OCTG1 2021 UP2: Oil country tubular goods
Conclusion of normal value review
The Canada Border Services Agency (CBSA) has today concluded a normal value review to determine the normal values, export prices and amount of subsidy applicable to certain oil country tubular goods (OCTG) specific to insulated tubing (IT) and vacuum insulated tubing (VIT) exported from China to Canada by China Petroleum Technology & Development Corporation (CPTDC).
The review follows the CBSA’s amended scope ruling made on , regarding IT/VIT and is part of the CBSA’s enforcement of the Canadian International Trade Tribunal’s (CITT) order, respecting the dumping and subsidizing of certain OCTG from China, in accordance with the Special Import Measures Act (SIMA).
The product definition and the applicable tariff classification numbers of the goods subject to the CITT’s order are contained in Appendix 1.
Period of investigation
The period of investigation (POI) for the normal value review was from to .
Normal value review process
At the initiation of the normal value review, the CBSA sent requests for information (RFIs) to CPTDC, the Government of China (GOC) and an importer in order to solicit information for purposes of determining normal values, export prices, amount of subsidy and subjectivity applicable to IT/VIT exported to Canada by CPTDC.
Bohai Equipment Liaohe Thermal Recovery Machinery (Liaohe), IT/VIT producer, also submitted a substantially complete response to the dumping and subsidy RFIs on Footnote 3 and responded adequately to SRFIsFootnote 4.
During the course of the review, CPTDCFootnote 7, LiaoheFootnote 8, PEMSCOFootnote 9, Western Alliance Tubulars Ltd. (WAT), the sole Canadian producer of IT/VITFootnote 10, and two IT/VIT end-users in Canada (Cenovus Energy Inc.Footnote 11 and Canadian Natural Resources Ltd.Footnote 12) all responded to the subjectivity RFI. Other interested parties who participated in two other concurrent proceedings involving IT/VIT from China also responded to the subjectivity RFI.
The GOC did not respond to the CBSA’s government subsidy RFI.
A case brief was submitted by counsel on behalf of WAT.Footnote 13
The main issue raised in the comments of the case brief concerned the subjectivity of IT/VIT to the OCTG1 finding.
Based on the information on the administrative record, it was found that IT/VIT imported by PEMSCO during the POI were subsequently sold to an IT/VIT end-user in Canada after importation, and all of the imported IT/VIT were exclusively used for steam injection in injection wells in steam-assisted gravity drainage (SAGD) operations in Canada. PEMSCO submitted that only API 5CT tubing (not IT/VIT) was used in production wells to convey fluid to the surface.
PEMSCO also argued that IT/VIT imported by PEMSCO were casing products according to the dimension and other characteristics of the imported IT/VIT, therefore, they are not subject to the CITT’s OCTG1 finding.
Counsel for WAT argued that IT/VIT is used in downhole wells to convey fluids and thus meets the functional definition of tubing, regardless of outside diameter (OD), and submitted that “it would be incorrect and contrary to the CITT’s finding to create a distinction between tubing and casing based on OD”. Counsel for WAT further submitted that IT/VIT meets the API specification 5CT mechanical, dimensional and chemical characteristics and thus meets the OCTG1 definition.
In its decision in Appeals No. EA-2019-006 and EA-2019-007, issued on , the CITT found that “the goods in issue are of the same description as goods subject to the Tribunal’s finding in OCTG I”. As a result, the CBSA is of the opinion that all IT/VIT within an OD of 2 3/8 inches to 13 3/8 inches (60.3 mm to 339.7 mm) is subject to the OCTG1 finding.
Normal values, export price and amount of subsidy
Specific normal values and an amount for subsidy for future shipments of IT/VIT have been determined for CPTDC. An amount of subsidy has also been determined for Liaohe. These normal values and amounts of subsidy are effective today, , and anti-dumping and/or countervailing duties may be applicable retroactively on subject IT/VIT originating in or exported from China on or after , the date of the original scoping ruling and where the conditions described below in the “Exporter Responsibility” section are met.
Where section 20 conditions 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.
A Surrogate Producer RFI was sent to all known IT/VIT producers in surrogate countries at the initiation of the review, however, none of the identified surrogate producers provided a response. As such, sufficient information was not available in this normal value review to determine normal values under these provisions. As a result, normal values were determined under a ministerial specification, pursuant to section 29 of SIMA.
Since both inner and outer pipes used to make IT/VIT are OCTG, the CBSA determined the normal values for IT/VIT based on the normal values of the inner and outer OCTG. The OCTG normal values are based on pricing and costing data from OCTG exporters/producers in surrogate countries, as determined in the most recent proceeding related to these goods (OCTG 2022 RI) which concluded on .
