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Anti-dumping and Countervailing Program
Preliminary Determination - Waterproof Footwear and Waterproof Footwear Bottoms
OTTAWA, September 9, 2002
File No. 4261-125
Case No. AD/1284
STATEMENT OF REASONS
Concerning a preliminary determination of dumping pursuant to subsection 38(1) of the Special Import Measures Act regarding
THE DUMPING OF CERTAIN WATERPROOF FOOTWEAR
AND
WATERPROOF FOOTWEAR BOTTOMS, ORIGINATING IN OR EXPORTED FROM HONG KONG, CHINA; MACAO, CHINA; AND VIETNAM
DECISION
Pursuant to subsection 38(1) of the Special Import Measures Act (SIMA), the Commissioner of Customs and Revenue has today made a preliminary determination of dumping regarding certain waterproof footwear and waterproof footwear bottoms, originating in or exported from Hong Kong, China; Macao, China; and Vietnam.
This Statement of Reasons is also available in French. Please refer to the "Information" section.
Cet énoncé des motifs est également disponible en français. Veuillez consulter la section « Renseignements ».
CONTENTS
- SUMMARY
- INTERESTED PARTIES
- BACKGROUND
- CANADIAN INDUSTRY
- IMPORTS OF SUBJECT GOODS
- THE INVESTIGATION
- SUMMARY OF RESULTS
- DECISION
- PROVISIONAL DUTIES TO BE IMPOSED
- FUTURE ACTION
- UNDERTAKINGS
- PUBLICATION
- INFORMATION
- Appendix 1
- Appendix 2
STATEMENT OF REASONS
SUMMARY
On April 26, 2002, the Commissioner of Customs and Revenue (Commissioner) initiated an investigation respecting the alleged injurious dumping of certain waterproof footwear and waterproof footwear bottoms, originating in or exported from Hong Kong, China; Macao, China; and Vietnam. The investigation was initiated in response to a complaint filed by the Shoe Manufacturers' Association of Canada (SMAC) of Beaconsfield, Quebec.
On receiving notice of the investigation, the Canadian International Trade Tribunal (Tribunal) started its preliminary injury inquiry. On June 25, 2002, the Tribunal made a preliminary determination that the evidence disclosed a reasonable indication that the alleged dumping of the subject goods has caused injury to the domestic industry.
On July 17, 2002, pursuant to paragraph 39(1)(a) of SIMA, the Commissioner extended to 135 days the time period for rendering a preliminary determination or for terminating the investigation in whole or in part, due to the complexity and novelty of the issues presented by the investigation.
As a result of the Canada Customs and Revenue Agency's (CCRA) preliminary investigation, the Commissioner is satisfied that the subject goods have been dumped, that the margins of dumping are not insignificant and that the volume of dumped goods is not negligible. Accordingly, the Commissioner has made a preliminary determination of dumping in accordance with subsection 38(1) of SIMA.
INTERESTED PARTIES
Complainant and the Canadian Industry
The complainant, SMAC, is located in Beaconsfield, Quebec, and acts as a representative for the footwear manufacturing industry in Canada. The complaint is supported by six producers who are members of SMAC: Acton International Inc. (Acton), Baffin Inc. (Baffin), Genfoot Inc. (Genfoot), Les Chaussures Régence (Régence), Rallye Footwear Inc. (Rallye) and Chaussures Yeti Inc. (Yeti). These six firms account for more than 95 per cent of all Canadian production of the subject goods. The complainant and the supporting producers are listed with their addresses in Appendix 1.
Exporters
The CCRA has identified 77 exporters of the subject goods located not only in the named countries, but in other countries as well. Where there were a large number of exporters in a country of export, the CCRA limited its examination of dumping to a sampling of exporters, pursuant to subsection 30.3(1) of SIMA. The sampling was based on exporters whose combined shipments to Canada represent a substantial portion of the subject goods exported from that country, during the calendar year 2001.
Importers
The CCRA identified 57 importers of subject goods. The CCRA also limited its detailed examination of imports to those importers whose combined importations represent a substantial portion of the subject goods imported into Canada during the calendar year 2001.
BACKGROUND
An anti-dumping complaint was filed on behalf of SMAC on March 6, 2002. On March 27, 2002, the CCRA informed SMAC that its complaint was properly documented. At the same time, the governments of Hong Kong, China (hereinafter referred to as Hong Kong, except in the definition of the subject goods); Macao, China (hereinafter referred to as Macao, except in the definition of the subject goods); and Vietnam were notified that a properly documented complaint had been received.
