Statement of Reasons—Final determinations: Wind towers (WT 2023 IN)

Complainant

[13] The name and address of the complainant is as follows:

Marmen Inc.
557 rue des Érables
Trois Rivières, Québec  G8T 8Y8

Marmen Énergie Inc.
1905 av du Phare O
Matane, Québec  G4W 3N1

[14] Marmen was founded in 1972. Marmen is a manufacturing partner of Original Equipment Manufacturers (OEM) in the aviation, oil and gas, hydropower, steam and gas turbines, mining and steel mills, wind power, nuclear power, infrastructure, space, defense and military industries.^{Footnote 1}

Other producers

[15] The complainant stated that they are the only producer of wind towers in Canada.^{Footnote 2} The CBSA conducted independent research, but could not identify any other producers in Canada.

Trade unions

[16] The complainant stated that their employees are not represented by a trade union.^{Footnote 3} As Marmen is the only known producer of wind towers in Canada, there are no known trade unions.

Importers

[17] At the initiation of the investigations, the CBSA identified 36 potential importers of the subject goods from CBSA import entry documentation and from information submitted in the complaint. All of the potential importers were asked to respond to the CBSA’s importer Request for Information (RFI).^{Footnote 4} Two importers provided a response to the importer RFI, Siemens Gamesa Renewable Energy Limited (“Siemens”)^{Footnote 5} and Vestas Canadian Wind Technology Inc. (“Vestas Canada”)^{Footnote 6}.

Exporters

[18] At the initiation of the investigations, the CBSA identified 83 potential exporters of the subject goods from CBSA import entry documentation and from information submitted in the complaint. All of the potential exporters were asked to respond to the CBSA’s dumping, subsidy, and section 20 RFIs.^{Footnote 7}

[19] Three exporters responded to the CBSA’s RFIs. The CBSA received RFI responses from a producer/exporter named CS Wind China Co., Ltd. (“CSWC”)^{Footnote 8}, its related vendor, CS Wind Corporation (“CSWK”) and its related input supplier, CS Trading (Lianyungang) Co., Ltd (“CSWT”) (collectively “CS Wind”); a producer/exporter named Penglai Dajin Offshore Heavy Industry Co., Ltd. (“Penglai Dajin”)^{Footnote 9}; and a producer/exporter named Shanghai Taisheng Wind Power Equipment Co., Ltd. (“STWPE”)^{Footnote 10} and two related parties, Nantong Taisheng Blue Island Offshore Co., Ltd. (“Blue Island”)^{Footnote 11} and Shanghai Taisheng Power Engineering Machinery Co., Ltd. (“Dongtai”)^{Footnote 12} (collectively “TSP Group”).

[20] One vendor of subject goods, Vestas Manufacturing A/S (“Vestas Denmark”)^{Footnote 13}, provided a response to the dumping RFI.

Government

[21] Upon initiation of the investigations, the GOC was sent the CBSA’s government subsidy RFI requesting information concerning the alleged subsidy programs available to producers/exporters of subject goods. The GOC was also sent a section 20 RFI.^{Footnote 14} The GOC did not respond to either the government subsidy RFI or section 20 RFI.

[22] On June 12, 2023, the CBSA received representations from the GOC expressing its opposition to the section 20 inquiry.^{Footnote 15}

[23] For the purposes of these investigations, GOC 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.

Definition

[24] For the purposes of these investigations, subject goods are defined as:^{Footnote 16}

Additional product information^{Footnote 17}

[25] The subject goods are wind towers or sections thereof. These goods are produced primarily from steel. When assembled at the installation site, the goods form a structural tower that support a wind turbine’s nacelle and rotor.

[26] A wind tower, when assembled, may or may not be tapered. An assembled wind turbine may also consist of several wind tower sections.

[27] In general, a wind tower section consists of one or more steel plates rolled into cylindrical or conical shapes and attached at the edges by welding to form a steel shell. A wind tower section may fall within scope of the product definition regardless of its coating, end-finish, painting, treatment, or method of manufacture. At each end of the section, a flange is attached.

[28] Internal and external components of wind turbines, such as those goods described at paragraph 1.A. of the product definition, are not within scope when unattached and shipped separate from a wind tower or section thereof. However, once attached to the tower or section – by welding, the use of fasteners or some other means that fixes the good to the wind tower or section in a non-incidental manner – the external or internal components become part of the tower and are therefore within scope. Similarly, internal and external components of wind turbines described in paragraph 1.A. of the product definition that are shipped with wind towers or sections, and that are intended to be attached to the wind tower when assembled, are considered part of the wind tower or section and within scope. Internal and external components may be shipped with a wind tower or section if such goods are listed on the same bill of lading or purchase order. Materials that are shipped with the tower or sections but are not intended as wind turbine components to be attached to the tower or section – such as packing material – are not within scope. Similarly, a rotor, hub or nacelle are not within scope as they are excluded by paragraph 1.C.i. of the product definition.

[29] Wind towers and sections can also be produced from fabricated steel panels that are shipped to the installation site and then constructed on-site into a tower or section. This is referred to in the product definition as a “kit”. These panels are assembled sections and/or towers using structural bolts. Towers produced and constructed using this method are not common in Canada as it requires significant labour resources at the installation site to construct or assemble the sections or towers and install any internal or external components. Nevertheless, towers and sections produced using this method are substitutable for towers and sections produced by rolling and welding plate into sections at a manufacturing facility. A kit tower section can be easier to transport compared to a traditionally manufactured section.

Production process^{Footnote 18}

[30] Wind towers are generally purchased by a wind turbine OEM. Each wind tower is produced to the OEM’s proprietary specifications.

[31] The primary input for wind towers is steel plate. The general plate thickness used ranges from 12 mm to 50 mm or more. Plate thickness will vary based on wind turbine design, rotor diameter, wind turbine component weight, positioning of the tower and other factors. The wall thickness of the tower may vary, with the base of the tower requiring thicker plate than the top of the tower.

[32] Wind tower manufacturing generally consists of the following steps:

1. Plate cutting: Plate is checked for quality and then cut using a plasma and/or oxygen acetylene cutter. Its edges may also be beveled to facilitate welding
2. Rolling: The cut plate is passed through a roller that bends and forms the plate into a cylindrical or conical shape
3. Welding: The edges of the rolled plate are welded on both sides of the seam. This creates a cylindrical or conical “can”. Individual cans are then fitted together and welded along the circumferential edge to create a tower section. A flange is then welded to each end of the section. A flange is a high precision, machined steel ring. It has a flared edge with evenly spaced holes. During installation the sections are attached together flange to flange using structural nuts and bolts. At various stages ultrasonic tests are completed to confirm the quality of the welds
4. Internal support attachments: Brackets, clips, lugs and similar goods used to attach internals to the tower are attached to the tower by welds. These support attachments are subsequently used to attach internal components to the tower
5. Door installation: A door is installed at the bottom of the base section. This involves cutting a hole in the section and installing a door frame and door
6. Painting and coating: The sections are coated on the inner and outer surfaces. The surfaces are prepared to ensure better paint adhesion. The flanges and portions of the sections may have a metallic coating, such as aluminum zinc alloy, applied to inhibit rust and corrosion. Sections are then painted with one or more layers of a urethane, epoxy or other coating
7. Component installation: Mechanical, electrical, and other components are installed
8. Inspection: The tower sections undergo a final quality control inspection process

[33] Delivery of a wind tower to the installation site and installation of the wind tower is arranged by the OEM customer.

[34] It is also possible for a wind tower or sections to be constructed at the installation site using fabricated steel panels that are shipped to a turbine installation site as a kit. The panels are fabricated at a manufacturing facility by cutting shapes from steel plate, bending them as required, drilling holes and painting or coating. The panels are delivered to the installation site as a kit and assembled into a tower or tower section at the turbine installation site using structural bolts to attach adjacent panels. Internals, externals, and doors would all be installed on site. Wind towers constructed from kits are not common in Canada.

