Annual Report March 31, 2015- Chapter III

Process

Under SIMA, the CBSA may impose anti-dumping and countervailing duties if Canadian producers are injured by imports of goods into Canada:

• that have been sold at prices lower than prices in the home market or at prices lower than the cost of production (dumping), or
• that have benefited from certain types of government grants or other assistance (subsidizing).

The determination of dumping and subsidizing is the responsibility of the CBSA. The Tribunal determines whether such dumping or subsidizing has caused or is threatening to cause material injury to a domestic industry or has caused material retardation to the establishment of a domestic industry.

Preliminary Injury Inquiries

A Canadian producer or an association of Canadian producers begins the process of seeking relief from alleged injurious dumping or subsidizing by making a complaint to the CBSA. If the CBSA initiates a dumping or subsidizing investigation, the Tribunal initiates a preliminary injury inquiry under subsection 34(2) of SIMA. The Tribunal seeks to make all interested parties aware of the inquiry. It issues a notice of commencement of preliminary injury inquiry that is published in the Canada Gazette and notice of the commencement of the preliminary injury inquiry is provided to all known interested parties.

In a preliminary injury inquiry, the Tribunal determines whether the evidence discloses a reasonable indication that the dumping or subsidizing has caused injury or retardation, or is threatening to cause injury. The primary evidence is the information received from the CBSA and submissions from parties. The Tribunal seeks the views of parties on what are the like goods and which Canadian producers comprise the domestic industry. In most cases, it does not issue questionnaires or hold a public hearing at the preliminary injury inquiry stage. The Tribunal completes its inquiry and renders its determination within 60 days.

If the Tribunal finds that there is a reasonable indication that the dumping or subsidizing has caused injury or retardation, or is threatening to cause injury, it makes a determination to that effect, and the CBSA continues the dumping or subsidizing investigation. If there is no reasonable indication that the dumping or subsidizing has caused injury or retardation, or is threatening to cause injury, the Tribunal terminates the inquiry, and the CBSA terminates the dumping or subsidizing investigation. The Tribunal issues reasons for its decision no later than 15 days after its determination.

Preliminary Injury Inquiry Activities

Preliminary Injury Inquiries Completed in Fiscal Year and in Progress at the End of the Fiscal Year

As illustrated in the above table, the Tribunal completed three preliminary injury inquiries in the fiscal year. There were no preliminary injury inquiries in progress at the end of the fiscal year.

Final Injury Inquiries

If the CBSA makes a preliminary determination of dumping or subsidizing, the Tribunal commences a final injury inquiry pursuant to section 42 of SIMA. The CBSA may levy provisional duties on imports from the date of the preliminary determination. The CBSA continues its investigation until it makes a final determination of dumping or subsidizing.

As in a preliminary injury inquiry, the Tribunal seeks to make all interested parties aware of its inquiry. It issues a notice of commencement of inquiry that is published in the Canada Gazette and notice of the commencement of the injury inquiry is forwarded to all known interested parties.

In conducting final injury inquiries, the Tribunal requests information from interested parties, receives representations and holds public hearings. Under the direction of the Tribunal, ATSSC staff carries out extensive research for each inquiry. Questionnaires are sent to Canadian producers, importers, purchasers, foreign producers and exporters. Primarily on the basis of questionnaire responses, ATSSC staff prepares an investigation report that focuses on the factors that the Tribunal must consider in arriving at its decision on injury or retardation or threat of injury to a domestic industry. The report becomes part of the case record and is made available to counsel and parties.

Parties participating in the proceedings may present their own cases or may be represented by counsel. Confidential or business-sensitive information is protected in accordance with provisions of the CITT Act.

The Special Import Measures Regulations prescribe factors that the Tribunal must consider in its determination of whether the dumping or subsidizing of goods has caused injury or retardation or is threatening to cause injury to a domestic industry. These factors include, among others, the volume of dumped or subsidized goods, the effects of the dumped or subsidized goods on prices and the impact of the dumped or subsidized goods on domestic production, sales, market share, profits, employment and utilization of domestic production capacity.

The Tribunal holds a public hearing about 90 days after the commencement of the inquiry, i.e. after the CBSA has made a final determination of dumping or subsidizing. At the public hearing, Canadian producers attempt to persuade the Tribunal that the dumping or subsidizing of goods has caused injury or retardation or is threatening to cause injury to a domestic industry. Importers, foreign producers and exporters may challenge the Canadian producers’ case. After cross-examination by parties and questioning by the Tribunal, each side has an opportunity to respond to the other’s case and to summarize its own. In some inquiries, the Tribunal calls witnesses who are knowledgeable of the industry and market in question. Parties may also seek the exclusion of certain goods from the scope of a Tribunal finding.

