SM2 2017 IN
Certain Silicon Metal
Statement of Reasons

[21] The Complainant accounts for all of the production of like goods in Canada. The name and address of the Complainant are as follows:

Québec Silicon Limited Partnership and QSIP Canada ULC
6500 rue Yvon Trudeau
Bécancour, Québec, G9H 2V8

[22] Québec Silicon Limited Partnership (QSLP) is a producer of silicon metal and QSIP Canada ULC (QSIP Canada) is responsible for sales. QSIP Canada is a wholly owned subsidiary of Ferroglobe PLC (UK) (Ferroglobe). QSLP is 51% owned by QSIP Canada and 49% owned by Dow Corning Corporation.^{Footnote 3}

[23] The CBSA identified 18 potential importers of the subject goods based on both information provided by the Complainant and CBSA import entry documentation. The CBSA sent an Importer Request for Information (RFI) to all potential importers of the goods. The CBSA received seven responses to the Importer RFI.

[24] In addition, on May 16, 2017, all potential importers were sent a Section 20 RFI in relation to their re sales in Canada of imports of silicon metal from any non named countries. No importers provided a response to the Section 20 RFI.^{Footnote 4}

[25] The CBSA identified 27 potential exporters/producers of the subject goods from information provided by the Complainant and CBSA import entry documentation. An Exporter Dumping RFI was sent to each of the potential exporters/producers. An Exporter Subsidy RFI was also sent to the potential exporters/producers located in Brazil, Kazakhstan, Malaysia, Norway and Thailand.

[26] In addition, on May 16, 2017, the exporter located in Kazakhstan, Tau-Ken Temir LLP (Tau-Ken), was sent a Section 20 RFI. A Section 20 RFI was also sent to one other known producer of silicon metal in Kazakhstan, KazSilicon LLP. Only Tau-Ken provided a response to the Section 20 RFI.^{Footnote 5}

[27] Six exporters provided substantially complete responses to the Dumping RFI, namely one each in Brazil, Kazakhstan, Norway, Russia, Thailand and the United States. A vendor in Singapore also provided a substantially complete response to the Dumping RFI. Three producers of silicon metal also responded but they did not export subject goods to Canada during the POI.

[28] A vendor located in the United States provided a late and incomplete response to the Dumping RFI, which could not be used for the purposes of the final determination.

[29] Five exporters/producers provided substantially complete responses to the Subsidy RFIs; including two in Brazil and one each in Kazakhstan, Norway, and Thailand. Three additional producers provided responses to the Subsidy RFIs, but they did not export subject goods to Canada during the POI.^{Footnote 6}

[30] Officers conducted on site verifications at the premises of two exporters (i.e. Sica in Thailand and Tau-Ken in Kazakhstan) and one vendor (i.e. Rio Tinto Procurement (Singapore) Pte Ltd. in Singapore). The information provided by the remaining exporters was verified through desk audits.

[31] For the purposes of these investigations, “Government of Brazil (GOB),” “Government of Kazakhstan (GOK),” “Government of Malaysia (GOM),” “Government of Norway (GON)” and “Government of Thailand (GOT)” refer to all levels of government, i.e., federal, central, provincial/state, regional, municipal, city, township, village, local, legislative, administrative or judicial, singular, collective, elected or appointed. It also includes any person, agency, enterprise, or institution acting for, on behalf of, or under the authority of, or under the authority of any law passed by, the government of that country or that provincial, state or municipal or other local or regional government.

[32] The CBSA sent a Government Subsidy RFI to each of the governments of the countries involved in the subsidy investigation. Substantially complete responses were received from the GOB, GOK, GON and GOT. A substantially complete response was not received from the GOM.

[33] As a result of the initiation of a section 20 inquiry on May 16, 2017, the CBSA also sent a Section 20 RFI to the GOK. A response to the Section 20 RFI was received from the GOK on June 22, 2017.^{Footnote 7}

[34] During the course of the investigations, the CBSA conducted on site verification meetings with the governments of Kazakhstan and Thailand. The information provided by the GOB and the GON was verified through desk audits.

[35] For the purpose of these investigations, the subject goods are defined as:

Silicon metal containing at least 96.00% but less than 99.99% silicon by weight, and silicon metal containing between 89.00% and 96.00% silicon by weight that contains aluminum greater than 0.20% by weight, of all forms and sizes, originating in or exported from the Federative Republic of Brazil, the Republic of Kazakhstan, Lao People’s Democratic Republic, Malaysia, the Kingdom of Norway, the Russian Federation and the Kingdom of Thailand.

[36] The subject goods include all forms and sizes of silicon metal, including off specification material such as silicon metal with higher than normal percentages of other elements, such as aluminum, calcium, iron, etc.^{Footnote 8}

[37] Silicon is a chemical element, metallic in appearance, solid in mass, and steel gray in color, that is commonly found in nature in combination with oxygen, either as silica or in combination with both oxygen and a metal in silicate minerals. Although commonly referred to as metal, silicon exhibits characteristics of both metals and non-metals. Silicon metal is a polycrystalline material whose crystals have a diamond cubic structure at atmospheric pressure. It is usually sold in lump form typically ranging from 6” x 1⁄2” to 4" x 1⁄4” for the metallurgical industry, 1” by 1” and smaller for the chemical industries and also in crushed powder form.

[38] Silicon metal is produced by combining high purity quartzite (consisting principally of natural crystallized silica (SiO2)) with a carbonaceous reducing agent (such as low-ash coal, petroleum coke, charcoal or coal char) and a bulking agent (such as wood chips) in a submerged arc electric furnace.

[39] In the furnace, the raw materials are smelted at a very high temperature into molten silicon metal. Periodically, the molten silicon metal is tapped from the furnace and poured into large ladles.

[40] Certain impurities, called “slag” – consisting mainly of calcium, aluminum and silicon oxides – are inherent to the production of silicon metal and therefore end up in the ladle with the molten silicon metal. When the molten silicon metal is tapped from the furnace and exposed to oxygen, the slag and molten silicon metal, which have different densities, tend to separate in the ladle. As the slag and molten silicon metal separate, impurities are removed from the silicon metal.

[41] At this point in the process, oxygen can be used to remove additional impurities (aluminum and calcium) from the molten silicon metal, before it is allowed to cool. Oxygen is introduced into the molten silicon metal in gaseous form by means of a porous plug in the base of the ladle.

[42] The molten silicon metal is next poured into molds or onto areas of the plant floor sectioned off using beds of silicon metal fines or sand. Once all of the molten silicon metal has been tapped (drained) from the ladle, the slag is then removed and placed in a slag pot.

[43] After the silicon metal has cooled, it is pre-crushed by lifting and dropping the cooled metal onto the floor using a front-end loader or by using a pre-crushing jack hammer. The purpose of such pre-crushing is to yield pieces suitable for transporting to the silicon metal crushing and sizing equipment, which typically is located in a separate area of the plant. At this point, the silicon metal can be stored.^{Footnote 9}

[44] Silicon metal is used in three main segments: chemical, primary aluminum and secondary aluminum. Silicon metal is principally used by primary and secondary aluminum producers as an alloying agent and by the chemical industry to produce a family of chemicals known as silicones.

[45] In Canada, silicon metal is used mainly in the primary and secondary aluminum industries. There are no large chemical industry users of silicon metal in Canada.^{Footnote 10}

[46] The subject goods are normally classified under the following Harmonized System (HS) classification number:

• 2804.69.00.00

[47] The HS classification number is identified for convenience of reference only. Refer to the product definition for authoritative details regarding the subject goods.

[69] Normal values are generally determined based on the domestic selling prices of like goods in the country of export, in accordance with section 15 of SIMA, or on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, plus a reasonable amount for profits, in accordance with paragraph 19(b) of SIMA.

[70] Where the CBSA is of the opinion that section 20 conditions exist in the sector under investigation, normal values cannot be determined on the basis of domestic selling price of like goods or on the full cost of the goods plus an amount for profits. Section 20 provides that the normal values be determined using the selling prices or the full cost and profits of like goods in a “surrogate” country, or using re-sales in Canada of goods imported from a “surrogate” country.

[71] Where, in the opinion of the CBSA, sufficient information has not been furnished or is not available, normal values are determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA.

[72] The export price of the goods sold to the importers in Canada is generally based on the lesser of the adjusted exporter’s selling price or the adjusted importer’s purchase price, pursuant to section 24 of SIMA. These prices are adjusted, where necessary, by deducting the costs, charges, expenses, duties and taxes resulting from the exportation of the goods as provided for in subparagraphs 24(a)(i) to 24(a)(iii) of SIMA.

[73] Where, in the opinion of the CBSA, sufficient information has not been furnished or is not available, export prices are determined pursuant to a ministerial specification under subsection 29(1) of SIMA.

[74] The CBSA determined a margin of dumping for each of the exporters by comparing the total normal value with the total export price of the goods. When the total export price was less than the total normal value, the difference was the margin of dumping for that specific exporter.

[75] Details of the results of the investigation by exporter follows. A summary of each exporter’s margin of dumping is provided in the table at the end of this section and Appendix 1.

Brazil

RIMA Industrial S.A. (RIMA)

[76] RIMA is a producer and exporter of the subject goods to Canada.

[77] RIMA provided a response to the Dumping RFI^{Footnote 14} and each of the four supplemental RFIs^{Footnote 15} (SRFIs) that were sent to RIMA to gather additional information and seek clarification. A desk audit was completed to review and verify the submission provided by the exporter. RIMA’s submission was considered substantially complete for the purposes of the final determination.

[78] RIMA had sufficient domestic sales of silicon metal during the PAP which permitted the determination of the normal values of the silicon metal grade exported to Canada pursuant to section 15 of SIMA.

[79] For subject goods exported from Brazil to Canada by RIMA during the POI, export prices were determined in accordance with section 24 of SIMA, based on the exporter’s selling price adjusted by deducting the costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

[80] For the final determination, the total normal value compared to the total export price results in a margin of dumping of 0.0% for RIMA, expressed as a percentage of the export price.

Companhia Ferroligas Minas Gerais (Minasligas)

[81] Minasligas is a producer of silicon metal and did not export any subject goods to Canada that were released into Canada during the POI. Minasligas provided a response to the Dumping RFI.^{Footnote 16} For the purpose of the final determination, Minasligas’ domestic sales information was used for purposes of the determination of normal values pursuant to subparagraph 20(1)(c)(i) of SIMA.^{Footnote 17}

Polymet Alloys Inc. (USA) (Polymet)

[82] Polymet is a trading company and exporter of subject goods located in the United States of America.

[83] Polymet provided a response to the Dumping RFI^{Footnote 18} as well as a response to a supplemental RFI.^{Footnote 19} The information submitted by Polymet was reviewed and verified by way of a desk audit and was considered substantially complete for the purpose of the final determination.

[84] During the POI, Polymet exported a subject good from the USA to Canada that was produced by RIMA and purchased from an intermediary vendor. During the PAP, Polymet also sold like goods in the USA that were produced by RIMA.

[85] Although Polymet had domestic sales of a like good during the PAP, the sales were made to a single customer. Consequently, these sales could not be used to calculate a normal value for the subject goods exported to Canada in accordance with paragraph 16(2)(a) of SIMA. As such, a normal value was determined pursuant to a ministerial specification under subsection 29(1) of SIMA following the methodology of paragraph 19(b) of SIMA, based on the aggregate of the cost of production of the good, a reasonable amount for administrative, selling and all other costs and a reasonable amount for profits.

[86] As RIMA provided substantially complete responses to the Dumping RFI and to the four SRFIs, the CBSA was able to calculate the cost of production of the goods. An amount for administrative, selling and all other costs was determined for RIMA, Polymet and the intermediary vendor. The amount for profits was calculated following the methodology of subparagraph 11(1)(b)(ii) and subsection 11(2) of the SIMR, based on the cumulative profit made by RIMA and Polymet on their respective domestic sales of goods that are of the same general category as the goods sold to the importer in Canada and the overall profit earned by the intermediary vendor.

[87] In situations where a good is shipped indirectly to Canada through a third country, the CBSA is required to determine the normal value of the good in both the country of origin and in the country of export in accordance with subsection 30(2) of SIMA. Where the normal value determined in the country of origin is higher than the normal value determined in the country of export, then both normal value and export price are to be determined as if the goods were shipped directly from the country of origin.

[88] In the case of the subject good Polymet exported to Canada, two normal values were determined for the good: one based on the country of export, the USA, and one based on the country of origin, Brazil. A comparison of the two values revealed that the normal value determined in the country of export (i.e. the USA) was the higher of the two.

[89] For the subject good exported to Canada by Polymet during the POI, the export price was determined in accordance with section 24 of SIMA based on Polymet’s selling price less all costs, charges and expenses resulting from the exportation of the goods.

[90] For the final determination, the total normal value compared to the total export price results in a margin of dumping of 27.8% for Polymet, expressed as a percentage of export price.

All Other Exporters – Brazil

[91] At the initiation of the investigation, all known and potential exporters were given the opportunity to participate in the investigation and notified that failure to submit all required information and documentation, including non-confidential versions, or failure to permit verification of any information, may result in the normal values of the subject goods being based on the facts available. It was further stated that such a decision would be less favourable to their company than if complete and verifiable information were made available.

[92] For all other exporters of subject goods originating in or exported from Brazil that did not provide a response to the dumping RFI or did not furnish sufficient information, normal values and export prices were determined under a ministerial specification pursuant to subsection 29(1) of SIMA on the basis of facts available.

[93] In establishing the methodology for determining normal values under the ministerial specification, the CBSA analyzed all the information on the administrative record including the complaint filed by the domestic industry, the CBSA’s margin of dumping estimate at the initiation of the investigation and other information submitted by exporters of certain silicon metal originating in or exported from Brazil, Kazakhstan, Norway and Thailand. No information was provided by the exporters in Laos and Malaysia.

[94] The CBSA decided that the normal values and export prices determined for the exporters whose submissions were verified for the final determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for determining normal values since it reflects exporters’ trading practices during the POI. The CBSA first considered whether the information from cooperative exporters of certain silicon metal originating in or exported from Brazil was appropriate to use as the basis for the determination of normal values for all other exporters in Brazil. As the goods from RIMA were not dumped, the normal values and export prices for these goods were not used. The only other information on the record with respect to goods originating in or exported from Brazil was from Polymet, the exporter in the United States.

[95] The CBSA considered that the amount by which the normal value exceeded the export price on an individual transaction of Polymet (expressed as a percentage of the export price), was an appropriate basis for determining normal values. This method relies on information related to goods that originated in Brazil and limits the advantage that an exporter may gain from not providing necessary information requested in a dumping investigation as compared to an exporter that did provide the necessary information.

[96] Therefore, the normal values were determined under a ministerial specification pursuant to subsection 29(1) of SIMA, based on the export price as determined under section 24 or 29 of SIMA, plus an amount equal to 27.8% of that export price.

[97] The CBSA considered that the information submitted on the CBSA customs entry documentation was the best information on which to determine the export price of the goods for all other exporters as it reflects actual import data.

[98] Based on the above methodologies, the subject goods exported to Canada by all other exporters were found to be dumped by a margin of dumping of 27.8%, expressed as a percentage of the export price.

Kazakhstan

Section 20 Inquiry

[99] Section 20 of SIMA may be applied to determine the normal value of goods subject to a dumping investigation where certain conditions prevail in the domestic market of the exporting country. Normal values are to be determined under section 20 of SIMA where, in the opinion of the CBSA, the government of a country has a monopoly or substantial monopoly of its export trade, it substantially determines domestic prices and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be if they were determined in a competitive market.

[100] For purposes of a dumping investigation, the CBSA proceeds on the presumption that section 20 of SIMA is not applicable to the sector under investigation absent sufficient information to the contrary. The CBSA may form an opinion where there is sufficient information that the conditions set forth in paragraph 20(1)(b) of SIMA exist in the sector under investigation.

[101] During the preliminary phase of the dumping investigation, based on information on the administrative record, the CBSA had reason to believe that the GOK may have a monopoly or substantial monopoly of its export trade of silicon metal, that the domestic prices in the silicon metal sector in Kazakhstan may have been substantially determined by the government and there was sufficient reason to believe that these prices were not substantially the same as they would be if they were determined in a competitive market.

[102] Accordingly, on May 16, 2017, the CBSA initiated a section 20 inquiry to examine the extent to which the conditions of paragraph 20(1)(b) of SIMA exist in the silicon metal sector in Kazakhstan and sent Section 20 RFIs to the GOK as well as two silicon metal producers located in Kazakhstan, only one of which had exported subject goods to Canada during the POI.

[103] The CBSA received substantially complete responses to the Section 20 RFIs from the GOK and from Tau-Ken Temir LLP (Tau-Ken). Officers of the CBSA met with representatives of the GOK at the offices of the Ministry of National Economy in Astana, Kazakhstan to verify the information provided by the GOK as well as some information provided by Tau-Ken. Officers of the CBSA also met with representatives of Tau-Ken at their head office and production facilities located in Karaganda, Kazakhstan to verify the information provided by the company.

Results of the Section 20 Inquiry

Government Monopoly or Substantial Monopoly of Export Trade

[104] As a result of the on-site verification meetings with the GOK and Tau-Ken and the information submitted by both parties during the course of the investigations, the CBSA confirmed that Tau-Ken is the only current producer of silicon metal in Kazakhstan and that it is indirectly and wholly owned by the GOK. During the POI, Tau-Ken was also the only exporter of silicon metal originating in Kazakhstan and shipped directly to Canada.

[105] The GOK did note that there was one other company capable of producing silicon metal in Kazakhstan, KazSilicon LLP (KazSilicon), but that it had not produced silicon metal during the POI.^{Footnote 20} During the on-site verification meetings with the GOK, the CBSA confirmed that KazSilicon had ceased production in early 2015 and had not restarted production as of August 2017 when the verification meetings were held.