On April 26, 2002, the Commissioner initiated a dumping investigation and notified the Tribunal of that decision. The Tribunal subsequently initiated a preliminary injury inquiry into whether the evidence discloses a reasonable indication of injury, retardation or threat of injury caused by the dumping of the goods. On June 25, 2002, the Tribunal concluded that the evidence disclosed a reasonable indication that the alleged dumping has caused injury.
There have been two past findings concerning waterproof footwear. The footwear covered by the findings is described in the Tribunal's expiry review inquiry RR-97-001 (October 20, 1997) and the Tribunal's finding NQ-2000-004 (December 8, 2000). The anti-dumping measures in both cases apply to imports from the People's Republic of China (China). The Tribunal's order in expiry review RR-97-001 reflects a 20-year-old finding by the Anti-dumping Tribunal (ADT-2-82) April 23, 1982, which covered waterproof rubber footwear only, as plastic was not widely used in the manufacture of waterproof footwear at that time. As waterproof footwear items of other materials appeared, the Anti-dumping Tribunal finding could not be broadened to include them. Consequently, pursuant to another anti-dumping investigation, the Tribunal's inquiry (NQ-2000-004) dealt with waterproof plastic footwear and certain items of waterproof rubber footwear that had either been omitted from the original inquiry in 1982 or excluded by the Tribunal's expiry review RR-97-001 in 1997.
Product Information
Product - Subject Goods Definition
For the purpose of this investigation the subject goods are defined as:
"waterproof footwear and waterproof footwear bottoms, constructed wholly or in part of rubber or plastic, worn over the foot or shoe, originating in or exported from Hong Kong, China; Macao, China; and Vietnam. The distinctive feature of waterproof footwear is that both the sole portion and a portion of the upper, sufficient to give waterproof protection to the foot, are incorporated in a waterproof component that may be made of rubber or plastic. The goods subject to this investigation include moulded clogs, waterproof safety footwear and waterproof footwear made of waterproof footwear bottoms combined with tops made of leather, textiles or other materials. They may be constructed with or without liners, linings, fasteners or safety features."
Excluded from the definition of subject goods are equestrian riding boots, ski boots and skating boots.
The product information and definitions that follow are an integral part of the description of the goods that are subject to this investigation.
Product Information
Waterproof footwear described as "waterproof rubber footwear" is produced, wholly or in part of natural rubber and/or synthetic rubber, by vulcanization, injection moulding or other processes. The term synthetic rubber includes thermoplastic rubber (TPR).
Waterproof footwear described as "waterproof plastic footwear" is constructed wholly or in part of plastic. It is made from plastic resins by injection moulding or other processes. The term "plastic" includes polyvinyl chloride (PVC), polyurethane (PU) and other plastics. PVC is the plastic most commonly used to date in this class of footwear.
Waterproof rubber footwear and waterproof plastic footwear include footwear worn over the foot or shoe, with or without liners, linings, fasteners or safety features. These include red sole rubber boots, city boots, rain boots, hunting and fishing boots, hip waders and chest waders. In certain styles, such as duck shoes or winter boots, a boat-like (or shell-like) waterproof bottom may have trimmings, attachments, liners, cuffs or tops of nylon or other materials.
The product range of subject goods includes footwear manufactured for men, women, youth, misses and children.
Definitions
The following are specific definitions respecting the footwear that are subject to this investigation.
"Footwear with waterproof bottoms" is characterized by two major components: a "bottom" of plastic or rubber that is waterproof, and a "top". In such footwear, the waterproof bottom comprises the sole and the lower portion of the upper. The term "bottoms" should not be confused with "sole", a portion of footwear that extends from the ground to the sole of the foot. "Top", which comprises the top portion of the upper in certain styles, varies greatly in height and design, and may be made of leather, plastic, fabrics, coated fabrics or other materials. The bottoms and tops of waterproof footwear may be joined by stitching. The tops, which in many instances are assembled by stitching, have seams that may or may not be treated with an adhesive or other substance to inhibit the entry of water. In other cases, waterproof bottoms may be affixed to tops by other means such as direct-injection. Refer to related definition of "Waterproof footwear bottoms" below.
"Moulded clogs" are typically made from plastic or rubber by moulding to produce a clog designed for use in gardening or similar pursuits. Clogs may be open or closed at the heel.
