LP2 2022 RI: Line pipe 2
Notice of conclusion of re-investigation

Period of investigation

The Period of Investigation (POI) and the Profitability Analysis Period (PAP) for the re investigation was from July 1, 2021 to June 30, 2022.

Re-investigation process

At the initiation of the re-investigation, the CBSA sent a Request for Information (RFI) to all known importers, exporters, producers and vendors to solicit information on the costs and selling prices of subject goods and like goods. The information was requested for purposes of updating the normal values and export prices for subject goods imported into Canada. On-site verifications were conducted at the premises of four exporters located in South Korea.

As part of the re-investigation, case briefs and reply submissions were provided by counsel representing the complainants and responding exporters. Details of the representations are provided in Appendix 1. Details pertaining to the information submitted by the exporters in response to the RFIs as well as the results of the CBSA’s re-investigation are provided below.

Specific normal values, export prices and amounts of subsidy for future shipments of line pipe have been determined for exporters that submitted a complete response to the Dumping RFI, Supplemental RFIs, and for whom the verification was considered reliable.

Normal values and export prices

Importer responsibility

Importers are reminded that it is their responsibility to calculate and declare their anti-dumping and countervailing duty liability. If importers are using the services of a customs broker to clear importations, the brokerage firm should be advised that the goods are subject to anti-dumping and countervailing measures and be provided with sufficient information necessary to clear the shipments. To determine their liability for anti-dumping and countervailing duty, importers should contact the exporters to obtain the applicable normal values and amounts of subsidy. For further information on this matter, refer to Memorandum D14-1-2, Disclosure of normal values, export prices, and amounts of subsidy established under the Special Import Measures Act to importers.

The Customs Act applies, with any modifications that the circumstances require, with respect to the accounting and payment of anti-dumping and countervailing duties. As such, failure to pay the duties within the prescribed time will result in the application of the interest provisions of the Act.

Should the importer disagree with the determination made on any importation of goods, a request for re-determination may be filed with the Director General, Trade and Anti-dumping Programs Directorate, 11th Floor, 100 Metcalfe St., Ottawa, Ontario, K1A 0L8. Such a request must be received within 90 days from the making of the determination in the form and manner outlined in Memorandum D14-1-3, Procedures for making a request for a re-determination or an appeal of goods under the Special Import Measures Act.

Exporter responsibility

Please note that exporters with normal values are required to promptly inform the CBSA in writing of changes to domestic prices, costs, market conditions or terms of sale associated with the production and sales of the goods. All parties are cautioned that where there are increases in domestic prices, and/or costs as noted above, the export price for sales to Canada should be increased accordingly to ensure that any sale made to Canada is not only above the normal value but at or above selling prices and full costs and profit of the goods in the exporter’s domestic market. Where exporters do not properly notify the CBSA of any such changes, do not adjust export prices accordingly, or do not provide the information required to make any necessary adjustments to normal values and export prices, retroactive assessments of anti-dumping or countervailing duties may be warranted.

Contact us

• Telephone:
• Sean Robertson: 343-553-1584
• Jordan Harris: 343-573-3003

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

Appendix 1: Representations

Case arguments were received on behalf of SeAH Steel Corporation and SeAH Steel America, Inc. (SeAH)^{Footnote 1}, Hyundai Steel Company (Hyundai Steel)^{Footnote 2}, Evraz Inc. NA Canada (Evraz)^{Footnote 3}, Nexteel Co., Ltd. (NEXTEEL)^{Footnote 4}, Tenaris Global Services Inc. (Tenaris)^{Footnote 5}, and Husteel Co., Ltd. and Husteel Canada Co., Ltd. (Husteel)^{Footnote 6}.

The CBSA received reply submissions from counsel on behalf of SeAH^{Footnote 7}, Tenaris^{Footnote 8}, Hyundai Steel^{Footnote 9}, Evraz^{Footnote 10}, NEXTEEL^{Footnote 11}, and Husteel^{Footnote 12}.

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

Retroactive duty assessments

Case briefs

Counsel for Evraz as well as Tenaris reiterated that in order to ensure that normal values accurately reflect changing market conditions, exporters with normal values are required to inform the CBSA of changes to domestic prices, costs, market conditions or terms of sale associated with the production and sale of line pipe. Where an exporter fails to properly notify the CBSA of such changes, fails to properly adjust their export prices, or fails to provide the CBSA with the information needed to make the relevant adjustments to normal values, the CBSA is authorized to impose retroactive anti-dumping duties on the subject goods.

