ARCHIVED - Anti-dumping and Countervailing Program

This page has been archived.

Final Determination - Stainless Steel Round Bar

OTTAWA, September 27, 2000

4258-109 - AD/1238
4218-9 - CV/90

 

STATEMENT OF REASONS

 

Concerning the making of a final determination
of dumping with respect to

CERTAIN STAINLESS STEEL ROUND BAR
ORIGINATING IN OR EXPORTED FROM BRAZIL

and of subsidizing with respect to

CERTAIN STAINLESS STEEL ROUND BAR
ORIGINATING IN OR EXPORTED FROM BRAZIL AND INDIA

 

DECISION

Pursuant to paragraph 41(1)(a)of the Special Import Measures Act, the Commissioner of Customs and Revenue has today made a final determination of dumping with respect to certain stainless steel round bar originating in or exported from Brazil and a final determination of subsidizing with respect to the same goods originating in or exported from Brazil and India.

This Statement of Reasons is also available in French.
Cet énoncé des motifs est également disponible en français.

 

STATEMENT OF REASONS

 

SUMMARY

On March 31, 2000, the Commissioner of Customs and Revenue (Commissioner) initiated an investigation respecting the alleged injurious dumping into Canada of certain stainless steel round bar originating in or exported from Brazil and the injurious subsidizing of the same goods from Brazil and India.

The investigation was initiated in response to a complaint filed by Atlas Specialty Steels, a division of Atlas Steels Inc. of Mississauga, Ontario.

On June 29, 2000, the Commissioner made a preliminary determination of dumping and subsidizing with respect to the subject goods from the named countries.

The investigation continued after the preliminary determination and the Commissioner is now satisfied that the margins of dumping and amounts of subsidy are not insignificant and that the volumes of dumped and subsidized goods are not negligible. Accordingly, the Commissioner has made a final determination of dumping and subsidizing in accordance with paragraph 41(1)(a) of the Special Import Measures Act (SIMA).

 

INTERESTED PARTIES

Complainant

The complainant is Atlas Specialty Steels, a division of Atlas Steels Inc. of Mississauga, Ontario (Atlas). The company is the only known producer of stainless steel round bar in Canada.

Exporters

The Canada Customs and Revenue Agency (CCRA) has identified five exporters and two vendors who were involved in the manufacture and sale of the subject goods to Canada during the period of investigation (POI). The names and addresses of these exporters and vendors are listed by country of origin in Appendix 1.

Importers

The CCRA identified seven importers of subject goods during the POI. The names and addresses of these importers are listed in Appendix 2.

 

BACKGROUND

Since 1982, there have been six separate dumping investigations initiated with respect to imports of stainless steel bar as a result of complaints filed by Atlas.

The complaint relating to the current investigation was filed on February 25, 2000, following a number of discussions and meetings with the CCRA. On March 1, 2000, the CCRA informed Atlas that the complaint was properly documented and also notified the Governments of Brazil and India that a properly documented complaint had been filed.

On March 27, 2000, a submission was made by the Government of India (GoI) to the CCRA expressing its view that the identified subsidy programs in India are not actionable subsidies within the meaning of SIMA or the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures (SCM Agreement). The CCRA considered this submission, but determined that there was sufficient evidence to proceed with the investigation.

This investigation into the alleged injurious dumping of certain stainless steel round bar from Brazil and the injurious subsidizing of the same product from Brazil and India was initiated on March 31, 2000.

On June 29, 2000, the Commissioner made a preliminary determination of dumping and subsidizing with respect to the subject goods from the named countries pursuant to subsection 38(1) of SIMA.

 

PRODUCT INFORMATION

Definition

For the purpose of this investigation, the subject goods are defined as:

stainless steel round bar of sizes 25 mm diameter up to 570 mm diameter inclusive, originating in or exported from Brazil and India, but excluding stainless steel round bar made to specifications:

• ASN-A3380 and ASN-A3294
• 410QDT (oil quenched), i.e. grade 410 quenched and double tempered with an oil quenching medium.

Product Description

The subject goods include round bar in cut lengths, with various diameters, and with a variety of surface finishes.

Stainless steel round bar may be hot rolled or forged only; hot rolled or forged and annealed; hot-rolled or forged and annealed and descaled or bar turned, rough turned or lathe turned; cold drawn whether smooth turned/rough ground, centreless ground or centreless ground and polished; hot-rolled and bar turned and smooth turned/rough ground or centreless ground or centreless ground and polished.

Stainless steels are corrosion resistant and/or heat resistant steels which contain, by weight, a maximum carbon content of 1.2% and a minimum chromium content of 10.5%.

There are many individual chemical analyses or grades for stainless steels. These analyses typically include other alloying elements besides chromium (such as nickel and molybdenum, among others) and are tailored to meet the mechanical and/or physical properties of particular end-use applications. The most popular analyses of stainless steel bar are AISI (American Iron & Steel Institute) types 303, 304, 304L, 316, 316L, 410, 416, 420, 430F, and the 630 or 17Cr-4Ni precipitation hardening grade. These analyses account for over 85% of the total Canadian consumption of stainless steel bar.

Use of the Subject Goods

Stainless steel round bar is used in a variety of production and maintenance applications which require resistance to corrosion and/or heat. Consequently, stainless steel round bar finds application in a variety of industries.

These include pulp and paper, power generation, petro-chemical, oil and gas, valves and fittings, automotive and transportation. Round bars are used for a variety of applications including valve bodies, various mixer shafts and pump shaft applications. Due to the corrosive and/or high heat environments in which stainless steel is employed, substitute or alternate goods are not appropriate.