During the POI, the limited volume of IT/VIT exported to Canada by CPTDC were sold to an associated importer. Due to the relationship between the companies, a reliability test is typically performed to determine whether the section 24 export prices are reliable as envisaged by SIMA. However, a reliability test could not be conducted given the very low volume of subject goods imported into Canada during the POI and a representative sample of sales could not be selected to perform such a test. Nonetheless, upon review of the information on record, the CBSA is not of the opinion that the export price, as determined under section 24, is unreliable. As such, the CBSA determined the export price in accordance with section 24 of SIMA.
For future shipments, the CBSA will conduct periodic export price reviews to ensure that an appropriate selling price is maintained in the Canadian market and that hidden dumping does not occur. If a subsequent review reveals that hidden dumping is occurring, anti-dumping duties may be assessed retroactively.
The GOC did not respond to the CBSA’s Government Subsidy RFI, which 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. Therefore, subsidy amounts were determined pursuant to subsection 30.4(2) of SIMA, based on a ministerial specification.
In consideration of the fact that the exporter and IT/VIT producer provided sufficient information in response to their Subsidy RFI, individual amount of subsidy were determined based on the information provided in response to the Subsidy RFI and obtained through additional SRFIs. The amount of subsidy determined for CPTDC is 409.87 RMB per metric tonne. The amount of subsidy determined for Liaohe is 408.35 RMB per metric tonne.
The normal values and amount of subsidy determined as a result of this review may be applied to any requests for re-determination of importations of subject goods that have not been processed prior to the conclusion of this normal value review, regardless of the date that the requests were received. The normal values and amount of subsidy determined as a result of this review may be applied retroactively on subject IT/VIT originating in or exported from China released from the CBSA on or after , the date of the original scoping ruling. Retroactive assessments may also be applied in the future where the conditions described below are met.
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. If there are changes to the exporter’s domestic prices, costs, market conditions or terms of sale associated with the production and sales of the goods, and where the CBSA considers such changes to be significant, the normal values and export prices will be updated to reflect current conditions. All parties are cautioned that where there are increases in domestic prices, and/or costs as noted above, the export price 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 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 will be applied where such action is warranted.
Importers are reminded that it is their responsibility to calculate and declare their anti-dumping and/or 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 SIMA measures and be provided with sufficient information necessary to clear the shipments. To determine their anti-dumping and/or countervailing duty liability, importers should contact the exporters to obtain the applicable normal values and amount 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. Such a request must be received within 90 days from the making of the determination in the form and manner outlined in Memorandum D14-1-3, Procedures for making a request for a re-determination or an appeal of goods under the Special Import Measures Act.
- Aaron Maidment: 343-553-1633
Appendix 1: Product definition
Subject goods definition
“Oil country tubular goods including, in particular, casing and tubing, made of carbon or alloy steel, welded or seamless, heat-treated or not heat-treated, regardless of end finish, having an outside diameter from 2 3/8 inches to 13 3/8 inches (60.3 mm to 339.7 mm), meeting or supplied to meet American Petroleum Institute specification 5CT or equivalent standard, in all grades, excluding drill pipe, seamless casing up to 11 3/4 inches (298.5 mm) in outside diameter, pup joints, welded or seamless, heat-treated or not heat-treated, in lengths of up to 3.66 m (12 feet), and coupling stock, originating in or exported from the People’s Republic of China.”
Classification of imports
Prior to 2022, the subject goods were usually classified under the following tariff classification numbers:
Beginning , under the revised customs tariff schedule, subject goods are normally classified under the following tariff classification numbers:
This listing of tariff classification numbers is for convenience of reference only. Refer to the product definition for authoritative details regarding the subject goods.
Additional product information
Insulated tubing (IT) and vacuum insulated tubing (VIT) are known as insulated steam injected tubing and oil production tubing products, including double-walled tubing, with or without insulation, which are used for thermal-enhanced oil recovery of extremely viscous crude oils. IT/VIT are used in steam injection wells in steam assisted gravity drainage (SAGD) operations in the oil sands and also in cyclic steam stimulation (CSS) in heavy oil fields.
SAGD operations have a well pair consisting of steam injection and production wells. IT/VIT can be used in both the steam injection and production wells in place of American Petroleum Institute (API) 5CT casing and tubing. In CSS operations, IT/VIT can be used both for steam injection and oil production in place of API 5CT casing and tubing. The use of IT/VIT can result in a significant reduction of water volume requirements when used in a steam injection applications.
IT/VIT can also be used in conventional deep oil producing wells in place of API 5CT casing and tubing. The product assists the oil in maintaining temperatures above 80 degrees Fahrenheit to avoid paraffin and wax deposition which causes the production well to plug.
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