[106] Based on the information on the administrative record, Tau-Ken’s ownership structure is summarized in the chart below:

[107] The Joint-Stock Company Sovereign Wealth Fund Samruk-Kazyna (Samruk-Kazyna) was established by Presidential Decree in 2008. The founder of the company is the GOK which is represented by the State Property and Privatization Committee of the Ministry of Finance. The Ministry of Finance owns 100% of Samruk-Kazyna, and as the sole shareholder is solely responsible for appointing members to the Board of Directors as well as the Chief Executive Officer of the company.^{Footnote 21}

[108] According to the Samruk-Kazyna Charter^{Footnote 22}, the Ministry of Finance, as sole shareholder, also approves the financial statements and development strategies of Samruk Kazyna, as well as controls the number and types of shares that can be issued. The Board of Directors of Samruk Kazyna, appointed by the Ministry of Finance, consists of eight members which include: the Minister of Finance; the Minister of National Economy; an assistant to the President of Kazakhstan; and the Prime Minister of Kazakhstan who is appointed Chairman of the Board. The three other board members are identified as Independent Directors.^{Footnote 23} While the Samruk-Kazyna Board of Directors is responsible for appointing the members of the company’s Management Board, which is responsible for the day-today activities of the company, it is the sole shareholder (i.e. the GOK) that is responsible for appointing the Chief Executive Officer who is the head of the Management Board and the company.^{Footnote 24}

[109] In the past, as well as during the POI, Samruk-Kazyna has received funding directly from the GOK. A review of Samruk-Kazyna’s 2016 audited financial statements showed that the company received various types of contributions from the GOK during the POI including: capital contributions in the forms of cash and property in kind^{Footnote 25}; a loan at below-market interest rates^{Footnote 26}; and grants^{Footnote 27}, including grants to cover losses in a number of industries it operates in such as transportation and telecommunications. The 2016 financial statements also showed that Samruk Kazyna financed various social projects in relation to the International Astana Expo 2017 by order of the sole shareholder^{Footnote 28} and that it has commitments on the implementation of investment projects using funds form the Republican Budget.^{Footnote 29}

[110] The Joint-Stock Company Tau-Ken Samruk National Mining Company (Tau Ken Samruk) was established by Presidential Decree in 2009.^{Footnote 30} According to that Decree, Tau-Ken Samruk was founded jointly by the State Property and Privatization Committee of the Ministry of Finance with the Ministry of Energy and Mineral Resources and the initial capital contributions used to establish company came from the GOK’s reserves for urgent expenses as stipulated in the Republican Budget of 2009. Following its creation (registration), the state shareholding of Tau-Ken Samruk was then transferred to Samruk-Kazyna. Since then, and during the POI, Samruk-Kazyna remains the sole shareholder of Tau-Ken Samruk Samruk Kazyna owns all of Tau-Ken Samruk’s shares and the shares are not available publicly.

[111] The majority of information submitted by Tau-Ken with respect to the ownership and management structure of Tau-Ken Samruk, including that Tau-Ken Samruk’s Charter, is confidential. However, the Charter^{Footnote 31} of Samruk-Kazyna does state that for companies in which it owns 50% or more of the shares (e.g. Tau-Ken Samruk), the Management Board of Samruk Kazyna is responsible for defining the list of business activities and approval of the guidelines and corporate standards of those companies. The Charter also notes that where Samruk-Kazyna owns all of the shares in a company, the Management Board of Samruk-Kazyna is responsible for the approval of the appointment and dismissal of head of executive bodies of those companies.

[112] In Note 22 of Tau-Ken Samruk’s 2016 audited financial statements^{Footnote 32}, it states that Tau Ken Samruk’s capital management is strictly dependent on the capital management strategy of Samruk-Kazyna. That note also explains that Samruk-Kazyna may make contributions to Tau Ken Samruk’s equity, provide debt financing, or authorize Tau-Ken Samruk to obtain debt financing from third parties while providing all essential guarantees for all significant external loans. The financial statements do not show any third party loans, but do show that Tau-Ken Samruk has received loans from Samruk-Kazyna.^{Footnote 33} In addition, the financial statements also show that in 2016 Samruk-Kazyna provided a significant capital contribution in the form of cash during the POI.^{Footnote 34}

[113] In reviewing Tau-Ken Samruk’s 2016 audited financial statements^{Footnote 35}, the CBSA also noted that Samruk-Kazyna provided a loan at a very low interest rate to Tau-Ken Samruk for the acquisition of a company involved in the mining of tungsten. In explaining the details of the acquisition and the loan, the financial statements also stated that Tau-Ken Samruk experienced a

“gain from the bargain purchase due to the fact that the Group [Tau-Ken Samruk] acts on behalf of the Government of the Republic of Kazakhstan and, accordingly, has the right to act as the main buyer when owners sell their subsoil use rights.”^{Footnote 36}

[114] The Tau-Ken Limited Liability Partnership (Tau-Ken) was created in accordance with a decision by the Board of Directors of Tau-Ken Samruk in November 2013 and is a producer of silicon metal.^{Footnote 37} According to Tau-Ken, the sole shareholder is Tau-Ken Samruk^{Footnote 38} which owns 100% of the company, and Tau-Ken is ultimately owned by the GOK.^{Footnote 39}

[115] According to Tau-Ken, the company does not have a Board of Directors, Supervisory Board or Board of Shareholders. The Supreme Body is the sole participant (i.e. Tau Ken Samruk) and the executive body of Tau-Ken is the Management Board. The Management Board consists of three members: the Chairman of the Board (Chairman); the Vice-Chairman of the Board for Production (Vice-Chairman of Production), and the Vice Chairman of the Board for Economy and Commerce (Vice-Chairman of Economy). According to Tau-Ken, the Chairman is responsible of the management of every aspect regarding the whole organization. The Vice-Chairman of Production is responsible for managing the production activities while the Vice-Chairman of Economy manages economic activities of Tau Ken including financing of operations, sales, and procurement.^{Footnote 40} All three members of the Management Board are elected by the decision of the sole participant, Tau-Ken Samruk.^{Footnote 41}

[116] Based on the information on the administrative record and presented above, Tau-Ken is the only current producer of silicon metal in Kazakhstan; was the only company to export subject goods directly from Kazakhstan that were imported into Canada during the POI; is ultimately wholly owned by the GOK; and the GOK has the ability to exert control over Tau Ken through the appointment of the company’s executive body who is responsible for managing all aspects of the company. As a result, the CBSA is of the opinion that the GOK has a monopoly or substantial monopoly of its export trade with respect to silicon metal, and that the condition of subparagraph 20(1)(b)(i) of SIMA has been met.

Domestic Selling Prices are Substantially Determined by the Government

[117] According to Tau-Ken, all pricing decisions are performed by the Management Board of the company and the distribution of the company’s profits are the responsibility of the sole participant, Tau-Ken Samruk.^{Footnote 42} Each month, the Management Board meets and approves the table of selling prices for silicon metal for the month and the resolution is recorded in the minutes of those board meetings.^{Footnote 43} These prices set the limits and are issued to sales staff within the company who are not permitted to sell below the prices established by the Management Board.^{Footnote 44} In general, when reviewing the sales contracts between Tau Ken and its customers (both domestic and export), the CBSA noted that the contracts were signed by the Chairman of the Management Board. Any other details relating to the responsibility of the Management Board and its role in pricing practices and management of the company, including the company Charter, cannot be addressed here as the relevant information submitted was designated confidential.

[118] Based on the information on the administrative record showing that Tau-Ken is the only silicon metal producer and exporter located in Kazakhstan; the ownership structure detailed earlier demonstrates it is owned and controlled by the GOK; that the entire Management Board including the Chairman is selected by Tau-Ken’s parent company who is owned and controlled by the GOK; that the Management Board is responsible for approving all pricing; and that the Chairman is responsible for signing all sales contracts, the CBSA is of the opinion domestic selling prices of silicon metal are substantially determined by the GOK and that the first condition of subparagraph 20(1)(b)(ii) has been met.

Prices not Substantially the Same as in a Competitive Market

[119] The CBSA analyzed confidential domestic pricing and sales information on the administrative record submitted by Tau-Ken as well as producers located in other competitive markets including: Brazil, Norway, Russia and Thailand with respect to silicon metal. In addition, the CBSA also examined silicon metal pricing information published by the metals trade publication MetalBulletin.

[120] In conducting the pricing analysis, the CBSA first compared the monthly weighted average domestic prices of silicon metal sold by Tau-Ken in Kazakhstan during the POI with the monthly weighted average domestic selling prices of producers located in Brazil, Norway, Russia and Thailand sold during the same period. The results of that analysis showed that pricing in Kazakhstan during the period was significantly different than the prices charged by producers in most of those other competitive markets.^{Footnote 45}

[121] In the second part of its pricing analysis, the CBSA compared the monthly weighted average domestic prices of silicon metal sold by Tau-Ken in Kazakhstan during the POI with the monthly average domestic selling prices in the United States and Europe published by MetalBulletin during the same period. The results of that analysis revealed an even greater difference between the pricing in Kazakhstan and the pricing in the American and European markets during the period analyzed.^{Footnote 46}

[122] Based on the results of the pricing analysis detailed above, the CBSA is of the opinion that there is sufficient reason to believe that domestic prices for silicon metal in Kazakhstan are not substantially the same as they would be if they were determined in a competitive market, and that the second condition of subparagraph 20(1)(b)(ii) has been met.

Section 20 Inquiry Conclusion

[123] Based on the analysis of the information on the administrative record for this investigation, the CBSA is of the opinion that the GOK has a monopoly or substantial monopoly of its export trade in the silicon metal sector; that domestic prices of silicon metal are substantially determined by the GOK; and there is sufficient reason to believe that the domestic prices of silicon metal in Kazakhstan are not substantially the same as they would be in a competitive market.

Section 20 Normal Values

[124] Based on the CBSA’s opinion that the conditions of paragraph 20(1)(b) of SIMA exist with respect to the silicon metal sector in Kazakhstan, normal values for purposes of the final determination were determined in accordance with subparagraphs 20(1)(c)(i) and 20(1)(c)(ii) of SIMA. For purposes of the final determination, the CBSA designated Brazil, Norway, Russia and Thailand as the surrogate countries.

[125] The normal values determined under subparagraph 20(1)(c)(i) were based on the price of like goods sold domestically by producers in the surrogate countries listed above. The normal value determined under subparagraph 20(1)(c)(ii) was based on aggregate of the cost of the production of like goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits using sales and costing information supplied by producers located in the surrogate countries.

Tau-Ken

[126] Tau-Ken is both a producer and an exporter of the subject goods and is located in Karaganda, Kazakhstan.

[127] Tau-Ken provided a response to the Dumping RFI^{Footnote 47} and the Section 20 RFI^{Footnote 48}. One supplemental RFI^{Footnote 49} was sent to Tau-Ken to gather additional information and seek clarification. Officers of the CBSA met with the representatives of Tau-Ken at their offices and production facilities in Kazakhstan to verify information provided by the company.^{Footnote 50} Tau Ken’s submissions were considered to be substantially complete for the purpose of the final determination.

[128] During the POI, Tau-Ken exported several grades of silicon metal to Canada. For the majority of grades exported to Canada by Tau-Ken, the CBSA determined normal values in accordance with subparagraph 20(1)(c)(i) of SIMA based on the weighted average selling prices of like goods sold by producers located in the surrogate countries listed in the previous section.

[129] For one particular grade exported to Canada by Tau-Ken, there were no domestic sales of that grade by producers located in the surrogate countries. As there was information on the production of that grade available from the information submitted by producers located in the surrogate countries, the normal value for that grade was determined in accordance with subparagraph 20(1)(c)(ii) based on aggregate of the cost of the production of like goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits using sales and costing information supplied by producers located in the surrogate countries.

[130] For subject goods exported by Tau Ken to Canada during the POI, export prices were determined in accordance with section 24 of SIMA, based on the price at which the importer has purchased or agreed to purchase the goods, adjusted by deducting therefrom all costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

[131] For the final determination, the total normal value compared to the total export price results in a margin of dumping of 18.2% for Tau-Ken, expressed as a percentage of the export price.

All Other Exporters – Kazakhstan

[132] At the initiation of the investigation, all known and potential exporters were given the opportunity to participate in the investigation and notified that failure to submit all required information and documentation, including non confidential versions, or failure to permit verification of any information, may result in the normal values of the subject goods being based on the facts available. It was further stated that such a decision would be less favourable to their company than if complete and verifiable information were made available.

[133] For all other exporters of subject goods originating in or exported from Kazakhstan that did not provide a response to the dumping RFI or did not furnish sufficient information, normal values and export prices were determined under a ministerial specification pursuant to subsection 29(1) of SIMA on the basis of facts available.

[134] In establishing the methodology for determining normal values under the ministerial specification, the CBSA analyzed all the information on the administrative record including the complaint filed by the domestic industry, the CBSA’s margin of dumping estimate at the initiation of the investigation and other information submitted by exporters of certain silicon metal originating in or exported from Brazil, Kazakhstan, Norway and Thailand. No information was provided by the exporters in Laos and Malaysia.

[135] The CBSA decided that the normal values and export prices determined for the exporters whose submissions were verified for the final determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for determining normal values since it reflects exporters’ trading practices during the POI. The CBSA first considered whether the information from the cooperative exporter of certain silicon metal originating in or exported from Kazakhstan was appropriate to use as the basis for the determination of normal values for a party which exported goods originating in Kazakhstan. The only information on the record with respect to goods originating in or exported from Kazakhstan was from Tau-Ken.

[136] The CBSA considered that the highest amount by which the normal value exceeded the export price on an individual transaction of Tau Ken (expressed as a percentage of the export price), was an appropriate basis for determining normal values. This method relies on the information that was used to determine normal values and export prices for the goods that originated in Kazakhstan and limits the advantage that an exporter may gain from not providing necessary information requested in a dumping investigation as compared to an exporter that did provide the necessary information.

[137] Therefore, the normal values were determined under a ministerial specification pursuant to subsection 29(1) of SIMA, based on the export price as determined under section 24 or 29 of SIMA, plus an amount equal to 86.5% of that export price.

[138] The CBSA considered that the information submitted on the CBSA customs entry documentation was the best information on which to determine the export price of the goods for all other exporters as it reflects actual import data.

[139] Based on the above methodologies, the subject goods exported to Canada by all other exporters were found to be dumped by a margin of dumping of 86.5%, expressed as a percentage of the export price.

Laos

[140] At the initiation of the investigation, all known and potential exporters were given the opportunity to participate in the investigation and notified that failure to submit all required information and documentation, including non confidential versions, or failure to permit verification of any information, may result in the normal values of the subject goods being based on the facts available. It was further stated that such a decision would be less favourable to their company than if complete and verifiable information were made available.

[141] No exporters or producers in Laos provided a response to the dumping RFI. As such, normal values and export prices were determined under a ministerial specification pursuant to subsection 29(1) of SIMA on the basis of facts available.

[142] In establishing the methodology for determining normal values under the ministerial specification, the CBSA analyzed all the information on the administrative record including the complaint filed by the domestic industry, the CBSA’s margin of dumping estimate at the initiation of the investigation and other information submitted by exporters of certain silicon metal originating in or exported from Brazil, Kazakhstan, Norway and Thailand. No information was provided by the exporters in Malaysia.

[143] The CBSA decided that the normal values and export prices determined for the exporters whose submissions were verified for the final determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for determining normal values since it reflects exporters’ trading practices during the POI. As no exporters of certain silicon metal originating in or exported from Laos provided a response to the Dumping RFI, the CBSA considered the verified information from the cooperative exporters of certain silicon metal originating in or exported from the other countries.

[144] For the same reasons provided at the initiation of the investigation (i.e., the geographic proximity of these two countries and the comparable cost of electricity, a main cost driver for the production of silicon metal), the CBSA considered that the information in respect of subject goods from Thailand provides a reasonable basis to establish normal values for the subject goods from Laos.

[145] The CBSA considered that the amount by which the normal value exceeded the export price on an individual transaction of Sica (expressed as a percentage of the export price), was an appropriate basis for determining normal values. This method limits the advantage that an exporter may gain from not providing necessary information requested in a dumping investigation as compared to an exporter that did provide the necessary information.

[146] Therefore, the normal values were determined under a ministerial specification pursuant to subsection 29(1) of SIMA, based on the export price as determined under section 24 or 29 of SIMA, plus an amount equal to 85.2% of that export price.

[147] The CBSA considered that the information submitted on the CBSA customs entry documentation was the best information on which to determine the export price of the goods for all other exporters as it reflects actual import data.

[148] Based on the above methodologies, the subject goods exported to Canada by all exporters in Laos were found to be dumped by a margin of dumping of 85.2%, expressed as a percentage of the export price.

Malaysia

[149] At the initiation of the investigation, all known and potential exporters were given the opportunity to participate in the investigation and notified that failure to submit all required information and documentation, including non confidential versions, or failure to permit verification of any information, may result in the normal values of the subject goods being based on the facts available. It was further stated that such a decision would be less favourable to their company than if complete and verifiable information were made available.

[150] No exporters or producers in Malaysia provided a response to the dumping RFI. As such, normal values and export prices were determined under a ministerial specification pursuant to subsection 29(1) of SIMA on the basis of facts available.

[151] In establishing the methodology for determining normal values under the ministerial specification, the CBSA analyzed all the information on the administrative record including the complaint filed by the domestic industry, the CBSA’s margin of dumping estimate at the initiation of the investigation and other information submitted by exporters of certain silicon metal originating in or exported from Brazil, Kazakhstan, Norway and Thailand. No information was provided by the exporters in Laos.

[152] The CBSA decided that the normal values and export prices determined for the exporters whose submissions were verified for the final determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for determining normal values since it reflects exporters’ trading practices during the POI. As no exporters of certain silicon metal originating in or exported from Malaysia provided a response to the Dumping RFI, the CBSA considered the verified information from the cooperative exporters of certain silicon metal originating in or exported from the other countries.

[153] For the same reasons provided at the initiation of the investigation (i.e., the geographic proximity of these two countries and the comparable cost of electricity, a main cost driver for the production of silicon metal), the CBSA considered that the information in respect of subject goods from Thailand provides a reasonable basis to establish normal values for the subject goods from Malaysia.

[154] The CBSA considered that the amount by which the normal value exceeded the export price on an individual transaction of Sica (expressed as a percentage of the export price), was an appropriate basis for determining normal values. This method limits the advantage that an exporter may gain from not providing necessary information requested in a dumping investigation as compared to an exporter that did provide the necessary information.

[155] Therefore, the normal values were determined under a ministerial specification pursuant to subsection 29(1) of SIMA, based on the export price as determined under section 24 or 29 of SIMA, plus an amount equal to 85.2% of that export price.

[156] The CBSA considered that the information submitted on the CBSA customs entry documentation was the best information on which to determine the export price of the goods for all other exporters as it reflects actual import data.

[157] Based on the above methodologies, the subject goods exported to Canada by all exporters in Malaysia were found to be dumped by a margin of dumping of 85.2%, expressed as a percentage of the export price.

Norway

Elkem AS

[158] Elkem is a producer and exporter of subject goods to Canada located in Norway.

[159] Elkem provided a response to the Dumping RFI^{Footnote 51} and the three SRFIs^{Footnote 52} sent to Elkem to gather additional information and seek clarification. A desk audit was completed to review and verify the submission provided by the exporter. Elkem’s submission was considered substantially complete for the purpose of the final determination.

[160] Elkem did not have sufficient domestic sales of like goods to enable the determination of normal values under section 15 of SIMA. As such, normal values were determined pursuant to paragraph 19(b) of SIMA, based on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits.

