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Anti-dumping and Countervailing Program
Preliminary Determination - Hot-rolled Carbon Steel Plate
OTTAWA, February 28, 2000
4258-108 AD/1228
4218-8 CV/89
STATEMENT OF REASONS
Concerning the making of a preliminary determination
of dumping with respect to
CERTAIN HOT-ROLLED CARBON STEEL PLATE
ORIGINATING IN OR EXPORTED FROM
BRAZIL, FINLAND, INDIA, INDONESIA, THAILAND AND UKRAINE
and of subsidizing with respect to
CERTAIN HOT-ROLLED CARBON STEEL PLATE
ORIGINATING IN OR EXPORTED FROM
INDIA, INDONESIA AND THAILAND
DECISION
Pursuant to subsection 38(1) of the Special Import Measures Act, the Commissioner of the Canada Customs and Revenue Agency has today made a preliminary determination that certain hot-rolled carbon steel plate originating in or exported from Brazil, Finland, India, Indonesia, Thailand and Ukraine has been dumped and that the same goods originating in or exported from India, Indonesia and Thailand have also been subsidized. Further, there is evidence which discloses a reasonable indication that the dumping and subsidizing of the subject goods have caused material injury to the Canadian industry.
This Statement of Reasons is also available in French.
Cet énoncé des motifs est également disponible en français.
STATEMENT OF REASONS
SUMMARY
On October 15, 1999, the Deputy Minister of National Revenue (now the Commissioner of Customs and Revenue (Commissioner)) initiated an investigation respecting the alleged injurious dumping into Canada of certain hot-rolled carbon steel plate originating in or exported from Brazil, Finland, India, Indonesia, Thailand and Ukraine and the injurious subsidizing of the same goods from India, Indonesia and Thailand.
The investigation was initiated in response to a complaint filed by Algoma Steel Inc., of Sault Ste. Marie, Ontario and Stelco Inc. of Hamilton, Ontario, supported by Ipsco Inc., Regina, Saskatchewan.
As a result of the investigation, the Commissioner is satisfied that the subject goods have been dumped and subsidized, that the margins of dumping and amounts of subsidy are not insignificant, that the volumes of dumped and subsidized goods are not negligible, and that there is a reasonable indication that the dumping and subsidizing have caused injury. Accordingly, the Commissioner has made a preliminary determination of dumping and subsidizing in accordance with subsection 38(1) of the Special Import Measures Act (SIMA).
INTERESTED PARTIES
Complainant
The complainants are Algoma Steel Inc., Sault Ste. Marie and Stelco Inc., Hamilton, Ontario. The complainants are two of the three producers of hot-rolled carbon steel plate in Canada. The third producer, Ipsco Inc., Regina, Saskatchewan, has supported the complaint.
Exporters
At initiation, 19 potential exporters of subject goods were identified. Based on information obtained during the investigation, it was confirmed that 11 exporters and 20 vendors were involved in the manufacture and sale to Canada of the subject goods during the period of investigation (POI). The names and addresses of these exporters (producers) are listed in Appendix 1. The vendors, listed by country of origin, are listed in Appendix 2.
Importers
The Canada Customs and Revenue Agency (CCRA) has identified 22 importers of subject goods. The names and addresses of these importers are listed inAppendix 3.
BACKGROUND
Following a number of meetings and discussions with representatives of the complainants, a complaint was filed on September 13, 1999. On September 17, 1999, Algoma Steel Inc. and Stelco Inc. were informed that the complaint was properly documented. The governments of the named countries were also notified that the complaint had been filed.
The investigation into the alleged dumping and subsidizing was initiated on October 15, 1999.
On November 13, 1999, the exporter, Steel Authority of India Limited, referred to the Canadian International Trade Tribunal (CITT) the question of whether the evidence before the Commissioner disclosed a reasonable indication that the dumping or subsidizing of the subject goods had caused injury or retardation or was threatening to cause material injury to the domestic industry. On December 14, 1999, the Tribunal ruled that there was a reasonable indication that the dumping or subsidizing of subject goods from all the named countries had caused or was threatening to cause material injury to the domestic industry.
On January 7, 2000, the preliminary investigation was extended from 90 to 135 days due to the volume of the data and information to be analyzed and the complexity of the issues presented by the investigation.
PRODUCT INFORMATION
Definition
For the purpose of this investigation, subject goods are:
- hot-rolled carbon steel plate and high strength low alloy steel plate not further manufactured than hot-rolled, heat-treated or not, in cut lengths, in widths from 24 inches (+/- 610 mm) to 152 inches (+/- 3,860 mm) inclusive, and:
- in thicknesses from 0.187 inches (+/- 4.75 mm) to 5.25 inches (+/-133 mm) inclusive, excluding plate produced to ASTM specifications A515 and A516M/A516 Grade 70 in thicknesses greater than 3.125 inches (+/- 79.3 mm), originating in or exported from Brazil, Finland, India, Indonesia and Thailand,
- in thicknesses from 4.0 inches (+/- 101 mm) to 5.25 inches (+/- 133 mm) inclusive, excluding plate produced to ASTM specifications A515 and A516M/A516 Grade 70, originating in or exported from Ukraine,
- in thicknesses from 0.187 inches (+/- 4.75 mm) to 3.125 inches (+/- 79.3 mm) inclusive originating in or exported from Ukraine, produced to ASTM specifications A515 and A516M/A516 Grade 70 which meet the following carbon equivalent as per ASME SA-20:
- carbon equivalent equal to or less than 0.40 for plate equal to or less than 1.5 inches (38.1 mm) in thickness; or
- carbon equivalent equal to or less than 0.42 for plate greater than 1.5 inches (38.1 mm) in thickness; or
- carbon equivalent equal to or less than 0.42, with maximum hydrogen and oxygen contents of 2 parts per million and 10 parts per million respectively, for plate equal to or less than 1.5 inches (38.1 mm) in thickness,
- excluding universal mill plate, plate for use in the manufacture of pipe and plate having a rolled, raised figure at regular intervals on the surface (also known as floor plate), originating in or exported from Brazil, Finland, India, Indonesia, Thailand and Ukraine.