As indicated above, stainless steel is classified and sold by AISI chemical analysis numerical designations. Once these analyses are met, the resulting product is fungible and the most important factor in purchasing decisions is price. The imported goods from Brazil and India are fully substitutable for Atlas' stainless steel round bar.

 

CLASSIFICATION OF IMPORTS

The subject stainless steel round bar may be imported under the following Harmonized System classification numbers:

7222.11.00.11
7222.20.90.11
7222.11.00.21
7222.20.90.21
7222.20.10.11
7222.30.00.11
7222.20.10.21
7222.30.00.21

 

THE CANADIAN INDUSTRY

Atlas, a division of Atlas Steels Inc., is a producer of specialty steels and Canada's only manufacturer of stainless steel round bar. The company was founded in 1928 at Welland, Ontario, where it currently employs approximately 1,000 workers.

On June 15, 2000, Atlas Steels Inc. announced that it had agreed to sell its operating divisions to Slater Steel Inc. of Mississauga, Ontario, with a targeted completion date of July 31, 2000, for the sale. On August 1, 2000, Slater Steel Inc. announced that it had completed the acquisition of Atlas Specialty Steels and Atlas Stainless Steels and other assets from Atlas Steels Inc.

 

THE CANADIAN MARKET

In its complaint, Atlas provided an estimate of the size of the Canadian market for 1996 to 1999, based on its domestic sales plus information from Statistics Canada on imports of subject goods.

Subsequent to the preliminary determination, the CCRA continued to review the import data to ensure that these statistics reflected the actual situation. As a result of information provided by the Indian exporters, it was revealed that the volume of imports of subject goods during the period of investigation (POI) from India had been understated in the Statement of Reasons issued for the preliminary determination. This has been changed to reflect the correct volumes imported in 1999.

Information on the total size of the Canadian market cannot be divulged because it could reveal the complainant's confidential sales data.

Appendix 3 outlines the imports of stainless steel round bar from all sources for 1996 to 1999 and reflects the revised volume of subject goods imported from India in 1999.

 

RESULTS OF THE INVESTIGATION

In conducting its investigation, the CCRA requested the identified Brazilian exporters, vendors and importers to provide information necessary to determine the normal values and export prices of the subject goods. In addition, information was requested from the Governments of Brazil and India to determine whether or not programs were available to the steel industry in those countries and if so, to establish if an actionable benefit was conferred on the industry. Exporters from these countries were also requested to provide information concerning the benefits, if any, conferred by any subsidy program.

The dumping and subsidy investigation covered all subject goods released into Canada during the Period of Investigation (POI) of January 1, 1999 to December 31, 1999.

A preliminary response to the CCRA's Request for Information (RFI) received from the Government of Brazil (GoB) on May 11, 2000, was incomplete. Although additional information was subsequently submitted by the GoB, on August 4, 2000, its response could still not be considered complete. Also, no responses were received from the exporter or vendors of the subject goods from Brazil. Under the circumstances, the CCRA was compelled to use the best information available to reach a final determination with respect to Brazil.

Responses to the RFI were received from four exporters in India and verified through on-site meetings at the exporters' premises. In addition, submissions respecting subsidy programs were received from the GoI and discussed at a meeting held in New Dehli on August 4, 2000. In response to GoI' s request for informal consultations, Canadian government and GoI representatives met again in Ottawa on September 6, 2000. The GoI made representations with respect to certain subsidy programs which the CCRA had reviewed during the investigation.

 

DUMPING INVESTIGATION

BRAZIL

Normal Value

Normal values are usually determined using information which is submitted by the foreign companies and verified by the CCRA. In normal circumstances, the normal values are based on the exporter's domestic selling prices or product costs. In the absence of such data, the Minister must prescribe the method for the determination of the normal values.

For the final determination, the normal values were determined by ministerial specification and are based on the export price advanced by 59.5%. The advance found in the specification was identified as the highest margin of dumping found for shipments made during the POI.

Export Price

The export prices were based on the importers' declared purchase prices pursuant to section 24 of SIMA, less amounts for export charges, where identified.

Margins of Dumping

All of the subject goods from Brazil during the POI were reviewed and found to be dumped by 37.3% of normal value.

The margin of dumping and the resulting percentage rate of duty for all exporters of subject goods from Brazil is contained in Appendix 4.

 

VOLUME OF DUMPED IMPORTS

Before making a final determination of dumping, the Commissioner must be satisfied that the actual or potential volume of dumped goods is not negligible. If the volume of dumped goods of a country is less than 3% of the total volume of like goods that are released into Canada from all countries, the volume is considered to be negligible. The volume of dumped imports from Brazil exceeds this negligibility threshold (Appendix 5).

 

SUBSIDY INVESTIGATION

Background

The subsidy portion of the investigation covered all shipments of the subject goods released into Canada during the period of investigation of January 1, 1999 to December 31, 1999, originating in or exported from Brazil and India. Subsidy Requests for Information (Subsidy RFIs) were sent to each of the governments and exporters in the named countries. Responses to the subsidy RFIs were received from four exporters in India. In addition, submissions were received from the GoI.

In determining whether a program results in a subsidy, the CCRA considered whether: (1) there was a financial contribution by a government of a country other than Canada; and (2) whether there was a benefit conferred on persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of goods.