[161] The amount for profits was determined in accordance with subparagraph 11(1)(b)(ii) of the SIMR based on the weighted average profit made on domestic sales of goods that are of the same general category as the subject goods exported to Canada.

[162] For subject goods exported from Elkem to Canada during the POI, export prices were determined under section 24 of SIMA, based on the exporter’s selling price adjusted by deducting the costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

[163] For the final determination, the total normal value compared to the total export price results in a margin of dumping of 1.2% for Elkem, expressed as a percentage of the export price. Since the margin of dumping is insignificant, the dumping investigation in respect of the goods of this exporter was terminated pursuant to paragraph 41(1)(a) of SIMA.

No Other Exporters - Norway

[164] Based on the information on the record, 100% of the subject goods originating in and exported from Norway during the POI, were exported by Elkem. Therefore, no “all other exporters” margin of dumping has been determined for purposes of the final determination.

Thailand

Sica New Materials (Thailand) CO., Ltd. (Sica)

[165] Sica is a producer and exporter of subject goods and its production facility is located in Kanchanaburi, Thailand.

[166] Sica provided a response to the Dumping RFI^{Footnote 53} and the two SRFIs^{Footnote 54} that were sent to Sica to gather additional information and seek clarification. Officers of the CBSA met with the representatives of Sica at their offices and facilities in Thailand to verify information provided by the company.^{Footnote 55} Sica’s submission was considered substantially complete for the purpose of the final determination.

[167] Normal values could not be determined under section 15 of SIMA as Sica did not have domestic sales of silicon metal during the POI. In addition, sufficient information was not available to permit the determination of normal values pursuant to paragraph 19(b) of SIMA, based on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs and a reasonable amount for profits. Specifically, a reasonable amount for profits could not be determined under paragraph 11(1)(b) of SIMR. As such, normal values were determined pursuant to subsection 29(1) of SIMA using a paragraph 19(b) methodology, based on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs and a reasonable amount for profits.

[168] The cost of production and the amount for administrative, selling and all other costs were based on the information provided by Sica. The amount for profits was based on the average profit made on sales of like goods or goods that are of the same general category as the subject goods as determined for exporters who provided a complete response to the dumping RFI in the investigation and had qualified and reliable domestic sales of silicon metal during the period of profitability analysis.

[169] For subject goods exported by Sica to Canada and released into Canada during the POI, export prices were determined under section 24 of SIMA, based on the exporter’s selling price adjusted by deducting the costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

[170] For the final determination, the total normal value compared to the total export price results in a margin of dumping of 51.0% for Sica, expressed as a percentage of the export price.

G.S. Energy

[171] G.S. Energy is a producer of silicon metal and did not export any subject goods to Canada that were released into Canada during the POI. GS Energy provided a response to the Dumping RFI.^{Footnote 56} For the purpose of the final determination, G.S. Energy’s domestic sales information was used for purposes of the determination of normal values pursuant to subparagraph 20(1)(c)(i) of SIMA.^{Footnote 57}

Rio Tinto Procurement (Singapore) Pte Ltd. (RTPS)

[172] RTPS is located in Singapore and was a vendor of subject goods during the POI. RTPS sold subject goods that were procured from unrelated sources in several of the named countries.

[173] RTPS is a subsidiary of the Rio Tinto Group and provides global category management services to its associated companies under the Rio Tinto Group. During the POI, all subject goods sourced by RTPS were sold to its related importer in Canada, Rio Tinto Alcan Inc. (RTA).^{Footnote 58}

[174] RTPS provided a response to the Dumping RFI.^{Footnote 59} Two supplemental RFIs^{Footnote 60} were sent to RTPS to gather additional information and seek clarification. Officers of the CBSA met with the representatives of RTPS at their offices in Singapore to verify information provided by the company.^{Footnote 61} RTPS’s submission was considered substantially complete for the purpose of the final determination.

[175] For the purpose of the final determination, RTPS is considered a vendor, not an exporter of the subject goods imported into Canada during the POI.

All Other Exporters – Thailand

[176] At the initiation of the investigation, all known and potential exporters were given the opportunity to participate in the investigation and notified that failure to submit all required information and documentation, including non-confidential versions, or failure to permit verification of any information, may result in the normal values of the subject goods being based on the facts available. It was further stated that such a decision would be less favourable to their company than if complete and verifiable information were made available.

[177] For all other exporters of subject goods originating in or exported from Thailand that did not provide a response to the dumping RFI or did not furnish sufficient information, normal values and export prices were determined under a ministerial specification pursuant to subsection 29(1) of SIMA on the basis of facts available.

[178] In establishing the methodology for determining normal values under the ministerial specification, the CBSA analyzed all the information on the administrative record including the complaint filed by the domestic industry, the CBSA’s margin of dumping estimate at the initiation of the investigation and other information submitted by exporters of certain silicon metal originating in or exported from Brazil, Kazakhstan, Norway and Thailand. No information was provided by the exporters in Laos and Malaysia.

[179] The CBSA decided that the normal values and export prices determined for the exporters whose submissions were verified for the final determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for determining normal values since it reflects exporters’ trading practices during the POI. The CBSA first considered whether the information from cooperative exporters of certain silicon metal originating in or exported from Thailand was appropriate to use as the basis for the determination of normal values for all other exporters in Thailand. The only information on the record with respect to goods originating in or exported from Thailand was from Sica.

[180] The CBSA considered that the amount by which the normal value exceeded the export price on the individual transaction of Sica (expressed as a percentage of the export price), was an appropriate basis for determining normal values. This method relies on information related to goods that originated in Thailand and limits the advantage that an exporter may gain from not providing necessary information requested in a dumping investigation as compared to an exporter that did provide the necessary information.

[181] Therefore, the normal values were determined under a ministerial specification pursuant to subsection 29(1) of SIMA, based on the export price as determined under section 24 or 29 of SIMA, plus an amount equal to 85.2% of that export price.

[182] The CBSA considered that the information submitted on the CBSA customs entry documentation was the best information on which to determine the export price of the goods for all other exporters as it reflects actual import data.

[183] Based on the above methodologies, the subject goods exported to Canada by all other exporters were found to be dumped by a margin of dumping of 85.2%, expressed as a percentage of the export price.

Summary of Results - Dumping

[184] A summary of the margins of dumping by exporter respecting all subject goods released into Canada during the POI are as follows:

Margins of Dumping by Exporter
Period of Investigation (January 1, 2016 to December 31, 2016)

Country	Margins of Dumping as Percentage of Export Price
Brazil
Ligas de Aluminio S.A.	27.8%
RIMA Industrial S.A.	0.0%
Polymet Alloys Inc. (USA)	27.8%
All Other Exporters - Brazil	27.8%
Kazakhstan
Tau-Ken Temir LLP	18.2%
All Other Exporters – Kazakhstan	86.5%
Laos
All Exporters - Laos	85.2%
Malaysia
All Exporters – Malaysia	85.2%
Norway
Elkem AS	1.2%
Thailand
Sica New Materials (Thailand) Co., Ltd.	51.0%
All Other Exporters – Thailand	85.2%

[185] Under paragraph 41(1)(a) of SIMA, the CBSA shall terminate the dumping investigation in respect of the goods of an exporter if the CBSA is satisfied that there has been no dumping or the margin of dumping of those goods is insignificant. Pursuant to subsection 2(1) of SIMA, a margin of dumping of less that 2% of the export price of the goods is defined as insignificant.

[186] As can be seen from the above table, goods exported to Canada from Brazil by RIMA were not dumped and goods exported to Canada from Norway by Elkem have an insignificant margin of dumping. As a result, the CBSA terminated the dumping investigation in respect of these goods pursuant to paragraph 41(1)(a) of SIMA.

[187] The remaining goods under investigation have been dumped and the margins of dumping on the goods are greater than the threshold of 2% and are therefore not considered insignificant. As a result, pursuant to paragraph 41(1)(b) of SIMA, the CBSA made a final determination of dumping respecting certain silicon metal originating in or exported from Brazil, Kazakhstan, Malaysia, and Thailand, for which the dumping investigation was not terminated.

[196] At the initiation of the investigation, the CBSA sent Subsidy RFIs to the governments of the countries under investigation as well as all known exporters/producers of silicon metal in those countries. Information was requested in order to establish whether there had been financial contributions made by any level of government, including SOEs possessing, exercising or vested with government authority and, if so, to establish if a benefit has been conferred on persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of silicon metal; and whether any resulting subsidy was specific in nature.

[197] The respective governments were also requested to forward the RFIs to all subordinate levels of government that had jurisdiction over the exporters. The exporters/producers were requested to forward a portion of the RFI to their input suppliers, who were asked to respond to questions pertaining to their legal characterization as SOEs.

[198] The governments and the exporters/producers were also 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 visits may result in the amount of subsidy and the assessment of countervailing 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 favourable to their firm than if complete, verifiable information was made available.

[199] All governments, with the exception of the Government of Malaysia (GOM), provided a substantially complete response to the CBSA’s government Subsidy RFI.

[200] The CBSA also received substantially complete responses to the Subsidy RFI from five exporters/producers. The programs used by the responding exporters are listed in Appendix 2.

[201] Amounts of subsidy relating to each of the exporters that provided a substantially complete response to the RFI are presented in a summary table at the end of this section and in Appendix 1.

Brazil

[202] At the initiation of the subsidy investigation, the CBSA identified 16 potential subsidy programs. As a result of information obtained in the course of the investigation, one additional program was added (Program 17).

[203] In total, 17 programs were investigated for the purposes of this investigation.

[204] For the purposes of the final determination, the CBSA found that the following programs did not confer benefits on subject goods originating in or exported from Brazil during the POI. Further details on these programs can be found in Appendix 2.

Ligas de Aluminio S.A. (Liasa)

[205] Liasa is a producer and exporter of subject goods to Canada. Liasa provided complete responses to the Subsidy RFI and three SRFIs.^{Footnote 62}

[206] For the purposes of the preliminary determination, the CBSA found that Liasa benefitted from two subsidy programs during the POI and estimated an amount of subsidy for these programs, based on its analysis of the information provided by Liasa and by the GOB.

[207] For the purposes of the final determination and based on its analysis of the information provided by Liasa and by the GOB, the CBSA determined an amount of subsidy on the basis of financial benefits received under the following two programs:

[208] For the purposes of the final determination, both programs are considered to be specific and, therefore, actionable. Appendix 2 provides descriptions of the programs used by the exporter in the investigation and a summary of the legislative basis on which the programs are considered actionable.

[209] The CBSA has determined that Liasa received an amount of subsidy equal to 7.2%, when expressed as percentage of the total export price.

RIMA Industrial S.A. (RIMA)

[210] RIMA is a producer and exporter of subject goods to Canada. RIMA provided substantially complete responses to the Subsidy RFI and three SRFIs.^{Footnote 63}

[211] For the purposes of the preliminary determination, the CBSA found that RIMA benefitted from six subsidy programs during the POI and estimated an amount of subsidy for these programs, based on its analysis of the information provided by RIMA and by the GOB.

[212] For the purposes of the final determination and based on its analysis of the information provided by RIMA and by the GOB, the CBSA determined an amount of subsidy on the basis of financial benefits received under the following four programs:

[213] For the purposes of the final determination, all four programs are considered to be specific and, therefore, actionable. Appendix 2 provides descriptions of the programs used by the exporter in the investigation and a summary of the legislative basis on which the programs are considered actionable.

[214] The CBSA has determined that RIMA received an amount of subsidy equal to 2.8%, when expressed as a percentage of the total export price.

Companhia Ferroligas Minas Gerais (Minasligas)

[215] Minasligas is a producer of silicon metal that did not export any subject goods to Canada during the POI. Minasligas provided a response to the Subsidy RFI. However, given that Minasligas is not an exporter for this investigation, its information was not used for purposes of the final determination.^{Footnote 64}

Polymet Alloys Inc. (USA) (Polymet)

[216] Information on the record confirmed that Polymet’s exported subject goods were sourced from RIMA. As such, using RIMA’s rate of subsidy per kilogram, the amount of subsidy expressed over the export price for Polymet at the final determination is 2.7%.

All Other Exporters – Brazil

[217] Based on the information on the record, 100% of the subject goods originating in or exported from Brazil during the POI were produced by Liasa or RIMA.

[218] As such, based on the amount of subsidy per kilogram determined for the exporter/producer at the final determination, the amount of subsidy for the other exporters was 6.0%, when expressed as percentage of the total export price.

Kazakhstan

[219] At the initiation of the subsidy investigation, the CBSA identified two subsidy programs. As noted at the preliminary determination, Program 1 was found to have represented a broad category of benefits, such that the CBSA identified additional potential subsidy programs available in the Saryarka Special Economic Zone (SEZ). In addition, the CBSA had also identified new potential subsidy programs for purposes of the preliminary determination, which resulted in a total of 10 potential programs being investigated during the preliminary phase of the investigation.

[220] During the final phase of the investigation, the CBSA identified one additional program (Program 11) and changed the name of one of the programs (Program 5) to better reflect the type of benefits received by the exporter. As a result, a total of 11 programs were investigated for purposes of the final determination. Details respecting all 11 programs can be found in Appendix 2.

Tau-Ken Temir LLP

[221] Tau-Ken is a producer and exporter of subject goods to Canada. Tau-Ken provided substantially complete responses to the CBSA’s Subsidy RFI and SRFI.^{Footnote 65}

[222] For purposes of the preliminary determination, the CBSA found that Tau-Ken benefitted from six subsidy programs during the POI and estimated an amount of subsidy for these programs, based on its analysis of the information provided by Tau-Ken and by the GOK.

[223] For the purposes of the final determination and based on its analysis and verification of the information provided by Tau-Ken and by the GOK, the CBSA determined an amount of subsidy on the basis of financial benefits received under the following six programs:

[224] For the purposes of the final determination, all six programs above are considered to be specific and, therefore, actionable. Appendix 2 provides descriptions of the programs used by the exporter in the investigation and a summary of the legislative basis on which the programs are considered actionable.

[225] The CBSA determined that Tau-Ken received an amount of subsidy equal to 40.3%, when expressed as percentage of the total export price.

All Other Exporters – Kazakhstan

[226] For all other exporters of subject goods originating in or exported from Kazakhstan that did not provide sufficient information, the CBSA determined an amount of subsidy, pursuant to a ministerial specification under subsection 30.4(2) of SIMA, on the basis of the following methodology:

1. the highest amount of subsidy per unit found for an individual subsidy program from all of the subsidy programs under which the cooperative exporter received benefits, as found at the final determination; multiplied by
2. the total number of subsidy programs (i.e. six programs) under which the cooperative exporter received benefits, as found at the final determination.

[227] Using the above methodology, the amount of subsidy for all other exporters is 269.7%, expressed as a percentage of the export price.

Malaysia

[228] No exporters in Malaysia participated in the subsidy investigation.

[229] The GOM provided a response to the Subsidy RFI which was considered incomplete. The CBSA sent a letter to the GOM stating that their response was incomplete. The CBSA’s letter identified the deficiencies in their response and indicated that if sufficient information was not provided, their response could not be considered for the investigation.^{Footnote 66} No further correspondence was received from the GOM.

All Exporters – Malaysia

[230] Given that no exporters in Malaysia provided a response to the subsidy RFI, the CBSA estimated an amount of subsidy for all exporters in Malaysia based on the difference between:

1. the average cost of production during the period of investigation from producers in Thailand that provided a sufficient response to the RFI,
2. the average export price of the subject goods during the period of investigation from Malaysia, as declared on import documentation.

[231] This methodology uses the best information available to determine the amount of subsidy as it represents the differential between the exporter’s costs, based on verified surrogate data, and the export price at which the goods were actually sold. Subsidies reduce the cost to produce a good, thereby allowing producers to sell their goods at a lower price.

[232] Using the above methodology, the amount of subsidy for all other exporters is 10.6%, expressed as a percentage of the total export price.

Norway

[233] In total, 17 programs were investigated for the purposes of this investigation.

Elkem AS (Elkem)

[234] Elkem is a producer and exporter of subject goods to Canada. Elkem provided substantially complete responses to the Subsidy RFI and three SRFIs.^{Footnote 67}

[235] For the purposes of the preliminary determination, the CBSA found that Elkem benefitted from six subsidy programs during the POI and estimated an amount of subsidy for these programs, based on its analysis of the information provided Elkem and by the GON.

[236] For the purposes of the final determination, the CBSA found that the following programs did not confer benefits on subject goods exported from Norway during the POI. Further details on these programs can be found in Appendix 2.

[237] For the purposes of the final determination and based on its analysis of information provided by Elkem and by the GON, the CBSA determined an amount of subsidy on the basis of financial benefits received under the following two programs:

[238] For the purposes of the final determination, both programs are considered to be specific and, therefore, actionable. Appendix 2 provides description of the programs used by the exporter in the investigation and a summary of the legislative basis on which the program are considered actionable.

[239] The CBSA has determined that Elkem received an amount of subsidy equal to 2.8%, when expressed as a percentage of the total export price.

Wacker Chemicals Norway AS (Wacker)

[240] Wacker is a producer of silicon metal that did not export any subject goods to Canada during the POI. Wacker provided a response to the Subsidy RFI. However, given that Wacker is not an exporter for this investigation, its information was not used for purposes of the final determination.

No Other Exporters – Norway

[241] Based on the information on the record, 100% of the subject goods originating in and exported from Norway during the POI were exported by Elkem. Therefore, no “all other exporters” amount of subsidy has been determined for purposes of the final determination.

Thailand

[242] In total, four programs were investigated for the purposes of the final determination.

Sica New Materials (Thailand) Co., Ltd. (Sica)

[243] Sica is a producer and exporter of subject goods in Canada. Sica provided substantially complete responses to the Subsidy RFI and two SRFIs^{Footnote 68}.

[244] For the purposes of the preliminary determination, the CBSA found that Sica benefitted from the following program during the POI and estimated an amount of subsidy for that program, based on its analysis of the information provided by Sica and by the GOT.

[245] For the purposes of the final determination, the CBSA found that the following programs did not confer benefits on subject goods exported from Thailand during the POI. Further details on these programs can be found in Appendix 2.

[246] For the purposes of the final determination and based on the analysis of information provided by Sica and the GOT, the CBSA determined an amount of subsidy on the basis of financial benefits received under the following program:

[247] For the purposes of the final determination, this program is considered to be specific and, therefore, actionable. Appendix 2 provides a description of the program used by the exporter in the investigation and a summary of the legislative basis on which the program is considered actionable.

[248] The CBSA has determined that Sica received an amount of subsidy equal to 0.8%, when expressed as a percentage of the total export price.

G.S. Energy Co., Ltd. (GS Energy)

[249] GS Energy is a producer of silicon metal that did not export subject goods that were released into Canada during the POI. GS Energy provided a response to the Subsidy RFI.^{Footnote 69} However, given that GS Energy is not an exporter for this investigation, an amount of subsidy was not determined for this company.

