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Final Determination - Carbon Steel Pipe Fittings

OTTAWA, June 27, 2003

4258-119
AD1291

STATEMENT OF REASONS

Concerning the making of a final determination of dumping
on June 16, 2003 with respect to

CERTAIN CARBON STEEL PIPE NIPPLES, THREADED COUPLINGS AND ADAPTOR FITTINGS, ORIGINATING IN OR EXPORTED FROM THE PEOPLE'S REPUBLIC OF CHINA DECISION

Pursuant to paragraph 41(1)(a) of the Special Import Measures Act, the Commissioner of Customs and Revenue made a final determination of dumping on June 16, 2003 regarding carbon steel pipe nipples, threaded couplings and adaptor fittings, in nominal diameters up to and including 6 inches or the metric equivalents, originating in or exported from the People's Republic of China.

Cet énoncé des motifs est également disponible en français.

TABLE OF CONTENTS

Summary
Interested Parties
Background
Product
Canadian Industry And Market
The Investigation
Section 20 Inquiry
Exporter Inquiry
Normal Values, Export Prices and Margins of Dumping

Decision
Future Action
Publication
Information
Appendix 1 - Margins of Dumping
Appendix 2 - Product Information


Summary

On December 18, 2002, the Commissioner of Customs and Revenue (Commissioner) initiated an investigation respecting the alleged injurious dumping of certain carbon steel pipe nipples, threaded couplings and adaptor fittings (certain carbon steel pipe fittings) originating in or exported from the People's Republic of China (China). The investigation was initiated in response to a complaint filed by Canvil, a Division of Mueller Canada Limited of Simcoe, Ontario.

On February 17, 2003, the Canadian International Trade Tribunal (Tribunal) made a preliminary finding that the evidence disclosed a reasonable indication that the alleged dumping of the subject goods had caused injury to the domestic industry.

On March 18, 2003, the Commissioner made a preliminary determination of dumping.

The Canada Customs and Revenue Agency (CCRA) continued its investigation, and on the basis of the results, the Commissioner is satisfied that the subject goods have been dumped and that the margins of dumping are not insignificant. Consequently, on June 16, 2003, the Commissioner made a final determination of dumping pursuant to paragraph 41(1)(a) of the Special Import Measures Act (SIMA).

The Tribunal's inquiry into the question of injury to the Canadian industry is continuing. Provisional duty will continue to be imposed on the subject goods originating in or exported from China until the Tribunal renders its decision. The Tribunal will issue its finding by July 16, 2003.

Interested Parties

Complainant

Canvil is one of three Canadian producers of the subject goods. The other producers are: CapProducts of Canada, located in Vanastra, Ontario and TCG Pipe Services Ltd. of Edmonton, Alberta. Officials of CapProducts provided the CCRA with a letter of support for this complaint.

Exporters

The CCRA identified five exporters and three vendors that were involved in exports of subject goods during the period of investigation (PoI) (January 1, 2002 to September 30, 2002).

Importers

The CCRA investigation identified twelve importers of subject goods during the PoI.

Background

Following a number of discussions and meetings with the CCRA, Canvil submitted a formal complaint on October 11, 2002, alleging that the dumped imports of certain carbon steel pipe fittings originating in or exported from China were causing injury to domestic producers. The complainant was notified on October 31, 2002, that their complaint was not properly documented.

On November 6, 2002, Canvil filed a revised complaint with the CCRA. The CCRA informed Canvil on November 27, 2002, that its revised complaint was properly documented and notified the Government of China (GoC) that a complaint had been received regarding the alleged dumping of certain carbon steel pipe fittings.

On December 18, 2002, the Commissioner initiated a dumping investigation and notified the Tribunal of that decision. Subsequently, the Tribunal initiated a preliminary injury inquiry into whether the evidence disclosed a reasonable indication of injury, retardation or threat of injury caused by the dumping of the goods. The Tribunal made a preliminary determination on February 17, 2003, that the evidence disclosed a reasonable indication that the alleged dumping of each of the three classes of the subject goods has caused injury. On March 18, 2003, the Commissioner made a preliminary determination of dumping respecting the three classes of the subject goods and provisional duty has been in place since that date.