The Tribunal must issue its finding within 120 days from the date of the preliminary determination of dumping or subsidizing issued by the CBSA. It has an additional 15 days to issue reasons supporting the finding. A Tribunal finding of injury or retardation or threat of injury to a domestic industry is required for the imposition of anti-dumping or countervailing duties by the CBSA.

Final Injury Inquiry Activities

Final Injury Inquiries Completed in the Fiscal Year

As illustrated in the above table, the Tribunal completed two final injury inquiries in the fiscal year. The completed inquiries concerned hot-rolled carbon steel plate and concrete reinforcing bar. The following summaries were prepared for general information purposes only.

NQ-2013-005—Hot-rolled Carbon Steel Plate

This inquiry concerned dumped hot-rolled carbon steel plate and high-strength low-alloy steel plate (hot-rolled carbon steel plate) originating in or exported from Brazil, Chinese Taipei, Denmark, Indonesia, Italy, Japan and Korea. During the inquiry, the CBSA terminated its dumping investigation in respect of the subject goods originating in or exported from Chinese Taipei.

There were 19 participants to the inquiry. During a five-day hearing, 14 witnesses appeared before the Tribunal. The official record contained 12,506 pages.

The Tribunal observed that, in absolute terms, the apparent volume of imports of the subject goods almost tripled between 2010 and 2012, before declining substantially in the 2013 interim period (January to September 2013). However, within this aggregate picture, imports of the subject goods by the individual subject countries did not move in unison but, instead, followed different trajectories over the period of inquiry. The Tribunal found that the prices of the subject goods had not significantly undercut those of sales of the like goods during the period of inquiry, nor was the Tribunal able to conclude from the evidence on the record that the subject goods had caused significant price depression. The evidence did indicate the occurrence of some, but not significant, price suppression in 2012.

The Tribunal found that production declined only to a limited degree. Moreover, the dumping of the subject goods had not had a significant negative impact on actual or potential domestic sales volumes. The Tribunal found that the dumped goods caused a decline in the domestic industry’s market share, but only to a limited degree. With respect to profitability, the Tribunal was of the view that there were a number of factors that contributed to the domestic industry’s poor financial performance during the period of inquiry and that, while the subject goods may have had some impact on profitability and productivity, their impact was limited. The Tribunal did not find that imports of the subject goods had had an adverse impact on the domestic industry in terms of employment and wages. The Tribunal concluded that the dumping of the subject goods was not, in and of itself, a cause of material injury.

However, the Tribunal also noted the chronic global overcapacity situation with regard to hot-rolled carbon steel plate, the export capacity of the subject countries and their ability to ramp up their exports of the subject goods to Canada, the fact that plate tends to fetch a higher price on the Canadian market than elsewhere, the projected growth in Canada in certain sectors of the economy that rely on plate, the incentive of producers to maintain a high level of production and capacity utilization in order to achieve economies of scale and reduce average costs, current steel price increases stalling, and the prospect of longer-term recovery of the domestic plate market being more modest than previously forecast. Given these market conditions, the Tribunal was of the view that Canada was likely to be an attractive market for exporters and that there was a clearly foreseen and imminent threat of material injury to the domestic industry.

NQ-2014-001—Concrete Reinforcing Bar

This inquiry concerned dumped and subsidized concrete reinforcing bar originating in or exported from China, Korea and Turkey (the subject rebar).

There were 10 participants to the inquiry. During a four-day hearing, 15 witnesses appeared before the Tribunal. The official record contained 11,025 pages.

The Tribunal observed that, despite decreases in interim 2014, there was a significant increase in the volume of imports of the subject rebar over the period of inquiry, both in terms of absolute volume and relative to domestic production and consumption.

At first glance the data revealed that price undercutting appeared to be present at the aggregate level throughout the period of inquiry. However, taking into account a domestic price premium component, and further adjusting the prices to account for costs related to inland shipping, the severity or extent of the actual price undercutting appeared to be significantly reduced. When applied to both the aggregate prices and the injury allegations themselves, the Tribunal did not conclusively find that the subject rebar undercut domestic prices significantly during the period of inquiry.

Moreover, while the Tribunal recognized that the subject rebar was generally lower-priced, it could not come to the conclusion that significant price depression occurred throughout the period of inquiry because of the lack of correlation in comparative pricing trends. The Tribunal did however note some indication of price depression towards the end of the period of inquiry. In relation to price suppression, the Tribunal observed that there was nothing to suggest that price suppression occurred throughout the period of inquiry; there was however limited evidence indicating a trend towards price suppression at the end of the period of inquiry.

The Tribunal observed that the domestic industry’s sales did not decline over the period of inquiry, despite a significant increase in sales of the subject rebar. The domestic industry’s market share decreased slightly from 2011 to 2012 and then increased in 2013, yet remained below the share that it held in 2011. For the interim periods, the domestic industry increased its market share in 2014 compared to 2013, but was unable to recover to the level of market share that it held in 2011.