[250] However, its cost information was used for the purposes of determining the amount of subsidy for “all other exporters” of subject goods originating in or exported from Malaysia.

All Other Exporters – Thailand

[251] For all other exporters of subject goods originating in or exported from Thailand that did not provide sufficient information, the CBSA determined an amount of subsidy, pursuant to a ministerial specification under subsection 30.4(2) of SIMA, on the basis of the amount of subsidy per unit found for the subsidy program under which the cooperative exporter received benefits, as found at the final determination.

[252] Using the above methodology, the amount of subsidy for all other exporters is 0.5%, expressed as the percentage of the total export price.

Summary of Results – Subsidy

[253] A summary of the final results of the subsidy investigation respecting all subject goods released into Canada during the subsidy POI is provided below:

Amounts of Subsidy by Exporter
Period of Investigation (January 1, 2016 to December 31, 2016)

Country	Amount of Subsidy as Percentage of export price
Brazil
Ligas de Aluminio S.A.	7.2%
RIMA Industrial S.A.	2.8%
Polymet Alloys Inc. (USA)	2.7%
All Other Exporters – Brazil	6.0%
Kazakhstan
Tau-Ken Temir LLP	40.3%
All Other Exporters – Kazakhstan	269.7%
Malaysia
All Exporters – Malaysia	10.6%
Norway
Elkem AS	2.8%
Thailand
Sica New Materials (Thailand) Co., Ltd. (Sica)	0.8%
All Other Exporters – Thailand	0.5%

[254] Under paragraph 41(1)(a) of SIMA, the CBSA shall terminate the subsidy investigation in respect of any goods of an exporter if the CBSA is satisfied that there has been no subsidizing or the amount of subsidy on the goods is insignificant. Pursuant to subsection 2(1) of SIMA, an amount of subsidy of less than 1% of the export price of the goods is defined as insignificant.

[255] As can be seen from the above table, the amounts of subsidy in respect of certain silicon metal exported to Canada from Thailand by Sica and certain silicon metal originating in or exported from Thailand and exported to Canada by all other exporters did not exceed 1% of their value calculated on a per unit basis and were, therefore, determined to be insignificant. As a result, the CBSA terminated the subsidy investigation in respect of these goods pursuant to paragraph 41(1)(a) of SIMA.

[256] The remaining goods under investigation have been subsidized and the amounts of subsidy on the goods are greater than the threshold of 1% and are therefore not considered insignificant. As a result, pursuant to paragraph 41(1)(b) of SIMA, the CBSA made a final determination of subsidizing respecting certain silicon metal originating in or exported from Brazil, Kazakhstan, Malaysia, and Norway.

Responses to the Subsidy RFI were received from the Government of Brazil (GOB) and from two exporters, RIMA Industrial S.A. (RIMA) and Ligas de Aluminio S.A. (Liasa).

In its original response to the subsidy RFI, the GOB provided a description of the subsidy programs identified by the CBSA and submitted copies of the relevant supporting laws, regulations and policies for programs relevant to the producers in Brazil that exported during the POI.

Both RIMA and Liasa responded to three SRFIs and the GOB responded to two SRFIs in regards to the subsidy investigation.

The CBSA was satisfied that sufficient information was provided through all these submissions to determine an amount of subsidy for both Liasa and RIMA on a program-by-program basis.

A total of 17 subsidy programs were reviewed by the CBSA in the subsidy investigation.

Of the 17 subsidy programs, 16 programs were identified at initiation.

One program, Program 10 – Program to Induce Industrial Modernization in the State of Minas Gerais (PROIM), was eliminated prior to the preliminary determination as information on the record indicated that this program is no longer in force in Brazil.

Also, prior to the preliminary determination, the CBSA added Program 17 – Taxes exempted from Free Trade Zone of Manaus; and determined that Program 15 – Export Credit Insurance provided by the Brazilian Guarantees and Fund Managements Agency falls under Program 9 – Export Guarantee Fund.

Furthermore, at the preliminary determination, the CBSA determined that these six programs were not used by the exporters in Brazil:

Details of these aforementioned programs can be found in the CBSA’s preliminary determination Statement of Reasons.^{Footnote 71}

A summary of the investigation results respecting the remaining subsidy programs in relation to RIMA and Liasa is provided below.

Subsidy Programs Used by the Responding Exporters

The Superintendence for the Development of the Northeast (SUDENE) program was created in 1959, through Law No. 3,692. It was extinguished in 2001 and substituted by the ADA (Agency for the Development of the Amazon Region) and ADENE (Agency for the Development of Northeast) and recreated by Supplementary Law No. 125, in 2007.^{Footnote 72}

SUDENE provides assistance to the economically disadvantaged Northeast Region by means of income tax reductions equal to 75% reduction of the corporate income tax.^{Footnote 73} The objective is to reduce economic and social imbalances between Brazilian regions by means of compensatory mechanisms for the development of the Northeast Region.

Both cooperative exporters qualified for benefits under this program during the POI, although only one was an actual recipient of benefits.

For the purposes of the final determination, the information on the record indicates that this program is an actionable subsidy. This program constitutes a financial contribution, pursuant to paragraph 2(1.6)(b) of SIMA, i.e., amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confers a benefit to the recipient equal to the amount of the reduction/exemption.

The information also indicates that this program is a specific subsidy under paragraph 2(7.2)(a) of SIMA as it is limited pursuant to an instrument or document to a specific number of enterprises, within the authority of the jurisdiction, in this case being located in a specific geographic location of its jurisdiction.

REINTEGRA was established August 2, 2011 in Provisional Measure No. 540, which was converted into Law No. 12,546, on December 14, 2011. The law expired in December 2013, but was reinstituted by Provisional Measure No. 651, of July 9, 2014, and converted into Law No. 13,043 on November 13, 2014.^{Footnote 74}

REINTEGRA aims to partially return the remaining residual tax in the supply chain of exported goods.

After making an export, the legal entity obtains tax credits that can be used to offset debts related to taxes administered by the Federal Revenue of Brazil – RFB (except social security contributions) or receive reimbursements in cash.^{Footnote 75} During the POI, the subsidy was calculated at 0.1% of the value of a company’s exports.

Both cooperative exporters from Brazil received benefits under this program during the POI.

For the purposes of the final determination, the information on the record indicates that this program is an actionable subsidy. This program is a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the government are reduced and/or exempted, and would confer a benefit to the recipient equal to the amount of the reduction/exemption.

The information also indicates that this program is a specific subsidy under paragraph 2(7.2)(b) of SIMA as it is contingent upon export performance and, therefore, constitute a prohibited subsidy as defined in subsection 2(1) of SIMA.

Drawback was established in 1966. The enacting legislation is in Article 78 of Law No. 37, published on November 18, 1966.^{Footnote 76}

Drawback essentially allows a manufacturing company to purchase raw materials, parts and components without paying import duty and indirect taxes, whether importing or buying from domestic suppliers, with the condition being the finished product is exported. In Brazil, companies have one year to fulfill this obligation to export. The period can be extended for an extra year. Drawback cannot be applied to capital goods.^{Footnote 77}

There are three schemes under the Integrated Drawback Regime: suspension, exemption and refund. According to the GOB, 95% of drawback transactions are made under the suspension scheme.^{Footnote 78}

Suspension Drawback

Suspension Drawback is regulated under Law No. 11.945, effective March 25, 2009. This type of drawback allows companies to import or purchase from domestic suppliers, without paying import duties or indirect taxes, raw materials, parts and components that will be used in manufacturing goods that will be exported. Only imports made under Suspension Drawback may be relieved of “Tax on Circulation of Goods and Services” (ICMS).^{Footnote 79}

Both cooperative exporters from Brazil used the Suspension Drawback regime during the POI.

For the purposes of the final determination, it was determined that the Integrated Drawback Program as it relates to the exemption of duties and taxes on purchases of carbon/graphite electrodes (including electrode paste) used in the production of subject goods is a subsidy. The definition of a subsidy in section 2 of SIMA provides that a subsidy:

Based on the information available on the record, the CBSA concluded that carbon/graphite electrodes (including electrode paste) used in the production of subject goods do not meet the exemptions noted above.

This program is a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the government are reduced and/or exempted, and would confer a benefit to the recipient equal to the amount of the reduction/exemption.

The information also indicates that this program is a specific subsidy under paragraph 2(7.2)(b) of SIMA as it is contingent upon export performance and, therefore, constitutes a prohibited subsidy as defined in subsection 2(1) of SIMA.

IPTU in the municipality of Várzea de Palma is authorized under municipal law No. 2.232, dated December 16, 2015.^{Footnote 80}

The IPTU has a municipal property tax on urban property and land. The basis of calculation of the tax is the real value (sale value) of the real estate.^{Footnote 81} The subsidy is described as a “fiscal incentive” whereby the purpose is to give stimulus to a company in order to maintain activity and hiring, guaranteeing employability of the citizens of Várzea de Palma, and stability of the local economy.^{Footnote 82}

For the purposes of the final determination, the information on the record indicates that this program is an actionable subsidy. This program constitutes a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, i.e., amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

The information also indicates that this program is a specific subsidy under paragraph 2(7.2)(a) of SIMA as it is limited pursuant to an instrument or document to a specific number of enterprises, within the authority of the jurisdiction, in this case being located in a specific geographic location of its jurisdiction.

Other Subsidy Programs Investigated

The following five programs were also included in the subsidy investigation and investigated in the final phase of the investigation, but were found not to be countervailable during the POI.

Both ICMS and IPI function as part of an indirect, value-added tax (VAT) regime in Brazil, established under the Constitution of the Federative Republic of Brazil (CFRB). The CFRB, establishes in Title VI, Chapter I, the general rules for The National Tax System. ICMS was established under CFRB Article 155 and Complementary Law 87/1996, while IPI was established under CFRB Article 153.^{Footnote 83}

IPI Tax

Regulated through Laws 5,172 on October 25, 1966 and 4,502 on November 30, 1964 and Decree 7,212 on June 15, 2010,^{Footnote 84} the IPI tax is a Brazilian Federal tax that applies to all national or foreign industrialized (i.e. manufactured) products. The IPI tax rates are product-specific, and generally range between 0% and 20%, although they can reach up to 300%.

The IPI tax is linked to the price or value of the industrialized product on which it is imposed. In the case of domestic products, the taxable base is the transaction value. In the case of imported products, the taxable base is the customs value plus the import duties and charges paid. In the case of industrialized products acquired in auction, the taxable base is the price of the auctioned product.^{Footnote 85}

ICMS Tax

The specific application of this tax varies from state to state. The State of Minas Gerais (where the two Brazilian exporters are located) in compliance with the provisions of Complementary Law No. 87/1996, instituted ICMS into Law No. 6,763 / 1975.^{Footnote 86}

This is a tax on operations related to the circulation of goods and to the rendering of interstate and inter Municipal transportation services and communication services.^{Footnote 87}

ICMS is charged on the circulation of goods, including on imports from abroad. However, ICMS will not be levied on goods exported.^{Footnote 88}

CBSA Determination

At the preliminary determination, an amount of subsidy was estimated for one of the exporters in Brazil based on information that indicated the exporter was exempted from paying these taxes on purchases of equipment.

As such, for the purposes of the preliminary determination, this program was found to be a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the government are reduced and/or exempted, and would confer a benefit to the recipient equal to the amount of the reduction/exemption.

The investigation into this program concerned the allegation that there was excessive relief of these taxes such that the taxes exempted or reduced exceeded the taxes payable by the silicon metal producers in Brazil to the GOB. The CBSA did not find any such excess relief, as these indirect taxes function within the Brazilian VAT regime, where the GOB demonstrated reasonable measures to ensure refunds are not excessive.

It was also determined that what was estimated at the preliminary determination to be “exemptions” of ICMS payable were not correctly characterized.^{Footnote 89} There are merely different tax rates established for various categories of equipment and as such, they do not constitute a financial contribution under paragraph 2(1.6)(b) of SIMA, as amounts that would otherwise be owing and due to the government which are reduced and/or exempted.

The current framework for Ex-Tarifário was established in light of the institution of the Brazilian Chamber of Foreign Trade (CAMEX) in 2001. The current authority rests under CAMEX Resolution No. 66/2014, which repealed the previous CAMEX Resolution No. 17/2012.^{Footnote 90}

Ex-Tarifário is a special tariff regime which aims to reduce costs to companies located in Brazil. The program reduces import tariffs on certain Capital Goods (BK) and Informatics and Telecommunications Goods (BIT) where there is no equivalent production in Brazil.^{Footnote 91}

Although the creation of an Ex-Tarifário needs to be requested by a company or industrial association located in Brazil, an approved tariff reduction relates not to the applicant per se but to the good itself. This means that any importer seeking to import a good whose description corresponds to an Ex-Tarifário can make use of this reduction once it comes into force.

The result is an exception under the Common Tariff List with a tariff rate of 2% or 0%, substantially lower in comparison to that applicable to BK and BIT codes, which are usually 14%.

The effective duration of the reduction in the tariff rate is about two years.

CBSA Determination

For the purposes of the preliminary determination of subsidizing, sufficient information was not available to make a determination in respect of this potentially actionable subsidy program. Subsequent to the preliminary determination, the CBSA received additional information on this program.

The information provided by the exporter that made use of this program demonstrated that none of the imported equipment was used in the production of subject goods. The equipment was either used in the production of non subject goods or in the production of goods produced at a facility which did not export subject goods during the POI.

The GOB’s position regarding Ex-Tarifário can be summarized as follows:

1. Ex-Tarifário cannot be considered “revenue foregone by government” under SIMA paragraph 2 (1.6)(b) because the tariff rate under Ex-Tarifário is essentially changed, not merely a reduced rate, so there is nothing “foregone” with a new rate;
2. It is generally available also by virtue of the new tariff rate being available to all importers upon approval, not just the applicant;
3. It is generally available, not favouring particular industries, as evidenced by historical usage.

The GOB provided substantial documentation on the usage distribution of this program historically, including the POI.^{Footnote 92}

The information provided by the GOB sufficiently demonstrated that the program is generally available, as there is a broad usage of Ex-Tarifário across industry sectors rather than any concentration amongst a small number of sectors.

For example, during the POI, 65 of the 81 industry sectors reportedly availed themselves of benefits under this program, with 50 of those sectors each accounting for less than 1.5% of the total value of imports under the program.

Based on this information, the CBSA found that the program was generally available as evidenced by the objectivity of the application criteria and its historical usage.

The Brazilian Development Bank (BNDES) operates under national legislation which encompasses Presidential Decree No. 4418/2002 (as amended),^{Footnote 93} BNDES by-laws, as well as rules that govern the provision of credit established by the Central Bank. The daily operation of financial instruments is regulated internally by norms settled by BNDES’ Board of Executive Directors.^{Footnote 94}

BNDES is the Brazilian financial institution responsible for the medium and long-term investment credit policy of the GOB. Founded in 1952, BNDES also finances machinery and equipment purchases. BNDES’ activities are aimed at financing investments in the Brazilian economy that improve the standard of living in Brazil. BNDES is a 100% state owned company under private law.^{Footnote 95}

There are several regimes under the BNDES banner that were identified by the GOB:

• FINAME;^{Footnote 96}
• Exim^{Footnote 97} (Pre and Post Shipment Financing);
• Automatic^{Footnote 98}

The FINAME was set up in 1966. Its purpose is to provide financing for the acquisition of machines and equipment.

BNDES Exim was established in 1991. Its purpose is to provide support to competitive Brazilian companies in the international market of goods and services.

The BNDES Automatic was established in 1993. Its purpose is to provide loans to support investment projects of a value lower than R$ 20 million.

The GOB stated that BNDES operates in every sector of the economy, focusing on industrial restructuring, infrastructure expansion and revamping, safeguarding the environment, and accomplishing and improving agriculture and services.

BNDES directly finances the purchase of new domestic and imported machinery and equipment, as well as leasing domestic equipment, works of infrastructure and working capital when associated with an investment project of a total value above R$ 20 million. The financed company has the option of acting directly with BNDES or through an on-lending agent bank. In some cases, the financing may also be mixed between direct financing by BNDES and indirect financing through an agent bank.^{Footnote 99}

CBSA Determination

For the purposes of the preliminary determination of subsidizing, sufficient information was not available to make a determination in respect of this potentially actionable subsidy program.

The GOB provided substantial documentation on the usage distribution of this program historically and for the POI.^{Footnote 100}

The information provided by the GOB demonstrated that the program, including specifically the FINAME regime under the BNDES umbrella, is generally available, as there is a usage of FINAME across nearly all industry sectors, rather than being concentrated amongst only a small number of sectors.

The scheme relevant to the exporters in Brazil, which is not export contingent, is BNDES FINAME. The information available supports that the scheme under the BNDES program for loans is generally available.

This is by far the most widely held of the BNDES schemes with 88% of industry categories availing themselves of loans in 2016. Of those industries, 69% each received less than 1% of the loan values over the period, indicating a broad, non-specific usage.^{Footnote 101} The Metallurgical sector, which includes silicon metal, claimed only 0.76% of the loans under FINAME over that period.

The information provided indicated that 14,596 loans under FINAME were dispersed amongst 13,794 individual clients during the POI.^{Footnote 102}

Consequently, the general availability of the program can be summarized as follows:

• 88% of industries availed themselves of the program (78/89) during the POI;
• The criteria for qualification are objective, as set out in BNDES regulations;
• The criteria for approval are economic in nature and horizontal in application.^{Footnote 103}

Based on this information, the CBSA found that the program was generally available.

The allegation in the complaint concerned the potential supply of electricity at less than FMV. During the course of the investigation, the CBSA also investigated charcoal purchases made through SOEs, based on information submitted by the Brazilian exporters.

Electricity

There are two government-owned, related institutions which were investigated for potentially supplying electricity to producers of silicon metal at less than FMV.

Eletrobras (Centrais Elétricas Brasileiras S.A.) is an open capital company controlled by the GOB, which operates in the areas of generation, transmission and distribution of electricity.

The company controls 14 subsidiaries - Eletrobras Furnas, Eletrobras Chesf, Eletrobras Eletronorte, Eletrobras Eletrosul, Eletrobras Eletronuclear, Eletrobras CGTEE, Eletrobras Amazonas Geração e Transmissão, Eletrobras Distribuição Amazonas, Eletrobras Distribuição Roraima, Eletrobras Distribuição Alagoas, Eletrobras Distribuição Piauí, Eletrobras Distribuição Rondônia, Eletroacre and CELG Distribuição (CELG-D), a holding company (Eletrobras Eletropar), a research center (Cepel) and it also holds 50% of Itaipu Binacional.

Furnas is a mixed economy, private capital company whose main shareholder is Eletrobras. Furnas operates in three segments of the electricity industry chain:

• Generation;
• Transmission; and
• Marketing.

