NIT 2018 IN
Certain Nitisinone Capsules
Statement of Reasons
Ottawa, January 4, 2019
Concerning the preliminary determination with respect to the dumping of certain nitisinone capsules from Sweden.
Pursuant to subsection 38(1) of the Special Import Measures Act, the Canada Border Services Agency made a preliminary determination on December 20, 2018 respecting the dumping of certain nitisinone capsules from Sweden.
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 On August 2, 2018, the Canada Border Services Agency (CBSA) received a written complaint from Laboratoires KABS Inc. and its associated company MendeliKABS Inc. of Saint-Hubert, Quebec, (hereinafter, “the complainant”), alleging that imports of certain nitisinone capsules (NIT) from Sweden are being dumped. The complainant alleged that the dumping has caused injury and is threatening to cause injury to the Canadian industry producing like goods.
 On August 23, 2018, pursuant to paragraph 32(1)(a) of the Special Import Measures Act (SIMA), the CBSA informed the complainant that the complaint was properly documented. The CBSA also notified the government of Sweden that a properly documented complaint had been received.
 The complainant provided evidence to support the allegation that NIT from Sweden has been dumped. The evidence also discloses a reasonable indication that the dumping has caused injury and is threatening to cause injury to the Canadian industry producing like goods.
 On September 21, 2018, pursuant to subsection 31(1) of SIMA, the CBSA initiated an investigation respecting the dumping of NIT from Sweden.
 Upon receiving notice of the initiation of the investigation, the Canadian International Trade Tribunal (CITT) commenced a preliminary injury inquiry, pursuant to subsection 34(2) of SIMA, into whether the evidence discloses a reasonable indication that the alleged dumping of NIT has caused injury or retardation or is threatening to cause injury to the Canadian industry producing the like goods.
 On November 20, 2018, pursuant to subsection 37.1(1) of SIMA, the CITT made a preliminary determination that the evidence discloses a reasonable indication that the dumping of NIT from Sweden has caused injury or is threatening to cause injury to the domestic industry.
 On December 20, 2018, as a result of the CBSA’s preliminary investigation and pursuant to subsection 38(1) of SIMA, the CBSA made a preliminary determination of dumping of NIT originating in or exported from Sweden.
 On December 20, 2018, pursuant to subsection 8(1) of SIMA, provisional duty was imposed on imports of dumped goods that are of the same description as any goods to which the preliminary determination applies, and that are released during the period commencing on the day the preliminary determination was made and ending on the earlier of the day on which the CBSA causes the investigation in respect of any goods to be terminated pursuant to subsection 41(1) of SIMA or the day the CITT makes an order or finding pursuant to subsection 43(1) of SIMA.
Period of Investigation
 The Period of Investigation (POI) for this investigation is January 1, 2018, to June 30, 2018.
Profitability Analysis Period
 The Profitability Analysis Period (PAP) for this investigation is January 1, 2018, to June 30, 2018.
 Founded in 1997, Laboratoires KABS Inc. is a company that specializes in drug development and contract manufacturing. The head office and production facilities of Laboratoires KABS Inc. are located in Longueuil, Quebec. MendeliKABS Inc. is an affiliated company that is the promoter of NIT produced by Laboratoires KABS Inc. and has been granted market authorization and accreditation by Health Canada. The complainant is the only producer of NIT in Canada.
 The contact information of the complainant is as follows:
Laboratoires KABS Inc.
4500, rue de Tonnancour
4601, rue de Tonnancour
 The complainant has indicated that there are no trade unions that represent persons employed in the production of NIT in Canada.
 At the initiation of the investigation, the CBSA identified 5 potential importers of the subject goods from CBSA import documentation and from information submitted in the complaint. All of the potential importers were sent the CBSA’s Importer Request for Information (RFI) in respect of imports of NIT from Sweden.
