UDS 2021 XR: Upholstered domestic seating
Notice of conclusion of expedited review
Ottawa,
The Canada Border Services Agency (CBSA) has today concluded an expedited review of certain upholstered domestic seating (UDS) exported to Canada by the exporters, Dongguan Advantech Polyurethane Foam Products Co., Ltd. (Dongguan Advantech) and Jiashan Foamtech Furniture Ltd. (Jiashan Foamtech) and their related trading company, Fine Home Limited (Fine Home), and by the exporter, Gold Lion Furniture (Shanghai) Co. Ltd. (Gold Lion), in accordance with the Special Import Measures Act (SIMA).
The expedited review initiated on November 29, 2021 and is part of the CBSA’s enforcement of the Canadian International Trade Tribunal’s (CITT) finding of injury issued on September 2, 2021, respecting the dumping and subsidizing of UDS from China and Vietnam.
The product definition and the applicable tariff classification numbers of the goods subject to the CITT finding are contained in Appendix 1 (subject goods).
Period of investigation
The period of investigation (POI) and the profitability analysis period (PAP) for the expedited review were from October 1, 2020 to October 31, 2021.
Expedited review process
At the initiation of the expedited review, the CBSA sent dumping and subsidy requests for information (RFIs) to the exporters Dongguan Advantech and Jiashan Foamtech, and their related trading company, Fine Home, and to the exporter, Gold Lion as well as importers, to solicit information on the costs and selling prices of subject and like goods. The information was requested for the purposes of determining the normal values, export prices and amounts of subsidy for subject goods imported into Canada.
Responses to the dumping and subsidy RFIs were received from Dongguan Advantech, Jiashan Foamtech, Fine Home and Gold Lion.
Exporters were also asked to forward sections of the RFI to any related suppliers of significant inputs. Responses were received from King Furniture Australia Pty Ltd.
As part of the review, counsel on behalf of Palliser Furniture Ltd. (Palliser), a Canadian producer, Gold Lion, Dongguan Advantech, Jiashan Foamtech and Fine Home submitted comments during the course of the investigation.
Counsel on behalf of Dongguan Advantech, Jiashan Foamtech and Fine Home (“the Fine Home Parties”) submitted case arguments after the close of record.
No reply submissions were received by any party.
Representations
Counsel for Palliser made comments throughout the investigation in regards to the Fine Home Parties’ submissions, which are summarized as follows:Footnote 1
The Fine Home Parties’ costs of production cannot be relied upon as there are discrepancies and errors in the costs of production. Further the costs of production are misreported and their selling, general, and administrative expenses are underreported.
The Fine Home Parties must properly provide confirmation of the subjectivity of certain goods. If not, these goods should be considered subject. In particular, all components of sectionals should be considered subject.
Counsel for Gold Lion made comments throughout the investigation and proposed different methodologies to determine normal values for new models of UDS imported into Canada.Footnote 2
Counsel of the Fine Home Parties submitted comments throughout the investigationFootnote 3 and as case arguments after the close of recordFootnote 4, which are summarized as follows:
The information including cost of production data submitted by the Fine Home Parties were complete, corrected and verified.
While issuance of normal values based on key UDS characteristics is appropriate, the CBSA should calculate a weighted average margin of dumping for cooperative exporters in the expedited review for the purpose of determining normal values for new models of subject goods imported into Canada.
The CBSA should determine the subjectivity of sectional components based on the physical and technical characteristics of the goods at the time of importation into Canada.
The CBSA should determine normal values under either section 19(a) and/or 19(b) for goods produced and sold by the Fine Home Parties to Canada and other countries based on the domestic sales information, reasonable amounts for administrative, selling and all other costs, net interest expenses and amounts for profits of the Fine Home Parties.
The CBSA cannot use the sales between related parties in the determination of export prices and should rely on the vendor’s selling price to the importer as the basis of export price.
The subsidy programs received by the Fine Home Parties are non-actionable because they are not specific under subsection 2(1) of the SIMA.
The information submitted in these case arguments was given due consideration by the CBSA.
CBSA response
The CBSA reviewed all costs provided by the Fine Home Parties. In general, these costs were accurate and discrepancies were corrected and/or explained.
The CBSA took the complainant’s comments about the sectional components into consideration and determined normal values for all goods subject to the CITT’s finding.
The CBSA determined normal values, export prices and amounts of subsidy based on relevant requirements of SIMA and the Special Import Measures Regulations (SIMR) as well as the relevant policies in the Handbook.
In regards to calculating a weighted average margin of dumping for cooperative exporters in an expedited review for the purpose of determining normal values for new models of subject goods, the CBSA will continue to review the current policy and update the ministerial specification, if warranted.
