OCTG3 2021 IN: Oil country tubular goods
Statement of Reasons—final determination

Concerning the final determination with respect to the dumping of certain oil country tubular goods originating in or exported from Mexico.

Decision

Ottawa,

On December 22, 2021, pursuant to paragraph 41(1)(b) of the Special Import Measures Act, the Canada Border Services Agency made a final determination respecting the dumping of certain oil country tubular goods originating in or exported from Mexico.

On this page

Summary of events

[1] On May 10, 2021, the Canada Border Services Agency (CBSA) received a written complaint from Evraz Inc. NA Canada (Regina, Saskatchewan) and Welded Tube of Canada Corp. (Concord, Ontario) (hereinafter, the Complainants) alleging that imports of certain oil country tubular goods (OCTG) originating in or exported from Mexico are being dumped. The Complainants alleged that the dumping has caused injury and is threatening to cause injury to the Canadian industry producing like goods.Footnote 1

[2] On May 31, 2021, pursuant to paragraph 32(1)(a) of the Special Import Measures Act (SIMA), the CBSA informed the Complainants that the complaint was properly documented. The CBSA also notified the Government of Mexico that a properly documented complaint had been received.

[3] The Complainants provided evidence to support the allegations that OCTG from Mexico 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.

[4] On June 30, 2021, pursuant to subsection 31(1) of SIMA, the CBSA initiated an investigation respecting the dumping of OCTG from Mexico.

[5] 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 the above‑mentioned goods has caused injury or retardation or is threatening to cause injury to the Canadian industry producing the like goods.

[6] On August 30, 2021, pursuant to subsection 37.1(1) of SIMA, the CITT made a preliminary determination that there is evidence that discloses a reasonable indication that the dumping of OCTG from Mexico has caused injury.Footnote 2

[7] On September 28, 2021, 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 OCTG from Mexico.

[8] On the same day, 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.

[9] Based on the available evidence, the CBSA is satisfied that OCTG originating in or exported from Mexico has been dumped. Therefore, on December 22, 2021, the CBSA made a final determination of dumping pursuant to paragraph 41(1)(b) of SIMA in respect of those goods.

[10] The CITT’s inquiry into the question of injury to the domestic industry is continuing, and it will issue its decision by January 26, 2022. Provisional duties will continue to be imposed on the subject goods from Mexico until the CITT renders its decision.

Period of investigation

[11] The Period of Investigation (POI) for the dumping investigation is May 1, 2020 to April 30, 2021.

Profitability analysis period

[12] The Profitability Analysis Period (PAP) is January 1, 2020 to April 30, 2021.

Interested parties

Complainants

[13] The contact information of the complainants is as follows:

EVRAZ Inc. NA Canada
P.O. Box 1670
100 Armour Rd
Regina, SK  S0G 5K0

Welded Tube of Canada Corporation
111 Rayette Rd
Concord, ON  L4K 2E9

EVRAZ Inc. NA Canada

[14] EVRAZ Inc. NA Canada (Evraz) is a vertically integrated steel pipe producer with four production facilities that manufacture oil country tubular goods (OCTG) located in Regina, Saskatchewan, as well as in Calgary, Camrose, and Red Deer, Alberta.Footnote 3 Evraz has operated in Canada since 2008 when it acquired the facilities formerly owned by IPSCO.Footnote 4

Welded Tube of Canada Corporation

[15] Welded Tube of Canada Corporation (Welded Tube or WTC) was founded in 1970 as a family‑owned business with three facilities in Canada producing and finishing OCTG: a primary production facility located in Concord, Ontario, and two finishing facilities located in Welland and Port Colborne, Ontario.Footnote 5

Other Canadian producers

[16] The following Canadian producers also manufacture OCTG:

  • Algoma Tubes Inc.
  • Prudential Steel ULC (closed in July 2020)Footnote 6
  • Tenaris Global Services (Canada) Inc. and
  • Hydril Canadian Company LP.
    (The above companies are collectively referred to as “Tenaris Canada”):
    • Tenaris Canada
      400‑530 8th Ave SW
      Calgary, AB  T2P 3S8

[17] Tenaris Canada along with the Complainants account for all known domestic production.

Trade unionsFootnote 7

[18] The following trade unions were identified for the various facilities producing like goods in Canada.

[19] For Evraz:

United Steel Workers 5890
26‑395 Park St
Regina, SK  S4N 3V9

United Steel Workers 6673
2888 Glenmore Trail SE
Calgary, AB  T2C 4V7

UNIFOR 551
6215 48th Ave
Camrose, AB  T4V 0K4

Iron Workers 805
106‑25 Chisholm Ave
St. Albert, AB  T8N 5A5

[20] For Welded Tube:

United Steel Workers 8328
25 Cecil St
Toronto, ON  M5T 1N1

UNIFOR 199
124 Bunting Rd
St. Catharines. ON  L2P 3G5

Importers

[21] The CBSA identified two potential importers of the subject goods from CBSA import documentation and from information submitted in the complaint. The potential importers were sent the CBSA’s Importer Request for Information (RFI)Footnote 8 in respect of imports of OCTG from Mexico. Only Tenaris Global Services Canada (TGS Canada) provided a response to the Importer RFI.Footnote 9

Exporters

[22] The CBSA identified two potential exporters from CBSA import documentation and from information submitted in the complaint. Both parties were sent the CBSA’s Dumping RFIFootnote 10.

[23] Tubos de Acero de Mexico S.A. (TAMSA) of Mexico, provided a response to the CBSA’s Dumping RFI,Footnote 11 as did its related vendor which facilitates export sales to Canada, Tenaris Global Services S.A. Uruguay (TGS Uruguay).Footnote 12

[24] Since TAMSA identified four related input suppliers in their response to the RFI, those suppliers were also requested to respond to the section of the exporter RFI which concerns costing.