"Thermoplastic rubber" is a thermoplastic elastomer, developed in the 1970s, that has been used in the manufacture of waterproof footwear since the early 1980s. This material has many of the physical properties of rubber but, unlike conventional rubber, it is processed as a thermoplastic material and is not vulcanized. Vulcanization, a thermosetting process, is slow and irreversible. With TPR, the process from molten material to a solid, rubber-like object, which is rapid and reversible, takes place upon cooling.
"Waterproof footwear", for the purpose of this investigation, includes most of the footwear classified under the Harmonized System (HS) heading 6401. It also includes certain footwear with waterproof bottoms and tops of any material, assembled by stitching or other means, that are classified in Chapter 64 under subheadings of 6402, 6403 and 6404, and not under HS 6401.
"Waterproof footwear bottoms" for use in the manufacture of subject footwear are classified as incomplete footwear under HS subheading 6401.99, and more specifically, under HS classification numbers 6401.99.21 if rubber or 6401.99.30 if plastic. Waterproof footwear bottoms are boat-like (or shell-like) components that are combined with tops made of leather, nylon, plastic, coated fabrics or other materials to form articles of finished waterproof footwear. The distinctive feature of waterproof bottoms is that both the outer sole portion and a portion of the upper, sufficient in height to give waterproof protection to the foot, are incorporated into a waterproof component. Waterproof footwear bottoms may be made by the traditional process of cutting components from sheets of rubber, assembling by cement and vulcanizing. Alternatively, waterproof footwear bottoms may be made of thermoplastic rubber by injection moulding. Waterproof footwear bottoms may also be made from plastic resins by injection moulding.
"Waterproof plastic footwear" is made of plastic resins by injection moulding or other moulding processes. The external surface may be made entirely of plastic, as in the case of rain boots. In other styles, such as duck shoes, footwear of moulded plastic may be provided with trimmings or attachments of other materials. Waterproof plastic footwear styles, which are frequently designed to resemble rubber footwear, are widely sold and used as substitutes for rubber footwear.
"Waterproof rubber footwear" is made in many instances by the traditional method commonly referred to as "lay-up" or "vulcanized". Alternatively, waterproof rubber footwear can be made of thermoplastic rubber by the injection moulding process.
"Waterproof safety footwear" includes waterproof footwear made with safety features, whether or not it meets established CSA standards. Safety features include any reinforcement made to the footwear either by adding extra layers of material or by incorporating other materials to reinforce the footwear.
Footwear Excluded from this Investigation
The following are specific definitions respecting the footwear that are excluded from this investigation:
"Equestrian riding boots" designed for use in horse riding are excluded from this complaint. They may be made from either rubber or plastic and are classified under the HS classification number 6401.10.11.00 or 6401.91.11.00 if made of rubber and under the HS classification number 6401.91.20.00 if made of plastic.
"Ski boots" are boots designed for use in downhill skiing.
"Skating boots" are designed to be fitted with skate blades and used for ice skating.
Other Industry Definitions
"Sole" refers to that portion of an item of footwear which extends from the ground to the bottom of the foot.
"Top" refers to that component or portion of an upper which is attached to a waterproof footwear bottom by stitching or other means.
"Upper" refers to that part of any footwear that extends upward from the sole to the uppermost part of the finished product. For the purposes of this investigation the relevant definition of "the upper", its constituent material and the terms "rubber" and "plastics" are found in the HS general notes of Section XII, Chapter 64, notes (D) and (E).
Production Processes
The goods subject to this investigation may be manufactured by the traditional lay-up and vulcanization process, by moulding processes such as injection-moulding, by the direct injection process or by other processes.
Waterproof footwear may be produced using the injection-moulding process alone or in combination with the stitched product process. An example of a product made solely by injection-moulding is a PVC rain boot. On the other hand, the injection-moulding process and stitching could be used in combination to produce a rubber-bottom, nylon-top winter boot.
The following provides an overview of various processes which may be used in manufacturing waterproof footwear:
In the vulcanization process (occasionally referred to as "lay-up"), natural and synthetic rubber are compounded with specialty chemicals and formed into sheets. Footwear parts are then cut from the sheets of rubber. The parts are then laid up on forms and secured with rubber cement. The laid-up footwear is then vulcanized in an oven so that the rubber is irreversibly cured.
