Anti-dumping and Countervailing Program

Wood Venetian Blinds and Slats

4249-33
AD/1306

STATEMENT OF REASONS

Concerning the preliminary determination of dumping pursuant to subsection 38(1) of the Special Import Measures Act regarding

WOOD VENETIAN BLINDS AND SLATS ORIGINATING IN OR EXPORTED FROM MEXICO AND THE PEOPLE'S REPUBLIC OF CHINA

DECISION

On February 19, 2004, in accordance with subsection 38(1) of the Special Import Measures Act, the President of the Canada Border Services Agency (formerly the Commissioner of Customs and Revenue) made a preliminary determination of dumping respecting wood venetian blinds and slats originating in or exported from Mexico and the People's Republic of China.

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TABLE OF CONTENTS

SUMMARY
BACKGROUND
PERIOD OF INVESTIGATION
INTERESTED PARTIES

• COMPLAINANT
• EXPORTERS
• IMPORTERS

PRODUCT INFORMATION

• DEFINITION
• PRODUCT INFORMATION
• CLASSIFICATION OF IMPORTS

CANADIAN INDUSTRY
IMPORTS INTO CANADA
INVESTIGATION
VOLUME OF DUMPED GOODS
REPRESENTATIONS CONCERNING THE INVESTIGATION
DECISION
PROVISIONAL DUTY TO BE IMPOSED
FUTURE ACTION

• THE CANADA BORDER SERVICES AGENCY
• THE CANADIAN INTERNATIONAL TRADE TRIBUNAL

RETROACTIVE DUTY ON MASSIVE IMPORTATIONS
UNDERTAKINGS
PUBLICATION
INFORMATION
APPENDIX 1

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SUMMARY

[1] On November 21, 2003, the Commissioner of Customs and Revenue initiated an investigation into the alleged injurious dumping of wood venetian blinds and slats originating in or exported from Mexico and the People's Republic of China (China). The investigation was initiated in response to a complaint filed by Stores de bois Montréal Inc. (SBM).

[2] Upon receiving notice of the investigation, the Canadian International Trade Tribunal (Tribunal) started its preliminary injury inquiry. On January 20, 2004, in a preliminary determination of injury, the Tribunal determined that the evidence discloses a reasonable indication that the dumping of the subject goods has caused injury to the Canadian industry.

[3] The Tribunal also found that the question of whether there should be more than one class of goods merits further consideration. As a result, the Tribunal requested the Canada Border Services Agency (CBSA) to collect information regarding the dumping of wood venetian blinds, wood slats, and wood venetian blinds and slats combined.

[4] The Tribunal also found that the question of whether the volume of wood venetian blinds and slats from Mexico is negligible or not needs to be addressed more precisely in the preliminary determination of dumping. As a result, the Tribunal asked the CBSA to make a determination, based on actual volumes, on whether the imports of wood venetian blinds and slats from Mexico were negligible during the period of investigation.

[5] On December 12, 2003, responsibility for the Canada Customs and Revenue Agency (CCRA) program, including the administration of the Special Import Measures Act (SIMA), was transferred to the CBSA, which was created on the same day. The President of the CBSA (President) is now responsible for dumping investigations.

[6] Following the CBSA investigation, on February 19, 2004, the President made a preliminary determination of dumping respecting wood venetian blinds and slats originating in or exported from Mexico and China pursuant to subsection 38(1) of SIMA. There was no reason to terminate the investigation according to the provisions of section 35 of SIMA because the aforementioned goods have been dumped and the margins of dumping of these goods are not insignificant. Moreover, the President is not satisfied, based on available data, that the actual and potential volume of dumped goods is negligible.

BACKGROUND

[7] Following discussions and meetings with the CBSA (formerly the CCRA), an official complaint was filed on October 8, 2003, by SBM alleging injurious dumping in Canada of wood venetian blinds and slats originating in or exported from Mexico and China.

[8] On October 22, 2003, the CBSA informed the complainant that the complaint was properly documented. The CBSA also notified the Tribunal and the governments of Mexico and China.