The Tribunal also observed that the domestic industry’s relatively strong financial performance, even in the year with the largest increase in the volumes of dumped and subsidized goods, indicated that, to the extent that the subject rebar had had an adverse impact on the domestic industry, it was not sufficient to constitute material injury as prescribed by SIMA.

The Tribunal determined that the continued and sustained presence of the low-priced subject rebar would have a further depressing effect on Canadian production and that, within the following 12 to 18 months, the accumulated depressing effects would likely have an imminent and material impact on the domestic industry. In the Tribunal’s view, in the absence of anti-dumping and countervailing duties, the subject rebar would result in significant price undercutting or depression and cause material injury to the domestic industry in the form of lost sales, reduced market share and decreased production levels. The Tribunal concluded that the dumping and subsidizing of the subject rebar was threatening to cause material injury to the domestic industry.

During the inquiry, the Tribunal denied a request for a regional exclusion for all rebar imported from the subject countries into the province of British Columbia for use or consumption within the province. The Tribunal found that, absent dumping and subsidizing, the domestic industry would be in a position to competitively serve the B.C. market and was willing and able to supply customers in British Columbia. The Tribunal also noted concerns regarding the enforcement of a finding with respect to product exclusions based on the location of use or consumption.

Final Injury Inquiries in Progress at the End of the Fiscal Year

There were two final injury inquiries in progress at the end of the fiscal year concerning oil country tubular goods and photovoltaic modules and laminates.

Public Interest Inquiries

Following a finding of injury, the Tribunal notifies all interested parties that any submissions requesting a public interest inquiry must be filed within 45 days. The Tribunal may initiate, either after a request from an interested person or on its own initiative, a public interest inquiry following a finding of injury or threat of injury caused by dumped or subsidized imports, if it is of the opinion that there are reasonable grounds to consider that the imposition of all or part of the duties may not be in the public interest. If it is of this view, the Tribunal then conducts a public interest inquiry pursuant to section 45 of SIMA. The result of this inquiry may be a report to the Minister of Finance recommending that the duties be reduced and by how much.

A request for a public interest inquiry concerning concrete reinforcing bar was filed with the Tribunal in 2014-2015. The request was under consideration at the end of the fiscal year. In addition, the Tribunal ruled on a request for a public interest inquiry received in the previous fiscal year (PB-2013-001) (decision dated April 14, 2014, and reasons dated April 24, 2014) and decided not to initiate a public interest inquiry of its findings dated December 13, 2013, in Inquiry No. NQ-2013-004 concerning circular copper tube.

Interim Reviews

The Tribunal may review its findings of injury or threat of injury or orders at any time, on its own initiative or at the request of the Minister of Finance, the CBSA or any other person or government (section 76.01 of SIMA). The Tribunal commences an interim review where one is warranted, and it then determines if the finding or order (or any aspect of it) should be rescinded or continued to its expiry date, with or without amendment.

An interim review may be warranted where there is a reasonable indication that new facts have arisen or that there has been a change in the circumstances that led to the finding or order. For example, since the finding or order, the domestic industry may have ceased production of like goods or foreign subsidies may have been terminated. An interim review may also be warranted where there are facts that, although in existence, were not put into evidence during the related expiry review or inquiry and were not discoverable by the exercise of reasonable diligence at the time.

Interim Review Activities

Requests for Interim Reviews and Interim Reviews Completed in the Fiscal Year

As can be seen in the above table, the Tribunal ruled on Request for Interim Review No. RD‑2014‑001 and held Interim Review No. RD-2013-003 in abeyance pending related proceedings before the Federal Court of Appeal.

Expiries

Subsection 76.03(1) of SIMA provides that a finding or order expires after five years, unless an expiry review has been initiated. Not later than 10 months before the expiry date of the order or finding, the Secretary of the Tribunal publishes a notice of expiry in the Canada Gazette. The notice invites persons and governments to submit their views on whether the order or finding should be reviewed and gives direction on the issues that should be addressed in the submissions. If the Tribunal determines that an expiry review is not warranted, it issues an order with reasons for its decision. Otherwise, it initiates an expiry review.

Expiry Activities

As illustrated in the above table, the Tribunal decided to commence six expiry reviews in the fiscal year.

On the basis of submissions from interested parties, the Tribunal was of the view that expiry reviews were warranted and initiated Expiry Review No. RR-2014-001 concerning fasteners, Expiry Review No. RR-2014-002 concerning hot-rolled carbon steel plate, Expiry Review No. RR-2014-003 concerning oil country tubular goods, Expiry Review No. RR-2014-004 concerning whole potatoes, Expiry Review No. RR-2014-005 concerning greenhouse bell peppers and Expiry Review No. RR-2014-006 concerning refined sugar.

