The CBSA has also conducted verifications of the exporters’ submissions through Verification Questionnaires. All exporter submissions were considered complete for the purposes of the final determination, and the CBSA determined normal values, export prices and a margin of dumping on the basis of the exporters’ submissions.

Like goods and domestic sales (CSC)

Case briefs

Counsel for the complainant made representations regarding CSC’s databases of domestic sales of heavy plate, including noting sales that should be disregarded for the purpose of determining normal values^{Footnote 35}.

Reply submissions

Counsel for CSC submitted that the complainant’s allegations are irrelevant in terms of proper comparison^{Footnote 36}.

CBSA’s position

A profitability test was performed on CSC’s domestic sales that met the requirements of sections 15 and 16 of SIMA. Where there were sufficient domestic sales of like goods, normal values were determined pursuant to section 15 of SIMA. Where there were insufficient domestic sales of like goods, normal values were determined in accordance with section 19 of SIMA.

Product groupings (CSC)

Case briefs

Counsel for CSC made representations regarding its product groupings, stating the groupings are relevant and reasonable, and reflect market practice. They further stated that normal values should be determined based on the groupings^{Footnote 37}.

Reply submissions

Counsel for the complainant responded to these comments, stating the CBSA should match goods based on detailed and specific dimensions where possible, and indicates subsection 2(1) of SIMA directs the CBSA to prefer goods with identical characteristics^{Footnote 38}.

CBSA’s position

The CBSA has reviewed the information submitted by CSC, and has found that the product groupings used by CSC are reasonable, and reflect common market practices, therefore these groupings were used in determining normal values.

Matching reference number (Dillinger Hütte)

Case arguments

Counsel for Algoma argues that Dillinger’s grouping of goods and matching reference numbers are unreliable for the purpose of the final determination. Counsel for Algoma submits that Dillinger’s production costs differ greatly between comparable like goods and within the same matching reference numbers.^{Footnote 39}

Counsel for Algoma argues that Dillinger’s cost data is deficient. Specifically, counsel for Algoma submits that the cost data provided by Dillinger does not account for additional costs related to some of the subject goods produced by Dillinger. Counsel for Algoma notes that in some cases, either the grade/specification or the customer will require that testing be done on the plate to confirm its properties. This testing is also an additional cost borne by the producer, which is generally transferred to the customer through a price extra.^{Footnote 40}

Reply submissions

Counsel for Dillinger submits that the arguments made by Algoma overstate the cost differences and that the matching reference number is reliable for the purpose of the final determination. Dillinger submits that differences in circumstances will create some cost variability between very similar products. Counsel for Dillinger indicate that it provided extensive information regarding Dillinger’s product characteristics in case that the CBSA chooses to group the products differently than Dillinger.^{Footnote 41}

Dillinger submits the cost data provided is accurate and represents a high degree of detail and precision. Specifically, they refer to the cost summary sheets listed in Exhibits D31(a) and D31(b). Dillinger argues that these cost summary sheets summarize, in a highly detailed manner, all costs that are related to the production of plate. Further, counsel for Dillinger notes that testing costs appear in each of the cost summary sheets provided.^{Footnote 42}

CBSA’s position

Based on the information on the administrative record, the CBSA finds that the product groupings established by Dillinger are not based on the most clear or logical parameters. The CBSA has therefore adjusted the product groupings to reflect the product equivalencies determined by the CBSA. The other metrics used in matching reference numbers were accepted with slight modifications, as the CBSA found them to be reasonable, and reflect common market practices.

With respect to Dillinger’s cost of production information, the CBSA was able to adequately verify the costing reported in Dillinger’s export and domestic sales databases during the verification. Based on the information gathered throughout the course of this investigation, including during the verification, the CBSA was satisfied with the costing information and has made certain adjustments where necessary.

Trade levels (Dillinger Hütte)

Case arguments

Counsel for Dillinger submits that the CBSA must take into account the different trade levels of Dillinger’s domestic and Canadian customers when determining normal values. Dillinger provided information on three trade levels for their domestic and Canadian customers: national distributor, service centres, and end-users.^{Footnote 43}

Reply submissions

Counsel for Algoma submits that Dillinger’s reported transactions were made to customers at only two trade levels: distributors/service centres and end-users. Algoma submits that sales activities required to sell to national distributors and service centres are the same.^{Footnote 44}

CBSA’s position

Dillinger consistently reported to the CBSA in the response to the original RFI and the first supplemental RFI that its domestic customers in Germany operated at the same trade level as the importers of subject goods sold to Canada by Dillinger.^{Footnote 45} Only on the day of the close of the record did Dillinger provide new information which identified its customers in Germany and in Canada as operating at various levels of trade (service centres, end users, etc).^{Footnote 46} This information was provided after the verification and did not allow the CBSA sufficient time to verify or request additional information.

