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ARCHIVED - STATEMENT OF REASONS

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OTTAWA, August 10, 2007

4366-32

Concerning a determination under subsection 76.03(7) of the
Special Import Measures Act regarding

CERTAIN BICYCLES AND FRAMES ORIGINATING IN
OR EXPORTED FROM
CHINESE TAIPEI (FORMERLY DESIGNATED AS TAIWAN)
AND THE PEOPLE'S REPUBLIC OF CHINA

DECISION

On July 26, 2007, pursuant to paragraph 76.03(7)(a) of the Special Import Measures Act, the President of the Canada Border Services Agency determined that the expiry of the order made by the Canadian International Trade Tribunal on December 9, 2002, in Expiry Review No. RR-2002-001, continuing, with amendment, its order made on December 10, 1997, in Review No. RR-97-003, continuing, with amendment, its finding made on December 11, 1992, in Inquiry No. NQ-92-002, concerning bicycles and frames originating in or exported from Chinese Taipei (formerly designated as Taiwan) and the People’s Republic of China was likely to result in the continuation or resumption of dumping of the goods into Canada.

Table of Contents

Summary

  1. On February 6, 2007, the Canadian International Trade Tribunal (CITT) issued a notice concerning the upcoming expiry of its injury order. Based on the available information and the information submitted by the interested parties, the CITT decided that a review of the order was warranted.

  2. On March 28, 2007, the CITT, pursuant to subsection 76.03(3) of the Special Import Measures Act (SIMA), initiated an expiry review of its order issued on December 9, 2002, in Expiry Review No. RR‑2002-001, concerning certain bicycles and frames, originating in or exported from Chinese Taipei (formerly designated as Taiwan) and the People’s Republic of China (China). The order is scheduled to expire on December 8, 2007.

  3. On March 29, 2007, the Canada Border Services Agency (CBSA) initiated an expiry review to determine whether the expiry of the order is likely to result in the continuation or resumption of dumping of the goods from the above‑mentioned countries.

  4. The Canadian producer of certain bicycles and frames, Raleigh Canada Ltd. (Raleigh), provided information in support of its position that resumed or continued dumping of certain bicycles and frames from Chinese Taipei and China is likely if current anti-dumping measures against these countries expire.

  5. Raleigh’s position is supported by Canadian Tire Corporation (CTC), one of the major bicycle importers in Canada. In addition, Yong Qi (Changzhou) Bicycle Industrial Co., Ltd. (Yong Qi), a significant exporter of bicycles to Canada in 2006 from the People’s Republic of China, appears to suggest that resumed or continued dumping is likely upon the expiration of the current order.

  6. Nine exporters, five from China 1 and four from Chinese Taipei, provided information in support of the position that, if the current anti-dumping measures against Chinese Taipei and China expire, resumed or continued dumping of certain bicycles and frames is not likely.

    Names of the exporters from China are:

    • Ideal Bicycle (Dong Guan) Corporation (Ideal Dongguan)
    • Giant China Co. Ltd. (Giant China)
    • Hua Chin Bicycle (Shen Zhen) Co. Ltd. (Hua Chin)
    • Oyama Bicycles (Taicang) Co., Ltd. (Oyama)
    • Acetrikes Ind. Co. Ltd. (Ace Bicycle)

    Names of the exporters from Chinese Taipei are:

    • Giant Manufacturing Co. Ltd. (Giant Taiwan)
    • Ideal Bike Corporation (Ideal Taiwan)
    • Fairly Bike Manufacturing Co., Ltd. (Fairly Bike)
    • Willing Industries Limited (Willing)

  7. Two Canadian importers 2 and two importers’ associations in Canada also support the position that resumed dumping is not likely if the order expires.

    Names of the two Canadian importers:
    • Dorel Distribution Canada (DDC)
    • Genesis Cycle Inc. (Genesis Cycle)

    Names of the two Canadian importers’ associations:
    • Retail Council of Canada
    • Canadian Association of Specialty Bicycle Importers (CASBI)

  8. Analysis of evidence on the record indicates that numerous producers of bicycles and frames in Chinese Taipei and China have excess production capacity, insufficient domestic demand (creating pressures to export), are subject to anti-dumping measures in several countries other than Canada (indicating a propensity to dump and a risk of diverting export volumes to Canada), have recently sold into worldwide export markets at prices which suggest they continue to dump, and have revealed a determination to compete even at prices below the normal values.

  9. For the foregoing reasons, the President of the CBSA (President), having considered the relevant information on the record, determined under paragraph 76.03(7)(a) of SIMA that the expiry of the order made by the CITT on December 9, 2002, concerning certain bicycles and frames, originating in or exported from Chinese Taipei and China is likely to result in the continuation or resumption of dumping from these countries.

Background

  1. The original anti-dumping investigation into certain bicycles and frames originating in or exported from Chinese Taipei and China was initiated on May 15, 1992, following a complaint filed by three Canadian bicycle manufacturers – Groupe Procycle Inc., Raleigh Industries of Canada Ltd. and Victoria Precision Inc. At the time of initiation, these three complainants accounted for approximately 90% of bicycles produced and sold in Canada 3.

  2. On August 13, 1992, the Deputy Minister of National Revenue - Customs and Excise (since replaced by the CBSA) made a preliminary determination of dumping concerning the subject goods from Chinese Taipei and China. A final determination of dumping was made on November 10, 1992. The CITT issued a finding of injury with respect to bicycles with a freight-on-board (FOB) selling price not exceeding CAN$325 and a finding of future injury with respect to bicycle frames on December 11, 1992. Imports of the subject goods have been monitored since the CITT’s finding.

  3. The CITT continued the finding, with amendment, on December 10, 1997. The amendment excluded bicycle frames with an FOB Chinese Taipei or China selling price exceeding CAN$100. On December 9, 2002, the CITT continued with amendment its order made on December 10, 1997 for another five years. The amendment excluded bicycles with an FOB selling price exceeding CAN$225, bicycles with foldable frames and stems, and bicycle frames with an FOB selling price exceeding CAN$50.

  4. The CBSA completed its last reinvestigation to update the normal values and export prices of bicycle and frames on December 20, 2006 . The results of this reinvestigation were made public in Customs Notice 07-006 on December 20, 2006 4.

PRODUCT DEFINITION

  1. The goods subject to this expiry review are defined as:

    Bicycles, assembled or unassembled, with wheel diameters of 16 inches (40.64 cm) and greater, originating in or exported from Chinese Taipei and the People's Republic of China, excluding bicycles with an FOB Chinese Taipei or People's Republic of China selling price exceeding CAN$225, and excluding bicycles with foldable frames and stems, and bicycle frames, originating in or exported from the aforementioned countries, excluding bicycle frames with an FOB Chinese Taipei or People's Republic of China selling price exceeding CAN$50.

PRODUCT DESCRIPTION

  1. A subject bicycle is a two-wheeled vehicle, consisting of a frame, drive train, wheels, a seat, handlebars and brakes, each of which in turn consists of several parts. Bicycle frames are the major component of any bicycle and are normally composed of two triangular structures, made of steel, alloy steel or aluminium, which are either welded together to form a rigid frame or held together by a bolt in the case of suspension frames.

  2. The design, appearance and construction of bicycles continue to evolve. In addition to steel and its various alloys, aluminium and carbon fibre frames are becoming increasingly common, as well as front and rear shock absorbers, and disk brakes. The industry has also introduced new types of bicycles in recent years. The following seven types are currently accepted and generally marketed by the industry: BMX, cruiser, mountain, hybrid, junior, racer and touring bicycles, and there is a large variety of models within each type. Types are not rigidly defined, which results in a certain overlap between types.

