SR 2018 IN
Certain Sucker Rods
Statement of Reasons

[14] AOT is a manufacturer and supplier of steel products for the oil and gas sector. AOT’s product range includes conventional sucker rods, specialty Drive Rods® for progressing cavity pump applications, polished rods, sinker bars, pony rods and sucker rod/polished rod couplings. The company also manufactures other oil tubular products, including pup joints. AOT’s production facilities are located in Edmonton, Alberta.^{Footnote 4}

[15] The complainant accounts for all production of like goods in Canada.

[16] The contact information of the complainant is as follows:

Apergy Canada ULC – Alberta Oil Tool Division
9530 – 60^th Avenue
Edmonton, Alberta, T6E 0C1

[17] At the initiation of the investigations, the CBSA identified 22 potential importers of the subject goods based on both information provided by the complainant and CBSA import documentation. All of the potential importers were asked to respond to the CBSA’s Importer Request for Information (RFI).^{Footnote 5} The CBSA received five responses to the Importer RFI: Exceed (Canada) Oilfield Equipment Inc. (Exceed Canada), Imex Canada Inc. (Imex), Lifting Solutions Inc., Weatherford Canada Ltd. (Weatherford Canada) and Westcan Oilfield Supply Ltd.^{Footnote 6}

[18] CBSA officers conducted an on-site verification at the premises of Weatherford Canada in Calgary, Alberta.

[19] At the initiation of the investigations, the CBSA identified 40 potential exporters/producers of the subject goods located in China from CBSA import documentation and from information submitted in the complaint. The potential exporters located in China were asked to respond to the CBSA’s Dumping RFI, Section 20 RFI and Subsidy RFI.^{Footnote 7}

[20] Three exporters/producers in China provided substantially complete responses to the Dumping and Subsidy RFIs: Shandong Nine-Ring Petroleum Machinery Co., Ltd. (Nine-Ring), Shandong Shouguang Kunlong Petroleum Machinery Co., Ltd. (Shandong Kunlong) and Zibo Hongyang Weatherford Oilfield Equipment Co., Ltd. (Zibo Weatherford). In addition, one exporter, FOUND Petroleum Equipment Co., Ltd. (FOUND), provided a response which was considered substantially complete for the purposes of the preliminary determinations, but was subsequently determined to be incomplete and inaccurate in the final phase of the investigations. Two exporters, FOUND and Zibo Weatherford, also provided responses to the Section 20 RFI. See the “Dumping Investigation” and “Subsidy Investigation” sections for information on the results of the investigations pertaining to the responding exporters.

[21] CBSA officers conducted on-site verifications at the premises of FOUND in Baotou, Inner Mongolia and Zibo Weatherford in Zibo, Shandong. The information provided by Nine-Ring and Shandong Kunlong was verified through desk audits.

[22] As part of the section 20 inquiry, the CBSA identified 12 known foreign producers of sucker rods located in the following eight countries: Argentina, Brazil, India, Kazakhstan, Mexico, Romania, Russia and the United States. The CBSA sent a Surrogate Producer RFI to those 12 producers. The CBSA received three substantially complete responses, two from producers located in the United States, Norris Rods^{Footnote 8} and Weatherford Artificial Lift Systems LLC (Weatherford ALS)^{Footnote 9}, and one from a producer located in Romania, S.C. Silcotub S.A. (Silcotub).^{Footnote 10} CBSA officers conducted an on-site verification at the premises of Norris Rods in Tulsa, Oklahoma.

[23] For the purposes of these investigations, “Government of China” refers 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.

[24] At the initiation of the investigations, the CBSA sent a Government Subsidy RFI and Government Section 20 RFI to the GOC. The GOC did not respond to the CBSA’s Subsidy or Section 20 RFI.

[25] For the purposes of these investigations, subject goods are defined as:

[26] Sucker rods are used in oil and gas extraction. In an oil or gas well, the rod string connects the above-ground drive to the down well pump(s). They are usually produced to 25 feet in length but can be longer.

[27] Pony rods are shorter lengths of sucker rods used to obtain the proper length of rod string when a full sucker rod would make the string too long. Pony rods are connected to each other, or to sucker rods, with couplings. They are usually produced in lengths of 1, 2, 4, 6, 8, 10 or 12 feet. Pony rods are usually made in the same diameters as sucker rods in the rod string.

[28] Sucker rods are “semi-finished” at any point following the forming of the ends of the material input (i.e. solid bar) into the essential sucker rod shape (e.g. forging) which typically creates the pin shoulder, wrench square and transition/upset of the sucker rod.

[29] The diameter of the sucker rod always refers to the outer diameter of the rod body, rather than any part of the forged end.

[30] Special grades of steel referred to in the product definition includes steel grades which may not meet standard industry specifications including proprietary grades.

[31] For greater clarify, the product definition does not cover:

• Polished rods, which are above ground connections to the rod strings;
• Sinker bars, which are used to add weight to the rod string;
• Fiberglass sucker rods (Fiber reinforced plastic);
• Hollow sucker rods; and
• Continuous sucker rods.

[32] A “polished rod” connects the rest of the rod string to the above-ground drive. A polished rod is a special rod required to endure exposure to the surface conditions, unlike sucker rods which remain below ground the entire time they are being used. The polished rod’s placement requires particular sizing and characteristics which make it quite different from a sucker rod.

[33] A “sinker bar” is at the opposite end from the polished rod, as it connects the sucker rod string to the pump. The bar provides weight so that the tool will lower properly into the well.

[34] A fiberglass sucker rod or pony rod is typically manufactured in three pieces and assembled by a process that connects two metal end-fittings to a non-metallic fiber reinforced plastic rod body.

[35] A hollow sucker rod is made of seamless steel pipe, and the screw thread joint is connected with the rod body through friction welding and heat treatment. Hollow sucker rod is used for the exploitation of heavy oil, high freezing point oil and waxy crude oil. The hollow rod presents the ability to inject diluents through the hollow rod in progressive cavity pumping (PCP) operations.

