SPT 2021 IN: Certain small power transformers
Statement of Reasons—final decisions

Decision

Ottawa, December 10, 2021

On November 25, 2021, pursuant to paragraph 41(1)(a) of the Special Import Measures Act, the Canada Border Services Agency terminated the dumping investigation in respect of certain small power transformers exported to Canada from South Korea by IEN Hanchang Co., Ltd.

On the same date, pursuant to paragraph 41(1)(b) of the Special Import Measures Act, the Canada Border Services Agency made a final determination respecting the dumping of certain small power transformers originating in or exported from Austria, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), and South Korea (excluding goods exported from South Korea by IEN Hanchang Co., Ltd.).

Summary of events

[1] On February 23, 2021, the Canada Border Services Agency (CBSA) received a written complaint from Transformateurs Delta Star Inc., Northern Transformer, PTI Transformers Inc., and PTI Transformers L.P. (hereinafter, the “complainants”) alleging that imports of certain small power transformers (SPT) originating in or exported from Austria, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), and South Korea (hereinafter “named sources”) have been dumped, have caused injury and are threatening to cause injury to Canadian producers of SPT.^{Footnote 1}

[2] On March 16, 2021, pursuant to paragraph 32(1)(a) of the Special Import Measures Act (SIMA), the CBSA informed the complainants that the complaint was properly documented. The CBSA also notified the governments of the named sources that a properly documented complaint had been filed with the CBSA.

[3] The complainants provided evidence to support the allegations that SPT from the named sources have been dumped and that this dumping has caused injury and is threatening to cause injury to the domestic industry producing like goods.

[4] On April 15, 2021, pursuant to subsection 31(1) of SIMA, the CBSA initiated an investigation respecting the dumping of SPT from the named sources.

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

[6] On June 14, 2021, pursuant to subsection 37.1(1) of SIMA, the CITT made a preliminary determination that there is evidence that discloses a reasonable indication that the dumping of SPT from the named sources has caused injury or is threatening to cause injury to the domestic industry.^{Footnote 2}

[7] On July 7, 2021 the CBSA notified interested parties that the preliminary stage of the investigation will be extended pursuant to subsection 39(1) of SIMA.

[8] On August 27, 2021, as a result of the CBSA’s preliminary investigation and pursuant to subsection 38(1) of SIMA, the CBSA made a preliminary determination of dumping of SPT from the named sources.

[9] On the same day, pursuant to subsection 8(1) of SIMA, provisional duty was imposed on imports of dumped goods that are of the same description as any goods to which the preliminary determination applies, and that are released during the period commencing on the day the preliminary determination was made and ending on the earlier of the day on which the CBSA causes the investigation in respect of any goods to be terminated pursuant to subsection 41(1) of SIMA or the day the CITT makes an order or finding pursuant to subsection 43(1) of SIMA. Where an exporter’s estimated margin of dumping was found to be insignificant, provisional duty does not apply.

[10] Based on the available evidence, the CBSA is satisfied that SPT originating in or exported from South Korea by IEN Hanchang Co., Ltd. have not been dumped. As a result, on November 25, 2021, the CBSA terminated the dumping investigation in respect of the goods of this exporter pursuant to paragraph 41(1)(a) of SIMA.

[11] Based on the available evidence, the CBSA is satisfied that SPT originating in or exported from the names sources have been dumped (excluding goods exported from South Korea by IEN Hanchang Co. Ltd.). Therefore, on November 25, 2021, the CBSA made a final determination of dumping pursuant to paragraph 41(1)(b) of SIMA in respect of those goods.

[12] The CITT’s inquiry into the question of injury to the domestic industry is continuing, and it will issue its decision by December 24, 2021. Provisional duties will continue to be imposed on the subject goods from the named sources (excluding goods exported from South Korea by IEN Hanchang Co., Ltd.) until the CITT renders its decision.

Period of investigation

[13] The Period of Investigation (POI) for the dumping investigation is July 1, 2019 to December 31, 2020.