CLASSIFICATION OF IMPORTS

  1. The subject goods are normally imported into Canada under one of the following 10-digit Harmonized System classification numbers:


    Bicycles Frames and Parts
    8712.00.00.12 8714.91.90.00
    8712.00.00.20  
    8712.00.00.30  
    8712.00.00.40  
    8712.00.00.50  
    8712.00.00.90  

PERIOD OF REVIEW

  1. The period of review (POR) for this expiry review investigation in respect of sales and costing data requested from participants is January 1, 2004 to March 31, 2007. The President also considered additional information placed on the administrative record, up to the closing of the record date, which was May 17, 2007.

CANADIAN INDUSTRY

  1. Raleigh, Groupe Procycle Inc., and Victoria Precision Inc. were the three major domestic producers of bicycles in Canada and were the three complainants in the original dumping complaint against Chinese Taipei and China 5. However, Victoria Precision Inc. went into bankruptcy in 2004 6. In the following year, Groupe Procycle ceased to be a Canadian producer of subject bicycles in any meaningful volumes 7. As a consequence, Raleigh has become the major producer of subject goods in Canada. There are several smaller producers such as Norco Products Limited, Rocky Mountain Bicycle and Cycle Devinci. These smaller firms are generally more specialized and serve either regional markets or specific market niches.

CANADIAN MARKET

  1. The estimated Canadian market for subject bicycles over the POR cannot be divulged because it would reveal information that is confidential to the parties. For purposes of estimating the apparent Canadian market, the CBSA aggregated sales from domestic production with the estimated imports of subject goods 8. Estimated imports were compiled from information available through the Customs Commercial System database and import documents. The estimated market for imported bicycles over the POR is indicated in Table 1 below:

    Table 1 9

    Estimated Imports of Subject Bicycles (Units)

    Source 2004 % 2005 % 2006 % 2007
    Jan. 1 - Mar. 31    		 %
    Chinese Taipei 140,600 14.0% 37,300 4.0% 43,000 4.2% 41,000 5.4%
    China 376,900 37.6% 588,400 63.0% 756,100 73.9% 512,200 67.4%
    Other Countries 485,300 48.4% 308,300 33.0% 223,900 21.9% 206,800 27.2%


  2. There has been a large decrease in recent years, especially after 2004, of imports from countries not subject to this order, most notably from Vietnam, Philippines and Thailand. On the other hand, there were increases of imports from Indonesia, Bangladesh and Mexico 10.

ENFORCEMENT

  1. In the enforcement of the CITT finding during the POR (including the month of April 2007), the amounts of anti‑dumping duty collected on subject bicycles were $240,198 and $822,674 for Chinese Taipei and China, respectively. The value for duty on all subject bicycles from Chinese Taipei and China over this same period was approximately $28 million and $223 million, respectively. The amounts of duty collected represent 0.9% and 0.4% of the value for duty on all subject bicycles from Chinese Taipei and China. During the POR, t he amount of anti-dumping duty collected on subject frames from Chinese Taipei and China combined was $60,902, which represents 0.14% of the total value of duty on subject frames. In general, the largest exporters from Chinese Taipei and China have consistently sold their bicycles above the normal values.

  2. The bicycle business in Canada is seasonal and has regular annual model changes similar to those occurring in the automobile industry. Typically, production is from late fall to spring while the bulk of the shipments are made in the spring and early summer. The changeover occurs in September, and the CBSA normally conducts annual reinvestigations to coincide with the bicycle selling season and trade shows pertaining to the model year change.

  3. The CBSA requires exporters to apply for interim normal values for bicycles they intend to ship to Canada in the upcoming selling season. These interim normal values are valid for one model year (from September 1st of the current year to August 31st of the next year).

  4. For each bicycle or frame model year, an interim normal value is calculated based on each exporter’s projected manufacturing costs for that model, advanced by a mark-up resulting from the previous CBSA reinvestigation and adjusted for conditions of trade where warranted. The mark-ups are established on the basis of profitable domestic sales of bicycles and frames in the subject countries (Chinese Taipei and China).

  5. Whenever exporters make a request for interim normal values to the CBSA, they are also requested to provide a proposed selling price for each model of bicycle or bicycle frame they intend to ship to Canada in the upcoming season. This enables the CBSA to compare the proposed selling price with the interim normal value already determined for each model. Whenever the proposed selling price for a particular model is found to be lower than its interim normal value, a hypothetical margin of dumping is calculated by the CBSA and the exporter is advised of this hypothetical margin of dumping. Exporters normally price up to the interim normal value to avoid having the importers pay anti‑dumping duties.

  6. In the past, normal values for subject goods from China were determined pursuant to section 20 of SIMA with Chinese Taipei being used as a surrogate country. Since August 31, 2004, normal values for subject goods originating in China have been determined pursuant to sections 15, 16 and 19 of SIMA using domestic selling prices and cost of production in China. Between the 2004 and 2005 model years, the normal values for Chinese exporters declined by approximately 40% and the importation of subject bicycles from China increased from 37.6% of the total estimated imports of subject goods in 2004 to 73.9% in 2006.

PARTICIPANTS

  1. The CITT’s notice concerning the expiry review and a questionnaire were sent to bicycle producers located in Canada, importers, exporters and other interested parties. The expiry review questionnaire (ERQ) requested information relevant for purposes of considering the factors set forth in subsection 37.2(1) of the Special Import Measures Regulations (SIMR).

  2. Raleigh participated in the expiry review and answered the ERQ. Raleigh also provided a case brief and a reply submission supporting their position that the dumping of subject goods would continue or resume should the CITT’s order be allowed to expire. Norco, one of the smaller producers, also provided information about its production during the POR but declined to respond to the questionnaire in its entirety.

  3. Twelve exporters participated and provided responses to the ERQ. Four of these exporters are located in Chinese Taipei (Fairly Bike Co., Giant Taiwan, Ideal Taiwan and Willing Industries), seven are located in China (Ace Bike, Ideal (Dongguan), Oyama, Hua Chin, Viva, Giant China and Yong Qi ) and one is located in the USA (Trek Bicycles).

  4. Most of the above mentioned exporters had participated in the previous expiry review of the bicycle order that took place in 2002, and in the CBSA’s reinvestigation of normal values and export prices, which concluded on December 20, 2006. All of them made requests for interim normal values during the POR. Accordingly, these exporters are familiar with the details of the order and how it has been enforced by the CBSA.

  5. Most of the exporters that answered the ERQ were of the opinion that the export of the subject goods from their respective countries was not likely to result in the continuation or resumption of dumping if the CITT’s order expired. None of the exporters submitted a case brief or a reply submission.

  6. Sixteen complete responses to the ERQ were received from importers, namely A. Mordo & Son, Cyber Sport Ltd., Dorel Industries, Genesis Cycle, Giant Canada, Stone Ridge Cycle, Forzani Group, World Bicycle Sports, Canadian Tire Corporation (CTC), Specialized Canada, Outdoor Gear, Mica Sport, Wal-Mart Canada, Huffy Bicycle Company, Pride International, and Trek Bicycle Corp. (a non-resident importer). No importers provided case briefs or reply submissions. Only a few expressed a firm position as to the likelihood of resumed or continued dumping. Two importers’ associations provided case briefs and reply submissions: the Retail Council of Canada and the Canadian Association of Specialty Bicycle Importers (CASBI). Counsel for both associations stated that there is not a likelihood of a continuation or resumption of dumping.