[36] Continuous (coiled) sucker rods have an entire rod string in one piece with only two connections; one at the top and one at the bottom. These rods are available in either round or elliptical configurations. Continuous rod eliminates all the couplings along the entire wellbore except for the top connection to the polished rod and the bottom connection to the pump itself.

[37] Sucker rods described in the product definition are produced world-wide using materially similar production processes.

[38] Steel bars are the raw material for sucker rods. In North America, suitable steel bars are typically referred to as special bar quality (SBQ), however this is not a rigidly standardized term. In some cases, including in other countries, the input material could be referred to as engineered bar or merchant bar. Ultimately, any steel bar that meets the relevant requirements (chemical, mechanical, dimensional and so forth) can be used as input material.

[39] SBQ arriving at the production facility is inspected and received into inventory. The SBQ is cut to length for 25 foot sucker rods.

[40] The SBQ is transferred to a straightener, and it is straightened by passing through straightener rollers.

[41] Bars then get passed through an Eddy Current tester to check for any surface quality defects. All good bars are collected to form a bundle and rejected bars are kicked out in reject pockets.

[42] Good bars are then transferred to forge machines. Each bar end (between 8 – 14 inches of material) is induction heated to 2300°F ±50°F and upset forged to dimensions specified by the drawing for one end.

[43] During the forging process, the material is stamped with: the name of the manufacturer, the size, pin type, grade, heat code and date of manufacturing.

[44] After forging, the rod is transferred to the normalizing furnace. Forged rods are put on conveyor chains which take them through the furnace at a preset speed and furnace temperatures above the critical transformational temperature (1550°F – 1675°F, depending on the desired finished grade) where the rods undergo beneficial microstructure changes. Essentially, normalizing allows for the re-crystallization of steel to offset any defects arising from the working of the metal (particularly the prior forging).

[45] Upon exiting the normalizing furnace, the rods will be brittle and have poor ductility, so the rods are then tempered. When the rods come out of the normalizing furnace, they are then slowly moved (to allow air cooling for a certain time) to the tempering furnace at preset speed and temperature. Again the speed and temperatures are governed by the finished grades, but are approximately 500°F lower than normalizing temperatures. Tempering improves the ductility and toughness of the steel.

[46] The rods are then transferred on another conveyor which takes them through the shot peener. In this process the rods are blasted with tiny metal balls which produce compressive residual stresses on the rod surface which improves the fatigue life of the rod making them a superior quality product over non peened rods.^{Footnote 13}

[47] Rods are then settled in output table pockets to allow for cooling to room temperature. Once cooled, rod bundles are moved to computer numerical control (“CNC”) machines where they are machined and threaded on the ends. AOT uses cold-formed rolled threads on its sucker rods. The cold-formed process displaces, rather than removes metal, to maintain consistent steel grain size. This strengthens the shear, yield, and fatigue resistance of the threads. As necessary, couplings are attached on one end and pin protector plastic caps are added to the other.

[48] Machined rods are then sent to paint tables where they are inspected for straightness. Rods that are out of straightness are straightened. The rods are then dipped into a paint vat.

[49] Painted rods are then arranged in a stack for bundling and strapping. Rods are covered in an oil-soluble coating to reduce atmospheric corrosion in storage. Rods are bundled to prevent handling damages during transportation. Bundled rods are then moved to the storage area from where they get loaded onto trucks for shipping out to distributors.

[50] Sucker rods are lengths of steel, usually with externally threaded (also referred to as male threaded) ends. Couplings are typically threaded hollow cylinders used to connect rods.

[51] They are used in oil and gas extraction. In an oil or gas well, the rod string connects the above-ground drive to the down well pump(s).

[52] In extracting oil or gas from a well, some form of “drive” (which includes the motor) is required to provide the motive force and power for the extraction. The drive may be located above ground, or it may be located down well. Sucker rods are only used with drives that are located above ground.

[53] The above-ground drive is physically connected to the down well pump(s) by a rod string. The rod string is primarily composed of a series of interconnected sucker rods. The number and length of sucker rods may vary widely from well to well, depending on the various requirements established by engineers of the purchasing end users. A string of sucker rods could consist of dozens or even hundreds of sucker rods and have a total length of thousands of feet. Rod strings in Canada are typically in the range of 2,500 to 7,500 feet (roughly 100 to 300 sucker rods of 25 feet in length).

[54] A down well pump will either be a reciprocating pump or a progressive cavity pump (“PCP”). Reciprocating pumps require the rod string to move up and down to extract oil and gas out. This style of pump is more traditional. For these kind of pumps, the drive will connect to a “walking beam” and “horse head,” which will then reciprocate by pulling the rod string up and then pushing it down.

[55] A single “polished rod” connects the rest of the rod string to the above-ground drive. A polished rod is a special rod required to endure exposure to the surface conditions, unlike sucker rods which remain below ground the entire time they are being used. The polished rod’s placement requires particular sizing and characteristics which make it quite different from a sucker rod.

[56] On the other extreme of the sucker rod string there is often a “sinker bar.” A sinker bar is similar to a polished rod and has special requirements based on its role. It connects the sucker rod string to the pump.

[57] In contrast to the up-down movement of sucker rods in a reciprocating pump application, PCPs require the rod string to spin. This spinning motion is what causes the PCP to extract oil and gas from the well. The basic layout and components of a PCP well are similar to a reciprocating pump well.

[58] The subject goods are normally imported under the following tariff classification number:

1. 8413.91.00.10

[59] The tariff classification number is for convenience of reference only. The tariff classification number may include non-subject goods. Refer to the product definition for authoritative details regarding the subject goods.

[76] 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.

[77] In the case of a prescribed country such as China, if, in the opinion of the CBSA, the government of that country substantially determines domestic prices and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market, the normal values are generally determined on the basis of section 20 of SIMA using either 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.

[78] 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.

[79] The export price of goods sold to importers in Canada is generally determined in accordance with section 24 of SIMA based on the lesser of the adjusted exporter’s sale price for the goods or the adjusted importer’s purchase price. 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.