Classification of imports

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

7308.20.00.00

[36] However, they can also be imported under the following tariff number, in particular if they are imported with other wind turbine components, such as the nacelle or rotors:

8502.31.00.00

[37] The listing of tariff classification numbers is for convenience of reference only. The tariff classification numbers include non-subject goods. Also, subject goods may fall under tariff classification numbers that are not listed. Refer to the product definition for authoritative details regarding the subject goods.

Background of the section 20 inquiry

[57] 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.^{Footnote 21}

[58] The provisions of section 20 are applied on a sector basis rather than on the country as a whole. The CBSA proceeds on the presumption that section 20 of SIMA is not applicable to the sector under investigation absent sufficient information to the contrary. The CBSA may form an opinion where there is sufficient information that the conditions set forth in paragraph 20(1)(a) of SIMA exist in the sector under investigation.

[59] 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.

[60] The complainant alleged that the conditions described in section 20 prevail in the wind tower sector in China. That is, the complainant alleged that this particular industry sector in China does not operate under competitive market conditions and consequently, wind tower prices established in the domestic market in China would not be reliable for purpose of determining normal values.^{Footnote 22}

[61] The complaint included a variety of evidence to support the claim that the GOC substantially determines domestic prices of wind towers in the country and that the prices are substantially different than they would be in a competitive market. Specifically, the complainant provided evidence of state-ownership in the wind power industry sector impacting the consumption of subject goods in China, state-ownership and subsidization in the wind tower sector, and state-ownership and subsidization in the steel industry, which is the primary input in the production of wind towers.

[62] The complainant also cited specific policies implemented by the GOC, such as China’s 14th Five-Year Plan for National Economic and Social Development and Long Range Objectives for 2035; 14th Five Year Renewable Energy Plan; Made in China 2025; 14th Five-Year Plan for Circular Economy Development; and the Iron and Steel Industry Adjustment and Upgrade Plan.^{Footnote 23}

[63] For the purpose of this section 20 inquiry, the sector under review is the wind tower sector, which is directly linked to the steel industry and the electricity production sector in China.

[64] At the initiation of the dumping investigation, 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 wind tower sector. The information indicated that the GOC substantially influences prices in the wind tower sector in China, and that the prices are substantially different than they would be in a competitive market.

[65] Consequently, on April 21, 2023, the CBSA sent Section 20 RFIs to producers and exporters of wind towers 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 wind tower sector. A surrogate producer RFI was sent to producers in Mexico, India, Indonesia and South Korea to gather information to be used for the purpose of determining normal values pursuant to paragraphs 20(1)(c) of SIMA.

[66] The CBSA selected Mexico as a surrogate for the purpose of determining normal values, where information was available to do so. Mexico is an appropriate surrogate country as it has significant domestic production of wind towers, a similar level of development as China (based on Gross Domestic Product per capita and Gross National Income per capita), been found to be an appropriate surrogate by other investigating authorities, and has a market based economy. These factors support that the prices and costs are determined in a highly competitive market, allowing them to be considered as a reliable and fair source for purpose of the final determination.

Summary of Chinese exporter responses

[67] The CBSA received five substantially complete responses to the exporter Section 20 RFI from CSWC, Penglai Dajin, STWPE and two of its subsidiaries Blue Island and Dongtai.

Government of China response

[68] An RFI was sent to the GOC requesting information for the purpose of the section 20 inquiry. No response was received from the GOC during the course of the investigation.

Surrogate country responses

[69] As part of the section 20 inquiry, Surrogate Producer RFIs were sent to all known producers of wind towers in Mexico, India, Indonesia and South Korea. However, no producers located in the surrogate countries responded to the RFI.

Responses from importers with sales in Canada of wind towers from other countries

[70] As part of the section 20 inquiry, RFIs sent to importers requested information on re-sales in Canada of wind towers imported from countries other than China. The CBSA received responses to the importer RFI from two importers. Vestas Canada^{Footnote 24} and Siemens^{Footnote 25} responded to the RFIs, but neither provided sufficient information for the purpose of paragraph 20(1)(d) of SIMA.

Analysis of section 20 conditions

[71] As the GOC did not respond to the section 20 RFI, information with respect to product mix, production volume and market share of wind tower manufacturers in the sector is limited. The CBSA analyzed section 20 factors and conditions in China with a focus on the elements presented in the complaint, responses to the exporter Section 20 RFIs, and the CBSA’s own research.

Government control analysis

[72] This section will present the CBSA analysis of how the GOC exerts control over the wind tower sector by examining:

• GOC Involvement in the Electricity Sector
• 14th Five-Year National Plan on National Economic and Social Development and Long Range Objectives for 2035
• 14th Five-Year Renewable Energy Plan
• Made In China 2025 Initiative
• GOC’s ownership and control of wind turbine OEMs
• GOC’s ownership and control of wind tower producers;
• GOC control over the steel industry; an
• Wind tower subsidies

Government involvement in the electricity sector

[73] Wind towers are a component of wind turbines, which are used to produce electricity from wind power. The complainant alleges that the GOC is heavily involved in China’s electricity production and distribution industries, which includes wind towers.

[74] In a 2020 article published in the Journal Energy Research & Social Science^{Footnote 26}, the authors state that the GOC: is involved in the energy industry; has not reduced state-control like in other industries; and can influence energy prices. The authors further state that the energy sector in China is dominated by state-owned enterprises (SOEs). In fact, 90% of energy distribution and 100% of energy transmission is state-owned. In their concluding section, the authors state:

[75] Some parties have contested that this is strictly an opinion and not factual, however they did not provide any information as to what the actual situation is in China. Based on the information on the record, it appears that nearly all end users of wind towers are SOEs and part of their role is to be used as policy instruments for a variety of reasons, including the setting of energy prices. The article also states that these energy SOEs have the ability to distort market mechanisms to their own advantage, which may include the purchase of their input materials, such as wind towers.

14th Five-Year Plan for National Economic and Social Development and Long Range Objectives for 2035

[76] In 2021, the GOC adopted its 14th Five-Year Plan for National Economic and Social Development and Long Range Objectives for 2035 (14th Five-Year Plan)^{Footnote 28} for the period of 2021-2025, which covers the POI, and includes long-range objectives up to the year 2035. The objectives outlined in the 14th Five-Year Plan continue some of the themes expressed in the 13th Five-Year Plan and 12th Five-Year Plan, including the strengthening of SOEs control, optimizing steel production, and increasing the scale of wind power within China.

[77] The 14th Five-Year Plan calls for greater involvement of SOEs in the development of the Chinese economy, stating:

[78] Steel is the primary input of wind towers and the 14th Five-Year Plan also emphasizes the optimization and upgrading of the steel manufacturing industry including expanding high-quality products and improving green manufacturing:

[79] The 14th Five-Year Plan also speaks to modernizing China’s infrastructure system, which includes a section titled: “Build a modern energy system”. In this section the GOC specifically states:

[80] Some parties have argued that these plans are not strict obligations, however, they still show that the GOC has specific goals for steel producers (the producers of wind tower inputs) and the wind power industry (the end users of wind towers) and with the abundance of SOEs in these industries, these SOEs are likely to make decisions based on GOC policy, rather than market forces.

14th Five-Year Renewable Energy Plan

[81] In 2020, China declared that it would reach carbon neutrality by 2060 through investment and increased production in renewable energy products, such as wind turbines, will be a mechanism to reach this goal.^{Footnote 32}

[82] This will be achieved through China’s 14th Five-Year Plan for Renewable Energy Development, which aims to develop wind power through investments in various projects and lays out certain targets to meet this goal, such as increasing the total capacity of wind and solar energy to more than 1.2 billion kilowatts by 2030.^{Footnote 33}

[83] China’s wind power industry is large, with seven of the world’s top ten wind power manufacturers located in China.^{Footnote 34} This plan, will likely result in an increase in sales of wind turbines and their components, including for export purposes, as Chinese producers are able to continue to offer low-prices. Currently Chinese wind turbines are consistently sold at cheaper rates than those manufactured in other countries.^{Footnote 35}

[84] This shows that the GOC has specific goals for the wind power industry in China, and has the ability to influence prices in the market to achieve this goals, including influencing the manufacture of components like wind towers.