Sales are to distribution companies and customers in the “open market.” Furnas does not provide distribution, an activity consisting of supply of power to end consumers (households, industries, commerce, etc.).

According to the present regulatory framework (Law No. 10,848, dated March 15, 2004), there are two trading environments in the Brazilian energy market:

1. The Regulated Trading Environment (ACR) encompasses the distribution companies and what are known as the “captive” consumers, serviced only by local distributors, with electricity supply tariffs and conditions regulated by the National Electricity Agency (ANEEL);
2. The Free Trading Environment (ACL) encompasses what are known as the “free” consumers, empowered to buy energy from any supplier, other than the distribution companies, and the trading agents, which may purchase energy from any supplier and sell it to any purchaser, except captive consumers.

Under the ACR, distribution companies need to purchase energy from generators through public auctions under capped prices set by government, while under the ACL, free consumers (non captive) and generators can freely negotiate their own bilateral contracts.

State-owned generators, in commercializing their energy in ACL, had to do so through public auctions, until the advent of Law No. 13,360 of November 17, 2016. Until then, state owned generation companies could only sell electricity in the open market through auctions.

The contracts that formalize trade relations among the agents have the obligation to be registered in the Electric Energy Trading Chamber (CCEE) whether held in ACR or ACL. In ACL the quantities and prices traded are not disclosed.^{Footnote 104}

Charcoal

As previously noted, during the course of the investigation, a further request was made by the CBSA in respect of the Brazilian exporters’ purchases of charcoal from suppliers owned by the GOB.

CBSA Determination

Electricity

The CBSA found that there was no benefit in regards to electricity provided at less than FMV as the transactions at issue were not related to the subject goods because the contracts only became effective after all subject goods had been exported to Canada during the POI.

Notwithstanding the timing of the contracts in relation to the exportation of the subject goods, the CBSA found that the auction process established a market price for the electricity contract as the GOB controlled only the floor price, not the ceiling and there was ample competition in the process to establish a FMV.

Charcoal

Similarly, there was no amount of subsidy calculated for charcoal provided from the GOB at less than FMV as variations in the product type/grade, purchase volumes and timing of transactions made establishing appropriate benchmarks from the available information impossible to conclude that any positive evidence of a less than FMV price from the GOB existed.

Nonetheless, even an imperfect analysis of the closest comparisons that could be made did not reveal a price differential which would suggest that Petrobras was selling the input at a more favourable price than would be obtained from sources unrelated to the GOB.

For the purposes of the preliminary determination of subsidizing, sufficient information was not available to make a determination in respect of this potentially actionable subsidy program. For the final determination, the CBSA determined that this program did not confer benefits to the Brazilian exporters.

While not identified at the initiation of the investigation, this program was reported during the course of the preliminary investigation phase by one of the Brazilian exporters.

The Free Trade Zone of Manaus is an import/export free trade area covered by special tax incentives. It was established with the purpose of promoting regional development, through the creation of an industrial, commercial and agricultural center with economic conditions to enable its development, given the local factors and the great distance from the consumer centers.

It was established by Article No. 1 of Decree-Law No. 288/1967, and Article No. 1 of Decree Law No. 356/1968. An exhibit was provided which represents the full legislation covering the Manaus zone.^{Footnote 105}

The so-called “Áreas de Livre Comércio – ALC” (Free Trade Areas) were created to promote the development of international border cities located in the Western Amazon and Amapá, with the aim of integrating them with the rest of the country. The main objectives of the Free Trade Areas are to improve the supervision on import and export of goods, the strengthening of the commercial sector, the opening of new companies and the generation of jobs.

CBSA Determination

For the purposes of the preliminary determination, this program was determined to be a specific subsidy under paragraph 2(7.2)(a) of SIMA as it is limited pursuant to an instrument or document to a specific number of enterprises, within the authority of the jurisdiction, in this case being located in a specific geographic location of its jurisdiction.

Following the preliminary determination, it was determined that Rima does not receive any subsidy out of this arrangement but rather, only parties in the free trade areas that benefit from not having to pay certain taxes on purchases.

For the final determination, the CBSA determined that this program did not confer benefits in respect of the Brazilian exporters.

Responses to the Subsidy RFI were received from the Government of Kazakhstan (GOK) and from one exporter, Tau-Ken Temir LLP (Tau-Ken).

Tau-Ken and the GOK each responded to one SRFI, which included questions related to the subsidy investigation, and both parties submitted additional supporting documentation as a result of the on-site verification meetings with the CBSA.

The CBSA was satisfied that sufficient information was provided by both parties to enable the CBSA to determine an amount of subsidy for Tau-Ken on a program-by-program basis.

A total of 11 subsidy programs were reviewed by the CBSA throughout the course of the subsidy investigation. Of the 11 programs identified at the final determination, six programs were found to have been used by the exporter and found to be specific and, therefore, actionable. The following provides details regarding each of the 11 programs identified.

Subsidy Programs Used by the Responding Exporter

Overview of Saryarka SEZ Benefits

The Saryarka SEZ was established by Decree of the President of the Republic of Kazakhstan No. 181 - On establishment of the special economic zone “Saryarka,” which was approved on November 24, 2011.^{Footnote 106} The Saryarka SEZ was established in order to attract investments aimed at developing competitive industries, to contribute to regional development, and to create jobs.^{Footnote 107}

According to the regulations attached to the decree, the priority activities for the SEZ includes the development of the metallurgical industry and the metalworking industry, in particular the production of finished products.^{Footnote 108} According to the GOK, 10 companies were located in the Saryarka SEZ during the POI.^{Footnote 109}

The benefits provided by the GOK to companies located in the Saryarka SEZ are in the form of preferential tax treatment respecting a number of different types of taxes including land and property taxes and fees, value-added tax (VAT), customs duty, and income tax.

The benefit under this program, the exemption of land tax, is provided for in Article 151 7 of the Code of the Republic of Kazakhstan No. 99-IV – On Taxes and Other Obligatory Payments into the Budget (Tax Code).^{Footnote 110} Under that article, organizations in certain manufacturing industries operating in the Saryarka SEZ are entitled to use a zero rate in calculating land tax.

The cooperative exporter, Tau-Ken, both qualified for and received benefits under this program which were attributable to subject goods imported into Canada during the POI.

For the purposes of the final determination, the information on the record indicates that this program is an actionable subsidy. This program constitutes a financial contribution, pursuant to paragraph 2(1.6)(b) of SIMA, i.e., amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

The information on the record also indicates that this program is a specific subsidy under paragraph 2(7.2)(a) of SIMA as it is limited pursuant to an instrument or document to a specific number of enterprises, within the authority of the jurisdiction, in this case being located in a specific geographic location of its jurisdiction.

The benefit under this program, the exemption of property tax, is provided for in Article 151 7 of the Tax Code.^{Footnote 111} Under that article, organizations in certain manufacturing industries operating in the Saryarka SEZ are entitled to use a zero rate in calculating property tax.

For the purposes of the final determination, the information on the record indicates that this program is an actionable subsidy. This program constitutes a financial contribution, pursuant to paragraph 2(1.6)(b) of SIMA, i.e., amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

The information on the record also indicates that this program is a specific subsidy under paragraph 2(7.2)(a) of SIMA as it is limited pursuant to an instrument or document to a specific number of enterprises, within the authority of the jurisdiction, in this case being located in a specific geographic location of its jurisdiction.

According to Tau-Ken, VAT was exempted on some equipment that it both imported and purchased domestically in accordance with the Saryarka SEZ exemptions.

The overall benefit in the form of the exemption of VAT, appears to be provided for in Article 244 2 of the Tax Code.^{Footnote 112} Under that article, organizations in the territory of a SEZ are entitled to use a zero rate in calculating VAT on goods fully consumed when performing an activity within the aims of that SEZ. During verification, Tau-Ken explained that in order to receive that exemption under the Tax Code, other criteria needed to be met with respect to other pieces of legislation.

For some of the VAT exemptions Tau-Ken received on machinery purchases, it was based on the fact that the machinery was included in a list attached to GOK Resolution #444 which became effective August 15, 2016 and that the machinery had been purchased after that date.^{Footnote 113} Resolution #444 lists specific machinery and items subject to VAT exemption for companies located in SEZs and includes items both imported and purchased domestically.

For other machinery prior to August 15, 2016 in which Tau-Ken received VAT exemptions, it was explained the goods were processed by Kazakhstan Customs under procedure code 78. It was explained that this procedure under Customs is linked to an agreement that was signed in St. Petersburg on June 18, 2010 under the Eurasian Economic Union regarding machinery purchased by companies located in SEZs. A copy of the law^{Footnote 114} in Kazakhstan implementing the St. Petersburg agreement on June 30, 2010 was provided by the GOK during verification. Like Resolution #444, the VAT exemptions are only available to companies located in SEZs.

The cooperative exporter, Tau-Ken, both qualified for and received benefits under this program which were attributable to subject goods imported into Canada during the POI.

For the purposes of the final determination, the information on the record indicates that this program is an actionable subsidy. This program constitutes a financial contribution, pursuant to paragraph 2(1.6)(b) of SIMA, i.e., amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

The information on the record also indicates that this program is a specific subsidy under paragraph 2(7.2)(a) of SIMA as it is limited pursuant to an instrument or document to a specific number of enterprises, within the authority of the jurisdiction, in this case being located in a specific geographic location of its jurisdiction.

The nature of the subsidy relates to loans with a preferential interest rate provided to Tau Ken by its parent company, Tau-Ken Samruk, which is ultimately wholly owned by the GOK.^{Footnote 115} An analysis of the ownership and role of Tau-Ken Samruk is detailed in the Section 20 section presented earlier in this SOR. As noted in that section, Tau-Ken Samruk was founded by the GOK and is presently wholly owned by Samruk-Kazyna who is directly owned by the GOK. Further, evidence on the record for the investigation also shows that Tau-Ken Samruk is controlled by and acts on behalf of the GOK.

An amount of subsidy for this program for the purposes of the final determination was calculated by comparing the amount of interest paid by Tau-Ken at the preferential rate on the loans with the amount of interest that could have been charged based on the average interest rates on loans charged to non-banking legal entities as published in the 2015 and 2016 Report of the National Bank of Kazakhstan.^{Footnote 116} The difference in the amount of interest payable was then attributed to subject goods imported into Canada during the POI.

For the purposes of the final determination, the information on the record indicates that this program is an actionable subsidy. This program constitutes a financial contribution, pursuant to paragraph 2(1.6)(a) of SIMA, i.e., practices of the government involve the direct transfer of funds or liabilities, and confers a benefit to the recipient equal to the difference between the amount of interest that would be payable, by the recipient of the preferential loan, on a non-guaranteed commercial loan in the same currency and the amount of interest paid on the preferential loan.

The information on the record also indicates that this program is a specific subsidy under paragraph 2(7.3)(a) of SIMA as there is exclusive use of the subsidy by a limited number of enterprises.

The nature of the subsidy relates to capital contributions provided to Tau Ken by its parent company, Tau-Ken Samruk, which is ultimately wholly owned, controlled, and acts on behalf of the GOK. An amount of subsidy for this program for the purposes of the final determination was calculated based on the total amount of the capital contributions provided to Tau-Ken and attributable to subject goods imported into Canada during the POI.

For the purposes of the final determination, the information on the record indicates that this program is an actionable subsidy. This program constitutes a financial contribution, pursuant to paragraph 2(1.6)(a) of SIMA, i.e., practices of the government involve the direct transfer of funds or liabilities, and confers a benefit to the recipient equal to the amount of the funds directly transferred (i.e. the capital contributions).

The information on the record also indicates that this program is a specific subsidy under paragraph 2(7.3)(a) of SIMA as there is exclusive use of the subsidy by a limited number of enterprises.

The nature of the subsidy relates to a loan with a preferential interest rate provided to one of Tau Ken’s related suppliers which is also wholly owned by its parent company, Tau-Ken Samruk. The input supplier only supplies its input to Tau-Ken and did not sell its input to any other customers during the period reviewed.

The input supplier received a loan from the Investment Fund of Kazakhstan (IFK) whose parent company, Joint-stock Company National Management Holding Baiterek (Baiterek), is directly owned by the GOK. The CBSA only obtained limited information with respect to IFK and Baiterek during the course of the investigation. Despite being requested to provide the official company Charters of both Baiterek and IFK as a result of the verification meetings, the GOK was unable to submit this information to the CBSA prior to the closing of the record.

An amount of subsidy for this program for the purposes of the final determination was calculated by comparing the amount of interest paid by the input supplier with the amount of interest that could have been charged based on the average interest rates on loans charged to non-banking legal entities as published in the 2015 and 2016 Report of the National Bank of Kazakhstan.^{Footnote 117} The difference in the amounts of interest payable were found to have been fully passed-through to Tau-Ken and were subsequently attributed to the subject goods imported into Canada during the POI.

For the purposes of the final determination, the information on the record indicates that this program is an actionable subsidy. This program constitutes a financial contribution, pursuant to paragraph 2(1.6)(a) of SIMA, i.e., practices of the government involve the direct transfer of funds or liabilities, and confers a benefit to the recipient equal to the difference between the amount of interest that would be payable, by the recipient of the preferential loan, on a non-guaranteed commercial loan in the same currency and the amount of interest paid on the preferential loan.

The information on the record also indicates that this program is a specific subsidy under paragraph 2(7.3)(a) of SIMA as there is exclusive use of the subsidy by a limited number of enterprises.

Other Subsidy Programs Investigated

The following five programs are also included in the subsidy investigation and examined during the final phase of the investigation, but were found not to have been used by the responding exporter or not to have provided any benefit to the responding exporter.

The benefit under this program, the exemption of corporate income tax, is provided for in Article 151-7 of the Tax Code.^{Footnote 118} Under that article, organizations in certain manufacturing industries operating in the Saryarka SEZ are entitled to reduce the amount of corporate income tax calculated in accordance with Article 139 of the Tax Code by 100 percent.

CBSA Determination

At the preliminary determination, the CBSA has indicated that sufficient information was not available to make a determination in respect of this potentially actionable subsidy program and that it would continue to investigate it in the final phase of the investigation.

At the preliminary determination, this program was found to be a financial contribution, pursuant to paragraph 2(1.6)(b) of SIMA, i.e., amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confers a benefit to the recipient equal to the amount of the reduction/exemption. It was also found to be a potentially specific subsidy under paragraph 2(7.2)(a) of SIMA as it is limited pursuant to an instrument or document to a specific number of enterprises, within the authority of the jurisdiction, in this case being located in a specific geographic location of its jurisdiction.

Based on the information provided in respect of this program and verified by the CBSA, it was determined that the cooperative exporter, Tau-Ken, did not receive benefits under this program and an amount of subsidy was not attributable to subject goods imported into Canada during the POI for purposes of the final determination.

The Saryarka SEZ was established by Decree of the President of the Republic of Kazakhstan No. 181 - On establishment of the special economic zone “Saryarka”, which was approved on November 24, 2011.^{Footnote 119} The Saryarka SEZ was established in order to attract investments aimed at developing competitive industries, to contribute to regional development, and to create jobs.^{Footnote 120} According to the regulations attached to the decree, the priority activities for the SEZ include the development of the metallurgical industry and the metalworking industry, in particular the production of finished products.^{Footnote 121} According to the GOK, 10 companies were located in the Saryarka SEZ during the POI.^{Footnote 122}

CBSA Determination

At the preliminary determination, the CBSA has indicated that sufficient information was not available to make a determination in respect of this potentially actionable subsidy program and that it would continue to investigate it in the final phase of the investigation.

The benefit under this program, the exemption of Land Use Fee, is provided for in Article 151 7 of the Tax Code.^{Footnote 123} Under that article, organizations in certain manufacturing industries operating in the Saryarka SEZ are entitled to use a zero rate in calculating the land use fee.

At the preliminary determination, this program was found to be a financial contribution, pursuant to paragraph 2(1.6)(b) of SIMA, i.e., amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption. It was also found to be a potentially specific subsidy under paragraph 2(7.2)(a) of SIMA as it is limited pursuant to an instrument or document to a specific number of enterprises, within the authority of the jurisdiction, in this case being located in a specific geographic location of its jurisdiction.

Based on the information provided in respect of this program and verified by the CBSA, it was determined that the cooperative exporter, Tau-Ken, did not receive benefits under this program and an amount of subsidy was not attributable to subject goods imported into Canada during the POI for purposes of the final determination.

According to information supplied by Tau-Ken prior to the preliminary determination, duties were not assessed on certain importations of machinery in accordance with local customs regulations.^{Footnote 124} However, Tau-Ken had not identified the relevant legislative, regulatory or administrative instrument or other public document. Without this information, the CBSA was unable to assess whether the amount exempted under this program would be considered to be specific or generally available. For purposes of the preliminary determination, an amount of subsidy in relation to this program was not estimated and was not attributed to Tau-Ken.

CBSA Determination

At the preliminary determination, the CBSA has indicated that sufficient information was not available to make a determination in respect of this potentially actionable subsidy program and that it would continue to investigate it in the final phase of the investigation.

During the on-site verification with Tau-Ken, it was determined that the customs duties exempted on certain purchases of machinery were not as a result of the company being located in the Saryarka SEZ and were not actually exemptions at all. In fact, the reason that no customs duties had been assessed was that the customs duty rate applicable to the HS Codes under which the machinery was imported was zero percent in accordance with the Customs Tariff^{Footnote 125} applicable to members of the Eurasian Economic Union. As such, there was no exemption as the rate applicable to such imports for any company located in Kazakhstan, regardless of location or industry, would not be assessed customs duty on such machinery in accordance with the Customs Tariff.

As noted at the preliminary determination, the complaint indicated that Tau Ken received electricity at prices less than fair market value on its purchases of electricity under this alleged and potentially actionable subsidy program.

Information provided prior to the preliminary determination by the GOK indicated that prices for electricity were established independently by electricity companies in accordance with relevant laws and are subject to ceiling (maximum) prices that apply to all electricity companies based on production and marketing costs as well as profit margins.^{Footnote 126} However, information provided by the GOK also indicated that consumers can apply for a “temporary decreasing coefficient” to obtain a temporary discount on the price of electricity paid, subject to approval by the GOK.^{Footnote 127} While the GOK has indicated that any consumer can apply for the discount under the sole condition that the consumer will increase its amount of energy consumption,^{Footnote 128} the CBSA stated that this required further clarification and information with respect to the approval, calculation, duration, and use of the discount by consumers.

CBSA Determination

The CBSA stated at the preliminary determination that it required further information and clarification respecting how the price of electricity is established for its analysis regarding whether a benefit is conferred and whether such a benefit would be considered specific. For purposes of the preliminary determination, an amount of subsidy in relation to this program was not estimated and was not attributed to Tau-Ken.