In the injection moulding process, a granulated chemical compound of either PVC or TPR is heated and injected into steel moulds installed in moulding machines. Each mould dictates the size, style and number of colours of a moulded item. When the chemical is forwarded to the moulding machine, it is vacuumed into the hopper and pushed into a heated barrel. A screw inside the barrel generates additional heat to melt the compound and then injects it into a mould. The resulting product may consist of an unfinished waterproof bottom or an item of waterproof footwear such as a rain boot. The moulded items are then cooled, extracted and trimmed. Components and markings are added before the finished footwear is packed for shipping.
In the direct injection process, a suitable material such as polyurethane is injected into a mould that is fitted to a lasted footwear upper typically made of leather. The result is that a directly injected waterproof bottom is affixed permanently to the upper without stitching.
Complex waterproof footwear, such as winter boots, consists of waterproof bottoms that are attached by the simple process of stitching to tops that may be made of leather, textiles or other materials.
Classification of Imports
The subject goods in finished form are normally classified under HS headings 6401, 6402, 6403 and 6404.
The following are the 26 specific 10-digit HS classification numbers under which the subject goods are imported:
|
HS Numbers - 1 |
HS Numbers - 2 |
HS Numbers - 3 |
HS Numbers - 4 |
|---|---|---|---|
|
6401.10.19.00 6401.10.20.00 6401.91.19.00 6401.91.20.00 6401.92.91.10 6401.92.91.90 6401.92.92.90 6401.99.21.00 6401.99.29.00 6401.99.30.10 6401.99.30.90 |
6402.19.90.90 6402.91.00.10 6402.91.00.91 6402.91.00.92 6402.91.00.93 |
6403.40.00.10 6403.91.00.10 6403.91.00.91 6403.91.00.92 6403.91.00.93 |
6404.11.99.90 6404.19.90.20 6404.19.90.91 6404.19.90.92 6404.19.90.93 |
Canadian Industry
The Canadian industry for the subject footwear is now composed of the six producers listed in Appendix 1. Five years ago this was an industry of nine producers. Since then, four firms have left the industry and one has joined it.
Carlaw Manufacturing Ltd. and Maple Leaf Shoe Company closed in 1998 after years of financial difficulty. Bata Shoe Company Ltd. closed all of its domestic manufacturing operations in the second half of 1999. Kaufman Footwear, a large producer of high-end products that it marketed under the name Sorel, declared bankruptcy in July 2000. Régence, an established producer of women's footwear, acquired certain assets of Maple Leaf Shoe Company and began producing waterproof footwear in 1999.
Imports of Subject Goods
Before making a preliminary determination of dumping, the Commissioner must be satisfied that the actual and potential volume of dumped goods is not negligible. If the volume of dumped goods from a country is less than 3 per cent of the total volume of like goods released into Canada from all countries during the period of investigation, the volume is considered to be negligible.
In its complaint, SMAC identified 26 10-digit codes under which subject waterproof footwear may be properly classified (these codes are listed above). In some classes, notably those of heading 6401, SMAC indicates that all goods classified under this heading are subject goods. Under the 10-digit classifications of headings 6402, 6403, and 6404, the complainant indicates that broad varieties of subject and non-subject goods may be found within the same 10-digit classifications. Accordingly, SMAC compiled and analysed monthly data since January 1998 under each of the 26 10-digit headings for Hong Kong, Macao, Vietnam and the rest of the world.
SMAC concluded its examination of imports by focusing closely on the six 10-digit classes believed to capture most of the subject imports for men (6402.91.00.91, 6403.91.00.91 and 6404.19.90.91) and children (6402.91.00.93, 6403.91.00.93 and 6404.19.90.93). Imports from subject countries, as well as from the rest of the world, were also estimated on this basis. Based on a review of the information presented by the complainant and other available information, the CCRA was satisfied at initiation that the complainant's approach in estimating the total volume of imports was reasonable.
In order to further examine the issue of volumes of subject goods for purposes of the preliminary determination, supplemental questionnaires were sent during the preliminary phase of the investigation to all identified importers and exporters of footwear under the 26 HS classification numbers identified by the complainant. The purpose was to obtain the total volume of goods that were released into Canada from all countries and that are of the same description as the dumped goods. The questionnaires asked the importers and exporters to provide the total volume and value of footwear imported from each subject country and from the rest of the world during the period of investigation, and to provide information separately on like goods and non-subject goods.
At this time, there are insufficient complete responses to the importer and exporter questionnaires. As a result, the total volume of goods that were released into Canada from all countries and that are of the same description as the dumped goods must be determined based upon the information available. The information available is the information provided by SMAC at the time of the initiation. Based upon this information, the CCRA maintains that the actual and potential volume of dumped subject goods from each of Hong Kong, Macao and Vietnam is not negligible.