Made in China 2025 initiative

[85] In 2015, the GOC initiated Made in China 2025, a strategic plan to reduce China’s dependence on foreign technology and promote Chinese technological manufacturers in the global marketplace through setting explicit targets, government subsidies, and the mobilization of SOEs.

[86] Made in China 2025 focuses on the entire manufacturing process and one priority sector outlined in this plan is that of “power equipment”, which includes wind turbines and all components, such as wind towers.

[87] The Office of the United States (US) Trade Representative has estimated that the GOC is providing over USD 500 billion through this program to companies in these priority sectors and that this program is so significant that it is likely to create or exacerbate market distortions.

[88] This program shows that the GOC has plans to expand several priority sectors, one of which includes wind towers, and that the GOC is providing additional funding to make it happen, which can exacerbate market distortions. Large amounts of subsidy to a specific industry would also result in distortions to the sector in general, even to companies that did not receive a subsidy but must now compete with companies that did.

GOC’s Ownership and Control of Wind Turbine original equipment manufacturers (OEMs)

[89] The Global Wind Energy Council states that there are 20 active wind turbine manufacturers in China, but does not provide their names.^{Footnote 36} The complainant was able to identify 18 wind turbine OEMs in China and provided evidence that 12 of these are state-owned or state-controlled.^{Footnote 37}

[90] The CBSA analyzed domestic sales in China reported by the cooperative exporters in their response to the Dumping RFI and found that 45% of all wind towers sold during the POI were to SOEs.

[91] As wind turbine OEMs are the primary purchasers of wind towers, and a large proportion of all wind turbine OEMs are state-owned or state-controlled, this means that wind tower purchasing decisions may be based on non-market factors, such as meeting GOC policy objectives. Therefore, purchases by these wind turbine OEMs may not be at market prices.

GOC’s ownership and control of wind tower producers

[92] The complainant provided information indicating that the limited publicly available ownership information alone shows that 16 of the 74 Chinese producers of subject goods that the complainant identified are state-owned.^{Footnote 38} This was supported by additional evidence obtained by the CBSA during the investigation.

[93] In the same manner as state-owned and state-controlled wind turbine OEMs, state-owned and state-controlled wind tower producers are driven by GOC mandates and do not necessarily operate under market forces. As such, wind tower producers can potentially supply wind towers to customers at less than fair market value. As discussed above, these customers are often SOEs themselves, increasing the likelihood of wind towers being sold between these parties for less than fair market value.

[94] A recent decision by the European Union (EU) concerning wind towers from China found evidence of government involvement in regards to all three of the responding exporter’s in the CBSA’s current wind towers investigation.^{Footnote 39}

[95] The substantial presence of state-owned and controlled enterprises that produce wind towers would necessitate that private Chinese companies supplying wind towers would have to compete with these SOEs. As a result, the domestic selling prices of wind towers in China may not be substantially the same as they would be if they were determined in a competitive market.

GOC’s ownership and control of wind tower input suppliers

[96] The primary input material of wind towers is steel plate, which makes up over 60% of the responding exporters’ cost of production. The CBSA analyzed purchases of steel plate from SOEs by these exporters during the POI. The CBSA identified a purchase as coming from an SOE if either the supplier or the manufacturer is an SOE. These parties were considered SOEs if one of the exporters identified it as an SOE, or if there is evidence on the record that it is an SOE.

[97] The CBSA found that 76% of all steel plate purchased for purposes of producing wind towers during the POI was from SOEs. The substantial presence of SOEs in the production and supply of steel plate suggests that the GOC will have an impact on the selling of steel plate and that steel plate selling decisions may be based on non-market factors, such as meeting GOC policy objectives. Therefore the selling prices by these SOE steel plate suppliers may not be at market prices, which can cause an impact on the final selling price of wind towers in China.

Government control over the steel industry

[98] The primary input material of wind towers is steel plate and the next largest input is steel flange. The CBSA has previously found that the conditions of section 20 exist in various steel and metal cases, including those concerning the flat-rolled steel product sector, which contains steel plate.

[99] The CBSA has previously found that a government can indirectly control the prices of the sector being investigated by controlling the prices of the primary inputs. In Aluminum Extrusions, the CBSA found that the GOCs influence over the aluminum industry in China had a significant impact on the prices in the aluminum extrusion sector.^{Footnote 40} The CBSA made a similar conclusion in Fabricated Industrial Steel Components (FISC) where it relied on evidence pertaining to the steel industry as a whole to show that the prices in the fabricated structural steel sector were being indirectly controlled by the GOC.^{Footnote 41} The CBSA made a similar conclusion in Container Chassis where one of the factors that led to the conclusion that the conditions of section 20 exist in the semi-trailer sector was the GOC’s control over steel inputs.^{Footnote 42}

[100] Given that more than 80% of the responding exporters’ direct material costs are steel, including both steel plate and flange, and more than 60% of the responding exporters’ cost of production of wind towers is steel plate, it is appropriate to look at the steel industry as a whole as part of an analysis of the factors impacting the pricing of wind towers in China. The following policies and programs have a direct impact on the price of steel in China.

Capacity swap

[101] In 2017, the Ministry of Industry and Information Technology (MIIT) implemented a capacity swap program where if a steel producer in certain areas wants to open a new plant or use new furnaces that would increase its capacity, it must also reduce its old capacity by a ratio of 1.25:1 of old capacity to new.^{Footnote 43}

[102] In 2021, the MIIT updated this program by expanding the areas for which it is applicable, increasing the ratio to 1.5:1 for certain areas and types of capacity swaps; leaving it at 1.25:1 for others; and reducing it to 1.1:1 for others.^{Footnote 44}

[103] The complainant alleges that these changes show the GOC directly exerting influence over the steel industry. In addition, these changes to the ratio for capacity swaps for different locations and types of swaps will result in the concentration of steel capacity amongst a small amount of larger steel producers.^{Footnote 45}

[104] This also shows that the GOC has a direct control over the production levels of these producers, which can lead to an indirect impact on the selling prices of these goods.

14th Five-Year Plan for Circular Economy Development

[105] In 2021, the National Development and Reform Commission issued the 14th Five-Year Plan for Circular Economy Development, which focuses on resource recycling and includes the goal of increasing the steel scrap market by 40% within five years.^{Footnote 46} This mandate to increase scrap utilization will result in steel producers adapting their production to GOC policies as opposed to market forces.^{Footnote 47} This change in production and costs of production are a direct result of GOC policies and may impact and further distort the selling prices of steel in China.

Five-year plans for steel

[106] The complainant provided evidence that some major steel producing provinces have their own current five year plans for steel,^{Footnote 48} however the information provided only shows that these plans exist, but does not show what these plans entail. The CBSA could not find copies of these plans.

[107] The complainant states that previous five year plans for steel have provided directives that include: 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; GOC directed relocation of iron and steel companies to coastal areas; minimum requirements for steel production in order to eliminate smaller players in the market; and a target for the top ten producers to have a 60% share of total steel output.^{Footnote 49}

[108] In 2016, the MIIT issued the Iron and Steel Industry Adjustment and Upgrade Plan (Adjustment and Upgrade Plan) (2016-2020),^{Footnote 50} which the complainant alleges is essentially the 13th Five-Year Plan for the Steel Industry.^{Footnote 51} This plan aims to increase the average growth rate of industrial added value to 6% in 2020, increase the capacity utilization rate to 80% by 2020, and increase the yield of the top ten steel producers to 60% in 2025. The plan also calls on local governments to provide financial and other support.^{Footnote 52}

[109] The American Iron and Steel Institute commented on the Adjustment and Upgrade Plan, stating:

[110] The CBSA finds that the existence of these other five year plans that specifically target the steel industry, show that the GOC had and continues to have an interest in guiding the growth of the steel industry in China.