Under SIMA, there is a financial contribution by a government of a country other than Canada where:

• practices of the government involve the direct transfer of funds or liabilities or the contingent transfer of funds or liabilities;
• amounts that would otherwise be owing and due to the government are exempted or deducted; or amounts that are owing and due to the government are forgiven or not collected;
• the government provides goods or services, other than general governmental infrastructure, or purchases goods; or
• the government permits or directs a non-governmental body to do any thing referred to in any of paragraphs (a) to (c) where the right or obligation to do the thing is normally vested in the government and the manner in which the non-governmental body does the thing, does not differ in a meaningful way from the way the government would do it.

If a subsidy is found to exist, it will be subject to countervailing duties if the subsidy is specific. A subsidy is considered to be specific when it is limited, in law, to a particular enterprise or is a prohibited subsidy. A prohibited subsidy includes an export subsidy which is contingent on export performance. A subsidy is not specific where the criteria or conditions governing eligibility for, and the amount of, the subsidy are:

• objective;
• set out in a legislative, regulatory or administrative instrument or other public document; and
• applied in a manner that does not favour or is not limited to a particular enterprise. Under subsection 2(1) of the SIMA, the term "enterprise" is defined to include "a group of enterprises, an industry and a group of industries".

Notwithstanding that a subsidy is not limited in the foregoing manner, the Commissioner may still determine the subsidy to be specific if:

• there is exclusive use of the subsidy by a limited number of enterprises;
• there is predominant use of the subsidy by a particular enterprise;
• disproportionately large amounts of the subsidy are granted to a limited number of enterprises; and
• the manner in which discretion is exercised by the granting authority indicates that the subsidy is not generally available.

The amount of subsidy is calculated on the basis of the total benefits to the recipients and is generally considered to be insignificant if the amount of the subsidy attributable to the subsidized imports from a particular country is less than one percent of the total export price of all subject goods under investigation from that country. However, the two countries in this investigation are both developing countries according to the Organization for Economic Co-operation Development. When a subsidy investigation involves developing countries, section 41.2 of SIMA requires the Commissioner to take into account the provisions of paragraphs 10 and 11 of Article 27 of WTO SCM Agreement. This article will require termination of the subsidy portion of the investigation if the Commissioner determines that:

• the overall level of the subsidies granted upon the product in question does not exceed two per cent of its value calculated on a per unit basis or three per cent of its value calculated on a per unit basis in respect of those developing countries meeting the criteria set out in paragraph 11 of Article 27 of the SCM Agreement; or
• the volume of the subsidized imports represents less than four per cent of the total imports of the like products in the importing Member, unless imports from developing country Members whose individual shares of total imports represent less than four per cent collectively account for more than nine per cent of the total imports of the like products in the importing Member.

In this investigation, Brazil is subject to the two per cent level of subsidization. India is subject to the three percent level of subsidization as it is included in paragraph 11 of Article 27 as being a developing country member referred to in Annex VII of the SCM Agreement.

 

RESULTS OF THE SUBSIDY INVESTIGATION

The subsidy programs identified are discussed below for each country and exporter.

BRAZIL

A subsidy Request for Information (RFI) was sent to the GoB on March 31, 2000. On

April 26, 2000, the GoB requested a 30-day extension to the May 8^th deadline to provide its response. While the CCRA could not accede to the GoB's request, for the preliminary determination, owing to the legislated time frames, the GoB was advised that its submission would be taken into account for purposes of the final determination. The GoB then provided a preliminary response on May 11, 2000. Although additional information was submitted on August 4, 2000, the CCRA has concluded that the GoB's response remains incomplete.

A subsidy RFI was also sent on March 31, 2000 to possible exporters. Villares Metal SA (Villares) who had shipped subject goods to Canada during the period of investigation provided no response at all to the CCRA.

Consequently, the CCRA was compelled to use the information provided by the complainant and other information available to the CCRA to ascribe to Villares benefits from potential subsidy programs such as the following.

• Elimination of ICMS (consumption tax) on Exports of Primary and Semi-manufactured Goods,
• Unburdening of PIS/PASEP (payroll taxes) and Cofins (social security contributions) on Inputs Used in Exporting Products,
• Extension of Drawback to Exports Through Third Companies,
• Creation of Export Credit Insurance,
• Export Financing Program - PROEX,
• Manufacture Export Support Program,
• Reduction in Port Fees and Tariffs,
• Elimination of Port Tariff Additional ATP Charges,
• Fiscal Credits and Elimination of ICMS on Productive Activities and Investments,
• Fiscal Unburdening Measures - Income Tax, IPI (tax on manufactured goods), Import Tax,
• Accelerated Depreciation, and
• Reduction in Financial Cost of Investments.

Therefore, for Villares, the amount of subsidy for purposes of the final determination was determined by a ministerial specification based on the amount by which the export price of the goods was lower than the costs as established by the CCRA at the time of initiation. The amount of subsidy for Villares is 1,419 reals per metric tonne which is above the 2% insignificance threshold.

 

INDIA

Representations were made by the GoI on March 27, 2000, subsequent to the CCRA notifying the GoI of the receipt of a properly documented complaint. On March 31, 2000, a subsidy RFI was sent to the GoI to which a response was received on May 8, 2000. A response to Supplementary Information Request No.1 sent to the GoI on May 18, 2000, was not received until July 14 and 17, 2000. GoI's response to Supplementary Information Request No. 2 sent on July 10, 2000 was delayed until August 24 and 31, 2000, well after the verification meeting held on August 4, 2000. However, the key matters raised in this information request were discussed at the verification meeting.

On September 6, 2000, at a meeting in Ottawa at the GoI's request, GoI representatives made representations to Canadian government representatives with respect to certain subsidy programs reviewed by the CCRA in this investigation.