 One company, Sobi Canada Inc. (Sobi Canada) provided a response to the Importer RFI.Footnote 1 The CBSA sent the company two supplemental RFIs (SRFIs) to clarify information provided in the response and request additional information. The response to these SRFIs were received and the CBSA is reviewing these responses and additional information may be requested during the final phase of the investigation.Footnote 2
 The other four parties that were contacted indicated that they did not import subject goods during the POI. Two of the four parties performed certain roles and responsibilities within Sobi Canada’s sales process relating to the quality control and distribution of the goods. The other two parties, the Sainte-Justine Hospital and SigmaSanté, are the unrelated purchaser of the subject goods and the entity responsible for the tender process for the supply of NIT in Québec.Footnote 3
 Sobi Canada is considered to be the importer of subject goods for SIMA purposes.
 At the initiation of the investigation, the CBSA identified one exporter and a contract manufacturer of the subject goods from information provided by the complainant and CBSA import entry documentation. Both of these companies were sent the CBSA’s Dumping RFI.
 One company, Swedish Orphan Biovitrum AB (Sobi AB) provided a response to the CBSA’s Dumping RFI.Footnote 4 Sobi Canada Inc. is an affiliate of Sobi AB. In its response, Sobi AB indicated that it considers itself to be the importer, the exporter and the manufacturer of the subject goods. The other contacted party, Apotek Produktion & Laboratorier, responded that they are neither the exporter nor the producer of the subject goods.
 Sobi AB provided a substantially complete response to the CBSA’s Dumping RFI. The CBSA sent the company a supplemental RFI (SRFI) to clarify information provided in the response and request additional information. The response to the SRFI was received and the CBSA is reviewing this response and additional information may be requested during the final phase of the investigation.Footnote 5 Sobi AB is considered to be the exporter of subject goods for SIMA purposes. The submission and results have been summarized in the Preliminary Results of the Dumping Investigation section, found below.
 For the purpose of this investigation, subject goods are defined as:
Capsules and tablets of nitisinone with a dosage of 2 mg, 5 mg, 10 mg and 20 mg, whether or not they are packaged for retail, originating in or exported from the Kingdom of Sweden.
Additional Product InformationFootnote 7
 The goods in question are commonly called nitisinone capsules (NIT). The chemical name and the active molecule of nitisinone is 2 (2 Nitro 4 Trifluoromethylbenzoyl) 1, 3 Cyclohexanedione (“NTBC”) and its molecular formula is C14H10F3NO5.
 Nitisinone is a drug approved for the treatment of hepatorenal tyrosinemia type 1 (HT-1). HT-1 is a rare metabolic disease affecting approximately 1,000 people worldwide. Prevalence of this disease is particularly high in Quebec, where approximately 100 people receive NIT as treatment for HT-1.
 NIT is an orally administered drug. The capsules contain a powder of nitisinone and a pharmacologically inert substance. These drugs are sold in hospital and community pharmacies by prescription.
 The product definition includes nitisinone that is packaged for retail consumption at the time it is imported, that is, packaged in plastic or glass containers with an exact unit count of the capsules. In general, these containers contain sixty (60) capsule units with the same dosage. Blister pack-type containers are also included, as well as containers containing more or less than 60 capsules.
 The product definition also includes nitisinone that is not packaged for retail consumption at the time it was imported, that is, in bulk containers intended for bottling or packaging in Canada.
 The product definition does not include nitisinone in liquid suspension.
 The NIT production process can be subdivided into two elements; the production of the medicinal ingredient nitisinone and the assembly of the ingredients into a capsule.
 First, the chemical compound nitisinone is synthesized under controlled laboratory conditions. It is then combined with an inert substance and encapsulated in the desired proportions. The non-medicinal ingredients used by the complainant include corn starch, titanium dioxide, gelatin, shellac and iron oxide. The non-medicinal ingredients used by the manufacturer of the subject goods differ slightly, however, this does not affect the substitutability of the products. The assembled capsules are then bottled in plastic containers, each containing 60 units of the specified dosage.