INFORMATION USED BY THE PRESIDENT

Administrative Record

  1. The information used and considered by the President for purposes of this expiry review is contained on the administrative record. The administrative record is comprised of information received from the CITT at the initiation of the expiry review, CBSA exhibits, and submissions by interested persons, including information which they feel is relevant to the decision as to whether dumping is likely to continue or resume if the order expires. The information on the administrative record may consist of expert analysts’ reports, excerpts from trade magazines and newspapers, orders and findings issued by authorities of Canada or another country, documents from international trade organizations such as the World Trade Organization, and responses to the ERQs submitted by Canadian producers, importers, and foreign exporters.

  2. For purposes of an expiry review investigation, the CBSA sets a date after which no new information may be placed on the administrative record. This is referred to as the “closing of the record date”. For this expiry review, the administrative record closed on May 17, 2007. This allows participants time to prepare their case briefs and reply submissions based on the information that is on the administrative record as of the closing of the record date.

Procedural Issues to Note

  1. As noted previously, the closing of the record date for this expiry review was May 17, 2007. In accordance with the CBSA’s Expiry Review Guidelines, the President will normally not consider any new information submitted by participants subsequent to the closing of the record date. However, in certain exceptional circumstances, it may be necessary to permit new information to be submitted. The President will consider the following factors in deciding whether to accept new information submitted after the closing of the record date:

    1. The availability of the information prior to the closing of the record date;
    2. The emergence of new or unforeseen issues;
    3. The relevance and materiality of the information;
    4. The opportunity for other participants to respond to the new information; and
    5. Whether the new information can reasonably be taken into consideration by the President in making the determination.

  2. Participants wishing to file new information after the closing of the record date, either separately or in case briefs or reply submissions, must identify this information so that the President can decide whether it will be included in the record for purposes of the determination.

Information Not Considered after Closing of the Record

  1. Counsel for Zellers Inc. submitted its response to the Importer ERQ on May 18, 2007, a day after the closing of the record. Upon review, it was determined that the information contained in this document did not meet the requirements of the aforementioned Expiry Review Guidelines. Furthermore, counsel provided no explanation to justify the inclusion of the documentation in respect of those guidelines. Therefore, this late submission was struck from consideration in this review. Details of the document are found under Exhibits 121 and 122 of the CBSA’s listing of exhibits.

Information Stricken from the Record

  1. The CBSA also struck two submissions from consideration in this review. TBG The Bicycle Group and Louis Garneau Sports Inc. did not provide an adequate non‑confidential version of their response. Details of the document stricken from the record are found under Exhibits 86, 87 and 108 of the CBSA’s listing of exhibits.

POSITION OF THE PARTIES

CANADIAN PRODUCER

  1. Raleigh summarizes, in its case brief, the following factors that are indicative of a likelihood of a continuation or resumption of dumping 11:

    1. There has been ongoing dumping of bicycles and frames from Chinese Taipei and China despite the anti-dumping order;
    2. There are a large number of exporters from Chinese Taipei and China competing for market share, including non-producing exporters who will be shopping orders to the lowest cost producers;
    3. There continues to be significant excess capacity in both Chinese Taipei and China, and only a small portion of this capacity would be required to eliminate the Canadian industry;
    4. Raleigh alleges that whenever any opportunity is made available to lower prices to obtain competitive advantage, it has been seized upon by exporters in Chinese Taipei and China, whether in Canada or in other markets around the world;
    5. There has been a demonstrated willingness, limited only by normal values, of subject producers to lower prices to the extent possible in order to take market share from non-subject countries. The existence of bicycles from these countries in the Canadian market will lead the subject countries to reduce pricing to further gain market share;
    6. The proximity and size of the US market will allow an almost instantaneous transfer of dumped Chinese Taipei and Chinese pricing into the Canadian market;
    7. Both Chinese Taipei and China have been found to have dumped bicycles and related products in numerous other countries; and
    8. The increase in the anti-dumping duty rate applicable to Chinese bicycles in Europe has diverted significant volumes of Chinese bicycles into the world market. A small fraction of those volumes would quickly displace Canadian production.

  2. In its response to the Producer ERQ, Raleigh states, “The world market for bicycles, including Chinese bicycles who are the main exporters and producers in the world, is shrinking. At the lower end of the market, there is no significant technical change expected that would encourage existing bicycle owners to replace their current bicycle. New products will have different frame styles and graphic presentations and some better spec’d products will be available at lower prices. At the higher price points (not subject goods) there will be more offerings in the electric bicycle, road bike and serious mountain bike categories with newer materials and technology. Over time these products will become cheaper and more available at the mass merchant trade level 12.”

  3. With regard to the Canadian bicycle market, Raleigh contends, “Total units sold in Canada have changed very little on an annual basis. What has changed is the percentage sold by each distribution channel. Mass merchants and big box retailers have increased their market share each year. It is estimated that their current market share is more than 80%, due in large part to ever-decreasing retail prices. This is particularly prevalent in areas such as dual-suspension and opening pricing point (OPP) mountain bikes 13.” Raleigh provides examples to illustrate the alleged decrease in bicycle selling prices . It claims, “This is particularly evident in the dual-suspension market, where product that sold for $199 in 2004 is selling for $129 in 2007. The opening price point for adult mountain bike has gone from $119 to $99 in the same period. This is also the case with opening price point models in the junior 16”, 20” and 24” wheel categories 14.”

  4. Raleigh provides the reasons for decreasing retail prices in domestic market since 2004 in its response to the Producer ERQ. Raleigh states, “In 2005, the acceptance of China as a Market Economy and the allowance of China costs (by CBSA) to be used in the creation of normal values resulted in the pricing of every OPP bicycle in all categories to be lowered substantially 15.” Raleigh also identifies the result of the price competition; “A major competitor (Groupe Procycle) has significantly reduced (or eliminated) its domestic production of like goods and has begun sales of low-cost “CCM” branded product, made in China, to a major mass merchant account. This action has resulted in increased pressure from our accounts to provide lower prices or lose business 16.”

  5. Raleigh further contends, “In Canada, there are only a small number of accounts (i.e., customers) that can purchase significant volumes of product. There is fierce competition among these retailers with emphasis on price, especially on the high-volume opening price point models, and the worldwide level of excess capacity continues to make us vulnerable to ‘cut-throat’ price competition 17.”

  6. Raleigh expects the Canadian bicycle market in 2007, 2008 and 2009 will remain at a similar level as has been experienced in 2004 through 2006 in terms of quantity as the bicycle market is not a growth industry in Canada. The already established trend of the marketplace being served to a larger degree by mass merchants, rather than small independent retail dealers, will continue. Mass merchants will continue to supply the majority of lower-priced product at even lower prices. Independent dealers will try to keep as much market share as they can. Their market focus will be more directed to serious bicycle enthusiasts rather than occasional recreational users that are satisfied with the product offerings at mass merchants 18.

  7. Raleigh expects aggressive competition in the coming years from imported product from China due to China’s overcapacity and problems in other markets such as the European Union (EU). Raleigh intends to keep their existing market share by sourcing quality component items at as low a cost as possible and providing strong local servicing to its customers. It may need to import a larger percentage of frames in order to keep its total costs competitive and allow the rest of its fabrication (painting, wheel building and final assembly) operations to continue. As a last resort, Raleigh may have to cease manufacturing and strictly import if it cannot sustain profitable manufacturing 19.

  8. Raleigh contends that substantial dumping duties have been collected even while the anti-dumping order has been in place 20, which implies that the dumping will continue once the order expires.

  9. Raleigh argues that the low pricing levels of bicycles from Chinese Taipei and China in the United States market (without any anti-dumping measures against bicycles from Chinese Taipei and China) is further evidence of propensity to dump. It contends that the United States market, which is clearly much larger than the Canadian market, does not attract significant exports by producers from Vietnam, the Philippines, Thailand, Indonesia and Bangladesh. These countries compete in Canada only to serve market segments where Chinese Taipei and Chinese exporters are constrained by the anti‑dumping order. In the absence of that order, Raleigh contends that dumped pricing will likely result in all imports from these countries being shifted to Chinese Taipei and China 21.

China

  1. Raleigh states that there is over-capacity in China due to a reduction in Chinese domestic demand for bicycles caused by an increase in demand for automobiles and electric bicycles. Raleigh provided an article from Bicycle Retailer & Industry News dated April 1, 2007 showing that the production volume of bicycle units in China was 73 million in 2004, 80.73 million in 2005 and 79.5 million in 2006 22. The decrease in production in China by 1.2 million units from 2005 to 2006 means that unused capacity grew by a similar amount. This excess capacity will add further pressure on Chinese manufacturers to export more products into markets such as Canada 23.

  2. Raleigh claims that the over-capacity in China was also caused by the anti‑dumping measures issued by the EU. According to the same article in Bicycle Retailer & Industry News, “the EU imposed a 48.5 percent anti-dumping duty on Chinese bikes in 2004 and added the standard 15 percent duty on top of that in 2005, boosting the price of Chinese bikes by 63.5 percent. The 25 EU member nations imported more than 2.3 million Chinese bikes in 2004. That number dropped 44 percent to 1.3 million in 2005, and according to the preliminary figures from Eurostat, dropped by nearly half again in 2006 to 677,000 units.” As a result, Raleigh claims that there can be little doubt that excess capacity for bicycle manufacturing exists in China 24.

  3. Raleigh provides another element of evidence of a propensity to dump. After the CBSA determined in 2004 that the conditions of section 20 were not applicable to the determination of normal values for the bicycle sector in China, Chinese exporters lowered prices to Canada, and quickly increased their share of imported goods from 36% in 2004 to 69% in 2006 25. Raleigh contends that the effect of such lower prices has already led to the decline of Canadian production of subject goods by Groupe Procycle, and has increased the vulnerability of Raleigh to a renewal of dumping. Raleigh claims that the desperate battle of Chinese exporters for market share in Canada surely reflects a situation of “massive overcapacity” 26.

  4. Raleigh further suggests that the desperation amongst Chinese exporters to find market share will have predictable results. Raleigh states: “Economic theory tells us that when selling into another market, it may pay a producer to sell down to the level of variable cost plus some marginal amount, in order to use capacity and make some contribution to fixed costs” 27. Raleigh provides an example to illustrate the low pricing level of Chinese bicycles. Raleigh has recently been solicited to purchase complete bicycles with a cost of only US $30 and/or to purchase frame and fork sets for approximately US $10 . These prices are, in Raleigh’s view, unbelievably low and certainly below the fair value cost of the material alone 28. Consequently, Raleigh believes that these goods are dumped.

  5. In short, Raleigh claims that the vast production capabilities of China permit incremental volumes in the Canadian market to be easily filled by Chinese exporters. The proximity to the U.S. market means that Chinese bicycles, with their low pricing levels in that market, would be almost immediately transferred into the Canadian market in the event of rescission of the anti-dumping finding 29.

  6. To summarize Raleigh’s major arguments, Raleigh contends that the Chinese bicycle industry is suffering from a shrinking domestic market and declining export demand (due to various dumping actions against China from all over the world), which have resulted in significant excess manufacturing capacity. These factors will increase the likelihood of continued or resumed dumping.

Chinese Taipei

  1. According to Raleigh, excess capacity also exists in Chinese Taipei. Production in Chinese Taipei has dropped by 11% from 4.6 million bicycles in 2005 to 4.1 million in 2006 according to the figures from the Taiwan Bicycle Exporters Association 30. Raleigh notes that bicycle producers in Chinese Taipei have long been dependent on export markets, and their excess capacity and continued reliance on export markets will increase their propensity to dump.

  2. Raleigh provided an example to demonstrate that the average export price from Chinese Taipei to the worldwide market was below the average export price of bicycles sent to Canada. As many products from Chinese Taipei cost substantially more than this average, it follows that they sell many items below this average. Thus, Raleigh concludes that statements suggesting Chinese Taipei does not produce inexpensive bicycles are incorrect 31.

  3. Raleigh reports that it has been verbally informed that China maintained its high level of bicycle exports even after the EU’s anti-dumping ruling in 2004 and that Chinese products have been redirected to the EU through Chinese Taipei. Raleigh then quotes from an article, “Update on Taiwan’s Cycle Industry,” published in the 2007 spring edition of Bike Market Update:

    “The cycle industries in Taiwan and China are practically inseparable. China exported a total of 56 million bikes last year, and 65% of the export value was made by Taiwanese companies. Taiwan’s production lines have been springing up throughout China, Vietnam, Thailand and the Philippines 32.”

  4. Hence, Raleigh asserts that the relationship between Chinese Taipei and Chinese producers and the ability to shift production from one country to another speaks to the danger of terminating the finding with respect to Chinese Taipei alone.

EXPORTERS

China

  1. Although no producers in China provided case briefs or reply submissions, the participating exporters did provide the following information.

  2. Ace Bicycle was established in 2000 by their parent company, Sunnex (a Chinese Taipei bicycle manufacturer). Ace Bicycle has one production facility in China and is export oriented, with no domestic sales. Ace Bicycle employs 1,500 workers and its factory is approximately 15,000 square meters in size. Ace Bicycle provided confidential information on its capacity and capacity utilization. With regard to the likelihood of resumed dumping, Ace Bicycle stated that they would not modify their selling prices if the order expires for China. If the order expires for either China or Chinese Taipei, Ace Bicycle stated that they would take advantage of the expiry to satisfy the demand of their customers by shifting their production to the relevant country.

  3. Giant China was established in 1992 by their parent company Giant Taiwan. They have one factory in China with seven production lines. Giant China provided confidential data on annual production and operating capacity. Giant China sells both domestically and for export. In 2006, Giant China estimated that 29 million bicycles were sold in the domestic market. With regard to the likelihood of resumed dumping, Giant China stated that they would not shift production to Chinese Taipei if the order remains in place for China and expires for Chinese Taipei or if the order expired for China and remained in place for Chinese Taipei.

  4. Hua Chin was established in 1990 by their parent company, Willing Industries
    (a Chinese Taipei bicycle manufacturer). They have one production facility in China with a plant capacity of 700,000 units. Plant utilization rates were provided but they cannot be divulged because of their confidential nature. Hua Chin is export oriented and has no domestic sales. With regard to the likelihood of resumed dumping, Hua Chin contended that they would not shift production to Chinese Taipei if the order remained in place for China and expired for Chinese Taipei nor would they shift production if the order remained in place for Chinese Taipei and expired for China. In global terms, Hua Chin anticipates that the trend in the world market is towards an increasing demand for higher quality bicycles.

  5. Ideal Dongguan was established in 1997 and has one factory in China. Although capacity figures were not provided, Ideal Dongguan did provide its average annual production in the past three years for bicycles and frames. Ideal provided confidential information on what they would do if the order expired for either China or Chinese Taipei but they had no comments/arguments on the likelihood of resumed dumping.

  6. Oyama was established in 2001 by an overseas company and has one production facility in China. It is export oriented and has no domestic sales. Oyama’s provided confidential annual capacity and production data. With regard to the likelihood of resumed dumping, Oyama stated that it would not modify its selling prices to Canada if the order expires for China because they focus on mid to high-end bicycles.