The Hong Kong government made representations to the CCRA that Hong Kong should not be included in the investigation as import volumes were negligible.
Verification visits to exporters located in Hong Kong and meetings with Hong Kong government and industry officials were held during July 2002. The government officials and the exporters that were visited by the CCRA provided information respecting shipments of subject goods to Canada. During the verification meetings in Hong Kong, two industry associations, the Hong Kong Leather Shoe and Shoe Material Merchants Association Ltd. and the Hong Kong Rubber and Footwear Manufacturers' Association agreed to petition their members to obtain additional information for the CCRA. That information has not yet been provided. Accordingly, with the expectation of additional information being provided, no change has been made from the initiation of the investigation with respect to import volumes from Hong Kong for purposes of the preliminary determination of dumping.
The question of negligible volumes now rests with the Tribunal. The CCRA will continue to research the matter and will provide data to the Tribunal as required. Should any of the countries fail to meet the negligibility tests subsequent to this decision, it will be up to the Tribunal to remove that country from the investigation.
THE INVESTIGATION
The preliminary phase of the investigation covered subject goods shipped to Canada from January 1, 2001 to March 31, 2002.
Generally, a normal value is based on the domestic selling prices of the goods in the country of export, or the total cost of the goods (cost of production, administrative, selling and all other costs), plus an amount for profit. The export price of subject goods shipped to Canada is normally the lesser of the exporter's ex-factory selling price or the importer's purchase price. When the export price is less than the normal value, the difference is the margin of dumping.
All known importers of subject goods were contacted at the time of the initiation of the investigation and were requested to respond to a questionnaire concerning subject goods imported into Canada during the period of investigation. In response, complete submissions were received from only five importers of subject goods. Based on a lack of response to the initial request for information, the CCRA issued supplementary requests for information to all listed importers. Responses to these requests are due to be received during the final phase of the investigation.
In view of the large number of exporters, the CCRA limited the number of exporters to be investigated pursuant to subsection 30.3(1) of SIMA. A questionnaire was sent to those exporters that collectively account for a substantial quantity by volume of subject goods exported to Canada during the calendar year 2001. The exporters that were sent questionnaires are considered to be mandatory respondents. Further, where a mandatory respondent was not the producer of the goods, the CCRA requested such a respondent to forward a copy of the CCRA's questionnaire to all of their unrelated producers/suppliers.
Other exporters, who were not sent full questionnaires, were advised of the initiation of this investigation and requested to provide limited information concerning the company and its exports to Canada. These exporters were advised that if they wanted to make a full voluntary submission, they could have done so by requesting a copy of the exporter questionnaire from the officer identified in the Information section of this document.
For purposes of the preliminary determination, margins of dumping were determined in the following manner:
- for imports from an exporter who was part of the sampling of exporters sent a request for information questionnaire and has fully complied with the CCRA's request for information and permitted the verification of the information, the margins of dumping were based on the estimated weighted average margin of dumping determined for that exporter;
- for imports from an exporter who was not part of the sampling and who did not make a submission, the margins of dumping were based on the estimated weighted average margin of dumping for sampled exporters in the respective country of export, that cooperated;
- for imports from an exporter who was not part of the sampling but made a complete submission and permitted verification of its information, the margins of dumping would have been based on the estimated weighted average margin of dumping determined for that exporter;
- for imports from an exporter who was not part of the sampling but made an incomplete submission, the margins of dumping were based on the estimated highest margin of dumping determined for sampled exporters in the respective country of export, that cooperated;
- for imports from an exporter who was part of the sampling and failed to provide a complete response or failed to allow full verification of the information provided, the margins of dumping were based on the highest estimated margin of dumping determined for the sampled exporters in the respective country of export, that cooperated; and
- where the CCRA was unable to estimate margins of dumping because of late submissions, incomplete submissions or lack of cooperation by exporters in the sample in any of the named countries, the margin of dumping was based on the highest estimated margin of dumping determined for the investigation.
In the past, the CCRA has considered Vietnam to be a non-market economy with the result that the normal values for imports from Vietnam have been determined on the basis of sales of like goods in a third or surrogate country pursuant to section 20 of SIMA. In this investigation, the Government of Vietnam and exporters in Vietnam were given the opportunity to provide information so that the Commissioner could form an opinion concerning the market economy conditions of the waterproof footwear sector in Vietnam.