Classification of Imports
 The allegedly dumped goods are normally classified under the following tariff classification numbers (tariff numbers):
 The listing of tariff numbers is for convenience of reference only. The tariff numbers include non-subject goods. Also, subject goods may fall under tariff numbers that are not listed. Refer to the product definition for authoritative details regarding the subject goods.
Like Goods and Class of Goods
 Subsection 2(1) of SIMA defines “like goods” in relation to any other goods as goods that are identical in all respects to the other goods, or in the absence of any identical goods, goods the uses and other characteristics of which closely resemble those of the other goods.
 In considering the issue of like goods, the CITT typically looks at a number of factors, including the physical characteristics of the goods, their market characteristics and whether the domestic goods fulfill the same customer needs as the subject goods.
 After considering questions of use, physical characteristics and all other relevant factors, the CBSA initiated its investigation under the premise that domestically produced NIT are like goods to the subject goods. Further, the CBSA was of the opinion that subject goods and like goods constitute only one class of goods.
 In its preliminary injury inquiry for this investigation, the CITT considered the matter of like goods and classes of goods. On December 5, 2018, it issued its preliminary injury inquiry determination and reasons indicating that “domestically produced nitisinone capsules of the same description as the subject goods are ‘like goods’ in relation to the subject goods and that there is a single class of goods.”Footnote 8
The Canadian Industry
 The complainant is the only producer of NIT in Canada and accounts for all of the domestic production of the like goods.Footnote 9
Imports into Canada
 During the preliminary phase of the investigation, the CBSA refined the estimated volume and value of imports based on information from CBSA import entry documentation and other information received from the exporter and the importer.
 The following table presents the CBSA’s analysis of imports of NIT for the purposes of the preliminary determination:
|Country of Origin/Export||POI (January 1, 2018 to June 30, 2018)|
|All Other Countries||N/A|
 On December 7, 2018, the CBSA received representations from counsel representing Sobi Canada and Sobi AB.Footnote 10 Sobi AB submitted comments concerning the identification of the importer and exporter for SIMA purposes as well as the methodologies for determining the export prices and normal values.
 There was not sufficient time for the CBSA to evaluate and consider the representations for purposes of the preliminary determination. The CBSA has noted the comments and evidence submitted in the representations and will take them into consideration in the course of verifying and analyzing information for the purposes of a final decision.
 Information was requested from all known and potential exporters, producers, vendors and importers, concerning shipments of NIT released into Canada during the POI.
 The Dumping RFI notified parties that failure to submit all required information and documentation, including non-confidential versions, failure to comply with all instructions contained in the RFI, failure to permit verification of any information or failure to provide documentation requested during the verification visits may result in the margin of dumping and the assessment of anti-dumping duties on subject goods being based on facts available to the CBSA. Further, they were notified that a determination on the basis of facts available could be less favorable to them than if complete, verifiable information was made available.
 After reviewing the RFI responses, supplemental RFIs (SRFIs) were sent to the importer and the exporter to clarify information provided in the responses and request additional information, where necessary.
 The preliminary determination is based on the information available to the CBSA that was received in sufficient time to have been considered for the preliminary determination. During the final phase of the investigation, additional information may be obtained and selected responding parties may be verified on-site, the results of which will be incorporated into the CBSA’s final decision, which must be made by March 20, 2019.
 The following presents the preliminary results of the investigation into the dumping of NIT originating in or exported from Sweden
 Normal values are generally estimated based on the domestic selling prices of like goods in the country of export, in accordance with the methodology of section 15 of SIMA, or on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, plus a reasonable amount for profits, in accordance with the methodology of paragraph 19(b) of SIMA.
 The export price of goods sold to importers in Canada is generally estimated in accordance with the methodology of section 24 of SIMA based on the lesser of the adjusted exporter’s sale price for the goods or the adjusted importer’s purchase price. These prices are adjusted where necessary by deducting the costs, charges, expenses, duties and taxes resulting from the exportation of the goods as provided for in subparagraphs 24(a)(i) to 24(a)(iii) of SIMA.