Based on information supplied by the GOK and Tau-Ken following the preliminary determination as well as a result of the on-site verification with both parties, the CBSA found that for purposes of the final determination, Tau-Ken did not receive preferential electricity pricing as a result of any program offered by the GOK.

With respect to the price of electricity, the CBSA confirmed that maximum ceiling prices were set by the GOK which applied to all consumers, and that consumers could attempt to negotiate prices below the maximum rate with suppliers when establishing contracts for electricity supply. Further, information supplied by Tau-Ken during the verification demonstrated that it was possible to negotiate better prices with private electricity companies in comparison to prices negotiated with State-Owned Enterprises (SOEs).

With respect to the “temporary decreasing coefficient” in relation to the charges for transmission of electricity, information supplied by the GOK in its response to the SRFI^{Footnote 129} showed that the amount of such a decrease was subject to complex calculations based on detailed data related to electricity consumption of the customer and the costs incurred by the electricity producer. This would ensure that the producer would not sell electricity at an unprofitable price and that any decrease was directly in relation to the increased electricity to be consumed in the following period. During the verifications, it was confirmed that anyone (i.e. any company in Kazakhstan) who was planning to increase consumption of electricity would be eligible to apply for a decrease, and that the decrease was limited to a one year maximum. Information reviewed during verifications also showed that a temporary decrease could be issued for a period as little as two or three months. Information reviewed during the verification also showed that where a company did not meet its obligation to consume the increased amount of electricity stipulated in its contract, that the electricity transmission company would go back and retroactively increase the rate and charge a penalty which would nullify the decreasing coefficient discount previously applied.

This program was identified during the course of the preliminary investigation based on a review of the information submitted by exporter Tau Ken, as well as information submitted by its associated/related suppliers. For purposes of the preliminary determinations, the nature of the subsidy related to Tau-Ken’s purchases of quartz, a raw material input used in the production of silicon metal, from an SOE at prices less than fair market value.

For the purposes of the preliminary determination, an amount of subsidy for this program was estimated by comparing prices paid to the SOE for quartz purchased during the POI with prices paid to a private non-SOE for quartz purchased during the same period. For the purposes of the preliminary determination, this program was considered to be a financial contribution, pursuant to paragraph 2(1.6)(c) of SIMA, i.e., the government provides goods other than general governmental infrastructure, and confers a benefit to the recipient equal to the difference between the fair market value of the goods in the territory of the government providing the subsidy, and the price at which the goods were provided by that government. It had also been found to be specific subsidy under paragraph 2(7.3)(a) of SIMA as there is exclusive use of the subsidy by a limited number of enterprises.

CBSA Determination

As a result of the on-site verification meetings held with Tau-Ken, the CBSA uncovered evidence showing that the lower prices paid for quartz to the SOE in fact only related to the purchase of the rights to mine the quartz from the deposit owned by the SOE. This had not been disclosed prior to the preliminary determination. During the verification, documentation was submitted by Tau-Ken^{Footnote 130} showing that a private unrelated company had been hired to conduct the mining and processing activities with relation to those quartz purchases and that significant costs had been incurred by Tau-Ken for such services. In verifying the amount of quartz purchases made during the relevant period and calculating the total cost of that quartz based on the price paid to the SOE in combination with the costs incurred and paid to the mining and processing company, it was determined that the full price paid for the quartz was not less than the price paid to an unrelated quartz supplier during that same period.

Further, during a later period in the POI, it was also verified that the prices paid to the related quartz supplier following its takeover of the mining and processing activities were not at prices below those paid to the unrelated quartz supplier for purchases of quartz during the same period.

Based on the information provided in respect of this program and verified by the CBSA, it was determined that the cooperative exporter, Tau-Ken, did not receive benefits under this program and an amount of subsidy was not attributable to subject goods imported into Canada during the POI for purposes of the final determination.

As noted in the body of this document, the Government of Malaysia (GOM) did not submit a complete response to the subsidy RFI, which limited the CBSA’s ability to conduct an analysis of the programs for the final determination. Further, no exporter in the Malaysia submitted a complete response to the subsidy RFI.

A total of five subsidy programs were reviewed by the CBSA for this investigation.

This appendix consists of a listing of 5 potentially actionable subsidy programs which were reviewed by the CBSA in the current subsidy investigation. Descriptions of the following Malaysian subsidy programs, and references to source information, can be found in the non-confidential version of the complaint.

Potentially Actionable Subsidy Programs

At the Preliminary Determination, the CBSA determined that these eight programs initially investigated were either not used by the exporter in Norway or not found to be subsidies:

Details on these aforementioned programs can be found in the CBSA’s preliminary determination Statement of Reasons.^{Footnote 131}

A summary of the investigation results respecting the remaining subsidy programs in relation to Norway is provided below.

Subsidy Programs Used by the Responding Exporter

Electricity tax is imposed by the GON pursuant to annual decisions of the Norwegian Parliament and the Act on Excise Duties of May 19, 1933. Electricity consumption is taxed in three categories:

1. Residential rate;
2. Industrial rate;
3. Exempted.

The electricity tax is established under Section 3-12 of the Excise Tax Regulations.^{Footnote 132}

The nature of the subsidy concerns the exemption of taxes for large users of electricity where the electricity is an input in the production process.

The cooperative exporter, Elkem, received benefits under this program which were attributable to subject goods imported into Canada during the POI.

For the purposes of the final determination, the information on record indicates that this program is an actionable subsidy. This program constitutes a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, i.e., amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confers a benefit to the recipient equal to the amount of the reduction/exemption.

The information also indicates that this program is a specific subsidy under paragraph 2(7.2)(a) of SIMA as it is limited pursuant to an instrument or document to a specific number of enterprises, within the authority of the jurisdiction, in this case specific to industries specified under section 3-12 of the Excise Tax Regulations.

The legislation under which this subsidy is granted is Regulation No. 1,160 from September 2013 on CO2 compensation for industries. It is scheduled for termination at the end of 2020.

Norway participates in the European Union Greenhouse Gas Emission Trading System (ETS) with the purpose of promoting reductions of greenhouse gas emissions in a cost-effective and economically efficient manner. The implementation of the ETS across the European Union (EU) and European Economic Area resulted in significant increases in the cost of electricity production which in turn inflated the price that electricity producers are forced to pass on to consumers.^{Footnote 133} Consequently, industries may face increased production costs as a result of the ETS. The CO2 Compensation Scheme (Compensation Scheme) is “an aid scheme which compensates certain energy-intensive undertakings for increases in electricity prices resulting from the inclusion of the costs of greenhouse gas emissions incurred as a result of the EU ETS”.^{Footnote 134}

A Norwegian producer is eligible for aid if it falls under one of fifteen NACE (Nomenclature stastisque des activités économiques dans la Communauté européenne) codes (i.e. classifications of economic activity), of which there are approximately 996 separate codes, specified in the Compensation Scheme and has a consumption of electricity over an annual threshold of 10 GWh. Norwegian companies which qualify for reimbursement under the program are entitled to receive an annual grant directly from the Norwegian Environmental Agency which is an arm of the GON.

The cooperative exporter, Elkem, received benefits under this program which were attributable to subject goods imported into Canada during the POI.

For the purposes of the final determination, the information on the record indicates that this program constitutes a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA, i.e., practices of the government involve the direct transfer of funds, or liabilities, or the contingent transfer of funds or liabilities. In this case, the program involves more specifically direct transfers of funds (i.e. grants) paid out by the Norwegian Environment Agency to a recipient. Such grants confer a benefit to the recipients equal to their amount and, therefore, constitute a subsidy under subsection 2(1) of SIMA.

The information also indicates that this program is a specific subsidy under paragraph 2(7.2)(a) of SIMA as it is limited pursuant to an instrument or document to a specific number of enterprises, within the authority of the jurisdiction, in this case being explicitly limited to a group of industries that perform one of a limited number of economic activities.^{Footnote 135}

Other Subsidy Programs Investigated

This program was established in accordance with the Norwegian Public Support Act (Act No. 117 of 27 November 1992 relating to state aid). Pursuant to the European Economic Area (EEA) Agreement, grants are given in accordance with the European Union (EU) General Block Exemption Regulation, Article 25.^{Footnote 136}

The objective of this program is to stimulate research and development (R&D) activity in businesses and industry, particularly R&D activities that promote innovation and sustainable value creation.

CBSA Determination

At the preliminary determination, an amount of subsidy was estimated for the exporter in Norway based on the information that indicated the exporter had received assistance for research and development activities under this program.

As such, for the purposes of the preliminary determination, this program was found to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA, i.e., practices of the government involve the direct transfer of funds, or liabilities, or the contingent transfer of funds or liabilities, and confers a benefit to the recipient equal to these amounts. This program was also considered to be specific, due to the manner in which discretion is exercised by the granting authority, indicating that the subsidy is not generally available, pursuant to paragraph 2(7.3)(d) of SIMA.

Following the preliminary determination, the CBSA requested and received further information from the exporter and the GON concerning the manner in which discretion was exercised by the granting authority. This information indicated there was no predominant use of the subsidy by a particular enterprise, nor did it appear that the granting of the subsidy favored one industry over another.

As such, evidence on the administrative record indicates that the criteria and conditions for receiving assistance under the program is objective, it is set out in a legislative, regulatory or administrative instrument or other public document, and applied in a manner that does not favor or is not limited to a particular enterprise. Therefore, this program was not considered specific pursuant to subsection 2(7.3) of SIMA.

The purpose of the program is to create jobs and contribute to the development of permanent and profitable businesses in areas with special employment problems or a low level of economic activity. Under this program, support is provided in the form of grants and loans.

CBSA Determination

Upon further review of this program, it was determined that no financial contribution was received by the exporter with respect to the terms outlined in subsection 2(1.6) of SIMA during the POI. Therefore, this program does not constitute a subsidy for the purposes for the final determination.

This program is authorized pursuant to the following legal instruments:

• Act No. 130 of December 19, 2003;
• Regulation on regional aid funds (FOR-2013-12-11-1574);
• Regulation No. 807 of June 2003 on the regional aid map and regional transport aid.

The policy objective of the program is to stimulate research and innovation within the assisted area. The assistance comes in the form of a grant that covers costs eligible under the notion of “soft aid.” Specifically, eligible costs must be one-off in nature and for up-to-date knowledge in various fields or establishing network co-operation, and R&D projects.

CBSA Determination

Upon further review of this program, it was determined that no financial contribution was received by the exporter with respect to the terms outlined in subsection 2(1.6) of SIMA during the POI. Therefore, this program does not constitute a subsidy for the purposes for the final determination.

The national legal basis for the Energy fund scheme derives from the amendment of the Energy Act of 05-04-2001.^{Footnote 137} The Energy Fund scheme provides support in the form of grants for investment aid and support to environmental studies.

The objective of this program is to promote an environmentally friendly change in the use and production of energy in Norway, and to support the market diffusion of new technologies within the field of renewable energy production and energy efficiency.

CBSA Determination

For the purposes of the preliminary determination, this program was found to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA, and was considered to be specific, due to the manner in which discretion is exercised by the granting authority, indicating that the subsidy is not generally available, pursuant to paragraph 2(7.3)(d) of SIMA.

After further analysis of the information on record, the program appears to be generally available as many industries availed themselves of this program with no concentration to any particular industry. As such, this program is neither de jure nor de facto specific as set out in subsections 2(7.2) or 2(7.3) of SIMA, therefore, no amount of subsidy was calculated for this program at the final determination.

The program operates according to the Norwegian Tax Act, sections 16-40 of 1999-03-26.^{Footnote 138} The program is a tax credit for R&D costs that comes in the form of a deduction from the company’s payable corporate tax.

The SkatteFUNN scheme is a government program designed to stimulate R&D in Norwegian trade and industry.

CBSA Determination

For the purposes of the preliminary determination, this program was found to be a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, and was considered to be specific, due to a disproportionately large amounts of the subsidy are granted to a limited number of enterprises, pursuant to paragraph 2(7.3)(c) of SIMA.

After further analysis of the information on record, this program appears to be generally available as many industries availed themselves of this program with no specific concentration to any particular industry.

For example, during the POI, multiple industries received tax credits under this program, with the largest concentration of credits being allocated between two sectors representing approximately one third of the total credits granted. The silicon metal industry did not belong to either of these two sectors.

As such, this program is neither de jure nor de facto specific as set out in subsections 2(7.2) or 2(7.3) of SIMA.

This program was disclosed by Elkem during the preliminary phase of the investigation but the GON has not yet provided the legislative authority under which it operates.

This program provides financial support for the rehabilitation of sites with special value for cultural heritage, pursuant to regulations governing the Cultural Heritage Fund (Norsk Kulturminnefond). Sufficient information on this program has not been provided and will continue to be investigated by the CBSA.

CBSA Determination

Upon further review of this program, it was determined that the financial contribution received by the exporter was not attributable to the goods exported to Canada during the POI. Furthermore, the funding received was to a silicon metal plant that did not export subject goods to Canada during the POI.

As such, no amount of subsidy was calculated for this program at the final determination.

This program is authorized pursuant to the following legal instruments:

• Act no 130 of December 19, 2003;
• The Annual State Budget approved by parliament;
• Rules from the Ministry of Trade, Industry and Fisheries related to the Environment –Friendly Technology Program, dated June 20, 2016.

The objective of this program is wealth creation in Norwegian industry through developing more environmentally-friendly technology. This program provides support in the form of grants where aid is necessary to realize a project.

CBSA Determination

At the preliminary determination, this program was found to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA, and was considered to be specific, due to the manner in which discretion is exercised by the granting authority, indicating that the subsidy is not generally available, pursuant to paragraph 2(7.3)(d) of SIMA.

After further analysis of the information, the program was found to be generally available as many industries availed themselves of this program with no specific concentration to any particular industry.

During the POI, approximately 80% of the funding for the program was concentrated among three unrelated industries, with further distribution of funding under each industry to an array of enterprises. As well, companies in all regions in Norway availed themselves of this program.

As such, this program is neither de jure nor de facto specific as set out in subsections 2(7.2) or 2(7.3) of SIMA.

Responses to the Subsidy RFI were received from the Government of Thailand (GOT) and from two exporters, Sica New Materials (SICA) and GS Energy.

In its initial response to the subsidy RFI, the GOT provided a description of the subsidy programs identified by the CBSA and submitted copies of the relevant supporting laws, regulations and policies for programs relevant to the producer in Thailand that exported during the POI.

As noted in the body of this document, GS Energy provided a response to the Subsidy RFI and did not export subject goods during the POI.

Sica and the GOT provided substantially complete responses to the Subsidy RFI and two SRFIs.

The CBSA was satisfied that sufficient information was provided through all these submissions to determine an amount of subsidy for Sica on a program-by-program basis.

A total of four subsidy programs were reviewed by the CBSA in the subsidy investigation.

A summary of the investigation results respecting the remaining subsidy programs in relation to Thailand is provided below:

Subsidy Programs Used by the Responding Exporter

The program is administered by the Board of Investment (BOI).

The Investment Promotion Act B.E. 2520 (1977), amended by the Investment Promotion Act (No.2) B.E. 2534 (1991) and the Investment Promotion Act (No.3) B.E. 2544 (2001), provides a general framework and legal basis for the BOI to operate. BOI Announcement No. 1/2543 (2000) states the Policies and Criteria for Investment Promotion and Announcement 10/2552(2009) lists the types, sizes and conditions of activities eligible for promotion.

The program offers incentives to encourage and facilitate investments in Thailand such as a reduction or exemption of import duties on machinery and raw materials and corporate income tax exemption. The level of benefits varies based on the location of the investment project.

CBSA Determination

The cooperative exporter, Sica, received benefits under this program which were attributable to subject goods imported into Canada during the POI.

For the purposes of the final determination, this program constitutes a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, i.e., amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confers a benefit to the recipient equal to the amount of the reduction/exemption.

The information also indicates that this program is a specific subsidy under paragraph 2(7.2)(a) of SIMA as it is limited pursuant to an instrument or document to a specific number of enterprises, within the authority of the jurisdiction, in this case being located in a specific geographic location of its jurisdiction.

Other Subsidy Programs Investigated

The following three programs were also included in the subsidy investigation and investigated in the final phase of the investigation, but were found not to benefit the Thai exporter (Sica) during the POI:

Certain benefits are afforded to companies operating in specified zones. The legal basis for IEAT privileges are specified in the Industrial estate Authority of Thailand Act. These benefits may include:

1. Exemption from import duties, VAT and excise tax on machinery, equipment, tools and supplies;
2. Exemption from import duties, VAT and excise tax on raw materials;
3. Reduced standards of quality control for goods imported into the IEAT free zone for producing, mixing, assembling, packing or processing of the goods for export;
4. Reduced VAT on sales within the zone; and
5. Preferential duty rates on goods manufactured in the zone and exported from Thailand.^{Footnote 139}

CBSA Determination

Upon further review of this program, it was determined that Sica is not located in the Ratchaburi Industrial Estate and therefore did not receive any financial contribution or benefits under this program.

The Government of Thailand regulates electricity sales through the Electricity Generating Authority of Thailand (EGAT) Act. EGAT works through other utilities authorities, including the government enterprise PEA, in selling electricity to energy consumers.

CBSA Determination

Upon further review of this program, it was determined that Sica did not receive any discount on the electricity.

Producers in Thailand may be able to avail themselves of benefits under the Thai Customs Act (No.9) B.E. 2482 in relation to duty drawback with respect to raw materials. Benefits may include:

1. Duty drawback on raw materials which are clearly incorporated into exported goods;
2. Duty drawback on raw materials used directly in the manufacturing process of exported goods but not obviously seen;
3. Duty drawback on raw materials required in the manufacturing process.

CBSA Determination

Upon further review of this program, no excessive relief was found that would have constitutes a financial contribution by the Government of Thailand.

On-Site Verification

Case Briefs

Counsel for the Complainant alleged that company-specific normal values should not be issued to companies that were not verified onsite, and point to “deficiencies and inconsistencies” in RFI responses as support to this position.^{Footnote 159}

Reply Submissions

Counsel for Rima and Liasa both refuted the arguments raised by counsel for the Complainant in regards to on-site verifications and the issuance of company-specific normal values.