It is alleged that the Korean exporters have not adjusted the selling prices of subject goods sold to Canada to reflect increases in domestic selling prices and costs, as required by CBSA and therefore, the CBSA should assess retroactive duties for all Korean export sales to Canada that show ongoing dumping. Further, counsel requests that in conducting any retroactive analysis, the CBSA may assess duties for the POI as well as the period after the POI and up to the conclusion of the re-investigation, which in this case is December 23, 2022.

Furthermore, counsel for both Evraz and Tenaris submit that the CBSA should revise the ministerial specification rates that resulted from the original investigation so that they are more effective at counteracting any ongoing dumping of subject goods.

Reply submissions

Counsel for the exporters generally rebutted the allegations that retroactive duty assessments are warranted.

Counsel for SeAH submit that “there is no basis in fact or law to impose retroactive duties because the factors set out in Memorandum D14-1-8, Re-investigation policy and normal value review are not satisfied”. Further, they submit that counsel for the complainants “routinely ask the CBSA to impose retroactive assessments without proper justification.”

Counsel for Husteel argued that there is insufficient evidence on the record to support the imposition of retroactive duties based upon the factors described in CBSA policy, further stating that Husteel’s export price of subject goods were at or above normal values and its cost of production. They also submit that the CBSA does not have legal authority to re-determine any company specific margins of dumping from the ministerial specifications in a re-investigation.

CBSA response

Upon completion of the re-investigation, the CBSA will be conducting an analysis of subject imports from exporters of line pipe during the POI, to determine whether retroactive assessments are warranted. The analysis will rely on information provided via RFI and Supplemental RFI responses received, representations submitted by parties, on-site verifications and any other available relevant information.

Completeness of information provided and the calculation of normal values and export prices

Case briefs

Counsel for Evraz as well as Tenaris discuss various concerns pertaining to the responses to the RFIs and Supplemental RFIs provided by exporters, as well as related importers and input suppliers where applicable. Issues raised include: acquisition prices of raw materials, cost of production reporting methodologies, GS&A calculations, completeness and accuracy of line pipe sales databases, issues pertaining to what constitutes the ordinary course of trade in South Korea, selection of date of sale, relevance of certain product characteristics used to issue normal values, and information needed for purposes of establishing an amount for profit pursuant to subsection 11(1)(b) of SIMR, as well as the application of profit under Section 25(1)(c)(ii) of SIMA. Counsel submits that as a result of issues raised, the CBSA should determine normal values pursuant to section 29 of SIMA where appropriate to do so.

There were a number of exporter specific issues that were raised by counsel for the complainants as well. In order to respect the confidentiality designations made by interested parties, the CBSA is limited in the information that can be divulged in response to arguments made concerning certain topics.

Reply submissions

Counsel for the participating exporters generally submit that they have been fully cooperative in the re-investigation, have provided the CBSA with complete responses, and gone through full on-site verifications in South Korea. They submit that the CBSA is fully capable of determining normal values in accordance with section 15 or 19 of SIMA. They submit that evidence on the record supports using their costs as accurate, reliable and fully verified by the CBSA and argue that counsel for the complainant demonstrate a misunderstanding of the costing systems and that there is no reason to justify calculating normal values pursuant to a Ministerial Specification. It is also argued that counsel for the complainants have failed to consider the fulsome list of verification exhibits when presenting their case arguments, information which supports that the exporters have been fully cooperative in this re-investigation and provided all information necessary to calculate normal values and export prices.

CBSA’s response

The CBSA determined that the information provided by SeAH, Nexteel, Husteel and Hyundai Steel in their RFI, SFRI responses and on-site verification responses was sufficient for purposes of determining normal values and export prices in this re-investigation. Further, normal values and export prices calculated by the CBSA in this review were determined in accordance with both SIMA and the SIMR.

Due consideration has been given to submissions on the topics raised in case briefs on a case by case basis and appropriate adjustments were made, as applicable, in accordance with SIMA and SIMR. Additional information on the calculation of normal values is provided to exporters in the confidential exporter conclusion notices.

