Notice of conclusion of a re-investigation: Copper pipe fittings (CPF 2023 RI)

Ottawa, September 8, 2023

The Canada Border Services Agency (CBSA) has today concluded a re‑investigation of the normal values and export prices respecting certain copper pipe fittings from the United States, South Korea, and China and amounts of subsidy of copper pipe fittings from China, in accordance with the Special Import Measures Act (SIMA).

The re-investigation was initiated on February 15, 2023, as part of the CBSA’s ongoing enforcement of the Canadian International Trade Tribunal’s (CITT) order issued on September 14, 2022.

The product definition and the applicable tariff classification numbers of the goods subject to the CITT’s order can be found on the CBSA’s Measures in Force.

Period of Investigation

The period of investigation (POI) and the profitability analysis period (PAP) for the re-investigation was from February 1, 2022 to January 31, 2023.

Re-investigation Process

At the initiation of the re-investigation, the CBSA sent dumping and subsidy requests for information (RFI) to all known importers, exporters, producers and vendors to solicit information on the costs and selling prices of subject goods and like goods. The information was requested for purposes of updating the normal values, export prices, and amounts of subsidy for subject goods imported into Canada.

Three exporters located in China provided a response to the CBSA’s Exporter RFI. The CBSA didn’t receive a response from exporters located in the United States and South Korea.

Desk verifications were conducted for the responding exporters.

As part of the re-investigation, case briefs were provided by counsel representing the Canadian producer. Details of the representations are provided in Appendix 1. Details pertaining to the information submitted by the exporters in response to the RFIs and supplemental RFIs (SRFI), as well as the results of the CBSA’s re-investigation are provided below.

Specific normal values, export prices and amounts of subsidy for future shipments of copper pipe fittings have been determined for exporters that submitted a complete response to the dumping RFI, subsidy RFI, SRFIs, deficiency letters, and for whom the verification was considered reliable.

Normal Values and Export Prices

Normal Value

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 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.

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 Prices

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.

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.

China

Zhuji City Howhi Air Conditioners Made Co. Ltd.

Zhuji City Howhi Air Conditioners Made Co. Ltd. (Howhi) is a manufacturer and exporter of copper pipe fittings located in Zhuji City, China. Howhi exported subject goods to Canada during the POI.

Howhi provided substantially complete responses to the CBSA’s dumping RFI as well as three SRFIs and verification RFIs.

Howhi provided a database of domestic sales of copper pipe fittings during the PAP. Where Howhi had sufficient domestic sales that met the requirements of section 15 and 16 of SIMA, normal values were determined pursuant to section 15 of SIMA, based on the company’s weighted average domestic selling prices of copper pipe fittings in China. Where there were insufficient domestic sales of like goods that met the requirements of section 15 and 16 of SIMA, normal values were determined pursuant to section 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. The amount for profits was determined pursuant to paragraph 11(1)(b)(ii) of the Special Import Measures Regulations (SIMR).

For the subject goods exported to Canada by Howhi during the POI, the export prices were determined pursuant to section 24 of SIMA, based on the exporter’s selling price adjusted by deducting the costs, charges and expenses resulting from the exportation of the goods.

Zhejiang Hailiang Co., Ltd.

Zhejiang Hailiang Co., Ltd (Hailiang) is a manufacturer and exporter of copper pipe fittings located in Zhuji City, China. Hailiang did not export subject goods to Canada during the POI. Hailiang’s associated trading company, Hong Kong Hailiang Metal Trading Limited (Hong Kong Hailiang), is involved in certain sales of copper pipe fittings. The CBSA found Hailiang to be the exporter, as it acted as the principal in the transaction, and is located in the country of export, China.

Hailiang provided substantially complete responses to the CBSA’s dumping RFI as well as seven SRFIs and verification RFIs.

Hailiang provided a database of domestic sales of copper pipe fittings during the PAP. However, normal values could not be determined in accordance with section 15 of SIMA as there were not such a number of sales of like goods that complied with all the terms and conditions referred to in sections 15 and 16 of SIMA. Therefore, normal values were determined pursuant to section 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 plus a reasonable amount for profit. The amount for profit was determined pursuant to paragraph 11(1)(b)(ii) of the Special Import Measures Regulations (SIMR).

