Notice of conclusion of a re-investigation: Oil country tubular goods (OCTG 2024 RI)

Period of investigation

The period of investigation (POI) and the profitability analysis period (PAP) for the re-investigation was from May 1, 2023 to May 31, 2024.

Re-investigation process

At the initiation of the re-investigation, the CBSA sent a Request 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 CBSA sent a Surrogate Producer RFI to producers located in a number of surrogate countries including the United States (U.S).

The information was requested for purposes of updating the normal values and export prices for subject goods imported into Canada. On-site verifications were conducted at the premises of two exporters in India, two exporters in Thailand and three surrogate producers in U.S.

As part of the re-investigation, case briefs and reply submissions were provided by counsel representing the complainants and responding exporters. Details of the representations are provided in Appendix 1. Details of the results of the CBSA’s re-investigation are provided below.

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.

Normal values established during this re-investigation will be effective for the subject goods on the date of the conclusion of the re-investigation.

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.

Where there are sales between associated persons 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 non-associated 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 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).

OCTG II

The following table lists all exporters/producers who provided substantially complete responses to the CBSA’s dumping RFI and supplementary RFIs (SRFI). Specific normal values for future shipments of subject goods, effective on or after January 31, 2025, have been issued to these exporters/producers:

All other exporters

For all other exporters of subject goods, normal values for future shipments will be determined by a ministerial specification. The normal values for future shipments determined by the ministerial specification are calculated by advancing the export price of the goods by 37.4%, pursuant to section 29 of SIMA.

Normal values previously in place expire on January 31, 2025.

Chinese Taipei

Chung Hung Steel Corporation (CHS)

CHS is a manufacturer of OCTG, located in Chinese Taipei. CHS provided substantially complete responses to the RFI and to three SRFIs. Responses to the RFI and SRFIs were also provided by two associated parties that produced or supplied material input used by CHS in the production of the goods; China Steel Corporation and Dragon Steel Corporation.

As CHS did not have any domestic sales of like goods during the POI/PAP, normal values could not be determined pursuant to section 15 of SIMA. Additionally, the CBSA could not determine normal values pursuant to paragraph 19(b) of SIMA because a reasonable amount for profits could not be determined in accordance with paragraph 11(1)(b) of the Special Import Measures Regulations (SIMR).

As a result, normal values were determined pursuant to section 29 of SIMA using a paragraph 19(b) methodology, 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 profits. Where inputs used in the production of the goods were acquired by CHS from an associated supplier, the cost of the significant inputs in the production of the goods was substituted pursuant to the provisions of subsection 11.2(1) of the SIMR where appropriate. The amount for profits was determined based on the weighted average profit made on domestic sales of OCTG by other exporters from other countries who provided a complete response in this re-investigation, pursuant to ministerial specification.

Shin Yang Steel Co., Ltd. (Shin Yang)

Shin Yang is a manufacturer and exporter of subject goods, located in Chinese Taipei. Shin Yang provided substantially complete responses to the RFI and to three SRFIs.

As Shin Yang did not have any domestic sales of like goods during the POI/PAP, normal values could not be determined pursuant to section 15 of SIMA. Additionally, the CBSA could not determine normal values pursuant to paragraph 19(b) of SIMA because a reasonable amount for profits could not be determined in accordance with paragraph 11(1)(b) of the SIMR.

As a result, normal values were determined pursuant to section 29 of SIMA using a paragraph 19(b) methodology, 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 profits. The amount for profits was determined based on the weighted average profit made on domestic sales of OCTG by other exporters from other countries who provided a complete response in this re-investigation, pursuant to ministerial specification.

Tension Steel Industries Co., Ltd. (Tension Steel)

Tension Steel is a manufacturer and exporter of subject goods, located in Chinese Taipei. Tension Steel provided substantially complete responses to the RFI and to four SRFIs.

As Tension Steel did not have any domestic sales of like goods during the POI/PAP, normal values could not be determined pursuant to section 15 of SIMA. Additionally, the CBSA could not determine normal values pursuant to paragraph 19(b) of SIMA because a reasonable amount for profits could not be determined in accordance with paragraph 11(1)(b) of the SIMR.

As a result, normal values were determined pursuant to section 29 of SIMA using a paragraph 19(b) methodology, 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 profits. The amount for profits was determined based on the weighted average profit made on domestic sales of OCTG by other exporters from other countries who provided a complete response in this re-investigation, pursuant to ministerial specification.