[80] Where there are sales between associated persons or a compensatory arrangement exists, the export price may be determined based on the importer’s resale price of the imported goods in Canada to non-associated purchasers, less deductions for all costs incurred in preparing, shipping and exporting the goods to Canada that are additional to those incurred on the sales of like goods for use in the country of export, all costs that are incurred in reselling the goods (including duties and taxes) or associated with the assembly of the goods in Canada and an amount representative of the average industry profit in Canada, pursuant to paragraphs 25(1)(c) and 25(1)(d) of SIMA. In any cases not provided for under paragraphs 25(1)(c) and 25(1)(d) of SIMA, the export price is determined in such a manner as the Minister specifies, pursuant to paragraph 25(1)(e).

[81] 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.

[82] The margin of dumping by exporter is equal to the amount by which the total normal value exceeds the total export price of the goods, expressed as a percentage of the total export price. All subject goods imported into Canada during the POI are included in the margins of dumping of the goods. Where the total normal value of the goods does not exceed the total export price of the goods, the margin of dumping is zero.

[83] Section 20 is a provision of SIMA that may be applied to determine the normal value of goods in a dumping investigation where certain conditions prevail in the domestic market of the exporting country. In the case of a prescribed country under paragraph 20(1)(a) of SIMA, it is applied where, in the opinion of the CBSA, the government of that country substantially determines domestic prices and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market.

[84] The provisions of section 20 are applied on a sector basis rather than on the country as a whole. The sector reviewed will normally only include the industry producing and exporting the goods under investigation.

[85] A section 20 inquiry refers to the process whereby the CBSA collects information from various sources in order to form an opinion as to whether the conditions described under subsection 20(1) of SIMA exist with respect to the sector under investigation.

[86] The CBSA is required to examine whether the government of that country substantially determines domestic prices. The CBSA is also required to examine the price effect resulting from substantial government determination of domestic prices and whether there is sufficient information on the record for the CBSA to have reason to believe that the resulting domestic prices are not substantially the same as they would be in a competitive market.

[87] The complainant alleged that the conditions described in section 20 prevail in the steel oil and gas products sector, which includes sucker rods, in China. That is, the complainant alleged that this industry sector in China does not operate under competitive market conditions and consequently, prices established in the Chinese domestic market for sucker rods are not reliable for determining normal values.

[88] The complainant provided a variety of evidence supporting the claim that the GOC substantially determines prices of sucker rods sold in China, including a pricing analysis of long product inputs.^{Footnote 16} The complainant provided evidence of state-ownership in the steel industry, involving both producers and purchasers, including those in the steel oil and gas products sector. The complainant also cited specific GOC policies such as China’s 13^th Five-Year Plan, the 2016 Iron and Steel Industry Adjustment and Upgrade Plan and the State Council Decision on Accelerating the Development of Strategic Emerging Industries as evidence of continued influence on market forces in China.

[89] At the initiation of the investigations, the CBSA had sufficient evidence, supplied by the complainant and from its own research and past investigation findings, to support the initiation of a section 20 inquiry to examine the extent of GOC involvement in pricing in the steel oil and gas products sector, which includes sucker rods. The information indicated that prices in China in this sector have been influenced by various GOC industrial policies. Consequently, the CBSA sent Section 20 RFIs to producers and exporters of sucker rods in China, as well as to the GOC, to obtain information on the extent to which the GOC is involved with the determination of domestic prices in the steel oil and gas products sector, which includes sucker rods.

Responses to Section 20 Inquiry

[90] The CBSA received responses to the Section 20 RFIs from two exporters/producers. In general, the parties who provided a response did attempt to address each question. However, the responses did not include the information with respect to GOC influence on the steel oil and gas products sector.

[91] An RFI was sent to the GOC requesting information for the purposes of the section 20 inquiry, however, no response was received.

[92] As part of the section 20 inquiry, Surrogate Producer RFIs were sent to all known producers of sucker rods in Argentina, Brazil, India, Kazakhstan, Mexico, Romania, Russia and the United States. These countries were selected as they all have well-developed sucker rods industries. As previously stated the CBSA received responses from three surrogate producers, Norris Rods and Weatherford ALS located in the United States and Silcotub located in Romania.

[93] As part of the section 20 inquiry, the RFIs sent to importers requested information on re-sales in Canada of sucker rods imported from countries other than China. The CBSA received responses from five importers; however, only one importer, Weatherford Canada, provided information on re-sales in Canada of like goods.

CBSA’s Analysis with Respect to Section 20 Inquiry

[94] The following is the CBSA’s analysis of the relevant factors that are present in the steel oil and gas products sector in China, which includes sucker rods.

GOC Industrial Policies

[95] The CBSA has information on the record that indicates the involvement of the GOC in the steel industry, which include the following:

• The National Steel Policy and the Steel Revitalization/Rescue Plan;
• The 12^th Five-Year Development Plan for the Steel Industry;
• The 13^th Five-Year National Economic and Social Development Plan;
• State Council Decision on Accelerating the Development of Strategic Emerging Industries; and
• List of Industries, Products and Technologies Currently Encouraged by the State for Development (2000).

The National Steel Policy and the Steel Revitalization/Rescue Plan

[96] The Development Policies for the Iron and Steel Industry – Order of the National Development and Reform Commission [No. 35], (National Steel Policy)^{Footnote 17} was promulgated on July 8, 2005 and outlines the GOC’s future plans for the Chinese domestic steel industry. The major objectives of the National Steel Policy are:

• The structural adjustment of the Chinese domestic steel industry;
• Industry consolidations through mergers and acquisitions;
• The regulation of technological upgrading with new standards for the steel industry;
• Measures to reduce material and energy consumption and enhance environmental protection; and
• Government supervision and management in the steel industry.

[97] On March 20, 2009, the GOC promulgated the Blueprint for the Adjustment and Revitalization of the Steel Industry issued by the General Office of the State Council (Steel Revitalization/Rescue Plan)^{Footnote 18}. This macro-economic policy was the GOC’s response to the global financial crisis and is also the action plan for the steel industry for the 2009 through 2011 period. This plan included the following major tasks:

• Maintain the stability of the domestic market and improve the export environment;
• Strictly control the total output of steel and accelerate the process of eliminating what is backward (obsolete);
• Enhance enterprise reorganization and improve the industrial concentration level;
• Spend more on technical transformation and promote technical progress;
• Optimize the layout of the steel industry and overall arrangements of its development;
• Adjust the steel product mix and improve the product quality;
• Maintain stable import of iron ore resources and rectify the market order; and
• Develop domestic and overseas resources and guarantee the safety of the industry.