Normal values, export prices and amounts of subsidy for future shipments
Dongguan Advantech Polyurethane Foam Products Co., Ltd.
Dongguan Advantech is a producer and exporter of subject goods, located in Dongguan, Guandong Province, China. Dongguan Advantech is associated with a trading company, Fine Home Limited, involved in the sales of subject goods, located in Hong Kong. The CBSA found Dongguan Advantech to be the exporter of the subject goods as it acted as the principal in the transaction, and is located in the country of export, China.
During the course of the expedited review, Dongguan Advantech provided responses to the CBSA’s dumping request for information (RFI) and subsidy RFI as well as supplemental RFIs (SRFIs). Dongguan Advantech was also subject to Verification Questionnaires.
Dongguan Advantech did not have any domestic sales of like goods during the PAP, and as a result, normal values could not be determined in accordance with section 15 of SIMA.
Dongguan Advantech provided a database of export sales to a third country for the purposes of normal values determined in accordance with section 19(a) of SIMA. However, the CBSA is of the opinion that such sales do not fairly reflect the market value of the goods at the time the subject goods were sold to the importer in Canada.
Dongguan Advantech provided sufficient cost of production and administrative, selling and all other costs to determine normal values pursuant to paragraph 19(b) of SIMA. However, the CBSA was unable to determine an amount for profits under paragraph 11(1)(b) of the SIMR.
As such, normal values were determined pursuant to section 29 of SIMA using a method similar to that of paragraph 19(b), based on the aggregate of the production cost of the goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits determined by ministerial specification.
Dongguan Advantech provided a response to the subsidy RFI. Dongguan Advantech was found to have received countervailable benefits from the following four subsidy programs:
- Refund—other tax subsidies
- Preferential tax policies related to research and investment
- Corporate income tax reduction for new high tech enterprises (“NHTE”)
- Acquisition of government inputs/utilities at less than fair market value
The amount of subsidy found for Dongguan Advantech was CNY 10.47 per piece.
Gold Lion Furniture (Shanghai) Co. Ltd.
Gold Lion Furniture (Shanghai) Co., Ltd. (Gold Lion) is a producer and exporter of subject goods, located in Shanghai, China.
During the course of the expedited review, Gold Lion provided responses to the CBSA’s dumping request for information (RFI) and subsidy RFI as well as supplemental RFIs (SRFIs). Gold Lion was also subject to verification questionnaires.
Gold Lion provided a database of domestic sales of UDS during the POI. 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 as to permit a proper comparison with the sales of the goods to the importer in Canada.
Gold Lion provided sufficient cost of production and administrative, selling and all other costs to determine normal values pursuant to paragraph 19(b) of SIMA. However, the CBSA was unable to determine an amount for profits under paragraph 11(1)(b) of the SIMR.
As such, normal values were determined pursuant to section 29 of SIMA using a method similar to that of paragraph 19(b), based on the aggregate of the production cost of the goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits determined by ministerial specification. As Gold Lion acquired inputs from an associated supplier, the CBSA considered if an adjustment to the cost of those inputs pursuant to paragraph 11.2(1) of SIMR was warranted. It was found that no such adjustment was warranted.
During the POI, the subject goods exported to Canada by Gold Lion were sold to a related importer. Due to the relationship between the companies, a reliability test was performed to determine whether the section 24 export prices were reliable as envisaged by SIMA. This test was conducted by comparing the section 24 export prices with the section 25 export prices. The test revealed that the export prices in accordance with section 24 of SIMA were reliable and, therefore, export prices for Gold Lion were determined in accordance with section 24 of SIMA.
Gold Lion provided a response to the subsidy RFI. Gold Lion reported that it did not receive any subsidies during the POI, and the CBSA found no evidence of subsidies for Gold Lion Furniture.
Jiashan Foamtech Furniture Ltd.
Jiashan Foamtech Furniture Ltd. (Jiashan Foamtech) is a producer and exporter of subject goods, located in Jiashan, Zhejiang Province, China. Jiashan Foamtech is associated with a trading company, Fine Home Limited, involved in the sales of subject goods, located in Hong Kong. The CBSA found Jiashan Foamtech to be the exporter of the subject goods as it acted as the principal in the transaction, and is located in the country of export, China.
During the course of the expedited review, Jiashan Foamtech provided responses to the CBSA’s Dumping Request for Information (RFI) and Subsidy RFI as well as Supplemental RFIs (SRFIs). Jiashan Foamtech was also subject to Verification Questionnaires.
Jiashan Foamtech provided a database of domestic sales of UDS during the POI. 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 as to permit a proper comparison with the sales of the goods to the importer in Canada.