For subject goods exported to Canada, export prices were determined pursuant to section 24 of SIMA, based on the lesser of the exporter’s selling price and the importer’s purchase price, adjusted by deducting the costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

India

Maharashtra Seamless Limited (MSL) & GVN Fuels Limited (GVN)

GVN, MSL’s export trading arm, is an exporter of subject goods and MSL is a manufacturer of the subject goods exported by GVN during the POI. Due to the relationship between MSL and GVN, MSL/GVN have collectively been determined to be the exporter for SIMA purposes. MSL/GVN provided substantially complete responses to the RFI and SRFIs, and on-site verifications were conducted at the premises of MSL and GVN in India in November 2024.

MSL had qualified domestic sales of like goods during the PAP, and as a result, normal values for some models were determined pursuant to section 15 of SIMA. For the majority of models, however, 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. As a result, normal values for most models were determined pursuant to 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 plus a reasonable amount for profits. The amount for profits were determined in accordance with paragraph 11(1)(b) of the SIMR.

For subject goods exported to Canada, export prices were determined pursuant to section 24 of SIMA, based on the lesser of the exporter’s selling price and the importer’s purchase price, adjusted by deducting the costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

Jindal Saw Limited (JSL)

JSL is a producer and exporter of the subject goods during the POI. It currently produces and exports subject goods from its Nashik seamless facility in Maharashtra, India.

JSL provided substantially complete responses to the RFI and two supplementary RFIs, and an on-site verification was conducted at the premises of JSL in India in November 2024.

As JSL had insufficient sales of like goods during the POI/PAP that met the conditions of section 15 of SIMA, the CBSA determined normal values 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 plus a reasonable amount for profits.

As inputs significant in the production of the goods were acquired from an associated supplier, the cost of the inputs was substituted pursuant to the provisions of subsection 11.2(1) of the SIMR where appropriate. The amount for profits was determined in accordance with paragraph 11(1)(b) of the SIMR.

For subject goods exported to Canada, export prices were determined pursuant to section 24 of SIMA, based on the lesser of the exporter’s selling price and the importer’s purchase price, adjusted by deducting the costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

South Korea

Iljin Steel Corporation (Iljin)

Iljin is a manufacturer of OCTG, located in South Korea and did not export subject goods to Canada during the POI. Iljin provided substantially complete responses to the RFI and SRFIs.

Normal values could not be determined pursuant to section 15 of SIMA as Iljin did not have domestic sales of like goods during the PAP. As such, normal values were determined pursuant to 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 plus a reasonable amount for profits. The amount for profits were determined in accordance with paragraph 11(1)(b) of the SIMR.

Nexteel Co., Ltd. (Nexteel)

Nexteel is a producer and exporter of the subject goods during the POI. It currently operates three manufacturing plants in Pohang, South Korea.

Nexteel provided substantially complete responses to the CBSA’s RFI and four supplementary RFIs.

As Nexteel had insufficient sales of like goods during the POI/PAP that met the conditions of section 15 of SIMA, the CBSA determined normal values 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 plus a reasonable amount for profits. The amount for profits were determined in accordance with paragraph 11(1)(b) of the SIMR.

For subject goods exported to Canada, export prices were determined pursuant to section 24 of SIMA, based on the lesser of the exporter’s selling price and the importer’s purchase price, adjusted by deducting the costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

Thailand

Boly Pipe Co., Ltd. (Boly)

Boly is a producer and exporter of the subject goods during the POI, located in Thailand. Boly provided a substantially complete response to CBSA’s RFI and subsequent supplemental RFIs. On-site verifications were conducted at Boly’s premises in Thailand in November 2024.

Normal values could not be determined pursuant to section 15 of SIMA as Boly did not have domestic sales of like goods during the POI/PAP. Additionally, the CBSA could not determine normal values pursuant to paragraph 19(b) of SIMA because a reasonable amount for profits could not be determined in accordance with paragraph 11(1)(b) of SIMR.

As a result, normal values were determined pursuant to section 29 of SIMA using a paragraph 19(b) methodology, 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 profits. The amount for profits was determined based on the weighted average profit made on domestic sales of OCTG by other exporters from other countries who provided a complete response in this re-investigation, pursuant to ministerial specification.