[98] There are common measures between these two GOC policies, as the Steel Revitalization/Rescue Plan is an acceleration of the major objectives of the National Steel Policy. In the Steel Revitalization/Rescue Plan, the GOC asserts its strict control over new or additional steel production capacity, promotes new GOC directed mergers and acquisitions to reform the Chinese steel industry into larger conglomerates, along with an increased emphasis on steel product quality. These measures and reforms affect all of the steel industry in China, including the steel oil and gas products sector, which includes sucker rods.

12^th Five-Year Development Plan for the Steel Industry

[99] The 12^th Five-Year Development Plan for the Steel Industry^{Footnote 19} is a policy document that was released by the GOC’s Ministry of Industry and Information Technology on November 7, 2011. It served as the guiding document for the development of the Chinese steel industry for the 2011-2015 period. Some of the key objectives in the plan included:

• Increased mergers and acquisitions to create larger, more efficient steel companies;
• GOC restrictions on steel capacity expansion;
• Upgrading of steel industry technology;
• Greater GOC emphasis on high-end steel products; and
• GOC directed relocation of iron and steel companies to coastal areas.

[100] Also included in this plan were minimum requirements for steel production in order to eliminate smaller players in the market. Through this plan, the GOC continued its reform and restructuring of the Chinese steel industry. The GOC’s target was that by 2015, China’s top 10 steel producers would represent 60% of the country’s total steel output. According to the National Steel Policy, the long-range GOC target for mergers and acquisitions is to have the top 10 Chinese steel producers account for 70% of total national steel production by 2020. This plan was the next development stage of GOC directives aimed at achieving this long-range 2020 target.

[101] Additional GOC policies and measures in the 12^th Five-Year Development Plan for the Steel Industry include:

• Improve the industry management system;
• Create an environment for fair competition, strengthen and improve macro adjustment and control;
• Regulate the production and standardize the operation of the steel industry;
• Strengthen the macro guidance of the policy;
• Promote international exchange and co-operation;
• Improve industry information flow, capital flow and material flow. Support enterprise groups to establish and improve the information system in different regions; and
• Improve planning by regional authorities of industries to develop the steel industry, combine the regional mergers and reconstruction and eliminate obsolete construction.

[102] The GOC’s direction of the steel industry includes enabling regional or provincial governments to combine enterprises across boundaries. Furthermore, as a result of the GOC’s administration of steel production capacity, the Chinese steel industry is very much under the purview of the GOC.

[103] Together with the GOC’s: Criterion for the Production and Operation of Steel Industry^{Footnote 20} – GY [2010] No. 105 and Several Observations of the General Office of the State Council on Further Strengthening Energy-saving and Emission Reduction Efforts as well as Accelerating of Restructuring of Steel Industry^{Footnote 21} – GBF (2010) No. 34, these policies set out the detailed requirements for existing production and operations of steel enterprises in China.

[104] The intent of these latter policies is to further support and carry out the Steel Revitalization/Rescue Plan, to achieve the energy-saving and emission targets, in addition to the restructuring of the steel industry in China as approved by the State Council. One main objective of the State Council is to “resolutely suppress the excessive growth of steel production capacity” and “strictly implement the approval and review process of steel projects.”

[105] Should steel enterprises not acquiesce to the GOC’s requirements, laws and industrial policies, there are repercussions which include the withdrawal of steel production licenses and credit support. In respect of new construction or renovation of Chinese steel enterprises, the GOC’s steel development policies also apply.

13^th Five-Year Plan for National Economic and Social Development

[106] The GOC adopted its 13^th Five-Year Plan for National Economic and Social Development of the People’s Republic of China (2016-2020) (13^th Five-Year Plan)^{Footnote 22}, on March 15, 2016 and issued the plan in December 2016 through the National Development Reform Commission (NDRC). The 13^th Five-Year Plan outlines China’s goals, principles and targets for its development for the period of 2016-2020.

[107] The objectives outlined in the 13^th Five-Year Plan continue the themes expressed in the 12^th Five-Year Steel Plan, including the strengthening of state owned enterprises (SOE) and control over the economy, including the steel industry.

[108] The 13^th Five-Year Plan calls for greater involvement of SOEs in the development of the Chinese economy. Specifically, Chapter 11 of the plan states:

[109] Given the overcapacity in the steel industry causing excess supply, the above statement supports GOC intentions to further consolidate the steel industry through mergers and restructuring and that the GOC views SOEs as having an important role to play in the economy.

State Council Decision on Accelerating the Development of Strategic Emerging Industries

[110] The initial policy pertaining to Strategic Emerging Industries (SEIs) is the State Council Decision on Accelerating the Development of Strategic Emerging Industries^{Footnote 24}, issued in October 2010. The policy established a quantitative target for SEIs to account for eight percent of the gross domestic product by 2015 and 15 percent by 2020.

[111] The complainant provided information supporting that sucker rods falls within the seven specific SEIs denoted by the GOC for two main reasons:

1. The energy efficiency and environmental objectives of the decision will necessarily affect steel producers because energy is such a significant input for the production of steel. Steel production can also have significant environmental impacts.
2. The decision directs the “development of high-quality special steel, new alloy materials...” Given the demanding applications in which sucker rods are used, they can benefit greatly from advances in steel technology, particularly in special service and high strength products.

[112] The policies on SEIs indicate that the GOC considers the steel oil and gas products sector, which includes sucker rods, to be an important industry in China. Given the importance of the steel oil and gas products sector in China’s economy, the GOC will have a vested interest in maintaining influence over this sector.

List of Industries, Products and Technologies Currently Encouraged by the State for Development (2000)

[113] Issued by the State Planning Commission and State Economic and Trade Commission, the List of Industries, Products and Technologies Currently Encouraged by the State for Development (Revised in 2000)^{Footnote 25} was approved by the State Council on July 27, 2000.

