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

Complainant

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

Marmen Inc.
557 des Érables Street
Trois-Rivières, (QC)  G8T 8Y8

Marmen Énergie Inc.
1905 Av. du Phare O
Matane, (QC)  G4W 3N1

[12] 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

[13] 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

[14] 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

[15] 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

[16] 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}

[17] 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 "TS Group").

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

Government

[19] 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.

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

[21] 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

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

Additional product information^{Footnote 17}

[23] 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.

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

[25] 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.

[26] 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.

[27] 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}

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

[29] 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.

[30] 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

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

[32] 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

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

7308.20.00.00

[34] 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

[35] 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

[55] Section 20 is a provision of SIMA that may be applied to determine the normal values 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 23}

[56] 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.

[57] 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.

[58] 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 markets in China would not be reliable for purposes of determining normal values.^{Footnote 24}

[59] 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.

[60] 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 25}

[61] For the purposes 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.

[62] 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 the GOC involvement 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.

[63] Consequently, on April 21, 2023, the CBSA sent Section 20 RFIs to producers and exporters of wind towers in China as well as 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 purposes of determining normal values pursuant to paragraph 20(1)(c) of SIMA.

Summary of Chinese exporter responses

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

[65] Penglai Dajin, founded in 2009, specializes in the production of onshore and offshore wind towers, jacket platforms and other offshore equipment for the global market (i.e. sets of cages, monopiles, foundation sections, split towers, transition pieces and frapping brackets). The company is structured as a limited liability corporation and operates one plant dedicated to the production of wind towers for both the domestic and export markets.

[66] The CS Wind group of companies is a South Korean-based manufacturer of wind power generation towers. The company was founded in 2006 and has grown to become one of the leading wind tower manufacturers in the world. CSWK, the parent company, is the vendor of goods and located in South Korea. CSWC is the producer and exporter of the wind towers. CSWT is a related trading company that purchases raw materials.

[67] STWPE was founded in 2001. The company mainly produces and sells wind towers. It is one of the earliest companies specializing in the production of wind towers in China. STWPE has been designing and manufacturing wind towers for over 15 years, and delivered more than 2,000 sets of towers worldwide. Blue Island is a wholly-owned subsidiary of STWPE, established in 2009. They are a large heavy-industry enterprise specializing in the researching, engineering, and manufacturing of offshore equipment such as offshore wind farm substations, jackets, monopiles, towers, offshore platforms, and offshore modules. In 2007, Dongtai was established with STWPE as its sole shareholder. The main business activities of Dongtai is wind tower production.

Government of China response

[68] An RFI was sent to the GOC requesting information for the purposes of the section 20 inquiry. No response was received from the GOC as of the date of the preliminary determination of dumping.

[69] The CBSA received representations from the GOC expressing its opposition to the section 20 inquiry. The GOC stated that section 20 inquiry violates Canada's obligations under the World Trade Organization (WTO) and that it gives too much discretion to the CBSA, as the CBSA only needs to form an opinion. Furthermore, the GOC believes that the complainant did not provide sufficient evidence needed to apply for a section 20.

Surrogate Country responses

[70] 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 response to the surrogate producer RFI was received during the preliminary determination phase.

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

[71] 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 and Siemens responded to the RFIs, but neither provided usable information for the purposes of paragraph 20(1)(d) of SIMA.

Analysis of section 20 conditions

[72] 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 not available at this stage. The CBSA analyzes section 20 factors and conditions in China with a focus on the elements presented in the complaint and the responses to the exporter section 20 RFI.

Government control analysis

[73] The direction of the Chinese economy is governed by a complex system of industrial planning which affects all economic activities within the country. The totality of these plans covers a comprehensive and complex matrix of sectors and crosscutting policies and is present on all levels of government. The plans and initiatives discussed below exemplify how individual industrial sectors such as wind tower and/or related projects are in line with the government priorities and specific development goals.

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

• Government 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
• Government control over the steel industry
• Wind tower subsidies

Government involvement in the electricity sector

[75] 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.

[76] 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:

[77] This means that the majority of the end users of wind towers in China are SOEs and have the ability to distort the prices at which wind towers are purchased.

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

[78] 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.

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

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

[81] 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:

[82] This shows that the GOC intends to continue to exert control over its SOEs in general, which have a strong presence as end users of wind towers, purchasers of wind towers, producers of wind towers, and producers of wind tower inputs. In addition, this plan specifically lays out detailed goals for steel producers (the producers of wind tower inputs) and the wind power industry (the end users of wind towers). With this government involvement, SOEs are likely to make decisions based on GOC policy, rather than market forces.

14th Five Year Renewable Energy Plan

[83] 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}

[84] 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}

[85] 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}

[86] In order to meet its goals, the GOC will have an influence on the pricing of the wind power industry in China, including on the manufacture of components like wind towers.^{Footnote 36}

Made in China 2025 Initiative

[87] 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.

[88] 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.

[89] 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.

GOC's ownership and control of wind turbine original equipment manufacturers (OEMs)

[90] The Global Wind Energy Council states that there are 20 active wind turbine manufacturers in China, but does not provide their names.^{Footnote 37} 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 38} Of the three cooperative exporters, roughly one third of all domestic sales have been made to identified 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 39} One cooperative exporter, STWPE, is 26% owned by the GOC.

[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] 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.

Government control over the steel industry

[95] 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.

[96] 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 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}

[97] Given that more than 80% of the responding exporters' direct material costs are steel, including both 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

[98] 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}

[99] 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}

[100] 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}

[101] 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

[102] 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

[103] 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.

[104] 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}

[105] 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}

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

[107] 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

[108] 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}

[109] 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

[110] 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 plate, purchased from Chinese SOEs have been sold for less than their fair market value.

Steel subsidies

[111] The complainant notes that the CBSA has found in the past that 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

[112] 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.

[113] 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}

[114] 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.

[115] The CBSA's estimate of the amount of subsidy of 42.8% at the preliminary determination indicates the extent of the subsidization of wind tower producers in China.

Analysis of domestic price in China

Complainant price analysis

[116] 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.

[117] However, the most significant input of wind towers are steel plate and benchmarks do exist for 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.

[118] The complainant looked at the prices of hot-rolled band, a similar product to 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}

[119] The complainant also looked at the reported price of 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 plate prices were 27% to 75% below the US prices during this period.^{Footnote 66}

[120] 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.

