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Anti-dumping and Countervailing Program
OTTAWA, March 11, 2003
File No. 4240-21
Case No. AD/1234
STATEMENT OF REASONS
Concerning the confirmation of the final determination of dumping with respect to certain iodinated contrast media used for radiographic imaging, originating in or exported from the United States of America (including the Commonwealth of Puerto Rico)
DECISION ON REMAND
Pursuant to paragraph 41.1(2)(a) of the Special Import Measures Act, the Commissioner of Customs and Revenue has, on February 24, 2003, confirmed the final determination of dumping made on March 30, 2000, respecting certain iodinated contrast media for radiographic imaging, in solutions of osmolality less than 900 mOsm/kg H2O, originating in or exported from the
United States of America (including the Commonwealth of Puerto Rico).
This Statement of Reasons is also available in French.
Cet énoncé des motifs est également disponible en français.
TABLE OF CONTENTS
DECISION ON REMAND
- Product definition
- Additional Product Information
- Background
CONCLUSIONS OF THE PANEL REVIEW
RESPONSE TO THE PANEL REMAND
- RESPONSE TO REMAND 1(a) - Searle Ltd. had no Domestic Sales of the Subject Contrast Media
- Facts and Evidence Supporting the CCRA's Position That Searle had no Domestic Sales
- In the Ordinary Course of Trade for Use in the Country of Export Under Competitive Conditions
- RESPONSE TO REMAND 1(b) - The CCRA must justify its rejection of the use of SIMA sections 15 and 19 prior to utilizing section 29
- A Reasonable Amount for Profits could not be Determined
- A Reasonable Amount for Administrative, Selling and all Other Costs could not be Determined
- RESPONSE TO REMAND 2 (a) - If the CCRA again determines to apply section 29 to establish normal value, it must explicitly delineate the adjustments made to normal value starting price to achieve comparability with the export price
- Price Comparability
- RESPONSE TO REMAND 2 (b) - Margins of Dumping were not created solely by the Administration of SIMA but were also caused by distribution factors.
CONCLUSION
FUTURE ACTION
PUBLICATION
INFORMATION
On February 24, 2003, pursuant to paragraph 41.1(2)(a) of the Special Import Measures Act (SIMA), the Commissioner of Customs and Revenue (Commissioner) confirmed the final determination of dumping made on March 30, 2000, respecting certain iodinated contrast media used for radiographic imaging, originating in or exported from the United States of America (including the Commonwealth of Puerto Rico).
This action results from a decision of an Article 1904 Binational Panel (Panel) on
January 8, 2003, whereby certain issues were remanded for reconsideration by the
Canada Customs and Revenue Agency (CCRA).
The subject goods are defined as:
"Iodinated contrast media used for radiographic imaging, in solutions of osmolality less than 900 mOsm/kg H2O, originating in or exported from the United States of America (including the Commonwealth of Puerto Rico)."
Additional Product Information
For clarity, the subject goods include non-ionic monomers and dimers in solutions less than 900 mOsm/kg H2O. They are commonly referred to in the industry as low osmolality contrast media (LOCM) products. LOCM products sold in Canada must be approved for specific indications (i.e., use) by the Therapeutic Products Directorate (formerly the Health Protection Branch) of Health Canada.
As a result of a complaint filed by Mallinckrodt Canada Inc. (now known as Tyco Healthcare Canada Inc.), a dumping investigation was initiated on August 20, 1999. On March 30, 2000, the Commissioner made a final determination of dumping respecting the subject goods, pursuant to paragraph 41(1)(a) of SIMA.
On May 1, 2000, the Canadian International Trade Tribunal (CITT) issued a finding of injury respecting the subject goods.
Following the final determination of dumping, five companies, Bracco Diagnostics Inc. and Bracco Diagnostics Canada Inc. (the Bracco group), Nycomed Amersham Canada Ltd., Nycomed Inc. and Nycomed Imaging AS (the Nycomed group) requested a review of the final determination by a Panel established pursuant to Article 1904 of the North American Free Trade Agreement.
After the CITT issued its injury finding, several interested parties requested that a public interest investigation be conducted. On August 29, 2000, the CITT reported to the Minister of Finance (Minister) that it was of the opinion that the imposition of anti-dumping duties in the full amount in respect of the subject goods is not in the public interest. It recommended that the Minister reduce the anti-dumping duties on shipments of the subject goods to Canada.
On May 2, 2001, the Iodinated Contrast Media Remission Order came into effect. This remission order makes provision for the imposition of a lower anti-dumping duty on the subject goods.
CONCLUSIONS OF THE PANEL REVIEW
On January 8, 2003, the Panel remanded certain issues related to the final determination back to the Commissioner for reconsideration and action within 45 days as follows:
1. (a) The CCRA is required to clearly state and support its finding that Searle had no domestic sales of the subject goods.