The Government of Vietnam provided a response to the questionnaire sent by the CCRA at the initiation of the investigation.
In response to the exporter questionnaire, submissions were received from one exporter in Macao, and three exporters in Vietnam. No complete response to the exporter questionnaire was received from exporters in Hong Kong.
REPRESENTATIONS CONCERNING THE INVESTIGATION
On August 23, 2002, the Government of Vietnam made written representations to the CCRA that all commercial transactions of footwear products in Vietnam, in terms of both production and export sales, are conducted on the basis of market criteria. The Government of Vietnam objected to the allegation that the economy of Vietnam, or the footwear industry in particular, operates under non-market conditions. The CCRA will continue to examine this issue during the final phase of the investigation.
RESULTS OF THE INVESTIGATION
In this section, margins of dumping are expressed as a percentage of export price. A summary of the margins of dumping may be found in Appendix 2.
Hong Kong
No complete submissions were received from any exporters of subject goods located in Hong Kong. As a result, for exporters in Hong Kong that were requested to provide a complete response to the request for information questionnaire, the estimated margin of dumping is 187 per cent. This represents the highest margin of dumping found for a cooperating exporter in the investigation.
For exporters in Hong Kong that were not requested to provide a complete response to the request for information questionnaire, the margins of dumping were based on the estimated weighted average margin of dumping for sampled exporters in the investigation that cooperated. As a result, the estimated margin of dumping for the exporters in Hong Kong that were not requested to provide a complete response to the request for information questionnaire is 42 per cent.
Macao
The only exporter of subject goods originating in or exported from Macao that provided a complete submission was Sunrise Footwear Limited (Sunrise), a subsidiary of Symphony Holdings Limited. A verification of the information provided by Sunrise was conducted at the company's offices in Macao and Hong Kong. The information provided by Sunrise was sufficient to estimate a margin of dumping for the preliminary determination.
Estimated Normal Values - Sunrise did not have domestic sales of like goods during the period of investigation. As a result, normal values for Sunrise were estimated based upon paragraph 19(b) of SIMA, on the basis of the cost of production of the goods, an amount for selling, administrative and all other costs, and a reasonable amount for profit.
Estimated Export Prices - As the goods were sold to unrelated importers in Canada, export prices were estimated pursuant to section 24 of SIMA, on the basis of the exporter's selling price.
Estimated Margin of Dumping - For the subject goods shipped to Canada by Sunrise during the period of investigation, 100 per cent were estimated to have been dumped. The estimated margins of dumping for the dumped goods ranged from 11 per cent to 187 per cent. The estimated weighted average margin of dumping for all subject goods exported to Canada by Sunrise is 26 per cent.
For exporters in Macao that were requested to provide a complete response to the exporter questionnaire but did not, the estimated margin of dumping is 187 per cent. This represents the highest margin of dumping found for a cooperating exporter in the investigation.
For exporters in Macao that were not requested to provide a complete response to the exporter questionnaire and did not, the estimated margin of dumping is 26 per cent. This represents the weighted average margin of dumping for the co-operating exporter in Macao in the period of investigation.
Vietnam
A response to the CCRA questionnaire was received from the Government of Vietnam. Responses were also received from three exporters in Vietnam, as follows:
General Shoes Co., Ltd. (General Shoes) of An Phu Town, Binh Duong Province, Vietnam; Lac Ty Co., Ltd. (Lac Ty) of Ho Chi Minh City, Vietnam and Pou Yuen Vietnam Enterprise Ltd. (Pou Yuen) of Ho Chi Minh City, Vietnam
Section 20 of SIMA is applicable in determining normal values when the government of a country has a monopoly on its export market and substantially determines the domestic prices of the industry. In such circumstances, normal values are generally based on the domestic prices or on the full cost of the subject goods in a surrogate country operating under market conditions.
After reviewing the information provided by the Government of Vietnam, as well as information provided by the three exporters in Vietnam that responded to the exporter questionnaire, the CCRA issued supplementary questionnaires to the government and the exporters. A response to the supplementary questionnaire was received from the Government of Vietnam on August 23, 2002.
In view of the amount of information provided and supplemental information requested, the CCRA has not completed its analysis on the issue of whether section 20 of SIMA is applicable to exports from Vietnam. Therefore, for purposes of the preliminary determination, normal values will continue to be estimated based on section 20 of SIMA. After the response of the Government of Vietnam to the supplemental questionnaire has been analysed, and after responses have been received to the supplemental questionnaires sent to the three exporters in Vietnam, verification visits to the government and exporters of the subject goods may be conducted to obtain clarification deemed essential to enable the Commissioner to form an opinion on the matter of section 20 of SIMA for purposes of the final determination.