  7. Yong Qi was established in 2000 and has two production facilities in China - one for the production of bicycles and one for the production of frames. Yong Qi provided confidential capacity and production data for the company.

  8. In responding to question A18 of the exporter ERQ, Yong Qi made the following statement:

    A18. If the current order were allowed to expire for both the PRC and Chinese Taipei, would your company modify your selling prices of bicycles and frames to Canada? In case you need to lower your selling prices, would you lower it to the level below the normal values established for your bicycles and frames? Please provide a detailed explanation (with facts) for your answer.

    Yong Qi would negotiate prices as occurs currently but would not be bound by the floor price of the Normal Value 33.

  9. The CBSA’s interpretation of Yong Qi’s response to this question is that Yong Qi expects that dumping is likely to resume if the current order is rescinded and that Yong Qi is willing to negotiate selling prices that are below the normal values to retain its market share.

Chinese Taipei

  1. Although no producers in Chinese Taipei provided case briefs or reply submissions, the participating exporters did provide the following information.

  2. Fairly Bike was founded in 1977 and has one production facility in Chinese Taipei. They are export oriented and do not have domestic sales. Fairly Bike provided confidential capacity and production data for their production facility for the POR. With regard to the likelihood of resumed dumping, they claim that they will not modify their selling prices if the order expires for Chinese Taipei because they focus on mid- to high-end bicycles, as they cannot compete with China, Vietnam, Thailand, Mexico and Bangladesh in mass markets.

  3. Fairly Bike indicated that the trend for all bicycle manufacturers in Chinese Taipei is to produce mid- to high-end bicycles that have an average selling price of US$206 per unit for sales to Canada (as of 2006). According to the Taiwan Bicycle Exporters Association’s analysis, the average selling price per unit to the USA was US$358.35 in 2006 34. Fairly Bike stated that in the past five years, bicycle models exported from Chinese Taipei to Canada were similar to those exported from Chinese Taipei to the United States, which has no anti-dumping finding or order on bicycles. Fairly Bike stated that Chinese Taipei manufacturers would follow the US trend and export high-end bicycles to Canada regardless of whether the order continues or not.

  4. Giant Taiwan was established in 1972 and produced bicycles and frames for original equipment manufacturer (OEM) customers. Giant Taiwan is now the largest bicycle producer and exporter in Chinese Taipei. Giant Taiwan provided confidential production volumes for the POR.

  5. With respect to the likelihood of resumed dumping, Giant Taiwan provided statistics from the Taiwan International Trade Bureau relating to bicycles exported to Canada. These statistics showed that the FOB price is increasing and the proportion of subject goods is decreasing. Giant Taiwan indicated that Chinese Taipei producers are concentrating on higher value-added products and there is not a likelihood that exporters will continue or resume dumping the subject goods.

  6. Giant Taiwan stated it would not shift production from one country to another if the finding were allowed to lapse for one country and not the other. Finally, Giant Taiwan stated that it wouldn’t modify its selling prices of bicycles and frames to Canada nor modify its selling prices to below normal values if the current order were allowed to expire for Chinese Taipei.

  7. Ideal Taiwan is an OEM bicycle manufacturer established in 1980. Ideal Taiwan provided confidential production and capacity utilization during the POR. With respect to the likelihood of resumed dumping, Ideal Taiwan stated that it sells bicycles according to customer orders and that prices are set according to material, overhead and a reasonable margin. Ideal Taiwan stated that there should be no possibility of resumed dumping.

  8. Ideal Taiwan stated that the Chinese Taipei bicycle industry has to move to the production of middle and high-end bicycles, as Chinese Taipei producers are not competitive with low priced bicycles produced in Vietnam, China and Thailand. Ideal Taiwan also stated that for the past five years, the prices between Chinese Taipei bicycle exports to Canada and to the USA were not substantially different. Ideal Taiwan expects this trend to continue with or without the finding in place.

  9. With regards to domestic sales of bicycles in Chinese Taipei, Ideal Taiwan expects that the demand for high value bicycles will increase because people in Chinese Taipei are starting to have more leisure time and the Government is promoting bicycle use in many public activities.

  10. Finally, Ideal Taiwan stated that the finding has been in place for 15 years. The average FOB price from Chinese Taipei to Canada has been higher than CAN$225 for the last couple of years and the trend is for Chinese Taipei manufacturers to produce high value bicycles. As a consequence, it is not necessary to keep an anti-dumping finding against Chinese Taipei produced bicycles.

  11. Willing was established in 1972 and has one factory in Chinese Taipei. They are export oriented and do not have domestic sales. Willing provided no information on production or capacity utilization. With regard to the likelihood of resumed dumping, Willing asserted that they would not sell at a loss and that their selling prices are based on total cost plus profit.

  12. Willing indicated that producers in Chinese Taipei can no longer compete with Vietnam, Thailand and China for low-end bicycles due to the increasing costs in labour and material in Chinese Taipei. Willing stated that the quantities shipped out of Chinese Taipei are currently decreasing but the selling prices are increasing. The average selling price of all Chinese Taipei bicycle exports has increased steadily from US$124 in 2002 to US$205 in 2006. They predict that the average FOB selling prices from Chinese Taipei will increase above the CAN$225 threshold for subject goods and, as a consequence, they believe that there is no need to keep the order in place for Chinese Taipei.

CANADIAN IMPORTERS

  1. None of the Canadian importers submitted case briefs or reply submissions, although the Retail Council of Canada and CASBI did so on behalf of their members.  The following is a collection of information provided directly by importers in their responses to expiry review questionnaires, and of arguments set out in the case briefs.

Information Provided Directly by Importers

  1. Canadian Tire Corporation (CTC) is a national retailer of bicycles and is the only importer to support the continuation of the order. CTC has been in the retail business for over 80 years and began importing bicycles from Asia in the late 1970’s. CTC sells bicycles in most segments of the market including Mountain Bikes, Comfort, Hybrid, Cruisers and BMX bikes. CTC provided confidential data relating to its imports of subject bicycles from Chinese Taipei and China during the POR.

  2. Since the beginning of 2004, CTC has seen an increase in the number of competitive retailers in the Canadian market. The relative strength of the Canadian dollar has also made pricing from Asian factories favourable when compared to domestic suppliers. At the same time, CTC has seen their competitors increase their imports. While CTC has sourced bicycles from other non-subject countries, CTC has also been the strongest supporter of the Canadian manufacturers.

  3. CTC also states that the recent dumping rulings in Europe and South America indicate that there is still a risk of certain Chinese factories dumping bicycles to help generate export volumes. CTC provided confidential comments regarding the likelihood of resumed dumping.

  4. Dorel Distribution Canada (DDC) was formed in 1987 with the merger of Dorel Co. Ltd. and Ridgewood Industries. DDC is a national distributor with associated companies such as Pacific Cycle, Dorel Juvenile Group USA, Inc., and Ameriwood Industries, Inc., which are 100% owned by Dorel Industries. DDC markets the SCHWINN bicycle brand in Canada. DDC provided confidential comments regarding the likelihood of resumed dumping.