[114] The list came into force on September 1, 2000, and includes the following encouraged industries: iron and steel, petrochemical, oil and natural gas, nuclear energy and electric power. In promoting the development of these industries, it is clear that the steel oil and gas products sector, which includes sucker rods, is impacted due to the use of sucker rods in these encouraged industries.

GOC Ownership of Suppliers/Producers

[115] As part of its section 20 analysis with respect to the influence of SOEs, the CBSA examined:

• Decree of the State Council of the People’s Republic of China No.378;
• Circular of the State-Council on Supervision of State-Owned Enterprises to Prevent Loss of State Assets; and
• State ownership of the steel and oil & gas industries in China.

Decree of the State Council of the People’s Republic of China No.378

[116] The Decree of the State Council of the People’s Republic of China No.378 (the Decree)^{Footnote 26}, promulgated on May 27, 2003, provides the authority for the State Council, the chief administrative authority of China, to control, supervise and manage SOEs.

[117] According to Article 12 of the Decree, “The State-owned assets supervision and administration authority of the State Council is a specially established authority directly subordinated to the State Council which, on behalf of the State Council, performs the responsibilities of investor, supervises and manages state-owned assets of enterprises.” This indicates that the GOC has significant authority over the actions of SOEs in China.

Circular of the State-Council on Supervision of State-Owned Enterprises to Prevent Loss of State Assets

[118] On November 10, 2015, the State Council issued the Circular of the State-Council on Supervision of State-Owned Enterprises to Prevent Loss of State Assets.^{Footnote 27} According to a summary of the circular released by the GOC, “inside and outside supervision will be strengthened on SOEs.” A range of increased supervision efforts were listed in the summary by the GOC, including:

• improving supervision of SOEs’ key departments and subsidiaries in areas of finance, procurement, marketing, and investment;
• enhancing supervision of board of directors at SOEs;
• establishing an audit committee made up of outside directors; and reinforcing board of supervisors;
• better oversight by State assets supervisory agencies of SOEs covering investment plans;
• restructuring and reorganization;
• property rights management;
• financial evaluation;
• performance appraisal;
• employment and promotion, and salary distribution;
• regular inspections on all business operations and random inspections on key projects;
• improvement of board of external supervisors dispatched by the government to monitor finance, major decisions, operation, managers, and board of directors of SOEs; and
• improvement of auditing on SOEs, especially during replacement of SOEs’ top executives.

[119] Based on the summary of the GOC of its Circular of the State-Council on Supervision of State-Owned Enterprises to Prevent Loss of State Assets, the GOC increased its supervision of all SOEs in 2015, which includes SOEs in the steel industry.

State ownership of the steel and oil & gas industries in China

[120] Information on the record indicates that China accounted for just under half of the world’s crude steel production in 2016. The same data reports that five of the top ten steel producers in the world are in China and four are SOEs. These five companies accounted for over one-quarter of all Chinese production of crude steel. Of the total of 808.4 million metric tonnes (mmt) of crude steel produced by Chinese steel producers in 2016, the private Chinese companies accounted for only 107.1 mmt, meaning Chinese SOEs accounted for 87% of all Chinese crude steel production in that period.^{Footnote 28}

[121] China’s oil and gas industry is dominated by three SOE oil companies, Sinopec, China National Petroleum Corporation (CNPC) and China National Offshore Oil Corporation. Together these three SOE oil companies accounted for approximately 92% of Chinese oil production in 2017. The complainant provided information indicating that both Sinopec and CNPC own several large-scale producers of sucker rods in China. In addition, the three companies control the vast majority of purchases of sucker rods in China, and this gives the GOC monopolist power.^{Footnote 29}

[122] The above information suggests that there is substantial state ownership in the steel oil and gas products sector in China, which includes sucker rods.

Summary of the GOC’s Influence on Domestic Prices

[123] The GOC’s measures, notices and stated objectives detailed above illustrate that the GOC is closely administering the steel industry in China. Based on the information on the record and the scope of the GOC’s macro-economic policies and measures, there is a compelling factual basis to believe that the GOC is influencing the Chinese steel oil and gas products sector, which includes sucker rods. These policies and measures change the supply and demand balance in the domestic market and materially alter the domestic prices of steel products such as input steel bars, as well as sucker rods.

[124] The major macro-economic policies and measures of the GOC identified above have resulted in an environment where steel enterprises have conflicting objectives. The GOC objectives are likely to conflict with the commercial objectives of steel enterprises, including sucker rods producers, affecting the type of products to be produced, production volumes and ultimately prices. In addition to the industrial policies and measures, the GOC is closely administering the oil & gas industry, including the steel oil and gas products sector, through state ownership of three large-scale oil companies and their subsidiary producers of sucker rods.

[125] The cumulative impact of the GOC’s actions, measures and control indicate that prices of sucker rods in China are being indirectly determined by the GOC.

Chinese Domestic Price Analysis

[126] In order to determine normal values pursuant to section 20 of SIMA, in addition to the requirement in paragraph 20(1)(a) of SIMA that the CBSA be of the opinion that the government of a prescribed country substantially determines domestic prices, the CBSA must be of the opinion that there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market.

[127] At the initiation, the CBSA requested information regarding the domestic price of sucker rods in China from exporters/producers in that country. The CBSA received responses to the Dumping and Section 20 RFIs from several producers and exporters of sucker rods in China. The responses included information regarding the domestic selling prices of sucker rods sold by those producers and exporters. Publically available information on the domestic pricing of sucker rods in China could not be obtained.

[128] As mentioned above, during the course of the investigation, the CBSA obtained additional information regarding the prices of sucker rods in surrogate countries, namely the United States and Romania. The following summarizes the comparison of the domestic prices in China to the domestic prices in the surrogate countries for sucker rods.

[129] In conducting its price analysis of sucker rods, the CBSA calculated quarterly average domestic prices of sucker rods in both China and the surrogate countries during the PAP. The quarterly average Chinese prices were then compared to the quarterly average surrogate prices. Results are found in the table below:

[130] The results summarized in the table above demonstrate a significant difference in the price of sucker rods in China when compared to the price in the surrogate countries (i.e. the United States and Romania). The quarterly average surrogate price was 176% to 227% higher than the price of those goods in China. On average, Chinese prices were 205% below the surrogate countries’ during the PAP.^{Footnote 30}

[131] The analysis performed above supports the conclusion that the domestic prices of sucker rods in China are not substantially the same as they would be if they were determined in a competitive market.