- (b) The CCRA must justify its rejection of the use of SIMA sections 15 and 19 prior to utilizing section 29.
2. (a) If the CCRA again determines to apply section 29 to establish normal value, it must explicitly delineate the adjustments made to the normal value starting price to achieve comparability with the export price.
- (b) If the dumping margins are created solely through the administration of SIMA and not by differences in distribution, the CCRA should state whether its interpretation of the SIMA framework for the normal value determination results in a comparison which is consistent with any requirement of SIMA for a comparison at a comparable level of trade.
Copies of the Panel's Decision (Secretariat File No. CDA-USA-2000-1904-01) may be obtained from:
North American Free Trade Secretariat
Canadian Section
90 Sparks Street
Suite 705
Ottawa, Ontario
K1P 5B4
Phone: (613) 992-9388
Fax: (613) 992-9392
RESPONSE TO REMAND 1(a) - Searle Ltd. had no Domestic Sales of the Subject Contrast Media
The CCRA has reviewed the decision made for the final determination of dumping that the producer and exporter of the subject goods, Searle Ltd. (hereinafter also referred to as Searle), located in Barceloneta, Puerto Rico, had no domestic sales of the subject contrast media. The CCRA considers domestic sales to be sales which meet the terms and conditions provided for in sections 15 and 16 of SIMA.
Facts and Evidence Supporting the CCRA's Position That Searle had no Domestic Sales
It is evident that Searle did not have any domestic sales of like goods. A detailed analysis of the Supply Agreement between the two parties, Searle Ltd. and Nycomed Imaging AS, in Norway (hereinafter also referred to as Nycomed Imaging) with respect to the manufacture and sale of subject goods, established the fact that all of the sales of the subject contrast media manufactured by Searle, the exporter, were made to one purchaser, Nycomed Imaging.
Specific provisions of the Supply Agreement between the Supplier, Searle Ltd., and the Purchaser, Nycomed Imaging AS, which support the CCRA's position that Searle had no domestic sales of the subject goods include the following:
- (a) Searle, in Puerto Rico, was the manufacturer and supplier of the subject contrast media. Nycomed Imaging, a company located in Norway, was the only purchaser of the subject contrast media manufactured by Searle. This clearly established the fact that Searle did not engage in the sale of the subject contrast media to any company other than Nycomed Imaging.
- (b) The Purchaser, Nycomed Imaging, is to buy and the Supplier, Searle Ltd., to sell the products subject to certain conditions. This contractual arrangement between the two parties further supports the CCRA's position.
- (c) Information in the Agreement clearly establishes that the only parties to the sale and purchase transactions involving the subject contrast media were Searle as the vendor and Nycomed Imaging as the purchaser.
- (d) There is definitive proof that Searle did not, or could not, sell the subject contrast media of its own accord to any other party, but to Nycomed Imaging.
The foregoing was supported by the exporter's response to several questions in the CCRA's Exporters' Request for Information. Therefore it is evident that Searle did not sell the subject goods in the domestic market. In addition, Searle's sales did not meet the terms and conditions of paragraph 16(2)(a) of SIMA. These terms and conditions are discussed below.
The facts clearly prove that the sale of the subject contrast media by the exporter Searle was not a domestic sale. Therefore, for the final determination of dumping, the CCRA held that the sale of the subject contrast media by the exporter was not a domestic sale.
Notwitstanding the fact that there were no domestic sales, in reconsidering this issue on remand, the CCRA also examined the sales made by Searle to Nycomed Imaging that were shipped to Nycomed Inc.'s warehouse in the continental United States, to determine whether these sales could be used to determine the normal value of the goods exported to Canada.
In the Ordinary Course of Trade for Use in the Country of Export Under Competitive Conditions
One of the criteria used in selecting the exporter's sales to determine normal value is stipulated in paragraph 15(c) of SIMA. This criterion requires that the sales must be made in the ordinary course of trade for use in the country of export under competitive conditions.
Generally, the term "ordinary course of trade" is interpreted to mean that the goods are offered for sale to an individual customer on the same terms as they would be offered for sale to any other customers buying the same quantity, at the same trade level, with the same freight conditions, and so forth. "Under competitive conditions" means that the transaction occurred in a market where prices result from the free interplay of supply and demand.
On reconsidering the issue remanded, it was determined that sales by Searle to Nycomed Imaging could not be used to determine the normal values of the goods under section 15 of SIMA, since they were not made in the ordinary course of trade for use in the country of export under competitive conditions.