State ownership of steel production assets

[111] The complainant notes that in 2019, the CBSA found that eight of China’s top ten steel producers were state-owned, and these eight producers accounted for over 30% of Chinese steel production.^{Footnote 55}

[112] According to the World Steel Association, in 2021, six of the top ten steel producers in the world by volume are located in China^{Footnote 56} and of these six producers, the complainant has provided evidence that four of them are state-owned.^{Footnote 57} Further, the top ten steel producers in China accounted for 22.3% of global steel production^{Footnote 58} and the complainant provided evidence that six of these ten are state-owned.^{Footnote 59}

Top 10 steel-producers in China in 2021

[113] The complainant has also provided evidence that several Chinese producers of steel plate are state-owned. While the complainant is unsure if these SOEs are providing low-priced inputs to wind tower producers in China, which would impact the price in the wind tower sector, the complainant notes that in the past, the CBSA has found that steel inputs, including steel plate, purchased from Chinese SOEs have been sold for less than their fair market value.

Steel subsidies

[114] The complainant notes that the CBSA has found that in the past the GOC heavily subsidizes the steel industry in China and that these subsidies distort the domestic selling price of steel in China, which contribute to the section 20 conditions.^{Footnote 62}

Wind tower subsidies

[115] The complainant provided information on subsidization of the Chinese wind tower industry.^{Footnote 63} Some of the policies mentioned above also reference subsidies and financial support. Moreover, previous CBSA investigations have found many countervailing subsidies related to Chinese steel products, steel being the primary input of wind towers.

[116] The complainant also provided information that indicates that the US Department of Commerce has countervailing duties in place against wind towers from China, for subsidies such as lending policies, tax exemptions, grants, and provision of goods/services at less than adequate remuneration.^{Footnote 64}

[117] Subsidization influences the price of wind towers. The previous positive findings of subsidized steel products in China are evidence of the GOC’s indirect influence in the steel industry, including wind towers. These subsidies provided to the input material producers of steel in China have an indirect effect on the domestic pricing of steel goods, including wind towers.

[118] The CBSA’s determination of amounts of subsidy ranging from 3.0% to 21.9% indicate the extent of the subsidization of wind tower producers in China.

Analysis of domestic price in China

Complainant price analysis

[119] The complainant states that there are no price indices or benchmarks for wind towers in China or any other market as wind towers are not a commodity product and are produced to customer specifications depending on the project.

[120] However, the most significant input of wind towers are steel plate and benchmarks do exist for steel plate and other similar products. Therefore, the complainant has used the pricing of other steel products as a proxy for wind towers. The complainant also noted that the CBSA has used a similar approach with a proxy product in both Piling Pipe and FISC. The complainant obtained pricing of these steel products form the online publication, SteelBenchmarker.

[121] The complainant looked at the prices of hot-rolled band, a similar product to steel plate from 2017 to 2022 and compared the prices in China to the prices in the US and Europe. The complainant found that Chinese hot-rolled band prices were 15% to 66% below US prices and 7% to 46% below European prices.^{Footnote 65}

[122] The complainant also looked at the reported price of steel plate, the primary input in wind towers, during this same period, but only had prices in China and the US. The complainant found that Chinese steel plate prices were 27% to 75% below the US prices during this period.^{Footnote 66}

[123] The complainant states that the price of steel in China remained fairly stable over the last few years while steel prices rose globally, demonstrating the impact of the various GOC policies on steel prices in China.

[124] The complainant further states that the CBSA has recently found in cold-rolled steel and corrosion resistant steel that Chinese prices of flat-rolled steel products are not substantially the same as they would be in a competitive market. Steel plate, the primary input of wind towers, is also a flat-rolled steel product.^{Footnote 67}

CBSA price analysis

[125] At the initiation of the dumping investigation, the CBSA did not have information on the domestic pricing of wind towers in the Chinese domestic market. The CBSA reviewed the exporter’s dumping RFI responses to see if a wind tower pricing analysis could be made using these responses. The CBSA was able to calculate the average pricing of wind towers within China for each month of the POI. Unfortunately, no surrogate responses were received to create a comparison in a third country. However, the CBSA was able to obtain selling prices in Canada based on the complainant’s sales and the purchases by importers of wind towers from third countries. The CBSA took the average selling price per metric ton by the complainant and added in purchases from third countries by the responding importers to the appropriate months.

[126] While this gives the CBSA a good overview of pricing between the two countries, and shows that wind tower prices in China are considerably lower than they would be in absence of government control, it is important to note that wind towers are not a commodity product and are specially designed for each project, making an average selling price not necessarily comparable among projects. In addition, the low volume of sales of non-Chinese origin wind towers in Canada makes for a limited comparison.

[127] At initiation, the complainant looked at hot-rolled band and standard steel plate as a proxy for wind tower selling pricing. The CBSA agreed that this is an appropriate proxy for wind towers, in particular because steel plate is more than 60% of the cost of production of the responding exporters. The CBSA considered using SteelBenchmarker and Fastmarkets to find the historical prices of steel plates in different regions. Upon reviewing both, Fastmarkets was deemed to be a better source of information as it provides details on a larger number of steel products and markets.

[128] Initially, the CBSA reviewed the raw SteelBenchmarker data provided^{Footnote 68} by the complainant and obtained data from SteelBenchmarker.com^{Footnote 69}. After initiation, the CBSA used the most up to date information available on Fastmarkets^{Footnote 70} to calculate a more accurate world price and Chinese price. The world price is the result of the average price of steel plates in different regions, excluding China. The Chinese price was calculated using the average of two different steel plate benchmarks available for the Chinese market. The CBSA also compared these world and Chinese benchmark prices to prices reported by two of the exporters during the POI. The third exporter did not report prices in the same unit, so a comparison could not be made.

[129] The results of the CBSA’s analysis confirms and corroborates the complainant’s allegations, in that the prices of both hot-rolled band and steel plate in China are consistently lower than in the rest of the world since 2021.

[130] Based on the information obtained on the prices of steel plate, a major input in the production of wind towers, the CBSA can reasonably conclude that the prices of wind towers in China during the POI were consistently lower than those in other markets.

[131] Given that these steel products are commodity products that are freely traded on the world market, these disparities support the allegation in the complaint that domestic prices of wind towers in China are impacted by the distorted prices of steel inputs.

[132] The complainant’s analysis focused on using upstream inputs as a proxy for wind tower prices, and the CBSA’s analysis confirms the complainant’s findings. In addition, a downstream analysis is also a useful proxy in showing the difference in pricing between wind towers in China and in another market.

[133] The complainant obtained information from S&P Global Market Intelligence that shows that Chinese wind turbine prices are consistently lower than the global average.^{Footnote 71} Historically prices in China and the rest of the world appear to have followed the same trend, they have diverged dramatically in the second half of 2020 with Chinese wind turbine prices decreasing while prices of wind turbines in the rest of the world have increased.

[134] Despite the lack of world pricing for wind towers, an analysis of the upstream steel inputs and the downstream wind turbines show that the pricing of those products in China is distorted compared to other markets. These disparities support the allegations that wind tower prices in China are distorted as a result of GOC involvement.

Summary of the results of the section 20 inquiry

[135] Based on the information on the record, the scope of the GOC’s macro-economic policies and measures provide a compelling factual basis that the GOC is influencing the Chinese steel, wind tower, and electricity industries. The wind tower sector is located between the steel and electricity industries as steel is the primary input in wind towers and wind towers are an input in wind turbines, which generate electricity. Therefore wind towers are in a unique position where there are considerable GOC policies impacting wind towers themselves, but also both the upstream and downstream industries. The existence of such policies and measures dramatically change the demand and supply balance in the domestic market and materially alter the domestic prices of steel inputs such as steel plate, or price of electric outputs.

[136] The major macro-economic policies and measures of the GOC include the 14th Five-Year Plan for National Economic and Social Development and Long-Range Objectives for 2035; the 14th Five-Year Renewable Energy Plan; and Made in China 2025. All of these policies specifically call for an increase in wind power production in China. These policies also include targets and plans for reaching these targets to expand wind power capacity.