Expiry Reviews

When the Tribunal initiates an expiry review of a finding or an order, it issues a notice of expiry review and notifies the CBSA of its decision. The notice of expiry review is published in the Canada Gazette and notice is provided to all known interested parties.

The purpose of an expiry review is to determine whether anti-dumping or countervailing duties remain necessary. There are two phases in an expiry review. The first phase is the investigation by the CBSA to determine whether there is a likelihood of resumed or continued dumping or subsidizing if the finding or order expires. If the CBSA determines that such likelihood exists with respect to any of the goods, the second phase is the Tribunal’s inquiry into the likelihood of injury or retardation. If the CBSA determines that there is no likelihood of resumed dumping or subsidizing for any of the goods, the Tribunal does not consider those goods in its subsequent determination of the likelihood of injury and issues an order rescinding the order or finding with respect to those goods.

The Tribunal’s procedures in expiry reviews are similar to those in final injury inquiries.

Upon completion of an expiry review, the Tribunal issues an order with reasons, rescinding or continuing a finding or order, with or without amendment. If a finding or order is continued, it remains in force for a further five years, unless an interim review is initiated and the finding or order is rescinded. If the finding or order is rescinded, imports are no longer subject to anti-dumping or countervailing duties.

Expiry Review Activities

Expiry Reviews Completed in the Fiscal Year

As illustrated in the above table, the Tribunal completed three expiry reviews during the reporting period.

RR-2014-001—Certain Fasteners

This expiry review concerned the dumping of certain carbon steel fasteners originating in or exported from China and Chinese Taipei and the subsidizing of such products originating in or exported from China (the subject fasteners).

There were 18 participants to the expiry review, with 9 witnesses appearing before the Tribunal during a four-day public hearing. The official record contained 27,920 pages.

The Tribunal was of the view that to allow the expiry of the order would likely result in a significant increase in the volume of imports of the subject fasteners at prices that could be expected to significantly undercut, depress and suppress those of the like goods, thereby causing material injury to the domestic industry. For these reasons, on January 5, 2015, the Tribunal continued its order, with amendment, made on January 6, 2010, in Expiry Review No. RR-2009-001, concerning certain carbon steel fasteners originating in or exported from China and Chinese Taipei.

RR-2014-002—Hot-rolled Carbon Steel Plate and High-strength Low-alloy Steel Plate

This expiry review concerned the dumping of hot-rolled carbon steel plate and high-strength low-alloy steel plate originating in or exported from Ukraine (the subject plate).

The Tribunal held a one-day public hearing. The Tribunal heard oral arguments in support of a continuation of the finding from two parties and testimony from five witnesses. Three parties opposed the continuation of the finding but did not present oral arguments or call any witnesses at the hearing. One party made nine requests for product exclusions, of which one was withdrawn. At the hearing, one party cross-examined witnesses and presented oral argument in support of its product exclusion requests. The official record contained 10,273 pages.

The Tribunal found that the expiry of the finding would result in the importation of significant volumes of the subject plate at prices that would undercut and depress the prices of the like goods, causing a downward spiral in prices that would likely cause material injury to the domestic industry. For these reasons, on January 30, 2015, the Tribunal continued its finding in respect of the aforementioned goods, but excluded the goods described in the eight product exclusion requests.

RR-2014-003—Oil Country Tubular Goods

This expiry review concerned the dumping and subsidizing of oil country tubular goods originating in or exported from China (the subject oil country tubular goods). This was the first review of the findings made on March 23, 2010.

There were 5 participants in the expiry review, with 10 witnesses appearing before the Tribunal during a three-day public hearing. The official record contained 15,320 pages.

The Tribunal was of the view that the expiry of the findings, especially within the context of the recent decline in oil prices, would likely result in an increase in the volume of imports of the subject oil country tubular goods in the near to medium term at prices that could be expected to significantly undercut and depress those of the like goods, resulting in a significant adverse impact to the domestic industry’s sales, profits, market share and output. Consequently, on March 2, 2015, the Tribunal continued its findings in respect of the subject oil country tubular goods.

Expiry Reviews in Progress at the End of the Fiscal Year

There were three expiry reviews in progress at the end of the fiscal year.

Judicial or Panel Reviews of SIMA Decisions

There were no Tribunal decisions remanded by the Federal Court of Appeal during the fiscal year.

The following table lists Tribunal decisions that were before the Federal Court of Appeal under section 76 of SIMA in the fiscal year.

Summary of Judicial or Panel Reviews

WTO Dispute Resolutions

There was one Tribunal finding before the WTO Dispute Settlement Body during the fiscal year. Chinese Taipei requested consultations and the establishment of a panel concerning the Tribunal’s finding in Inquiry No. NQ-2012-003.

SIMA Findings and Orders in Force

As of December 31, 2014, there were 25 SIMA findings and orders in force.

Summary of Findings and Orders in Force as of March 31, 2015