 Where there are sales between associated persons and/or a compensatory arrangement exists, the export price is estimated based on the importer’s resale price of the imported goods in Canada to unrelated purchasers, less deductions for all costs incurred in preparing, shipping and exporting the goods to Canada that are additional to those incurred on the sales of like goods for use in the country of export, all costs included in the resale price that are incurred in reselling the goods (including duties and taxes) or associated with the assembly of the goods in Canada and an amount representative of the average industry profit in Canada as provided for in paragraphs 25(1)(c) and 25(1)(d) of SIMA.
Margins of Dumping
 The estimated margin of dumping by exporter is equal to the amount by which the total estimated normal value exceeds the total estimated export price of the goods, expressed as a percentage of the total estimated export price. All subject goods released into Canada during the POI are included in the estimation of the margin of dumping of the goods. Where the total estimated normal value of the goods does not exceed the total estimated export price of the goods, the margin of dumping is zero.
Preliminary Results of the Dumping Investigation
 The CBSA received a substantially complete response to the Dumping RFI from the only exporter in Sweden.Footnote 11
Swedish Orphan Biovitrum AB
 Sobi AB is a Swedish public limited liability company listed on Nasdaq Stockholm. It is an integrated biotechnology company with in-house capabilities that encompass the entire value chain, from research, to preclinical and clinical development, biologics manufacturing and supply, to patient access and distribution.
 Sobi AB provided a substantially complete response to the CBSA’s Dumping RFI, including a database of domestic sales of NIT during the PAP. Where there were sufficient sales of goods that were identical or similar to the subject goods exported to Canada, normal values were estimated based on the methodology of section 15 of SIMA, using domestic sales of like goods.
 In instances where there were an insufficient number of domestic sales of goods that were identical or similar to the subject goods exported to Canada, normal values were estimated based on the methodology of paragraph 19(b) of SIMA, as the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits.
 The cost of production was estimated in accordance with paragraph 11(1)(a) of the Special Import Measures Regulations (SIMR), based on Sobi AB’s unverified cost data associated with the subject goods shipped to Canada. The amount for administrative, selling and all other cost was estimated in accordance with subparagraph 11(1)(c)(i) of the SIMR. The amount for profits was estimated in accordance with subparagraph 11(1)(b)(i) of the SIMR, based on Sobi AB’s sales of like goods in their domestic market, during the PAP.
 For subject goods exported to Canada during the POI, although both the exporter and its related importer provided complete, timely and accurate information, the CBSA was unable to estimate the exporter’s sale price or the importer’s purchase price for the goods in accordance with the methodology of section 24 of SIMA.
 Where the exporter and the importer are related, as is the case here, the CBSA generally performs a reliability test to determine whether the section 24 export prices are reliable as envisaged by SIMA. As export prices could not be estimated using the methodology of section 24 of SIMA, the CBSA was unable to test the reliability of export prices for the preliminary phase of the investigation under paragraph 25(1)(b) of SIMA. As a result, export prices were estimated using the methodology of paragraph 25(1)(c) of SIMA, based on the importer’s selling prices to an unrelated party, adjusted by deducting the costs incurred on or after the importation of the goods and on or before their sale by the importer, an amount for profit by the importer, the costs charges and expenses incurred in preparing the goods for shipment to Canada that are additional to those generally incurred on sales of like goods for use in the country of export, and the costs, charges and expenses incurred resulting from the exportation and shipment of the goods. The amount for profit was estimated pursuant to paragraph 22(c) of the SIMR based on the only profit data that was available to the CBSA. The amount for profit was estimated to be 17.85% based on a report produced by Industry Canada which represents profit from pharmaceutical and pharmacy supplies merchant wholesalers during the year 2016.Footnote 12
 For the preliminary determination, the total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 1,461% for Sobi AB, expressed as a percentage of the export price. The CBSA will continue to collect and verify information from Sobi AB and Sobi Canada during the final phase of the investigation.