Summary of the Results of the Section 20 Inquiry

[132] The wide range and material nature of the GOC measures have resulted in significant influence on the steel oil and gas products sector in China, which includes sucker rods. Based on the preceding, the CBSA is of the opinion that:

• domestic prices of sucker rods in China are substantially determined by the GOC; and
• there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market.

[133] Based on the above analysis, for the purposes of the final determination, the CBSA affirmed the opinion rendered at the preliminary determination that the conditions of paragraph 20(1)(a) of SIMA exist in the steel oil and gas products sector in China, which includes sucker rods.

[134] Normal values could not be determined on the basis of the domestic selling prices in China or on the full cost of goods plus profit, because the CBSA formed the opinion that the conditions of paragraph 20(1)(a) of SIMA exist in the steel oil and gas products sector in China, which includes sucker rods.

[135] Where section 20 conditions exist, the CBSA may determine normal values pursuant to paragraph 20(1)(c) or 20(1)(d) of SIMA based on the domestic selling price or cost of production of the goods, plus a reasonable amount for administrative, selling and all other costs and a reasonable amount for profits of the like goods sold by producers in any country designated by the President and adjusted for price comparability; or on the basis of the selling price in Canada of like goods imported from any country designated by the President and adjusted for price comparability.

[136] The CBSA designated the United States and Romania as surrogate countries. These countries were selected as they have well-developed sucker rods industries and the CBSA received substantially complete responses to the Surrogate Producer RFI from producers in these countries. Given that more than one country was designated as a surrogate country and that those countries do not have a common currency, the normal values were calculated in U.S. dollars.

[137] For exporters that provided a substantially complete response for purposes of the final determination, normal values were determined in accordance with subparagraph 20(1)(c)(i) of SIMA using the profitable domestic sales of liked goods of producers in the surrogate countries. In the absence of liked goods, normal values could not be determined in accordance with subparagraph 20(1)(c)(ii) of SIMA because sufficient cost information was not available. In addition, normal values could not be determined in accordance with paragraph 20(1)(d) of SIMA as the CBSA had insufficient information on re-sales in Canada of like goods imported from countries other than China.

[138] As a result, in absence of sufficient like good information under paragraph 20(1)(c) of SIMA, normal values were determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA using domestic sales of the closest matching products in the surrogate countries, taking into consideration all relevant characteristics such as grade, length, coupling types and underlying mechanical and chemical properties of the input steel bar.

[139] The following summarizes the results of the dumping investigation for the exporters in China that provided a responses to the CBSA:

FOUND Petroleum Equipment Co., Ltd.

[140] FOUND is a producer and exporter of subject goods located in Baotou, Inner Mongolia, China. FOUND has one production facility in Baotou where subject goods are produced and directly exported to Canada. During the POI, all subject goods exported by FOUND to Canada were sold to an unrelated importer in Canada, Imex.

[141] FOUND provided substantially complete responses to the Dumping RFI and one SRFI^{Footnote 31}, which was sent to gather additional information and seek clarification regarding their original Dumping RFI response. CBSA officials performed an on-site verification at the premises of FOUND in August 2018.^{Footnote 32}

[142] Although FOUND’s information was used for the purposes of the preliminary determination, during the on-site verification CBSA officials discovered major discrepancies between the information in FOUND’s responses to the Dumping RFI and SRFI, and the information in their financial system. As a result, officials from FOUND and the CBSA agreed to terminate the verification.

[143] As FOUND’s information could not be verified and was determined to be incomplete and inaccurate, the CBSA has determined normal values and export prices for FOUND in accordance with subsection 29(1) of SIMA, based on the methodologies described below under “All Other Exporters”.

[144] For purposes of the final determination, the total normal value compared to the total export price results in a margin of dumping of 149.9% for FOUND, expressed as a percentage of the export price.

Shandong Nine-Ring Petroleum Machinery Co., Ltd.

[145] Nine-Ring is a producer and exporter of subject goods located in Binzhou, Shandong, China. During the POI, all subject goods exported by Nine-Ring to Canada were sold to a related importer, Exceed Canada.

[146] Nine-Ring provided substantially complete responses to the Dumping RFI and two SRFIs^{Footnote 33}, which were sent to gather additional information and seek clarification regarding their original Dumping RFI response. A desk audit was completed in order to verify the information provided by Nine-Ring.

[147] As explained above, where possible, normal values were determined pursuant to subparagraph 20(1)(c)(i). Therefore, normal values for the goods Nine-Ring exported to Canada during the POI were determined on the basis of the selling prices of like goods sold domestically by producers in the surrogate countries during the PAP. However, for a small amount of transactions, where like goods were not produced or sold by surrogate producers, the normal values were determined pursuant to subsection 29(1) of SIMA using domestic sales of the closest matching products in the surrogate countries.

[148] Due to the relationship between Nine-Ring and Exceed Canada, it is necessary for the CBSA to determine whether the section 24 export prices are reliable for SIMA purposes by performing a reliability test. This test is conducted by comparing the export prices determined under section 24 of SIMA, based on the lesser of the exporter’s selling prices and the importer’s purchase prices, with the export prices determined under section 25 of SIMA. Although both the exporter and its related importer provided complete, timely and accurate information, the CBSA was unable to determine export prices under section 25 of SIMA based on that information. As such, the CBSA was unable to make a comparison between the export prices. However, based on the information provided by the exporter and the importer, the section 24 export prices are not reliable.

[149] As export prices could not be determined pursuant to either section 24 or section 25 of SIMA, export prices for subject goods exported by Nine-Ring and sold to Exceed Canada were determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA.

[150] In establishing the methodology for determining export prices, the CBSA examined information on the record that was provided by cooperative exporters and customs import documentation. The CBSA decided that export prices determined for the cooperative exporters whose submissions were substantially complete and verified for the final determination, would be used to establish the methodology for determining export prices since it reflects the exporters’ trading practices during the POI.