For subject goods exported to Canada, export prices were determined pursuant to section 24 of SIMA, based on the lesser of the exporter’s selling price and the importer’s purchase price, adjusted by deducting the costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

Thai Oil Pipe Co. Ltd. (TOP)

TOP is a producer and exporter of the subject goods during the POI, located in Thailand. TOP provided a substantially complete response to CBSA’s RFI and subsequent supplemental RFIs. On-site verifications were conducted at TOP’s premises in Thailand in November 2024.

Normal values could not be determined pursuant to section 15 of SIMA as TOP did not have sufficient domestic sales of like goods during the POI/PAP that met the conditions of section 15 of SIMA. Additionally, the CBSA could not determine normal values pursuant to paragraph 19(b) of SIMA because a reasonable amount for profits could not be determined in accordance with paragraph 11(1)(b) of SIMR.

As a result, normal values were determined pursuant to section 29 of SIMA using a paragraph 19(b) methodology, 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 profits. The amount for profits was determined based on the weighted average profit made on domestic sales of OCTG by other exporters from other countries who provided a complete response in this re-investigation, pursuant to ministerial specification.

For subject goods exported to Canada, export prices were determined pursuant to section 24 of SIMA, based on the lesser of the exporter’s selling price and the importer’s purchase price, adjusted by deducting the costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

Petroleum Equipment (Thailand) Co., Ltd. (PET)

PET is a manufacturer of OCTG located in Thailand. PET provided responses to the RFI and CBSA’s deficiency letters. However, PET failed to provide substantially complete responses. As such, normal values for future shipments of subject goods from PET will be determined under the ministerial specification.

SC and OCTG I

On May 25, 2020, the CBSA reaffirmed its opinion that the conditions of section 20 of SIMA exist in China with respect to the oil country tubular goods industry sector. Section 20 of SIMA is applicable where, in the opinion of the CBSA, domestic prices are substantially determined by the government and there is sufficient reason to believe that they are not substantially the same as they would be if they were determined in a competitive market.

Where the conditions of section 20 of SIMA exist, the CBSA normally determines normal values using the selling price, or the total cost and profit, of like goods sold by producers in a surrogate country pursuant to paragraph 20(1)(c) of SIMA. Alternatively, normal values may be determined under paragraph 20(1)(d) of SIMA, on a deductive basis starting with an examination of the prices of imported goods sold in Canada, from a surrogate country.

As such, for purposes of this re-investigation, Chinese exporters were not requested to respond to the CBSA’s dumping RFI. Instead, at the initiation of the re-investigation, the CBSA sent a Surrogate Producer RFI to producers located in a number of surrogate countries including the U.S. Three surrogate producers located in the U.S provided substantially complete responses to the RFI and SRFIs. On-site verifications were conducted at the premises of the three surrogate producers in the U.S in November 2024.

Based on the information on the administrative record, the CBSA designated the U.S as a surrogate country when considering the similarities between the U.S and Chinese petroleum markets and industries. For purposes of this re-investigation, sufficient information was not furnished or was not available to determine surrogate normal values under section 20. As such, normal values were determined under a ministerial specification in accordance with section 29 of SIMA, based on a combination of the surrogate data provided by the U.S surrogate producers and pricing data available through the trade publication Argus Pipe Logix.

The CBSA determined normal values for future shipments of subject goods for the following 18 producers/exporters, effective on or after January 31, 2025, in accordance with the ministerial specification pursuant to section 29 of SIMA.

Exporters/producers that have been provided with specific normal values from China

• Huludao City Steel Pipe Industrial Co. Ltd.
• Jiangsu Changbao Group and its affiliates
• Jiangsu Chengde Steel Tube Share Company
• JingJiang Special Steel Co., Ltd.
• Shandong Molong Petroleum Machinery Co., Ltd.
• Shengli Oilfield Shengji Petroleum Equipment Co., Ltd.
• Tianjin Pipe Corporation
• Tianjin TianGang Special Petroleum Pipe Manufacture Co., Ltd.
• Vallourec Tianda (Anhui) Co., Ltd.
• Zibo Freet Thermal Tech Co., Ltd.
• Golden Ring Industrial Limited-Liability Company Liaohe Oilfield Panjin
• Shandong Continental Petroleum Equipment Co. Ltd.
• Dalipal Pipe Company
• Petrotex Oil & Gas Equipment Limited
• Shandong Yonglijinggong Petroleum Equipment Co., Ltd.
• Shandong Meshine Thermal Tech Co., Ltd.
• Bohai Equipment Liaohe Thermal Recovery Machinery
• Linzhou Fengbao Pipe Industry Co., Ltd.