Summary of Preliminary Results
 A summary of the preliminary results of the dumping investigation respecting all subject goods released into Canada during the POI are as follows:
|Country of origin or export||Estimated Margin of Dumping
(as % of Export Price)
|Estimated Volume of Subject Goods as a Percentage of Total Imports|
|All Other Exporters||N/A||0%|
 Under section 35 of SIMA, if at any time before making a preliminary determination the CBSA is satisfied that the actual and potential volume of goods of a country is negligible, the CBSA is required to terminate the investigation with respect to goods of that country.
 Pursuant to subsection 2(1) of SIMA, the volume of goods of a country is considered negligible if it accounts for less than 3% of the total volume of goods that are released into Canada from all countries that are of the same description as the goods.
 The volumes of subject goods from Sweden is 100% of the total volume of goods released into Canada. Based on the definition above, the volume of subject goods from Sweden is therefore not negligible.
 If, in making a preliminary determination, the CBSA determines that the margin of dumping of the goods of a particular exporter is insignificant pursuant to section 38 of SIMA, the investigation will continue in respect of those goods but provisional duties will not be imposed on goods of the same description imported during the provisional period.
 Pursuant to subsection 2(1) of SIMA, a margin of dumping of less than 2% of the export price of the goods is defined as insignificant. The margin of dumping estimated for Sobi AB is greater than the threshold of 2% and is therefore not considered insignificant.
 A summary of the estimated margin of dumping and provisional duty for Sobi AB is presented in Appendix 1.
 On December 20, 2018, pursuant to subsection 38(1) of SIMA, the CBSA made a preliminary determination of dumping respecting NIT originating in or exported from Sweden.
 Subsection 8(1) of SIMA provides that where a preliminary determination has been made and where the CBSA considers that the imposition of provisional duty is necessary to prevent injury, retardation or threat of injury, the importer in Canada of dumped goods shall pay, or post security for, provisional duty. If, in making the preliminary determination, a determination is made that the estimated margin of dumping on the goods of an exporter is insignificant, subsection 8(1.3) provides that provisional anti-dumping duties will not be imposed on importations of the goods from that particular exporter.
 Pursuant to subsection 8(1) of SIMA, provisional duty payable by the importer in Canada will be applied to dumped imports of NIT that are released from the CBSA during the period commencing on the day the preliminary determination is made and ending on the earlier of the day on which the CBSA causes the investigation in respect of any goods to be terminated, in accordance with subsection 41(1), or the day on which the CITT makes an order or finding. The CBSA considers that the imposition of provisional duty is needed to prevent injury. As noted in the CITT’s preliminary determination, there is evidence that discloses a reasonable indication that the dumping of NIT has caused injury or is threatening to cause injury to the domestic industry.
 Imports of NIT from Sweden released by the CBSA on or after December 20, 2018, will be subject to provisional duties equal to the estimated margin of dumping, expressed as a percentage of the export price of the goods. Appendix 1 contains the estimated margin of dumping and the rates of provisional duty for Sobi AB.
 Importers are required to pay provisional duty in cash or by certified cheque. Alternatively, they may post security equal to the amount payable. Importers should contact their CBSA regional office if they require further information on the payment of provisional duty or the posting of security. If the importers of such goods do not indicate the required SIMA code or do not correctly describe the goods in the import documents, an administrative monetary penalty could be imposed. The imported goods are also subject to the Customs Act. As a result, failure to pay duties within the specified time will result in the application of the provisions of the Customs Act regarding interest.
The Canada Border Services Agency
 The CBSA will continue its investigation and will make a final decision by March 20, 2019.
 If the margin of dumping is found to be insignificant, the CBSA will terminate the investigation in respect of those goods and any provisional duty paid or security posted will be refunded to importers, as appropriate. If the CBSA is satisfied that the goods were dumped, a final determination will be made.