Factors considered by the CCRA in reaching this conclusion included the following:
According to the Supply Agreement, there is only one customer for the subject goods in the sales transactions examined. Therefore, these sales did not meet the conditions of paragraph 16(2)(a) of SIMA which limits the sales that can be considered under section 15 by specifically excluding sales by a vendor to only one customer, if the vendor did not at the same or substantially the same time sell like goods in the ordinary course of trade to other persons. (It is reasoned that sales to only one company do not establish a reliable price for that trade level). These sales, therefore, were not made in the ordinary course of trade.
Furthermore, the sales were not made under competitive conditions. This conclusion was made in light of the fact that the Supply Agreement between Searle and Nycomed Imaging is restricted to the two parties and transactions are not open to market considerations. This was also the case with the selling prices from Searle to Nycomed Imaging. These prices were not subject to the market forces of supply and demand.
Therefore, based on the facts, the CCRA concluded that Searle Ltd., the exporter, had no domestic sales of the subject goods.
RESPONSE TO REMAND 1(b) - The CCRA must justify its rejection of the use of SIMA sections 15 and 19 prior to utilizing section 29
As noted above, evidence in the administrative record supports the conclusion that sales by the exporter, Searle, were not domestic sales and were not made in the ordinary course of trade under competitive conditions. Since the sales by Searle did not meet the conditions of section 15 of SIMA, the normal value of the goods exported to Canada could not be determined pursuant to that section.
When the method for determining the normal value under section 15 cannot be used, section 19 of SIMA provides two alternate methods by which normal value may be determined. This section is used where the normal value of any goods cannot be determined under section 15 of SIMA, by reason that there were not a sufficient number of sales that complied with the terms and conditions of that section so as to permit a proper comparison with the sale of the goods to the importer in Canada.
The two alternate methods are: paragraph 19(a) of SIMA which provides for the use of sales of like goods by the exporter under investigation to a third country, and paragraph 19(b) of SIMA using a constructed cost plus approach. The choice of one of the alternate methods is at the option of the Commissioner, and in this case consideration was given to determining the normal value under paragraph 19(b).
Paragraph 19(b) of SIMA provides a method of determining normal values using a constructed cost approach. This paragraph provides for normal value determination on the basis of "the aggregate of (i) the cost of production of the goods, (ii) a reasonable amount for administrative, selling and all other costs, and (iii) a reasonable amount for profit".
The constructed cost approach requires reference to section 11 of the Special Import Measures Regulations (SIMR). This Section of the SIMR deals with the determination of (a) cost of production, (b) profits and (c) administrative, selling and all other costs.
A Reasonable Amount for Profits could not be Determined
A reasonable amount for profits based on the exporter's sales of like goods or goods that are of the same general category as the goods sold to Canada could not be determined under subparagraphs 11(1)(b)(i) and 11(1)(b)(ii) of the SIMR, since the sales were not made in the ordinary course of trade under competitive conditions.
Consideration was then given to determining a reasonable amount for profits based on sales by other domestic producers of like goods or goods that are of the same general category as the goods sold to Canada, under subparagraphs 11(1)(b)(iii) and 11(1)(b)(iv) of the SIMR. However, the CCRA could not determine such an amount as sales information of the other domestic producers, Mallinckrodt Inc. and Bristol-Myers Squibb (BMS), was not available due to their lack of cooperation in the investigation.
Further, a reasonable amount for profit could not be determined under subparagraph 11(1)(b)(v) on the basis of sales of the group or range of goods that is the next largest to the category referred to in subparagraph (iv) by the exporter, since Searle did not have any such sales.
Finally, in the absence of sales information from the other domestic producers, Mallinckrodt Inc. and BMS, it was not possible to determine a reasonable amount for profits for these producers' domestic sales of the group or range of goods that is the next largest to the category referred to in subparagraph (iv), under subparagraphs 11(1)(b)(vi).
Thus, the provisions of paragraph 11(b) of the SIMR were exhausted and the CCRA was unable to determine a reasonable amount for profit.
A Reasonable Amount for Administrative, Selling and all Other Costs could not be Determined
Since Searle's sales of like goods were not made in the ordinary course of trade under competitive conditions, a reasonable amount for administrative, selling and all other costs that are not included in the cost of production but are reasonably attributable to the production and domestic sales of like goods made by the exporter could not be determined under
ubparagraph 11(1)(c)(i) of the SIMR.
In the absence of specific information, a reasonable amount for administrative, selling and all other costs that are not included in the cost of production but are reasonably attributable to the production and sales of the subject goods could not be determined under
subparagraph 11(1)(c)(ii) of the SIMR. Thus, the provisions of paragraph 11(c) of the SIMR were exhausted and the CCRA was unable to determine a reasonable amount for administrative, selling and all other costs.
It was therefore not possible to determine the normal value of the goods exported by Searle under section 19 of SIMA using a constructed cost approach, since information was not available to determine a reasonable amount for profits and a reasonable amount for administrative, selling and all other costs.
