Statement of reasons—Initiation of investigations: Thermoformed molded fiber tableware (TMFT 2025 IN)

Definition

[12] For the purpose of these investigations, subject goods are defined as:

Additional product information^{Footnote 3}

[13] TMFT are made from a pulp of cellulose fibers, thermoformed using one or more heated molds, and cured (dried) in the mold. Thermoforming results in a strong and durable product produced to relatively tight tolerances, with a smooth top surface finish and excellent oil, water and cut resistance.

[14] Subject goods can be any shape but are generally round, oblong, or rectangular, with a well defined rim. The scope of the subject goods includes plates and platters of all diameters (or in the case of rectangular shapes, lengths), but the vast majority of subject goods are circular and range in diameter from approximately 5 to 12 inches. Bowls with diameters or width of eight centimeters or greater, and lips up to eight centimeters, measured perpendicular from the base of the bowl to the top of the lip, are also included in the scope of the complaint. Width in this context only applies if a bowl is oblong, and relates to its shortest diameter.

[15] The subject goods are commonly but not always identified by different names according to their diameter. Plates are by far the most common type of TMFT. “Dessert” plates are generally in the range of 5-7” in diameter; “lunch” plates are generally in the range of 8-9” in diameter; and “dinner” plates are generally in the range of 9-11” in diameter. “Platters” are generally oblong. Bowls are often but not always made with a capacity of approximately 12 fluid ounces. The subject goods are usually made with flat interior surfaces but in some cases may have separate compartments designed to keep different food items apart.

[16] Thermoformed molded fiber products may be derived from any virgin or recycled cellulose fiber source, including but not limited to those sourced from wood, woody crops, agricultural crops, byproducts or residue, or waste from agricultural, industrial or other process. Subject goods appear to be most commonly made from the fibers of bagasse (sugar cane stalks), bamboo, and trees (wood).

[17] TMFT may have any weight or design, and may be bleached, unbleached, dyed, colored, or printed. They may include ingredients, additives, or chemistries to enhance functionality including, but not limited to, anti-microbial, antifungal, anti-bacterial, heat/flame resistant, hydrophobic, oleophobic, absorbent, or adsorbent. Thermoformed molded fiber products may also be subject to other processing or treatments, including, but not limited to, hot or after pressing, die-cutting, punching, trimming, padding, perforating, printing, labeling, dying, coloring, coating, laminating, embossing, debossing, repacking, or denesting.

[18] For clarity, plates, platters and bowls that are within the scope of this complaint do not include clam-shell style food service containers, which have lids that close by way of a hinge.

[19] The scope of this complaint also does not include “transfer molded” tableware. Transfer molded tableware is produced from molded fibers which are not cured in the mold. Rather, transfer molding involves removing the product from the mold while it is still wet and drying the product in an oven or similar drying process. Transfer molded products generally have a rougher texture (similar to a typical egg carton), lower density, strength, and moisture resistance, and looser tolerances for shape and texture. Transfer molded tableware are lower cost products and tend to be used as a low-cost option in certain fast food and similar applications.

[20] The scope of this complaint also does not include tableware produced directly from an existing roll or sheet of paper or paperboard, rather than from a pulp slurry which is formed and cured in a mold. Plates, platters or trays produced directly from paper or paperboard are mechanically pressed into their final shape, and are generally a thinner product with a lower and less pronounced profile and relatively little structural integrity. Pressed products are generally characterized by visible cut or fold lines around the rim which are inevitable when pressing a sheet of paper into a product with a three-dimensional shape. Bowls made directly from paper or paperboard generally cannot be pressed from single piece, and rather consist of two or more sections of paper or paperboard that are fused together at the base and rolled at the top of the lip.

Production process^{Footnote 4}

[21] TMFT are generally produced by mixing water with pulp which can be from either virgin or recycled fibers, and from various sources including wood, sugarcane stalks, bamboo, and other organic materials.

[22] Typically, the process begins with mixing the raw materials until a desired consistency of pulp and format has been achieved. TMFT products may be produced from pulp manufactured in an integrated facility, purchased pulp, or any combination of manufactured or purchased pulp. The pulp may undergo mechanical processing such as screening, cleaning, refining, or conditioning to achieve the desired fiber uniformity, purity, fiber length distribution, strength, smoothness, and bulkiness, enhancing its moldability and final product properties. The pulp may be mixed with water into a slurry or dry-mixed. Additives, such as sizing agents, fillers, or various chemistries to improve the molding process or product performance may be introduced at this stage. This step in the process is often referred to as stock preparation (or “stock prep”) or pulp preparation (or “pulp prep”).

[23] Molding the pulp slurry into finished TMFT generally involves a forming stage, followed by one or more drying/curing stages where heat and pressure are applied to the product. The prepared pulp is formed to the desired shape of the product on custom designed forming tools. In a wet molding process, the custom shaped tooling is lowered into the dilute pulp slurry and vacuum is applied to draw the fiber onto the shaped tool and drain water from the fiber mat. In a dry molding process, the prepared pulp fibers are laid out to form a loose mat, either manually or using automated systems like airlaiding or carding, to form a mat. The loose fiber mat may undergo a pre-pressing step to slightly compact the fibers, enhancing handling and ensuring that the mat fits properly into the mold cavity.