Profitability analysis period

[14] The Profitability Analysis Period (PAP) is January 1, 2019 to December 31, 2020.

Interested parties

Product information

Product characteristics

[37] All SPT are capital goods that are made to order from a customer’s specifications based on the customer’s particular needs. They are used to increase, maintain or decrease electric voltage in high voltage transmission and distribution systems. Broadly speaking, the distribution of electricity requires transformers to first increase (or “step-up”) the voltage from the source of generation (e.g., a hydro dam) so that it can be transmitted more efficiently at higher voltages; and to second decrease (or step-down) voltage for purposes of distribution to users. SPT are also used to connect different parts of transmission and distribution networks.

[38] SPT use electromagnetic induction between circuits to increase, decrease or transfer the output voltage levels being transmitted. Induction occurs when the electromagnetic field caused by electricity moving through a conductor crosses a second electrical conductor and generates a voltage in the second conductor even though the two conductors are not directly connected. This requires a fluctuating magnetic field generated by alternating current entering into an input conductor.

[39] SPT all share certain basic, key physical characteristics. All SPT have at least one “active part” where the electromagnetic induction occurs. This consists of a core, winding, electrical insulation between the windings, and a clamping system to hold the internal assembly together. The internal assembly is placed into a metal tank that is filled with an insulating media and has a cooling system attached. A diagram showing the major internal components of an SPT follows:

[40] The core of an SPT is made of grain-oriented silicone steel and is laminated with an inorganic coating. The silicone steel is layered in pieces and shaped into the legs and yokes of the core. Cores typically consist of two, three, four, or five legs depending on the number of phases, capacity, and transport restrictions. SPT below 10 MVA may sometimes use wound cores in some applications where the core laminations are wound around the windings instead of stacked into legs and yokes.

[41] Upon the core are windings made of copper conductor covered in insulation paper and/or enamel coating to insulate the turns from one another. They provide both electrical power input and output. There are typically windings for each voltage level and there can also be one or more windings for voltage regulation. Winding can be done through layer winding, helical winding, disc winding or interleaved disc winding. The winding method employed depends on the capacity, voltage and tap range of each SPT as specified.

[42] The core and windings are placed in a tank, which protects the active parts of the SPT. The tank must be strong enough to withstand an internal pressure of a full vacuum and external factors such as weather. The tank is usually filled with fluid (typically oil) for cooling and insulation. The size of the tank varies depending on the size of the core, required voltage clearances, number of windings and type of regulation, which itself is a function of the energy being transformed and customer specification.

[43] Lastly, all SPT possess a cooling system which ensures that heat is dissipated and prevents exceeding the specified temperature rise in the SPT. The cooling method is determined by the customer’s requirements and use. SPT can employ several different cooling systems including: natural oil cooling/natural air cooling (often abbreviated as “ONAN”), natural oil cooling/forced air cooling (“ONAF”), forced oil cooling/forced air cooling (“OFAF”), directed oil cooling/forced air cooling (“ODAF”), and forced oil cooling/forced water cooling (“OFWF”). Other insulating fluids, such as ester-based fluids or silicone, will have the ‘O’ abbreviation substituted with other characters identifying the fluid (i.e. K or L).

[44] A number of raw materials are common to the construction of all SPT. The most significant raw materials used are copper, electrical (magnetic) steel, tank steel, and insulation material. Oil is also a very important insulation element often included in the sale of the SPT or purchased separately by the customer.

[45] Within the class of goods of SPT, there are 16 common customizable features or product characteristics, which can be manufactured to correspond to specified customer criteria. The precise specification required for each of these features may significantly affect the overall cost of producing the required transformer.