A subsidy RFI was also sent on March 31, 2000 to possible exporters from India. Four companies, namely Ferro Alloys Corporation Limited; Panchmahal Steel Limited, Venus Wire Industries Limited and Viraj Impoexpo Limited provided the CCRA with complete submissions.

Supplementary information requests were also sent to all the exporters prior to the verification visit. Verification meetings with the GoI as well as all four exporters in India were held during August 2000.

The CCRA has determined that there is a financial contribution by the GoI that has conferred a benefit to one or more of the exporters during the period of investigation under the following programs:

• Duty Entitlement Passbook Scheme,
• Special Import Licences,
• Export Promotion Capital Goods Scheme,
• Pre-shipment Export Financial Assistance,
• Post-shipment Export Financial Assistance,
• Tax Exemptions for Export Profits.

Appendix 8 contains the rationale used in determining why these programs result in actionable subsidies in accordance with the legislation. In addition, it identifies the programs that were identified but found not to have been used by any of the four exporters.

Ferro Alloys Limited

After the preliminary determination, additional information was requested and verification meetings were held at Ferro Alloys premises in Nagpur on August 7 and 8, 2000. As a result, the Commissioner of the CCRA has determined that:

There is a financial contribution by the GoI that conferred a benefit to Ferro Alloys under the following programs:

• Duty Entitlement Pass Book Scheme (export subsidy)
• Special Import Licences (export subsidy)
• Export Promotion Capital Goods Scheme (export subsidy)
• Post-shipment Export Financial Assistance (export subsidy)

These programs are specific for the reason that they are prohibited subsidies in accordance with paragraph 2(7.2)(b) of SIMA; they are prohibited subsidies because they are contingent upon export performance as defined in Article 3.1(a) of the SCM Agreement.

The amount of subsidy in relation to these programs, in aggregate, represent 5,745 rupees per metric tonne, which exceeds the three per cent threshold stipulated in Article 27.11 of the SCM Agreement concerning developing countries referred to in section 41.2 of SIMA.

The volume of subject goods from all exporters in India, 797 metric tonnes, exceeds the four per cent threshold stipulated in Article 27.10(b) of the SCM Agreement concerning developing countries referred to in section 41.2 of SIMA.

Panchmahal Steel Limited

After the preliminary determination, additional information was requested and verification meetings were held at Panchmahal's premises in Vadodara on August 16 and 17, 2000. As a result, the Commissioner of the CCRA has determined that:

There is a financial contribution by the GoI that conferred a benefit to Panchmahal under the following programs:

• Duty Entitlement Pass Book Scheme (export subsidy)
• Export Promotion Capital Goods Scheme (export subsidy)
• Post-shipment Export Financial Assistance (export subsidy)

These programs are specific for the reason that they are prohibited subsidies in accordance with paragraph 2(7.2)(b) of SIMA; they are prohibited subsidies because they are contingent upon export performance as defined in Article 3.1(a) of the SCM Agreement.

The amount of subsidy in relation to these programs, in aggregate, represent 10,406 rupees per metric tonne, which exceeds the three per cent threshold stipulated in Article 27.11 of the SCM Agreement concerning developing countries referred to in section 41.2 of SIMA.

The volume of subject goods from all exporters in India, 797 metric tonnes, exceeds the four per cent threshold stipulated in Article 27.10(b) of the SCM Agreement concerning developing countries referred to in section 41.2 of SIMA.

Venus Wire Limited

After the preliminary determination, additional information was requested and verification meetings were held at Venus Wire's premises in Mumbai on August 12, 2000. As a result, the Commissioner of the CCRA has determined that:

There is a financial contribution by the GoI that conferred a benefit to Venus Wire under the following programs:

• Duty Entitlement Pass Book Scheme (export subsidy)
• Special Import Licences (export subsidy)
• Pre-shipment Export Financial Assistance (export subsidy)
• Post-shipment Export Financial Assistance (export subsidy)
• Tax Exemption for Export Profits (export subsidy)

These programs are specific for the reason that they are prohibited subsidies in accordance with paragraph 2(7.2)(b) of SIMA; they are prohibited subsidies because they are contingent upon export performance as defined in Article 3.1(a) of the SCM Agreement.

The amount of subsidy in relation to these programs, in aggregate, represent 8,454 rupees per metric tonne, which exceeds the three per cent threshold stipulated in Article 27.11 of the SCM Agreement concerning developing countries referred to in section 41.2 of SIMA.

The volume of subject goods from all exporters in India, 797 metric tonnes, exceeds the four per cent threshold stipulated in Article 27.10(b) of the SCM Agreement concerning developing countries referred to in section 41.2 of SIMA.

Viraj Impoexpo Limited

Viraj's submission was not considered for the preliminary determination as it was received after the established deadline. However, it was taken into account for the final determination. After the preliminary determination, additional information was requested from Viraj and verification meetings were held at the company's premises in Tarapur on August 10 and in Mumbai on August 11, 2000. On September 11, 2000, Viraj's counsel made representations to the CCRA with respect to certain issues pertaining to the calculation of the amount for subsidy. The Commissioner of the CCRA has determined that:

There is a financial contribution by the GoI that conferred a benefit to Viraj Impoexpo under the following programs:

• Duty Entitlement Pass Book Scheme (export subsidy)
• Special Import Licences (export subsidy)
• Pre-shipment Export Financial Assistance (export subsidy)
• Post-shipment Export Financial Assistance (export subsidy)
• Export Promotion Capital Goods Scheme (export subsidy)
• Tax Exemption for Export Profits (export subsidy)

These programs are specific for the reason that they are prohibited subsidies in accordance with paragraph 2(7.2)(b) of SIMA; they are prohibited subsidies because they are contingent upon export performance as defined in Article 3.1(a) of the SCM Agreement.