Product information

Product definitionFootnote 13

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

Oil country tubular goods, which are casing, tubing and green tubes made of carbon or alloy steel, welded or seamless, heat treated or not heat treated, regardless of end finish, having an outside diameter from 2 ⅜ inches to 13 ⅜ inches (60.3 mm to 339.7 mm), meeting or supplied to meet American Petroleum Institute specification 5CT or equivalent and/or enhanced proprietary standards, in all grades, excluding drill pipe, pup joints, couplings, coupling stock and stainless steel casing, tubing or green tubes containing 10.5 percent or more by weight of chromium, originating in or exported from the United Mexican States.

Additional product informationFootnote 14

[26] For greater certainty, the term “green tube” refers to unfinished casing, tubing, or other tubular products (including upgradable OCTG that may or may not already be tested, inspected, and/or certified) originating in or exported from Mexico and imported for use in the production or finishing of OCTG meeting final specifications, including grade and connections, required for use downhole. Green tubes, as they are commonly referred to in the OCTG industry, are intermediate or in process tubing and casing which require additional processing, such as threading, heat treatment and testing, before they can be used as fully finished oil and gas well casing or tubing in end‑use applications.

[27] For greater clarity, the product definition does not include green tubes originating in or exported from Mexico which are upgraded in the manner described above in an intermediate country prior to being exported to Canada for purposes of this dumping investigation. The CBSA considers these high‑strength tubing and casing to originate in the intermediate country for purposes of the investigation.

[28] Pup joints are essentially short lengths of OCTG used for spacing in a drill string, and these are excluded where their length is 12 feet or below (with a three‑inch tolerance), as defined in the API 5CT specification.

[29] Furthermore, accessory products used in conjunction with downhole OCTG tubing and casing strings such as cross‑over joints, marker joints, elbows etc. are not covered by the product definition, nor are further manufactured products which use OCTG as inputs to their production such as vacuum insulated tubing (VIT). Coiled tubing is also not part of the product definition.

Product characteristics and usesFootnote 15

[30] Casing is used to prevent the walls of the bored hole from collapsing, both during drilling and after the well has been completed. Tubing is used to convey oil and gas to the surface.

[31] As noted above, subject OCTG may be manufactured by the seamless or welded process. Typical casing and tubing end finishes include plain end, beveled, external upset ends, threaded, or threaded and coupled (including proprietary premium or semi‑premium connections).

[32] OCTG must be able to withstand outside pressure and internal yield pressures within the well. In addition, OCTG must have sufficient joint strength to hold the weight of the pipe string and must be equipped with threads sufficiently tight to contain the well pressure where lengths are joined. Threading may be performed by the manufacturer or a third‑party threading operation. Various factors limit the total amount of open hole that can be drilled at any one time, and it may be necessary to set more than one string of OCTG concentrically for certain portions of the well depth.

[33] Subject OCTG are supplied to meet at a minimum API specification 5CT. OCTG from Mexico is supplied in all grades including and not limited to, H40, J55, K55, N80, L80, L80 HC, L80 LT, L80 SS, C90, C95, C110, P110, P110 HC, P110 LT, T95, T95 HC, and Q125, or proprietary grades manufactured as substitutes for, or enhancements to, these specifications. The grade numbers define the minimum yield strength required of the grade in thousands of pounds per square inch (ksi).

[34] Heat‑treated grades are more sophisticated higher strength grades of pipes used in horizontal applications, deeper wells, and more severe environments such as low temperature services, sour service, heavy oil recovery, etc. These grades are made beginning with the use of a specific chemistry in the steel (either in billet for the seamless process or the steel coil in the ERW process) and are further‑processed with heat treatment to attain certain combinations of mechanical properties and/or resistance to corrosion and environmental cracking.

[35] For example, maximum strength (N80, P110, Q125), high‑strength with lower ductility (normally proprietary enhancements of API grades), or high‑strength combined with resistance to corrosion and environmental cracking (L80, C90, C95, C110, T95 and proprietary enhancements).

[36] Semi‑premium and premium connections similarly enhance the function of an OCTG string by providing additional performance and/or sealing characteristics which may be required in more demanding applications.

Production processFootnote 16

[37] OCTG casing and tubing are made on the same production equipment. Production may be by either the seamless or the welded process.

[38] The seamless process for producing OCTG begins with the formation of a central cavity in a sound solid steel billet to create a shell. The shell is then rolled on a retained mandrel and reduced in a stretch reduction mill to produce the finished size before cooling on a walking beam cooling bed.

[39] The welded process begins by slitting flat hot‑rolled steel in coil form of a pre‑determined thickness (skelp) to the proper width required to produce the desired diameter of pipe. The skelp is then sent through a series of forming rolls that bend it into a tubular shape. As the edges of the skelp come together under pressure in the final forming rolls, an electric current is passed between them. The resistance to the current heats the edges of the skelp to the welding temperature, and the weld is formed as the two edges are fused together. OCTG produced using the welded process is also known as electric‑resistance welded (ERW) OCTG.

[40] Pipe that is formed by either the seamless or the ERW methods is then cut to length. Depending on the API or proprietary specifications needed, OCTG may also be heat‑treated at this point. The product is then sent to the finishing line where it is beveled and threaded on both ends. Tubing may undergo a separate process of upsetting and normalizing prior to threading. Finally, a coupling and coupling protector are applied to one end of the pipe and a thread protector is applied to the other end before it is ready for shipment. Finishing operations also include cooling, straightening, facing, testing, coating, marking, and/or bundling.

[41] Evraz and Welded Tube both employ the ERW production process. Specifically, Evraz produces specific OCTG products at the following four locations.