Counsel for Rima responded that on-site verification is but one form of verification, that desk audits are both recognized and acceptable as a practice and that the method of verification is at the CBSA’s discretion. Counsel also emphasized that Rima consented to an on-site verification prior to the CBSA exercising that discretion.^{Footnote 160}

Similarly, counsel for Liasa stated that “there is no requirement in SIMA that an amount of subsidy be based on a verification on-site or a desk audit” and that “Liasa cannot be penalized because CBSA has decided to use its personnel and resources in a way which resulted in decisions not to verify certain parties.”^{Footnote 161}

Counsel for Elkem repudiated the claim made by the Complainant with respect to the reasonableness and reliability of the material on the record, due to the CBSA not completing an on-site verification for the exporter. Counsel stated that Elkem was verified through a desk audit, and provided the CBSA with all required clarifications or corrections, as appropriate.^{Footnote 162}

CBSA’s Response

The CBSA routinely conducts desk audits as part of its verification of information in an investigation. The CBSA was satisfied with the quality and accuracy of information submitted by the exporters who were verified by means of a desk audit. The CBSA has no reason to withhold normal values from an exporter verified through desk audit.

Inconsistency with Cost Information

Case Briefs

Counsel for the Complainant expressed concern over the “inconsistent cost information across the various exporters”^{Footnote 163} citing both general and specific observations with respect to information submitted by parties on the record.

CBSA’s Response

While information submitted in respect costs is at times complex, the CBSA did not find issues with costing that were either material or “inconsistent” such as to doubt the accuracy of the data. As individual company access to materials, production schedules and comparative advantages differ, costs of like goods will necessarily vary between product grades and amongst producers and exporters over the investigation period. This is not unique to silicon metal and any concerns identified by the CBSA in regards to costing were pursued for clarification as evidenced by the content of SRFIs and verification exhibits on the administrative record.

Lack of Importer Responses

Case Briefs

Counsel for the Complainant stated that:

“…full RFI responses by all of an exporter’s Canadian importers are a critical prerequisite to the issuance of normal values. The importer RFI response serves as a critical secondary check on the information provided by the exporter. The importer RFI responses provide an essential nexus between the export sale and the terms on which the product is introduced into the Canadian market...an importer RFI is necessary in order for an exporter to obtain normal values. Otherwise, there is no purposes in requesting importers to submit RFI responses.^{Footnote 164}

Reply Submissions

Counsel for Liasa rebutted the arguments from counsel for the Complainant by stating that there “is no need to provide importer responses unless the importer and the exporter are related.”^{Footnote 165}

CBSA’s Response

The CBSA notes that while counsel for the Complainant provided a general explanation for its concerns with the lack of responses from certain importers, it did not provide a detailed explanation as to how this affected the normal values calculated for participating exporters.

While it is preferable to obtain responses from the importers concerned, the CBSA will evaluate from case-to-case whether there is sufficient information to determine normal values and export prices in accordance with sections 15 to 28 of SIMA.

Reasonable Amount for Profits

Case Briefs

Counsel for the Complainant asserted that certain care must be taken in the event the CBSA must apply a “reasonable amount for profits” under paragraph 19(b) of SIMA to ensure that usable sales are “such as to permit a proper comparison” as described in the SIM Regulations. Counsel also cautioned that “if there are distortions in a company’s organizational or sales structure which preclude the profit on like goods sales from being such as to permit a proper comparison, then the President must adopt some other reasonable amount for profits.”^{Footnote 166}

Reply Submissions

Counsel for Elkem argued that the methodology for calculating an amount for profits being provided in the Complainant’s case briefs disregards the entire framework under the SIMR for the calculation of an amount of profits.^{Footnote 167} Counsel outlined that there is sufficient data on the record for the CBSA to calculate an amount for profits under paragraph 11(1)(b) of the SIMR, and refuted the suggestion by the Complainant of the use of any profit and loss statement of the various exporters in calculating an amount for profits, as it opposes the explicit requirements of SIMA and SIMR.^{Footnote 168}

CBSA Response

In instances where information was not available to calculate amounts for profits using the criteria established in paragraph 19(b) of SIMA and sections 11 and 13 of the SIMR, the CBSA calculated normal values, including the amounts for profits, under a ministerial specification in accordance with subsection 29(1) of SIMA.

Norway

Suppliers of Production Inputs

Case Briefs

Counsel for the Complainant made representations on the information provided by suppliers of production inputs that were used by the producer of silicon metal in Norway. Representations outlined perceived errors and deficiencies in the data on record.^{Footnote 169}

Reply Submissions

In reply submissions, counsel for Elkem stated:

“…these comments are belated, the alleged inconsistencies do not detract from the data verified by the Agency in the course of the investigation, and the alleged inconsistencies are otherwise minor.”^{Footnote 170}

Furthermore, counsel for Elkem noted that the Appendix 2 RFI responses, which are the source of the Complainant’s concern, are related to allegations of subsidization through input suppliers and are not required for the CBSA to complete the dumping investigation.

Counsel also stated that there was a failure to identify how the Complainant’s argument concerning the data provided in the Appendix 2 RFI responses related to the verified costs provided by Elkem.^{Footnote 171}

CBSA’s Response

The Complainant initially made these comments on June 26, 2017, prior to the CBSA’s preliminary determination.^{Footnote 172}

The CBSA was satisfied that sufficient information was provided by the input suppliers and the exporter. In addition, the CBSA verified this information and found that there were no material errors.

Domestic Sales

Case Briefs

Counsel for the Complainant stated that Elkem lacks a sufficient number of sales of like goods to allow for a proper comparison with the subject goods sold to the importer in Canada which is required by paragraphs 16(1)(a) and (b) of SIMA. As such, normal values cannot be determined pursuant to section 15.^{Footnote 173}

Reply Submissions

Counsel representing Elkem responded to this position and stated:

“Elkem’s domestic sales database is sufficiently robust to calculate normal values under s. 15 of the SIMA or to calculate an amount of profits under paragraph 11(1)(b) of the SIMR for use in the calculation of normal values under paragraph 19(b) of the SIMA.”^{Footnote 174}

CBSA’s Response

Based on the evidence on the administrative record, the CBSA determined that were insufficient domestic sales of like goods to allow for a proper comparison to the goods sold to Canada, therefore, normal values were calculated in accordance with paragraph 19(b) of SIMA.

Malaysia

Absence of Exporter RFI Response

Case Briefs

Counsel for the Complainant stated that in absence of an exporter RFI response from Malaysia, anti-dumping and countervailing duties must be assessed based on ministerial specifications pursuant to subsection 29(1) of SIMA.^{Footnote 175}

CBSA Response

No exporters of certain silicon metal originating in or exported from Malaysia responded to the Dumping RFI. As such, in the event that the CITT finds that the dumped goods have caused injury, normal values and export prices for all exporters of certain silicon metal originating in or exported from Malaysia will be determined pursuant to a ministerial specification under subsection 29(1) of SIMA.

Thailand

Export Price (Sica)

Case Briefs

Counsel for the Complainant submitted that Sica is a wholly owned subsidiary of Sica New Materials Co., Ltd. (SNMC) located in Taiwan and therefore, Sica and SNMC are considered associated companies for SIMA purposes.^{Footnote 176} Counsel argued that the export price must be tested to ensure it is reliable as required under section 25 of SIMA, in particular, Counsel asserted that special rules apply for determining export price when there is a compensatory arrangement between the producer and the vendor under subparagraph 25(1)(b)(ii) of SIMA.^{Footnote 177}

Counsel for Sica agreed with the CBSA’s decision for the preliminary determination that Sica and SNMC were collectively considered the exporter for Sica’s export sales to Canada and Sica’s export prices were determined under section 24 of SIMA. Counsel for Sica emphasized that Sica and SNMC operate as a single corporate entity and share most of the same staff and management.^{Footnote 178}

Reply Submissions

Counsel for the Complainant reiterated the argument submitted in its case brief that a reliability test should be performed for Sica’s export price as required under section 25 of SIMA.^{Footnote 179}

Counsel for Sica refuted the Complainant’s argument by stating that there is no compensatory arrangement between the producer and the vendor. Counsel for Sica submitted that Sica and SNMC do not operate as distinct commercial entities and therefore cannot by definition have a “compensatory arrangement” within the meaning of section 25.^{Footnote 180}

CBSA’s Response

The CBSA treated Sica and SNMC as one entity for the purposes of this investigation. Detailed information respecting SNMC’s operation and its staff and management were verified during the on-site verification. In addition, expenses incurred by SNMC are fully allocated to the total cost of the subject goods produced by Sica. The export price for Sica’s export sales to Canada during the POI was determined under section 24 of SIMA.

Cost Adjustments for Start-up Period (Sica)

Case Briefs

Counsel for Sica noted that Sica is new company and started producing silicon metal in March 2015. It was stated that Sica’s overall plan is to construct three phases of four 7,500 MT furnaces for a total of 12 furnaces with a total 90,000 MT capacity. Counsel for Sica submitted that Sica was only able to operate one of the four furnaces installed prior to and during the POI and that the total production of silicon metal was much lower than the current production capacity.^{Footnote 181}

Counsel for Sica argued that two types of cost adjustments should be made to the actual costs incurred by Sica during the POI. First, Counsel suggested to adjust one particular cost to account for its in-progress plan for the purposes of reducing that cost as required under subsection 13.1(2) of the SIMR.^{Footnote 182} Second, Counsel suggested that certain depreciation, factory overhead, GS&A and interest expenses should be adjusted and allocated on a reduced volume basis based using the methodology discussed during the verification.^{Footnote 183}

CBSA’s Response

The CBSA determined that certain costs incurred during the POI should be adjusted on a reduced volume basis. The details of those costs and the methodology used for the adjustments were verified during the on-site verification. However, the CBSA did not adjust the cost to account for the in-process plan because that particular cost is a direct expense and the in-process plan to reduce that cost was in its early stage and not in place by the end of the POI.

Who is the Exporter? (RTPS)

Case Briefs

Counsel for the Complainant argued that Rio Tinto Procurement Singapore (RTPS) should be considered the exporter of the subject goods sold by RTPS to its related importer in Canada, (i.e. Rio Tinto Alcan (RTA)) for the purposes of the final determination.^{Footnote 184} Counsel for the Complainant noted that the CBSA had determined RTPS was an exporter of the subject goods from China in the Silicon Metal I investigation.^{Footnote 185} Counsel also argued that a reliability test should be performed to ensure RTPS’ export prices are reliable as required under section 25 of SIMA because RTPS and RTA are associated companies.^{Footnote 186}

Reply Submissions

Counsel for Sica agreed with the CBSA’s decision at the preliminary determination that RTPS was considered a vendor, not an exporter for the subject goods sold by Sica.^{Footnote 187} Counsel for Sica cited the SIMA Handbook that:

“As a general guideline the exporter for SIMA purposes is the person or firm who is a principal in the transaction, located in the country of export, and who is the owner of the goods at the point in time when the goods were sent to Canada.”^{Footnote 188}

Counsel for Sica argued that Sica and RTA are the principal players in the transaction, and RTPS acts as a procurement agent for RTA and is not located in the country of export.^{Footnote 189}

CBSA’s Response

The CBSA determined that RTPS is a vendor, not an exporter of the subject goods purchased from Sica and other exporters located in the named countries for the purposes of the final determination. All subject goods sold to RTA were shipped directly from the named countries. The roles and functions performed by RTPS respecting its sales of the subject goods during the POI were confirmed during the on-site verification.

Missing Responses from Producers (RTPS)

Case Briefs

Counsel for the Complainants submitted that RTPS is not a producers of the subject goods it exported to Canada and that the subject goods were produced by several producers located in the named countries. Counsel argued that RTPS’ responses are only complete and reliable to the extent that those producers provide complete information regarding their costs in producing and conveying the goods to RTPS. Counsel further argued that RTPS’ cost data could not be reconciled without complete responses from several producers in the named countries.^{Footnote 190}

CBSA’s Response

The CBSA received responses to the Dumping RFI from two exporters/producers who sold subject goods to RTPS during the POI. The information submitted by the two exporters/producers as well as RTPS’ information was verified and the CBSA is satisfied that their information is substantially complete and can be used for the purposes of the final determination.

Reasonable Amount for Profits

Case Briefs

Counsel for the Complainant submitted that a reasonable amount for profits should be used when normal values are determined under paragraph 19(b) of SIMA for Sica.^{Footnote 191} Based on the information on the record, Counsel for the Complainants calculated profit amounts from seven exporters and producers of silicon metal based on their submissions to the Dumping RFI and argued that the reasonable amount for profit should be at least the average of the four highest profit margins.^{Footnote 192}

Counsel for Sica argued that the CBSA failed to provide sufficient disclosure respecting the calculation of the amount for profits used to calculate Sica’s margins of dumping for the preliminary determination.^{Footnote 193} Counsel further argued that the methodology used by the CBSA to calculate the amount for profits for the preliminary determination is not reasonable within the meaning of subparagraph 19(b)(iii) 19(b)(iii) of SIMA because the profit amount used for the preliminary determination does not appear arithmetically valid, and the amount defies logic and common sense for an essentially fungible and internationally traded commodity product.^{Footnote 194}

Counsel for Sica conducted an analysis of the submissions provided by other exporters who provided a response to the Dumping RFI and had domestic sales during the POI and suggested that grade-specific average profits should be used in order to determine normal values for Sica under subsection 29(1) of SIMA.^{Footnote 195}

Reply Submissions

There was no rebuttal on this issue in reply submissions.

CBSA’s Response

For the purposes of the final determination, grade-specific amounts for profits were determined pursuant to subsection 29(1) of SIMA, based on the average profit made on sales of like goods or goods that are of the same general category as the subject goods as determined for exporters who provided a complete response to the dumping RFI in the investigation and had qualified and reliable domestic sales of silicon metal during the period of profitability analysis.

Brazil

Counsel for both the Complainant and the exporters in Brazil offered comments on subsidy programs investigated by the CBSA in regards to Brazil. The material issues raised in regards to the subsidy investigation respecting Brazil and the CBSA’s position in regards to the issues are summarized in the following.

Program 2 – SUDENE

Case Briefs

In response to comments placed on the record by counsel for Rima following the preliminary determination, counsel for the Complainant disagreed with Rima’s position that the Superintendence for the Development of the Northeast (SUDENE) program does not constitute a countervailable subsidy because in order for Rima to reduce its income tax, the company had to invest in the development of its economic activities and be in compliance with various legislation aside from the geographic requirement.

Counsel for the Complainant also disagreed with Rima’s position that the SUDENE program was not created for the purpose of favouring a specific industrial activity, such that this is a non actionable subsidy as its purpose includes assistance to disadvantaged regions.

Counsel for the Complainant stated that the exception in SIMA for subsidies that provided assistance to disadvantaged regions under the definition of “non-actionable subsidies,” is no longer in effect, as noted in the SIMA Handbook, as of January 23, 2001.^{Footnote 196}

Reply Submissions

Counsel for Rima submitted that while the Complainant may be correct that the SIMA Handbook says that the definition in paragraph (b) of section 2(1) of SIMA under the definition of “non actionable subsidies” has been suspended effective January 23, 2001, SIMA was never amended to reflect this suspension and therefore, the SUDENE program should be found non actionable.^{Footnote 197}

CBSA’s Response

As notified in the Canada Gazette, Part II on February 14, 2001, the Governor General in Council, pursuant to subsection 98(1) of SIMA, made an Order Suspending Certain Provisions of the Special Import Measures Act on January 23, 2001. The order suspended paragraph (b) of the definition “non-actionable subsidy” in subsection 2(1) of SIMA with respect to all countries.^{Footnote 198}

Programs 2 – SUDENE – Geographic Specificity

Case Briefs

The Brazilian producers alleged that the CBSA did not properly apply the relevant legislative provisions in determining that the SUDENE program was de facto specific by virtue of the geographic zone it operates within.

Counsel for Rima submitted that the CBSA’s interpretation of geographic regions as creating specificity for subsidy programs is “fatally flawed”^{Footnote 199} and cited the relevant portion of subsection 2(7.2) of SIMA where it states:

In respect of the SUDENE program, counsel for Rima included arguments in reference to a WTO panel decision regarding an alleged subsidy program respecting an “Economic Stimulus Plan of Pennsylvania.”^{Footnote 200}

Reply Submissions

Counsel for the Complainant rebutted the allegation regarding the alleged flaws with the CBSA’s approach to geographic specificity, indicating that “…it is established CBSA practice, supported by WTO rulings, that subsidies are considered specific if they are limited to certain enterprises (i.e. those companies located within the designated geographic region)…”^{Footnote 201}

CBSA Response

The SUDENE program, established by the GOB, provides tax privileges to companies located in the Northeast Region. At the final determination, the CBSA concluded that the SUDENE program conferred benefits and is specific. See Appendix 2 for more information on this program and the CBSA’s determination.

The CBSA notes that while subsection 2(7.2) of SIMA makes reference to “a particular enterprise” the legislation also defines enterprise in section 2 “to include a group of enterprises, an industry and a group of industries.”

Furthermore, Article 2.2 of the Agreement on Subsidies and Countervailing Measures (ASCM). States that “A subsidy which is limited to certain enterprises located within a designated geographical region within the jurisdiction of the granting authority shall be specific.”

The GOB’s response to the RFI specifically stated that the SUDENE program is under the authority of the federal government.^{Footnote 202} The granting authority, the GOB, has made the subsidy available to all companies within the Northeast Region and, as such, it is specific because it is limited to certain enterprises (i.e. those companies located within the designated geographic region). The fact that all companies within that region receive the benefit does not mean that it is generally available.

Furthermore, counsel for Rima’s reference to the WTO Panel Decision^{Footnote 203} regarding the alleged subsidy program “2003 Economic Stimulus Plan of Pennsylvania” is not comparable to the argument respecting SUDENE, as the financial contributions in the aforementioned stimulus plan were apparently granted by the state of Pennsylvania. It therefore follows that if the state is the granting authority then recipients within the state may be benefiting from a program which is non-specific.

Program 3 – REINTEGRA

Case Arguments

Counsel for the Complainant cited numerous references on the record where information submitted by the cooperative exporters and the GOB demonstrates that the REINTEGRA is an export contingent subsidy, as it confers a financial benefit in the form of amounts refunded that would otherwise be owing the GOB.^{Footnote 204}

Reply Submissions

Counsel for the GOB objected to the Complainant’s allegation regarding REINTEGRA, stating that they “could not provide any concrete evidence that the Brazilian program is a subsidy and merely resorted to information contained in a preliminary determination made by other [sic] investigation authority to do so.”^{Footnote 205}

CBSA Response

The CBSA determined that this program is an actionable subsidy. Notwithstanding explanations that were offered by the exporters and the GOB, the program simply refunds an exporter a fixed percentage of the CIF price value of their exports in the year. There is no other consideration of what taxes were paid or what was exported or any other criteria. During the POI, that refund rate was 0.1%. As detailed in Appendix 2 of this Statement of Reasons, this is a financial contribution from the GOB in that amounts that would otherwise be due to the government are refunded and it is specific by virtue of being an export subsidy.