Product

Product Definition

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

  • "carbon steel pipe nipples, threaded couplings and adaptor fittings, in nominal diameters up to and including 6 inches or the metric equivalents, originating in or exported from the People's Republic of China."

This investigation was conducted on the basis that there were three classes of goods based on variances in their ultimate use, their product characteristics, functions and other factors. The three classes of goods are pipe nipples, threaded couplings and adaptor fittings. For additional product information and uses, please refer to Appendix 2 of this document.

Classification of Imports

The goods in question are usually classified under the following Harmonized System classification numbers:

7307.99.99.11
7307.99.99.19

Canadian Industry And Market

There have been no changes in the structure of the Canadian industry since the investigation was initiated. Canvil is one of three Canadian producers of the subject goods. The other producers are: CapProducts of Canada, located in Vanastra, Ontario and TCG Pipe Services Ltd. of Edmonton, Alberta.

In order to determine the Canadian imports, the CCRA utilized its internal information system, Facility for Information Retrieval Management (FIRM), and reviewed selected customs entries for the subject goods to determine the value and volume of imports. For the PoI, imports of Chinese origin accounted for 92 per cent of the total volume of goods of the same description released into Canada from all countries. The only other imports of carbon steel pipe fittings originated in the United States of America (United States) and the Republic of Korea (Korea), which are both non-subject countries.

The CCRA is unable to publish the specific figures regarding the Canadian market, since only two Canadian producers provided sales information, and the release of the market information would result in the disclosure of confidential information.

The Investigation

The dumping investigation included all of the subject goods released into Canada during the PoI.

For purposes of the preliminary determination, the Government of the People's Republic of China (GoC) and Beijing Beier Plumbing Manufacturing (BBPM), a producer and exporter of the subject goods, provided responses to the CCRA's Request for Information (RFI). An incomplete response was received from China East Resources Import & Export Company (China East), a vendor of the subject goods. Complete responses were also received from six importers of the subject goods.

On March 18, 2003, a preliminary determination of dumping was made. Subsequent to the preliminary determination, supplemental questionnaires were sent to the GoC, BBPM and China East.

Under Article 15 of the WTO Anti-dumping Agreement, developed countries are to give regard to the special situation of developing country members when considering the application of anti-dumping measures under the Agreement. Possibilities of constructive remedies provided for under the Agreement are to be explored before applying anti-dumping duty where they would affect the essential interests of developing country members.

The Commissioner recognizes China as a developing country for purposes of actions taken pursuant to the SIMA. In this particular investigation, this obligation was met by providing an opportunity for exporters to submit price undertakings.

On April 29, 2003, a proposal for an undertaking by Jinan Meide Casting Co. Ltd. (JMC), a producer and exporter of the subject goods, was submitted to the Commissioner. The undertaking proposed pricing intended to eliminate injury based on minimum point of direct shipment prices. The undertakings were not accepted by the CCRA, as the Commissioner was not of the opinion that the undertaking would eliminate the injury, retardation or threat of injury being caused by the dumping.

Section 20 Inquiry

Sections 15 and 19 of SIMA are subject to section 20 of the Act. Therefore, in any anti-dumping investigation, normal values cannot be determined on the basis of domestic sales of like goods or be based on the cost of production of the exported goods if the Commissioner is of the opinion that the conditions outlined in subsection 20(1) of SIMA are applicable to the sector under investigation.

Paragraph 20(1)(a) of SIMA stipulates the methodology for establishing normal values where the goods in question are sold to an importer in Canada "from a prescribed country where, in the opinion of the Commissioner, domestic prices are substantially determined by the government of that country and there is sufficient reason to believe that they are not substantially the same as they would be if they were determined in a competitive market." China is a prescribed country for the purpose of this provision.1

If the Commissioner forms the opinion that such conditions exist, the normal value of the goods is generally determined using the domestic selling price or the full costs of like goods produced in a surrogate country. Another method to determine normal values is on the basis of the resale prices in Canada of like goods produced in a surrogate country and imported from that country.

In order to assess the applicability of paragraph 20(1)(a) of SIMA in an anti-dumping investigation, the CCRA limits its inquiry to the sector or industry in the domestic market producing the goods under investigation. The inquiry assesses if the government substantially determines domestic prices of like goods in law (de jure) or in fact or practice (de facto). In this analysis, the CCRA examines whether price determination in law or in fact has occurred directly or indirectly.

At the initiation of this investigation, the CCRA had information that the sector producing the subject goods may be operating under conditions described in paragraph 20(1)(a) of SIMA. For example, the key input carbon steel pipe, used in the manufacture of the subject goods, is subject to import and export restrictions.2 The CCRA also had evidence of government ownership in the pipe fittings sector in China.3 Further evidence included the treatment of that sector in China by other anti-dumping authorities.4 On the basis of such information, the CCRA was satisfied that a paragraph 20(1)(a) inquiry would be warranted in this investigation.

To form an opinion on the conditions stipulated in paragraph 20(1)(a) of SIMA, the CCRA requested information from the GoC, the Chinese producers and exporters, including producers who did not export the goods to Canada. In addition, the CCRA obtained and reviewed publicly available information which is relevant to this question.

Government

On January 23, 2003, the GoC contacted the CCRA to express their concerns regarding the section 20 inquiry pertaining to the carbon steel pipe fittings sector in China. On January 24, 2003, the GoC provided a response to the CCRA's RFI, and indicated that they were unable to determine how many companies were involved in the carbon steel pipe fittings sector. However, through the China Chamber of Commerce of Metals, Minerals & Chemical Importers & Exporters (the Chamber), they were able to identify two companies that manufactured the subject goods, BBPM and JMC. In its response, the GoC indicated that BBPM was involved only in export sales while JMC was involved in both export and domestic sales.

In a letter dated February 11, 2003, the CCRA responded to the GoC's letter of January 23, 2003 regarding the section 20 inquiry. The CCRA explained that when conducting a section 20 inquiry for goods from China, the conditions outlined under paragraph 20(1)(a) of SIMA are applicable. In order to form an opinion on whether the GoC substantially determines domestic prices, the CCRA was seeking information from the GoC and from exporters of the goods to Canada. Since the CCRA makes this assessment based on the industry as a whole, information was also being sought from producers of the goods in China that had not exported the goods to Canada during the PoI.

In order to assist the Chamber, the CCRA, on February 14, 2003, provided them a list of ten Chinese companies that may be producers in the carbon steel pipe fitting sector, that had been identified on the China Business Guide web site (www.cbg.org.cn) under the key word "steel pipe fittings". In addition, it was noted that the two companies identified in the GoC's January 24, 2003 response were listed in the China Business Guide under the key word "malleable iron pipe fittings" along with another forty-three companies. The GoC was also provided with a list of these additional forty-three companies.

The GoC provided a substantive response to the CCRA's Government RFI. Based on a review of the response, the CCRA found no domestic law that imposes direct price control on the subject goods.5 Notwithstanding the apparent absence of direct legal controls, the CCRA's review of legislative documents provided in the GoC's response, in conjunction with other publicly available information, indicated that there is a potential for the GoC to exercise indirect legal control of prices. For example, the ability of enterprises to engage in import and export business appears subject to various requirements and government approvals.6 The CCRA believed that further investigation was required to ascertain whether these measures had an effect on the domestic prices of the goods under investigation.

Subsequent to the preliminary determination, the CCRA requested clarification to ascertain whether the GoC may be substantially determining the domestic price of the goods through its possible control of state owned enterprises (SOEs) and through other regulatory means relating to the supply of inputs, namely carbon steel pipe. The GoC was provided with a list of supplemental questions in this regard. In previous investigations involving China, the CCRA has found the steel sector to be operating under conditions described in section 20 of SIMA.7

A response to these questions was received by the CCRA on April 11, 2003. Regarding other domestic producers, the GoC responded that of the additional forty-two companies contacted by them only three companies replied. Of these three, only one identified itself as a producer of the subject goods and they indicated that they would not provide any information for purposes of the investigation.

Domestic Producers

Only one producer, Beijing Beier Plumbing Manufacturing (BBPM) responded to the CCRA's Producer RFI. The response was of limited use in assessing if the GoC substantially determines domestic pricing, since they do not sell in the domestic market and do not have the right to import or export.

The majority of the producers in the carbon steel pipe fittings sector in China did not respond to the CCRA's Producer RFI or provide any comments concerning the investigation. During the course of the investigation, the CCRA reviewed information from publicly available sources that indicated that three producers of the subject goods had some degree of government ownership.8 However, due to the lack of cooperation, it was impossible to confirm the extent of government ownership and any effect that this would have on domestic pricing.

Submissions by Interested Parties

On March 10, 2003, a submission was filed by BBPM.9 The submission provided arguments that the sector producing the subject goods should be considered to be operating under market conditions in China. It also provided comments on the treatment of individual producers versus the treatment of the carbon steel pipe fittings sector. In conclusion, BBPM submitted that market economy conditions prevail in the carbon steel pipe fittings sector, or at least prevail for BBPM.

On May 20, 2003, a submission from the GoC was received. Similar to the BBPM's submission, the GoC submission provided arguments that the sector producing the subject goods should be considered to be operating under market conditions in China. It also provided comments on the treatment of individual producers versus the treatment of the carbon steel pipe fittings sector. In conclusion, the GoC submitted that market economy conditions prevail for the identified producers in the carbon steel pipe fittings sector, or at least prevail for the participating producer.

As noted, both the GoC and BBPM, expressed concerns regarding the CCRA's policy of reviewing the sector that produces the goods versus a review of the individual producers. The GoC argued that, pursuant to the terms of Articles 15(a)(i) and (ii) of the Protocol on the Accession of the People's Republic of China to the World Trade Organization (the "Protocol"), an individual producer may prove that market economy conditions prevail for this producer, or that market economy conditions prevail for producers in the particular market. In either of the two cases, the GoC argued that market economy treatment should be granted to the individual producer. The GoC further expressed concern with any administrative policy that requires the participation of the majority of producers or of the major producer in assessing whether market conditions prevail in the industry under review as this policy would discourage, if not deter, the participation of the significant (but not major) producer in the investigation. The GoC notes that, in conducting investigations, the WTO Anti-dumping Agreement requires that Members, inter alia, be "objective and unbiased" and that any policy which discourages the participation of the foreign producers or exporters would raise serious concerns about Canadian commitment to its WTO obligations. In addition, the GoC indicated that the general fairness doctrine in Canadian administrative law would require that the CCRA not formulate or cause such a policy.

In determining price comparability under Article VI of the GATT 1994 and the Anti-dumping Agreement, the CCRA notes that Article 15(a)(i) of the Protocol indicates that the importing WTO Member shall use Chinese prices or costs for the industry under investigation if the producers under investigation can clearly show that market economy conditions prevail in the industry producing the like product with regard to the manufacture, production and sale of that product.

Noting that the Protocol specifically refers to the "industry producing the like goods", the CCRA believes that it is both permissible and reasonable to base its assessment at the industry level as opposed to the individual firm level when assessing whether the government substantially determines the price of the goods under consideration in the country of export. While the Protocol does not constrain Members from making this assessment at the individual firm level if it so chooses, the CCRA believes that an industry level assessment of market conditions is generally more appropriate than one undertaken at the firm level. This is based on the expectation that if the government substantially determines prices in respect of any particular firm, such activity could have a significant effect on pricing and competition within the industry as a whole.

In order to assess if the government substantially determines domestic prices, the CCRA provides an opportunity for the government of the country of export and all known producers and exporters of the goods to provide information pertaining to this matter. This reflects the obligation contained in Article 6.1 of the Anti-dumping Agreement by providing all interested parties with notice of the information which the authorities require and permits ample opportunity to present in writing all evidence which the parties consider relevant in respect of the investigation in question.

The failure of any parties to submit the requested information will not necessarily prevent the CCRA from making its assessment regarding domestic pricing provided that it has sufficient verifiable information from other sources regarding market conditions in the industry under review. Likewise, in some cases, it may be possible to base the assessment primarily on the information received from an individual firm if the production and domestic sales of the goods under review in respect of that firm represents a substantial proportion of the market. However, this determination will still reflect an assessment of the industry as a whole as opposed to an individual firm.

Concerning market economy conditions of the carbon steel pipe fittings sector, both BBPM and the GoC noted that section 20 of SIMA has been amended and governmental monopoly of export trade is no longer a factor that should be considered in respect of prescribed countries. In addition, the test for non-market economy status is a two-part test: domestic prices are substantially determined by the government and domestic prices are not substantially the same as they would be if they were determined in a competitive market. Both BBPM and the GoC stated that there is some level of state ownership in the steel industry in China. However, the GoC noted that there was no evidence of government involvement, direct or indirect in price setting or determination. In addition, they noted that the carbon steel pipe fitting sector is not considered to be part of the steel industry in China. BBPM noted that the Chinese government is not involved in the price setting activities of any state owned enterprise. Both commented that the world market essentially controls the domestic prices of steel in China and that China is a net importer of steel.

Regarding comments made by BBPM and the GoC that the world market essentially controls the domestic prices of steel in China, they did not comment on the fact that steel is subject to "designated trading"10 and what role or impact this would have on domestic prices.

Concerning the carbon steel pipe fittings sector, BBPM argued that domestic prices in this sector are not determined by the GoC and that domestic prices are substantially the same as if they would be if they were determined in a competitive market, since the world market influences the price of the inputs. However, neither BBPM nor the GoC provided the CCRA with any analysis to demonstrate that the price of inputs for domestic production was comparable to prices in the world market or how the prices of inputs used domestically were influenced by world prices.

The GoC argued that the producers identified by them in their response were operating under market economy conditions and are either privately owned enterprises or joint ventures. BBPM argued that it is a privately owned company and operates under market economy conditions.

During the investigation, the CCRA was able to identify twelve companies involved in the carbon pipe fitting sector from publicly available information. Of these companies identified, one was privately owned, four had some degree of government ownership, four had no information on ownership and three were joint ventures. No information was available concerning the identity of the joint venture parties.

BBPM and the GoC also acknowledged that in certain United States and European Union anti-dumping cases, the Chinese pipe fittings sector was treated as being a non-market economy. However, both commented that the goods under investigation covered a different product, i.e. cast iron pipe fittings, and that the non-market criteria used by the United States and European Union differ from Canada and are therefore not relevant.

With respect to the United States and the European Union anti-dumping cases, the CCRA is cognizant that non-market criteria used by anti-dumping authorities may differ from country to country. Regarding the fact that the two cases involved a different type of pipe fitting, the CCRA notes that publicly available information indicates that some of the producers that were involved in cast iron pipe fittings cases also produce the carbon steel pipe fittings subject to this investigation.

Final comments were made regarding the CCRA anti-dumping investigation and decision concerning xanthates.11 Both BBPM and the GoC stated that xanthates is a different industry sector and the CCRA's decision, that the xanthates industry was non-market, was based on government control and governmental monopoly of the export trade. However, both concluded that because SIMA has been amended since the conclusion of the xanthate investigation, it cannot be used as a precedent in the carbon steel pipe fittings investigation.12

In the xanthates investigation, the CCRA reviewed both the export trade and domestic pricing of xanthates. However, contrary to the arguments of BBPM and the GoC, the Commissioner did not form an opinion regarding the market status of the xanthates industry in China.13 The CCRA agrees that the xanthates industry is a different industrial sector than the carbon steel pipe fitting sector. As already noted, it is the policy and practice of the CCRA to conduct its examination and assessment on a sectoral basis in order to determine applicability of the provisions of paragraph 20(1)(a) of SIMA. In addition, the CCRA is not precluded from looking at the control of export (or import) trade, if it is a factor that could influence the prices in the domestic market.

Assessment of the Section 20 Inquiry

The CCRA's assessment of the conditions described in paragraph 20(1)(a) of SIMA addressed the issue of both de jure and de facto government controls (i.e. in law and in fact), in the domestic pricing of carbon steel pipe fittings.

The majority of carbon steel pipe fittings producers in China did not participate in the GoC's effort to collect information concerning the carbon steel pipe fitting sector. Consequently, the CCRA was unable to fully determine the structure and nature of the carbon steel pipe fittings sector in China. BBPM, the only producer to respond to the CCRA's Producer RFI, indicated that it was not involved in the domestic market. Information on the domestic market was deemed essential in order to determine the applicability of the various laws and regulations to the carbon steel pipe fittings producers, their impact on the sector and to assess the extent of state ownership and/or control over the industry.

Owing to the lack of cooperation from other producers, the CCRA could not reasonably determine the extent of indirect control imposed by the GoC on the industry. As noted, there is no indication that the GoC directly determines the domestic prices of carbon steel pipe fittings, either in law or practice. However, as a result of the information not being made available from most of the producers in China, the CCRA was unable to assess whether the GoC may be substantially determining domestic prices, either in law or practice, on an indirect basis. Of particular concern was the provision of inputs by SOEs to the producers of carbon steel pipe fittings and the role of the GoC in the operations of the SOEs.

In addition, based on the information available, the CCRA could not determine the market share of state-owned carbon steel pipe fitting producers in the domestic industry and the role of the GoC in the operations of those SOEs, especially with respect to decision making. The CCRA was also unable to assess any pricing differences between the raw materials supplied by SOEs and the raw materials supplied by non-SOEs. In this particular investigation, cooperation from the Chinese domestic producers is considered crucial in assisting the CCRA in its assessment of the Chinese carbon steel pipe fitting sector.

While the information currently collected during the investigation demonstrates the potential for the conditions described in paragraph 20(1)(a) of SIMA to exist in the carbon steel pipe fittings sector of China, the lack of cooperation from most of the producers prevented the CCRA from assessing the existence of, or the extent of indirect controls with respect to the manufacture, production and sale of carbon steel pipe fittings.

For the purposes of the final determination, the CCRA concluded that material information was missing. As a result, the Commissioner does not have sufficient information on which to form the opinion referred to in paragraph 20(1)(a) of SIMA.

Exporter Inquiry

For the preliminary determination, only BBPM responded to the CCRA's Exporter RFI. However, BBPM does not have the right to export the subject goods and therefore uses the services of a state trading company, China East.14 Since BBPM does not have the right to export, the CCRA considers that China East is integral to the export of the subject goods to Canada. Subsequent to the preliminary determination, and in response to the CCRA's supplemental request, both BBPM and China East submitted additional information on April 11, 2003, relating to their respective roles in the export sales to Canada.

For purposes of SIMA, the CCRA generally considers the exporter to be the person or firm who is a principal in the transaction, located in the country of export at the point of direct shipment to Canada who gave up responsibility for the goods by knowingly placing them in the hands of a carrier, courier, forwarding company, their own truck or conveyance for delivery to Canada. Based on the information supplied by BBPM and China East, the CCRA considers BBPM to be the exporter during the PoI.

Normal Values, Export Prices and Margins of Dumping

Section 29 of SIMA stipulates that, where in the opinion of the Commissioner, sufficient information has not been furnished or is not available to enable the determination of normal values or export price as provided for in the relevant sections of SIMA, such determinations will be made in such manner as the Minister of National Revenue specifies.

For purposes of the final determination, the normal values of the subject goods for all exporters during the PoI were determined pursuant to section 29 of SIMA, in view of the circumstances, as described in the section entitled Assessment of the Section 20 Inquiry.

Carbon Steel Pipe Nipples

  • Normal Values

Only BBPM provided a response to the CCRA's Exporter RFI. For purposes of the final determination, normal values for the subject pipe nipples for this company were determined by ministerial specification pursuant to section 29 of SIMA. Using a cost of production methodology, the CCRA began with the complainant's detailed cost of production information for twenty-five benchmark pipe nipples produced in Canada. This cost of production information was then adjusted by the CCRA to account for differences between Canadian and Chinese labour costs.15 With respect to administrative and selling expenses, the CCRA used information from a study published in June 2001 by the Reserve Bank of India.16 This was determined to more closely approximate the operational conditions of BBPM, compared to the complainant's administrative and selling expenses. For an amount for profit, the CCRA used the same published India study.

The non-benchmark pipe nipples for BBPM were determined based on the export price plus an advance. The advance, which represents BBPM's weighted average margin of dumping for the benchmark pipe nipples, was determined to be 96 per cent.17

For all other exporters who did not cooperate with the CCRA in the investigation, normal values for the pipe nipples were determined by advancing the export price by the highest margin of dumping found for BBPM, which is 153 per cent, excluding anomalies.

  • Indirect Shipments from the United States

Goods of Chinese origin were also shipped indirectly to Canada through the United States. In situations where goods are shipped indirectly to Canada, the CCRA is required to determine the normal value of the goods in the country of origin and in the country of export. Where the normal value in the country of origin is higher than the normal value determined in the country of export, both normal value and export price will be determined as if the goods were shipped directly from the country of origin. Since the CCRA received no cooperation from the United States exporters of the subject goods, the normal values were determined based on the export price plus an advance of 153 per cent. The advance represents the highest margin of dumping found, excluding anomalies, for the cooperating exporter for pipe nipples, expressed as a percentage of the export price.

  • Export Prices

For purposes of the final determination, the export prices for the subject pipe nipples produced by BBPM were determined pursuant to section 24 of SIMA on the basis of the lesser of the exporter's selling price and the importer's purchase price. In all cases, the exporter's selling price was the lower of the two prices.

For all other exporters, export prices were determined pursuant to section 29 of SIMA by using the purchase price paid by importers adjusted for freight charges and all other costs resulting from the exportation of the goods to Canada.

  • Margins of Dumping

The margin of dumping is the difference by which the normal value of a good exceeds the export price. The CCRA's investigation of imports from China between January 1, 2002, and September 30, 2002 (PoI), revealed that 100 per cent of the total volume of subject pipe nipples imported were dumped. For BBPM, the margins of dumping ranged from 59 to 158 per cent, when expressed as a percentage of the export price. The weighted average margin of dumping for the subject pipe nipples is 96 per cent, when expressed as a percentage of the export price.

For all other exporters of subject pipe nipples to Canada during the PoI, the weighted average margin of dumping is 153 per cent, when expressed as a percentage of the export price.

Carbon Steel Threaded Couplings

  • Normal Values

No producers or exporters of the subject threaded couplings cooperated with the CCRA in the investigation. For purposes of the final determination, normal values for the subject goods were determined by ministerial specification pursuant to section 29 of SIMA. Using a cost of production methodology, the CCRA began with the complainant's detailed cost of production information for nine benchmark threaded couplings produced in Canada. This cost of production information was then adjusted by the CCRA to account for differences between Canadian and Chinese labour costs.18 With respect to administrative and selling expenses, the CCRA used information from a study published in June 2001 by the Reserve Bank of India.19 This was determined to more closely approximate the operational conditions of companies located in China, compared to the complainant's administrative and selling expenses. For an amount for profit, the CCRA used the same published India study.