[121] 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

[122] 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.

[123] 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 do not make it the ideal country for comparison.

[124] At initiation, the complainant looked at hot-rolled band and standard 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.

[125] 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.

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

[127] Based on the information obtained on the prices of 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.

[128] 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.

[129] 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.

[130] 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.

[131] 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.

Preliminary results of the section 20 inquiry

[132] Based on the information on the record to date, the CBSA finds that the scope of the GOC's macro-economic policies and initiatives provide a compelling factual basis that the GOC is likely influencing the Chinese wind tower sector.

[133] The GOC's ownership of upstream enterprises involved in the supply of steel inputs, indicate that producers are likely to be instilled with the GOC's responsibilities and mandates. Competitive market conditions in the steel and wind tower sector could be significantly influenced as the GOC's directives and objectives compete against the commercial interests of the enterprises and their corporate decisions, which are normally based on market dynamics of supply and demand.

[134] Evidence was collected that non-market conditions exist in the steel industry, an important input in the production of wind tower. Information was gathered on the record that the GOC provides subsidies to the steel industry and by doing so, indirectly subsidised wind tower manufacturers. Steel producers receive extensive subsidies form the GOC and are likely able to pass the benefit to the wind tower manufacturers by offering low-priced steel inputs. This gives wind tower producers the ability to market their products at lower prices and further distort prices.

[135] The GOC did not provide evidence supporting or rebutting the existing evidence on the record. The GOC provided comments concerning the section 20 allegations, but did not provide evidence in relation to the existence of significant distortions and/or on the appropriateness of the application of section 20 in the wind tower sector in China.

[136] Based on the analyses presented, the CBSA believes that there is sufficient evidence to support the allegation of the existence of non-market conditions in the wind tower industry.

[137] For the purposes of the preliminary determination of dumping, the CBSA is of the opinion that 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.

[138] During the final phase of the dumping investigation, the CBSA will continue the section 20 inquiry and further verify and analyze relevant information. The CBSA may reaffirm its opinion that the conditions of section 20 of SIMA exist in the wind tower sector as part of the final phase of the investigation, or conclude that the determination of normal values may be made using domestic selling prices and costs in China.

Normal value

[144] For purposes of a preliminary determination, normal values are generally estimated based on the domestic selling prices of like goods in the country of export, in accordance with the methodology of section 15 of SIMA, or one of the methodologies of section 19. Where the methodology of paragraph 19(b) is used, it is based 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.

[145] 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 estimated on the basis of section 20 of SIMA using either the selling prices or costs of like goods in a surrogate country.

[146] For purposes of the preliminary determination, normal values could not be estimated on the basis of 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 wind tower sector in China.

[147] Where section 20 conditions exist, the CBSA may estimate 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 CBSA 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.

[148] 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.

[149] Accordingly, the CBSA used an alternate method to estimate normal values for the purposes of the preliminary determination on the basis of the best information available. This alternate method is considered to be a representative and reasonable approach and is based on a constructed cost methodology similar to that used at the initiation of the dumping investigation and is consistent with the methodology followed by the Canadian producer in their dumping and subsidy complaint.

[150] The CBSA selected Mexico as a surrogate country for the purposes of estimating 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, been found to be an appropriate surrogate by other investigating authorities, there is 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 highly competitive market, allowing them to be considered as a reliable and fair source for purposes of the preliminary determination.

[151] The CBSA estimated normal values for sections of wind towers based on the information available on the record, including information provided by the complainant, publically available information, and information obtained through MetalBulletin Fastmarkets as well as SteelBenchmarker, subscription-based providers of steel and metal prices around the world.

[152] For purposes of the preliminary determination, the normal values were estimated using a constructed cost methodology as described further below. The CBSA will endeavor to collect additional information during the final phase of the dumping investigation in order to permit the calculation of normal values based on the surrogate country methodologies referred to above.

Cost of materials

[153] Based on the information available on the record, the primary input of wind towers are steel plates, but steel flanges are also a significant input. Flanges are machined steel rings that are welded on both ends of the wind tower sections and are used to connect different sections together during installation of the wind turbine.

[154] The CBSA obtained benchmark pricing of steel plate from Fastmarkets. Pricing was not available in the surrogate country, Mexico, so the CBSA created a world benchmark by averaging the steel prices in all available markets, excluding China. There is no benchmark pricing available for steel flanges, so the CBSA used the average flange cost per wind tower section based on the complainant's estimates for four different recent wind tower projects in Canada.

[155] The CBSA then multiplied the benchmark steel plate price by the weight of steel plate used in each section of the wind tower based on the exporter's reported weight and added in the average flange cost per wind tower section to obtain the cost of materials.

Fabrication costs

[156] The CBSA looked at the complainant's average cost over four recent wind tower projects to convert steel plate and flanges into a wind tower section. This fabrication cost includes other minor inputs, labour and overhead. It was expressed as an average cost per metric ton of wind tower section.

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

Internals

[158] Internals are any components that are attached to the inside of a wind tower, but is not part of the wind tower itself and can include ladders, elevators, cables, platforms, etc. Often, these are provided by the customer (i.e. the importer) to the producer (the exporter) for installation. Internals can also be shipped separately from the tower and installed in Canada. When the internals are shipped with or attached to the wind tower section they are part of the subject goods. When they are shipped separately, they are not.

[159] Where wind tower sections and the internals are shipped together, an amount equal to the average internal cost per wind tower section provided by the complainant was added.

Amount for administrative, selling and all other costs

[160] The CBSA obtained the 2022 and 2021 financial results of Arcosa, Inc.'s Engineered Structures division, which produces wind towers and other similar structures in Mexico, and Speco Ltd., which is a South Korean company that owns a Mexican wind tower producer. The CBSA used this information to estimate a reasonable amount for administrative, selling and all other costs. The amount is equal to 11.37% of the aggregate of the cost of material plus fabrication cost for goods produced in 2021 and 11.43% for goods produced in 2022 and 2023. The CBSA will endeavor to collect additional information during the final phase of the dumping investigation for the amount for administrative, selling and all other costs.

Amount for profit

[161] The CBSA used the same information from Arcosa, Inc. and Speco Ltd. to estimate a reasonable amount for profit for purposes of a preliminary determination. The amount is equal to 9.14% of the total cost of goods for goods sold in 2021 and 10.89% for goods sold in 2022 and 2023. The CBSA will endeavor to collect additional information during the final phase of the dumping investigation for the amount for profits.