[42] In Regina, Saskatchewan, Evraz produces ERW plain‑end tubing in sizes ranging from 2.375 inches to 3.5 inches in outside diameter (OD).

[43] In Calgary, Alberta, Evraz produces ERW casing, threaded and coupled with API connections, in sizes ranging from 4.5 inches to 13.375 inches in OD, as well as ERW tubing, threaded and coupled with API connections, in sizes ranging from 2.375 inches to 3.5 inches in OD.

[44] In Camrose, Alberta, Evraz produces ERW plain‑end casing in sizes ranging from 6.625 inches to 16 inches in OD.

[45] Finally, in Red Deer, Alberta, Evraz produces ERW casing, threaded and coupled with both API and proprietary (premium and semi‑premium) connections, in sizes ranging from 4.5 inches to 12.75 inches in OD.

[46] Plain‑end products are finished at either the Red Deer or the Calgary facilities. Finishing activities at these locations include heat treatment, as well as testing, inspection, measurement, and certification. In addition, threading and coupling for API, premium, or semi‑premium connections takes place at the Red Deer facility and threading and coupling for API connections takes place at the Calgary facility.

[47] As a result of production at each of these facilities, Evraz is capable of producing ERW OCTG in grades including API 5CT H40, J55, L80, L80 HC, L80 HCI, L80 RY, N80, P110, P110 HC, P110 HCI, P110 RY and other proprietary grades.

[48] Welded Tube produces and finishes OCTG casing for the Canadian market at three production facilities in Canada. Welded Tube’s primary pipe production facility is in Concord, Ontario, where it produces, among other products, hollow structural sections and welded OCTG green tube for further processing into finished casing.

[49] The OCTG green tube produced at the Concord facility is transferred to the facility in Welland, Ontario for quenching, tempering, threading and coupling, and other finishing steps such as further testing and inspection. The output of the Welland facility therefore is finished API 5CT casing in sizes ranging from 4.5 inches to 9.625 inches OD, and up to 0.475 inches in wall thickness, in grades including H40, J55, N80, L80, L80 HC, P110, P110 HC, and proprietary grade WTC80, threaded and coupled with API and semi‑premium connections.

[50] At its third facility, located in Port Colborne, Ontario, Welded Tube performs threading and coupling operations and other finishing steps such as further testing and inspection. The output of the Port Colborne facility therefore is finished API 5CT casing in sizes ranging from 4.500 inches to 9.625 inches OD, and up to 0.475 inches in wall thickness, in grades including H40, J55, N80, L80, L80 HC, EP L80, CY P110, P110, P110 HC, HP P110, and proprietary grade WTC80, threaded and coupled with API and semi‑premium connections.

Classification of importsFootnote 17

[51] Prior to January 1, 2022, imports into Canada of the subject goods were normally classified under the following tariff classification numbers:

  • 7304.29.00.11
  • 7304.29.00.19
  • 7304.29.00.21
  • 7304.29.00.29
  • 7304.29.00.31
  • 7304.29.00.39
  • 7304.29.00.41
  • 7304.29.00.49
  • 7304.29.00.51
  • 7304.29.00.59
  • 7304.29.00.61
  • 7304.29.00.69
  • 7304.29.00.71
  • 7304.29.00.79
  • 7306.29.00.11
  • 7306.29.00.19
  • 7306.29.00.21
  • 7306.29.00.31
  • 7306.29.00.29
  • 7306.29.00.39
  • 7306.29.00.61
  • 7306.29.00.69

[52] Beginning January 1, 2022, under the revised customs tariff schedule, subject goods are normally classified under the following tariff classification numbers:

  • 7304.29.00.12
  • 7304.29.00.13
  • 7304.29.00.14
  • 7304.29.00.15
  • 7304.29.00.16
  • 7304.29.00.17
  • 7304.29.00.19
  • 7304.29.00.22
  • 7304.29.00.23
  • 7304.29.00.24
  • 7304.29.00.25
  • 7304.29.00.26
  • 7304.29.00.27
  • 7304.29.00.29
  • 7304.29.00.32
  • 7304.29.00.33
  • 7304.29.00.34
  • 7304.29.00.35
  • 7304.29.00.36
  • 7304.29.00.37
  • 7304.29.00.39
  • 7304.29.00.42
  • 7304.29.00.43
  • 7304.29.00.44
  • 7304.29.00.45
  • 7304.29.00.46
  • 7304.29.00.47
  • 7304.29.00.49
  • 7304.29.00.52
  • 7304.29.00.53
  • 7304.29.00.54
  • 7304.29.00.55
  • 7304.29.00.56
  • 7304.29.00.57
  • 7304.29.00.59
  • 7304.29.00.62
  • 7304.29.00.63
  • 7304.29.00.64
  • 7304.29.00.65
  • 7304.29.00.66
  • 7304.29.00.67
  • 7304.29.00.69
  • 7304.29.00.72
  • 7304.29.00.73
  • 7304.29.00.74
  • 7304.29.00.75
  • 7304.29.00.76
  • 7304.29.00.77
  • 7304.29.00.79
  • 7306.29.00.12
  • 7306.29.00.13
  • 7306.29.00.14
  • 7306.29.00.15
  • 7306.29.00.16
  • 7306.29.00.17
  • 7306.29.00.19
  • 7306.29.00.22
  • 7306.29.00.23
  • 7306.29.00.24
  • 7306.29.00.25
  • 7306.29.00.26
  • 7306.29.00.27
  • 7306.29.00.29
  • 7306.29.00.32
  • 7306.29.00.33
  • 7306.29.00.34
  • 7306.29.00.35
  • 7306.29.00.36
  • 7306.29.00.37
  • 7306.29.00.39
  • 7306.29.00.42
  • 7306.29.00.43
  • 7306.29.00.44
  • 7306.29.00.45
  • 7306.29.00.46
  • 7306.29.00.47
  • 7306.29.00.49
  • 7306.29.00.52
  • 7306.29.00.53
  • 7306.29.00.54
  • 7306.29.00.55
  • 7306.29.00.56
  • 7306.29.00.57
  • 7306.29.00.59
  • 7306.29.00.62
  • 7306.29.00.63
  • 7306.29.00.64
  • 7306.29.00.65
  • 7306.29.00.66
  • 7306.29.00.67
  • 7306.29.00.69
  • 7306.29.00.72
  • 7306.29.00.73
  • 7306.29.00.74
  • 7306.29.00.75
  • 7306.29.00.76
  • 7306.29.00.77
  • 7306.29.00.79