[137] There is evidence that several wind tower producers in China are SOEs. In addition, there is evidence that there are SOEs in China that: produce steel plate, the primary input in wind towers; produce other steel products; are wind turbine OEMs that purchase wind towers; and are energy producers, i.e. the end users of wind towers. This demonstrates that the entire wind tower production lifecycle, from the production of the inputs to their final use, involves the influence of an SOE. The substantial presence of SOEs contributes to non-market economy conditions in the wind tower sector in China as these SOEs can make decisions based on GOC policy objectives rather than market forces.

[138] The GOC also exerts control on the steel industry, which includes steel plate, the primary input of wind towers. This is done through state-ownership and control of steel producers, specific policies and plans targeting the steel industry, subsidies, and tightly controlled regulations on capacity upgrades. In making corporate decisions, Chinese steel producers must adhere to the GOC’s macro-economic policies including measures related to steel production capacity, mergers and acquisitions, research and development, etc. As a result, corporate decisions based on market dynamics of supply and demand compete with the GOC’s directives and mandates. The prevalence of state-owned or state-controlled steel producers in China also allows these SOEs to sell stockpiled goods to put downward pressure on prices, if desired.

[139] Furthermore, the subsidization of the steel industry in general, and the wind tower sector specifically, demonstrates the GOC’s intent to exert control to maintain domestic prices at a certain level. These subsidies allow steel producers to sell their products at prices below fair market value to wind tower producers, who in turn, are able to sell their products at distorted prices.

[140] The CBSA has previously issued opinions in respect of nine Chinese steel product sectors, including the flat-rolled steel sector, which includes steel plate, the primary input of wind towers. This indicates that domestic prices of these inputs, which make up a considerable percentage of the costs of wind towers are substantially determined by the GOC.

[141] Overall, the cumulative impact of the GOC’s policies and actions indicate that the GOC influences prices in the wind tower sector in China.

[142] Based on the above analysis, for the purpose 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 wind tower sector in China:

• domestic prices in the wind tower sector 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

Normal value

[143] Normal values could not be determined in accordance with the methodology of section 15 of SIMA, or one of the methodologies of section 19, because the CBSA formed the opinion that the conditions of paragraph 20(1)(a) of SIMA exist in the wind tower sector in China.

[144] Where section 20 conditions exist, the CBSA may determine normal values using the selling prices, or the total costs and profit, of like goods sold by producers in a surrogate country designated by the President in accordance with the provisions of paragraph 20(1)(c) of SIMA. However, no surrogate country producers provided the necessary domestic pricing and costing information relating to the goods under investigation.

[145] Where normal values cannot be determined under paragraph 20(1)(c), SIMA provides an alternative methodology to calculate normal values under paragraph 20(1)(d), using re-sales in Canada of like goods imported from a third country. The CBSA determined that this provision could also not be used given that the importers did not provide sufficient re-sale information.

[146] As a result, and in the absence of sufficient information to determine normal values under section 20 of SIMA, normal values were determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA, on the basis of facts available.

[147] In establishing the methodology for determining normal values, the CBSA analyzed all the information on the administrative record, including the complaint filed by the domestic industry, the CBSA’s estimates at the initiation of the investigation, and customs import documentation.

[148] The CBSA calculated the normal values for the subject goods from China using an approach that reflects the methodology of subparagraph 20(1)(c)(ii) of SIMA, calculated as the aggregate of the cost of production of the like goods sold for consumption in the surrogate country plus a reasonable amount for administrative, selling and all other costs and a reasonable amount for profits.

[149] The CBSA selected Mexico as a surrogate country for the purpose of determining normal values, where information was available to do so. Mexico is an appropriate surrogate country as it has significant domestic production of wind towers, a similar level of development as China, has been found to be an appropriate surrogate by other investigating authorities, has publically available information on its domestic wind tower producers, and has a market-based economy. These factors support that the prices and costs are determined in a competitive market, allowing them to be considered as a reliable and fair source for purposes of these investigations.

[150] As no surrogate producer provided a response to the CBSA’s Surrogate RFI, normal values were determined based on the information available on the record, including information provided by the complainant, publically available information, and information obtained through MEPS International Ltd., a subscription-based provider of steel and metal prices around the world.

Fabrication costs

[153] Additional production costs to convert steel plate into a wind tower section includes other inputs, labour and overhead.

[154] The other inputs include the costs of steel flanges and internals. Steel flanges are machined steel rings that are welded on both ends of the wind tower section and used to connect different sections together during installation of the wind tower. Internals are any other internal component included with the wind tower such as ladders, lighting, and cables. Both of these costs are significant, but not as major as the cost of steel plate.

[155] There was no information on the record to determine the above additional production costs in Mexico or any other third country, therefore the CBSA determined the cost of these components based on the complainant’s average cost over four recent wind tower projects. The result was expressed as an average cost per metric ton of wind tower section

[156] The labour amount and the labour portion of the overhead amount were adjusted to reflect the differing labour costs between Canada and Mexico.

[157] The CBSA then multiplied the average fabrication cost per metric ton of wind tower by the weight of each wind tower section.

Export price

[160] The export price of goods sold to importers in Canada is generally determined in accordance with the methodology of 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.

Margin of dumping

[161] 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.

Results of the dumping investigation

CS Wind China Co., Ltd. (“CSWC”)

[162] CSWC is a producer and exporter of the subject goods, located in Lianyungang City, Jiangsu Province, China.

[163] CSWC is related to the vendor, CSWK and the input supplier, CSWT.

[164] CSWC, CSWK and CSWT provided a complete joint response to the Dumping RFI and Supplemental RFIs (SRFIs). CS Wind’s information was verified by way of verification questionnaires issued by the CBSA in August 2023.

[165] During the POI, CSWC sold subject goods to one unrelated Canadian importer through its related vendor. For the purpose of the final determination, the CBSA found CSWC to be the exporter of the subject goods as it is located in the country of export, China, and owned the goods until their shipment to Canada

[166] Normal values were determined pursuant to subsection 29(1) of SIMA as described above.

[167] For purpose of the final determination, the total normal value compared to the total export price results in a margin of dumping of 108.2% for CSWC, expressed as a percentage of the export price.

Penglai Dajin Offshore Heavy Industry Co., Ltd. (“Penglai Dajin”)

[168] Penglai Dajin is a producer and exporter of the subject goods, located in Yantai City, Shandong Province, China.

[169] Penglai Dajin provided a complete response to the Dumping RFI and SRFIs. Penglai Dajin’s information was verified by way of verification questionnaires issued by the CBSA in August 2023.

[170] During the POI, Penglai Dajin sold subject goods to two unrelated Canadian importers. Subject goods exported to one importer were made through an intermediary vendor. For the purpose of the final determination, the CBSA found Penglai Dajin to be the exporter of the subject goods as it is located in the country of export, China, and owned the goods until their shipment to Canada.

[171] Normal values were determined pursuant to subsection 29(1) of SIMA as described above.

[172] For purpose of the final determination, the total normal value compared to the total export price results in a margin of dumping of 109.0% for Penglai Dajin, expressed as a percentage of the export price.

Shanghai Taisheng Wind Power Equipment Co., Ltd. (“STWPE”)

[173] STWPE is a producer and exporter of the subject goods, located in Shanghai, China. STWPE also exported goods produced by its related companies, Blue Island and Dongtai.

[174] The TSP Group provided a complete response to the Dumping RFI and SRFIs. The TSP Group’s information was verified by way of verification questionnaires issued by the CBSA in August 2023.

[175] During the POI, STWPE sold subject goods to one unrelated Canadian importer through an intermediary vendor. For the purpose of the final determination, the CBSA found STWPE to be the exporter of the subject goods as it is located in the country of export, China, and owned the goods until their shipment to Canada.

[176] Normal values were determined pursuant to subsection 29(1) of SIMA as described above.