[162] The CBSA invites interested parties to submit representations and information regarding the determination of costs of production as it relates to steel plate and flange benchmarks, internals, fabrication costs and amount for amount for administrative, selling and all other costs and amount for profits.

Export price

[163] The export price of goods sold to importers in Canada is generally estimated 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

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

Preliminary results of the dumping investigation

CS Wind China Co., Ltd. (CSWC)

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

[166] CSWC provided a response to the dumping RFI, including a database of domestic sales of wind towers during the POI. CSWC also provided a late response to the section 20 RFI. The CBSA will continue to collect and verify information from CSWC during the final phase of the investigation.

[167] During the POI, CSWC sold subject goods to one unrelated Canadian importer through its related vendor, CSWK, located in South Korea. For purposes of the preliminary 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.

[168] For the preliminary determination, the total estimated normal value compared with the total estimated export price results in an estimated margin of dumping of 92.9%, expressed as a percentage of export price.

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

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

[170] Penglai Dajin provided a response to the dumping RFI, including a database of domestic sales of wind towers during the POI. Penglai Dajin also provided a response to the section 20 RFI. The CBSA will continue to collect and verify information from Penglai Dajin during the final phase of the investigation.

[171] 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 purposes of the preliminary 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.

[172] For the preliminary determination, the total estimated normal value compared with the total estimated export price results in an estimated margin of dumping of 89.8%, expressed as a percentage of 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.

[174] STWPE and its two related companies, Blue Island and Dongtai, provided responses to the dumping RFI, including a database of domestic sales of wind towers during the POI. They also each provided a response to the section 20 RFI. The CBSA will continue to collect and verify information from STWPE and its associated companies during the final phase of the investigation.

[175] During the POI, STWPE sold subject goods to one unrelated Canadian importer through an intermediary vendor. For purposes of the preliminary 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] For the preliminary determination, the total estimated normal value compared with the total estimated export price results in an estimated margin of dumping of 83.8%, expressed as a percentage of export price.

All other exporters: China

[177] 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.

[178] In establishing the methodology for estimating the normal values and export prices for other 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 customs entry documentation.

[179] The CBSA decided that the normal values and export prices estimated for the exporters whose submissions were complete for purposes of the preliminary determination rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for estimating normal values since it reflects the trading practices of wind tower exporters during the POI. Three exporters in China provided complete information for the purposes of the preliminary determination.

[180] The CBSA examined the difference between the estimated normal value and the estimated 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 estimating the normal value. 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 favourable outcome than those who have not participated.

[181] As a result, based on the facts available, for exporters that did not provide a response to the dumping RFI, the normal value of subject goods originating in or exported from China were estimated based on the highest amount by which an estimated normal value exceeded the estimated 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.

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

[183] Using the above methodologies, for the preliminary determination, the estimated margin of dumping for all other exporters in China is 151.0%, expressed as a percentage of the export price.

Summary of preliminary results: Dumping

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

[185] Under section 35 of SIMA, if at any time before making a preliminary determination the CBSA is satisfied that the actual and potential volume of goods of a country is negligible, the CBSA is required to terminate the investigation with respect to goods of that country.

[186] Pursuant to subsection 2(1) of SIMA, the volume of goods of a country is considered negligible if it accounts for less than 3% of the total volume of goods that are released into Canada from all countries that are of the same description as the goods.

[187] The volume of subject goods from China is above 3% of the total volume of goods released into Canada from all countries. Based on the definition above, the volume of subject goods from China is therefore not negligible.

[188] If, in making a preliminary determination, the CBSA determines that the margin of dumping of the goods of a particular exporter is insignificant pursuant to subsection 38(1.1) of SIMA, the investigation will continue in respect of those goods but provisional duties will not be imposed on goods of the same description imported during the provisional period.

[189] Pursuant to subsection 2(1) of SIMA, a margin of dumping of less than 2% of the export price of the goods is defined as insignificant. For all exporters, the estimated margin of dumping, expressed as a percentage of the export price, is above 2% and is, therefore, not insignificant. In respect of these goods, provisional anti-dumping duties will be imposed on goods of the same description imported during the provisional period.

[190] A summary of the estimated margin of dumping and provisional duties by exporter is presented in Appendix 1.

Penglai Dajin Offshore Heavy Industry Co., Ltd. ("Penglai Dajin")

[206] Penglai Dajin provided a response to the subsidy RFI. For purposes of the preliminary determination, Penglai Dajin was found to have received countervailable benefits from 17 subsidy programs.^{Footnote 72}

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 & 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 43: Acquisition of government inputs/utilities at less than fair market value
15. Program 49: Exemption/Refund of sales tax on material inputs
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

[207] Further to its analysis of the information on the administrative record, the CBSA considers that the subsidy programs constitute a financial contribution that confers a benefit to the exporter. The CBSA also considers these programs to be specific and therefore actionable.

[208] For purposes of the preliminary determination, the estimated amount of subsidy for Penglai Dajin is 7.8%, expressed as a percentage of the export price.

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

[209] Multiple programs were found to have conferred benefits to the exporter by being passed-through from Blue Island and Dongtai. The CBSA attributed the subsidies received by the related producers 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 producers. Consequently, any actionable subsidies received by the related producers which are attributable to the goods under investigation and exported to Canada, were aggregated with those directly received by the exporter.

[210] For purposes of the preliminary 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 & 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

[211] Further to its analysis of the information on the administrative record, the CBSA considers that the subsidy programs constitute a financial contribution that confers a benefit to the exporter. The CBSA also considers these programs to be specific and therefore actionable.

[212] For purposes of the preliminary determination, the estimated amount of subsidy for STWPE is 16.3%, expressed as a percentage of the export price.

All other exporters: China

[213] Although the CBSA received subsidy RFI responses from 3 exporters of subject goods originating in or exported from China, one of the responses was insufficient for the purposes of the preliminary determination. A deficiency letter has been sent out to the exporter, CSWC. The letter noted deficiencies and advised the exporter to provide a revised subsidy RFI response to ensure that the CBSA has sufficient time to review, analyze and verify the information provided.