As inputs that are significant in the production of the goods was acquired from one or more associated suppliers, the cost of the inputs were determined pursuant to subparagraph 11.2(1) of SIMR.

Ningbo Jintian Copper Tube Co., Ltd.

Ningbo Jintian Copper Tube Co., Ltd. (Jintian) is a manufacturer and exporter of copper pipe fittings located in China. Jintian did not export subject goods to Canada during the POI. Jiantian’s associated trading company Hong Kong Maytime International Industry Co., Ltd. (Maytime), is involved in certain sales of copper pipe fittings.

The CBSA determined that the information provided in response to the RFI as well as the SRFIs and verification RFIs by Jintian and its related trading company, Maytime, were incomplete and unreliable for purposes of determining normal values and export prices in this re-investigation. Normal values and export prices for Jintian were determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA.

All Other Exporters in the United States, South Korea, and China

For all other exporters of subject goods originating in or exported from the United States, South Korea, and China, normal values will be determined by ministerial specification. The normal values for future shipments determined by ministerial specification are calculated by advancing the export price of the goods by 242%, pursuant to subsection 29(1) of SIMA.

Normal values previously in place expire on September 8, 2023.

Amounts of Subsidy

In accordance with section 2 of SIMA, a subsidy exists if there is a financial contribution by a government of a country other than Canada that confers a benefit on persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of goods. A subsidy also exists in respect of any form of income or price support, within the meaning of Article XVI of the General Agreement on Tariffs and Trade, 1994, being part of Annex 1A to the World Trade Organization (WTO) Agreement, that confers a benefit.

Pursuant to subsection 2(1.6) of SIMA, there is a financial contribution by a government of a country other than Canada where:

(a) practices of the government involve the direct transfer of funds or liabilities or the contingent transfer of funds or liabilities;
(b) 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;
(c) the government provides goods or services, other than general governmental infrastructure, or purchases goods; or
(d) the government permits or directs a non governmental body to do anything referred to in any of paragraphs (a) to (c) where the right or obligation to do the thing is normally vested in the government and the manner in which the non governmental body does the thing does not differ in a meaningful way from the manner in which the government would do it.

Where subsidies exist, they may be subject to countervailing measures if they are specific in nature. According to subsection 2(7.2) of SIMA, a subsidy is considered to be specific when it is limited, in a legislative, regulatory or administrative instrument, or other public document, to a particular enterprise within the jurisdiction of the authority that is granting the subsidy; or is a prohibited subsidy.

A “prohibited subsidy” is either an export subsidy or a subsidy or portion of a subsidy that is contingent, in whole or in part, on the use of goods that are produced or that originate in the country of export. An export subsidy is a subsidy or portion of a subsidy contingent, in whole or in part, on export performance. An “enterprise” is defined as including a group of enterprises, an industry and a group of industries. These terms are all defined in section 2 of SIMA.

Notwithstanding that a subsidy is not specific in law, under subsection 2(7.3) of SIMA a subsidy may also be considered specific having regard as to whether:

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

For purposes of a subsidy re-investigation, the CBSA refers to a subsidy that has been found to be specific as an “actionable subsidy,” meaning that it is subject to countervailing measures if the persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of goods under investigation have benefited from the subsidy.

Financial contributions provided by state owned enterprises (SOEs) may also be considered to be provided by the government for purposes of this re-investigation. A SOE may be considered to constitute “government” for the purposes of subsection 2(1.6) of SIMA if it possesses, exercises, or is vested with governmental authority. Without limiting the generality of the foregoing, the CBSA may consider the following factors as indicative of whether the SOE meets this standard: 1) the SOE is granted or vested with authority by statute; 2) the SOE is performing a government function; 3) the SOE is meaningfully controlled by the government; or some combination thereof.

China

The Government of China (GOC) did not respond to the CBSA’s government subsidy RFI. The lack of response from the GOC limited the CBSA’s ability to determine the amount of subsidy in the prescribed manner as the required information relating to financial contribution, benefit and specificity was not provided. It also limited the CBSA’s ability to determine whether producers, or other suppliers of goods and services, are public bodies.

Due to a lack of government response, subsidy amounts for all exporters were determined pursuant to subsection 30.4(2) of SIMA, based on a ministerial specification. However, in consideration of the fact that cooperative producers/exporters provided sufficient information in response to the subsidy RFI, for each of these exporters, an individual amount of subsidy was determined based on the information provided in response to the subsidy RFI, subsequent SRFIs and verification RFIs.