[177] For purpose of the final determination, the total normal value compared to the total export price results in a margin of dumping of 89.4% for STWPE, expressed as a percentage of the export price.

All other exporters: China

[178] 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 estimated on the basis of facts available.

[179] In establishing the methodology for determining the normal values and export prices for other potential exporters from China, 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 parties who responded to the Dumping RFI, and CBSA import documentation.

[180] The CBSA decided that the normal values and export prices determined for the exporters from China whose submissions were substantially complete, 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 the trading practices of wind tower exporters during the POI. Three exporters in China provided complete information.

[181] The CBSA examined the difference between the normal value and the export price for each individual transaction, 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 originated in China and in general, provides an incentive for exporters to participate by ensuring that exporters who have provided the necessary information requested in a dumping investigation will have a more favorable outcome than those who have not participated.

[182] As a result, based on the facts available, for exporters that did not provide a response to the Dumping RFI, normal values of subject goods originating in or exported from China were determined based on the highest amount by which a normal value exceeded the export price, on an individual transaction as found for the three cooperative exporters during the POI. The transactions were examined to ensure that no anomalies were considered, such as very low volume and value, effects of seasonality or other business factors. No such anomalies were identified.

[183] The CBSA considered that the information submitted on the CBSA import documentation was the best information on which to determine the export price of the goods as it reflects actual import data.

[184] Using the above methodologies, the margin of dumping for all other exporters in China is 159.3%, expressed as a percentage of the export price.

Summary of results: Dumping

[185] A summary of the results of the dumping investigation respecting all subject goods released into Canada during the POI are as follows:

[186] Under paragraph 41(1)(a) of SIMA, the CBSA is required to terminate an investigation in respect of any 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.

[187] The goods under investigation have been dumped and the margins of dumping determined for the goods are greater than the threshold of 2% and are therefore not considered insignificant. As a result, pursuant to paragraph 41(1)(b) of SIMA, the CBSA made a final determination of dumping respecting wind towers originating in or exported from China.

[188] A summary of the results of the dumping investigation respecting the subject goods released into Canada during the POI is presented in Appendix 1.

Results of the subsidy investigation

[196] At the initiation of the investigation, the CBSA sent Subsidy RFIs to the GOC, as well as to all known exporters/producers of wind towers in China.

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

[198] The GOC and the exporters/producers were also notified that failure to submit all required information and documentation, including non-confidential versions, failure to comply with all instructions contained in the Subsidy RFI, failure to permit verification of any information or failure to provide documentation requested during the verification visits or desk audits may result in the amount of subsidy and the assessment of countervailing duties on subject goods being based on facts available to the CBSA. Further, they were notified that a determination on the basis of facts available could be less favourable than if complete, verifiable information was made available.

[199] 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.

[200] Due to a lack of government response, subsidy amounts for the exporters were determined pursuant to subsection 30.4(2) of SIMA, based on a ministerial specification. However, in consideration of the fact that the cooperative exporters provided sufficient information in response to their Subsidy RFI, an individual amount of subsidy was determined based on the information provided in response to the Subsidy RFI and obtained during the verification.

[201] The available information indicates that these programs do not appear to be generally available to all enterprises in China. As well, due to the lack of a response by the GOC, there is not sufficient information on the administrative record to determine that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1) of SIMA. Therefore, guided by the principles of subsection 2(7.2) or subsection 2(7.3) of SIMA and basing its opinion on the best information available, the CBSA has taken the position that the subsidy derived from these programs is likely to be specific.

[202] An account of the subsidies received by the exporters that provided a response to the Subsidy RFI is provided below. The amount of subsidy for the exporters is also presented in a summary table in Appendix 1. Additional details regarding identified programs and incentives is included in Appendix 3.

CS Wind China Co., Ltd. (“CSWC”)

[203] CSWC, producer and exporter of the subject goods, purchased material inputs from a related input supplier, CSWT.

[204] CSWC and CSWT provided complete responses to the Subsidy RFI and SRFIs. The information was verified by way of verification questionnaires issued by the CBSA in August 2023.

[205] One subsidy program was found to have conferred benefits to the exporter, CSWC, by being passed-through from its related supplier, CSWT, during the purchase of major raw materials. The CBSA attributed the subsidy received by CSWT to the goods exported to Canada because of the relationship between the parties. The CBSA has concluded that a subsidy pass-through test is not required given the relation between the exporter and the related supplier. Consequently, any actionable subsidies received by the related supplier which are attributable to the goods under investigation and exported to Canada, was aggregated with those directly received by the exporter.

[206] For purpose of the final determination, CSWC was found to have received countervailable benefits from 10 subsidy programs:

1. Program 1: Loans from state-owned banks at preferential rates
2. Program 10: Reductions in land use and/or rental fees
3. Program 15: Subsidies related to company/enterprise development and innovation
4. Program 22: Subsidies to provide business support
5. Program 25: Special economic zones (SEZs) and other designated areas incentives
6. Program 31: Corporate income tax reduction for new high tech enterprises (“NHTE”)
7. Program 34: Preferential tax policies related to research and investment
8. Program 40: Exemption or refund of tariff and import value-added tax (VAT) for imported technologies and equipment
9. Program 43: Acquisition of government inputs/utilities at less than fair market value
10. Program 49: Service Charges for Individual Income Tax Withholding

[207] For purpose of the final determination, the amount of subsidy for CSWC is 5.3%, expressed as a percentage of the export price.

Penglai Dajin Offshore Heavy Industry Co., Ltd. (“Penglai Dajin”)

[208] Penglai Dajin is a producer and exporter of the subject goods.

[209] Penglai Dajin provided complete responses to the Subsidy RFI and Supplemental RFIs. The information was verified by way of verification questionnaires issued by the CBSA in August 2023.

[210] For purpose of the final determination, Penglai Dajin was found to have received countervailable benefits from 17 subsidy programs:

1. Program 7: Design, research and development grants
2. Program 8: Export development and performance grants
3. Program 10: Reductions in land use and/or rental fees
4. Program 12: Environment protection grant
5. Program 15: Subsidies related to company/enterprise development and innovation
6. Program 16: Subsidies related to employment, training and recruitment
7. Program 18: Subsidies related to quality and improvement
8. Program 19: Subsidies related to science and technology
9. Program 20: Subsidies related to social security
10. Program 21: Subsidies related to talent and skills
11. Program 25: Special economic zones (SEZs) and other designated areas incentives
12. Program 31: Corporate income tax reduction for new high tech enterprises ("NHTE")
13. Program 34: Preferential tax policies related to research and investment
14. Program 39: Offsets to taxable income related to purchases of domestic machinery
15. Program 43: Acquisition of government inputs/utilities at less than fair market value
16. Program 50: Special funds related to the construction and maintenance of ports and harbour
17. Program 51: Service Center Manufacturing Strong City Compensation Fund

[211] For purpose of the final determination, the amount of subsidy for Penglai Dajin is 3.0%, expressed as a percentage of the export price.

Shanghai Taisheng Wind Power Equipment Co., Ltd. (“STWPE”)

[212] STWPE is a producer and exporter of the subject goods. STWPE also exported goods produced by its related companies, Blue Island and Dongtai.

[213] The TSP Group provided a complete response to the Subsidy RFI and SRFIs. The information was verified by way of verification questionnaires issued by the CBSA in August 2023.

[214] For purpose of the final determination, STWPE was found to have received countervailable benefits from 20 subsidy programs, including pass-through subsidies from Blue Island and Dongtai:

1. Program 1: Loans from state-owned banks at preferential rates
2. Program 6: Insurance grants
3. Program 7: Design, research and development grants
4. Program 8: Export development and performance grants
5. Program 10: Reductions in land use and/or rental fees
6. Program 11: Grant—Patent assistance/award
7. Program 15: Subsidies related to company/enterprise development and innovation
8. Program 16: Subsidies related to employment, training and recruitment
9. Program 17: Subsidies related to pandemic support
10. Program 18: Subsidies related to quality and improvement
11. Program 19: Subsidies related to science and technology
12. Program 20: Subsidies related to social security
13. Program 21: Subsidies related to talent and skills
14. Program 22: Subsidies to provide business support
15. Program 26: Financial/loan interest subsidy
16. Program 31: Corporate income tax reduction for new high tech enterprises ("NHTE")
17. Program 34: Preferential tax policies related to research and investment
18. Program 35: Accelerated depreciation on fixed assets
19. Program 43: Acquisition of government inputs/utilities at less than fair market value
20. Program 48: Special Industrialization Fund for Wind Power Equipment

[215] For purpose of the final determination, the amount of subsidy for STWPE is 5.6%, expressed as a percentage of the export price.