[53] The listing of tariff classification numbers is for convenience of reference only. The tariff classification numbers may include non subject goods. Also, subject goods may fall under tariff classification numbers that are not listed. Refer to the product definition for authoritative details regarding the subject goods.

Like goods and single class of goods

[54] 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.

[55] In considering the issue of like goods, the CITT typically looks at a number of factors, including the physical characteristics of the goods (such as composition and appearance), their market characteristics (such as substitutability, pricing, distribution channels and end uses) and whether the domestic goods fulfill the same customer needs as the subject goods.

[56] In its preliminary injury inquiry, the CITT confirmed that it will conduct its analysis on the basis that OCTG produced in Canada that is of the same description as the subject goods is “like goods” in relation to the subject goods, and that there is one class of goods.Footnote 18

[57] OCTG casing and tubing are made to the same minimum API 5CT specifications and/or to proprietary equivalent/enhanced specifications, and are both used in down hole well applications. Casing and tubing are produced on the same equipment and have the same channels of distribution.

[58] Although the goods produced by the Canadian industry may or may not be considered identical in all respects to the subject goods imported from Mexico, the CBSA has concluded that the Canadian goods closely resemble the subject goods. Further, after reviewing the physical characteristics of the goods, the end‑uses and all other relevant factors, the CBSA is of the opinion that the subject goods constitute only one class of goods.

The Canadian industry

[59] The domestic industry is comprised of three producers: the Complainants and Tenaris Canada, which is divided into Algoma Tubes (Sault Ste. Marie, Ontario) and Tenaris Hydril (Nisku, Alberta). Prudential Steel was also part of the Tenaris Canada group of companies until it was closed in July 2020.Footnote 19

Imports into Canada

[60] During the final phase of the investigations, the CBSA refined the volume and value of imports based on information from CBSA import entry documentation and other information received from exporters and importers.

[61] The following table presents the CBSA’s analysis of imports of OCTG for the purposes of the final determination:

Imports of OCTG
(May 1, 2020—April 30, 2021)
Country of origin or export % of total imports
(by volume)
Mexico 25.0%
Tubos de Acero de Mexico S.A. (TAMSA) 24.75%
All other exporters 0.25%
All other countries 75.0%
Total 100.0%

Investigation process

[62] At the outset of the investigation, information was requested from all known and potential exporters, producers, vendors, and importers, concerning shipments of OCTG released into Canada during the POI.

[63] All parties were notified 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 verification may result in the margins 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 their firm than if complete, verifiable information was made available.

[64] After reviewing the RFI responses, supplemental RFIs (SRFIs) were sent to TAMSA, TGS Canada and related input suppliers to clarify information provided in the responses and request additional information, where necessary. Verifications of the responding parties were conducted by way of video teleconferencing conducted in October 2021. This included participation from the exporter, related importer and related input suppliers.

[65] Details pertaining to the information submitted by the exporter in response to the Dumping RFI as well as the results of the CBSA’s investigation, are provided in the Dumping Investigation section of this document.

[66] As part of the final phase of the investigation, on November 10, 2021, case arguments were received from the Complainants as well as from counsel representing the Tenaris Group of companies. On November 17, 2021, the CBSA received reply submissions from these parties as well. Details of the representations are provided in Appendix 2.

Dumping investigation

Normal value

[67] Normal values are generally determined based on the domestic selling prices of like goods in the country of export, in accordance with section 15 of SIMA, or based on either the methodology of paragraph 19(a) 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 paragraph 19(b) of SIMA.

[68] Where, in the opinion of the CBSA, sufficient information has not been furnished or is not available, normal values are determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA.

Export price

[69] The export price of goods sold to importers in Canada is generally determined in accordance with 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.

[70] Where there are sales between associated persons and/or a compensatory arrangement exists, the export price may be determined 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, pursuant to paragraphs 25(1)(c) and 25(1)(d) of SIMA. In any cases not provided for under paragraphs 25(1)(c) and 25(1)(d) of SIMA, the export price is determined in such a manner as the Minister specifies, pursuant to paragraph 25(1)(e).

[71] Where, in the opinion of the CBSA, sufficient information has not been furnished or is not available, export prices are determined pursuant to a ministerial specification under subsection 29(1) of SIMA.

Margin of dumping

[72] The margin of dumping by exporter is equal to the amount by which the total normal value exceeds the total export price of the goods, expressed as a percentage of the total export price. All the subject goods shipped to Canada during the POI are included in the margins of dumping of the goods. Where the total normal value of the goods does not exceed the total export price of the goods, the margin of dumping is zero.

Results of the dumping investigation

Tubos de Acero de Mexico S.A.

[73] Tubos de Acero de Mexico S.A. (TAMSA) is a producer and exporter of subject goods, located in Veracruz, Mexico. TAMSA, along with its related intermediary vendor TGS Uruguay and importer TGS Canada are 100% fully indirectly owned by Tenaris S.A. (Luxembourg).