[151] The submissions of Shandong Kunlong and Zibo Weatherford were substantially complete for purposes of the final determination. The CBSA examined the difference between normal value and the export price for each individual transaction from these exporters in order to obtain an appropriate amount for the export price methodology.

[152] The CBSA considered that the highest amount by which the export price differed from the normal value on an individual transaction of the two exporters mentioned above (expressed as a percentage) was an appropriate basis for determining export prices. Therefore, the export prices were determined based on the normal value, less an amount equal to 59.9% of that normal value. Based on its analysis, the CBSA considered that this methodology was the most appropriate basis for determining export prices.

[153] For purposes of the final determination, the total normal value compared to the total export price results in a margin of dumping of 149.9% for Nine-Ring, expressed as a percentage of the total export price.

Shandong Shouguang Kunlong Petroleum Machinery Co., Ltd.

[154] Shandong Kunlong is a producer and exporter of subject goods. Its headquarters and factory are located in Shouguang, China. During the POI, Shandong Kunlong exported a single shipment of sucker rods to an unrelated customer in Canada.

[155] Shandong Kunlong provided substantially complete responses to the Dumping RFI and one SRFI^{Footnote 34}, which was sent to gather additional information and seek clarification regarding their original Dumping RFI response. A desk audit was completed in order to verify the information provided by Shandong Kunlong.

[156] Normal values for the goods Shandong Kunlong exported to Canada during the POI were determined pursuant to subparagraph 20(1)(c)(i) on the basis of the selling price of like goods sold domestically by producers in the surrogate countries during the PAP.

[157] For the subject good exported to Canada by Shandong Kunlong during the POI the export prices were determined pursuant to section 24 of SIMA based on the exporter’s selling price less all costs, charges and expenses resulting from the exportation of the good.

[158] For purposes of the final determination, the total normal value compared to the total export price results in a margin of dumping of 141.1% for Shandong Kunlong, expressed as a percentage of the total export price.

Zibo Hongyang Weatherford Oilfield Equipment Co., Ltd.

[159] Zibo Weatherford is a producer and exporter of subject goods located in Zibo, Shandong, China. During the POI, all subject goods exported by Zibo Weatherford to Canada were sold to a related importer, Weatherford Canada.

[160] Zibo Weatherford provided substantially complete responses to the Dumping RFI and one SRFI^{Footnote 35}, which was sent to gather additional information and seek clarification regarding their original Dumping RFI response. CBSA officials performed an on-site verification at the premises of Zibo Weatherford in August 2018.^{Footnote 36}

[161] As explained above, where possible, normal values were determined pursuant to subparagraph 20(1)(c)(i). Therefore, normal values for most of the goods Zibo Weatherford exported to Canada during the POI were determined on the basis of the selling prices of like goods sold domestically by producers in the surrogate countries during the PAP. However, for a small amount of transactions, where like goods were not produced or sold by surrogate producers, the normal values were determined pursuant to subsection 29(1) of SIMA using domestic sales of the closest matching products in the surrogate countries.

[162] Due to the relationship between Zibo Weatherford and Weatherford Canada, for subject goods exported during the POI by Zibo Weatherford, a reliability test under section 25 was performed to determine whether the section 24 export prices were reliable. The test was conducted by comparing the section 24 export prices with the export prices calculated in accordance with paragraph 25(1)(c) of SIMA.

[163] The export prices determined under paragraph 25(1)(c) were based on Weatherford Canada’s resales of the subject goods in Canada during the POI less deductions for all costs incurred in preparing, shipping and exporting the goods that were additional to those incurred on sales of like goods for use in the country of export, all costs incurred in reselling the goods (including duties and taxes) and an amount representative of the industry profit. The amount for profit used for the section 25 calculations was determined in accordance with paragraph 22(a) of the SIMR, based on the profit information relating to vendors who are at the same or substantially the same trade level as Weatherford Canada and that operated at a profit during the POI in Canada. The reliability test revealed that the export prices determined in accordance with section 24 of SIMA were reliable and, therefore, export prices for Zibo Weatherford were determined pursuant to section 24 of SIMA.

[164] For purposes of the final determination, the total normal value compared to the total export price results in a margin of dumping of 100.4% for Zibo Weatherford, expressed as a percentage of the total export price.

All Other Exporters

[165] For exporters of subject goods that did not provide a response to the Dumping RFI or did not furnish sufficient information, the normal values and export prices were determined under subsection 29(1) of SIMA pursuant to a ministerial specification, on the basis of facts available.

[166] In establishing the methodology for determining the normal values and export prices, the CBSA considered all of the information on the administrative record, including the complaint filed by the domestic industry, the CBSA’s estimates at the initiation of the investigation, information submitted by exporters of sucker rods from China, information provided by surrogate producers in the United States and Romania and customs import documentation.

[167] The CBSA decided that the normal values and export prices determined for the cooperative exporters whose submissions were substantially complete and 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 for all other exporters in China since it reflects the exporters’ trading practices during the POI.

[168] The submissions of Nine-Ring, Shandong Kunlong and Zibo Weatherford were substantially complete for purposes of the final determination. The CBSA examined the difference between normal value and the export price for each individual transaction from these exporters in order to obtain an appropriate amount for the normal value methodology. For the purposes of this exercise, the CBSA excluded transactions concerning pony rods, a shorter length sucker rod, as the pony rod transactions represent less than three percent of all export sales of subject goods to Canada and are not representative of the remaining sucker rods transactions. The remaining transactions were examined to ensure that no anomalies were considered, such as a very low volume and value, effects of seasonality or other business factors.

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

[170] Therefore, the normal values were determined based on the export price, plus an amount equal to 149.9% of that export price.

[171] 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. This information is more comprehensive than what was available in the complaint.

[172] Based on the above methodologies, the subject goods exported to Canada from China, by all other exporters were found to be dumped by a margin of dumping of 149.9%, expressed as a percentage of the export price.