Jiashan Foamtech also provided a database of export sales to a third country for the purposes of normal values determined in accordance with section 19(a) of SIMA. However, the CBSA is of the opinion that such sales do not fairly reflect the market value of the goods at the time the subject goods were sold to the importer in Canada.
Jiashan Foamtech provided sufficient cost of production and administrative, selling and all other costs to determine normal values pursuant to paragraph 19(b) of SIMA. However, the CBSA was unable to determine an amount for profits under paragraph 11(1)(b) of the SIMR.
As such, normal values were determined pursuant to section 29 of SIMA using a method similar to that of paragraph 19(b), based on the aggregate of the production cost of the goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits determined by ministerial specification.
Jiashan Foamtech provided a response to the Subsidy RFI. Jiashan Foamtech was found to have received countervailable benefits from the following four subsidy programs:
- Grant—Patent assistance/award
- Grants/Awards—Subsidies related to employment, training and recruitment
- Grants/Awards—Subsidies to provide business support
- Acquisition of government inputs/utilities at less than fair market value
The amount of subsidy found for Jiashan Foamtech was CNY 2.95 per piece.
These specific normal values, export prices and amounts of subsidies for future shipments are effective today, December 30, 2022. The normal values, export prices and amounts of subsidies determined as a result of this expedited 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 review, regardless of the date that the requests were received. The normal values and export prices determined as a result of this review may be applied retroactively where the conditions described below are met.
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. 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.
Importer responsibility
Importers are reminded that it is their responsibility to calculate and declare their anti-dumping 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 liability, importers should contact the exporter(s) to obtain the applicable normal values. For further information on this matter, please 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 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.
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Appendix 1: Product definition
Subject goods definition
“Upholstered seating for domestic purposes originating in or exported from the People’s Republic of China and the Socialist Republic of Vietnam, whether motion (including reclining, swivel and other motion features) or stationary, whether upholstered with a covering of leather (either full or partial), fabric (including leather-substitutes) or both, including, but not limited to seating such as sofas, chairs, loveseats, sofa-beds, day-beds, futons, ottomans, stools and home-theatre seating.
Excluding:
- Stationary (i.e. non-motion) seating upholstered only with fabric (rather than leather), even if the fabric is a leather-substitute (such as leather-like or leather-look polyurethane or vinyl)
- dining table chairs or benches (with or without arms) that are manufactured for dining room end-use, which are commonly paired with dining table sets
- upholstered stools with a seating height greater than 24 inches (commonly referred to as “bar stools” or “counter stools”), with or without backs, and/or foldable
- seating manufactured for outdoor use (e.g. patio or swing chairs)
- bean bag seating and
- foldable or stackable seating
For greater certainty, the product definition includes:
- Upholstered motion seating with reclining, swivel, rocking, zero-gravity, gliding, adjustable headrest, massage functions or similar functions
- seating with frames constructed from metal, wood or both
- seating produced as sectional items or parts of sectional items
- seating with or without arms, whether part of sectional items or not and
- foot rests and foot stools (with or without storage)”
On September 2, 2021, the Canadian International Trade Tribunal excluded the following products from its finding:
- Specialized reclining massage chairs, not intended to be used for general seating purposes, with padded seat, headrest, back, and footrest, and containing built-in motorized mechanical components that operate by way of computerized controls to provide a full body massage for a single person, including to the head and/or neck, shoulders, back, buttocks, arms, and legs and/or feet
- Medical lift chairs containing electric motion mechanisms and motorized positioning controls, designed to carefully lift, lower and tilt (by raising or lowering the base and back of the seating) the occupant, and otherwise adjust the occupant’s seating position by adjusting one or more of the headrest, footrest, and seat; designed, manufactured, and tested to meet or exceed the requirements of Health Canada’s Medical Devices Regulations (SOR/98-282) applicable thereto and conforming with the following, or equivalent, standards and testing methodologies: EN12182, ANSI/AAMI/ISO10993, ANSI/AAMI/ES60601-1, CAL117, BSEN1021, ISO8191, ANSI/AAMI/ES60601-1-2, ISO14971
- Height-adjustable ergonomic gaming chairs for use with a desk and intended to be used primarily while playing video games, upholstered in leather or a leather-substitute, with armrests, headrests, lumbar support pillows, five-star swivel bases, and wheels or castors
Tariff classification numbers
The importation of the subject goods are usually classified under the following tariff classification numbers:
- 9401.41.00.00
- 9401.49.00.00
- 9401.61.10.10
- 9401.61.10.90
- 9401.71.10.10
- 9401.71.10.90
This listing of tariff classification numbers is for convenience of reference only. Refer to the product definition for authoritative details regarding the subject goods.
- Date modified: