Conclusion of normal value review: Upholstered Domestic Seating (UDS 2024 UP2)

Representations

The CBSA received case briefs submitted on behalf of the exporter, Wayfair^{Footnote 10}. In their representations, counsel for Wayfair submitted that Wayfair has cooperated in the review and responded to all of the CBSA’s RFIs and Supplemental RFIs (SRFI).

Counsel also stated that normal values should be calculated based on section 15 of SIMA where possible. Where section 19 of SIMA is used, counsel submitted that the CBSA should use the production costs of the producers, that the selling, general, and administrative expenses should only include certain expenses, and that its domestic sales contain sufficient profitable sales to determine an amount for profit.

Lastly, counsel stated that the producers’ subsidies are insignificant, and that a pass-through analysis would be required where there is a sale between an arm’s length party such as the producer and Wayfair.

CBSA response

Due consideration has been given to the topics raised in the submissions on a case-by-case basis. Additional information is contained in the confidential notice of conclusion provided to the various parties involved in the sale and/or production of the goods exported to Canada.

The CBSA did not receive any reply submissions from interested parties with respect to this review.

Wayfair

Wayfair is a vendor and exporter of subject goods located in the United States. Wayfair purchased subject goods from intermediary vendors in the United States, which were produced in China or Vietnam. Wayfair sold and shipped the subject goods to retail customers in Canada.

With regards to dumping, the CBSA determined Wayfair to be the exporter of the subject goods, as it acted as the principal in the transaction, is located in the country of export, the United States, and was the owner of the goods at the point in time when the goods were sent to Canada.

On April 29, 2024, the CBSA received a response to the dumping RFI from Wayfair, which was determined to be deficient. The CBSA sent Wayfair deficiency SRFI #1 on June 7, 2024, with a due date of June 24, 2024. Wayfair responded to deficiency SRFI #1, which was placed on the record on June 26, 2024. However, the information submitted in this response was incomplete. Wayfair provided additional information in response to deficiency SRFI #1, which was placed on the record on July 18, 2024, almost a month after the original deadline of June 24, 2024.

However, the submitted information still did not address some of the key requirements of the original RFI. In response, the CBSA sent Wayfair deficiency SRFI #2 on July 26, 2024, with a due date of August 5, 2024. Wayfair responded to deficiency SRFI #2 and the response was placed on the record on August 9, 2024. This response was incomplete and was further revised by Wayfair in a submission that was placed on the record on August 14, 2024.

Although the response remained deficient, given the close of the record on August 30, 2024, the CBSA decided to proceed with verification questions to give the company one final opportunity to address the deficiencies and substantiate the information provided. These verification questions were included in the deficiency SRFI #3 sent to Wayfair on August 15, 2024. However, deficiencies and inconsistencies were still found in the response to deficiency SRFI #3, which was placed on the record on September 3, 2024.

The CBSA also received responses from Wayfair’s suppliers and producers of subject goods. As it relates to the subject goods exported by Wayfair, the CBSA also determined the responses from suppliers and/or producers to be deficient and/or late, and were not considered for the purposes of establishing normal values for Wayfair.

As the CBSA did not have sufficient information to determine normal values for Wayfair under section 15 or 19 of SIMA. As such, normal values and/or export prices for subject goods exported to Canada by Wayfair will be determined pursuant to a ministerial specification under subsection 29(1) of SIMA. Refer to the All Other Exporters section for further information.

With regards to subsidy, SIMA defines country of export as the country in which the subsidy originated. Therefore, the exporter for subsidy purposes is located in China or Vietnam. As such, the amounts of subsidy for subject goods exported to Canada will be based on the extent to which the exporter for subsidy purposes in China or Vietnam receives an amount of subsidy. Where the exporter does not have a specific amount of subsidy, imports will be subject to the all others countervailing rate for China or Vietnam.

Shanghai Chouqin

Shanghai Chouqin is a producer and exporter of subject goods, located in Shanghai, China. During the POI, Shanghai Chouqin operated multiple sales channels for subject goods.

For direct shipments to Canada, Shanghai Chouqin was determined to be the exporter, as it acted as the principal in the transaction, is located in the country of export, China, and was the owner of the goods at the point in time when the goods were sent to Canada.

The following information in this section is only applicable to Shanghai Chouqin’s direct sales to Canada.

Shanghai Chouqin did not have any domestic sales of like goods during the POI. As a result, it was not possible to determine normal values pursuant to section 15 of SIMA.

Shanghai Chouqin provided sufficient cost of production and administrative, selling and all other costs to determine normal values pursuant to paragraph 19(b) of SIMA. However, the CBSA was unable to determine an amount for profits under paragraph 11(1)(b) of the SIMR.

As a result, normal values were determined pursuant to section 29 of SIMA using a method similar to that of paragraph 19(b), based on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits (31.92%) determined by ministerial specification.

Specific normal values for future shipments of subject goods have been determined for Shanghai Chouqin. These normal values are only applicable to subject goods directly sold by Shanghai Chouqin to Canada, and are effective today, October 22, 2024.

The export price of subject goods sold to Canada during the POI was determined pursuant to section 24 of SIMA, based on the exporter’s selling price less all costs, charges and expenses resulting from the exportation of the goods.

Shanghai Chouqin reported an amount of a subsidy benefit received during the POI. The CBSA found no other evidence of subsidies for Shanghai Chouqin and determined the amount of subsidy to be insignificant.

The normal values and amounts of subsidy determined as a result of this review 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 normal value review, regardless of the date that the requests were received. The normal values and amounts of subsidy determined as a result of this review may be applied retroactively where the conditions described below are met.

All other exporters

For all other participating exporters, the CBSA has determined that the information provided in the course of the review was insufficient and/or unreliable for the purposes of determining normal values and amounts of subsidy. As such, for goods originating in or exported from China and Vietnam, normal values will be determined in accordance with the ministerial specification based on the export price of the goods advanced by 188.0% and 179.5%, respectively. Additionally, for goods originating in or exported from China and Vietnam, the amount of subsidy will be equal to 1,390.65 CNY and 1,914,726.79 VND per piece, respectively, in accordance with the ministerial specification.