[214] 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 estimated an amount of subsidy on the basis of the following methodology:

1. the highest amount of subsidy for each of the 25 programs, as found at the preliminary determination, for the producers/exporters located in China for whom the CBSA has sufficient information to estimate an amount of subsidy, plus
2. the average amount of subsidy for the 25 programs listed in (1), applied to each of the remaining 26 potentially actionable subsidy programs for which sufficient information is not available or has not been provided at the preliminary determination

[215] In establishing the methodology for estimating the amount of subsidy for all other 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 exporter, as well as their related affiliates in China who responded to the subsidy RFI.

[216] 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.

[217] Using the above methodology, for the preliminary determination, the estimated amount of subsidy for all other exporters in China is 42.8%, expressed as a percentage of the export price.

Summary of preliminary results: Subsidy

[218] A summary of the preliminary results of the subsidy investigation respecting all subject goods released into Canada during the POI follows:

[219] Under section 35 of SIMA, if, at any time before making a preliminary determination, the CBSA is satisfied that the actual and potential volume of goods of a country is negligible, the CBSA is required to terminate the investigation with respect to goods of that country.

[220] Pursuant to subsection 2(1) of SIMA, the volume of goods of a country is considered negligible if it accounts for less than 3% of the total volume of goods that are released into Canada from all countries that are of the same description as the goods.

[221] If, in making a preliminary determination, the CBSA determines that the amount of subsidy on the goods of an exporter is insignificant, pursuant to section 38 of SIMA, the investigation will continue in respect of those goods but provisional duties will not be imposed on goods of the same description imported during the provisional period.

[222] 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.

[223] As can be seen from the above table, the volume of subject goods from China is above 3% of the total volume of goods released into Canada from all countries. Based on the provisions above, the volume of subject goods from China is, therefore, not negligible.

[224] The estimated amount of subsidy for all exporters exceed 1% of the export price, and is therefore not insignificant. In respect of these goods, provisional countervailing duty will be imposed on subject goods imported into Canada during the provisional period.

The Canada Border Services Agency

[229] The CBSA will continue its investigations of the dumping and subsidizing and will make final decisions by October 18, 2023.

[230] If the margins of dumping or amounts of subsidy of any exporter are found to be insignificant, the CBSA will terminate the investigation in respect of goods of that exporter and any provisional duties paid or security posted will be refunded to importers, as appropriate. If the CBSA is satisfied that the goods were dumped and/or subsidized, final determinations will be made.

The Canadian International Trade Tribunal

[231] The CITT has begun its inquiry into the question of injury to the Canadian industry. The CITT is expected to issue its finding by November 17, 2023.

[232] If the CITT finds that the dumping has not caused injury, retardation or is not threatening to cause injury, the proceedings will be terminated and all provisional anti-dumping duty collected or security posted will be refunded.

[233] If the CITT makes a finding that the dumping has caused injury, retardation or is threatening to cause injury, anti-dumping duty in an amount equal to the margin of dumping will be levied, collected and paid on imports of wind towers that are of the same description as goods described in the CITT's finding.

[234] If the CITT finds that the subsidizing has not caused injury, retardation or is not threatening to cause injury, the proceedings will be terminated and all provisional countervailing duty collected or security posted will be refunded.

[235] If the CITT makes a finding that the subsidizing has caused injury, retardation or is threatening to cause injury, countervailing duty in the amount equal to the amount of subsidy on the imported goods will be levied, collected and paid on imports of wind towers that are of the same description as goods described in the CITT's finding.

[236] For purposes of the preliminary determinations of dumping or subsidizing, the CBSA has responsibility for determining whether the actual and potential volume of goods is negligible. After preliminary determinations of dumping or subsidizing, the CITT assumes this responsibility. In accordance with subsection 42(4.1) of SIMA, the CITT is required to terminate its inquiry in respect of any goods if the CITT determines that the volume of dumped or subsidized goods from a country is negligible.

Category 1: Preferential loans and loan guarantees

Program 1: Loans from state-owned banks at preferential rates

This program relates to government loans at a preferential rate of interest. The benefit provided in this case is a lower rate of interest than would otherwise be available if the enterprises had to obtain a non-guaranteed commercial loan (i.e. the benchmark non-guaranteed commercial loan). Financial institutions may be considered to constitute "government" if they possess, exercise or are vested with government authority, which may be indicated by the following factors:

1. Where a statue or other legal instrument expressly vests government authority in the entity concerned
2. Evidence that an entity is, in fact, exercising governmental functions; and
3. Evidence that a government exercises meaningful control over an entity

The CBSA has previously countervailed this program in Mattresses, Container Chassis, Decorative and Other Non Structural Plywood (Decorative Plywood), Cold Rolled Steel and Upholstered Domestic Seating.

In the investigation by the US Department of Commerce (USDOC) in Wind Towers from China, it appears that they countervailed this program as "Policy Lending to the Renewable Energy Industry".

The USDOC listed the following laws, decisions, and regulations as examples of the GOC's implementation of plans for wind tower industry development and preferential policy lending.

1. Article 25 of the Renewable Energy Law: financial institutions are afforded discretion to offer preferential loans with a financial interest subsidy to certain renewable energy projects, provided that the project is listed in the national development guidance catalogue of the renewable energy industry and meet other loan requirements
2. National Development Reform Commission ("NDRC') Directory Catalogue on Readjustment of Industrial Structure: contains a list of encouraged projects the GOC develops through loans and other forms of assistance, and two encouraged projects listed relates to wind power
3. Article 5 of the Decision of the State Council on Promulgating the Interim Provisions on Promoting Industrial Structure Adjustment for Implementation (Decision 40): The GOC proclaims support and development of renewable energy industries including the "speed up" of the development of wind power through policies and measures

This program may constitute a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the government are reduced or exempted, and would confer a benefit to the recipient equal to the amount of the reduction/exemption. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 2: Loan guarantee through the Government of China/SOE banks/public bodies

Assurance provided by the GOC, a SOE bank or public body (the guarantor) to assume the debt obligation of a borrower if that borrower defaults. A guarantee can be limited or unlimited, making the guarantor liable for only a portion or all of the debt.

The CBSA has previously countervailed this program in Container Chassis, Decorative Plywood, Cold Rolled Steel, Upholstered Domestic Seating, Large Diameter Carbon and Alloy Steel Line Pipe (Large Line Pipe), FISC and Line Pipe.

This program may constitute a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the government are reduced or exempted, and would confer a benefit to the recipient equal to the amount of the reduction/exemption. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 3: Debt and interest forgiveness on loans from state-owned banks

To stimulate the economy and support the development of key industries, the state-owned banks write off bad debts or interest owed by state-owned enterprises.

The CBSA has previously countervailed this program in Mattresses, Container Chassis, Seamless Casing.

This program may constitute a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the government are reduced or exempted, and would confer a benefit to the recipient equal to the amount of the reduction/exemption. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 4: Debt to equity swaps for less than fair market value

Asset management companies formed by the GOC are permitted to purchase "non-performing loans" from State-Owned Banks and then conduct debt-to-equity swap transactions with companies that are liable for the "non-performing loans" forgiving some or all of a company's debt in exchange for equity in the company.

The CBSA has previously countervailed this program in Cold Rolled Steel and Oil Country Tubular Goods (OCTG).

This program may constitute a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the government are reduced or exempted, and would confer a benefit to the recipient equal to the amount of the reduction/exemption. The program may be considered specific pursuant to subsection 2(7.2) of SIMA because it is limited to state-owned enterprises.

Program 5: Preferential export financing and export credit guarantee/insurance

The China Export & Credit Insurance Corporation (Sinosure) is a state funded policy oriented insurance company that was established to promote China's foreign trade and economic cooperation. The China Exim Bank and Sinosure each provide export credit guarantees which, according to information from the Bank, have "played a key role in supporting Chinese companies to go global" and promoted "the export of new and high tech products".

The CBSA has previously countervailed this program in Mattresses, Line Pipe and Upholstered Domestic Seating.

In the 2012 investigation by the USDOC into Wind Towers from China, it appears that they countervailed this program as "Financing Services Provided by the Export-Import Bank of China (aka Export Buyer's Credit Program.)

This program may constitute a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA; i.e., amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due to the government are forgiven or not collected. The above confers a benefit to the exporter by way of reducing its financial costs upon obtaining loans from a financial institution, and the benefit is equal to the amount of the exemption/deduction. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Category 2: Grants and grant equivalents

Program 6: Insurance grants

This program constitutes local and provincial government reimbursement grants on credit insurance fees.

The CBSA has previously countervailed this program in Mattresses, Galvanized Steel Wire, Seamless Casing, OCTG, Pup Joints, Stainless Steel Sinks, Line Pipe, Large Line Pipe and Upholstered Domestic Seating.

The financial contribution by the government is the direct transfer of funds pursuant to section 2(1.6)(a) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 7: Design, research and development grants

A grant that provides financial aid for enterprises determined to have undertaken expenses in design or research and development.

Grants may be provided for the commercialization of technological innovation and research findings and to promote scientific and technological results.

The CBSA has previously countervailed this program in Mattresses, Sucker Rods, Copper Tube, Photovoltaic Modules and Laminates, OCTG, Unitized Wall Modules, Seamless Casing, Pup Joints, Decorative Plywood and Upholstered Domestic Seating.

The financial contribution by the government is the direct transfer of funds pursuant to section 2(1.6)(a) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 8: Export development performance grants

Companies in China receive such grants provided by the GOC to assist in the development of export markets or to recognize export performance.

For example, awards may also be provided to assist in marketing and export brand development and overseas investment. Other export awards may also be provided to enterprises that export high-tech products or achieve certain export volume. Financial subsidies may be provided for participations in trade exhibitions. Grants are provided for trade dispute expenses, the exportation of goods and increasing export value, and the International Service Outsourcing Industry.

The CBSA has previously countervailed this program in Mattresses, Sucker Rods, OCTG, Unitized Wall Modules, Galvanized Steel Wire, Aluminum Extrusions, Carbon Steel Welded Pipe, Steel Grating, Decorative Plywood and Upholstered Domestic Seating.

As per the Statement of Reasons (SOR) issued at the OCTG final determination, the program was established in the Circular of the Trial Measures of the Administration of International Market Development Funds for Small and Medium-Sized Enterprises Cai Qi No. 467, 2000, which came into force on October 24, 2000. The program was established to support the development of small and medium-sized enterprises, to encourage them to join in the competition of international markets, to reduce the business risks of the enterprises, and to promote the development of the national economy. The granting authority is the Foreign Trade and Economic Department and the program is administered at the local levels.

The financial contribution by the government is the direct transfer of funds pursuant to section 2(1.6)(a) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 9: Performance award grants

A grant that provides financial aid for enterprises with excellent performances.

Grants in the form of awards may be provided to major tax payers, enterprises who are recognized for their brands or trademarks in China.

Awards may be provided for recognition of contributions to the local economy.

The CBSA has previously countervailed this program in Mattresses, Seamless Casing, Aluminum Extrusions, OCTG, Pup Joints, Copper Tube, Line Pipe and Upholstered Domestic Seating.

This program is a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 10: Reductions in land use and/or rental fees

This program provides for the reduction in land use fees and rental rates for a certain number of years. Examples of this program in action include: a document titled '[2003] No. 8 Preferential Supply of Land', in order to offset costs for industrial companies in the Ninghai Economic Development Zone; or similar initiatives in the Tianjin Binhai New Area and the Tianjin Economic and Technological Development Area.

The CBSA has previously countervailed this program in Mattresses, Stainless Steel Sinks, Unitized Wall Modules, Photovoltaic Modules and Laminates, Seamless Casing, OCTG, Pup Joints, Line Pipe, Decorative Plywood and Upholstered Domestic Seating.

The financial contribution by the government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 11: Grant—Patent assistance/award

Based on the information available to the CBSA, this program was provided in several provinces, such as Guangdong, Shanghai and Jiangsu.

For example, the GOC's document associated with this program for Guangdong province may include: "Administrative Measures of Patent Award of Guangdong Province". In Guangdong province, this program was administered by the Intellectual Property Office of Guangdong, the Bureau of Personnel of Guangdong Province and municipal level authorities. The program was established to support improvement in technology innovation and to promote intellectual property.

In addition, the GOC document associated with this program for Shanghai may include: "The administrative measures regarding the financial support/subsidy for Patents by Shanghai". In Jiangsu province, this program was administrated by Jiangsu Intellectual Property Office.

The CBSA has previously countervailed this program in Mattresses, Decorative Plywood.