The CCRA contacted footwear producers in six surrogate countries to obtain the information necessary to establish normal values. One producer in Malaysia has responded to the request for information, but the submission was incomplete. None of the other producers contacted have responded to date. While information was available from one exporter in Macao, using information from only one exporter to estimate normal values could reveal confidential information of that exporter to the exporters in Vietnam.
Since information from surrogate countries is not available for the preliminary determination, the normal values and export prices for subject goods shipped to Canada by General Shoes, Lac Ty and Pou Yuen, and the non-sampled exporters in Vietnam, were estimated using the information available, that is, the information provided in the complaint at the time of the initiation of the investigation. That information included an estimate of export prices based upon retail selling prices, deducting amounts for retail margin and handling costs, for three models of subject goods from Vietnam, and an estimate of normal values based upon the full cost in Vietnam of producing the same three models. As a result, 100 per cent of the total volume of subject goods imported from these exporters is estimated to be dumped. The weighted average margin of dumping for each of these exporters is estimated to be 72 per cent.
For exporters in Vietnam that were requested to provide a response to the exporter questionnaire but did not, the estimated margin of dumping on all shipments of subject goods is 187 per cent. This represents the highest margin of dumping found for a cooperating exporter in the investigation.
For exporters in Vietnam that were not requested to provide a complete response to the exporter questionnaire and did not, the estimated margin of dumping is 72 per cent. This represents the weighted average margin of dumping for the co-operating exporters in Vietnam in the period of investigation.
SUMMARY OF RESULTS
Before making a preliminary determination of dumping, the Commissioner must be satisfied that the actual and potential volume of dumped goods is not negligible and that the estimated margins of dumping are not insignificant. If the volume of dumped goods from a country is less than 3 per cent of the total volume of like goods released into Canada from all countries during the period of investigation, the volume is considered to be negligible. Based upon the information available for the preliminary determination, the total actual and potential volume of all imports of dumped subject goods from each of Hong Kong, Macao and Vietnam during the period of investigation is not negligible.
Subsection 2(1) of SIMA stipulates that the estimated margin of dumping is considered to be insignificant if it is less than 2 per cent of the export price of the goods. As shown in Appendix 2, the estimated margins of dumping are not insignificant since they exceed 2 per cent.
DECISION
Based on the preliminary results of the investigation, the Commissioner is satisfied that the subject goods originating in or exported from Hong Kong, Macao, and Vietnam have been dumped, that the volume of goods is not negligible, and that the estimated margin of dumping is not insignificant.
Accordingly, on September 9, 2002, the Commissioner has made a preliminary determination of dumping pursuant to subsection 38(1) of SIMA.
PROVISIONAL DUTIES TO BE IMPOSED
In order to prevent further injury from dumped imports, provisional duty will be applied to all subject goods imported into Canada from Hong Kong, Macao, and Vietnam on or after September 9, 2002, as per subsection 8(1) of SIMA.
The amounts of provisional duty are based on the estimated margins of dumping found during the period of investigation. The duty to be collected is provided in Appendix 2.
Provisional duty is payable by the importer and is applied on all subject imports until the day the Tribunal makes its final ruling on injury. However, if the investigation is terminated by the CCRA or there is an undertaking arrangement, provisional duty will no longer be applied to the imported goods.
Importers are required to pay provisional duty in cash or by certified cheque. Alternatively, they may post security equal to the amount payable. Importers should contact their regional customs office if they require further information on the payment of provisional duty or the posting of security.
FUTURE ACTION
The Canada Customs and Revenue Agency
The CCRA will continue its investigation of the dumping and will, by December 9, 2002, make a final decision. If the margin of dumping is insignificant, 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 Canadian International Trade Tribunal
The Tribunal will now begin its full injury inquiry and conduct a public hearing into the question of injury. The Tribunal is required to issue its final decision not later than January 8, 2003.
If the Tribunal finds that the dumping has not caused injury or is not threatening to cause injury, then proceedings will be terminated and all provisional duties collected will be refunded. If a decision of injury is made, anti-dumping duty will be imposed on imports of the subject goods.
Retroactive duty on massive importations
Under certain circumstances, anti-dumping duty can be imposed retroactively on subject goods imported into Canada.