[24] This is followed by drying and pressing the preformed fiber mat in a pre-heated mold cavity. Molds are typically made of metal (e.g., steel or aluminum) and are designed to the specific geometry of the final product. The pressing also improves the mechanical properties of the product, aiding stacking and nesting for more efficient storage and shipping. Once the product has been thermoformed, it may go through one or more secondary processes at this stage to meet specific product needs, such as trimming, surface treatments, coating, laminating, printing, labeling, punching, perforating, padding, or embossing.

[25] A final manufacturing step would generally be quality control, where the products are inspected for quality, either manually or automated, and scraps or rejected products are generally returned to the pulp mixture and re-used.

[26] TMFT that passes quality control is finally packaged in various package sizes and quantities for shipment.

Classification of imports

[27] The allegedly dumped and subsidized goods are normally imported under the following tariff classification numbers:

1. 4823.61.00.00
2. 4823.69.00.90
3. 4823.70.00.00
4. 4823.90.00.90

[28] The listing of tariff classification numbers is for convenience of reference only. The tariff classification numbers 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 class of goods^{Footnote 5}

Domestic producers

[33] Besides the complainant, there are no other known producers of subject TMFT in Canada.

Estimates of domestic production^{Footnote 6}

[34] The complaint includes the annual production of like goods for the complainant from January 1, 2022 to June 30, 2025. As the complainant is the only producer in Canada, the complainant accounts for 100% of the production of subject TMFT in Canada.

Standing

[35] Pursuant to subsection 31(2) of SIMA, the following conditions must be met in order for an investigation to be initiated:

1. the complaint is supported by domestic producers whose production represents more than 50% of the total production of like goods by those domestic producers who express either support for or opposition to the complaint and
2. the production of the domestic producers who support the complaint represents 25% or more of the total production of like goods by the domestic industry

[36] Based on an analysis of information provided in the complaint, as well as the information gathered by the CBSA, the CBSA is satisfied that the standing requirements of subsection 31(2) of SIMA have been met.

The Canadian market

[37] The complainant, using Statistics Canada Import Data^{Footnote 7}, estimated the total volume and value of imports under the tariff classification numbers listed in the complaint from China and all other countries from January 1, 2022 to June 30, 2025.

[38] The CBSA conducted its own independent review of imports of TMFT from the CBSA’s Facility Information Retrieval Management (FIRM) database and the CBSA Assessment and Revenue Management (CARM) system using the tariff classification numbers under which the subject goods are imported from China and all other countries. In addition, the CBSA reviewed its Accelerated Commercial Release Operations Support System (ACROSS) data to correct any errors and remove non subject imports.

[39] Detailed information regarding the sales from domestic production by the complainant as well as the volume of imports of subject goods cannot be divulged for confidentiality reasons. The CBSA, however, has prepared the following tables to show the estimated import share of subject goods in Canada as well as the Canadian market as a whole from:

[40] The CBSA will continue to gather and analyze information on the volume and value of imports during the period of investigation (POI) of October 1, 2024 to September 30, 2025 as part of the preliminary phase of the dumping and subsidy investigations and will refine these estimates.

Section 20 allegations

[47] Section 20 is a provision of SIMA that may be applied to determine the normal value of goods in a dumping investigation where certain conditions prevail in the domestic market of the exporting country. In the case of a prescribed country under paragraph 20(1)(a) of SIMA, it is applied where, in the opinion of the CBSA, the government of that country substantially determines domestic prices and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market.^{Footnote 8}

[48] The CBSA initiates dumping investigations on the presumption that section 20 is not applicable to the sector under investigation unless there is information that suggests otherwise.

[49] A section 20 inquiry refers to the process whereby the CBSA collects information from various sources in order to form an opinion as to whether the conditions described under subsection 20(1) of SIMA exist with respect to the sector under investigation. Before initiating an inquiry under section 20, the CBSA must first analyze the information submitted in the complaint and the evidence it has gathered independently to determine if it is sufficient to warrant the initiation of an inquiry.

[50] The complainant alleges that the conditions described in section 20 of SIMA prevail in the pulp and paper sector in China. That is, the complainant alleges that this industry sector in China does not operate under competitive market conditions and consequently, the domestic prices of TMFT established in China, would not be reliable for determining normal values.

[51] The information provided by the complainant suggest a level of government influence in the pulp and paper sector, including TMFT. The complainant alleges that the market distortions and cost advantages provided to Chinese producers of wood, pulp and paper products translate directly into distortions to TMFT prices in China.

[52] The CBSA has reviewed the information provided in the complaint and conducted its own research. Based on this information, the CBSA believes that there is reasonable evidence to support an inquiry into the allegations that the measures taken by the Government of China substantially influence prices in the pulp and paper sector in China, and that the prices are substantially different than they would be in a competitive market.