All other exporters: China

[216] For all other exporters of subject goods originating in or exported from China during the POI that did not provide a response to the Subsidy RFI or did not furnish sufficient information, the CBSA determined an amount of subsidy on the basis of the following methodology:

1. the highest amount of subsidy for each of the 27 programs, as found at the final determination, for the producer/exporter located in China for whom the CBSA has sufficient information to determine an amount of subsidy, plus
2. the average amount of subsidy for the 27 programs listed in (1), applied to each of the remaining 24 potentially actionable subsidy programs for which sufficient information is not available or has not been provided at the final determination

[217] In establishing the methodology for determining the amount of subsidy for all other potential exporters from China, 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, and information submitted by the exporters, as well as their related affiliates in China who responded to the subsidy RFI.

[218] This methodology relies on information related to potentially actionable subsidies in China, it recognizes that the GOC did not provide a response to the Subsidy RFI (thereby impeding the CBSA’s ability to make a fully informed decision), and in general, provides an incentive for exporters to participate by limiting 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.

[219] Using the above methodology, for the final determination, the amount of subsidy for all other exporters in China is 21.9%, expressed as a percentage of the export price.

Summary of results: Subsidy

[220] A summary of the final results of the subsidy investigation respecting subject goods released into Canada during the POI follows:

[221] Under paragraph 41(1)(a) of SIMA, the CBSA is required to terminate an investigation in respect of any 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.

[222] Pursuant to subsection 2(1) of SIMA, an amount of subsidy of less than 1% of the export price of the goods, for a developed country, is defined as insignificant.

[223] The goods under investigation from China have been subsidized and the amount of subsidy determined for those goods is greater than the threshold of 1% and is therefore not considered insignificant. As a result, the legislative requirement is satisfied for making a final determination of subsidy respecting wind towers from China.

Dumping representations

Deficiencies

Case briefs

Counsel for Marmen submitted that RFI responses by Vestas Canada, Vestas Manufacturing A/S and Siemens Gamesa Renewable Energy include several deficiencies that render the responses insufficiently reliable for the purpose of the CBSA’s dumping investigation. Counsel argued that deficient or lack of response from either vendors and importers are sufficient basis to determine that an exporter RFI response is unreliable.

Counsel further submitted that all exporter responses include several deficiencies and all responses should be considered deficient. These deficiencies include: failure to report all domestic and export sales; using an inappropriate costing methodology; and using an inappropriate unit of measurement.

Reply submissions

Counsel for Vestas denied the deficiencies alleged by counsel for Marmen. Counsel argued that even if such deficiencies existed, they would not impact the CBSA’s conduct of its statutory duty and, in particular, would not affect the final determination.

Counsel representing TSP Group and Penglai Dajin maintained that the information reported in their appendices and responses are accurate and complete and the method of reporting is allowed by the CBSA in the RFI. Counsel also submitted that any discrepancies identified were addressed and explained to the CBSA.

Counsel for CS Wind submitted that the complainant incorrectly analyzed the information regarding the cost differences in its revised appendix and did not properly consider the revisions to its amount for administrative, selling and all other costs.

CBSA’s response

The CBSA considered the case arguments and reply submissions provided by counsel for Marmen as well as counsels for the CS Wind, TSP Group, Penglai Dajin and Vestas.

For the purpose of the final determination, the CBSA determined the margins of dumping based on the verified information as provided by the cooperative exporters. The CBSA determined the margins of dumping by comparing the total export prices with the total normal values for either sections or towers, which ever is reported.

Section 20 finding

Case briefs

Counsel for Marmen maintained its position that a section 20 finding is appropriate and necessary given the influence of the GOC in the Chinese wind tower sector due to the combined effect of various factors.

Counsels for CS Wind, TSP Group and Penglai Dajin provided similar arguments stating that the conditions of section 20 do not exist for the wind tower sector in China. Counsels argued that the CBSA must focus only on the sector under review, in this case the wind tower sector, and that the CBSA erred by looking at the steel sector and relied to heavily on previous section 20 decisions concerning steel products.

Counsels submitted that the section 20 opinion must be based on positive evidence; exporters are not required to prove that the conditions of section 20 do not exist, and the CBSA must demonstrate that the government has substantially determined the selling price, and the existence of government regulations alone is not sufficient to do so.

Counsels further submitted that none of the factors the CBSA typically looks at to show government direct or indirect control are present in the wind tower sector and that the policies relied on by the CBSA are not sufficient to show government control.

Reply submissions

Counsels for the complainant and the exporters reiterated their positions in their case briefs regarding section 20 conditions in the wind tower sector.

CBSA’s response

The CBSA considered the case arguments and reply submissions provided by counsel for the complainant and counsels for the exporters. The CBSA is of the opinion that the conditions of section 20 exist in the wind tower sector in China based on available evidence on the record. This evidence is specific to the wind tower industry, but does include information pertaining to steel as well, as wind towers are made primarily of steel. Details of the analyses and findings are included in the relevant sections of the section 20 report.

Surrogate country selection

Case briefs

Counsel for Marmen submitted that Mexico remains the most appropriate surrogate country for the purpose of determining normal values and citing that Mexico’s Gross National Income per capita is similar to that of China, indicating that Mexico has a similar level of development to China. Counsel further argued that no country has as significant a wind power industry as China, but Mexico’s power industry is significantly bigger in comparison to South Korea’s.

Counsel for Marmen noted that in the EU’s investigation concerning the dumping of wind towers from China, Mexico was used as a surrogate country because of a similar level of development and the availability of reliable public information. The EU also considered India, but it was rejected due to its differing level of development from China.

Concerning surrogate labour rates, counsel for Marmen indicated that only Mexican labour rates are available in the record. If another country is used as surrogate it would not be possible to adjust costs and into consideration differing labour rates.

Counsel for CS Wind argued that South Korea is a more suitable surrogate country because Total Gross Domestic Product is a more appropriate index to use and South Korea has a similar index to China. Counsel also argued that South Korea is more suitable than Mexico given its proximity to China and that there is publically available information pertaining to South Korea. Counsel noted that steel plate prices in Mexico do not follow the same patterns as steel plate prices in other countries, while steel plate prices in South Korea do.

Counsel representing TSP Group and Penglai Dajin reiterated CS Wind’s concerns with using Mexico as a surrogate country and recommended either India or South Korea. Counsel argued that Mexico does not have significant domestic production of wind towers in comparison to China; Mexico is expected to slow down its wind power growth; Mexico has anti-dumping duties against Chinese wind towers that over inflate the domestic selling prices; steel prices and wind tower costs in Mexico are not determined in a highly competitive market due to a limited number of suppliers, quotas on the importation of steel products, and volatile steel prices; and that profits are decreasing for wind tower producers in Mexico.

Reply submissions

Counsel for Marmen reiterated its position that Mexico is the most appropriate surrogate country, while counsels for the exporters reiterated their opinions that Mexico is not an appropriate surrogate country and suggested that India or South Korea would be a more appropriate surrogate.

CBSA’s response

The CBSA sent Surrogate RFIs to all known producers of wind towers in Mexico, India, Indonesia and South Korea. However, no response was received before the close of the record. The CBSA has considered the arguments submitted by counsels for the complainant and the exporters and has considered all information on the administrative record and determined that, for reasons discussed earlier in this document, and in the absence of any surrogate RFI responses, Mexico represents the most reasonable surrogate country.