  5. Genesis Cycle was incorporated in 1996. Sixty per cent of bicycles imported by Genesis Cycle fall within the product definition – the remaining bicycles are above the CAN $225 threshold. Suppliers to Genesis are: Fritz Jou Mfg. Co. Ltd., Southern Cross International Co. Ltd., Ideal Bike, Co., Willing Industry Co. Ltd., MT Racing – all in Chinese Taipei – and Hua Chin Bicycle Co., Fastract (i.e., Ideal Dongguan), Acetrikes Ind. Co. Ltd. and Shanghai Giant & Phoenix Bicycle Co. Ltd., in China. No purchases are made from Canadian sources. Genesis Cycle provided confidential data on its imports of bicycles from Chinese Taipei and China in 2006 and confidential comments regarding the likelihood of resumed dumping.

Information and Arguments Provided by Importers' Associations

  1. The Retail Council of Canada submitted a case brief with the position that the expiry of the present order would not result in resumed dumping. Their arguments can be summarized as follows:

    1. Export prices significantly exceed normal values, which create a protective buffer against the likelihood of dumping.
    2. The CBSA has collected insignificant and immaterial SIMA duties in the last five years.

  2. CASBI represents 12 specialty bicycle importers in Canada, and submitted a case brief on its members’ behalf. CASBI states that its members do not sell low-end commodity bicycles (i.e., subject bicycles) to mass merchandisers and do not participate in the private label business. CASBI only sells bicycles to independent bicycle dealers. CASBI’s position is that the expiry of the order in respect of all subject bicycles and frames is unlikely to result in a continuation or resumption of dumping for the following reasons:

    1. The CBSA has collected insignificant and immaterial SIMA duties in the last five years. The amount of dumping duty collected is de minimis when compared to total imports of subject goods ($1.35 million/$221.8 million for model years 2004, 2005 and 2006 combined).
    2. Since the last review, producers located in Chinese Taipei have shifted their bicycle production to more expensive bicycles, which do not fall under the current subject goods threshold of CAN $225 FOB.
    3. Chinese Taipei producers are not interested in the Canadian market as evidence on the record demonstrates that the United States, the EU, and Japan are Chinese Taipei’s major export markets.
    4. In the last three model years, over 99% of imports from China entered the Canadian market at non-dumped prices. During the same period, imports from China doubled from 321,000 to 683,000 units. This illustrates that Chinese imports can increase market share with the sale of goods at non-dumped prices.
    5. In 2004, the CBSA determined that section 20 of SIMA was not applicable to the Chinese bicycle sector. As such, normal values for Chinese bicycles and frames were determined under sections 15 or 19 of SIMA. This change in the determination of normal values lowered normal values from China and allowed Chinese exporters to compete against non-subject exporters at non-dumped prices.

CONSIDERATION AND ANALYSIS

  1. In deciding whether the expiry of the finding was likely to result in the continuation or resumption of dumping, the President considered factors specifically identified in paragraphs (a) to (i) of subsection 37.2(1) of the SIMR, as well as any other factors relevant in the circumstances in rendering a determination pursuant to paragraph 76.03(7)(a) of SIMA.

  2. Guided by the factors in the aforementioned SIMR and based on the documentation submitted by the various participants and the consideration of the information on the administrative record, the ensuing list represents a summary of the analysis conducted in this review:

    • There is excess capacity of bicycles and frames available in Chinese Taipei and China.
    • Anti-dumping measures imposed by other countries increase the risk that export volumes of bicycles and frames could be diverted to Canada.
    • A Chinese bicycle exporter to Canada has stated that it “would negotiate prices as occurs currently but would not be bound by the floor price of the normal value 35.” This suggests that it would be willing to dump in order to remain competitive.
    • A Chinese Taipei producer is producing low cost bicycles for sale to a mass merchandiser of subject goods 36. This is a counter example to the assertions of CASBI and the Retail Council of Canada that Chinese Taipei producers are concentrating on high-end bicycles for sale to independent bicycle dealers.
    • Total SIMA duties collected from January 1, 2004 to April 30, 2007 were $1,062,873, which represents 0.4% of the value for duty of the estimated subject goods imported during this period. The fact that some of the subject goods were being dumped while the order is in effect leads the CBSA to believe that the subject countries will likely dump at much larger scale if the order is rescinded.
    • Some Chinese exporters have been selling subject goods above established normal values and have still captured a large percentage of the Canadian market. However, the amount by which their export prices exceed the normal values indicates that such prices are constrained by the order. If the finding were rescinded , established Chinese exporters would need to sell at reduced prices in order to deal with the anticipated competition from Chinese exporters that currently do not have interim normal values. There is a likelihood that Chinese exporters may need to resume dumping in order to meet this competition from all Chinese exporters that are looking for an additional market for their bicycles and current competitors in the Canadian market.

Likelihood of Continued or Resumed Dumping

  1. Although the analysis appears to cover bicycles only, information pertaining to bicycles is also relevant to bicycle frames. Most of the information available in respect of frames is indirect. The statistics that are available for the industry as a whole include complete bicycles, components and accessories. Frames are a “component” of every bicycle, so it can be stated that the information pertaining to bicycles is relevant to frames. For example, if the Chinese bicycle industry has a capacity to produce 80 million complete bicycles per annum, then it has the capacity to produce at least 80 million frames per annum, not including the production of those companies and plants that are dedicated to the production of frames only.

China

  1. As previously noted, seven Chinese exporters provided responses to the ERQ but none filed case briefs or reply submissions.

  2. China’s bicycle market and bicycle industry are the largest in the world. A decrease in production from 2005 to 2006 of 1.2 million units has created significant excess capacity . This excess capacity will add further pressure on Chinese manufacturers to export more products into markets such as Canada.

  3. The CBSA concludes that the decline in China’s domestic demand for bicycles has contributed to this excess capacity. The development of China’s automotive industry has, in recent years, led to a significant decline in China’s domestic demand for bicycles 37.

  4. The anti-dumping measures being imposed by other countries such as Malaysia, Mexico, Argentina and those of the EU, against bicycles and frames from China increase the risk that China’s export volumes could be diverted to Canada. These anti-dumping measures have created pressure on Chinese bicycle manufacturers to look for new export markets to replace lost volumes in markets where anti-dumping orders are in place 38.

  5. The excess capacity due to the decrease in domestic demand and the excess export capacity resulting from being excluded from markets due to anti-dumping measures create an even greater combined excess capacity in search of an unprotected market.

  6. In response to a question in the ERQ asking if the company would lower their selling prices of bicycles and frames to Canada in the event of the expiration of the current order, Yong Qi, a significant Chinese bicycle exporter to Canada, stated that it “would negotiate prices as occurs currently but would not be bound by the floor price of the normal value”. It would appear from this statement that Yong Qi is prepared to sell at dumped prices in order to compete for sales to Canada.

  7. In 2006, the second and third largest exporters from China were selling, on average, 1.2% and 4% respectively, above the normal values. The CBSA concludes that such prices are constrained by the order and does not consider these marginal amounts as different from selling at the normal values in view of the low-end nature of the bicycles that were sold to mass merchandisers.

  8. The amount of SIMA duties collected on subject bicycles from January 1, 2004 to April 30, 2007 for China was $822,674. As the Tribunal stated in the 2002 Review 39: “… Although this represents only a small proportion of total imports of the subject goods, the fact that some of the subject goods are being dumped, even while an anti-dumping order is in effect, leads the Tribunal to believe that the subject countries will likely dump in much larger volumes, if the order is rescinded.”

  9. In 2006, anti-dumping duties were collected on bicycles from 55 exporters, out of a total of approximately 190 exporters from China 40. Not all the 55 exporters are new to the interim normal value system. At least 12 of them are exporting bicycles to Canada on a regular basis and are well aware of the interim normal value system. Since established exporters shipping to Canada have dumped, it cannot be argued that only exporters unaware of the finding have been dumping.