Raw material inputs purchased from related suppliers

Case briefs

Counsel for Evraz cite the definition of related parties in SIMA as follows:

They go on to argue that raw material inputs purchased from related parties should be adjusted in accordance with subsection 11.2(1)(c) of SIMR, using published prices provided by counsel for the complainants, rather than comparing purchase prices of the inputs to the total cost of production from the raw material producers.

Reply submissions

Counsel for the producers/exporters who are implicated argue that although they do not contest that they purchase raw materials from input suppliers who meet the low threshold of related parties for SIMA purposes referenced by Evraz, the relationships between them and the input suppliers are very clearly arm’s length. They assert that the related input suppliers and the producers/exporters have no influence on each other’s business activities and go on to state that the companies typically operate as competitors, so should not be considered to be related in reality.

CBSA response

During the course of this re investigation, information required under paragraphs 11.2(1)(a) and 11.2(1)(b) were provided by responding exporters and their respective associated suppliers, and such information is available on the administrative record.

In order to respect the confidentiality designations made by interested parties, the CBSA is limited in the information that can be divulged in response to arguments made concerning certain “associated persons”. Nevertheless, the CBSA finds it relevant to raise this as a factor that was subject to several representations from various parties. As such, due consideration has been given to submissions on this topic. Further, the CBSA confirms that normal values have been calculated in accordance with both SIMA and SIMR. Additional information on the calculation of normal values, including the applicability of subsection 11.2(1) of SIMR, is provided to any implicated exporters in their confidential exporter conclusion notice.

Paragraph 19(b) normal values for products not exported to Canada in the POI

Case briefs

Counsel for numerous exporters have requested that normal values be issued for not just goods sold to Canada during the POI, but also for goods sold domestically or to other export markets during the POI. Counsel went on to refer to the following question that was sent to exporters in supplemental RFIs and further discussed during on-site verifications as follows:

Reply submissions

Counsel for Evraz submits that the CBSA should not issue normal values based on the cost of production of goods sold to a third country. They assert that Section 19 of SIMA states that where the normal value of any goods cannot be determined by reason that there was not such a number of sales of like goods that comply with all terms and conditions of sections 15 and 16 of SIMA, the legislation does not permit cost of production data for sales to third countries to be used to calculate normal values.

Counsel for the exporters generally reiterated their original position in the case briefs. More specifically, counsel for NEXTEEL submits that since it had no sales to Canada of subject goods during the POI, it followed CBSA instructions and provided detailed costs of production for sales made domestically and to other export markets. NEXTEEL submits that normal values for all line pipe models it wishes to export to Canada should be determined based on the information it has submitted.

CBSA response

A re-investigation conducted by the CBSA is, in part, meant to provide an opportunity for exporters to obtain normal values for subject goods that are being imported or will be imported into Canada in the foreseeable future. Therefore, as part of a re-investigation, an exporter may request normal values for models not exported to Canada during the POI. Provided that the exporter has furnished sufficient information relating to the costs and/or selling prices of those particular products or models and that those goods were produced and/or sold during the POI, it is common practice for the CBSA to establish normal values for those goods regardless of whether or not they were exported to Canada during the POI.

Identity of the exporter for SIMA purposes

Case briefs

Counsel for Evraz argue that Hyundai Steel should not be considered the exporter for SIMA purposes. They allege that Hyundai Steel was not the owner of the subject goods at the time the goods were exported to Canada, state that the vendor is located in the country of export and argue that the vendor is the principal to the export transactions.

Reply submissions

In response to the comments provided by counsel for the complainant, counsel for Hyundai Steel reiterated its arguments from its own case brief, stating that evidence on the record supports that Hyundai Steel is the exporter for SIMA purposes. It is submitted that the vendor is a small trading company that only takes ownership of the goods after they were exported from South Korea.

Counsel further submits that there is no grounds to strip Hyundai Steel of its SIMA exporter designation in this re-investigation as the same issue was previously considered by the CBSA during the original investigation. Counsel for Hyundai Steel summarizes by stating that they are the exporter for SIMA purposes as they are located in South Korea, are principal to the transaction and own the goods when they are sent to Canada.

CBSA response

The CBSA considered all information on the record pertaining to whether Hyundai Steel is the exporter for SIMA purposes. After reviewing the information on the record, including RFI, Supplemental RFI and on-site verification questions, the CBSA is of the view that, like in the previous investigation, Hyundai Steel is the exporter for SIMA purposes.