The CBSA considered the information provided by Dillinger prior to the close of the record, however, the CBSA did not find that the new information concerning the respective trade levels of its customers in Germany and Canada could be relied upon for the purposes of the final determination. Accordingly, the CBSA found that the customers in Canada and in Germany operated at the same, or substantially the same trade level.

A reasonable amount for profit (Dillinger Hütte)

Case arguments

Counsel for Algoma submits that the CBSA should use a subset of reported transactions from Appendix 3A. Counsel for Algoma argues that Dillinger has only selected the “most similar goods” in Appendix 3A and has therefore excluded domestic sales of goods of the same description sold during the Profitability Analysis Period. Counsel for Algoma submits that the CBSA should include all goods of the same description for the purposes of determining an amount for profit for Dillinger.

Algoma also argues that the CBSA should continue using subparagraph 11(1)(b)(ii) of the Special Import Measures Regulations (SIMR) in determining a reasonable amount for profit.^{Footnote 47}

As part of their case brief counsel for Dillinger provided a walkthrough of the methodology they argued should be applied in calculating normal values for Dillinger. As part of this exercise counsel for Dillinger made a number of specific arguments concerning how the CBSA should determine normal values, including the argument that any amount for profit should be determined pursuant to subparagraph 11(a)(b)(i) of SIMR.^{Footnote 48}

Reply submissions

Counsel for Dillinger argues that the CBSA should use Appendix 3B as its starting point for the purposes of determining normal values. Counsel for Dillinger submits that there are sufficient sales in Appendix 3B which meet the conditions of SIMA and that these goods permit a proper comparison with the goods sold to Canada. Finally, counsel for Dillinger argues that the CBSA should determine the amount for profit pursuant to subparagraph 11(1)(b)(i) of SIMR.^{Footnote 49}

Counsel for Algoma submits that the CBSA should not rely on Dillinger’s Appendix 3B generally, as its conclusions are based on a narrow, and restricted set of Dillinger’s reported transactions and should continue using subparagraph 11(1)(b)(ii) of SIMR in determining a reasonable amount for profit.^{Footnote 50}

CBSA’s position

The CBSA considered all of the information on the administrative record and determined that the subject goods sold in Canada and goods of the same description sold by Dillinger in Germany are not identical, but are of the same general category as the goods sold to Canada. The CBSA also found that the Appendix 3B provided by Dillinger did not include certain goods which were of the same general category as the goods sold to Canada.

For the purposes of the final determination the CBSA has used a subset of reported transactions from Appendix 3A and determined a reasonable amount for profit pursuant to subparagraph 11(1)(b)(ii) of SIMR.

Significant Factor (Dillinger Hütte)

Case arguments

Counsel for Algoma provided market pricing for pig iron at close of record of the investigation. Counsel for Algoma submits in its case brief that in determining normal values for Dillinger the CBSA must also consider subparagraph (c) of SIMR 11.2(1), being “the price in the country of export of the same or substantially the same inputs.”. Algoma notes that Dillinger purchases the significant input factor from its related party.^{Footnote 51}

Reply submissions

Dillinger argues that the CBSA should reject both sets of benchmark pricing data because they are not representative and do not meet the requirements under the SIMR. Dillinger notes that data is reporting pig iron prices in Baltic countries that are part of the Commonwealth of Independent States (CIS). Germany is an EU country that is not a member of the CIS.^{Footnote 52}

Dillinger requests that CBSA determine pig iron prices based on those purchase prices reported by Dillinger pursuant to paragraph 11.2(1)(a) of the SIMR, as these are the highest available German prices on the record.^{Footnote 53}

CBSA’s position

The CBSA finds that there is insufficient information available on the record to determine pig iron prices pursuant to Section 11.2(1)(c) of SIMR, as the CBSA is unable to verify its applicability to exporters in Germany.