[46] The most common customizable features are:

• Maximum MVA rating
• Type
• Voltage
• Basic impulse level (BIL) voltage
• Number of windings
• Number of phases (either 1 or 3 phase)
• Impedance
• Regulation by tap changer
• Noise level
• Load losses (expressed in kilowatts)
• No load losses (expressed in kilowatts)
• Cooling class
• Overload capability requirement
• Frequency
• Type of current to be transformed (AC current or DC current)

Like goods and class of goods

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

[59] In considering the issue of like goods, the CITT typically looks at a number of factors, including the physical characteristics of the goods (such as composition and appearance), their market characteristics (such as substitutability, pricing, distribution channels and end uses) and whether the domestic goods fulfill the same customer needs as the subject goods.

[60] In its preliminary injury inquiry for the investigation, the CITT further reviewed the matter of like goods and classes of goods. On June 29, 2021 the CITT issued its preliminary injury inquiry determination and reasons indicating that “… the Tribunal is satisfied that domestically produced small power transformers are like goods to the subject goods”^{Footnote 21}. The Tribunal further concluded that “… the subject goods form a single class of goods”^{Footnote 22}.

[61] While all SPT have similar characteristics and uses, they are capital goods that are made to order from a customer’s specifications based on the customer’s particular needs. The goods produced in the named sources are used to increase, maintain or decrease electric voltage in high voltage transmission and distribution systems. Both the goods in Canada and in the named sources are produced following substantially the same production process and follow the same key steps of design. Given the same specifications, the goods produced by the complainants are completely substitutable with the subject goods imported from the named sources.

[62] Although the goods produced by the Canadian industry may or may not be considered identical in all respects to the subject goods imported from the named sources, the CBSA has concluded that the Canadian goods closely resemble the subject goods. Further, after reviewing the raw material used to produce the goods, the production process, the physical characteristics of the goods, the end-uses and all other relevant factor, the CBSA is of the opinion that the subject goods constitute only one class of goods.

The Canadian industry

[63] The domestic industry is comprised of the three complainants, as well as Transformateurs Pioneer Ltée. and Stein Industries Inc., who support the complaint.^{Footnote 23} Based on the available evidence, the CBSA is satisfied that the complainants and the supporting producers account for all known production of like goods produced in Canada.

Imports into Canada

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

[65] The following table presents the CBSA’s analysis of imports of SPT for the purposes of the final determinations:

Investigation process

[66] Regarding the investigation, information was requested from all known and potential exporters, producers, vendors, and importers, concerning shipments of SPT released into Canada during the POI.

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

[68] Several parties requested an extension to respond to their respective RFIs. Measures being taken to address the Covid-19 global pandemic by governments and health authorities around the world have made it difficult for stakeholders, including exporters located in foreign countries and domestic companies and their counsel to respond to the CBSA’s RFI in a timely manner. As a result, the CBSA granted extensions to exporters where appropriate, in an effort to alleviate pressures brought on by the Covid-19 global pandemic, which still provided the CBSA adequate time to review the responses for purposes of the preliminary determination of the investigation.

[69] After reviewing the RFI responses, supplemental RFIs (SRFIs) and deficiency letters were sent to several responding parties to clarify information provided in the responses and request additional information, where necessary. Verifications of select responding parties were conducted by way of Verification Questionnaires.

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

[71] As part of the final phase of the investigation, case briefs and reply submissions were provided by counsels representing the complainants, importers and exporters from the named sources. Details of the representations are provided in Appendix 2.

Dumping investigation

Decisions

[146] Pursuant to paragraph 41(1)(a) of SIMA, on November 25, 2021, the CBSA terminated the dumping investigation with respect to certain SPT from South Korea by Hanchang.

[147] On the same date, pursuant to paragraph 41(1)(b) of SIMA, the CBSA made a final determination of dumping respecting certain SPT originating in or exported from Austria, Chinese Taipei, and South Korea (excluding goods exported from South Korea by Hanchang).

Future action

[148] The provisional period began on August 27, 2021, and will end on the date the CITT issues its finding. The CITT is expected to issue its decision by December 24, 2021. Provisional anti-dumping duties will continue to apply until this date on imports of the subject goods from Austria, Chinese Taipei, and South Korea (excluding goods exported from South Korea by Hanchang). For further details on the application of provisional duties, refer to the Statement of Reasons issued for the preliminary determinations.