For importations of subject goods originating in or exported from China for which the exporter has not been issued specific normal values, the normal values for future shipments determined by the ministerial specification are calculated by advancing the export price of the goods by 91% (SC) or 166.9% (OCTG I) of the export price, pursuant to section 29 of SIMA.

Exporter responsibility

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. If exporters did not adjust export prices accordingly, retroactive assessments of anti-dumping duties may be warranted. Please refer to the CBSA’s Memorandum D14-1-8: Administrative Review Policy for details.

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 (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:
• Jason Huang: 343-553-1891
• Karim Ben Hamadou: 343-596-4760

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

Appendix 1: Representations

After the initiation of the re-investigation, the CBSA received representations regarding the existence of a particular market situation (PMS) in several of the subject countries on behalf of Tenaris Canada^{Footnote 1} as well as from Evraz Inc. NA Canada (Evraz) and Welded Tube of Canada Corp. (WTC)^{Footnote 2}.

During the course of the re-investigation, the CBSA received a representation regarding carbon costs from counsel on behalf of Tenaris Canada^{Footnote 3}. Submissions in response to the carbon cost representation were received from counsel representing the following parties: Evraz and WTC^{Footnote 4}, Thai Oil Pipe and Boly Pipe^{Footnote 5}, MSL & GVN^{Footnote 6}, Iljin Steel^{Footnote 7}, Nexteel^{Footnote 8}, JSL^{Footnote 9}, and Chung Hung^{Footnote 10}.

Following the closing of the record on December 5, 2024, case briefs were received from counsel on behalf of Tenaris Canada^{Footnote 11}, Evraz and WTC^{Footnote 12}, Western Alliance Tubulars Ltd. (WAT)^{Footnote 13}, Chung Hung^{Footnote 14}, Jindal SAW Ltd. (JSL)^{Footnote 15}, and Nexteel^{Footnote 16}.

The CBSA received reply submissions from counsel on behalf of Tenaris Canada^{Footnote 17}, Evraz and WTC^{Footnote 18}, Iljin Steel^{Footnote 19}, Chung Hung^{Footnote 20}, Nexteel^{Footnote 21}, and JSL^{Footnote 22}.

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 material issues raised by the parties are summarized as follows and the CBSA has provided responses to representations below.

Surrogate country and surrogate normal values

Case arguments

Counsel for Tenaris Canada submitted that the US is the most appropriate surrogate country to calculate surrogate normal values for Chinese exporters because there are many similarities between the Chinese and U.S oil and gas industries. Counsel further submitted that the OCTG II countries are not appropriate as surrogate countries.

Counsel for Tenaris Canada submitted that OCTG pricing data provided by the three surrogate U.S producers and in trade publication Pipe Logix (PLX) should be used to determine surrogate normal values. Counsel argued that the existing downward adjustment specified in the ministerial specification with respect to OCTG I does not reflect current market conditions. Counsel also argued that data from the surrogate U.S producers are now closely aligned with published PLX prices, and that the data shows that minimal, if any, downward adjustment is appropriate.

Counsel for Tenaris Canada submitted that the CBSA should rely primarily on surrogate U.S producer data to set normal values under subsection 20(1)(c) and use PLX Data to supplement this data as necessary. Counsel also submitted that appropriate groupings should be set for Chinese normal values following five product categories (Production process, OCTG type, Grade, Outer Diameter range, End connection type).

Counsel for Evraz and WTC submitted that for future shipments of subject goods from China without model-specific normal values, the CBSA should determine the normal values using “all others” rates, or PLX, with revised distributor margin adjustments.

Counsel for Western Alliance Tubulars (WAT) submitted that CBSA should revise how it determines normal values for insulated/vacuum insulated tubing (IT/VIT) and use the average normal value of the bare OCTG used in the IT/VIT OCTG, plus an upward adjustment percentage to reflect the additional costs to convert the bare OCTG into IT/VIT, as well as selling, general and administrative expenses (SG&A) and profit.

Counsel for WAT also argued that the CBSA should continue to use U.S market OCTG costs, but apply an adjustment that is indexed to inflation to accurately account for the cost of converting OCTG into IT/VIT.

Counsel for WAT also argued that conversion costs should not be linked to bare OCTG prices because conversion costs and bare OCTG prices are unrelated.