Note that there has been a minor correction to the product definition of the subject goods originating in or exported from Ukraine. The carbon equivalent for A515 and A516M/A516 Grade 70 plate less than 1.5 inches (38.1 mm) in thickness should have included the qualifier for oxygen content, "and 10 parts per million". For greater clarity, the revision has been underscored in the product definition. All interested parties were advised of this change on January 7, 2000.
Additional Product Information
For greater clarity, the Canadian Standards Association (CSA) specifications covered by the product definition represent different grades within the broad specification G40.21 that covers steel for general construction purposes.
In the American Society for Testing & Materials (ASTM), specifications A283M/ A283 and A36M/A36 include structural plate; specifications A572M/A572, A588M/A588 and A242M/A242 include high strength low alloy steel plate; and specifications A515M/A515 and A516M/A516 include pressure vessel quality plate. The ASTM specification A36M/A36 is considered to be equivalent to the CSA specification G40.21, grade 300W/44W and together these are the most common specifications of structural quality plate sold in Canada. The most common specification of pressure vessel quality plate sold in Canada is the ASTM specification A516M/A516, grade 70.
Production Process
Hot-rolled carbon steel plate is made by hot-rolling semi-finished slabs or ingots into rectangular shapes or coils. While details may vary from mill to mill, the process by which hot-rolled carbon steel plate is produced is essentially the same for all producers and entails the following processes: heating the slabs/ingot, descaling, rolling, leveling, cutting to size, inspecting and testing. The plate may be heat-treated which may include annealing, normalizing, stress relieving, quenching, tempering or combinations of these treatments.
Product Application
The subject hot-rolled carbon steel plate can be used in a number of applications, the most common being in the production of rail cars, oil and gas storage tanks, heavy construction machinery, agricultural equipment, bridges, industrial buildings, high rise office towers, automobiles and truck parts, and shipbuilding and repairs (including pressure vessels).
CLASSIFICATION OF IMPORTS
The subject hot-rolled carbon steel plate is properly classified under the following Harmonized System classification numbers:
7208.51.91.10
7208.51.99.10
7208.52.90.10
7208.51.91.91
7208.51.99.91
7208.52.90.91
7208.51.91.92
7208.51.99.92
7208.52.90.92
7208.51.91.93
7208.51.99.93
7208.52.90.93
7208.51.91.94
7208.51.99.94
7208.52.90.94
7208.51.91.95
7208.51.99.95
7208.52.90.95
THE CANADIAN INDUSTRY
There have been no significant changes in the structure of the Canadian industry since the CCRA initiated its investigation. For details on the Canadian industry, refer to the Statement of Reasons issued at the time of the initiation of the investigation.
THE CANADIAN MARKET
In the Statement of Reasons issued on initiation of this investigation, statistics were provided on the apparent Canadian market for hot-rolled carbon steel plate, including import volumes from the named countries and other countries and the sales volumes of the Canadian producers. The data was derived from the information provided by the complainants and from the CCRA's internal information system. Since that time, as part of the ongoing investigative process and to ensure that the statistics reflect the actual situation, the CCRA has continued to review and evaluate import data available.
As a result of more extensive sampling, the reported volume of imports from the United States has increased slightly. In addition, the reported volume of imports from Indonesia has increased as a result of information provided during the investigation. The revised apparent market statistics are contained in Appendix 4.
RESULTS OF THE INVESTIGATION
In conducting its investigation, the identified exporters, vendors and importers were requested to provide the information necessary to determine the normal values and export prices of the subject goods. The Government of Ukraine was asked to provide the information to determine whether the steel sector in Ukraine was operating under market economy conditions. In addition, information was requested from the Governments of India, Indonesia and Thailand to determine whether or not the steel industry in those countries had benefited from countervailable subsidies. Exporters from these countries were also requested to provide information concerning the benefits, if any, conferred by any subsidy program.
The dumping and subsidy investigation covered all subject goods released into Canada during the Period of Investigation (POI) of July 1, 1998, to June 30, 1999.
Responses to the requests for information were received from one exporter in India, two exporters in Indonesia and one exporter in Thailand. In addition, submissions respecting subsidy programs were received from the Governments of India, Indonesia and Thailand. A partial submission was received from the Government of Ukraine. No responses were received from exporters in Brazil, Finland and Ukraine.
DUMPING INVESTIGATION
In this section, margins of dumping are expressed as a percentage of normal value.
INDIA
Steel Authority of India Limited
A submission was received from the Steel Authority of India Limited (SAIL). Verification meetings were held at the company's corporate headquarters in New Delhi and its production facilities in Bhilai. All products exported to Canada were produced at SAIL's mill in Bhilai.
Normal ValueAs there were insufficient sales of like goods in the domestic market that met the conditions of section 15 of the SIMA, normal values were estimated on the basis of production costs, selling, administrative and other expenses, and an amount for profit, pursuant to paragraph 19(b). Downward adjustments were made to the selling prices used to determine profit, pursuant to the relevant sections 5 and 7 of the Special Import Measures Regulations (SIMR). The adjustments were made to account for differences in the payment terms in the two markets and to remove delivery costs included in the price.
Export PriceAs the goods were sold to unrelated importers in Canada, export prices were estimated based on the exporter's ex-factory selling prices, pursuant to section 24 of the SIMA.
Margin of DumpingAll the goods exported to Canada during the POI were reviewed. Of the goods, 86 per cent were found to be dumped. The estimated weighted average margin of dumping was 13.6 per cent. The estimated margins ranged from 1.6 per cent to 29.4 per cent.
THAILAND
LPN Plate Mill Public Co., Ltd.
A submission was received from LPN Plate Mill Public Company Limited (LPN). Verification meetings were conducted at the company's premises in Bangkok, Thailand. All products were exported to Canada from LPN's production facility located in Samutprakarn, Thailand.