For the purpose of final determination, the CBSA applied the cost of pig iron pursuant to paragraph 11.2(1)(a) of the SIMR, based on the greater amount of (a), (b), (c)(i) or (c)(ii).

Particular market situation

Case briefs

Counsel for the complainant maintained its position as in the complaint that a Particular Market Situation (PMS) exists in respect of Erdemir and the Turkish heavy plate market as a whole, due to the combined effect of a multitude of factors as follows^{Footnote 54}:

• Volatility in economic conditions
• Government involvement
• Government support programs
• Government control over Erdemir and its affiliates
• Distorted costs of inputs acquired from state-controlled entities

Erdemir emphasized that both OYAK’s and Erdemir are not under government control or act on behalf of the government based on SIMA and WTO rules^{Footnote 55}.

Reply submissions

Counsel for Algoma submitted that a “public body” analysis is not required for determination of whether Erdemir is a government owner or controlled entity for PMS purposes^{Footnote 56}.

Erdemir submitted that with the European Union, Turkey has an exclusive free trade agreement which strictly prohibits state control over the market but also any kind of incentive/aid to steel manufacturers. Erdemir further underlined that both Erdemir and OYAK are functioning purely in line with the commercial stipulations and aim to maximize profits.^{Footnote 57}

CBSA’s position

The CBSA conducted its own research and analysis of the following PMS factors:

• Competition in the Turkish heavy plate market
• Volatility in economic conditions in the home market
• Government economic policies and plans
• Government support programs
• State-owned or state-controlled steel enterprises
• Input cost distortion
• Effect and impact of the market conditions on domestic price in Turkey

Based on the research and analysis conducted, the CBSA is of the view that insufficient information is available to support an opinion that input costs or domestic prices in Turkey have been materially affected by PMS existence which does not permit a proper comparison of the sale of like goods with the goods to importers in Canada.

Issues regarding domestic sales, cost of production, selling and administrative expenses and other expenses (Erdemir)

Case briefs

Counsel for the complainant argued that Erdemir had not provided proper explanations or substantiations in response to issues identified by the CBSA in its supplemental SRFIs, namely the currency of domestic sales, slab, iron ore and coal input costs, domestic rebates, domestic specific administrative expenses, negative interest and other expenses. Counsel for the complainant submitted that the CBSA should reject Erdemir’s selling price, input costs, administrative expenses and other expenses.^{Footnote 58}

Erdemir reiterated that it cooperated with the CBSA during the process of investigation by providing valuable information and documents with utmost transparency. Erdemir further explained how information provided by its SAP accounting system is reliable.^{Footnote 59}

Reply submissions

Counsel for Algoma submitted that while Erdemir described its monitoring and tracking of costs under SAP, this does nothing to justify or explain Erdemir’s calculation of costs for inputs acquired from associated entities, which Algoma submits are unreliable.^{Footnote 60}

Erdemir responded to the complainant’s arguments by explaining^{Footnote 61} that:

• Domestic sales were denominated in USD
• CRU’s mill-specific costs provided by the complainant are not reliable
• Transfer pricing between related companies in Erdemir is determined in line with OECD practices together with domestic legislation and Erdemir’s own policy documents
• Discounts and rebates can be reconciled and traced into accounting ledgers
• Selling, administrative, interest and other expenses were resubmitted based on the CBSA’s supplemental requests

CBSA’s position

The CBSA addressed those issues through supplemental requests and verification questionnaires during the investigation. Taking materiality into consideration, the CBSA is satisfied with information submitted by Erdemir in response to the requests for clarification and substantiation of domestic sales and various cost items.

Product code and grouping (Erdemir)

Case briefs

Counsel for the complainant made representations regarding Erdemir’s approach of identifying like goods in Appendix 2 and product grouping without considering heat treatment^{Footnote 62}.

Erdemir explained the way they keep track of costs through their accounting SAP system and production control system. Erdemir further illustrated their approach of product grouping and its reasonableness in order to respond to the request of the CBSA’s RFI^{Footnote 63}.

Reply submissions

Counsel for the complainant maintained its position as stated in its case brief that costing reported by Erdemir was not properly justified and the product grouping should not be accepted.^{Footnote 64}

CBSA’s position

The CBSA has reviewed the information submitted by Erdemir, and has taken into consideration the characteristic of heat treatment when matching like goods and extracting product specific costs. The product groupings used by Erdemir are considered to be reasonable, and therefore were used in determining normal values.