[53] Consequently, on October 15, 2025, the CBSA included in its investigation, a section 20 inquiry in order to determine whether the conditions set forth in paragraph 20(1)(a) of SIMA prevail in the pulp and paper sector in China.

[54] As part of this section 20 inquiry, the CBSA sent section 20 RFIs to all potential producers and exporters of TMFT in China, as well as to the Government of China, requesting detailed information related to the pulp and paper sector in China.

[55] In cases where conditions of section 20 exist, pursuant to paragraph 20(1)(c), the normal value can be determined based on profitable selling prices or full costs of production and an amount for profit on goods sold domestically in a surrogate country, to which the conditions described in section 20 of SIMA are not applicable.

[56] For the purposes of obtaining information necessary to calculate normal values pursuant to subparagraph 20(1)(c) of SIMA, the CBSA requested information from producers in surrogate countries. As such, the CBSA has selected Brazil, Italy, South Korea, Chinese Taipei and United States as potential surrogate countries and has sent questionnaires to known producers of TMFT in these countries.

[57] In the event that the CBSA does not receive sufficient information from producers and exporters of subject goods in the selected surrogate countries for the purposes of determining normal values pursuant to section 20, the CBSA may identify other surrogate countries at a later date.

[58] Importers will be requested to provide information on sales of like goods produced in the surrogate countries, in the event that normal values must be determined under paragraph 20(1)(d) of SIMA.

[59] In the event that the CBSA forms an opinion that domestic prices of TMFT in China are substantially determined by the government, and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be if they were determined in a competitive market, the normal values of the goods under investigation will be determined, pursuant to paragraph 20(1)(c) of SIMA, where such information is available, on the basis of the domestic selling prices or the aggregate of the cost of production, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits of like goods sold by producers in any country designated by the CBSA and adjusted for price comparability; or, pursuant to paragraph 20(1)(d) of SIMA, where such information is available, on the basis of the selling price in Canada of like goods produced and imported from any country designated by the CBSA and adjusted for price comparability.

Normal value

Complainant’s estimates of normal value

Section 15

[60] The complainant stated that in general the sales price for TMFT in China was not publicly available at the manufacturer/wholesale level. The complainant was able to obtain retail level pricing, however they explained that there are many problems with using this information to estimate ex-factory normal values as they do not know the retailer’s mark-up, the number of intermediary distributors, or the freight cost.^{Footnote 9}

[61] Nevertheless, the complainant obtained examples of selling prices of TMFT in China at the retail level from various e-commerce platforms. To take into account the problems with accepting these prices described above, the complaint lowered the average retail selling price by 27%. This number was selected as it was the average gross margin of the top e-commerce platforms in China based on 2024 financial statements.^{Footnote 10}

Section 19(b)

[62] The complainant estimated normal values using a constructed cost approach based on the methodology in paragraph 19(b) of SIMA, calculated based on the aggregate of estimates of the cost of production of the subject goods, a reasonable amount for administrative, selling and other costs and a reasonable amount for profits.

[63] As detailed costs of production of TMFT producers in China were not available, the complainant estimated the costs of production of TMFT in China using:

• The average bagasse pulp (direct material) price in China, multiplied by the complainant’s own yield loss and the weight of plate^{Footnote 11}
• The complainant’s own cost of chemicals and other raw materials (direct material)^{Footnote 12}
• The complainant’s own direct and indirect labour costs adjusted to reflect the difference between manufacturing wages in Canada and China^{Footnote 13}
• The complainant’s overhead costs^{Footnote 14}

[64] To estimate a reasonable amount for administrative, selling and other costs, and a reasonable amount for profits for the subject goods from China, the complainant relied on the publicly available financial results of Fuling Technology Co. Ltd. and Hefei Hengxin Life Science & Technology Co. Ltd., two producers of TMFT with factories in China. Using this information, the complainant estimated a reasonable amount for administrative, selling and other costs; financial expenses; and profits as a percentage of the costs of production for the second half of 2024 and the first half of 2025, collectively.^{Footnote 15}

Section 20

[65] The complainant calculated section 20 normal values using the United States as a surrogate country under paragraph 20(1)(c)(ii).^{Footnote 16}

[66] The complainant provided two different estimates for a section 20 surrogate normal value. The first was estimated in a similar manner as the previously discussed section 19(b) normal values methodology based on the complainant’s material costs, adjusted United States labour costs, and the SG&A, FE, and profit from the producer Karat Packaging Inc., located in the United States.^{Footnote 17}

[67] For the second method, the complainant obtained the domestic selling prices of a large producer in the United States of thermoformed paper plates.^{Footnote 18}

CBSA’s estimate of normal value

[68] For the purposes of initiation, the CBSA estimated normal values using a constructed cost approach based on the methodology in paragraph 19(b) of SIMA, calculated based on the aggregate of estimates of the cost of production of the subject goods, a reasonable amount for administrative selling and other costs and a reasonable amount for profits. The CBSA reviewed the complainant’s methodology to determine how normal values were estimated and found that the approach was reasonable, but made the following adjustment:

• The complainant estimated separate normal values for the second half of 2024 and first half of 2025 . The CBSA instead estimated only one set of normal values for the whole POI, using the POI average published pricing of bagasse pulp, the POI average exchange rates, and the POI average of the complainant’s costs.