The amount of subsidy in relation to these programs, in aggregate, represent 4,949 rupees per metric tonne, which exceeds the three per cent threshold stipulated in Article 27.11 of the SCM Agreement concerning developing countries referred to in section 41.2 of SIMA.

The volume of subject goods from all exporters in India, 797 metric tonnes, exceeds the four per cent threshold stipulated in Article 27.10(b) of the SCM Agreement concerning developing countries referred to in section 41.2 of SIMA.

 

SUMMARY OF RESULTS

A summary of the amounts of subsidy for all exporters of subject goods is contained in Appendix 6. Appendix 7 provides a summary of the volume of subsidized imports of subject goods during the POI which indicates that Brazil and India each have a volume of subsidized goods that exceeds the negligibility threshold, i.e. exceeds 4% of the total volume of goods that are released into Canada from all countries and that are of the same description as the like goods.

 

DECISION

On this date, pursuant to paragraph 41(1)(a) of SIMA, a final determination of dumping was made with respect to certain stainless steel round bar originating in or exported from Brazil and a final determination of subsidizing was made with respect to the same goods originating in or exported from Brazil and India.

In making this decision, the Commissioner is satisfied that the subject goods have been dumped and subsidized, that the margin of dumping and amounts of subsidy are not insignificant and that the volume of dumped and subsidized goods is not negligible.

Clause 41(1)(a)(iv)(C)of SIMA, requires that the Commissioner specify where there is a prohibited subsidy on the goods and the amount of the prohibited subsidy. The Government of India's Duty Entitlement Pass Book Scheme, Special Import Licence, Pre-shipment Export Financial Assistance, Post-shipment Export Financial Assistance, Export Promotion Capital Goods Scheme and Tax Exemption for Export Profits, being export subsidies, have been specified as prohibited subsidies and the amounts of subsidy have been specified.

 

FUTURE ACTION

The Canadian International Trade Tribunal's inquiry concerning the question of injury to production in Canada is continuing. The Tribunal will issue its finding by October 27, 2000.

Subject goods imported during the provisional period will continue to be assessed provisional duty as determined at the time of the preliminary determination. The provisional period began on June 29, 2000, the date of the preliminary determination, and will end on the date the Tribunal issues its finding. For further details on the application of provisional duties, refer to the Statement of Reasons issued at the time of the preliminary determination of the investigation which is available on the CCRA internet web site at: www.ccra-adrc.gc.ca/sima-lmsi/.

If the Tribunal finds that the dumped and subsidized goods have not caused injury and do not threaten to cause injury, all proceedings relating to this investigation will be terminated. In such a case, all provisional duty or security posted by importers will be returned and future imports will not be subject to anti-dumping or countervailing duties.

If the Tribunal finds that the dumped and subsidized goods have caused injury, the CCRA will finalize the anti-dumping and countervailing duty payable on subject goods released from customs' possession during the provisional period pursuant to section 55 of SIMA. If the provisional duty paid is in excess of the final amount of anti-dumping and countervailing duty payable, the excess duty paid will be refunded. Imports released from customs' possession after the date of the Tribunal's finding will be subject to anti-dumping duty and countervailing duty equal to the margin of dumping or amount of subsidizing. If anti-dumping duty or countervailing duty is payable, such duty is hereby demanded pursuant to section 11 of SIMA.

If the Tribunal finds that the dumped and subsidized goods threaten to cause injury, all provisional duty paid or security posted by importers will be returned. However, imports released from customs' possession after the date of the Tribunal's finding will be subject to anti-dumping duty and countervailing duty equal to the margin of dumping or amount of subsidizing. If anti-dumping duty or countervailing duty is payable, such duty is hereby demanded pursuant to section 11 of SIMA.

In relation to the dumping portion of this investigation, as there are no co-operating exporters specific normal values for the subject goods have not been determined. Where specific normal values have not been issued, anti-dumping duty at a rate of 59.5 per cent of the export price will be payable on imports of the subject goods from Brazil. To avoid the application of such an advance on export prices on their future shipments of the subject goods, exporters can submit to the CCRA information required to permit the establishment of specific normal values for these products.

With respect to the subsidizing portion of this investigation, a specific amount of subsidy was determined for the four co-operating exporters in India - Ferro Alloys, Panchmahal Steel, Venus Wire and Viraj Impoexpo. For all other exporters, the amount of subsidy will be equal to amounts specified pursuant to a ministerial specification. Exporters and their respective governments can avoid application of an amount specified pursuant to the ministerial specification by furnishing the CCRA with the information required to determine company specific amounts of subsidy.

If the Tribunal finds that injury is likely to be caused by further dumped and subsidized imports and if the export prices of the imported goods are lower that their corresponding normal values, anti-dumping and countervailing duties will be collected. As provided in section 10 of SIMA, where both anti-dumping and countervailing duties are to be collected on goods imported into Canada and the margin of dumping is wholly or partly attributable to an export subsidy, only that portion of the anti-dumping duty which exceeds the amount of subsidy is payable.

In the case of goods imported from Brazil, insufficient information was provided to enable the CCRA to determine whether the subsidies were domestic subsidies affecting the domestic market as well as export prices. Consequently, the duty applicable to imports of these goods will be equal to the sum of both the margins of dumping and the amount of subsidy.