In the absence of sufficient information to determine the normal value of the subject goods exported to Canada on the basis of sales of like goods by the exporter under section 15 of SIMA, or on a constructed cost methodology under section 19 of SIMA, the normal value of the goods was determined in a manner specified by the Minister of National Revenue pursuant to section 29 of SIMA.
RESPONSE TO REMAND 2 (a) - If the CCRA again determines to apply section 29 to establish normal value, it must explicitly delineate the adjustments made to normal value starting price to achieve comparability with the export price.
The CCRA has reconsidered the manner in which the normal values were determined for the subject contrast media exported to Canada by Searle for the final determination of dumping. Based on the facts available to the CCRA, the Commissioner of Customs and Revenue determined the normal value under section 29 of SIMA, in accordance with a ministerial specification.
The ministerial specification sets out the methodology for determining the normal value of the goods on the basis of domestic sales of like goods by one or more vendors in the country of export as selected by the CCRA, where the exporter provides all requested information, but its information cannot be used to determine the normal value.
In this case, the normal value was determined on the basis of the domestic sales of like goods by the vendor selected, Nycomed Inc. The starting point in determining the normal value of the like goods was the same starting point used in determining the export price of the subject goods, i.e. the first arm's length selling prices of the like goods to those hospital groups in the United States who purchased in comparable quantities as the hospital groups in Canada.
Rebates and discounts averaging a certain percentage of the gross selling price were deducted from the list price. No other adjustments were made.
Under Article 6.8 of the WTO Anti-dumping Agreement, the investigating authorities may make preliminary and final determinations, affirmative or negative, on the basis of facts available.
For reasons stated in responding to Remand 1, the normal value of the goods exported to Canada could not be determined under section 15 or section 19 of SIMA. As such, the normal value was determined under section 29 of SIMA, on the basis of sales by a selected vendor of like goods in the United States. The objective of the CCRA was to establish a normal value based on the facts available that, in the circumstances, would permit the fairest comparison possible with the export price.
The normal value was determined on the basis of the selling price by Nycomed Inc. to unrelated end-users in the United States in the ordinary course of trade under competitive conditions, who purchased the like goods in comparable quantities to the end-users in Canada, less applicable rebates and discounts. It is recognized that the normal value was not determined at the ex-factory point of shipment in Puerto Rico. However, having selected another vendor, that vendor's
ex-warehouse normal value would reflect or be representative of the normal value of the like goods sold in the domestic market. A comparison of the export price with the normal value determined for goods sold by the selected vendor would fairly indicate the extent to which dumping of the goods is occurring.
Therefore, it is the position of the CCRA that, by substituting another vendor's domestic sales on which to base normal value, the normal value determined at that vendor's point of direct shipment fairly represents the normal value of like goods when sold to domestic customers in the ordinary course of trade under competitive conditions. In this case, the normal value of the goods was determined on the facts available and was based on the submission by Nycomed Inc. with respect to its domestic sales.
RESPONSE TO REMAND 2 (b) - Margins of Dumping were not created solely by the Administration of SIMA but were also caused by distribution factors.
It is the position of the CCRA that the margins of dumping were not created solely by the administration of SIMA but were also caused by distribution factors.
The CCRA has prepared these final results of determination pursuant to the remand order from the Article 1904 Binational Panel in the matter of Certain Iodinated Contrast Media used for Radiographic Imaging, originating in or exported from the United States of America (including the Commonwealth of Puerto Rico) (Secretariat File No.CDA-USA-2000-1904-01). In accordance with the Article 1904 Binational Panel's instructions, the Commissioner has, on February 24, 2003, re-examined and confirmed the final determination of dumping with respect to iodinated contrast media for radiographic imaging, in solutions of osmolality less than 900 mOsm/kg H2O, originating in or exported from the United States of America (including the Commonwealth of Puerto Rico).
The Binational Panel has 90 days to review the Commissioner's Determination on Remand.
Notice of this determination on remand is being published in the Canada Gazette pursuant to paragraph 41.1 (2)(b) of SIMA.
This Statement of Reasons has been provided to persons directly interested in these proceedings. It is also available on the CCRA's website at:
http://www.cbsa-asfc.gc.ca/sima-lmsi/menu-eng.html
A free copy may be obtained upon request.
For further information, please write to Richard Chung at the following address:
Anti-dumping and countervailing directorate
Canada customs and revenue agency
Anti-dumping and countervailing directorate
191 laurier avenue west, 19th floor
Ottawa, ontario k1a 0l5
Canada
This officer can also be reached by fax at (613) 954-2510 or at (613) 954-7253.
Suzanne parent
Director General
Anti-Dumping and Countervailing Directorate