[69] For the purposes of the initiation of the investigation the CBSA has estimated margin of dumping using normal values based on the methodology of section 19. The CBSA recognizes that there is available information to estimate normal values based on the methodology of section 15 of SIMA, however, given that all information regarding the domestic selling prices are at the retailer level and not at the producer level, the methodology of section 19 is a more conservative approach. During the investigations, the CBSA will endeavor to gather additional information regarding domestic prices in China from exporters in order to calculate normal values under section 15 of SIMA.

[70] The CBSA acknowledges that there is reasonable indication that the conditions of section 20 may exist in the pulp and paper sector in China, however, the CBSA finds the methodology of section 19 to be a conservative and reasonable basis for estimating the margin of dumping at this stage.

Export price

Complainant’s estimates of export price

[71] The complainant stated that they could not estimate export price based on import data because the tariff classification numbers for TMFT covers both subject and non-subject goods. Further, goods can be sold in different units of measure, such as by number of plates or by weight, which can lead to inaccuracies in the data reported.^{Footnote 19}

[72] The complainant instead estimated the export price based on a quote.^{Footnote 20}

CBSA’s estimates of export price

[73] In order to estimate the export price for the subject goods imported into Canada, the CBSA attempted to use information available through FIRM, CARM and ACROSS. However, the CBSA encountered similar problems as the complainant identified, for example inaccuracy of reported units of measure and for many entries it was difficult to determine the subjectivity of the goods..

[74] However, the CBSA was able to obtain sufficient information on importations of Chinese TMFT and used this information to estimate export prices.

Estimated margins of dumping

[75] For the purposes of the initiation of the investigation, as previously mentioned, the CBSA has estimated a margin of dumping using normal values based on the methodology of section 19 of SIMA.

[76] The CBSA estimated the margin of dumping for the subject goods by comparing the estimated normal values with the estimated export prices for the period of July 1, 2024 to June 30, 2025. The CBSA estimates that subject goods from China were dumped by 95.4%, expressed as a percentage of the export price.

Subsidy programs in China

[83] The complainant has provided information regarding a variety of potential subsidy programs or categories available in order to support its allegations that the subject goods originating in China have been subsidized. The complainant asserted that the programs are subsidies according to subsection 2(1) of SIMA and that they are actionable. The complainant has also claimed that the programs are either used by or available for use by exporters of TMFT, and the pulp and paper industry in China.^{Footnote 21}

[84] In the analysis of the complainant’s allegations, the CBSA reviewed the information contained in the supporting documents submitted in the complaint as well as in other publicly available reference material to determine whether the programs referred to could constitute financial contributions in accordance with subsections 2(1) and 2(1.6) of SIMA. These programs were further examined to establish whether they could also be considered specific under subsections 2(7.2) or 2(7.3) of SIMA.

Complainant's identification of alleged subsidy programs in China

[85] In alleging that actionable subsidies were applicable to the subject goods imported from China, the complainant relied on previous CBSA subsidy investigation findings, US Department of Commerce (USDOC) investigations and past countervailing duty findings. The complainant also relied on publications issued by the WTO and Government of China, and general news articles and publications.

[86] The complainant identified and provided 29 potential subsidy programs that producers and exporters of TMFT in China may have benefitted from. The complainant allege that these subsidy programs constitute a financial contribution, in accordance with section 2 of SIMA, and are therefore, actionable. The complainant also claimed that each program is either used by or is available for use by producers and exporters of TMFT in China. The documents that formed the basis for these allegations were appended to the complaint.

[87] The complainant provided a general description of each alleged subsidy program and additional evidence to support their allegations. The complainant alleges that each identified program potentially confers an actionable or prohibited subsidy to producers and exporters of TMFT in China. The documents that formed the basis for these allegations were appended to the complaint.

CBSA's conclusion

[88] Sufficient evidence is available to support the allegations that TMFT originating in or exported from China have been subsidized. In investigating these programs, the CBSA has requested information from the Government of China, exporters and producers to determine whether exporters/producers of subject goods received benefits under these programs and whether these programs, or any other programs, are actionable subsidies and, therefore, countervailable under SIMA.

Estimated amount of subsidy

[89] The complainant was unable to estimate the amounts of subsidy on a program basis for the subject goods imported from China. Instead, the complainant estimated the amount of subsidy as being equal to the difference between the estimated cost of production and the export price for TMFT sold into Canada.^{Footnote 22}

[90] The CBSA estimated the amount of subsidy conferred to exporters of the subject goods from China by comparing the estimated full costs of the subject goods with their total estimated export prices, using the costing and export price methodologies explained in the evidence of dumping section.

[91] It is the CBSA’s understanding that subsidies have the effect of lowering the full cost of the goods, including the cost of production and the amount for selling, administrative and all other costs, which allows exporters to pass-through the subsidy benefits in reducing the selling price of those goods to Canada. Therefore, the CBSA is satisfied that the exporter’s ability to sell subject goods to Canada at prices substantially below their estimated full costs supports the complainant’s allegations that subsidies are being conferred on the exported goods.