When the Tribunal conducts its inquiry on material injury to the Canadian industry, it may consider if dumped goods that were imported close to or after the initiation of the investigation constitute massive importations over a relatively short period of time and have caused injury to the Canadian industry. Should the Tribunal issue a finding that there were recent massive importations of dumped goods that caused injury, imports of subject goods released by the CCRA in the 90 days preceding the day of the preliminary determination could be subject to anti-dumping duty.
UNDERTAKINGS
After a preliminary determination of dumping, the Commissioner may accept undertakings that eliminate the margin of dumping of the goods, or that eliminate the injury caused by the dumping. Acceptable undertakings must account for all or substantially all of the exports to Canada of the dumped goods. If undertakings are accepted, the imposition of provisional duty will be suspended.
In view of the time needed for consideration of undertakings, written undertaking proposals should be made as early as possible, and no later than 60 days after the preliminary determination of dumping.
The legislation allows all interested parties to make representations concerning any undertaking proposals. The CCRA will maintain a list of interested parties and will notify them should an undertaking proposal be received. Persons wishing to be notified must provide their name, address, telephone, fax, or e-mail address, to one of the officers listed below. Interested parties may also consult the Internet website noted below for information on undertakings offered in this investigation. A notice will be posted on the website when an undertaking proposal is received. Interested parties have nine days from the date the undertaking offer is received to make representations.
PUBLICATION
Notice of the initiation of this investigation is being published in the Canada Gazette pursuant to paragraph 38(3)(a) of SIMA.
INFORMATION
This Statement of Reasons has been provided to persons directly interested in these proceedings. A free copy may be obtained upon request or from the CCRA's Web site at the address below. For further information, please contact Mr. Jody Grantham or Mr. Bob Cousineau, as follows:
Canada Customs and Revenue Agency
Anti-dumping and Countervailing Directorate
19th Floor, Sir Richard Scott Building
191 Laurier Avenue West
Ottawa, Ontario K1A 0L5
Canada
Or
Jody Grantham: (613) 954-7405
Bob Cousineau: (613)954-7243
Or
FAX (613) 954-2510
Or
jody.grantham@ccra-adrc.gc.ca
robert.cousineau@ccra-adrc.gc.ca
Suzanne Parent
Director General
Anti-dumping and Countervailing Directorate
Appendix 1
Canadian Manufacturers of Waterproof Footwear
Association
Shoe Manufacturers' Association of Canada
PO Box 223
Beaconsfield, Québec
H9W 5T7
Domestic Producers
Acton International Inc.
881, rue Landry
Acton Vale, QC
J0H 1A0
Baffin Inc.
346 Arvin Avenue
Stoney Creek, ON
L8E 2M5
Chaussures Yeti Inc.
9935 St. Vital
Montreal-Nord, QC
H1H 4S5
Genfoot Inc.
554 Montée de Liesse
Montreal, QC
H4T 1P2
Les Chaussures Régence Inc.
655, rue de L'argon
Charlesbourg, QC
G2N 2G7
Rallye Footwear Inc.
10310, bulevard Ray Lawson
Ville D'Anjou, QC
H1J 1M1
Appendix 2
Summary of Preliminary Determination Estimated Margins of Dumping per Exporter for certain Waterproof Footwear and Waterproof Footwear Bottoms
|
Exporters |
% of Dumped Goods |
Range of Margins of Dumped Goods (% of Export Price) |
Weighted Average Margin of Dumping (% of Export Price) |
Provisional Duties to Be Imposed (% of the Export Price) |
|---|---|---|---|---|
|
Hong Kong |
||||
| Non-sampled exporters |
100% |
42% |
42% |
42% |
| All other exporters |
100% |
187% |
187% |
187% |
|
Macao |
||||
| Sunrise |
100% |
11% to 187% |
26% |
26% |
| Non-sampled exporters |
100% |
26% |
26% |
26% |
|
All other exporters |
100% |
187% |
187% |
187% |
|
Vietnam |
||||
| General Shoes Co., Ltd. |
100% |
72% |
72% |
72% |
| Lac Ty Co., Ltd. |
100% |
72% |
72% |
72% |
| Pou Yuen Vietnam Enterprise Ltd. |
100% |
72% |
72% |
72% |
| Non-sampled exporters |
100% |
72% |
72% |
72% |
|
All other exporters |
100% |
187% |
187% |
187% |
Note: Margin of dumping expressed as a percentage of the export price.