Reply submissions

Counsels for Jindal SAW Limited and for Chung Hung Steel Corporation submitted that CBSA should not accept Tenaris’ proposed product groupings. Counsels argued that such groupings of numerous sizes and grades combined imply that many of the OCTG items will have normal values that are too high and some may have normal values that are too low.

Counsel for Jindal SAW Limited submitted that CBSA should issue normal values for all models of subject goods for which JSL has submitted actual or surrogate costs.

CBSA response

Based on the information on the administrative record, the CBSA designated the U.S as a surrogate country when considering the similarities between the U.S and Chinese petroleum markets and industries.

For purposes of this re-investigation, sufficient information was not furnished or was not available to determine surrogate normal values under section 20. As such, normal values were determined pursuant to a ministerial specification in accordance with section 29 of SIMA, on the basis of a combination of the surrogate data provided by the three U.S surrogate producers and pricing data available through the trade publication Argus Pipe Logix. Pipe Logix prices may require an adjustment to reflect comparability with the US surrogate data.

Amount for profits: Same general category and next largest category

Case arguments

Counsel for Nexteel submitted that certain pipe used for consumption in Korea should be considered goods of the same general category for purposes of determining an amount for profits used to calculate normal values under paragraph 19(b) of SIMA. Similarly, counsel for CHS submitted that an amount for profits used to calculate normal values under paragraph 19(b) of SIMA should be determined on the basis of its own domestic sales of goods that it considered to be either goods of the same general category as the goods sold to the importer in Canada or goods that are of the group or range of goods that is next largest to the goods of the same general category.

Counsel for Tenaris Canada submitted that sales of standard pipe or “low pressure” welded pipe do not permit a proper comparison to the subject goods and should not be used in determining an amount for profits. Counsel also noted this approach would be consistent with the CBSA’s practice in the 2019 OCTG re-investigation.

Counsel for Evraz and WTC submitted that the CBSA should only consider profits on the sale of OCTG (in the case of like goods or goods of the same general category) and profits on the sale of line pipe (in the case of goods that are of the group or range of goods that is next largest to goods that are of the same general category). Counsel noted that the profit earned on other steel tubular products such as structural pipe or carbon steel welded pipe for general application should not be used as they do not command the same cost and price premiums associated with API-certified OCTG and line pipe.

Counsel for Evraz and WTC reiterated its position that using profit earned on domestic sales of standard pipe would not permit a proper comparison with the subject goods and should not be relied upon by the CBSA.

CBSA response

Consistent with the approach taken in the previous re-investigation, the CBSA considered profits on the sale of goods of the same general category as relating to sales of OCTG and profits on the sale of goods that are of the group or range of goods that is next largest to goods that are of the same general category as relating to sales of line pipe. Profits earned on standard pipe and other tubular products were not used in the determination of an amount for profit under paragraph 11(1)(b) of the SIMR.

Carbon costs

Case arguments and comments made during the re-investigation

Counsel for Tenaris Canada submitted that the CBSA should issue RFIs to collect information from foreign OCTG producers regarding the carbon emissions caused by the production of OCTG. Tenaris Canada also submitted that the CBSA should adopt a methodology that would allow it to quantify the impact of these emissions, and to include the “cost of carbon” in the calculation of the cost of production under SIMA. Counsel for Evraz and WTC provided representations that noted their support of Tenaris Canada’s position, and agreed with Tenaris Canada’s submission that these externalized costs are nevertheless attributable to the production of the subject goods and should be included in the determination of exporters’ normal values.

Exporters who submitted responses opposed this request on the grounds that the cost of carbon does not represent an actual expenditure that is incurred by producers as reflected in those producers’ books and records. It was also submitted that a re-investigation is not the proper forum for the CBSA to consider changing how it calculates normal values.

CBSA response

The CBSA calculates costs based on the books and records kept by foreign producers in accordance with Generally Accepted Accounting Principles (GAAP). Costs of production mean actual expenditures incurred by a producer to manufacture subject goods, including costs of raw materials, labor, overhead, etc. Carbon emissions caused by the production of subject goods are not costs or expenditures incurred by producers in the exporting country to manufacture subject goods and are not reflected in the exporters’ books and records. The “cost” of carbon emissions is a cost borne by society, but such an externality would not be considered an actual expenditure included as a cost of production.