This program is a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 12: Environment protection grant

These are grants provided by the GOC for the purposes of improving environmental performance, for example, monitoring and cleaning pollutants, improving energy efficiency, upgrading facilities to be more environmentally efficient, and waste water treatment. The grants are also provided to support various environmental conservation and energy-saving projects.

The CBSA has previously countervailed this program in Mattresses and Copper Tube

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 13: Grants for the retirement of capacity

The GOC's 12th Five-Year Plan for Energy Conservation and Emission Reduction calls for accelerating and eliminating "backward production capacity" in certain industrial sectors, including the elimination of 48 million MT of steel production. In 2013, the State Council issued the "Guiding Opinion on Resolving the Problem of Severe Excess Capacity," which called for establishing special funds to accelerate the elimination of backwards capacity and to also support industries with excess production capacity.

This program is a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 14: Grants for relocating production facilities

As part of the GOC's 12th Five-Year Steel Development Plan, the GOC has been relocating urban based steel producers to locations outside of their current city. The GOC's 12th Five-Year Plan for Energy Conservation and Emission Reduction calls for the relocation for "heavy polluting enterprises" and for measures to optimize the "regional spatial layout" of "key industries," including the steel industry.

This program is a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 15: Subsidies related to company/enterprise development and innovation

Available information indicates that the GOC has introduced several grants and incentives related to company and enterprise development and innovation grants and awards.

For example, the awards may be provided to encourage and support enterprises to develop new technologies. Grants may also be provided to encourage enterprises to upgrade business technologies and processes.

The CBSA has previously countervailed this program in Mattresses and Upholstered Domestic Seating.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 16: Subsidies related to employment, training and recruitment

Available information indicates that the GOC has introduced several grants and incentives designed to support job stabilization by assisting companies with unemployment insurance payments as well as supporting the recruitment, training and subsequent job security of their staff. Grants may also be provided to improve labor relations.

Subsidies may also be granted to companies that recruit recent graduates, youths and impoverished laborers. Subsidies may also be provided to agencies that monitor and analyze employment conditions/situations in an area.

The CBSA has previously countervailed this program in Mattresses and Upholstered Domestic Seating.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 17: Subsidies related to pandemic support

Available information indicates that the GOC has introduced several grants and incentives designed to support job stabilization and weather economic hardships experienced by exporters during the COVID-19 pandemic. This grant may also be provided to promote the resumption of work and production.

The CBSA has previously countervailed this program in Mattresses and Upholstered Domestic Seating.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 18: Subsidies related to quality & improvement

Available information indicates that the GOC has introduced several grants and incentives related to quality and improvement in production.

For example, awards may be provided to encourage enterprises to upgrade the equipment and increase the production capacity as well as provide support to optimize production and sales process, and interconnect production and management data for enterprises; and improve efficiency.

The CBSA has previously countervailed this program in Mattresses and Upholstered Domestic Seating.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 19: Subsidies related to science and technology

Available information indicates that the GOC has introduced several grants and incentives related to science and technology.

The CBSA has previously countervailed this program in Mattresses and Upholstered Domestic Seating.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 20: Subsidies related to social security

Available information indicates that the GOC has introduced several grants and incentives related to social security.

The CBSA has previously countervailed this program in Mattresses and Upholstered Domestic Seating.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 21: Subsidies related to talent and skills

Available information indicates that the GOC has introduced several grants and incentives related to talent and skills.

The CBSA has previously countervailed this program in Mattresses and Upholstered Domestic Seating.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 22: Subsidies to provide business support

Available information indicates that the GOC has introduced several grants and incentives related to providing business support.

The CBSA has previously countervailed this program in Upholstered Domestic Seating.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 23: Subsidies for utilities for certain enterprises

Available information indicates that the GOC has introduced several grants and incentives related to utilities for specific enterprises classes.

The CBSA has previously countervailed this program in Upholstered Domestic Seating.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 24: Subsidies for the establishment of non-manufacturing facilities

Available information indicates that the GOC has introduced several grants and incentives related to assistance in establishing non-manufacturing facilities.

The CBSA has previously countervailed this program in Upholstered Domestic Seating.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 25: Special economic zones (SEZs) and other designated areas incentives

The complainant alleges that producers of wind towers established or located in the SEZ benefit from various incentives, including but not limited to free currency exchange and free licenses.

Wind tower producers may avail themselves of grants/awards for investments, construction, expansion, development, upgrading, technological transformation and modernizing operations.

Wind tower producers may also benefit from the following subsidies: rent, employment, recruitment and training, social security, unemployment insurance, storage, transportation and logistics; and refund or exemption of export duty.

Wind tower producers who establish or relocate headquarters in the SEZ, who achieve national and global brand recognition and rankings, who become publically listed on stock exchanges and who are involved in formulation of standards may also receive awards.

Wind tower producers may also receive tax refund for profits re-invested in SEZs and reimbursement for services fees charged for the commissioned withholding, collection and levying of tax payments.

In the investigation by the USDOC in Wind Towers from China, it appears that they countervailed the following programs:

1. Support Funds for Construction of Project Infrastructure Provided by Administration Commission of Lianyungang Economic and Technology Development Zone ("LETDZ") for the company's investments within the LETDZ
2. Award for Good Performance in Paying Taxes for top 20 income tax payers located in the LETDZ
3. Award of Taicang City to Support Public Listing of Enterprises for company's successful listing on the Shenzhen Stock Exchange; and
4. Award of Taicang City to Promote Development of Industrial Economy for the Three year period 2010 to 2012

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.2) of SIMA because it is limited to enterprises in certain geographic areas.

Program 26: Financial/loan interest subsidy

The complainant alleges that wind tower producers may benefit from subsidies in the form of grants to assist in the payment of loans. The program was established to support technology improvement and innovation projects and industrial transformation and upgrading projects. Similar programs were established for importations of encouraged products and technology.

The CBSA has previously countervailed this program in Cold Rolled Steel, Stainless Steel Sinks, Silicon Metal, Galvanized Steel Wire, PET Resin and Copper Tube, Carbon Steel and Alloy Steel Line Pipe and Unitized Wall Modules.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 27: Grants for international certification

This grant is provided to help enterprises to obtain international product certification.