[74] Subject goods exported to Canada by TAMSA during the POI represent 99% of the value of subject goods shipped to Canada during the POI. All subject goods exported by TAMSA were to TGS Canada, its related importer.

[75] TAMSA, along with its related intermediary vendor TGS Uruguay and importer TGS Canada provided substantially complete responses to the CBSA’s RFIs. Supplemental RFIs (SRFIs) were sent to both TAMSA and TGS Canada to gather additional information and seek clarification regarding their original response. Responses were received from both parties and found to be substantially complete.

[76] Four related input suppliers to TAMSA, namely, Servicios Generales Tenaris Tamsa (SEGE),Footnote 20 Techgen S.A. de C.V. (Techgen),Footnote 21 Exiros B.V. Sucursal Uruguay (Exiros)Footnote 22 and Ternium México, S.A. de C.V. (Ternium)Footnote 23 also provided information related to their sales and costing of significant factor inputs provided to TAMSA for their production of OCTG also provided RFI and SRFI responses. These responses were also found to be substantially complete.

[77] TAMSA’s information was verified by way of a video teleconferencing conducted in October 2021. This included participation from the related importer and related input suppliers.

[78] The CBSA considered the price of the subject goods between TAMSA and their related intermediary vendor TGS Uruguay as the appropriate basis to calculate the export price of the subject goods. While the companies identified TGS Uruguay as the exporter for commercial purposes, the CBSA determined that TAMSA, as owner and producer of the goods in the country of export and located at the point of direct shipment, which prepares and ships the goods from its facility directly to Canada should be the exporter for SIMA purposes.

[79] TAMSA serves the domestic market as a direct distributor, with no intermediaries between the factory and end user. As noted above, their exports are facilitated through TGS Uruguay, which provides logistics services in coordinating the exports of goods from TAMSA to the related importer, TGS Canada.

[80] Normal values were determined in accordance with both section 15 and 19 of SIMA. Where there were sufficient domestic sales, normal values were determined in accordance with section 15 of SIMA, based on domestic selling prices of like goods. Where there were insufficient sales of like goods that met the conditions of sections 15 and 16 of SIMA, normal values were determined in accordance with paragraph 19(b) of SIMA, based on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits.

[81] The amount for profits was calculated in accordance with subparagraph 11(1)(b)(ii) of the SIMR, based on the profits earned by TAMSA on its domestic sales of goods of the same general category during the PAP.

[82] During the POI, all of the subject goods exported by TAMSA were sold through TGS Uruguay to TGS Canada, its related importer. Due to the relationship between the parties involved in the export sales, a reliability test was performed to determine whether the section 24 export prices were reliable as envisaged by SIMA. This test was conducted by comparing the section 24 export prices with the section 25 “deductive” export prices based on the importer’s matching resale of the imported goods to unrelated purchasers in Canada, less deductions for all additional costs incurred in preparing, shipping and exporting the goods to Canada, all costs included in the resale prices that were incurred in re‑selling the goods in Canada (including duties and taxes) and an amount for profit.

[83] The amount for profit was calculated in accordance with paragraph 22(a) of the SIMR based on the financial information relating to vendors that operated at a profit during the POI. The test revealed that the export prices in accordance with section 24 of SIMA were reliable and, therefore, export prices for TAMSA were calculated in accordance with section 24 of SIMA.

[84] For the final determination, the total normal value compared to the total export price resulted in a margin of dumping of 43.3% for TAMSA, expressed as a percentage of the export price.

All other exporters

[85] For exporters of subject goods originating in or exported from Mexico that did not provide a response to the Dumping RFI or did not furnish sufficient information, the normal values and export prices were determined pursuant to a ministerial specification under subsection 29(1) of SIMA, which is based on a comparative analysis of facts available.

[86] In establishing the methodology for determining normal values and export prices, the CBSA analyzed all the information on the administrative record, including the complaint filed by the domestic industry, the CBSA’s estimates at the initiation of the investigation and information submitted by the exporter from Mexico.

[87] The CBSA decided that the normal values determined for the exporter whose submission was substantially complete for the final determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for determining normal values since it reflects an exporter’s actual trading practices during the POI.

[88] The CBSA examined the difference between the normal value and the export price determined for each individual transaction from the exporter’s Dumping RFI response for the POI, and considered that the highest amount (expressed as a percentage of the export price), was an appropriate basis for determining normal values. This methodology relies on information related to goods that originated in Mexico and limits the advantage that an exporter may gain from not providing necessary information requested in a dumping investigation as compared to an exporter that did provide the necessary information.

[89] As a result, based on the facts available, for exporters that did not provide a response, did not provide a response in a timely fashion, or provided an incomplete response to the Dumping RFI, normal values of subject goods originating in or exported from Mexico were determined based on the highest amount by which a normal value exceeded the export price, on an individual transaction during the POI. The transactions were examined to ensure that no anomalies were considered, such as very low volume and value, effects of seasonality or other business factors. As a result, one anomaly was excluded from this analysis.

[90] The CBSA considered that the information submitted on the CBSA customs entry documentation was the best information on which to determine the export price of the goods as it reflects actual import data.

[91] Using the above methodologies, for the final determination, the margin of dumping for all other exporters in Mexico is 164.7%, expressed as a percentage of the export price.

Summary of results—dumping

[92] A summary of the results of the dumping investigation respecting all subject goods released into Canada during the POI is as follows (also available in Appendix 1):

Margins of dumping and insignificance test
(May 1, 2020—April 30, 2021)
Origin or source Volume of subject goods as a percentage of total imports Margin of dumping
(as % of export price)
Mexico 25.0% N/A
Tubos de Acero de Mexico S.A. (TAMSA) 24.75% 43.3%
All other exporters 0.25% 164.7%
All other countries 75.0% N/A
All sources 100% N/A

[93] Under paragraph 41(1)(a) of SIMA, the CBSA is required to terminate an investigation in respect of any goods of an exporter if it is satisfied that the goods have not been dumped or the margin of dumping of the goods of that exporter is insignificant, meaning a margin of dumping that is less than 2% of the export price of the goods.