The available information indicates that these programs do not appear to be generally available to all enterprises in China. As well, due to the lack of a response by the GOC, there is not sufficient information on the administrative record to determine that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1) of SIMA. Therefore, guided by the principles of subsection 2(7.2) or subsection 2(7.3) of SIMA and basing its opinion on the best information available, the CBSA has taken the position that the subsidy derived from these programs is likely to be specific.

Zhuji City Howhi Air Conditioners Made Co. Ltd.

Howhi provided substantially complete responses to the CBSA’s subsidy RFI as well as three SRFIs and verification RFIs.

For purposes of this re-investigation, the CBSA determined that Howhi benefited from the following subsidy programs during the POI:

Export Development and Performance Grants
Environment Protection Grant
Subsidies Related to Employment, Training and Recruitment
Municipal/Local Income or Property Tax Reductions
Preferential Tax Policies related to Research and Investment
Offsets to Taxable Income Related to Purchases of Domestic Machinery

Descriptions of the programs used by the responding exporter are listed in Appendix 2.

The amount of subsidy determined for future shipments of subject goods for Howhi is equal to 0.92 CNY/KG, effective on September 8, 2023.

Zhejiang Hailiang Co., Ltd.

Hailiang provided substantially complete responses to the CBSA’s subsidy RFI as well as seven SRFIs and verification RFIs.

For purposes of this re-investigation, the CBSA determined that Hailiang benefited from the following subsidy programs during the POI:

Design, Research and Development Grants
Export Development and Performance Grants
Loans from State-Owned Banks at Preferential Rates
Municipal/Local Income or Property Tax Reductions
Subsidies Related to Company/Enterprise Development and Innovation
Subsidies Related to Employment, Training and Recruitment
Subsidies Related to Pandemic Support
Subsidies Related to Science and Technology
Subsidies Related to Talent and Skills
Subsidies to Provide Business Support

Descriptions of the programs used by the responding exporter are listed in Appendix 2.

The amount of subsidy determined for future shipments of subject goods for Hailiang is equal to 0.62 CNY/KG, effective on September 8, 2023.

Ningbo Jintian Copper Tube Co., Ltd.

The CBSA determined that the information provided in response to the subsidy RFI as well as the SRFIs and verification RFIs by Jintian were incomplete and unreliable for purposes of determining amounts of subsidy in this re-investigation. Amounts of subsidy for Jintian were determined pursuant to a ministerial specification.

All Other Exporters in China

For all other exporters of subject goods from China, the amount of subsidy will be determined in accordance with a ministerial specification, and is equal to 17.73 CNY/KG.

Exporter Responsibility

Please note that exporters with normal values are required to promptly inform the CBSA in writing of changes to domestic prices, costs, market conditions or terms of sale associated with the production and sales of the goods. All parties are cautioned that where there are increases in domestic prices, and/or costs as noted above, the export price for sales to Canada should be increased accordingly to ensure that any sale made to Canada is not only above the normal value but at or above selling prices and full costs and profit of the goods in the exporter’s domestic market. Where exporters do not properly notify the CBSA of any such changes, do not adjust export prices accordingly, or do not provide the information required to make any necessary adjustments to normal values and export prices, retroactive assessments of anti-dumping or countervailing duties may be warranted.

Importer Responsibility

Importers are reminded that it is their responsibility to calculate and declare their anti-dumping and countervailing duty liability. If importers are using the services of a customs broker to clear importations, the brokerage firm should be advised that the goods are subject to anti-dumping and countervailing measures and be provided with sufficient information necessary to clear the shipments. To determine their liability for anti-dumping and countervailing duty, importers should contact the exporters to obtain the applicable normal values and amounts of subsidy. For further information on this matter, refer to Memorandum D14-1-2, Disclosure of normal values, export prices, and amounts of subsidy established under the Special Import Measures Act.

The Customs Act applies, with any modifications that the circumstances require, with respect to the accounting and payment of anti-dumping and countervailing duties. As such, failure to pay the duties within the prescribed time will result in the application of the interest provisions of the Act.