[173] A summary of the results of the dumping investigation respecting all subject goods released into Canada during the dumping POI are as follows (also available in Appendix 1):

[174] Under paragraph 41(1)(a) of SIMA, the CBSA is required to terminate an investigation in respect of the goods of an exporter if it is satisfied that the goods have not been dumped or the margin of dumping of the goods of that exporter is insignificant, meaning a margin of dumping that is less than 2% of the export price of the goods.

[175] As can be seen from the table above, the goods under investigation have been dumped and the margins of dumping determined in respect of the goods of the exporters are greater than the threshold of 2% and are therefore not considered insignificant.

[183] The following presents the results of the investigation into the subsidizing of certain sucker rods originating in or exported from China.

[184] The GOC did not respond to the CBSA’s Government Subsidy RFI, which limited the CBSA’s ability to determine the amount of subsidy in the prescribed manner as the required information relating to financial contribution, benefit and specificity was not provided. It also limited the CBSA’s ability to determine whether producers, or other suppliers of goods and services are public bodies.

[185] Due to a lack of government response, subsidy amounts for all exporters were determined pursuant to subsection 30.4(2) of SIMA, based on a ministerial specification. However, in consideration of the fact that Shandong Kunlong, Nine-Ring and Zibo Weatherford provided sufficient information in response to their subsidy RFI, for each of these exporters, an individual amount of subsidy was determined based on the information provided in response to the Subsidy RFI and obtained during the on-site verification or desk audit.

[186] For exporters that did not provide sufficient information in response to the RFI, amounts of subsidy were determined under subsection 30.4(2) of SIMA on the basis of facts available.

[187] At the initiation of the subsidy investigation, the CBSA identified 22 potential subsidy programs. Information concerning these programs is provided in Appendix 2.

FOUND Petroleum Equipment Co., Ltd.

[188] FOUND is a producer and exporter of subject goods to Canada.

[189] FOUND provided substantially complete responses to the Subsidy RFI and one SRFI^{Footnote 37} for purposes of the preliminary determination. However, major discrepancies discovered with FOUND’s responses led to the termination of the on-site verification. FOUND’s information could not be verified and was considered incomplete and inaccurate for the final determination. As such, the CBSA determined the amount of subsidy under a ministerial specification based on the methodology as described below under “All Other Exporters”.

[190] The amount of subsidy determined for FOUND is 119.54 RMB/piece or 68.1%, expressed as a percentage of the export price.

Shandong Nine-Ring Petroleum Machinery Co., Ltd.

[191] Nine-Ring is a producer and exporter of subject goods to Canada. It provided substantially complete responses to the Subsidy RFI and two SRFIs.^{Footnote 38}

[192] For purposes of the final determination, the CBSA determined that Nine-Ring benefited from the following subsidy programs during the POI:

[193] The amount of subsidy for Nine-Ring is 28.78 RMB/piece or 21.0%, expressed as a percentage of export price.

Shandong Shouguang Kunlong Petroleum Machinery Co., Ltd.

[194] Shandong Kunlong is a producer and exporter of subject goods to Canada. It provided substantially complete responses to the Subsidy RFI and two SRFIs.^{Footnote 39}

[195] For purposes of the final determination, the CBSA determined that Shandong Kunlong benefited from the following subsidy programs during the POI:

[196] With respect to program 13 and as noted in Appendix 2, the information available indicates that this program is considered 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.

[197] The amount of subsidy for Shandong Kunlong is 31.21 RMB/piece or 24.4%, expressed as a percentage of export price.

Zibo Hongyang Weatherford Oilfield Equipment Co., Ltd.

[198] Zibo Weatherford is a producer and exporter of subject goods. It provided substantially complete responses to the Subsidy RFI and one SRFI.^{Footnote 40}

[199] For purposes of the final determination, the CBSA determined that Zibo Weatherford benefited from the following subsidy programs during the POI:

[200] The amount of subsidy for Zibo Weatherford is 5.81 RMB/piece or 2.8% expressed as a percentage of export price.

All Other Exporters

[201] For exporters of subject goods originating in or exported from China that did not provide a response to the Subsidy RFI or provided incomplete or unreliable information, the CBSA determined an amount of subsidy pursuant to subsection 30.4(2) of SIMA on the basis of facts available.

[202] In establishing the methodology for determining the amounts of subsidy, the CBSA examined all information on the record, including information from the complaint, information provided by exporters and publically available information. The CBSA considered that the information provided by exporters who provided sufficient information in response to the CBSA’s Subsidy RFI, as well as the information on the potentially actionable subsidy programs that were identified at the initiation of the investigation was the best information on which to base the methodology for determining amounts of subsidy. Therefore, the amounts of subsidy were determined pursuant to a ministerial specification on the basis of the following methodology:

1. the highest amount of subsidy for each of the seven programs, as found at the final determination, for the exporters located in China that provided a substantially complete response to the Subsidy RFI, plus;
2. the average amount of subsidy for the seven programs listed in (1), applied to each of the remaining 15 potentially actionable subsidy programs for which sufficient information was not provided for the final determination.

[203] The CBSA considers that this is an appropriate basis for determining the amounts of subsidy since the information available supports that the potentially actionable subsidy programs may be available to exporters and producers of the subject goods in China. Furthermore, the amount of subsidy applied to each of these potentially actionable subsidy programs is based on the benefits received by the responding exporters. This method of determining the amounts of subsidy is based on information on the record and limits the advantage that an exporter may gain from not providing necessary information requested in a subsidy investigation as compared to an exporter that did provide the necessary information.

[204] Using the above methodology, the amount of subsidy for all other exporters in China is 119.54 RMB/piece or 68.1%, expressed as a percentage of the export price.

[205] A summary of the results of the subsidy investigation respecting all subject goods released into Canada during the subsidy POI follows (also available in Appendix 1):

[206] Under paragraph 41(1)(a) of SIMA, the CBSA is required to terminate an investigation in respect of the goods of an exporter if the CBSA is satisfied that the goods have not been subsidized or the amount of subsidy on the goods of that exporter is insignificant.

[207] 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. As can be seen from the table above, the goods under investigation have been subsidized and the amounts of subsidy on the goods are above 1% and are, therefore, not insignificant.