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

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

[151] The importer in Canada shall pay all applicable duty. If the importers of such goods do not indicate the required SIMA code or do not correctly describe the goods in the customs documents, an administrative monetary penalty could be imposed. The provisions of the Customs Act apply with respect to the payment, collection or refund of any duty collected under SIMA. As a result, failure to pay duty within the prescribed time will result in the application of interest.

Retroactive duty on massive importations

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

Publication

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

[154] A notice of the termination of the dumping investigation with respect to certain SPT exported to Canada from South Korea by Hanchang will be published in the Canada Gazette pursuant to paragraph 41(4)(a) of SIMA.

Information

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

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

• Telephone:
• Matthew Lerette: 343-553-1867
• Benjamin Crossan: 343-553-1634

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

Doug Band
Director General
Trade and Anti-dumping Programs Directorate

Appendix 1: Summary of margins of dumping

Appendix 2: Dumping representations

Following the October 5, 2021 closing of the record, case briefs were received from the complainants, Hyundai Electric & Energy Systems (Hyundai Energy) and Hyundai Electric America Corporation (HE America), ILJIN Electric Co., Ltd. and ILJIN Electric USA, Inc. (collectively “ILJIN”), Shihlin Electric & Engineering Corp. (SEEC), and Siemens Energy Austria GmbH (SE AT) and Siemens Energy Canada Limited (SECL). The CBSA received reply submissions from Northern Transformers Corporation, PTI Transformers Inc., PTI Transformers L.P., and Tranformateurs Delta Star Inc. (collectively, the complainants), Hyundai Energy & HE America, ILJIN, SEEC, and SE AT & SECL.

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

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

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

Profit Such as to Permit a Proper Comparison (SEEC)

Case briefs

Counsel for SEEC submitted that the basis employed by the CBSA when determining an amount for profits for the purposes of the preliminary determination, basing the weighted average profit made on domestic sales of goods of the same general category, using SEEC’s total domestic sales of SPT does not permit a proper comparison. Counsel stated that the CSBA should determine profits based on domestic sales which are comparable to SEEC’s Canadian sales by narrowing the goods selected to a specific type of SPT.^{Footnote 26}

Reply submissions

Counsel for the complainants maintained the argument advanced in its case brief that the CBSA should apply a Ministerial Specification to determine SEEC’s normal values and export prices. Counsel also stated that should the CBSA accept SEEC’s data for purposes of the final determination, the CBSA should reject SEEC’s arguments concerning the methodology for calculating an amount for profits as being inconsistent with the provisions of SIMA as well as longstanding CBSA practice.^{Footnote 27}

CBSA response

The CBSA did not agree with the argument put forth by SEEC to limit the group of goods forming the same general category to a specific type of SPT due to the fact that it would be too narrow a selection of goods to use when determining an amount for profit when taking into consideration the numerous factors influencing costs and pricing of SPT.

For the purposes of paragraph 19(b), the CBSA determined a reasonable amount for profits under the hierarchy of subparagraphs 11(1)(b)(i) to 11(1)(b)(vi) of the SIMR, taking into consideration section 13 of the SIMR and sections 15 and 16 of SIMA.

With respect to SEEC, as there were no domestic sales of like goods during the PAP, the CBSA determined a reasonable amount for profits based on domestic sales of goods of the same general category in accordance with subparagraph 11(1)(b)(ii) of the SIMR.