Normal ValueAs there were insufficient sales of like goods in the domestic market that met the conditions of section 15 of the SIMA, normal values were estimated on the basis of production costs, selling, administrative and other expenses, and an amount for profit, pursuant to section 19(b).
Export PriceAs goods were sold to unrelated importers in Canada, export prices were estimated on the basis of the exporter's ex-factory selling price, pursuant to section 24 of the SIMA. For goods exported by LPN that were produced on behalf of a third party, export price was estimated based on the importer's purchase price adjusted to an ex-factory basis, pursuant to section 24 of the SIMA.
Margin of DumpingAll the goods exported to Canada during the POI were reviewed. Of the goods, 100 per cent were found to be dumped. The estimated weighted average margin of dumping was 56.3 per cent. The estimated margins ranged from 56.1 to 57.6 per cent.
INDONESIA
PT Krakatau Steel and PT Gunawan Dianjaya Steel
Submissions were received from PT Krakatau Steel (Krakatau) and PT Gunawan Dianjaya Steel (Gunawan). With the extension of the preliminary phase of the investigation, the CCRA intended to conduct verification in Indonesia during the first two weeks of January 2000 in order to complete its review for the preliminary determination. However, Krakatau and Gunawan were unable to schedule the verification meetings during this period. The verification meetings occurred from January 19 to February 1, 2000. Consequently, there was insufficient time to analyze the information received. In addition, a significant amount of information requested prior to the verification meetings as well as information requested during the verification meetings remains outstanding.
Normal ValueFor imports of subject goods from Krakatau and Gunawan, normal values were estimated on the basis of an advance over export price based on the highest estimated margin of dumping determined during the investigation.
Export PriceAs the goods were sold to unrelated importers in Canada, export prices were estimated based on the exporter's ex-factory selling prices, pursuant to section 24 of the SIMA.
Margin of DumpingAll the goods exported to Canada during the POI were reviewed. Of the goods, 100 per cent were found to be dumped. The estimated weighted average margin of dumping was 57.6 per cent.
UKRAINE
In previous investigations, Ukraine has been treated as a non-market economy, with the result that normal values for imports from Ukraine have been determined on the basis of sales of like goods in a third or surrogate country.
In this investigation, information was requested from Ukraine to determine whether economic reforms have progressed sufficiently, such that it should no longer be considered to be operating in non-market economy conditions in the context of section 20 of the SIMA. Section 20 is applicable for the determination of normal values when the government of the country of export has a monopoly of its export trade and it substantially determines domestic prices in respect of the goods under investigation. In response to requests for information, a partial submission was received from the Government of Ukraine and no submissions were made by exporters. No response was received from the Government of Ukraine to a follow-up request for information. Therefore, there was insufficient information to assess whether or not the steel sector in Ukraine was operating under market economy conditions.
As a result, normal values were estimated on the basis of an advance over export price based on the highest estimated margin of dumping determined during the investigation.
Margin of DumpingAll the goods exported to Canada during the POI were reviewed. Of the goods, 100 per cent were found to be dumped. The estimated weighted average margin of dumping was 57.6 per cent.
BRAZIL and FINLAND
No submissions were received from exporters in Brazil. In the case of Finland, a letter was received from one exporter indicating that the company would not participate in the investigation.
Normal values were estimated on the basis of an advance over export price based on the highest estimated margin of dumping determined during the investigation. Export prices were estimated on the basis of the exporter's ex-factory selling price pursuant to section 24 of the SIMA.
Margin of DumpingAll the goods exported to Canada during the POI were reviewed. Of the goods, 100 per cent were found to be dumped. The estimated weighted average margin of dumping was 57.6 per cent.
Summary of Results (dumping)
A summary of the estimated margins of dumping and resulting percentage rates of provisional duty for all exporters of subject goods is contained in Appendix 5.
Volume Of Dumped Imports
Before making a preliminary determination of dumping, the Commissioner must be satisfied that the actual or potential volume of dumped goods is not negligible. If the volume of dumped goods of a country is less than 3 per cent of the total volume of the like goods that are released into Canada from all countries, the volume is considered to be negligible. However, if there are three or more countries each of whose dumped goods represent less than 3 per cent of the total imports, but which collectively represent more than 7 per cent of the total imports into Canada, the imports of these countries are not considered to be negligible.
A review of imports effected under the relevant tariff items for the period of investigation was carried out by the CCRA prior to the preliminary determination. In performing this analysis, imports of non-subject goods were extracted, including universal mill plate, plate for use in the manufacture of pipe, floor plate, hot-rolled coil and incorrectly described goods. The table in Appendix 6 summarizes the volume of dumped imports of subject goods during the period of investigation (July 1, 1998 to June 30, 1999). The volume of dumped goods from each of the named countries exceeds the negligibility threshold.
SUBSIDY INVESTIGATION
Background
The subsidy portion of the investigation covered all shipments of the subject goods released into Canada during the period of investigation of July 1, 1998, to June 30 1999, originating in or exported from India, Indonesia and Thailand. Requests for information were sent to each of the governments and exporters in the named countries. Responses to the subsidy request for information (subsidy RFI) were received from one exporter in India, two exporters in Indonesia and one exporter in Thailand. In addition, submissions were received from the Governments of India, Indonesia and Thailand. Verification visits were conducted at the premises of the four exporters, Steel Authority of India Limited of India, PT Krakatau Steel and PT Gunawan Dianjaya Steel of Indonesia, and LPN Plate Mill Public Co., Ltd. of Thailand, and at the offices of the responsible government representatives.
In determining whether a program results in a subsidy, the CCRA considered whether: (1) there was a financial contribution by a government of a country other than Canada; and (2) whether there was a benefit conferred to persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of goods.
Under the SIMA, there is a financial contribution by a government of a country other than Canada where:
- practices of the government involve the direct transfer of funds or liabilities or the contingent transfer of funds or liabilities;
- amounts that would otherwise be owing and due to the government are exempted or deducted; or amounts that are owing and due to the government are forgiven or not collected;
- the government provides goods or services, other than general governmental infrastructure, or purchases goods; or
- the government permits or directs a non-governmental body to do any thing 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.