[94] All of the goods under investigation have been dumped and the margins of dumping determined for the goods are greater than the threshold of 2% and are therefore not considered insignificant. As a result, pursuant to paragraph 41(1)(b) of SIMA, the CBSA made a final determination of dumping respecting certain OCTG originating in or exported from Mexico.

[95] A summary of the results of the dumping investigation respecting the subject goods released into Canada during the POI are presented in Appendix 1.

Decision

[96] Pursuant to paragraph 41(1)(b) of SIMA, the CBSA made a final determination of dumping respecting certain oil country tubular goods originating in or exported from Mexico.

Future action

[97] The provisional period began on September 28, 2021, and will end on the date the CITT issues its finding. The CITT is expected to issue its decision by January 26, 2022. Provisional anti‑dumping duties will continue to apply until this date on imports of the subject goods from Mexico. For further details on the application of provisional duties, refer to the Statement of Reasons issued for the preliminary determinations.

[98] If the CITT finds that the dumped goods have not caused injury and do not threaten to cause injury, all proceedings will be terminated. In this situation, all provisional duty paid or security posted by importers will be returned.

[99] If the CITT finds that the dumped goods have caused injury, the anti‑dumping duty payable on the subject goods released by the CBSA during the provisional period will be finalized pursuant to section 55 of SIMA. Imports released by the CBSA after the date of the CITT’s finding will be subject to anti‑dumping duty equal to the margin of dumping.

[100] The importer in Canada shall pay all applicable duty. If the importers of such goods do not indicate the required SIMA code or do not correctly describe the goods in the customs documents, an administrative monetary penalty could be imposed. The provisions of the Customs Act apply with respect to the payment, collection or refund of any duty collected under SIMA. As a result, failure to pay duty within the prescribed time will result in the application of interest.

Retroactive duty on massive importations

[101] 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.

Publication

[102] A notice of the final determination of dumping will be published in the Canada Gazette pursuant to paragraph 41(3)(a) of SIMA.

Information

[103] This Statement of Reasons will be 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
11-100 Metcalfe St
Ottawa ON  K1A 0L8

Email: simaregistry-depotlmsi@cbsa-asfc.gc.ca

Doug Band
Director General
Trade and Anti‑dumping Programs Directorate

Appendix 1: summary of margins of dumping

Origin or export Margin of dumping
(% of export price)
Mexico
Tubos de Acero de Mexico S.A. (TAMSA) 43.3%
All other exporters 164.7%
All other countries
Total N/A

Note: The margins of dumping reported in the table above were determined by the CBSA for the purposes of the final decisions. These margins and amounts may not reflect the amount of anti‑dumping duties to be levied on future importations of dumped goods. In the event of an injury finding by CITT, normal values for future shipments to Canada have been provided to the exporters who provided sufficient information in their response to the CBSA RFIs, as appropriate. These normal values would come into effect the day after an injury finding. Information regarding normal values of the subject goods should be obtained from the exporters. Imports from any other exporters will be subject to an anti‑dumping duty rate, as applicable, in accordance with a ministerial specification and in an amount equal to the margin of dumping found for “all other exporters” at the final determinations.

Normally, normal values will not be applied retroactively. However, normal values may be applied retroactively in cases where the parties have not advised the CBSA in a timely manner of substantial changes that affect values for SIMA purposes. Therefore, where substantial changes occur in prices, market conditions, costs associated with production and sales of the goods, the onus is on the concerned parties to advise the CBSA.

Please consult the SIMA Self‑Assessment Guide for more detailed information explaining how to determine the amount of SIMA duties owing.

Appendix 2: dumping representations

Following the November 3, 2021 closing of the record, case arguments were received from the Complainants as well as from counsel representing the Tenaris Group of companies. On November 17, 2021, the CBSA received reply submissions from these parties as well.

Certain details provided in case briefs and reply submissions were designated as confidential information by the submitting counsel. This has restricted the ability of the CBSA to discuss all issues raised in these submissions.

The CBSA has provided responses below to representations that relate to the final determination of dumping. The CBSA will not address representations pertaining to future enforcement in this Statement of Reasons.

The material issues raised by the parties are summarized as follows:

Representations from the Government of Mexico

On October 15, 2021, the Government of Mexico provided comments which focused on the CBSA’s decision to initiate the OCTG investigation against Mexico and the substance of the filed complaint.Footnote 24

Case briefs

Counsel for the Complainants argued that the Government of Mexico’s arguments should be disregarded by the CBSA. Counsel stated that the “Government of Mexico’s arguments can be divided into three areas: the CBSA’s standing determination, the CBSA’s dumping estimates, and the CBSA’s reasonable indication of injury determination.”Footnote 25

With regard to the CBSA’s standing determination, counsel stated that:

“Evraz and Welded Tube included in their Complaint positive evidence demonstrating that Tenaris Canada is indirectly controlled by importers and exporters of subject goods through common ownership under Tenaris S.A. and its “complementary” sales approach with TAMSA showing it behaves differently towards the exporter and importer than a non‑related producer. Further, the Complainants also show how Tenaris used Mexican imports to aggressively grow market share, compete with like goods, and that Tenaris has engaged in a coordinated approach to used dumped imports to displaces Canadian production—including Tenaris’ own Canadian production.