Accuracy and Completeness of Submissions (Complainants)

Case briefs

Counsel for the complainants made representations regarding the accuracy and completeness of information submitted by Shihlin Electric & Engineering (SEEC), IEN Hanchang Co., Ltd. (Hanchang), Siemens Energy Austria GmbH (SE AT) and Hyundai Electric & Energy Systems (Hyundai Energy), in response to the Dumping RFI, supplemental RFIs and/or Deficiency letters. Counsel submitted that the normal value and export price be determined pursuant to a ministerial specification.^{Footnote 28}

Reply submissions

Counsel for SEEC and Hyundai Energy both responded to the complainant’s arguments, stating that each company provided all information required by the CBSA in order to calculate normal values and export prices.^{Footnote 29}

CBSA response

Based on the CBSA’s review of the information submitted, the CBSA found that sufficient information had been furnished by SEEC, Hanchang, and Hyundai Energy, and that the information was reliable. As a result, the CBSA used the information submitted by these three exporters to determine normal values, export prices and margins of dumping for purposes of the final determination.

Based on a review of the information submitted by SE AT, the CBSA found that sufficient information had not been furnished by SE AT in a timely manner. As a result, normal values and export prices were determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA for purposes of the final determination.

Determining Export Prices for Cooperative Exporters under paragraph 25(1)(c) (Complainants)

Case briefs

Counsel for the complainants submitted that for the purpose of the final determination, export prices for sales between cooperative exporters and cooperative affiliated importers should be determined under the provisions of SIMA 25(1)(c) as opposed to 25(1)(d), as the goods sold by importers to Canadian customer are sold in the same condition as the goods sold by exporter to the affiliated importer.^{Footnote 30}

Counsel for Hyundai Energy submitted that paragraph 25(1)(d) applies to goods that are imported for the purpose of assembly, among other purposes. Counsel stated that Hyundai Energy sells subject goods that have been assembled and tested prior to issuance of the authorization of the customer in Canada for Hyundai Energy to ship the subject goods to Canada.^{Footnote 31}

Reply submissions

Counsel for Hyundai Energy restated that paragraph 25(1)(d) applies to sales of subject goods because it applies to sales of goods that are imported for the purpose of assembly.^{Footnote 32}

CBSA response

The CBSA determined that subject goods are disassembled for shipment to Canada and subsequently reassembled and installed at the customer’s site following importation. As such, paragraph 25(1)(d) is applicable as it relates to goods that are imported for the purposes of assembly. This approach is consistent with the methodology used within the Liquid Dielectric Transformers investigation.

Deduction of Net Expenses from Export Prices Determined under Sections 24 and 25 (Complainants)

Case briefs

Counsel for the complainants submitted that when accounting for non-subject ancillary goods, such as oil and non-subject ancillary services, such as commissioning and installation, where such items are separately identified and charged to the importer or to the Canadian customer, the CBSA should only deduct net expenses from the price of the subject goods.^{Footnote 33}

Counsel submitted that an approach called revenue capping is used by the United States Department of Commerce (DOC) and that it has been approved by the United States Court of International Trade. Counsel stated that such an approach was applied by the DOC when dealing with large power transformers^{Footnote 34}.

Reply submissions

Counsel for Hyundai Energy and ILJIN submitted that the complainants are incorrect that the CBSA should apply revenue capping, stating that it is not consistent with the wording of SIMA^{Footnote 35}.

CBSA response

The CBSA used the information on the record to determine export prices and the resulting margins of dumping in accordance within the provisions of SIMA and the SIMR. Revenue capping is an approach utilized by the DOC, which is not consistent with the provisions of SIMA and SIMR, as such it was not utilized by the CBSA in accounting for non-subject ancillary goods and services.

Determination of Export Prices of Subject Goods Imported by Remington (Hyundai Energy and HE America)

Case briefs

No evidence that Hyundai Energy and Remington do not deal at arm’s length

Counsel for Hyundai Energy submitted that there is no evidence within the current proceeding that Hyundai Energy and Remington do not deal at arm’s length. Counsel stated that the new final determination is not evidence that Hyundai Energy and Remington were not dealing at arm’s length due to the fact that the finding was specific to a relationship between Hyundai Heavy Industries and Remington. Counsel concluded that a finding that another company was not dealing at arm’s length with Remington a decade ago, and in respect of different goods, cannot justify the determination that Hyundai Energy and Remington were not dealing at arm’s length during the POI.^{Footnote 36}