If a subsidy is found to exist, it will be subject to countervailing duties if the subsidy is specific. A subsidy is considered specific when it is limited, in law, to a particular enterprise or is a prohibited subsidy. A prohibited subsidy includes an export subsidy which is contingent on export performance. A subsidy is not specific where the criteria or conditions governing eligibility for, and the amount of, the subsidy are:
- objective;
- set out in a legislative, regulatory or administrative instrument or other public document; and
- applied in a manner that does not favour or is not limited to a particular enterprise. Under subsection 2(1) of the SIMA, the term "enterprise" is defined to include "a group of enterprises, an industry and a group of industries".
Notwithstanding that a subsidy is not limited in the foregoing manner, the Commissioner may still determine the subsidy to be specific if:
- there is exclusive use of the subsidy by a limited number of enterprises;
- there is predominant use of the subsidy by a particular enterprise;
- disproportionately large amounts of the subsidy are granted to a limited number of enterprises; and
- the manner in which discretion is exercised by the granting authority indicates that the subsidy is not generally available.
The amount of subsidy is calculated on the basis of the total benefits to the recipients and is generally considered to be insignificant if the amount of subsidy attributable to the subsidized imports from a particular country is less than one per cent of the total export price of all subject goods under investigation from that country. However, the three countries in this investigation are all developing countries according to the Organization for Economic Development and Co-operation. When a subsidy investigation involves developing countries, section 41.2 of SIMA requires the Commissioner to take into account the provisions of paragraphs 10 and 11 of article 27 of WTO's Agreement on Subsidies and Countervailing Measures. This article will require termination of the countervailing duty portion of the investigation if the Commissioner determines that:
- the overall level of subsidies granted upon the product in question does not exceed 2 per cent of its value calculated on a per unit basis; or
- the volume of the subsidized imports represents less than 4 per cent of the total imports of the like product in the importing Member, unless imports from developing country Members whose individual shares of total imports represent less than 4 per cent collectively account for more than 9 per cent of the total imports of the like products in the importing Member.
RESULTS OF THE SUBSIDY INVESTIGATION
The subsidy programs identified are discussed below for each country and exporter.
INDIA:
Steel Authority of India Limited
A Request for Information was sent to the Government of India (GoI) on October 15, 1999, respecting subsidy programs. A response was received on November 22, 1999. The related documentation was received on November 24, 1999. Verification meetings were held with the GoI on January 17 and 24, 2000, in New Delhi.
A subsidy RFI was also sent on October 15, 1999 to possible exporters. Three companies, namely Essar Steel Limited, Lloyds Steel Industries Limited and The Tata Iron & Steel Company Limited, responded that they had not exported subject goods. A submission was received on November 22, 1999, from the Steel Authority of India Limited (SAIL), the sole exporter of subject goods from India. Verification meetings were held at the company's head office in New Delhi and at its steel plant in Bhilai from January 18 to 21, 2000, for the combined dumping and subsidy investigation.
The following programs were examined in order to establish if there were financial contributions made by any level of government and, if so, to establish if a benefit was conferred on persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of the subject goods:
- Duty Entitlement Pass Book Scheme;
- Special Import Licences;
- Advance Licences;
- Export Promotion Capital Goods Scheme;
- Pre-Shipment Export Financial Assistance;
- Post-Shipment Export Financial Assistance;
- Long-Term Credit Provided By The Export-Import Bank;
- Long-Term Loans From Government Banks;
- Loan Guarantees From The GoI;
- Loans From The Steel Development Fund;
- Tax Exemption For Export Profits;
- Import Duty Exemption And Drawback;
- Central Or State Sales Tax And Excise Duty Exemption;
- Export Oriented Units;
- Free Trade Zones;
- Export Processing Zones;
- Market Development Assistance Grants;
- Grants-In-Aid;
- Prime Minister's Trophy Award Fund; and
- Land Gifted By State Governments.
The CCRA has preliminarily determined that:
- there is a financial contribution by the GoI that conferred a benefit to SAIL under the Duty Entitlement Pass Book Scheme, Special Import Licences and Advance Licences programs;
- these three programs are specific for the reason that they are prohibited subsidies in accordance with paragraph 2(7.2)(b) of the SIMA;
- they are prohibited subsidies because they are contingent upon export performance as defined in Article 3.1(a) of the Agreement on Subsidies and Countervailing Measures;
- the benefits received from these programs, in aggregate, represent 1703 rupees per metric tonne, which exceeds the 2 per cent threshold stipulated in Article 27.10(a) of the Subsidies Agreement concerning developing countries referred to in section 41.2 of the SIMA; and
- the volume of the subject goods, 24,382 net tons, exceeds the 4 per cent threshold stipulated in Article 27.10(b) of the Subsidies Agreement concerning developing countries referred to in section 41.2 of the SIMA.
Appendix 9 contains the rationale used in determining why these programs result in countervailable subsidies in accordance with the legislation. It also provides why the information received for certain programs identified indicates that they did not confer benefits to SAIL and it identifies the programs that are still under review.
THAILAND
LPN Plate Mill Public Co., Ltd.
A subsidy RFI was sent to the Government of Thailand (GOT) on October 15, 1999. A submission was received from the GOT on November 22, 1999. Verification meetings were held with the GOT on December 9, 13 and 14, 1999.
A subsidy RFI was also sent to the only known exporter, LPN Plate Mill Public Company Ltd. (LPN). A response was received from LPN on November 22, 1999.