This was sufficient evidence upon which the CBSA could conclude that, for purposes of initiation, Tenaris should be excluded from the definition of “domestic producer” for purposes of assessing standing requirements in subsection 31(2) of SIMA.”Footnote 26

With regard to the CBSA’s dumping estimates, counsel stated that:

“The Government of Mexico claims that the CBSA should not have accepted the Complainants’ normal value calculations based on cost of production because they had to first show that there were no home market prices in the country of export within the meaning of Article 2.2 of the ADA. The Complainants clearly stated that they did not have access to nor could they locate any publicly available information concerning home market prices for OCTG. What the Government of Mexico is arguing, therefore, is even when the information is not reasonably available to the Complainants, failure to provide any home market sales information will be fatal to a dumping Complaint since the CBSA can only move to constructed value where the Complainant can show no home market sales or a particular market situation. This would be a perverse outcome where domestic producers will be unable to launch a Complaint because of a lack of public information on home market prices. In any event, the SIMA and the ADA merely require a reasonable indication of dumping or sufficient evidence of dumping and do not specify the type of normal values to demonstrate dumping to for purposes of initiating an investigation.”Footnote 27

With regards to the injury standard at initiation, counsel stated that:

“Neither the SIMA nor the ADAFootnote 28 require an investigating authority to determine injury based on all possible factors before initiating an investigation, as doing so would run counter to the very purpose of an investigation. Indeed, the SIMA merely requires a “reasonable indication” of dumping and injury whereas the ADA simply requests that the evidence be “sufficient to justify the initiation of an investigation.” The CBSA met these standards in this case.”Footnote 29

Counsel rebutted further arguments from the Government of Mexico that concerned the injury factors considered by the CBSA at the initiation including the period analyzed and the volumes of imports from Mexico.

In conclusion, counsel stated that: “the Government of Mexico is in effect demanding that the CBSA meet the evidentiary standards for final determinations and findings at the initiation stage of a dumping investigation. Such a suggestion is entirely misplaced given the lower standard in the SIMA and the ADA and should be rejected by the CBSA.”Footnote 30

CBSA response

The comments submitted on behalf of the Government of Mexico concern the basis upon which the CBSA initiated its investigation. On July 30, 2021, parties related to the exporter TAMSA, namely: Algoma Tubes Inc., Prudential Steel ULC, Tenaris Global Services Canada Inc. and Hydril Canadian Company LP (collectively “Tenaris Canada”), filed an application with the Federal Court of Canada challenging the CBSA’s initiation of the investigation.Footnote 31

Given the unresolved litigation, the CBSA will make limited comments concerning the representations submitted by the Government of Mexico.

As a general comment, the evidentiary threshold to initiate an investigation is less than that of a final determination. To this extent, the CBSA concurs with counsel for the Complainants in their characterization of the evidentiary standard required at each stage and maintains that it has met those standards throughout the investigation.

Selling, General and Administrative Expenses (SG&A)

Case briefs

Counsel for the Complainants made arguments concerning the calculation of SG&A as it relates to normal values calculated for the exporter. Counsel argued that the SG&A of the intermediary vendor, TGS Uruguay (TGSU) should be added to any paragraph 19(b) normal values.Footnote 32 The CBSA policy Handbook was cited as support to this suggested approach.Footnote 33

“In this case, SIMR subparagraph 11(1)(c)(ii), rather than subparagraph 11(1)(c)(i), is the proper provision to determine TAMSA’s SG&A. This is because SIMR subparagraph 11(1)(c)(i) requires there to be sufficient sales of identical or similar goods in the home market that meet the conditions set out in paragraphs 15(a) to (e) of the SIMA, taking into account subsection 16(1) of the SIMA. However, given that there are no section 15 normal values for a given model, there will likewise be no sales in the home market that meet SIMR subparagraph 11(1)(c)(i) to determine an amount of SG&A for those same models.”Footnote 34

Conversely, counsel for Tenaris argued that it would not be a fair comparison to calculate the margin of dumping using TAMSA’s selling price to TGSU and a normal value that includes the SG&A of TGSU, given that their SG&A is only reflected in the price of a downstream sale by TGSU to Tenaris Canada. Counsel argued that such an adjustment is “not supported in SIMA or its regulations, and is asymmetrical and unfair.”Footnote 35

Furthermore, also in relation to the calculation of SG&A on subsection 19(b) normal values, counsel for Tenaris reasoned that the “application of subparagraph 11(1)(c)(i) is not contingent on sales meeting the criteria set out in SIMA subsection 16(2),” noting the fact that “SIMR subparagraph 11(1)(c)(i) makes explicit reference to SIMA subsection 16(1) but makes no reference to SIMA subsection 16(2).” Counsel concluded that this demonstrates parliament’s intent that:

“(1) SIMA section 16 does not automatically or implicitly limit sales that can be used to calculate SG&A under subparagraph 11(1)(c)(i), as otherwise the reference to subsection 16(1) would be superfluous and
(2) Parliament did not intend for SIMA subsection 16(2) to exclude sales that could be used to calculate a reasonable amount for SG&A, as otherwise it would have explicitly identified it as a limitation as it did with subsection 16(1).”Footnote 36

Reply submissions

Counsel for the Complainants rebutted the position of Tenaris by reasoning that “TGS Uruguay’s SG&A must be added to TAMSA’s SG&A to calculate SIMA paragraph 19(b) normal values. This is because TGS Uruguay and TAMSA are affiliated entities that do not operate at arm‑length [sic].”Footnote 37 Counsel further argued that to not do this would “give TAMSA, the exporter, an opportunity to hide SG&A expenses, which are regularly incurred by an exporter in making sales to Canada, through use of an affiliate.”Footnote 38

CBSA response

Paragraph 11(1)(c) of the Special Import Measures Regulations (SIMR) states that:

11(1)(c) the expression a reasonable amount for administrative, selling and all other costs, in relation to any goods, means:

  1. an amount equal to all administrative, selling and other costs, including the costs of any warranty against defect or guarantee of performance and any design or engineering costs, that are not included in the cost of production but are reasonably attributable to the production and domestic sales of like goods made by the exporter, that satisfy the greatest number of the conditions set out in paragraphs 15(a) to (e) of the Act, taking into account subsection 16(1) of the Act, or
  2. where an amount cannot be determined under subparagraph (i), an amount equal to all administrative, selling and other costs, including the costs of any warranty against defect or guarantee of performance and any design or engineering costs, that are not included in the cost of production but are reasonably attributable to the production and sale of the goods

Subsection 16(1) of SIMA concerns criteria to be satisfied in order to consider sales under section 15 to ensure comparability with the sales of the goods exported to Canada. These criteria include the location of those sales, the trade level and the quantities sold. Conversely, section 16(2) concerns the exclusion of sales of goods that are sold to a single customer and those that are unprofitable. As such, the CBSA concurs that section 16(2) of SIMA is not a required qualification under section 11 of SIMR for purposes of the reasonable allocation of SG&A.

In the investigation concerning the exporter TAMSA, the CBSA determined that subparagraph 11(c)(i) was the most appropriate methodology for the calculation of SG&A. There are domestic sales in the country of export and there is no condition regarding the number of sales or the profitability of those sales. The exporter provided the data necessary to facilitate the calculation of SG&A attributable to domestic sales. It is worthy to note that both approaches would yield very similar results.

However, the CBSA did not apply the SG&A related to TGSU, as there is no mechanism under the SIMR to do so. Only subsection 11(3) of SIMR provides consideration to intermediary vendors and that scenario is not applicable:

11(3) For the purpose of subparagraph (1)(c)(i), where the exporter is not the producer of the goods referred to in that subparagraph, a reasonable amount for administrative, selling and all other costs shall also include the amounts incurred by the producer and any subsequent vendors in respect of sales of those goods to the exporter.

In the present situation, TAMSA is both the producer and exporter and the export price is the price TAMSA sold the goods to TGSU. As such, there is no authority in the SIMR to include the SG&A of TGSU, notwithstanding their related status with TAMSA. The reference in SIMR subparagraph 11(c)(ii) to costs “reasonably attributable to the production and sale of the goods” are in relation to the party that is the producer and exporter of the goods as the “sale” under consideration is the export price determined from TAMSA to TGSU.

Section 25 amounts for profit

Case briefs

Counsel for the Complainants argued that the CBSA should use paragraph 22(c) of the SIMR to determine an amount for profit for calculating “deductive” export prices under section 25 of SIMA. The central piece of their argument is that the CBSA must have at least three sources to protect confidentiality in order to calculate an amount for profit under any of the 22(a) through 22 (c) paragraphs of the SIMR.

Reply submissions

Counsel for TGS Canada rebutted this argument by contending that:

“This SIMR provision does not limit ‘usable’ data to any specific number of data points. There is no related legal requirement that CBSA must disclose to the public or even to an importer, how many or which other vendors’ data was used to determine the profit amount, and there is certainly not such a requirement that we justify derogating from the obligations of s. 22(a) of the SIMR.”Footnote 39

CBSA response

Given that several parties submitted confidential data and the amount used under paragraph 22(a) of SIMR remains confidential, there is no breach of confidentiality in using an amount for profit based on less than three parties.

Related input supplier costs

Case briefs

Counsel for the Complainants argued that the CBSA must use the greater of the amounts specified in subsection 11.2(1) of SIMR to determine the cost of significant inputs from TAMSA’s associated suppliers.

Counsel made suggestions surrounding possible adjustments to the billet costs, including using the selling prices or published prices of steel billets in Mexico. Counsel further stated that:

“The SIMA Handbook provides that in selecting the “greater” amount, that “an amount under paragraphs (a) and (b) is required, but paragraph (c) can only be considered where there is sufficient information to do so.”Footnote 40

Reply submissions

Counsel for Tenaris rebutted these arguments by stating that “there is no argument that any of the other TAMSA inputs (such as electricity etc.) are not priced at the highest of the three methods contemplated by subsection 11.2(1)” and that alternative billet price information on the record should not be used in place of the data provided by Tenaris because, in part, these prices are not from the country of export and thus sufficient information is not available as required by s. 11.2(1)(c) of the SIMR to ensure a proper comparison.Footnote 41

CBSA response

Subsection 11.2(1) of SIMR states:

11.2 (1) For the purposes of subparagraphs 11(1)(a)(i) and 11.1(a)(i), if an input used in the production of the goods is acquired by the exporter or producer from an associated person and is a significant factor in the production of the goods, the cost of that input in the country of export is considered to be the greater of the following amounts:

  1. the price paid in respect of that input by the exporter or producer to the associated person
  2. the cost incurred by the associated person in the production of that input, including the administrative, selling and all other costs with respect to that input and
  3. the price in the country of export of the same or substantially the same inputs, if sufficient information is available to enable the price to be determined on the basis of:
    1. the selling prices of those inputs in the country of export, in the same or substantially the same quantities, between parties who are not associated persons, or
    2. the published prices of those inputs in the country of export

The CBSA did not find there was sufficient information in any instance to satisfy paragraph 11.2(1)(c) of SIMR above. The CBSA was unable to make proper comparisons between selling prices or published prices in the country of export on the administrative record with what the exporter purchased from the their related suppliers.

In each instance, the CBSA found that TAMSA had purchased inputs from its four related suppliers at an amount greater than the full costs of the suppliers over the POI and as such, determined paragraph 19(b) normal values in accordance with paragraph 11.2(1)(a) of SIMR.

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