[92] The CBSA’s analysis of the information indicates that subject goods imported into Canada during the period of January 1, 2024 to December 31, 2024 were subsidized and that the estimated amount of subsidy is 67.3% of the export price.

Increased volume of imports of subject goods

[97] The complainant alleges that imports of subject goods have significantly increased in both absolute and relative terms. To support their allegations on an absolute basis, the complainant provided estimates of TMFT imports under tariff classification number 4823.70.00.00 from 2022 to the first half of 2025, using import data obtained from Statistics Canada.^{Footnote 23}

[98] Based on the Statistics Canada import data, the volume of imports of subject goods have increased in absolute terms, on a unit (kg) basis, by 73.4% between 2022 to 2024. The complainant also noted a 7.5% growth in imports when comparing subject imports from interim 2024 to 2025. The rise of subject imports since 2022 demonstrates a significant increase.^{Footnote 25}

[99] Even taking into consideration subject goods imported under other tariff classification numbers (i.e. 4823.61.00.00, 4823.69.00.90, and 4823.90.00.90), the complainant notes overall increases in the absolute volume by 47.9% between 2022 to 2024, and by 11.6% between the first half of 2024 to the same period in 2025.^{Footnote 26}

[100] The complainant asserts that the absolute increase in the subject imports volumes shown in the Statistic Canada data aligns with the complainant’s experiences in the market.^{Footnote 27}

[101] In terms of relative increase, the rise in the volume of subject goods is even more distinct relative to the production and consumption of like goods. While subject import volumes have risen, the volumes of both domestically produced and sold like goods continued to decline.^{Footnote 28}

[102] Based on the above, the CBSA finds the complainant’s claim of increased import volumes to be reasonable and well supported. The increase was substantial in both absolute and relative terms. The CBSA finds that the injury factor of an increased volume of subject goods is sufficiently supported and linked to the allegedly dumped and subsidized goods.

Price undercutting, price depression and price suppression

Price undercutting

[103] The complainant argues that subject imports have undercut the pricing of domestically produced like goods with key retailer accounts, resulting in forced price drops, substantial loss in volumes of sales and a loss of profitability.

[104] The complainant explains that it is not reasonable to present average unit value pricing from the Statistics Canada import data due to the inclusion of non-subject goods, product mix issues, and the various assumptions that would need to be made to present such an analysis. Instead, the complainant uses retail pricing comparisons as the best available data to demonstrate price undercutting in sales to retailers.^{Footnote 29}

[105] Since the introduction of the subject imports in 2023, the subject goods have consistently undercut the prices of like goods at the retail level, ranging between 8.3 – 39.8%.^{Footnote 30}

Price depression

[106] With respect to price depression, the complainant asserts that the presence of the subject goods in the market has caused price depression in the prices of like goods. Due to the competition with subject imports, the complainant has been forced to take price decreases since 2023, resulting in an overall aggregate and product-specific pricing decline.^{Footnote 31}

Price suppression

[107] Concerning the allegations of price suppression, the complainant suggests that both the average unit cost of goods manufactured (COGM) and the average unit cost of goods sold (COGS) have increased as a percentage of average unit selling value (AUV). The price suppression that has been experienced by the complainant over the second half of 2024 and the first half of 2025 corresponds directly to a sharp decline in profitability over the same period.^{Footnote 32}

[108] Based on the information contained in the complaint, as well as the analysis above, the CBSA finds the claims of price undercutting, price depression and price suppression to be well supported and sufficiently linked to the allegedly dumped and subsidized goods.

Adverse impact on output, sales and market share

[109] The complainant states that between 2022 and 2024, their outputs and sales of TMFT have declined, directly contributing to lost market share and lost sales.^{Footnote 33}

[110] The CBSA finds that the injury factor of adverse impact on output, sales and market share are sufficiently supported and linked to the allegedly dumped and subsidized goods.

Decline in profitability

[111] The complainant alleges that the dumping and subsidizing of subject goods have caused a significant decline in the complainant’s profitability. To support this allegation, the complainant provided a summary of their key financial performance indicators from 2022 to the first half of 2025.^{Footnote 34}

[112] The complainant points to significant reductions in both gross margin and net income from 2023 to 2024.^{Footnote 35} The complainant notes that the reduced profitability caused by significant volumes of subject goods capturing their market share is primarily a result of the company being unable to spread high fixed costs of production across a sufficient volume of sales.^{Footnote 36}

[113] Overall, the information contained in the complaint generally establishes a trend of a worsening financial performance, particularly between 2023 and the first half of 2025, thereby supporting the complainant’s allegations of a decline in profitability causing an adverse impact on financial results. As such, the CBSA finds that the injury factor of decline in profitability is sufficiently supported and reasonably linked to the alleged dumped goods.