The following programs were examined in order to establish if there were financial contributions made by any level of government, and if so, to establish if a benefit was conferred on persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of the subject goods:
- Loans From Banks Owned, Controlled, Or Influenced By The Royal Thailand Government;
- Export Packing Credits;
- Pre-Shipment Loans Made In US Dollars And Yen By The Export-Import Bank To Exporters;
- Trust Receipt Financing For Raw Materials By The Export-Import Bank;
- Corporate Income Tax Exemptions Under IPA Section 31;
- Tax Benefits From Revaluation Of Assets;
- Additional Tax Deductions Under IPA Section 35, Relating To The Cost Of Transportation, Electricity And Water;
- Duty Exemptions On Imports Of Raw And Essential Materials Under The Investment Promotion Act (IPA) Section 30;
- Duty Exemption On Imports Of Machinery Under IPA;
- Tax Certificates For Export;
- Exemptions From Value Added Tax (VAT) Under Section 21(4) Of The VAT Act;
- Subsidized Transport, Electricity And Water Charges From The Board Of Investment;
- Loans From The Industrial Finance Corporation And The THAI Export-Import Bank;
- Export Insurance Program;
- IPA Subsidies For Building And Operating The Prachuab Port;
- Subsidized Waterworks From The State-Owned Eastern Water Resources Development And Management Co.;
- Regional Electricity Subsidies Provided To The Provincial Electricity Authority By The Electricity Generation Authority;
- Import Duty Exemptions For Industrial Estates;
- Export Processing Zone Incentives;
- Export Marketing Assistance; and
- Indirect Equity Infusions.
The CCRA has preliminarily determined that:
- there is a financial contribution by the GOT that conferred a benefit to LPN from the following programs:
- Loans From Banks Owned, Controlled, Or Influenced By The Royal Thailand Government,
- Export Packing Credits, and
- Duty Exemption On Imports Of Machinery Under IPA;
- these three programs are specific for the reason that they are limited to a particular enterprise in accordance with paragraph 2(7.2)(a) of the SIMA;
- the benefits received from these programs, in aggregate, represent 900 baht per metric tonne of the subject goods, which exceeds the 2 per cent threshold stipulated in Article 27.10(a) of the Subsidies Agreement concerning developing countries referred to in section 41.2 of the SIMA; and
- the volume of the subject goods, 17,549 net tons, exceed the 4 per cent threshold stipulated in Article 27.10(b) of the Subsidies Agreement concerning developing countries referred to in section 41.2 of the SIMA.
Appendix 10 contains the rationale used in determining why these programs result in countervailable subsidies in accordance with the legislation. It also provides why the information received for certain programs identified indicates that they did not confer benefits to LPN and it identifies the programs that are still under review.
INDONESIA:
PT Krakatau Steel and PT Gunawan Dianjaya Steel
A subsidy RFI was sent to the Government of Indonesia (GoID) on October 15, 1999. A submission was received from the GoID on November 22, 1999. Verification meetings were held with the GoID on January 25 and 26, 2000.
Subsidy RFI's were also sent to PT Gunawan Dianjaya Steel (Gunawan) and PT Krakatau Steel (Krakatau), the only known exporters of subject goods from Indonesia. Submissions relating to the subsidy RFI were received from Gunawan and Krakatau on November 22, 1999.
With the extension of the preliminary phase of the investigation, the CCRA intended to conduct verification in Indonesia during the first two weeks of January 2000 in order to complete its review for the preliminary determination. However, Krakatau and Gunawan were unable to schedule the verification meetings during this period. The verification meetings occurred from January 19 to February 1, 2000. Consequently, there was insufficient time to analyze the information received. In addition, a significant amount of information requested prior to the verification meetings as well as information requested during the verification meetings remains outstanding.
Consequently, the CCRA was unable to determine whether Gunawan and Krakatau benefited from any of the following potential subsidy programs identified by the complainants and from other information available to the CCRA:
- Equity Infusions to Krakatau,
- Corporate Income Tax Holidays,
- Reductions in Electricity Tariffs for the Steel Industry,
- Bank of Indonesia Cash Collateral Scheme,
- Exemptions of tariffs and VAT on Imported Materials,
- Tax concessions and Tariff exemptions on Capital Equipment, Machinery and Raw, Materials, for Exporters located in Export-Processing Zones,
- Ten-year tax holiday offered to Corporate Taxpayers in selected industries, and
- Reductions in natural gas prices.
Therefore, for Gunawan and Krakatau, the CCRA estimated an amount of subsidy for purposes of the preliminary determination based on the complainants' estimates at the time of initiation of the investigation. The estimated amount of subsidy for Gunawan is 448,962 rupiah per metric tonne and is above the 2% insignificant threshold. The estimated amount of subsidy for Krakatau is 390,746 rupiah per metric tonne which is also above the 2% insignificant threshold.
SUMMARY OF RESULTS (subsidies - ALL COUNTRIES)
A summary of the amounts of subsidy for all exporters of subject goods is contained in Appendix 7. Appendix 8 summarizes the volume of subsidized imports of subject goods during the period of investigation (July 1, 1998 to June 30, 1999). Results indicate that all three countries, India, Indonesia and Thailand, have each a volume of subsidized goods that exceeds the negligibility threshold, that is, exceeds 4 per cent of the total volume of goods that are released into Canada from all countries and that are of the same description as the like goods.
INJURY
Before making a preliminary determination of dumping or subsidizing under subsection 38(1) of the SIMA, the Commissioner is required to conclude that there is evidence that discloses a reasonable indication that the dumping or subsidizing has caused injury or is threatening to cause injury.
In their complaint, Algoma and Stelco provided details respecting the alleged injury caused by the dumping and subsidizing. This evidence of injury related to reduced market shares, price suppression and erosion, lost sales and reduced profitability. Subsequent to the initiation of the investigation, complainants provided additional information which updated the evidence of injury. Algoma noted that its sales for domestic consumption have continued to decline as a consequence of orders lost to the dumped and subsidized imports. It also continues to experience a decline in its sales revenue on a net ton basis. Stelco has provided documentation that shows that price erosion is continuing. It also provided up-dated financial data to demonstrate that its sales revenues and profit margins on a net ton basis have continued to decline as has its overall profitability.
In view of the foregoing the Commissioner has concluded that there is evidence that discloses a reasonable indication that the dumping or subsidizing has caused injury.