Program 4 – Excessive Credit or Refund on ICMS and IPI

Case Arguments

Counsel for the Complainant alleged there were discrepancies within some of the information submitted by the exporters with regards to this alleged subsidy program and that certain comments from the cooperative exporters in Brazil demonstrates their own concession that this s a subsidy program.^{Footnote 206}

Reply Submissions

Counsel for Liasa clarified that the “exemption” referenced by Liasa refers to transactions in a general sense and not to specific individual transactions.^{Footnote 207}

Counsel for Rima similarly rebutted the Complainant’s case brief by emphasizing that there is no exemption of ICMS applicable to them, merely different tax rates “applicable to different classes of machinery and equipment.”^{Footnote 208}

CBSA Response

The CBSA acknowledges the complexities within the Brazilian tax system and indeed pursued further clarification from one of the exporters on ICMS specifically, which was provided following the preliminary determination.^{Footnote 209}

The investigation into this program concerned the allegation that there was excessive relief of these taxes such that the taxes exempted or reduced exceeded the taxes payable by the silicon metal producers in Brazil to the GOB. The CBSA did not find any such excess relief, as these indirect taxes function within the Brazilian VAT regime, where the GOB demonstrated reasonable measures to ensure refunds are not excessive.

Program 5 – Integrated Drawback

Case Arguments

The GOB and Brazilian exporters, Liasa and Rima, made representations concerning whether the drawback on purchases of carbon/graphite electrodes which are used in the production of subject goods qualify as an actionable subsidy.

The GOB, along with counsel for Liasa and Rima argued that these electrodes should qualify for one of the drawback exceptions in the definition of a subsidy in section 2 of SIMA, which provides for exemptions on “energy, fuel, oil and catalysts that are used or consumed in the production of the exported goods.” The particular emphasis was on the contention that these goods qualify as a “catalyst” in the production process and are consumed in production.

Counsel for Liasa referenced the dictionary definition of a catalyst as: “A substance that increases the rate of a chemical reaction without itself undergoing any permanent chemical change.”^{Footnote 210}

Counsel for Rima also argued that the electrodes are “consumed in the production of the Silicon Metal”^{Footnote 211} and that the electrode “disappears in the production process.”^{Footnote 212}

A WTO panel decision (PET Pakistan vs. EU in DS486)^{Footnote 213} was further cited to support their position for when duty drawback schemes are actionable subsidies.^{Footnote 214}

In their case brief, counsel for the Complainant characterized the carbon electrodes as “tools” which convey electrical current but do not themselves function as a catalyst as the material undergoes change and emphasized with reference to specific confidential data on the record that the electrodes are not in fact “consumed in the process.”^{Footnote 215}

Reply Submissions

Liasa reiterated in its reply submission the production process whereby “carbon electrodes are fully consumed by chemical reduction removing oxygen from the SiO2 in the form of CO2 which escapes from the furnace in gaseous form…”^{Footnote 216} and that the carbon electrodes are “consumed in the process either in the form of carbon electrons in the chemical process or as gas which is normal waste.”^{Footnote 217}

CBSA’s Response

The information gathered in the investigation does not support the position that the drawback in relation to electrodes qualifies for the carve-out provision in subsection 2(1) of SIMA.

SIMA identifies two categories of materials or inputs under drawback regimes which may qualify for an exemption from the definition of a subsidy under SIMA:

2. energy, fuel, oil and catalysts that are used or consumed in the production of the exported goods and that have been exempted or have been or will be relieved by means of remission, refund or drawback, or
3. goods incorporated into exported goods and that have been exempted or have been or will be relieved by means of remission, refund or drawback.

The position taken by the CBSA for the preliminary determination was that these electrodes did not fit the categories above. That position remains unchanged.

Much of the representations surrounding this issue, as noted above, concern whether or not the carbon electrodes can be properly regarded as a “catalyst.”

While counsel for Liasa characterized the usage of carbon electrodes as being “consumed entirely in the production of silicon metal”^{Footnote 218} and as being an “input” to the production process,^{Footnote 219} the CBSA determined that the electrodes are better characterized as equipment or tools which are destroyed as collateral damage in the production process, and are not energy, fuel, oil or a catalyst. As noted by counsel for the Complainant, the electricity or the electrical current may be a catalyst but not the electrode itself which is in reality the tool carrying the current.^{Footnote 220}

The citation by Rima to the WTO panel decision in PET Pakistan vs. EU^{Footnote 221} concerned a separate issue under drawback regimes in regards to determining if there had been an excess remission.

However, the consideration of whether there is an excess amount refunded is only necessary if it has been determined that the inputs at issue qualify for one of the duty drawback exceptions noted above (i.e. catalysts). If the inputs qualify for the exception, then only the amount of refund in excess of what the exporter actually paid in duty related to the exported good may constitute a subsidy.

Since the CBSA has determined that the carbon electrodes do not qualify for the carve-out as they are best characterized as tools or equipment, this reference is not relevant to the issue.

Consequently, this program is considered to constitute a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the government are reduced and/or exempted, and would confer a benefit to the recipient equal to the amount of the reduction/exemption.

The program is a specific subsidy under paragraph 2(7.2)(b) of SIMA as it is contingent upon export performance and, therefore, constitutes a prohibited subsidy as defined in subsection 2(1) of SIMA.

Program 11 – IPTU

Case Briefs

Counsel for Rima stated that the exemption of payment of IPTU in the municipality of Várzea de Palma is generally available to all enterprises within the municipality and therefore cannot be considered a subsidy by reason of geographic specificity under paragraph 2(7.2)(a) of SIMA.^{Footnote 222}

Counsel for Rima also expressed these views in response to the CBSA’s characterization of this program as a specific subsidy at the preliminary determination.

Reply Submissions

Counsel for the Complainant stated that the CBSA’s preliminary determination was correct and that this program constitutes a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA and is specific under paragraph 2(2.7)(a) of SIMA as it is limited pursuant to an instrument or document to a specific number of enterprises within the authority of the jurisdiction.^{Footnote 223}

CBSA Response

The GOB described this program as a “fiscal incentive” whereby the purpose is to give stimulus to a company in order to maintain activity and hiring, guaranteeing employment for the citizens of Várzea de Palma, and stability in the local economy.^{Footnote 224}

The law No. 2,232 issued by the City Hall of Várzea Da Palma authorizing the exemption was specifically issued in regards to Rima.^{Footnote 225} The application filed by Rima to obtain the exemption was also provided.^{Footnote 226}

The CBSA determined that the exemption of IPTU is a specific subsidy under paragraph 2(7.2)(a) as it is limited, pursuant to an instrument or document, to a particular enterprise within the jurisdiction of the authority that is granting the subsidy, which in this case is the municipal government of Várzea de Palma.

This program constitutes a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, i.e., amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

This determination stems from the CBSA’s analysis of the application process which did not reveal any objective criteria for approval and requires a law specific to the company to be issued by the municipality in order to grant exemption from payment of municipal taxes, which in this case is for a 20 year period.

Rima stated that to be eligible, it has to “keep the industrial facilities in the county, for a period no shorter than the exemption, with total capacity not inferior to 50%.”^{Footnote 227} This was confirmed in the law No. 2,232 issued in regards to Rima by the municipality.

Rima’s application itself is more of a letter seeking relief, without reference to any checklist of requirements or what law or regulation etc. the company made the request under. As such, there is no apparent objectivity to the application process and it is clear from Rima’s description of the necessary criteria that only a select number of companies would be granted this exemption from municipal taxes at the discretion of the municipal authority.

Program 14 – Financing Program for Production and Commercialization of Machinery and Equipment (FINAME) under the Brazilian Development Bank (BNDES)

Case Briefs

The GOB asserted it had “provided enough information in its response to the CBSA questionnaire demonstrating that BNDES loans do not constitute subsidies, including a list of all the Bank´s disbursements by product, sector, and region in Brazil.”^{Footnote 228}

Furthermore, the GOB stated that the only sectors restricted from qualification for the BNDES loans are those which go against “social responsibility” and that FINAME is available to all sectors of the economy which is reflected in the distribution of its disbursements which follows a pattern of proportionality compared to national economic activity.^{Footnote 229}

Reply Submissions

Counsel for the Complainant rebutted the position of the Brazilian producers and the GOB that FINAME is non-specific and stated that: “although financing many be provided to many companies, the granting of the preferential loan is restricted.” Counsel pointed to confidential information in relation to the exporters to support its position.^{Footnote 230}

CBSA Response

As noted in Appendix 2, the CBSA’s review of the extensive information provided by both the exporters and the GOB supports the determination that the FINAME loans through BNDES are generally available.

Most of the information cited by the GOB in response to the RFI and SRFIs is publically available and demonstrates a wide ranging usage of these loans, including the FINAME scheme, across industries year after year. There are no significant restrictions to obtain the loans, and BNDES is essentially the only means of financing in Brazil as there is no private credit market in the country.

Program 16 – Goods/Services provided by the Government of Brazil at less than fair market value (FMV) – Electricity

Case Briefs

Counsel for the Complainant suggested that a punitive subsidy rate be applied to this program in absence of information to calculate an amount of subsidy based on the information on the record.^{Footnote 231}

Reply Submissions

Referencing the Complainant’s confidential brief, counsel for Rima objected to the characterization of their electricity purchases and stated that “energy acquired from the sole state-owned enterprise, was the most expensive of all of its supplier of electricity and in fact was at a rate above the average FMV of energy purchased from the other suppliers.^{Footnote 232}

CBSA Response

As noted in Appendix 2, the CBSA found that the GOB did not provide electricity to Brazilian exporters at less than FMV during the POI in relation to the subject goods.

Program 17 – Taxes exempted from Free Trade Zone of Manaus

Case Briefs

Rima made numerous representations concerning the CBSA’s estimation of an amount of subsidy in relation to a benefit Rima received for sales to the Free Trade Zone of Manaus. Rima clarified that “sales to companies located in the Manaus Free Trade Zone by any enterprise outside the Zone are exempt from PIS, COFINS, IPI and ICMS taxes.”^{Footnote 233} Consequently, Rima is not the recipient of any financial benefit but rather the purchaser located in the zone is the beneficiary.

Reply Submissions

The GOB supported Rima’s assertions regarding the nature of the Free Trade Zone of Manaus, which do not confer any benefit to Rima.^{Footnote 234}

CBSA Response

For the purposes of the preliminary determination, an amount of subsidy was estimated for the exemption of taxes by virtue of being located in a free trade zone.

Information submitted by Rima subsequent to the preliminary determination clarified that any benefit conferred was not to Rima but rather to the purchaser located in the free trade zone. As such, no amount of subsidy in relation to this program was calculated for the final determination.

Malaysia

Deficient Response from Government of Malaysia (GOM)

Case Briefs

Counsel for the Complainant stated that, as evidenced by the CBSA letter to the GOM prior to the preliminary determination, the response from the GOM in regards to the Subsidy RFI is incomplete, yet their response indicates that some programs are specific under SIMA.^{Footnote 235}

CBSA Response

Given the lack of participation from the GOM and the Malaysian exporters, the amounts of subsidy were determined under a ministerial specification, using the best information available. Refer to the “Results of the Subsidy Investigation by Country and Exporter” section of the Statement of Reasons for more information.

Norway

Affiliated Companies

Case Briefs

Counsel for the Complainant stated that the CBSA must be satisfied that transactions between Elkem and its affiliates were completed at arm’s length prices.

Furthermore, representations were made with respect to several companies listed in Elkem’s Appendix 2 RFI responses (suppliers of major production inputs), alleging the submission was incomplete resulting in Elkem’s response being incomplete and unreliable.^{Footnote 236}

Reply Submissions

Counsel for Elkem responded that these comments alleging deficiencies are belated and that the alleged inconsistencies do not detract from the data verified by the CBSA in the course of the investigation and are otherwise minor. Counsel for Elkem stated that the Complainant failed to demonstrate if and how the alleged deficiencies are relevant in the subsidy investigation and stated:

“transactions between private companies, whether affiliated or not, have no apparent relevance in a subsidy investigation, unless an argument of upstream subsidy or entrustment or direction has been raised.”^{Footnote 237}

CBSA’s Response

The CBSA reviewed the documentation on record and requested further information pertaining to the transactions between Elkem and its affiliates. The CBSA received satisfactory information from Elkem and its affiliates and, based on that information, it considers the transactions to be at arm’s length.

With respect to a select number of Elkem’s major production input providers not providing a response to Appendix 2 of the CBSA’s subsidy RFI. For the purposes the CBSA’s subsidy analysis, the CBSA considers the information received sufficient for determining amounts of subsidy.

Production Input Costs

Case Briefs

Counsel for the Complainant stated that there are inconsistencies in the data reported by Elkem for its major production input costs and those reported by its suppliers. It was alleged for specific raw materials that there are costs and invoice numbers reported by Elkem which are different than those reported by its suppliers.^{Footnote 238}

Reply Submission

Counsel representing Elkem argued that the alleged deficiencies identified by the Complainant are immaterial. Counsel stated:

“…none of these deficiencies, even if they had been timely raised be Québec Silicon, would justify rejection of Elkem’s verified data and the application of ministerial Specification.”^{Footnote 239}

CBSA’s Response

The CBSA verified Elkem’s costs through a desk audit and was satisfied with the evidence and explanations provided by the exporter in support of those costs.

Program 12 – CO2 Compensation Scheme

Case Briefs

Counsel for the Complainant provided arguments to substantiate its position that the financial contribution received by Elkem confers a benefit and the benefit makes the exporter better off than they would be without the financial contribution since it reduces their electricity costs.

Furthermore, Counsel for the complainant stated that the subsidy is specific under paragraph 2(2.7)(a) of SIMA as it is limited pursuant to an instrument or document to a specific number of enterprises, within the authority of the jurisdiction (i.e., an enterprise consuming over 10 GWh of electricity annually).^{Footnote 240}

Reply Submissions

Counsel for Elkem and the GON refuted the fact that a benefit is conferred in the form of a financial contribution since the purpose of the benefit is to offset the increasing electricity costs incurred due to Norway’s participation in the EU Emissions Trade Scheme (ETS). The compensation received under the program only compensates a part of the increased costs by design, therefore, recipients incur net costs under the EU ETS.^{Footnote 241}

Counsel for Elkem and the GON further argued that the program is not a standalone “program” and it is completely inappropriate for the CBSA to consider the CO2 program in isolation opposed to a component of a much larger integrated program.^{Footnote 242}

With respect to specificity, counsel for Elkem and the GON state that the program is not an actionable subsidy as it is not specific in law or fact.^{Footnote 243} To this matter, representations state that the criteria and conditions governing eligibility for, and the amount of, compensation are objective, set out in law, and applied in the manner that does not favour or limited to a particular enterprise.

CBSA’s Response

The CBSA’s review of the information provided by both Elkem and the GON support the determination that payments under the CO2 Compensation Scheme are financial contributions by the GON in the form of direct transfers of funds (i.e. grants).^{Footnote 244}

With respect to the offset argument, the information on the record was assessed in terms of whether the recipient of the contribution was better off than it otherwise would have been, absent the financial contribution. The information provided by the GON and Elkem supports that the grants are direct transfers of funds to the recipients for no consideration to the GON; therefore, conferring a benefit to the recipient.^{Footnote 245}

With respect to the program not being considered a “standalone program” as referenced by counsel for Elkem and GON, there is no provision in SIMA or any related jurisprudence that requires adjusting the benefit received from a grant in order to deduct increased costs that have resulted from the government adopting more burdensome regulations. Therefore, the CBSA considers the program to be a standalone for the purposes of determining whether the recipient would be better off than if they had not received the grants.

This program was determined to be specific in accordance with paragraph 2(7.2)(a) of SIMA as it is limited, pursuant to an instrument or document, to a particular enterprise within the jurisdiction of the authority that is granting the subsidy, which in this case is the list of industries established by the program.

Program 9 – Electricity Tax

Case Briefs

Counsel for the Complainant submitted that exemptions for producers from paying a Norwegian electricity tax is a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA and that the subsidy is specific pursuant to paragraph 2(7.2)(a) of SIMA because the exemption is limited to five types of enterprises, including large users of electricity where the electricity is an input in the production process.^{Footnote 246}

Counsel for Elkem and the GON submitted in their case arguments that the Electricity Tax program is neither de jure nor de facto specific. Counsel stated that an exemption for electricity tax for “industries that are large users of electricity” does not make it de jure specific as it qualifies as objective criteria, and that the objective criterion of “large user of electricity” is a criterion that is economic in nature and horizontal in application.^{Footnote 247} Regarding the WTO ASCM reference to “horizontal in application,” counsel stated that this criterion applies across the entire economy and all industries in Norway.

Reply Submissions

In response, counsel for the Complainant argued that the subsidy is not in practical terms available to the entire Norwegian economy as the availability is directed to energy-intensive industries and limited to energy intensive industries which utilize a sufficient amount of electricity to be eligible for the subsidy.^{Footnote 248}

CBSA’s Response

The CBSA has determined that the Electricity Tax program represents a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA and that the subsidy is specific pursuant to paragraph 2(2.7)(a) of SIMA. The industries listed as tax exemption eligible in Norway’s Regulation on Excise Duties represents certain enterprises. As outlined in the Regulations, the tax exemption is restricted to only five types of enterprises.^{Footnote 249}

Much of the representations made by counsel on behalf of Elkem and the GON surrounds the issue of non-specificity due to the tax exemption being “economic in nature and horizontal in application.” The CBSA normally regards a criterion or condition as being “economic” in nature when it is quantitative rather than qualitative in nature and pertaining to a definitive measurement.

The criterion provided in the Norwegian regulations supporting Elkem’s eligibility for tax exemption states:

“electricity supplied for use in chemical reduction or in electrolytic, metallurgical and mineralogical processes is exempted from tax.”^{Footnote 250}

The CBSA did not consider this type of economic indicator as one that satisfied the provision of a criterion or condition being “economic” in nature.

Thailand

All Subsidy Programs

Case Briefs

Counsel for the Complainant summarized all four subsidy programs investigated in Thailand by concluding for each of the programs that they provide financial contribution pursuant to paragraph 2(1.6)(b) of SIMA (revenue foregone) and are specific pursuant to SIMA paragraphs 2(7.2)(a) or (b) of SIMA.^{Footnote 251}

The Government of Thailand (GOT) submitted that it was confirmed at verification that the one Thai exporter during the POI had received benefits under only one of the four programs under investigation. The benefits received were insignificant and the President must terminate the investigation of the subject goods from Thailand.^{Footnote 252}

Thai exporter Sica submitted that none of the investigated programs are actionable subsidies. They further stated that any amount of subsidy the CBSA would calculate would be less than 1% and is insignificant. As such, the President must terminate the subsidy investigation in respect to Sica in accordance with paragraph 41(1)(a) of SIMA.^{Footnote 253}

CBSA Response

The CBSA determined that only one program was actionable. The amounts of subsidy found in respect of certain silicon metal originating in or exported from Thailand were insignificant and the investigation in respect of these goods was terminated.