The CBSA has previously countervailed this program in Photovoltaic Modules.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 28: Grants to enterprises that store goods in logistics enterprises located in bonded warehouse and customs custody warehouses

The program was established on June 20, 2020 in order to develop the logistics of companies.

The CBSA has previously countervailed this program in Container Chassis.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 29: Grants for safety production

The program provides "a grant for safety production" to exporters that are considered "an advanced enterprise.

The CBSA has previously countervailed this program in Copper Tube.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 50: Special funds related to the construction and maintenance of ports and harbours

Based on the information available to the CBSA, funding through this program is provided to companies engaged in the development and maintenance of ports and harbors.

The program aims to support businesses by granting special funds towards projects that will improve the capacity and efficiency of ports.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 51: Service center manufacturing strong city compensation fund

Based on the information available to the CBSA, funding through this program is provided to companies to support investments, improve infrastructure and development of the city. The local government aims to promote the construction of pioneering zones for green, low-carbon and high-quality developments. In turn, businesses benefit from improved processes and better services. The granting authority responsible for this program is allegedly the Industry and Information Bureau.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Category 3: Preferential tax programs

Program 30: Corporate income tax exemption and/or reduction in special economic zones (SEZs) and other designated areas

This program was established under the Rules for the Implementation of the Income Tax Law of the People's Republic of China for Enterprises with Foreign Investment and Foreign Enterprises, which came into effect on July 1, 1991. The program was allegedly established to absorb investment in special economic zones (SEZs) and designated areas to take the lead in their economic development. The granting authority responsible for this program is allegedly the State Administration of Taxation and the program is administered by local tax authorities.

Under this program, it is alleged that an eligible enterprises may receive a reduced corporate income tax rate of 15%.

The complainant has alleged that there are several known wind tower producers to benefit from their location in SEZs. The complaint alleges that additional preferential tax programs are available in the various SEZs.

The CBSA has previously countervailed this program in Aluminum Extrusions, Carbon Steel Welded Pipe, OCTG, Seamless Casing, Line Pipe, and Upholstered Domestic Seating.

The financial contribution by the Government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.2) of SIMA because it is limited to enterprises in certain geographic areas.

Program 31: Corporate income tax reduction for new high tech enterprises ("NHTE")

Under Article 28.2 of the Enterprise Income Tax Law in China, companies designated as high or new technology enterprises (HNTEs) are entitled to a reduced income tax rate of 10 percent instead of the normal national corporate tax rate of 25 percent. The granting authority responsible for this program is alleged to be the State Administration of Taxation and the program is administered by local tax authorities. In its notification of subsidy programs to the WTO, the GOC listed this program.

The CBSA has previously countervailed this program in Mattresses, FISC, Line Pipe, Certain Seamless Casing, OCTG, Pup Joints, Decorative Plywood, Upholstered Domestic Seating and Container Chassis.

The financial contribution by the Government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.2) of SIMA because it is limited to enterprises in certain industries.

Program 32: Municipal/local income or property tax reductions

This program covers reductions and exemptions in tax provided from Municipal/Local Income tax units.

The CBSA has previously countervailed this program in Mattresses and Upholstered Domestic Seating.

The financial contribution by the government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 33: Preferential tax policies for foreign-invested enterprises (FIEs)

Despite the implementation of the new Enterprise Income Tax Law (EITL) in 2008, which officially superseded the old FIE Tax Law, FIEs have likely continued to benefit from various incentives that were provided under the older FIE Tax Law. Specifically, Article 9 of the FIE Tax Law delegates to China's provincial and local governments the authority to provide exemptions and reductions of local income taxes for "productive" FIEs. Eligibility criteria vary by province and the relevant governmental authorities administer the application process.

The CBSA has previously countervailed this program in Mattresses, Pup Joints and Seamless Casing. Further, the GOC has listed this title in its notification of subsidy programs to the WTO.

The financial contribution by the government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.2) of SIMA because it is limited to foreign-invested enterprises.

Program 34: Preferential tax policies related to research and investment

Under this program based on the 2008 corporate tax law, high- or new-technology enterprises may deduct 50 percent of their total R&D expenses from their taxable income. Eligible expenses include design costs, expenses for materials and fuel consumed through R&D activities, wages, salaries, and benefits for personnel engaged in R&D activities, depreciation expenses on instruments and equipment, and many other expenses.

The CBSA has previously countervailed this program in Photovoltaic Modules and Laminates, Seamless Casing, OCTG, Pup Joints, Decorative Plywood, and Upholstered Domestic Seating. Further, the GOC has listed this title in its notification of subsidy programs to the WTO.

The financial contribution by the government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 35: Accelerated depreciation on fixed assets

The GOC listed this preferential tax treatment in their most recent notification of active subsidy programs to the WTO. This preferential tax treatment's objective is to speed up industrial restructuring.

The granting authorities for this subsidy include the Ministry of Finance and the State Administration of Taxation, granted under the following legislation:

1. Ministry of Finance Circular Cai Shui No. 75 of 2014
2. Ministry of Finance Circular Cai Shui No. 106 of 2015
3. Ministry of Finance Circular Cai Shui No. 54 of 2018
4. Ministry of Finance Circular Cai Shui No. 66 of 2019

The financial contribution by the government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 36: Corporate income tax reduction for newly profitable enterprises

The program provides "productive" enterprises that are scheduled to operate for more than 10 years a possible exemption from income tax for the first two years of profitability and income tax payments reduced by half the standard rate for the next three to five years.

The CBSA has previously countervailed this program in Cold Rolled Steel and Sucker Rods.

The financial contribution by the government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 37: Exemption from city maintenance and construction taxes and education fee surcharges for foreign invested enterprises (FIEs)

The program was established in order to support the construction of offices for new residents.

The CBSA has previously countervailed this program in Photovoltaic Modules, Rebar and PET Resin.

The financial contribution by the government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 38: Income tax deductions for enterprises that recruit retired soldiers

The program was established on January 1, 2019 in order to "encourage employment for retired soldiers.

The CBSA has previously countervailed this program in Container Chassis.