DECISION
Pursuant to subsection 38(1) of the SIMA, the Commissioner has, on this date, made a preliminary determination of dumping with respect to certain hot-rolled carbon steel plate originating in or exported from Brazil, Finland, India, Indonesia, Thailand and Ukraine and a preliminary determination of subsidizing with respect to the same goods originating in or exported from India, Indonesia and Thailand.
In making this decision, the Commissioner is satisfied that the subject goods have been dumped and subsidized, that the margin of dumping and amounts of subsidy are not insignificant and that the volume of dumped and subsidized goods is not negligible. Furthermore, the Commissioner has determined that there is evidence which discloses a reasonable indication that the dumping and subsidizing have caused injury to the Canadian industry.
Subparagraph 38(1)(b)(iii) of SIMA, requires that the Commissioner specify where there is a prohibited subsidy on the goods and estimate the amount of the prohibited subsidy. In this case, the Government of India's Duty Entitlement Pass Book Scheme, Special Import Licences and Advance Licences programs, being export subsidies, have been specified as prohibited subsidies and the amounts of subsidy have been estimated.
FUTURE ACTION
The CITT will now hold an inquiry into the question of whether the dumping and subsidizing have caused or is threatening to cause injury to the Canadian industry. The CITT is required to issue its decision on the question of injury with respect to the subject goods no later than 120 days after the receipt of notice of the preliminary determination.
As part of the CITT's inquiry, public hearings are held. If the CITT makes a no-injury decision then all proceedings are terminated. If a decision of injury is made, anti-dumping duties and/or countervailing duties will be levied on future imports.
While the CITT's inquiry is in progress, the CCRA will continue its investigation in order to obtain further information relating to the dumping and subsidizing of the subject goods. Within 90 days of the preliminary determination, a final determination will be made, specifying the margin of dumping and the amount of subsidy on the basis of all information available at that time.
If the margin of dumping or amount of subsidizing are insignificant or the actual or potential volume of dumped or subsidized goods is negligible, proceedings will be terminated in whole or in part, and any provisional duty paid or security posted will be returned to the importers, as appropriate.
The legislation provides that after a preliminary determination of dumping, exporters may submit written undertakings to revise their selling prices to Canada so that the margin of dumping or the injury caused by the dumping is eliminated.
Similarly, after a preliminary determination of subsidizing, foreign governments may submit written undertakings to eliminate the subsidy on the goods exported or to eliminate the injurious effect of the subsidy by limiting the amount of subsidy or the quantity of the goods exported to Canada. Alternatively, exporters, with the consent of their government, may undertake to revise their selling prices so that the injurious effect of the subsidy is eliminated.
Acceptable undertakings must account for all or substantially all of the exports to Canada of the dumped or subsidized goods. If undertakings are accepted, the required payment of provisional duties would be suspended.
In accordance with section 57 of the Special Import Measures Regulations, undertakings should be offered no later than 60 days after this preliminary determination. However, it is preferable that written undertaking proposals be received by the CCRA as early as possible to allow sufficient time for analysis.
PROVISIONAL DUTY TO BE IMPOSED
Pursuant to subsection 8(1) of the SIMA, the Commissioner considers that the imposition of provisional duty is necessary to prevent injury, in view of the expectation of continuing imports at injurious price levels during the provisional period. Therefore, subject goods released into Canada during the period commencing on this day and ending on the earlier of the day the investigation is terminated, the day on which the CITT makes an order or finding or the day an undertaking is accepted, are subject to provisional duty.
The importer of the goods subject to provisional duty must pay the duty in cash or by certified check or post security equal to the duty payable. Payment of such duty is hereby demanded.
The duty to be collected during the provisional period is based on the estimated margins of dumping, expressed as a percentage of the export price of the goods and estimated amounts of subsidy. Appendix 5 outlines the rates of provisional duty, based on the estimated margins of dumping, payable on subject goods imported on or after February 28, 2000. Appendix 7 outlines the amounts of provisional duty, based on the estimated amounts of subsidizing, payable on the goods imported on or after February 28, 2000.
Where the provisional duty relates to both dumping and subsidizing, and the subsidy is deemed to be an export subsidy, the provisional duty payable on the subject goods imported into Canada is the full amount of subsidy and the portion of the margin of dumping that is not attributable to the export subsidy.
PUBLICATION
Notice of this preliminary determination is being published in the Canada Gazette pursuant to paragraph 38(3)(a) of the SIMA.
INFORMATION
This Statement of Reasons has been provided to persons directly interested in these proceedings. A free copy may be obtained upon request by writing to Anti-dumping and Countervailing Directorate, Canada Customs and Revenue Agency, 191 Laurier Avenue West, Ottawa, Ontario, Canada, K1A 0L5 or from the internet site: http://www.cbsa-asfc.gc.ca/sima-lmsi/. For further information, please contact the following officers by fax at (613) 941-2612 or by telephone at:
Terry Huzarski
(613) 954-7412
terry.huzarski@ccra-adrc.rc.gc.ca
Vincent Gaudreau
(613) 954-7262
vincent.gaudreau@ccra-adrc.gc.ca
Michel Leclair
(613) 954-7232
michel.leclair@ccra-adrc.gc.ca
Ken McPhail
(613) 954-9530
ken.mcphail@ccra-adrc.gc.ca
R.A. Séguin
A/Director General
Anti-dumping and Countervailing Directorate
APPENDIX 1
EXPORTERS (PRODUCERS)
BRAZILCompanhia Siderurgica
Nacional - CSN
Avenida Lauro Muller 116
36 Andar
Rio de Janeiro - RJ
CEP 22299-900
Brazil
Usinas Siderurgicas De Minas Gerais
S.A. - USIMINAS
Rua Prof. José Vieira De Mendonça, 3011
Engenho Nogueira CEP - 31.910-260
Belo Horizonte - M.G.