In the case of India, the subsidies are export subsidies that only affect export price. Since a dumping finding concerning the same type of stainless steel round bar from India has been in place since September 4, 1998, any anti-dumping duty payable on imports of these goods will be reduced by the applicable amount of subsidy, pursuant to section 10 of SIMA.

 

PUBLICATION

Notice of this final determination is being published in the Canada Gazette pursuant to paragraph 41(3)(a) of SIMA.

 

INFORMATION

This Statement of Reasons has been provided to persons directly interested in these proceedings. It is also posted at the Directorate's Internet website . For further information, please contact the following CCRA officers by fax at (613) 941-2612, by telephone, or at their respective e-mail address:

Iqbal Motani
(613) 952-7547
iqbal.motani@ccra-adrc.gc.ca

Vera Hutzuliak
(613) 954-0689
vera.hutzuliak@ccra-adrc.gc.ca

Mailing address:

Canada Customs and Revenue Agency
Anti-dumping and Countervailing Directorate
191 Laurier Avenue West
16^th Floor, Sir Richard Scott Building
Ottawa, ON
K1A 0L5

Internet website for the Anti-dumping and Countervailing Directorate:

www.ccra-adrc.gc.ca/sima-lmsi/

 

R.A. Séguin
A/Director General
Anti-dumping and Countervailing Directorate

 

APPENDIX 1

Exporters

Brazil

Villares Metal SA
R. Alfredo Dumont Villares, 155
13177-900 Sumare, SP
Brazil

Vendors

Duferco Steel Inc.
100 Metro Park S.
Lawrence Harbour, N.J.
08879
USA

Ferrostaal Incorporated
P.O. Box 911553
Dallas, Texas
USA

India

Ferro Alloys Corp Ltd (FACOR)
46 A & B MIDC Industrial Estate
Hingna Road
Nagpur 440 028
India

Panchmahal Steel Ltd.
"Landmark", 7^th Floor
Race Course Circle
Vadodara, Gujarat 390007
India

Venus Wire Industries Ltd.
13^th Khetwadi Lane
Mumbai 400 004, Maharashtra
India

Viraj Impoexpo Ltd.
10 Imperial Chambers, lst Floor
Wilson Road
Ballard Estates
Mumbai 400 038, Maharashtra
India

 

APPENDIX 2

Importers

ASA Alloys Inc.
105 Claireport Crescent
Etobicoke, Ontario
M9W 6P7

Atlas Ideal Metals
Division of Rio Algom
161 The West Mall
Etobicoke, Ontario
M9C 4V8

Fidelity Stainless
7075 Firtree Drive
Mississauga, Ontario
L5S 1J7

Macsteel International (Canada) Ltd.
1210 - 21331 Gordon Way
Richmond, British Columbia
V6W 1J9

Ni-Met Resources Inc.
6130 Tomken Road
Mississauga, Ontario
L5T 1T6

Olbert Metal Sales Limited
989 Derry Road East
Suite 305
Mississauga, Ontario
L5T 2J8

Unalloy/IWRC Division
7925 Goreway Drive
Brampton, Ontario
L6T 5J7

APPENDIX 3

IMPORTS OF STAINLESS STEEL ROUND BAR

	1996		1997		1998		1999
Country of Export	Volume Imported (NT)	Per cent of Total Imports	Volume Imported (NT)	Per cent of Total Imports	Volume Imported (NT)	Per cent of Total Imports	Volume Imported (NT)	Per cent of Total Imports
Brazil	0	0.0	0	0.0	0	0.0	965	24.0
India	71	2.6	155	4.7	510	15.0	797	19.8
Total Imports - Named Countries	71	2.6	155	4.7	510	15.0	1,762	43.8
Other Imports	2,678	97.4	3,171	95.3	2,884	85.0	2,258	56.2
TOTAL IMPORTS	2,749	100%	3,326	100 %	3,394	100 %	4,020	100 %

Sources:

• Complaint, Attachment 1 (Based on Statistics Canada data).
• CCRA's internal information systems.
• Customs entries
• Exporters' Submissions

APPENDIX 4

MARGINS OF DUMPING -BRAZIL

STAINLESS STEEL ROUND BAR

(January 1, 1999 to December 31, 1999)

Country/ Exporter	Quantity of Goods Dumped (%)	(1) Margin of Dumping	(2) Highest Margin of Dumping	(3) Duty Payable
Brazil - All exporters	100%	37.3%	37.3%	59.5%

NOTES:

1. Expressed as a percentage of normal value for the dumped goods.
2. Expressed as a percentage of normal value for the selected importation.
3. Expressed as a percentage of export price.

APPENDIX 5

IMPORT VOLUMES DUMPING

STAINLESS STEEL ROUND BAR

(January 1, 1999 to December 31, 1999)

Country of Export/Origin	Total Volume Imported Net Tons	Per cent of Total Imports	Total Volume Dumped Net Tons	Dumped Imports as a Per Cent of Total Imports
Brazil Total - Other Countries TOTAL IMPORTS	965 3,055 4,020	24% 76% 100%	965	24%

Country of Origin/ Exporter	Quantity of Goods Subsidized (%)	Amount of Subsidy (Per Metric Tonne)	CountervailingDuty Payable (Per Metric Tonne)
Brazil: - Villares Metal SA - Any Other Exporters	100%	1,419 reals	1,419 reals 1,419 reals
India: - Ferro Alloys - Panchmahal Steel - Venus Wire - Viraj Impoexpo - Any Other Exporters	100% 100% 100% 100%	5,745 rupees 10,406 rupees 8,454 rupees 4,949 rupees	5,745 rupees 10,406 rupees 8,454 rupees 4,949 rupees 12,196 rupees

Sources:

• Complaint, Attachment 1 (Based on Statistics Canada data).
• CCRA's internal information systems.
• Customs entries.