Adverse impact on employment and productivity

[114] The complainant submits that there have been adverse effects on its employment capacity and suggests its ability to sustain employment levels is in jeopardy by the massive influx of dumped and subsidized subject goods. The complainant explains that its Hantsport, Nova Scotia plant is the largest employer in the area, employing generations of local workers since the early 1930s. To avoid detrimental layoffs that would negatively impact the region, the complainant has opted for alternative workforce adjustment strategies (i.e. hiring freezes or attrition through retirement).^{Footnote 37}

[115] The available evidence in the complaint supports the complainant’s claims of adverse impact on employment and productivity. The CBSA finds that the injury factor of adverse impact on employment and productivity is sufficiently supported and reasonably linked to the allegedly dumped and subsidized goods.

Decline in capacity utilization

[116] The complainant states that with the surge of subject imports into the Canadian market, the complainant’s capacity utilization dropped significantly between 2023 and 2024.^{Footnote 38}

[117] Based on the CBSA’s analysis of information related to the capacity utilization rates, the CBSA finds the complainant’s claims of a decline capacity utilization to be reasonable and well supported. As such, the CBSA is of the opinion that these injury factors are sufficiently supported and linked to the allegedly dumped and subsidized goods.

Adverse impact on investments and return on investments

[118] The complainant details its historical efforts in retaining the best manufacturing technology for TMFT production in order to remain globally competitive. Despite these efforts, the surge of subject imports within the past several years have negatively impacted the return on these investments.^{Footnote 39}

[119] The available evidence supports the complainant’s claim of an adverse effect on existing and future investments. The CBSA finds that this injury factor is sufficiently supported and reasonably linked to the allegedly dumped and subsidized goods.

CBSA's conclusion: Injury

[121] The CBSA has reviewed the injury factors discussed above. Based on the evidence provided in the complaint, and supplementary data available to the CBSA through its own research, its FIRM, CARM and ACROSS databases, the CBSA is satisfied that there is sufficient evidence the allegedly dumped and subsidized subject goods from China have caused injury to the domestic industry. The injury factors allegedly suffered by the domestic industry include increase in volume of imports of subject goods; price undercutting, price depression and price suppression; adverse impact on output, sales and market share; decline in profitability; adverse impact on employment and productivity; decline in capacity utilization; and adverse impact on investments and return on investments.

[122] In summary, the CBSA is of the opinion that the information provided in the complaint has disclosed a reasonable indication that the alleged dumping and subsidizing have caused injury and is threatening to cause injury to the Canadian domestic industry

Category 1: Grants

Program 1: Pulp and paper integration development grants

This program refers to a set of government-backed financial incentives and policy measures aimed at promoting the integration of domestic wood pulp production with plantation development and downstream paper manufacturing. These grants are part of a broader strategy to reduce reliance on imported pulp and modernize the industry. The Chinese government has supported this initiative through discounted loans, capital subsidies, and fast-track investment approvals, targeting the creation of millions of hectares of fast-growing pulpwood plantations and large-scale integrated pulp-paper projects.

The financial contribution by the government consists of direct transfer of funds from the government, pursuant to section 2(1.6)(a), and government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of Special Import Measures Act (SIMA). The program may be considered specific pursuant to subsection 2(7.2) of SIMA because it is limited to enterprises in certain industries.

Program 2: Export development and performance grants

The Export-Import Bank of China (China Exim Bank) and the China Export & Credit Insurance Corporation (Sinosure), a state-funded policy-oriented insurance company, were established to promote China’s foreign trade, investment, and international economic cooperation. The China Exim Bank and Sinosure each provide export loans and credit guarantees which, according to information from the Bank, have “played a key role in supporting Chinese companies to go global” and promoted “the export of new and high tech products”.

The Canada Border Services Agency (CBSA) has previously countervailed this program in Line Pipe, Mattresses, Pea Protein, and Upholstered Domestic Seating.

This program may constitute a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA; i.e., 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 above confers a benefit to the exporter by way of reducing its financial costs upon obtaining loans from a financial institution, and the benefit would be equal to the amount of the exemption/deduction. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 3: Environment protection grants

These are grants provided by the Government of China for the purposes of improving environmental performance, for example, monitoring and cleaning pollutants, improving energy efficiency, upgrading facilities to be more environmentally efficient, and waste water treatment.

The CBSA has previously countervailed this program in Container Chassis, Copper Tube, Mattresses, Pea Protein, and Upholstered Domestic Seating.

In the investigation Mattresses from China, conducted by the US Department of Commerce (USDOC, it appears the US countervailed this program as “Grants for Energy Conservation and Emission Reduction”.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 4: Performance award grants

A grant that provides financial aid for enterprises with excellent performances.

The CBSA has previously countervailed this program in Seamless Casing, Aluminum Extrusions, Oil Country Tubular Goods, Pup Joints, Copper Tube, Line Pipe, Mattresses, and Upholstered Domestic Seating.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 5: Subsidies related to company/enterprise development and innovation

Available information indicates that the Government of China has introduced several grants and incentives related to company and enterprise development and innovation grants and awards.