Normal value methodology

Case briefs

Counsel for Marmen stated that the CBSA should use the same methodology that it used at the preliminary determination, except that it should use steel plate prices for Mexico, rather than a world prices. Counsel also submitted that the CBSA should update the amount for administrative, selling and all other costs and the amount for profits, and include an amount for financial expenses.

Counsel for CS Wind stated that the CBSA’s methodology should use provided steel plate prices in South Korea. Counsel also submitted that the amount for administrative, selling and all other costs and the amount for profits should be based on the financial statement of a South Korean wind tower producer, DongKuk S&C.

Counsel representing TSP Group and Penglai Dajin stated that the CBSA erred in its estimation of normal values at the preliminary determination because adjustments must be made to reflect the cost of production in the country of origin; the CBSA did not disclose all the information upon which its estimates were made; and India or South Korea are more appropriate surrogate countries and the necessary information is on the record.

Reply submissions

Counsels for the complainant and the exporters reiterated their positions in their case briefs as to how normal values should be determined.

CBSA’s response

Where normal values cannot be determined in accordance with the provisions of section 20 of SIMA, normal values are determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA, on the basis of facts available.

The CBSA has considered the arguments submitted by counsels for the complainant and the exporters. However, as it was found that Mexico is the most appropriate surrogate country, the CBSA has determined normal values using information pertaining to the wind tower industry in Mexico, including costs of steel plate in Mexico and administrative, selling and all other costs, financial expenses, and profit, based on the financial statements of companies that produce wind towers in Mexico. For additional costs such as labour, overhead, and other inputs, the CBSA used the complainant’s costs as it was the only available information outside of China, but all labour related costs were adjusted to reflect wages in Mexico.

Future normal value

Case briefs

Counsel for Marmen submitted that wind towers for each project are unique and produced to specifications for that project. As such, counsel argued that wind towers for any new project that was not subject to the CBSA’s investigation will require its own, project specific normal value, unless it is identical in every respect to another tower for which a normal value exists. Counsel further argued that the CBSA should apply the all others rate to any imported wind towers that were not part of a project subject to the CBSA’s investigation.

Reply submissions

Counsel representing TSP Group and Penglai Dajin agreed with counsel for Marmen in regards to the unique nature of wind tower specifications and projects and suggested that the CBSA issue future normal values on a per metric ton basis for each specific project. Counsel objected to counsel for Marmen’s position in regards to the application of the all others rate to wind towers for projects that were not exported to Canada during the POI. Counsel argued that limiting the availability of recourse to prospective normal values and instead imposing the all others rate as suggested by counsel for Marmen is violation by Canada of its obligations under the WTO.

CBSA’s response

The CBSA considered the case arguments and reply submissions provided by counsel for Marmen and counsel representing TSP Group and Penglai Dajin.

The CBSA determined normal values for all wind towers for every project under ministerial specification as explained above in this Statement of Reasons.

Based on the wind tower projects reported by each cooperative exporter, the CBSA determined the average normal value on a metric ton basis for purposes of future shipments, in the event that the CITT finds that the dumped and subsidized goods have caused injury.

Subsidy representations

Deficiencies

Case briefs

Counsel for Marmen submitted that amounts of subsidy for all exporters should be determined under ministerial specification as the GOC did not respond to the Government Subsidy RFI. Counsel argued that Penglai failed to provide details of sales to SOEs and should be considered deficient. Counsel further argued that CS Wind did not properly report rental subsidies and its response to the Subsidy RFI should be considered deficient.

Counsel for CS Wind submitted that it has responded completely to Subsidy RFIs, SRFIs, and Verification Questionnaires and that the CBSA has all the information to determine an amount of subsidy for CS Wind.

Reply submissions

Counsel for CS Wind submitted that rent payments were paid for the specified period. Counsel objected to the complainant’s submission and requested that the CBSA continue its established practice of determining an amount of subsidy for cooperating exporters, where the GOC had declined to participate in the subsidy investigation.

CBSA’s response

For the purpose of the final determination, without a complete response to the Government Subsidy RFI from the GOC, the CBSA determined amounts of subsidy for all programs under ministerial specification, pursuant to section 29 of SIMA. In light of the cooperation received from exporters, the CBSA determined amounts of subsidy under ministerial specification based on the information submitted by the responding exporters.

Double remedies

Case briefs

Counsel representing TSP Group and Penglai Dajin submitted that the CBSA should address the issue of double counting when it applies surrogate values in the construction of normal values and the use of external benchmarks in the determination of amounts of subsidy as raised by the WTO Appellate Body in DS379.

Reply submissions

Counsel for Marmen submitted that the CBSA has previously considered the issue of double counting and noted that the Appellate Body’s decision is not binding on Canada. Counsel maintained that the CBSA must apply SIMA in its final determinations.

CBSA’s response

The CBSA assessed that the complaint met the requirements to initiate a subsidy investigation and a dumping investigation and therefore it proceeded with these investigations concurrently, as provided for in SIMA.

Countervailable subsidies, specificity and export subsidies

Case briefs

Counsel representing TSP Group and Penglai Dajin submitted that the CBSA has not established the specificity of the programs and argued that there is no evidence concerning the resulting benefits. Counsel also argued that it is not appropriate for the CBSA to determine an amount of subsidy in the absence of corroborating evidence and government response.

Counsel submitted that certain subsidy programs related to research and development are not countervailable if the assistance provided is not linked to industrial or commercial objectives and where the assistance is limited to the purposes of certain costs such as personnel involved in research activity; assets used exclusively and permanently for research activity; consultancy and equivalent services related to research activity; additional overhead costs and operating costs incurred as a result of research activities.

Counsel submitted that where the CBSA determines a subsidy to be an “export subsidy”, the amount of countervailing duty related to the export subsidy should be deducted from the total duty.

Reply submissions

Counsel for Marmen submitted that counsel for TSP Group and Penglai Dajin cited various WTO cases but did not provide any arguments, based on the record, to support the claims that there was no evidence to establish benefits or specificity.

CBSA’s response

The available information indicates that these programs do not appear to be generally available to all enterprises in the country of origin. Additionally, due to the lack of response by the GOC, there is not sufficient information on the administrative record to determine that certain subsidy programs are not specific pursuant to the criteria set out in subsection 2(7.1) of SIMA. Therefore, guided by the principles of subsection 2(7.2) or subsection 2(7.3) of SIMA and based on the best information available, the CBSA has determined that the subsidy derived from these programs is likely to be specific.

As a result, the CBSA determined an amount of subsidy for the cooperative exporters pursuant to a ministerial specification under subsection 30.4(2) of SIMA.

Steel plate benchmarks and input subsidy

Case briefs

Counsel for CS Wind submitted that the CBSA incorrectly used the steel plate price around the world excluding China as benchmarks because it did not consider the comparability of steel prices in the region or country. Counsel argued that South Korean steel plate prices are the most appropriate benchmarks. Counsel further that the CBSA should prove that subsidies accruing to the producers of the steel plate in China are passed through to the wind towers and that the subsidies are reflected in the selling prices of wind towers in China.

Counsel representing TSP Group and Penglai Dajin submitted that with respect to Program 43, the CBSA should attribute the subsidy received through the purchase of material inputs from SOEs directly to the production and sale of those goods.

Reply submissions

Counsel for CS Wind reiterated its comments regarding the use of South Korean steel plate prices as appropriate benchmarks in the calculation of the amounts of subsidy for Program 43 and the impact of the subsidy in the selling prices of wind towers.

CBSA’s response

For the purpose of the final determination, the CBSA considered commercial benchmarks of steel plate within China, importations of steel plate into China as well as foreign benchmarks. Based on the information on the record, the CBSA established benchmarks based on importations of steel plate from producers in South Korea as well as South Korean steel plate prices published by Korean Sheet and Metal News.

For the purpose of the final determination, the CBSA determined an amount of subsidy for Program 43 by distributing the benefit amount received by the exporter over the total quantity of goods to which the benefit was attributable.