Based on the above, it is CBSA’s view that unless there is an actual expenditure incurred by a producer that is reflected in that producer’s books and records, the “cost of carbon” cannot be currently captured in exporters’ production costs under SIMA when determining normal values.

Particular market situation

Comments made during the re-investigation

Counsel for Tenaris Canada argued that the CBSA should send PMS RFIs to the governments of India, Korea and Thailand. Counsel further argued that there was evidence of PMS factors in those countries. The allegations focused on two areas. First, counsel alleged that the market for inputs used in OCTG production was distorted in these countries. They alleged that this distortion was the result of low priced Russian and Chinese imports of the inputs, steel coil and steel billet. Secondly, counsel alleged that there were distortions in the oil and gas sector because of the influence of state-owned enterprises that operated in this sector.

Counsel for Evraz and WTC provided representations that noted their support of the allegations of PMS that were provided by Tenaris Canada. In addition, counsel provided additional information that they argued support the existence of PMS factors in Thailand, India and South Korea. Their allegations were focused on low priced imports of input products used in the production of OCTG from China as well as direct government ownership or control of producers, purchasers and suppliers in the OCTG sectors in those countries.

Case arguments

Counsel for Evraz and WTC argued that a PMS exists in India, Thailand, South Korea, and Chinese Taipei. Respecting India, counsel alleges that low-priced Chinese steel billet and steel coil were imported into India, causing distortions in the input costs for OCTG production. Further, counsel contends that low-priced steel imports from other countries including South Korea, Japan and Vietnam have caused further distortions in the input costs for OCTG. Counsel also contends that government control over electricity supply in India distorts production costs. Lastly, counsel contends that various government interventions distort production costs in India.

Respecting Thailand, counsel alleges that low-priced Chinese steel billet and steel coil were imported into Thailand. It is further argued by counsel that electricity and natural gas prices are not reflective of market-based pricing. Lastly, it is argued that the Government of Thailand intervenes to control prices of inputs used in OCTG. They allege that the above factors distort the production costs of OCTG in Thailand and that there is evidence that this distortion in production costs of OCTG have distorted selling prices.

Respecting South Korea, counsel alleges that low-priced Chinese steel billet and steel coil were imported into Korea, distorting the cost of production for OCTG. Counsel argues that subsidization of electricity and subsidization of OCTG manufacturers distorts the OCTG market in Korea.

Respecting Chinese Taipei, the Canadian producers allege that there was a surge of dumped imports of hot-rolled coils from China in Chinese Taipei, and which caused home market prices to be significantly depressed and suppressed. They allege that China Steel has recently filed a petition alleging that Chinese imports of HRC are dumped and causing it injury, and thus distorting the domestic prices of such input.

Reply submissions

Counsel for CHS argued that where there are no sales of like goods in the country of export, the CBSA cannot form an opinion under Paragraph16(2)(c) of SIMA that a PMS exists and that the cost of acquisition of an input used in the production of the goods does not reasonably reflect the actual cost of the good, under Section 11.2(2) of the SIMR.

Counsel for JSL argued that there is no basis for a positive PMS opinion in India and that PMS allegations made by domestic producers are not substantiated by evidence. Counsel for JSL also rejected the claim that government programs and utilities supplied by state-owned enterprises distort the OCTG market in India.

Counsel for NEXTEEL submitted that there is insufficient information on the record for the CBSA to make a PMS finding.

CBSA response

The CBSA reviewed the information submitted by Tenaris Canada as well as Evraz and WTC earlier during the re-investigation regarding allegations of PMS in India, South Korea and Thailand. The CBSA did not find sufficient evidence at the time to support sending PMS Questionnaires or to support the allegations of that PMS conditions existed in these countries, that the alleged distortions in the input costs for OCTG production had an impact on the domestic selling prices of OCTG in these countries, and whether the impact on the domestic selling prices of the final goods is different from the impact on the prices of the final goods sold to Canada.

Subsequently, the CBSA reviewed the information submitted by Evraz and WTC regarding the allegations of PMS made in their Case Briefs, along with the information submitted on the day the record for the re-investigation closed. Again, the CBSA found the evidence did not sufficiently support the allegation that a PMS existed in India, Thailand, South Korea or Chinese Taipei with respect to OCTG. Further, this evidence was submitted late in the process, limiting the CBSA’s ability to analyze, evaluate and verify the information provided. As a result, the CBSA could not form an opinion under paragraph 16(2)(c) of SIMA that a PMS exists in any of these OCTG markets.