The financial contribution by the government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Category 4: Relief from duties and taxes

Program 39: Offsets to taxable income related to purchases of domestic machinery

Under this program, a tax credit up to 40% of the purchase price of domestic equipment may apply to the incremental increase in tax liability from the previous year. The legal bases of this program are the Provisional Measures on Enterprise Income Tax Credit for Investment in Domestically Produced Equipment for Technology Renovation Projects of July 1, 1999 and the Notice of the State Administration of Taxation on Stopping the Implementation of the Enterprise Income Tax Deduction and Exemption Policy of the Investments of an Enterprise in Purchasing Home-made Equipment, No. 52 [2008] of the State Administration of Taxation, effective January 1, 2008.

The CBSA has previously countervailed this program in Aluminum Extrusions, Photovoltaic Modules, Laminates, Seamless Casing, OCTG, and Pup Joints.

In a recent investigation by the USDOC into Mattresses from China, it appears that they countervailed this program as "VAT Rebates on Domestically Produced Equipment".

The financial contribution by the government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 40: Exemption or refund of tariff and import value-added tax (VAT) for imported technologies and equipment

The program was established to absorb investment in SEZs and encourage districts to take the lead in development. The granting authority responsible for this program is the General Administration of Customs and this program is administered by local customs authorities. Under this program, machinery and equipment, spare parts, raw and semi-processed materials, means of transportation and other capital goods necessary for production that are imported by enterprises in SEZs are exempted from import duties.

The CBSA has previously countervailed this program in Photovoltaic Modules, Laminates, Unitized Wall Modules, Seamless Casing, Pup Joints, and Line Pipe.

The financial contribution by the government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 41: Relief from duties and taxes on imported material and other manufacturing inputs

Under a duty drawback program, a subsidy may exist where the amount of duties and taxes relieved or refunded on inputs incorporated into exported goods is found to be in excess of the actual liability that existed on those imports.

The CBSA has previously countervailed this program in Photovoltaic Modules and Laminates, Seamless Casing, OCTG and Pup Joints.

The financial contribution by the Government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 42: Deed tax exemption for soes undergoing mergers or restructuring

The GOC imposes a deed tax on transfers of land and real estate. In the context of an ownership transfer by means of an asset sale, as opposed to a stock sale, a deed tax of three to five percent is levied on the amount of the purchase price, and the purchaser is responsible for paying the tax. The GOC's "Notice of the Ministry of Finance and the State Administration of Taxation on Several Deed Tax Policies Concerning Enterprise Reorganization and Restructuring," exempts this deed tax where the transfer of ownership occurs as part of the restructuring or merger of an SOE.

This financial contribution by the government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 49: Exemption/refund of sales tax on material inputs

Based on the information available to the CBSA, the program was established to exempt or refund eligible businesses on the sales tax portion of purchases of goods used to manufacture products.

This financial contribution by the government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Category 5: Good / Services provided by the government at less than fair market value

Program 43: Acquisition of government inputs/utilities at less than fair market value

The complainant alleges that exporters may avail themselves of input materials or utilities from state-owned enterprises (SOE) at below fair market value. They have identified hot-rolled steel plate and electricity as an input that may be provided to wind tower producers at less than fair market value.

The CBSA has previously countervailed this program in Mattresses, Seamless Casing, OCTG, Stainless Steel Sinks, Steel Piling Pipe, Large Line Pipe, Pup Joints, Upholstered Domestic Seating and Container Chassis.

This program may constitute a financial contribution pursuant to paragraph 2(1.6)(c) of SIMA as they involve the provision of goods or services, other than general governmental infrastructure. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 44: Provision of land for less than adequate remuneration by government

All land in China belongs to the government (i.e., either national or local governments, or through a "collective" at the township or village level), and government land agencies across China control the allocation of land through the granting of land-use rights.

The CBSA has previously countervailed this program in Line Pipe and Large Line Pipe.

This financial contribution by the government consists of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Category 6: Other potential countervailing programs

Program 45: Wind Energy Accommodative programs

The Wind Energy Accommodative programs were formed in part to benefit the energy sector in China including renewable energy through provision of tax incentives, feed-in tariff ("FIT") schemes and grants. FIT schemes are policies formulated to benefit renewable energy producers. Specifically, the government and a domestic renewable energy producer will consent to a long-term contract (i.e., 15 to 20 years) for the government to provide a guarantee to purchase renewable energy from the renewable energy producer at a specified above market rate.

These programs confer a financial contribution, as described at paragraphs 2(1.6)(a)-(c) of SIMA, by way of a direct transfer of funds from the government, exempting or deducting amounts otherwise owing or due to the government, or providing goods and services, or purchasing goods, such as wind towers at more than fair market value. The benefit to the recipient varies depending on the type of financial contribution received under this program. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 46: GOC Catalogue of Industries for Encouraging Foreign Investment (2020 Version)

In January 2021 the GOC implemented the "Catalogue of Industries for Encouraging Foreign Investment (2020 Version). Any industry mentioned in the catalogue will benefit from preferential treatment including tariff exemptions on imported "self-use" equipment, access to preferential land prices, and lower corporate income tax rates for foreign-invested enterprises in encouraged industries in the central, western, and northeastern regions of China. Given that power production and supplying industries, including wind energy, is an encouraged industry in the "national" catalogue, the complainant alleges that wind tower producers receive actionable benefits under this program.

These programs confer a financial contribution, as described at paragraphs 2(1.6)(a)-(c) of SIMA, by way of a direct transfer of funds from the government, exempting or deducting amounts otherwise owing or due to the government, or providing goods and services, or purchasing goods, such as wind towers at more than fair market value. The benefit to the recipient varies depending on the type of financial contribution received under this program. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 47: Renewable power subsidy and subsidy debt owed to wind tower producers

In November 2021, China's Finance Ministry set the 2022 renewable power subsidy at over USD $607 million, and approximately 41% of that amount (or USD $243 million) will be allocated to wind farms. In May 2022, Bloomberg reported that China will use most of a USD $63 billion government fund toward paying off subsidies owed to the renewable energy sector.

The complainant alleges that wind tower producers benefit from the renewable power subsidy and that the GOC has outstanding subsidy payments owed to these producers.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 48: Special Industrialization Fund for Wind Power Equipment

In August 2008, the GOC issued the Provisional Measures on the Administration of the Special Fund Supporting the Industrialization of Wind Power Equipment, Cai Jian No. 476 (2008). The provisional measures established a "Special Industrialization Fund" which distributes award grants to domestically controlled or wholly owned enterprises that manufacture wind power machines and equipment within China.

The complainant alleges that wind tower producers still benefit from this subsidy program.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.