Should the importer disagree with the determination made on any importation of goods, a request for re-determination may be filed. For more information on how to file a request for re-determination, please refer to the Guide for appealing a duty assessment.

Contact Us

Telephone:
Jeffrey Laplante: 343-553-1864
Gladys Chau: 343-553-1678

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

Appendix 1: Representations

Representations were received from counsel on behalf of the Canadian producer and complainant, Cello Products Inc. (Cello), during the course of the re-investigation.^{Footnote 1}

Furthermore, following the close of the record on July 24, 2023, case arguments were received from counsel on behalf of Cello.^{Footnote 2}

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

The material issues raised by Cello and the CBSA’s responses are summarized as follows.

Dumping Representations

Completeness and reliability of information provided and the calculation of normal values and export prices

Representations made during the re-investigation

Counsel for Cello made representations during the re-investigation regarding Hailiang’s response to the dumping RFI. Counsel asserts that Hailiang’s response to the RFI is not complete, particularly with regards to associated companies, production cost and sales reconciliations, and input costs.^{Footnote 3}

CBSA Response

The CBSA reviewed the representations submitted by counsel in detail and considered each of the issues raised individually in the representations. Hailiang responded to SRFI questions that addressed questions similar to or directly considered from counsel’s representations. The CBSA determined that the information provided in response to the RFI, SRFIs and verification RFI by Hailiang were complete and reliable for purposes of determining normal values in this re-investigation.

Case Briefs

Counsel for Cello submitted multiple concerns which they interpret as fundamental shortcomings regarding the responses to RFIs and SRFIs provided to the CBSA by Hailiang, Howhi, Ningbo Jintian Copper Tube Co., Ltd. (“Jintian”) and its related trading company Hong Kong Maytime International Industry Co., Ltd. (“Maytime”). The issues raised by counsel included concerns with regards to: cost of production methodologies; labour and overhead allocations; input cost calculations; sales data; and reconciliation issues. Counsel claims that these issues are crucial since copper pipe fittings sales are won and lost over very small margins.^{Footnote 4}

Counsel further elaborates that the above-mentioned shortcomings casts doubt upon the reliability and completeness of the information presented by the exporters in question. Therefore, due to the issues raised, counsel asserts that the CBSA should determine the responses from the aforementioned exporters to be incomplete, unreliable and deficient and, as such, determine normal values pursuant to section 29 of SIMA.^{Footnote 5}

CBSA Response

The CBSA determined that the information provided in response to the RFI, SRFIs and verification RFI by Hailiang and Howhi were sufficient for purposes of determining normal values and export prices in this re-investigation. Furthermore, normal values and export prices calculated by the CBSA in this re-investigation were determined in accordance with both SIMA and SIMR.

The CBSA determined that the information provided in response to the RFI, SRFIs and verification RFIs by Jintian and its related trading company, Maytime, were incomplete and unreliable for purposes of determining normal values and export prices in this re-investigation. Normal values and export prices for Jintian were determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA.

Due consideration has been given to the issues raised in the case arguments and appropriate adjustments were made, as applicable, in accordance with SIMA and SIMR. Additional information on the calculation of normal values is provided to exporters in the confidential exporter conclusion notices.

Subsidy Representations

Completeness of information provided and the calculation of an amount for subsidy

Representations made during the re-investigations

Counsel for Cello made representations during the re-investigation regarding Hailiang’s response to the subsidy RFI. Counsel asserts that Hailiang’s response to the RFI is not complete, particularly with regards to raw material inputs and cost variances.^{Footnote 6}

CBSA Response

The CBSA reviewed the representations submitted by counsel in detail and considered each of the issues raised. Hailiang responded to SRFI questions that addressed questions similar to or directly considered from counsel’s representations. The CBSA determined that the information provided in response to the RFI, SRFIs and verification RFI by Hailiang were complete and reliable for purposes of determining an amount of subsidy in this re-investigation.

Case Briefs

Counsel for Cello submitted that various deficiencies included in the SRFIs sent by the CBSA throughout the re-investigation remain outstanding. Moreover, counsel submits that due to the lack of cooperation from the GOC throughout the re-investigation, there is insufficient information on the administrative record to determine specificity for certain programs. As such, Counsel submits that calculations for amounts of subsidy for the aforementioned exporters should be determined pursuant to subsection 30.4(2) of SIMA, based on ministerial specification.^{Footnote 7}

CBSA Response

Based on the information on the record and in accordance with SIMA and SIMR, the CBSA has taken the representations of these issues into account when determining the amount of subsidy for Hailiang and Howhi. Further details can be found in the Amounts of subsidy section as well as Appendix 2.