The CBSA has previously countervailed this program in Mattresses and Upholstered Domestic Seating.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 6: Subsidies for industrial and/or technology transformation or restructuring

Available information indicates that the Government of China has introduced several grants and incentives related to facilitating the transformation of restructuring of industries and/or technologies. The complainants allege Chinese thermoformed molded fiber tableware (TMFT) producers may have benefited from such grants.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 7: National key technology research and development (“R&D”) funding

Available information indicates that the Government of China has introduced several grants and incentives related to research and development under the State Key Technology Project Fund. The complainants allege Chinese TMFT producers may have benefited from such grants.

It appears the USDOC found this program to be a countervailable subsidy in the investigation Coated Free Sheet from China.

The financial contribution by the government appears to consist of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.2) of SIMA because it is limited to enterprises in certain industries.

Program 8: Other science and technology related subsidies

Available information indicates that the Government of China has introduced several grants and incentives related to science and technology. The complainants allege that producers are eligible to receive various grants awarded at the local and national levels.

The CBSA has previously countervailed this program in Mattresses and Upholstered Domestic Seating.

In the investigation Mattresses from China, conducted by the USDOC, it appears that the US countervailed this program as “SME Technology Innovation Fund”.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 9: Grants related to intellectual property rights

Available information indicates that the Government of China has introduced several grants and incentives related to intellectual property rights. The complainants allege that producers are eligible to receive various grants related to intellectual property rights awarded at the local and national levels.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 10: National and local investment promotion grants

Available information indicates that the Government of China has introduced several grants and incentives related to promoting investments nationally and locally. The complainants allege that producers are eligible to receive such grants.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available

Program 11: Subsidies related to employment, training and recruitment

Available information indicates that the Government of China has introduced several grants and incentives related to talent and skills.

The CBSA has previously countervailed this program in Mattresses and Upholstered Domestic Seating.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 12: Subsidies related to energy conservation, water saving, pollution treatment, and other

These are grants provided by the Government of China for the purposes of improving environmental performance, such as, monitoring and cleaning pollutants, improving energy efficiency, upgrading facilities to be more environmentally efficient, and treatment of waste water.

The CBSA has previously countervailed similar programs in Copper Tube, Mattresses, and Wind Towers which addressed grants relating to improving environmental performances. Further, the Government of China has listed this title in its notification of subsidy programs to the WTO.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 13: Subsidies related to pandemic support

Available information indicates that the Government of China has introduced several grants and incentives designed to support job stabilization and weather economic hardships experienced by exporters during the COVID-19 pandemic.

The CBSA has previously countervailed this program in Container Chassis and Mattresses.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 14: Subsidies related to social security

Available information indicates that the Government of China has introduced several grants and incentives related to social security.

The CBSA has previously countervailed this program in Mattresses.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Category 2: Preferential tax programs

Program 15: Corporate income tax reduction for new high-tech enterprises

Under Article 28.2 of the Enterprise Income Tax Law in China, companies designated as high- or new technology enterprises (NHTE) are entitled to a reduced income tax rate of 15 percent rather than the normal national corporate tax rate of 25 percent. The granting authority responsible for this program is alleged to be the State Administration of Taxation and the program is administered by local tax authorities. In its notification of subsidy programs to the WTO, the Government of China listed this program.

The CBSA has previously countervailed this program in Fabricated Industrial Steel Components, Line Pipe, Certain Seamless Casing, Oil Country Tubular Goods, Pup Joints, Plywood, Upholstered Domestic Seating, Container Chassis, Mattresses, Wind Towers, and Pea Protein.

The financial contribution by the government may consist of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.2) of SIMA because it is limited to enterprises in certain industries.

Program 16: Accelerated depreciation of fixed assets for light industry and high-tech enterprises

According to China’s WTO subsidy notification, enterprises in the light industry and high- tech enterprises can take accelerated depreciation of fixed assets in order to “speed up industrial restructuring”. The complainants argue that, per China’s Ministry of Industry and Information Technology, the papermaking industry is among the “light industry” and TMFT producers would be eligible for such tax programs.

The financial contribution by the government may consist of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.2) of SIMA because it is limited to enterprises in certain industries.

Category 3: Relief from duties and taxes

Program 17: Income tax deductions for research and development expenses under the Enterprise Income Tax Law

According to Article 30 of the Enterprise Income Tax Law (EITL) and Article 95 of the implementing Regulations of the Enterprise Income Tax Law, the expenses born by the enterprise incurred in the work of researching and development of new technologies, products, or techniques can be accounted for at the actual accrued amount of total expenses, thereby reducing the enterprise’s actual income tax payable.

The CBSA has previously countervailed this program in Photovoltaic Modules and Laminates, Seamless Casing, Oil Country Tubular Goods, Pup Joints, Plywood, Upholstered Domestic Seating, Mattress, and Wind Towers.

The financial contribution by the government may consist of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 18: Income tax concessions for enterprises engaged in comprehensive utilization of resources

Article 33 of the Enterprise Income Tax Law allocates a reduction in taxable income for enterprises “producing products complying with the industrial policies of the state by comprehensively utilizing resources.” If a Chinese enterprise utilizes resources listed in the Catalogue of Comprehensive Use of Resources for Preferential Enterprise Income Tax Treatment to produce goods also listed in the Catalogue that meet national and industrial standards, the company may be entitled to a reduced income tax rate.