APPENDIX 6

AMOUNTS OF SUBSIDY BY COUNTRY/EXPORTER

STAINLESS STEEL ROUND BAR

(January 1, 1999 to December 31, 1999)

 

APPENDIX 7

IMPORT VOLUMES SUBSIDY

STAINLESS STEEL ROUND BAR

(January 1, 1999 to December 31, 1999)

Country of Export/Origin	Total Volume Imported Net Tons	Per cent of Total Imports	Total Volume Subsidized Net Tons	Subsidized Imports as a Per Cent of Total Imports
Brazil India Total - Named Countries Total - Other Countries TOTAL IMPORTS	965 797 1,762 2,258 4,020	24.0% 19.8% 43.8% 56.2% 100%	965 797 1,762	24.0% 19.8% 43.8%

APPENDIX 8

INDIA - SUBSIDY PROGRAMS

PROGRAMS THAT WERE FOUND TO EXIST AND THAT WERE FOUND TO HAVE CONFERRED A BENEFIT TO INDIAN EXPORTERS

Duty Entitlement Pass Book Scheme

The GoI's Duty Entitlement Pass Book (DEBP) scheme is outlined in its "Export and Import Policy", Chapter 7 'Duty Exemption Scheme'. It is stated at paragraph 7.25 that the objective is "to neutralize the incidence of basic customs duty and surcharge thereof on the import content of the export product. The neutralization shall be provided by way of grant of duty credit against the exported product." Paragraph 7.33 further states that DEPB "aims to provide the facility to eligible exporters to import inputs which are required for production."

As such, it is the GoI's position that that the DEPB scheme is a duty refund or drawback program permissible under SIMA and the SCM Agreement.

All the Indian exporters of the subject goods in this investigation have received credits under the DEBP scheme on a post export basis. The companies are granted such credit at a specified percentage of the f.o.b. value of the export shipments. The GoI establishes the duty credit rates based on its "Standard Input-Output Norms" (SIONs) which lists, for a given product, goods that may be imported for use in production (inputs) and the quantity that may be imported for the production of a given quantity of the finished end-product. At the time of the preliminary determination, the GoI submission had indicated that the DEPB credit rate for exports of stainless steel round bar was 14%, whereas the exporter submissions had shown that each company received DEBP credit at a higher rate than this 14% stipulated by the government. This discrepancy was explained during the verification visit to the GoI whereupon it was revealed that 14% applied to unpolished stainless steel or "black" bar, while all exports to Canada had been of polished, or "bright" bar. The latter carried a DEPB rate of 20% from January to March 1999, and 21% from April to December 1999.

At the preliminary determination, the CCRA had noted that the exporter submissions indicated that the GoI had not conducted on site DEBP specific audits. At the verification meetings with the GoI and particularly with the exporters, the CCRA reviewed the operation of the DEPB scheme, its recording in the companies' books and the DEBP records at the companies' premises. Evidence was provided to show the verification procedures performed by the GoI (Customs authorities, Excise authorities and the Directorate General of Foreign Trade) prior to granting the application for the DEPB credit. Also, unlike the final results obtained in Canada's recent investigation into the subsidizing of certain hot-rolled carbon steel plate from several countries including India, exporters of stainless steel round bar maintained sufficient records and provided information to enable the CCRA to relate the DEBP credits on the goods exported with the duty paid on the inputs imported and used to produce exported goods. The CCRA has therefore determined the extent to which the DEPB credits received on the exported goods exceeds the import duties paid on the imported inputs used to produce these goods.

As a result, for purposes of the final determination of subsidizing, in accordance with paragraphs (1) and (2) of section 35.01 of the Special Import Measures Regulations (SIMR), the CCRA has considered the excess DEPB credits received during the period of investigation by the Indian exporters as constituting a countervailable benefit to these companies.

The excess credit granted under the DEBP scheme is a specific subsidy under paragraph 2(7.2)(b) of SIMR for the reason that it is a prohibited subsidy as defined in Article 3.1(a) of the Subsidies Agreement, because it is contingent upon export performance.

Based on data provided in the exporters' submissions and confirmed through on-site verification visits, the amount of subsidy for Ferro Alloys, Panchmahal, Viraj and Venus Wire was determined by distributing the excess DEPB credits over the respective quantity of goods exported.

Special Import Licences

The GoI's granting of Special Import Licences (SILs) is outlined in paragraph 11.12 of its "Export and Import Policy". SILs are issued to certain categories of exporters to allow the importation of certain restricted goods, but do not relieve the payment of import duties. Unused SILs may also be sold, as stipulated in paragraph 11.13.

The CCRA does not view the use of SILs for importation of restricted goods up to a certain value of eligible exports by Ferro Alloys, Panchmahal and Venus Wire and Viraj as having conferred a benefit to the companies. However, the sale of unused SILs in the period of investigation by Ferro Alloys, Venus Wire and Viraj is considered by the CCRA as conferring a benefit to these exporters. The GoI's financial contribution in this regard is established under paragraph 2(1.6)(c) of SIMA as the provision of goods and services other than general governmental infrastructure. The benefit to the exporters is the revenue from the sale of SILs on the market in India.

The provision of SILs constitutes a specific subsidy under paragraph 2(7.2) of SIMA for the reason that it is a prohibited subsidy as defined in Article 3.1(a) of the SCM Agreement, because it is contingent on export performance.