Minas Gerais
Brazil
Companhia Siderurgica Paulista - COSIPA
Av. Do Café, 277 - Torre B80 Andar
Vila Guarani
Sao Paulo - SP
CEP: 04311-000
Brazil
Rautaruukki Oy Steel
Raahe Steel Works
P.O. Box 93, SF-92170 Raahe
Harvialantia 420 Hameenlinna
FIN-92101
Finland
Steel Authority of India Limited
13th Floor, Hindustan Times House
18-20 Kasturba Gandhi Marg
New Dehli 110 001
India
LPN Plate Mill Public Co., Ltd.
199/9 Moo 4 Suksawad Rd.
Pakklongbangplakod
Prasamutjedee, Samutprakarn 10290
Thailand
PT Krakatau Steel
Wisma Baja 4th Floor
Jolan Gatot Subroto KAV54
P.O. Box 1174
Jakarta, Selatan
Jakarta 12950, Indonesia
PT Gunawan Dianjaya Steel
JL. Margomulyo 29A, Tandes
Surabaya, Jatim 60183
Indonesia
Azovstahl Iron & Steel Works
1, Leporsky Street, GSP - 211
Mariupol 341 000
Donetsk Region
Ukraine
Alchevsky Iron & Steel Works
4 Shmit Street
Alchevsk 349102
Lugansk Region
Ukraine
Mariupol Iron & Steel Works (Ilyich)
1 Levchenko Street
Mariupol 341 004
Donetsk Region
Ukraine
APPENDIX 2
OTHER EXPORTERS/VENDORS
BY COUNTRY OF ORIGIN)
BRAZILCosipa Overseas Ltd.
Av. Do Cafe, 277 - Torre B 8 Andar
Sao Paulo - SP
CEP: 04311-000
Brazil
Macsteel International USA Corp.
105 Corporate Park Drive
White Plains, New York 10804
USA
Stemcor USA Inc.
350 Fifth Avenue, Suite 7815
Empire State Building
New York, New York 10118
USA
American Alloy Steel, Inc.
7721 Pinemont
P.O. Box 40469
Houston, Texas 77240-0469
USA
Dikema Constructiestaal BV
Haven 2665
Eemhavenweg 70
3089 KH Rotterdam
The Netherlands
Salzgitter/Preussag Handel GmbH
Hans-Hermann Söhler
Schwannstr. 12, 40476 Düsseldorf
Postfach 30 09 43
Germany
Canam Steel Corp.
140 South Ellis Road
Jacksonville, Florida 32254
USA
TradeArbed Export SA
19, Avenue de la Liberté
L-2930
Luxembourg
Ferrostaal Ag
Hohenzollernstr. 24
D-45128 Essen
Germany
Itochu Steel Asia Pte., Ltd.
9 Rafffles Place, No. 41-01
Republic Plaza
Singapore 048619
Marubeni America Corporation
350 South Grand Avenue, #2200
Los Angeles, California 90071
USA
Balli Steel plc
5 Stanhope Gate
London W1Y 5LA
United Kingdom
Balli North America Inc.
Suite 340, 16945 Northchase
Houston, Texas 77060
USA
Fedmet Corporation
3050 Post Oak Blvd.
Suite 1350
Houston, Texas 77056
USA
Novosteel SA
P.O. Box 1106
2006 Neuchatel
Switzerland
Salzgitter/Preussag Handel GmbH
Hans-Hermann Söhler
Schwannstr. 12, 40476 Düsseldorf
Postfach 30 09 43, 40409 Dusseldorf
Germany
Klockner Steel Trade GmbH
Neudorfer Str. 3-5, D-47057 Duisberg
Postfach 10 08 51-D47008 Duisberg
Germany
SPS Steel Plate & Sections Ltd.
Island House, 2, Fazeley Street
Birmingham B5 5JP
England
American Alloy Steel, Inc.
7721 Pinemont
P.O. Box 40469
Houston, Texas 77240-0469
USA
Krupp Hoesch Stahlexport GmbH
Thedor-Althoff-SIN-1
45133 Essen, Postfach 101954
Germany
D.F.O.
Babcock & Wilcox
1200 19th Street, SW
Paris, Texas 75460
USA
Canam Steel Corp.
140 South Ellis Road
Jacksonville, Florida 32254
USA
Industristal AS
Postboks 31
No-3992 Langesund
Norway
APPENDIX 3
IMPORTERS
Macsteel International (Canada) Ltd.
1210-21331 Gordon Way
Richmond, British Columbia
V6W 1J9
Babcock & Wilcox Canada Ltd.
581 Coronation Blvd.
Cambridge, Ontario
N1R 5V3
Dollard Steel Co.
6600 Boul. Decarie
Bur. 310
Montréal, Québec
H3X 2K4
Canadian Erectors Ltd.
P.O. Box 730
23 Smith Street
St. Catharines, Ontario
L2R 6Y6
Francosteel Canada Inc.
5890 Monkland Avenue, 303
Montréal, Québec
H4A 1G2
Ferrostaal Metals Ltd.
390 Brant Street., Suite 301
Burlington, Ontario
L7R 4J4
Usinor Canada Inc.
2, Place Alexis Nihon
Suite 610
Westmount, Québec.
H3Z 3C1
Friede Goldman Newfoundland Ltd.
66-77 Ville Marine Drive
P.O. Box 262
Marystown, Newfoundland
A0E 2M0
Itochu Canada Ltd.
World Trade Centre
770 - 999 Canada Place
Vancouver, British Columbia
V6C 3C1
Les Aciers Canam
C.P. 130
St-Gedeon de Beauce, Québec
G0M 1T0
Klockner Steel Trade Corp.
10 Milner Business Cr., Suite 512
Scarborough, Ontario
M1B 3C6
Olbert Metal Sales Ltd.
989 Derry Rd. East
Suite 305
Mississauga, Ontario
L5T 2J8
Niagarasteel Service Center
23 Smith St.
P.O. Box 730
St. Catharines, Ontario
L2R 6Y6
Industries Davie Inc.
