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Conclusion of export price review: Small power transformers (SPT 2022 UP1)


The Canada Border Services Agency (CBSA) has today concluded an export price review to update all export prices of certain small power transformers exported from South Korea by Hyundai Electric & Energy Systems Co., Ltd. (Hyundai Energy) and imported into Canada by Hyundai Electric America Corporation (HE America).

The review is part of the CBSA’s enforcement of the Canadian International Trade Tribunal’s (CITT) finding of injury issued on December 24, 2021, respecting the dumping of small power transformers from the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei) and South Korea, in accordance with the Special Import Measures Act (SIMA).

The product definition and the applicable tariff classification numbers of the goods subject to the CITT’s finding are contained in Appendix 1 (subject goods).

Period of investigation

The period of investigation (POI) for the export price review was from January 1, 2021 to December 31, 2021.

Export price review process

At the initiation of this export price review, the CBSA sent Requests for Information (RFIs) to Hyundai Energy and HE America to solicit information on the selling prices of subject goods. The information was requested for purposes of updating export prices applicable to subject goods exported from South Korea by Hyundai Energy and imported into Canada by HE America.

As part of the export price review, representationsFootnote 1, case argumentsFootnote 2 and reply submissionsFootnote 3 were submitted by counsel on behalf of the Canadian producer Northern Transformer Corporation and PTI Transformers. Counsel on behalf of Hyundai Energy and HE America also submitted case argumentsFootnote 4 and reply submissionsFootnote 5.

The issues raised by parties mainly concerned the reliability of the export price under section 24, calculation methodology under paragraph 25(1)(d), as well as the validity of a reliability test.

In relation to the reliability of the export price and the validity of the reliability test, the CBSA’s position is that the reliability test followed by the CBSA in assessing the reliability of the export prices is fully compliant with Canada’s international obligations and is consistent with SIMA. Further, the reliability test is a matter of long-standing CBSA policy and practices.

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 export prices calculations. When calculating sections 24 and 25 export prices for HE America, deductions for non-subject services and other items were made in accordance with section 24 and paragraph 25(1)(d) of SIMA. Ultimately, export prices were found to be unreliable. Additional information on the calculation of export prices is provided to HE America in the confidential conclusion notice issued to the importer.

Note that issues raised by all parties were given due consideration by the CBSA prior to the conclusion of this review.

Export prices for future shipments

Hyundai Energy is located in South Korea and is a manufacturer and exporter of various transformers and related electricity distribution equipment, including small power transformers. The company head office is located in Seoul and its facility is in Ulsan. Before this review, HE America, a new non-resident importerFootnote 6 located in Atlanta, United States, had not participated in small power transformers’ initial Investigation. HE America is a wholly-owned subsidiary of Hyundai Energy importing large power transformers in Canada.

During the course of the review, Hyundai Energy provided responses to the CBSA’s Dumping RFI as well as one Supplemental RFI (SRFI). Likewise, HE America provided responses to the CBSA’s Importer RFI and two SRFIs. Based on the information provided, the CBSA was able to calculate the appropriate deductions accordingly to section 24 or section 25 of SIMA and conduct a reliability test of the export prices from Hyundai Energy to HE America. As export sales were also made on credit terms other than cash discounts, prices determined under section 24 and paragraph 25(1)(d) were also adjusted in accordance with subsection 27(2) of SIMA.

The test revealed that the export prices determined in accordance with section 24 were unreliable and, therefore, the export prices for subject goods exported to Canada by Hyundai Energy through HE America, for all future sales of subject goods, will be determined in accordance with paragraph 25(1)(d) of SIMA.

As such, the CBSA established specific deductions to determine HE America’s export prices based on HE America’s resale prices of the imported goods to unrelated purchasers in Canada, less deductions for all additional costs, charges and expenses incurred in preparing, shipping and exporting the goods to Canada, all costs, charges and expenses resulting from the imported goods, or arising from their shipment, that were incurred in reselling the goods in Canada (including GS&A, duties and taxes) or associated with the assembly and/or installation of the goods in Canada, and an amount representative of the industry profit pursuant paragraph 22(a) of the Special Import Measures Regulations (SIMR). These specific export price adjustments are effective for goods released on or after April 11, 2023.

The export price deductions determined as a result of this review for HE America may be applied to any requests for re-determination of importations of subject goods that have not been processed prior to the conclusion of this review, regardless of the date that the requests were received. The export price parameters determined as a result of this review may be applied retroactively where the conditions described below are met.

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. If there are changes to the exporter’s domestic prices, costs, market conditions or terms of sale associated with the production and sales of the goods, and where the CBSA considers such changes to be significant, the normal values and export prices will be updated to reflect current conditions. All parties are cautioned that where there are increases in domestic prices, and/or costs as noted above, the export price 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. If 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 will be applied where such action is warranted.

Importer responsibility

Importers are reminded that it is their responsibility to calculate and declare their anti-dumping 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 SIMA measures and be provided with sufficient information necessary to clear the shipments. To determine their anti-dumping liability, importers should contact the exporters to obtain the applicable normal values. 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.

The Customs Act (Act) applies, with any modifications that the circumstances require, with respect to the accounting and payment of anti-dumping 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. For more information on how to file a request for re determination please refer to the Guide for appealing a duty assessment.

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Appendix 1: Product definition

Liquid dielectric transformers having a top power handling capacity equal to or greater than 3,000 kilovolt amperes (kVA) (3 megavolt amperes (MVA)), and less than 60,000 kilovolt amperes (kVA) (60 megavolt amperes (MVA)), and having a nominal high voltage rating of greater than 34.5 kilovolts (kV), whether assembled or unassembled, complete or incomplete, originating in/or exported from the Republic of Austria, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), and the Republic of Korea.

Additional product information

For greater clarity, the subject goods include but are not limited to transformers manufactured to meet CSA standard C88 16, “Power transformers and reactors,” and superseding or equivalent standards, and similar proprietary specifications and standards that may be established by a customer for power transformers whether or not expressly based on or incorporating CSA C88 16.

Incomplete small power transformers (SPT) are subassemblies consisting of the active part and any other parts attached to, imported with, or invoiced with the active parts of the SPT. The “active part” of the SPT consists of one or more of the following when attached to or otherwise assembled with one another: the steel core or shell, the windings, electrical insulation between the windings, and/or the mechanical frame for an SPT.

The product definition encompasses all SPT regardless of name designation, including but not limited to: Generation Station/Generator Step Up Transformers, Step Down Transformers, Auto Transformers, Interconnection Transformers, Voltage Regulator Transformers, High voltage Direct Current (“HVDC”) Transformers, and Mobile Transformers.

The subject goods do not include reactors, as reactors are not like SPT. Reactors are used at the terminal end of a transmission line to neutralize the reactive power generated by the line capacitance. Rather than transform voltage from one level to another, as SPT do, reactors reduce voltage drop by consuming reactive power. Reactors, therefore, have very different end uses than SPT. Reactors are also produced differently than SPT. Reactors contain, in general, only one winding and are based on a completely different core concept than SPT. SPT, on the other hand, typically have more than one winding.

For greater clarity, the subject goods also do not include fully assembled mobile substations but do include SPT that are designed to be incorporated into mobile substations.

Tariff classification numbers

Since 2019, imports into Canada of the subject goods are normally classified under the following tariff classification numbers:

  1. 8504.22.00.20
  2. 8504.23.00.10

Incomplete SPT and parts and components thereof may also be imported under the following tariff classification numbers:

  1. 8504.90.90.10
  2. 8504.90.90.82
  3. 8504.90.90.90

The listing of tariff numbers is for convenience of reference only. The tariff numbers may also include non subject goods. Also, subject goods may fall under additional tariff numbers not listed. Refer to the product definition for authoritative details regarding the subject goods.

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