  10. In 2005, there were 174 bicycle exporters from China, which subsequently increased to 190 exporters in 2006 (Exhibit 17). The increase in the number of Chinese exporters indicates that Chinese exporters have a significant interest in the Canadian market. The majority of these additional Chinese exporters are new to Canada, with no history of exporting subject goods. They compete against each other for domestic and overseas orders. Flying Pigeon, a well-known bicycle producer in China, stated, “Relentless cost-cutting, coupled with fierce competition for domestic and foreign orders, has created a hothouse environment where only the nimblest companies survive – and clever upstarts can topple dominant, state-run business 41.” Similarly, a n unnamed bicycle entrepreneur in China said that she suspects that some bike makers are selling without profit – or even at a loss – to keep their market share intact as they wait for rivals to collapse 42.

  11. Evidence indicates that Chinese exporters always compete on price. CBSA data in Exhibit 45 indicates that Chinese pricing of subject goods has declined by over CAN $30 per unit since 2004. (The rate of price reduction is higher than the rate of appreciation of Canadian currency during the same period.) Chinese exporters have consistently reduced prices as much as possible to generate sales volumes and increase market share.

  12. Chinese producers did not maintain their selling prices to Canada when the normal values were lowered on August 31, 2004 by the CBSA. Instead, Chinese exporters reduced their selling prices in order to increase their market share. China’s share of imports has increased from 37.6% in 2004 to 73.9% in 2006 43. This appears to have been without significant dumping; however, this does not guarantee that all Chinese manufacturers would not dump in the future. If the order were rescinded , established Chinese exporters would likely need to reduce selling prices in order to compete against the anticipated new competition from other Chinese exporters . There is a likelihood that Chinese exporters may need to resume dumping in order to meet this competition from all Chinese exporters that are looking for a new market for their bicycles.

  13. Ultimately, in the absence of the anti-dumping measures, the CBSA is satisfied that there is a likelihood that China will try to increase exports to Canada to help alleviate their excess capacity. As well, imports from China during the POR suggest that Chinese exporters, even those that do not export regularly or apply for normal values, continue to maintain an interest in the Canadian bicycle market.

  14. Based on evidence contained on the record respecting: the existing production capacity in excess of Chinese domestic demand; anti-dumping measures in place by other countries creating further excess capacity; the willingness of a large Chinese bicycle exporter to sell, if necessary, at prices lower than their current normal values; SIMA duties collected during the POR; and the commercial interest in the Canadian marketplace by increasing numbers of Chinese exporters , the President determined that the expiry of the order is likely to result in the continuation or resumption of dumping into Canada of certain bicycles and frames originating in or exported from China.

Chinese Taipei

  1. As previously noted, four exporters from Chinese Taipei provided responses to the ERQ but none filed case briefs or reply submissions.

  2. The Chinese Taipei bicycle industry is among the most technologically advanced. In terms of volume of production , the bicycle industry in Chinese Taipei is the third largest in the world, behind China and India. The Bicycle Retailer of August 15, 2006 44 reports declining volumes of Chinese Taipei exports in 2006 compared to 2005. The article reports that Chinese Taipei exported 4.06 million bicycles to all overseas countries in 2006, down 11.58% from 2005 (i.e., approximately 4.6 million units in 2005). The evidence indicates that unused production capacity in Chinese Taipei at the end of 2006 was 600,000 units higher than in the previous year. Hence, CBSA concludes that there has been an increase in excess capacity in Chinese Taipei.

  3. The Chinese Taipei domestic bicycle market is relatively small and the annual consumption is about 700,000 units, which means Chinese Taipei’s bicycle industry is export oriented.

  4. There are anti-dumping measures against bicycles and related products from Chinese Taipei by Turkey, Argentina and Brazil. After the imposition of these measures, Chinese Taipei producers set up new plants in China and Vietnam and shifted their production there. Although the production has shifted to China and Vietnam, the manufacturers still maintain their production plants in Chinese Taipei. This suggests that a significant excess manufacturing capacity is still available in Chinese Taipei.

  5. When the EU increased anti-dumping duties against bicycles from China in 2005, production was shifted back to Chinese Taipei, with increased exports to the EU from about 2.5 million units in 2004 to 3.0 million units in 2005 45. This indicates that production can be quickly shifted at will between the production facilities in Chinese Taipei and China. Accordingly, terminating the current order with respect to Chinese Taipei would only provide an opportunity for Chinese producers to shift production back to Chinese Taipei in order to circumvent the anti-dumping order against China.

  6. Although most of the Chinese Taipei producers, in the past few years, were selling high-end bicycles to independent bicycle dealers in Canada, import data indicates that one exporter has begun to sell low-end bicycles to a mass merchandiser of subject goods. This exporter sold a considerable number of bicycles to Canada from September 1, 2006 to April 30, 2007 and now is the largest Chinese Taipei bicycle exporter to Canada. This indicates that at least one of the Chinese Taipei producers is exporting low cost subject bicycles to the Canadian market. Based on the information available, this exporter’s actual export prices were only, on average, 0.7% higher than the normal values in 2007 (up to April 30, 2007). CBSA does not consider this marginal rate as significantly different from the normal values in view of the low-end nature of their bicycles that were sold to a mass merchandiser.

  7. In 2006, the three largest exporters from Chinese Taipei were selling, on average, 9.2%, 8.5% and 9.8%, respectively, above the normal values. However, the CBSA does not consider these rates as materially different from the normal values in view of the high-end nature of the bicycles that were sold to independent bicycle dealers rather than mass merchandisers.

  8. The amount of SIMA-related duties collected on subject bicycles from January 1, 2004 to April 30, 2007 for Chinese Taipei were CAN $240,198. This represents 0.9% of the values for duty on all subject bicycles from Chinese Taipei and is more than double that of China. In 2006, the difference between dumping duties collected from Chinese Taipei and China was even larger: 1.59% of the total value for duty for Chinese Taipei versus 0.39% of the total value for duty for China. This indicates that there is a higher propensity for exporters in Chinese Taipei to sell at dumped prices. One reason for this is that interim normal values are often higher in Chinese Taipei than those from China due to a higher cost of production.

  9. There is an increasing trend of SIMA duties being collected on subject bicycles from Chinese Taipei during the POR. SIMA duties collected increased from 0.62% of the value for duty in 2004, to 0.82% in 2005, and 1.59% in 2006.

  10. In 2006, anti-dumping duties were assessed on bicycles from 17 exporters, out of a total of 144 exporters from Chinese Taipei 46. Not all the 17 exporters were new to the interim normal value system as at least 6 of them are exporting bicycles to Canada on a regular basis and are aware of the CBSA interim normal value system. This indicates that Chinese Taipei producers will sell below normal values in order to maintain or increase market share.

  11. Evidence indicates that exporters in Chinese Taipei compete on price. CBSA data in Exhibit 45 indicates that Chinese Taipei pricing of subject goods is estimated to have declined by 9.4% from 2005 to 2006. The rate of the price reduction is greater than the rate of appreciation of Canadian currency during the same period. When the exporter of low-end bicycle exports to a Canadian mass merchandiser are taken into consideration, the average value for duty of subject bicycles from Chinese Taipei in 2007 will be even lower (Note: Final data is not yet available for 2007). This indicates that exporters in Chinese Taipei are willing to lower their selling prices to generate sales volumes and increase market share.

  12. With the increasing number of bicycle exporters from China attempting to export to Canada and the increasing interest of at least one producer in Chinese Taipei in the low-end bicycle market in Canada (i.e., subject bicycle market in Canada), there is a likelihood that exporters in Chinese Taipei will compete for market share by lowering their selling prices. As their normal values are normally higher than those for China, exporters in Chinese Taipei may have to sell at dumped prices in order to compete with exporters from China.