The CBSA has previously countervailed this program in Line Pipe.

The complainants submit that the goods listed in the catalogue include papermaking raw materials and as such, would be applicable to the papermaking industry and that Chinese TMFT producers would be eligible to benefit from this program.

The financial contribution by the government may consist of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.2) of SIMA because it is limited to enterprises in certain industries.

Program 19: Income tax deductions/credits for purchase of special equipment

According to Article 34 of the EITL, tax deductions are awarded to enterprises that purchase “special equipment for protecting environment, saving energy, work safety, etc.”

The complainants have provided evidence suggesting Chinese TMFT producers may be eligible for tax incentives under such programs.

The financial contribution by the government may consist of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 20: Import tariff and VAT exemptions on imported equipment for encouraged industries

This program is to encourage foreign investment and to introduce advanced technology and equipment from abroad. The Government of China provides a subsidy to Foreign Invested Enterprises (FIEs) and certain domestic enterprises engaged in “encouraged” industries in the form of import tariffs and VAT exemptions on imported equipment, including components and parts.

The CBSA has previously countervailed this program in Photovoltaic Modules and Laminates, Unitized Wall Modules, Seamless Casing, Pup Joints, and Line Pipe.

The financial contribution by the government may consist of government revenue that is otherwise due is foregone or not collected, pursuant to section 2(1.6)(b) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Program 21: VAT rebates on domestically produced equipment

Available information indicates that the Government of China’s VAT rebate program provides financial contributions to companies by reducing or exempting amounts otherwise owed to the government. These rebates are commonly granted to enterprises engaged in export activities or designated as advanced manufacturers.

This program appears to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government and confers a benefit to the recipient equal to the amount of the grant. The program may be considered specific pursuant to subsection 2(7.2)(b) because it is contingent upon using domestically produced goods over imported goods and it is, thus, a prohibited subsidy.

Category 4: Provision of goods or services at less than adequate remuneration

Program 22: Provision of government inputs/utilities at less than adequate remuneration

The complainants allege that exporters may avail themselves of input materials and utilities from state owned enterprises (SOE) at below fair market value. They have identified the predominant inputs for TMFT through state-owned and controlled suppliers at less than fair market value. In addition, the complainants identified electricity as an input that may be provided to TMFT producers at less than fair market value.

The CBSA has previously countervailed this program in Seamless Casing, Oil Country Tubular Goods, Stainless Steel Sinks, Steel Piling Pipe, Large Line Pipe, Pup Joints, Upholstered Domestic Seating, Container Chassis, and Wind Towers.

This program may constitute a financial contribution pursuant to paragraph 2(1.6)(c) of SIMA as they involve the provision of goods or services, other than general governmental infrastructure. The program may be considered specific pursuant to subsection 2(7.2) of SIMA because it is limited to enterprises in certain industries.

Program 23: Provision of land for less than adequate remuneration

All land in China belongs to the Government of China (i.e., either national or local governments, or through a “collective” at the township or village level), and government land agencies across China control the allocation of land through the granting of land use rights.

The CBSA has previously countervailed this program in Line Pipe, Large Line Pipe, Mattresses, Pea Protein, Thermoelectric Coolers and Warmers, and Upholstered Domestic Seating.

This program may constitute a financial contribution pursuant to paragraph 2(1.6)(c) of SIMA as they involve the provision of goods or services, other than general governmental infrastructure. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.

Category 5: Preferential loans and loan guarantees

Program 24: Government policy loans and loan guarantees

Evidence provided in the complaint states that SOE and policy-controlled financial institutions in China serve as key investment tools for the government, frequently offering loans and guarantees to support China’s TMFT industry. These measures are commonly used to boost sectors favored by government policy.

This program may constitute a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the government are reduced or exempted, and would confer a benefit to the recipient equal to the amount of the reduction/exemption. The program may be considered specific pursuant to subsection 2(7.2) of SIMA because it is limited to enterprises in certain industries.

Program 25: Export loans and credits from Chinese state-owned banks

The China Exim Bank and the Sinosure, a state-funded policy-oriented insurance company, were established to promote China’s foreign trade, investment, and international economic cooperation. The China Exim Bank and Sinosure each provide export loans and credit guarantees which, according to information from the Bank, have “played a key role in supporting Chinese companies to go global” and promoted “the export of new and high tech products”. Companies in China receive export credits provided by the Government of China to assist in the development of export markets or to recognize export performance.

The CBSA has previously countervailed this program in Line Pipe, Mattresses, Pea Protein, and Upholstered Domestic Seating.

Additionally, it appears the USDOC may have countervailed this program in the investigation Lightweight Thermal Paper from the People's Republic of China and in its subsequent sunset reviews.

The financial contribution by the government appears to be the direct transfer of funds, pursuant to section 2(1.6)(a) of SIMA. The program may be considered specific pursuant to subsection 2(7.3) of SIMA in that the manner in which discretion is exercised by the granting authority indicates that the subsidy may not be generally available.