Appendix 2: Subsidy Programs Used by Responding Exporter

This Appendix consists of descriptions of the subsidy programs that the responding exporters benefited from during the POI.

Due to the fact that there is a limited number of participating exporters in relation to the subsidy re-investigation, the CBSA is limited in some regards in terms of the level of detail that can be shared since some information was designated as confidential by the exporters.

Preferential Loans and Loan Guarantees

Loans from State-Owned Banks at Preferential Rates

This program relates to government loans at a preferential rate of interest. The benefit provided in this case is a lower rate of interest than would otherwise be available if the enterprises had to obtain a non-guaranteed commercial loan (i.e. the benchmark non-guaranteed commercial loan).

For the purposes of the re-investigation, this program may be considered 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 and/or exempted, and confers a benefit to the recipient equal to the amount of the reduction/exemption.

For the purposes of the re-investigation, the program may be considered specific pursuant to paragraph 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.

Grants and Grant Equivalents

Design, Research and Development Grants

This program provides a grant for enterprises determined to have undertaken expenses in design or research and development.

For the purposes of the re-investigation, this program may be considered a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the government, and it confers a direct benefit to the recipient equal to the amount of the grant.

Export Development and Performance Grants

This grant is provided to assist in the development of export markets or to recognize export performance.

Environment Protection Grant

This program provides subsidies related to environmental protection, including the generation of photovoltaic power.

Subsidies Related to Company/Enterprise Development and Innovation

Subsidies under this program are related to company and enterprise development and innovation grants and awards.

Subsidies Related to Employment, Training and Recruitment

Subsidies under this program are related to employment, training and recruitment programs.

Subsidies Related to Pandemic Support

Subsidies under this program are related to pandemic support programs.

Subsidies Related to Science and Technology

Subsidies provided under this program are related to science and technology grants and awards.

Subsidies Related to Talent and Skills

Subsidies provided under this program are related to talent and skills awards and grants.

Subsidies to Provide Business Support

Subsidies provided under this program are related to programs providing business support.

Preferential Tax Programs

Municipal/Local Income or Property Tax Reductions

This program covers reductions and exemptions in tax provided from municipal/local income tax units.

For the purposes of the re-investigation, this program may be considered a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA. That is, amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

Preferential Tax Policies related to Research and Investment

This program provides preferential tax policies related to research and development.

Pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected.

Relief from Duties and Taxes

Offsets to Taxable Income Related to Purchases of Domestic Machinery

This program provides a corporate tax reduction, where exporters purchase domestic equipment.

Footnotes:

Footnote 1

Exhibits 54 (PRO) and 55 (NC) - Comments submitted by counsel on behalf of Cello Products Inc. regarding Zhejiang Hailiang Co., Ltd.'s request for information (RFI) responses (Refers to Exhibits 030-033).

Return to footnote 1 referrer

Footnote 2

Exhibits 167 (PRO) and 168 (NC) - Case brief filed on behalf of Cello Products Inc.

Return to footnote 2 referrer

Footnote 3

Exhibit 55 (NC) - Comments submitted by counsel on behalf of Cello Products Inc. regarding Zhejiang Hailiang Co., Ltd.'s request for information (RFI) responses (Refers to Exhibits 030-033).

Return to footnote 3 referrer

Footnote 4

Exhibits 168 (NC) - Case brief filed on behalf of Cello Products Inc.

Return to footnote 4 referrer

Footnote 5

Exhibits 168 (NC) - Case brief filed on behalf of Cello Products Inc.

Return to footnote 5 referrer

Footnote 6

Exhibit 55 (NC) - Comments submitted by counsel on behalf of Cello Products Inc. regarding Zhejiang Hailiang Co., Ltd.'s request for information (RFI) responses (Refers to Exhibits 030-033).

Return to footnote 6 referrer

Footnote 7

Exhibits 168 (NC) - Case brief filed on behalf of Cello Products Inc.

Return to footnote 7 referrer

Date modified:: 2023-09-08