[9] On November 21, 2003, the Commissioner initiated an investigation into the dumping and advised the Tribunal, the importers, the exporters, the governments of Mexico and of China, and the complainant, of his decision.

PERIOD OF INVESTIGATION

[10] The period of investigation that was used to determine whether there is dumping and to estimate the margin of dumping is from October 1, 2002 to September 30, 2003.

INTERESTED PARTIES

Complainant

[11] The name and address of the complainant is:

Stores de bois Montréal Inc.
8320 Place Lorraine
Montréal (Anjou district), Quebec H1J 1E6

Exporters

[12] When the investigation was initiated, the CBSA identified 51 possible exporters of the subject goods. Based on the provisions of subsection 30.3(1) of SIMA, whereby the CBSA can examine the largest percentage of goods that can reasonably be investigated, the CBSA sent a Request for Information to six exporters in China and three exporters in Mexico. The declared and combined value for duty of the six exporters in China and the three exporters in Mexico represents more than 75% and 95%, respectively, of the total value of the goods imported into Canada during the period of investigation. During the investigation, the CBSA confirmed that 20 of the exporters identified when the investigation was initiated did not ship any subject goods during the period of investigation. The difference in the number of exporters is due to some exporters exporting goods other than the subject goods under the Harmonized System classification numbers that are usually used for these goods. There were, therefore, 31 exporters of the subject goods during the period of investigation. No exporter to whom a Request for Information was sent provided a properly documented response.

Importers

[13] When the investigation was initiated, the CBSA identified 47 possible importers of the subject goods and sent them a Request for Information. During the investigation, the CBSA confirmed that four of the importers identified when the investigation was initiated did not import the subject goods during the period of investigation. The difference in the number of importers is due to some importers importing goods other than the subject goods under the Harmonized System classification numbers that are usually used for these goods. There were, therefore, 43 importers of the subject goods during the period of investigation. Six importers provided properly documented responses to the questionnaire.

PRODUCT INFORMATION

Definition

[14] For the purpose of this investigation, the subject goods are defined as:

Wood venetian blinds and slats originating in or exported from Mexico and the People's Republic of China.

Product Information

[15]Wood venetian blinds (blinds) are composed of stained, varnished and/or film-coated slats. Most often, the slats are one inch (25 mm) or two inches (50 mm) wide and an eighth of an inch (3 mm) thick. The blinds are used to cover windows of varied dimensions.

[16] Imported blinds are either made to measure or of standard sizes. The most-often used standard dimensions are 48 inches and 72 inches in height by 23, 30, 37, 44, 51, 58, 65, and 72 inches in width. Before delivery, the blinds are adjusted to fit the dimensions required by the consumer. As needed, slats are removed to shorten the blind and can be shortened by up to 3.5 inches at each end. Hence, a standard blind measuring 23 inches in width can be used to cover a window measuring anywhere from 16 to 23 inches in width.

[17] The slats are connected by strings used to tilt, raise and lower the slats. There is also a locking mechanism. The slats can be enhanced using decorative cords instead of strings. The blind is equipped with either a tilt cord or wand mechanism for opening and closing. The various mechanisms are housed in a headrail made of metal, PVC or other material. The slats rest on a bottom rail, usually made of wood, when the blinds are raised.

[18] The slats are also imported separately and are the main component of the blinds. These slats have no other purpose or commercial use. They may be stained, painted, film-coated or bare. The types of wood most commonly used to manufacture slats are basswood, cherry, white ash, beech, poplar, ramin, samba, red oak and red cedar.

[19] Note that ramin products imported into Canada must be accompanied by a Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) export permit issued by the exporting country if the wood is from a nation that has included ramin on the list of protected species or a CITES export permit, a CITES certificate of origin, or a CITES re?export certificate if the specimen is from another nation.

Classification of Imports

[20] Wood venetian blinds are properly classified under the following Harmonized System classification numbers:

4421.90.30.00
4421.90.40.40

[21] Wood slats are properly classified under the following Harmonized System classification numbers:

4421.90.40.40
4421.90.90.50
4421.90.90.99

[22] As there is no specific tariff classification for slats, it is difficult to determine slat imports accurately. Also, it is impossible for Statistics Canada to produce electronic data on imports of this product. There is, therefore, no public information available for slat imports.

CANADIAN INDUSTRY

[23] There has been no change in the structure of the Canadian industry since the initiation of the investigation. There are six Canadian producers. The producers of like goods in this case are those who produce both wood slats and blinds and who are not linked with an exporter or importer of the subject goods, or who themselves are importers of such goods. The list of Canadian producers can be found in Appendix 1.

IMPORTS INTO CANADA

[24] For several reasons, the CBSA is not in a position to calculate the volume of wood venetian blinds and slats imported into Canada. First, the Facility for Information Retrieval Management of the CBSA has no information on the volume of blinds and slats imported into Canada. Moreover, the volumes in the customs' declarations cannot be compiled as the information is incomplete. Though the number of units is given, the dimensions of the blinds are frequently missing. Thus, it is not possible to calculate the surface of the blinds. The surface of the blinds is the unit of measurement that allows data to be compiled and comparisons to be made. Finally, for the purposes of the preliminary determination, the CBSA received no properly documented responses from the exporters and received very few responses from the importers.

[25] As a result, the CBSA estimated the value of imports into Canada from all sources based on data published by Statistics Canada.

Value of Wood Blinds Imports from October 1, 2002 to September 30, 2003

Country	Value of Imports	Representation
People's Republic of China	$8,126,308	59.2%
United States of America	$4,719,164	34.4%
Mexico	$437,718	3.2%
Chinese Taipei	$280,652	2.0%
Other countries	$156,739	1.1%
Total	$13,720,581

Source: Statistics Canada

INVESTIGATION

[26] During its investigation, the CBSA asked nine exporters in these two countries, representing more than 75% of the total value of goods imported into Canada during the period of investigation, and potential importers, to provide it with information on sales and costs so that it could estimate the normal values and export prices of the subject goods.

[27] Normal values are generally based on the domestic selling price of the goods in the country of export or on the full cost of the goods plus a reasonable amount for profits. The export price is generally the lesser of the importer's purchase price or the exporter's selling price to Canada less all charges and expenses resulting from the exportation of the goods. When the export price is less than the normal value, the difference is the margin of dumping.

[28] The dumping investigation covered all shipments of the subject goods to Canada during the period of investigation, namely from October 1, 2002 to September 30, 2003.

[29] Normal values are usually estimated using information that the export companies provide and the CBSA then verifies. However, as the companies did not provide information to allow the normal values to be estimated in this manner, an alternative method had to be used. The CBSA used the best information available to estimate the normal values of the subject goods. As a result, the normal values were estimated based on the information provided by the complainant when the properly documented complaint was submitted.

[30] Normal Value - Not having received properly documented responses from the exporters, the CBSA used the normal values in the complaint. SBM chose to construct the normal values using its production costs for the two standard-height models in highest demand in the Canadian market, namely the 48-inch and the 72-inch. The material cost was considered universal. For labour, a percentage based on SBM's salaries was used. These percentages were obtained from the US Import Administration's Web site. The same Web site was used for the plant overhead and selling and administrative expenses. A generally accepted rate of 8% was used for profits. The same basis was used to construct the normal values of slats. The amounts for the blinds were expressed in dollars per square foot and the amounts for the slats were expressed in dollars per linear foot.

[31] Export price - The export price was estimated from information provided by importers in Canada with no links to the exporter, in compliance with the method described in section 24 of SIMA, based on the exporter's selling price.

[32] Margins of dumping - Not having received a properly documented response from the exporters, the CBSA estimated the margin of dumping based on the weighted average of the highest estimated margin of dumping established for each importer who had provided a properly documented response during the investigation. Thus, an estimated margin of dumping of 120% has been established and applied to the subject goods originating in or exported from Mexico and China.

[33] Owing to the absence of properly documented responses from the exporters, the CBSA was not able to answer the Tribunal's request to collect information on the dumping of wood venetian blinds, wood slats and venetian blinds and slats combined.