Counsel further submitted that Article 6.6 of the WTO Anti-dumping Agreement requires that the CBSA satisfy itself as to the accuracy of the information supplied by interested parties upon which the CBSA bases its findings.^{Footnote 37}

Comparing export prices is not necessary to determine export price reliability

Counsel submitted that SIMA does not require or permit the determination of export price reliability by comparing export prices. Counsel stated that it is a matter of CBSA policy that comparing export prices is not the exclusive means of determining export price reliability as per the SIMA Handbook.^{Footnote 38}

Counsel further submitted that the legality of the CBSA’s comparison of export prices to determine section 24 export price reliability is currently before the Canadian International Trade Tribunal in Hyundai Canada Inc. v. President of the Canada Border Services Agency EA-2019-008/010 and Remington Sales Co. v. President of the Canada Border Services Agency EA-2019-009. Counsel stated that should these decisions be issued before the final determination, the CBSA will be bound to follow the Tribunal’s findings regarding the CSBA’s reliability test.^{Footnote 39}

The CBSA must specify an export price, not a margin of dumping

Counsel submitted that if the CBSA determines Remington’s export prices under subsection 29(1), they must determine a methodology that specifies an export price, not a margin of dumping and in accordance with Canada—Welded Pipe.^{Footnote 40}

Reply submissions

No evidence that Hyundai Energy and Remington do not deal at arm’s length

Counsel for the complainants submitted that the CBSA has correctly concluded that Hyundai Energy and Remington are not dealing at arm’s length within the present investigation. To support their claim, counsel stated that Hyundai Energy provided no additional evidence to demonstrate that it was operating at arm’s length with Remington. Counsel further stated that the CBSA has traditionally relied upon determinations made within prior investigations to inform a present investigation in both dumping and subsidy contexts and provided examples of each to support their claim.^{Footnote 41}

Lastly, counsel submitted that that there is evidence on the record of the present investigation indicating that Hyundai Energy and Remington are not operating at arm’s length via Hyundai Energy’s exporter questionnaire response, which indicates that Remington conducted business as Hyundai Heavy Industries (Canada) during the POI, supporting a relationship between Hyundai Energy and Remington/Hyundai Heavy Industries (Canada).^{Footnote 42}

The CBSA must specify an export price, not a margin of dumping

Counsel for the complainants submitted that the CBSA did use the best information available in applying a ministerial specification to Remington’s export prices for the purpose of the preliminary determination, stating that the ministerial specification rate is based on Hyundai Energy’s sales to another affiliated Canadian importer that exported to Canada during the POI, making it reasonable to assume Hyundai Energy’s transactions and level of dumping on sales to Hyundai Canada HCI would be representative of the dumping occurring in the affiliated transaction between Hyundai Energy and Remington.^{Footnote 43}

CBSA response

Over the course of the investigation, both Hyundai Energy and Remington failed to provide evidence that they were dealing at arm’s length for the purposes of the final determination. During the Liquid Dielectric Transformers investigation, Remington was found to not be operating at arm’s length with Hyundai Heavy Industries, Hyundai Energy’s predecessor. As a result, for the purposes of the final determination, the CBSA determined that Hyundai Energy and Remington were not operating at arm’s length.

Throughout the course of the investigation, Remington chose not to provide any information despite multiple requests from the CBSA. As sufficient information has not been furnished by Remington to determine export prices under sections 24 and 25 of SIMA, export price were determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA.