22 George D. Davie
Lévis, Québec
G6V 6N7
Salzgitter Trade, Inc.
1444 - 1333 W Broadway
Vancouver, British Columbia
V6H 4C1
Shelley Machine & Marine Inc.
649 McGregor Road
P.O. Box 2163
Sarnia, Ontario
N7T 7L7
Thyssen Canada Ltd.
425 - 2560 Matheson Blvd.
Mississauga, Ontario
L4W 4Y9
M & M Offshore Ltd,
456 Logy Bay Road
P.O. Box 9558
St. John's, Newfoundland
A1A 2Y4
Wilkinson Steel-Metals
9525 - 60th Avenue
Edmonton, Alberta
T6E 0C3
TradeArbed Canada
390 Brant Street
Suite 601
Burlington, Ontario
L7R 4J4
Wirth Ltd.
1 Westmount Square
Suite 200
Montréal, Québec
H3Z 2P9
St John's Dockyard Ltd.
No. 475 Water Street
St. John's, Newfoundland
A1E 6B5
APPENDIX 4
APPARENT CANADIAN MARKET (NET TONS)
CERTAIN HOT-ROLLED CARBON STEEL PLATE
| 1997 | 1998 | POI July 1, 1998 to June 30, 1999 |
|
|---|---|---|---|
| Domestic Shipments (1) | 601,067 | 537,149 | 499,338 |
| IMPORTS (2):
Brazil Finland India Indonesia Thailand Ukraine All Named Imports Other Imports Total Imports |
4,352 392 0 12,080 0 7,132
23,956 147,213 |
7,269 2,308 22,383 43,872 14,088 19,435
109,355 270,404 |
11,756 18,288 24,382 57,155 17,549 17,798
146,928 189,554 |
| TOTAL MARKET | 772,236 | 916,908 | 835,820 |
|
MARKET SHARES: Domestic Named Countries Other Imports Total Imports |
77.8% 3.1% 19.1% 22.2% |
58.6% 11.9% 29.5% 41.4% |
59.7% 17.6% 22.7% 40.3% |
Sources:
- Domestic data based on information from Canadian producers.
- Import data based on information from the CCRA's internal information system. This data has been reconciled with information received from exporters, vendors and importers, where possible.
APPENDIX 5
ESTIMATED MARGINS OF DUMPING BY COUNTRY/EXPORTER
CERTAIN HOT-ROLLED CARBON STEEL PLATE
(July 1, 1998 to June 30, 1999)
| Country / Exporter | Quantity of Goods Dumped (%) |
(1) Margin of Dumping Range of Dumped Imports |
(2) Weighted Average Margin of Dumping |
(3) Provisional Duty Payable |
|---|---|---|---|---|
|
Brazil |
100% |
57.6% |
135.8% |
|
|
Finland |
100% |
57.6% |
135.8% |
|
|
India: |
86% |
1.6 - 29.5% |
13.6% |
15.7% (4) 135.8% (4) |
|
Indonesia: |
100% 100% |
57.6% 57.6% |
135.8% 135.8% 135.8% |
|
|
Thailand: |
100% |
56.1 - 57.6% |
56.3% |
128.8% 135.8% |
|
Ukraine |
100% |
57.6% |
135.8% |
|
| All Countries | 97.6% | 53.3% |
NOTES:
- Expressed as a percentage of normal value for the dumped goods.
- Expressed as a percentage of total normal value for all imported goods.
- Expressed as a percentage of export price.
- Provisional duty payable at the time of release from Customs will be the total provisional anti-dumping duty less the amount of the export subsidy.
APPENDIX 6
IMPORT VOLUMES DUMPING
CERTAIN HOT-ROLLED CARBON STEEL PLATE
(July 1, 1998 to June 30, 1999)
| Country of Export/Origin |
Total Volume Imported Net Tons |
Per cent of Total Imports |
Total Volume Dumped Net Tons |
Dumped Imports as a Per Cent of Total Imports |
|---|---|---|---|---|
|
Brazil Finland India Indonesia Thailand Ukraine Total - Named Countries Total - Other Countries TOTAL IMPORTS |
11,756 18,288 24,382 57,155 17,549 17,798 146,928 189,554 336,482 |
3.5% 5.4% 7.3% 17.0% 5.2% 5.3% 43.7% 56.3% 100% |
11,756 18,288 20,857 57,155 17,549 17,798 143,430 |
3.5% 5.4% 6.2% 17.0% 5.2% 5.3% 42.6% |
Sources:
- CCRA's internal information systems.
- Customs entries.
- Importer and exporter submissions.
APPENDIX 7
ESTIMATED AMOUNTS OF SUBSIDY BY COUNTRY/EXPORTER
CERTAIN HOT-ROLLED CARBON STEEL PLATE
(July 1, 1998 to June 30, 1999)
| Country of Origin / Exporter | Quantity of Goods Subsidized (%) |
Amount of Subsidy (Per Metric Tonne) |
Provisional Duty Payable (Per Metric Tonne) |
|---|---|---|---|
|
India: |
100% |
1,703 rupees |
1,703 rupees 1,703 rupees |
|
Indonesia: |
100% 100% |
390,746 rupiah 448,962 rupiah |
390,746 rupiah 448,962 rupiah 448,962 rupiah |
|
Thailand: |
100% |
900 baht |
900 baht 900 baht |
APPENDIX 8
IMPORT VOLUMES SUBSIDY
CERTAIN HOT-ROLLED CARBON STEEL PLATE
(July 1, 1998 to June 30, 1999)
| Country of Export/Origin |
Total Volume Imported Net Tons |
Per cent of Total Imports |
Total Volume Subsidized Net Tons |
Subsidized Imports as a Per Cent of Total Imports |
|---|---|---|---|---|
|
India Indonesia Thailand Total - Named Countries Total - Other Countries TOTAL IMPORTS |
24,382 57,155 17,549 99,086 237,405 336,482 |
7.3% 17.0% 5.2 29.5% 70.5% 100% |