VOLUME OF DUMPED GOODS

[34] Taking into consideration the estimated margin of dumping, all of the subject goods imported during the 12-month period from October 1, 2002 to September 30, 2003 (investigation period) were dumped.

[35] Under section 35 of SIMA if, before a preliminary determination of dumping is made regarding goods from a given country or countries, the President is satisfied that the actual and potential volume of dumped goods is negligible, the President must terminate the investigation with respect to that country. As explained above, the CBSA is not able to establish the actual volume of goods imported during the period of investigation. As a result, the President is not satisfied that the volume is negligible and he cannot terminate the investigation.

[36] Furthermore, the CBSA was not able to respond to the Tribunal's request in its preliminary determination of injury to make a determination based on actual volumes.

REPRESENTATIONS CONCERNING THE INVESTIGATION

[37] At the initiation of the investigation, the interested parties were invited to make written submissions with respect to the alleged dumping. The NAFTA Office of Mexico in Canada responded to this invitation.

[38] The senior representative of the NAFTA Office of Mexico in Canada alleged that the CBSA had initiated an investigation into wood venetian blinds and slats from Mexico without sufficient evidence of dumping, injury or a causal link between the dumping and the injury. The CBSA confirmed to him in writing that all the conditions in section 31 of SIMA regarding initiation of the investigation had been met, namely that the evidence in the complaint disclosed both that the subject goods were dumped and that the dumping had caused injury. On January 20, 2004, in a preliminary determination of injury, the Tribunal determined that the evidence disclosed a reasonable indication that the dumping of the subject goods has caused injury to the Canadian industry.

[39] The senior representative of the NAFTA Office of Mexico in Canada also alleged that the standing was not respected, i.e. that the complainant did not have the support of the Canadian industry. Although there are a number of producers in Canada to apply for standing under SIMA, the Canadian industry means all domestic producers of like goods. One can exclude a Canadian producer that is linked to an exporter or an importer of the goods that are allegedly being dumped or that is an importer of such goods itself. As a result, the CBSA considered that six Canadian producers constitute all the producers of like goods in this matter.

[40] The senior representative of the NAFTA Office of Mexico in Canada also alleged that the volume of the alleged dumped goods that had originated in or been exported from Mexico was negligible and, therefore, the investigation should be terminated with respect to Mexico. As explained above, the CBSA is not in a position to estimate the volume of goods being dumped and is, therefore, not satisfied that the volume is negligible and, accordingly, cannot terminate the investigation.

[41] Moreover, when the investigation was initiated, the CBSA sent a Request for Information to three Mexican producers who represent almost all the subject goods exported to Canada. Their participation was essential to obtain data, among other things, on the volume, in order to analyze the volume of goods being dumped. As no properly documented responses were received, the CBSA is in no better position now to make a decision on the question of volume.

[42] However, regarding the margin of dumping, the Mexican and Chinese exporters still have the opportunity to provide the CBSA with all the information required to allow for a complete analysis before the next determination is made.

DECISION

[43] Based on the preliminary results of the investigation, on February 19, 2004, the President made a preliminary determination of dumping pursuant to subsection 38(1) of SIMA. In light of the preliminary determination of injury made by the Tribunal, the President also considered that the imposition of provisional duties is necessary to prevent any injury from dumped imports.

PROVISIONAL DUTY TO BE IMPOSED

[44] Provisional duty will be applied to subject goods imported into Canada from Mexico and China, as per subsection 8(1) of SIMA.

[45] The amount of provisional duty is based on the estimated margins of dumping expressed as a percentage of the export price of the goods. The rate of duty payable is 120% of the export price for all goods originating in or exported from Mexico and China.

[46] Provisional duty is payable by the importer and is normally applied on all subject importations until the day the Tribunal makes its final ruling on injury. However, if the investigation is terminated by the CBSA or there is an undertaking arrangement, provisional duty will no longer be applied to the imported subject goods.

[47] 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. If the importers of such goods do not indicate the required SIMA code or do not correctly describe the goods in the customs documents, an administrative monetary penalty could be imposed. The imported goods are subject to the Customs Act. As a result, failure to pay duties within the specified time will result in the application of the provisions of the Act regarding interest.