  13. Ultimately, if the anti-dumping order is terminated, the CBSA is satisfied that there is a likelihood that exporters in Chinese Taipei will continue or resume their dumping activities to help alleviate their over-capacity . As well, the latest import statistics from Chinese Taipei already suggest that exporters in Chinese Taipei have a growing interest in the Canadian market for subject bicycles.

  14. Based on evidence contained on the record respecting the excess production capacity, limited domestic demand, anti-dumping measures in place by other countries, past practice of shifting production back and forth between Chinese Taipei and China, SIMA duties collected during the POR and the renewed interest in the Canadian marketplace by Chinese Taipei exporters, the President determined that the expiry of the order is likely to result in the continuation or resumption of dumping into Canada of certain bicycles and frames originating in or exported from Chinese Taipei.

CONCLUSION

  1. For the purpose of making a determination in this expiry review investigation, the CBSA conducted its analysis within the scope of the factors contained in subsection 37.2(1) of the SIMR. Based on the foregoing consideration of pertinent factors and analysis of evidence on the record, on July 26, 2007, pursuant to paragraph 76.03(7)(a) of SIMA, the President determined that the expiry of the order made by the CITT on December 9, 2002, concerning certain bicycles and frames, originating in or exported from Chinese Taipei and China is likely to result in the continuation or resumption of dumping from these countries.

FUTURE ACTION

  1. On July 27, 2007, the CITT commenced its inquiry to determine whether the expiry of the order is likely to result in injury or retardation with respect to goods from Chinese Taipei and China. The CITT will make its decision by December 10, 2007.

  2. If the CITT determines that the expiry of the order with respect to goods from Chinese Taipei and China is likely to result in injury or retardation, the order will be continued in respect of those goods, with or without amendment. If this is the case, the CBSA will continue to levy anti-dumping duties on importations of the subject goods that are imported into Canada at dumped prices.

  3. If the Tribunal determines that the expiry of the order is unlikely to result in injury or retardation, the order will be rescinded. Anti‑dumping duties would no longer be levied on importations of the goods in question from the date the order is rescinded.

INFORMATION

  1. For further information, please contact the officers listed below:

    Mail
    SIMA Registry
    Anti-dumping and Countervailing Program
    Trade Programs Directorate
    Canada Border Services Agency
    100 Metcalfe Street, 11th Floor
    Ottawa, Ontario K1A 0L8
    Canada

    Telephone
    Johnny Tong    613-954-7350
    Brian Hodgson    613-954-7237

    Fax
    613-948-4844

    E-mail
    simaregistry-depotlmsi@cbsa-asfc.gc.ca

    Website
    www.cbsa-asfc.gc.ca/sima



M.R. Jordan
Director General
Trade Programs Directorate


1. The other two exporters from China do not state their position in their responses. Neither does the exporter from the United States of America (USA).

2. The other twenty Canadian importers do not state their position in their responses.

3. Page 3 of the Statement of Reasons concerning the preliminary determination of dumping of bicycles from Chinese Taipei and China on August 13, 1992 (Exhibit 113).

4. Customs Notice 07-006, December 20, 2006 (Exhibit 4).

5. Statement of Reasons concerning the Final determination of dumping of bicycles and frames on November 10, 1992 (Exhibit 113).

6. CSN Communiqué on July 7, 2004 (Exhibit 107).

7. Raleigh’s submission to CITT requesting an expiry review in 2006, paragraph 7 (Exhibit 60, Appendix 10).

8. Estimated Canadian Market of Bicycles (Protected Exhibit 46).

9. Date extracted from Estimated Canadian Market of Subject bicycles (Exhibit 45).

10. Estimated Canadian Market of Bicycles, (Protected Exhibit 46).

11. Raleigh’s Case Brief (Exhibit 125).

12. Raleigh’s response to question A30 of the Producer ERQ (Exhibit 60).

13. Raleigh’s response to question A28 of the Producer ERQ (Exhibit 60).

14. Raleigh’s response to question A27 of the Producer ERQ (Exhibit 60).

15. Ibid.

16. Ibid.

17. Raleigh’s response to question A28 of the Producer ERQ (Exhibit 60).

18. Raleigh’s response to question A29 of the Producer ERQ (Exhibit 60).

19. Ibid.

20. Raleigh’s response to question A31 of the Producer ERQ (Exhibit 60).

21. Raleigh’s response to the Producer ERQ, Paragraph 55, Appendix 10 (Exhibit 60).

22. Raleigh’s response to the Producer ERQ, Appendix 9 (Exhibit 60).

23. Raleigh’s response to question A31 of the Producer ERQ (Exhibit 60).

24. Ibid.

25. Based on CBSA’s calculation, Chinese exporters increased their share of imported goods (units of bicycles) from 37.6% in 2004 to 73.9% in 2006 (Exhibit 45)

26. Raleigh’s response to the Producer ERQ, Paragraph 54, Appendix 10 (Exhibit 60).

27. Raleigh’s response to the Producer ERQ, Paragraph 59, Appendix 10 (Exhibit 60).

28. Raleigh’s response to question A31 of the Producer ERQ (Exhibit 60).

29. Raleigh’s response to the Producer ERQ, Paragraph 60, Appendix 10 (Exhibit 60).

30. Raleigh’s response to the Producer ERQ, Appendix 9 (Exhibit 60).

31. Raleigh’s response to question A31 of the Producer ERQ (Exhibit 60).

32. Ibid.

33. Yong Qi’s response to question A18 of the Exporter ERQ (Exhibit 58)

34. Fairly Bike’s response to question B20 of the ERQ (Exhibit 101)

35. Yong Qi’s response to question A18 of the Exporter ERQ (Exhibit 58)

36. From CBSA import data in Exhibit 17.

37. Based on an article written by Richard Spencer, “Wheels come off bike industry as Chinese buy cars” published in Daily Telegraph, dated October 1, 2003, submitted by Raleigh Canada Ltd., Exhibit 60, it is reported that there has been a fall in the number of bicycles sold in China from an annual peak of 40 million to something in the range of 20 to 25 million units per year.

38. Based on An article from Xinhua, “China’s bicycle exports to EU to drop due to EU dumping duty increase” published by People’s Daily Online, dated July 20, 2005, submitted by Raleigh Canada Ltd., Exhibit 60, it is reported that the decision of the European Union in 2005 to increase the anti-dumping duty rate on Chinese bicycles has forced further volumes of Chinese bicycles out of the European market.

39. Page 10 of the Order and Statement of Reasons of the CITT in Expiry Review No. RR-2002-001 regarding certain bicycles and frames originating in or exported from Chinese Taipei and China (Exhibit 2).

40. Total number of exporters and the number of exporters being charged with anti-dumping duties are calculated from Exhibit 17.

41. An article written by Andrew Browne, “A Legend’s Bumpy Ride” published in the Wall Street Journal dated April 29, 2006, submitted by Raleigh Canada Ltd., Exhibit 60.

42. Ibid.

43. Estimated Canadian Market of Subject bicycles (Exhibit 45)

44. Miscellaneous Articles on the Chinese and Chinese Taipei bicycle industry. (Exhibit 107)

45. Source: The Statistics of Taiwan Bicycles Export published by Taiwan Bicycles Export Association, submitted by Raleigh Canada Ltd., Exhibit 60.

46. Total number of exporters and the number of exporter being charged with anti-dumping duties are calculated from Exhibit 17.

Date Modified: 2007-08-21

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