The amount of subsidy in respect of SILs was determined in accordance with SIMR 36 on the basis of the revenues received from the sale of SIL distributed over the corresponding quantity of all products exported during the POI by Ferro Alloys, Venus Wire and Viraj.

Pre-shipment Export Financial Assistance

Under a program administered by the Reserve Bank of India, banks extend working capital loans known as Export Packing Credit (EPC) to exporters at preferential ceiling rates set by the RBI. Exporters, who generally qualify for these loans by presenting a confirmed export order or Letter of Credit to a bank, use the credit to purchase raw materials, or process, warehouse, pack, transport and/or ship goods for export. Under this program exporters may also establish pre-shipment credit lines which can be drawn upon as needed. The pre-shipment loans are then repaid from the proceeds of export bills which are purchased, negotiated or discounted by banks or other financial institutions.

The GoI's financial contribution is established under paragraph 2(7.2)(b) of SIMA. The subsidy is specific for the reason that it is a prohibited subsidy as defined in Article 3.1(a) of the SCM Agreement, because it is contingent on export performance.

The amount of subsidy derived from this program by Venus Wire and Viraj was determined in accordance with SIMR 28 as the amount by which the interest at the preferential rate paid on the pre shipment loans was lower than the interest that would have been payable by each of the exporters for comparable commercial loans, distributed over the respective quantity of goods shipped to Canada during the POI for which Venus Wire and Viraj had availed themselves of such loans.

Post-shipment Export Financial Assistance

The Reserve Bank of India also administers a program whereby banks provide exporters with post-shipment foreign currency and/or rupee denominated loans at preferential interest rates. The exporter must present a letter of credit and appropriate export documentation to the bank in order to be eligible for this financing. The bank then credits the account of the exporter an amount equal to 100 per cent of the invoice value less an interest expense that is based on the anticipated length of the loan. If the loan is repaid in a shorter or longer period of time than anticipated, an appropriate adjustment is made. Post-shipment loans are repaid from the proceeds of the export sale.

The GoI's financial contribution is established under paragraph 2(7.2)(b) of SIMA. The subsidy is specific for the reason that it is a prohibited subsidy as defined in Article 3.1(a) of the SCM Agreement, because it is contingent on export performance.

The amount of subsidy derived from this program by Ferro Alloys, Panchmahal, Venus Wire and Viraj was determined in accordance with SIMR 28 as the amount by which the interest at the preferential rate paid on such loans was lower than the interest that would have been payable for comparable commercial loans by each of the exporters, distributed over their respective quantity of exports of goods to Canada.

Tax Exemption on Export Profits

Under section 80 HHC of the Indian Income Tax Act, exporters may deduct export profit when determining taxable income. Under the current regime, eligible exporters file along with their tax return a certificate authenticating the amount of relief available to them under this provision, calculated as the percentage of export sales over total sales multiplied by total profit.

The GoI's financial contribution is established under paragraph 2(1.6)(b) as amounts that would otherwise be owing and due to the government are exempted.

The tax exemption on export profits constitutes a specific subsidy under paragraph 2(7.2) of SIMA for the reason that it is a prohibited subsidy as defined in Article 3.1(a) of the Subsidies Agreement, because it is contingent on export performance.

The CCRA determined the amount of subsidy under SIMR 32 for Venus Wire and Viraj, the two exporters who benefited from the program by multiplying the export profit deduction by the relevant tax rate and dividing this figure by the total quantity of the exports.

Export Promotion Capital Goods Scheme

The GoI's Export Promotion Capital Goods (EPCG) Scheme allows exporters to import capital equipment and components at reduced or nil import duties. Ferro Alloys, Panchmahal and Viraj have imported capital equipment and components at reduced, concessionary rates of duty under this scheme.

The GoI's financial contribution is established under paragraph 2(1.6)(b) of the Act as the amount of duties not collected. The benefit to the exporters is the amount of duty savings received under this program.

Only exporters are eligible for EPCG licences; thus the EPCG scheme provides a specific subsidy under paragraph 2(7.2)(b) of the Act for the reason that it is a prohibited subsidy as defined in Article 3.1(a) of the Subsidies Agreement, because it is contingent on export performance.

Under section 27.1(2) of the SIMR, the amount of subsidy in respect of any amount otherwise owing and due to government that is deducted is to be treated as a grant under section 27. Accordingly, the amount of subsidy was calculated as the difference by which duties paid were lower than duties applicable at time of importation. The resultant duty savings were amortized over the useful life of the imported capital equipment. The annualized duty savings for each of the exporters concerned were distributed over the respective quantity of the stainless steel products exported in the POI in order to determine the amount of subsidy.

OTHER PROGRAMS

In the Statements of Reasons at the time of the initiation of this investigation and at the preliminary determination, the CCRA had identified other programs which it had indicated would be followed up at the final determination.

The GoI's position is that no assistance is provided under some of the programs, or where the programs are utilized, no actionable benefit is conferred on the exporters. The CCRA's review was intended to ascertain whether the exporters had utilized or benefited from these programs with respect to the subject goods exported to Canada during the POI. Therefore, for the purposes of this investigation, as no benefits were attributable in this regard to any of the four exporters involved, the CCRA did not further pursue these programs or make any determinations with respect to such programs which are listed below.

• Advance Licence Scheme
• Duty and Sales Tax Exemption and Drawback Programs including Duty-Free Licence Program, Export Processing Zones and Export Oriented Units Scheme
• Loans at Preferential Rates from the Government of India
• Loan Guarantees from the Government of India
• Market Development Assistance Grants