The Canada Border Services Agency
 The CITT has begun its inquiry into the question of injury to the Canadian industry. The CITT is expected to issue its finding by April 19, 2019.
 If the CITT finds that the dumping has not caused injury, retardation or is not threatening to cause injury, the proceedings will be terminated and all provisional anti-dumping duty collected or security posted will be refunded.
 If the CITT makes a finding that the dumping has caused injury, retardation or is threatening to cause injury, anti-dumping duty in an amount equal to the margin of dumping will be levied, collected and paid on imports of NIT that are of the same description as goods described in the CITT’s finding.
 For purposes of the preliminary determination of dumping, the CBSA has responsibility for determining whether the actual and potential volume of goods is negligible. After a preliminary determination of dumping, the CITT assumes this responsibility. In accordance with subsection 42(4.1) of SIMA, the CITT is required to terminate its inquiry in respect of any goods if the CITT determines that the volume of dumped goods from a country is negligible.
Retroactive Duty on Massive Importations
 Under certain circumstances, anti-dumping duty can be imposed retroactively on subject goods imported into Canada. When the CITT conducts its inquiry on material injury to the Canadian industry, it may consider if dumped goods that were imported close to or after the initiation of the investigation constitute massive importations over a relatively short period of time and have caused injury to the Canadian industry. Should the CITT issue a finding that there were recent massive importations of dumped goods that caused injury, imports of subject goods released by the CBSA in the 90 days preceding the day of the preliminary determination could be subject to anti-dumping duty.
 After a preliminary determination of dumping by the CBSA, other than a preliminary determination in which a determination was made that the margin of dumping of the goods is insignificant, an exporter may submit a written undertaking to revise selling prices to Canada so that the margin of dumping or the injury caused by the dumping is eliminated. An acceptable undertaking must account for all or substantially all of the exports to Canada of the dumped goods.
 In view of the time needed for consideration of undertakings, written undertaking proposals should be made as early as possible, and no later than 60 days after the preliminary determination of dumping. Further details regarding undertakings can be found in the CBSA’s Memorandum D14-1-9, available online at: www.cbsa-asfc.gc.ca/publications/dm-md/d14/d14-1-9-eng.html.
 Interested parties may provide comments regarding the acceptability of undertakings within nine days of the receipt of an undertaking by the CBSA. The CBSA will maintain a list of parties who wish to be notified should an undertaking proposal be received. Those who are interested in being notified should provide their name, telephone number, mailing address and e-mail address to one of the officers identified in the “Information” section of this document.
 If undertakings were to be accepted, the investigation and the collection of provisional duties would be suspended. Notwithstanding the acceptance of an undertaking, an exporter may request that the CBSA’s investigation be completed and that the CITT complete its injury inquiry.
 A notice of this preliminary determination of dumping will be published in the Canada Gazette pursuant to paragraph 38(3)(a) of SIMA.
 This Statement of Reasons is posted on the CBSA’s website at the address below. For further information, please contact the officers identified as follows:
SIMA Registry and Disclosure Unit
Trade and Anti-dumping Programs Directorate
Canada Border Services Agency
100 Metcalfe Street, 11th floor
Ottawa, ontario K1A 0L8
- Hugo Dumas: 613-954-7262
- Matthew Lerette: 613-954-7410
Trade and Anti-dumping Programs Directorate
Appendix 1 – Summary of Estimated Margin of Dumping and Provisional Duties Payable
The following table lists the estimated margin of dumping and the provisional duty as a result of the decision mentioned above. Imports of subject goods released from the Canada Border Services Agency on or after December 20, 2018, will be subject to provisional duties at the rate specified below.
|Country of Origin or Export||Estimated Margin of Dumping*||Total Provisional Duty Payable*|
|Swedish Orphan Biovitrum AB||1,461%||1,461%|
|All Other Exporters||N/A||N/A|
*As a percentage of export price.
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