FUTURE ACTION

The Canada Border Services Agency

[48] The CBSA will continue its investigation of the dumping and will, by May 19, 2004, make a decision. If the President is satisfied that the goods were dumped and that the margin of dumping is not insignificant, he will make his final determination. Otherwise, the President will terminate the investigation and any provisional duty paid or security posted will be returned to the importers.

The Canadian International Trade Tribunal

[49] The Tribunal has begun an injury inquiry and will conduct a public hearing into the question of injury. The Tribunal will make the appropriate orders or findings no later than June 18, 2004.

[50] If the Tribunal finds that the dumping has not caused injury or is not threatening to cause injury, the 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

[51] Under certain circumstances, anti-dumping duty can be imposed retroactively on subject goods imported into Canada. When the Tribunal conducts its inquiry on 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 spread 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 CBSA in the 90 days preceding the day of the preliminary determination could be subject to anti-dumping duty.

UNDERTAKINGS

[52] After a preliminary determination of dumping, the President 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, as would the investigation, unless the exporters wish it to continue.

[53] 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, namely before April 19, 2004.

[54] The legislation allows all interested parties to make representations concerning any undertaking proposals. The CBSA will maintain an up-to-date list of these parties and will notify them should an undertaking proposal be received. Persons who wish to be notified must provide their name, address, telephone number, fax or email address to the officer whose name appears below. Interested parties may also consult the Web site noted below for information on undertakings offered in this investigation. A notice will be posted on the Web site when an undertaking proposal is received. Interested parties have nine days from the date the undertaking offer is received to make representations.

PUBLICATION

[55] A notice of this preliminary determination will be published in the Canada Gazette pursuant to paragraph 38(3)(a) of SIMA.

INFORMATION

[56] This Statement of Reasons has been provided to persons directly interested in these proceedings. It is also posted on the Directorate's Web site at the address below. For further information, please contact Michel Desmarais or Hugh Marcil, as follows:

Mail
Canada Border Services Agency
Anti-Dumping and Countervailing Directorate
191 Laurier Avenue West, 10th Floor
Ottawa, Ontario K1A 0L5
Canada

Telephone
Michel Desmarais   613-954-7188
Hugh Marcil   613-941-6340

Fax
(613) 948-4844

E-mail
MichelD.Desmarais@cbsa-asfc.gc.ca
Hugues.Marcil@cbsa-asfc.gc.ca

Web Site
www.cbsa-asfc.gc.ca/sima

Suzanne Parent

Director General
Anti-Dumping and Countervailing Directorate

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APPENDIX 1

List of domestic producers who make up the Canadian industry of like goods:

Les Industries La Belle
Division de la Belle Vénitienne Inc.
46 de la Seigneurie Blvd.
Blainville, QC J7C 3V5

Les Industries l'Avant-Garde
318B Saint-Paul St.
Le Gardeur, QC J5Z 3T3

Stores de bois Montréal
8320 Place Lorraine
Montréal (Anjou district), QC H1J 1E6

Tapis Saucier
98 Route 132 West
Trois-Pistoles, QC G0L 4K0

Trans UV
5235 Henri-Bourassa West
Saint-Laurent, QC H4R 1B8

V.P. Fabricants de Stores
2315 des Entreprises, Suite 102
Terrebonne, QC J6X 4J9

1. This product is known by several names: wood venetian blinds, wood blinds, basswood or other wood blinds, or simply blinds.

2. Both "strips" and "laths" are synonymous with slats.

3. US Import Administration: Safeguarding American Industries and Jobs against Unfair Trade, Expected Wages of Selected Non-Market Economy Countries, Corrected 2000 Income Data, Revised September 2002 http://ia.ita.doc.gov/wages/

4. US Import Administration: April 1997, Memorandum to: all reviewers, From: Richard W. Moreland, Acting Deputy Assistant Secretary. Subject: Index of Factor Values for Use in Antidumping Duty Investigations Involving Products from the People's Republic of China (PRC) http://ia.ita.doc.gov/factorv/prc/sganda.htm