Hyundai Canada’s Export Prices are Reliable (Hyundai Energy and HE America)

Case briefs

Counsel for Hyundai Energy submitted that Hyundai Canada’s export prices for subject goods are reliable based on the evidence on the record, provided that the CBSA calculates section 25 export prices. Counsel stated that for the purposes of the preliminary determination, the CBSA incorrectly estimated Hyundai Canada’s section 25 export prices by removing amounts for service revenues and third party expenses, resulting in a finding that section 25 export prices are lower than section 24 export prices and were therefore unreliable. Counsel went on to state that the legality of the deduction of service revenues and third party expenses is also at issue within the Tribunal Appeals.^{Footnote 44}

CBSA response

The CBSA used the information on the record to determine export prices and the resulting margins of dumping in accordance within the provisions of SIMA and the SIMR. When calculating section 25 export prices for Hyundai Canada, deductions for service revenues and third party expenses were made in accordance with paragraph 25(1)(d) of SIMA. Ultimately, export prices were found to be reliable and determined under section 24 of SIMA.

Export Price Methodology for HE America (Hyundai Energy and HE America)

Case briefs

Counsel for Hyundai Energy submitted that the CBSA should determine export prices for HE America for the purposes of the final determination. Counsel stated that the CBSA excluded HE America from the investigation on the basis that they had not imported subject goods during the POI. Counsel stated that during a disclosure meeting, the CBSA said the investigation was limited to importations during the POI and that it could not examine importations prior to or following that period due to the need to perform a negligibility analysis of importations for the purposes of the preliminary determination. Counsel submitted that the SIMA definition of negligible refers to an analysis of the volume of goods subject to an investigation that are released into Canada and does not refer to a specific period of time.^{Footnote 45}

Reply submissions

Counsel for the complainants submitted that the CBSA can decline to examine responses that are irrelevant to the investigation. Counsel stated that in Concrete Reinforcing Bar, the CBSA did not consider information provided by Balakovo Steel Works JSC, stating that the investigation focused solely on subject goods released into Canada during the POI and that BSW’s information was not relevant to the investigation and therefore was not used.^{Footnote 46}

CBSA response

The POI for this investigation is July 1, 2019 to December 31, 2020. HE America did not import any subject goods into Canada during the POI, and as such, the calculation of export prices for HE America imports occurring outside the POI were not required in order to determine margins of dumping for the current investigation.

Alternative Ministerial Specification for HE America (Hyundai Energy and HE America)

Case briefs

Counsel for Hyundai Energy stated that in the event the CBSA does not grant HE America an export price methodology for the purposes of the final determination, HE America requests that the CBSA determine a ministerial specification of the export price applicable to HE America that reflects its participation and cooperation within the investigation.^{Footnote 47}

CBSA response

As discussed in the relevant “all other exporters” sections of this document, the CBSA decided that the normal values and export prices determined for the exporters whose submissions were complete and reliable 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’ actual trading practices during the POI.

The CBSA examined the difference between the normal value and the export price for each individual transaction of each of the exporters that provided a complete and reliable response, and considered that the highest amount (expressed as a percentage of the export price), was an appropriate basis for determining normal values. This methodology relies on information related to goods that were shipped to Canada during the POI. The CBSA finds that this methodology sufficiently 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.

Initiating an Investigation against Austria (SE AT and SECL)

Case briefs

Counsel for SEAT and SECL made case arguments that the CBSA had erroneously initiated an investigation regarding subject goods originating in or exported from Austria.^{Footnote 48}

CBSA response

Subsection 31(1) of SIMA states that “The President shall cause an investigation to be initiated respecting the dumping or subsidizing of any goods and whether there is a reasonable indication that such dumping or subsidizing has caused injury or retardation or is threatening to cause injury… if the President is of the opinion that there is evidence (a) that the goods have been dumped or subsidized; (b) that discloses a reasonable indication that the dumping and subsidizing has caused injury or retardation or is threatening to cause injury.”

In this case, there was evidence before the CBSA that a number of subject goods exported from Austria and imported into Canada during the POI were potentially dumped. Given the nature of the subject goods (i.e., capital goods) there were only a limited number of imports that occurred during the POI for the CBSA to analyze prior to the initiation of the investigation. Based on the information available to the CBSA at the time of initiation, there was reasonable indication that dumping was occurring on multiple transactions and had caused injury or was threatening to cause injury to the domestic industry, therefore, an investigation pursuant to subsection 31(1) was warranted.