Normal values for the non-benchmark threaded couplings, were determined based on the export price plus an advance. The advance, which represents the highest margin of dumping found for a benchmark threaded coupling, was determined to be 74 per cent.

  • Export Prices

For purposes of the final determination, the export prices for the subject threaded couplings were determined pursuant to section 29 of SIMA by using the purchase price paid by importers adjusted for freight charges and all other costs resulting from the exportation of the goods to Canada.

  • Margins of Dumping

The CCRA's investigation of imports from China in the PoI, revealed that 100 per cent of the total volume of subject threaded couplings imported was dumped. For all exporters of subject threaded couplings to Canada during the PoI, the weighted average margin of dumping is 74 per cent, when expressed as a percentage of the export price.

Carbon Steel Adaptor Fittings

  • Normal Values

No producers or exporters of the subject adaptor fittings cooperated with the CCRA in the investigation. For purposes of the final determination, normal values for the subject goods were determined by ministerial specification pursuant to section 29 of SIMA. Using a cost of production methodology, the CCRA began with the complainant's detailed cost of production information for four benchmark adaptor fittings produced in Canada. This cost of production information was then adjusted by the CCRA to account for differences between Canadian and Chinese labour costs.20 With respect to administrative and selling expenses, the CCRA used information from a study published in June 2001 by the Reserve Bank of India.21 This was determined to more closely approximate the operational conditions of companies located in China, compared to the complainant's administrative and selling expenses. For an amount for profit, the CCRA used the same published India study.

Normal values for the non-benchmark adaptor fittings, were determined based on the export price plus an advance. The advance, which represents the highest margin of dumping found for a benchmark adaptor fitting, was determined to be 117 per cent.

  • Export Prices

For purposes of the final determination, the export prices for the subject adaptor fittings were determined pursuant to section 29 of SIMA by using the purchase price paid by importers adjusted for freight charges and all other costs resulting from the exportation of the goods to Canada.

  • Margins of Dumping

The CCRA's investigation of imports from China in the PoI, revealed that 100 per cent of the total volume of subject adaptor fittings imported was dumped. For all exporters of subject adaptor fittings to Canada during the PoI, the weighted average margin of dumping is 117 per cent, when expressed as a percentage of the export price.

Summary of Results

In making a final determination of dumping, the Commissioner must be satisfied that the subject goods have been dumped and that the margin of dumping is not insignificant. Subsection 2(1) of SIMA stipulates that the margin of dumping is insignificant if it is less than 2 per cent of the export price of the goods. The CCRA's investigation revealed the following by product class.

a) Pipe Nipples

All subject carbon steel pipe nipples imported into Canada during the PoI were reviewed. Of these goods, 100 per cent were found to be dumped. The margins of dumping ranged from 59 to 158 per cent. The weighted average margin of dumping was 150 per cent.

b) Threaded Couplings

All subject carbon steel threaded couplings imported into Canada during the PoI were reviewed. Of these goods, 100 per cent were found to be dumped. The margins of dumping ranged from 9 to 74 per cent. The weighted average margin of dumping was 50 per cent.

c) Adaptor Fittings

All subject carbon steel adaptor fittings imported into Canada during the PoI were reviewed. Of these goods, 100 per cent were found to be dumped. The margins of dumping ranged from 4 to 117 per cent. The weighted average margin of dumping was 74 per cent.

Decision

Based on the results of the investigation, the Commissioner is satisfied that the subject goods originating in or exported from China have been dumped and that the margin of dumping is not insignificant. Accordingly, on June 16, 2003, the Commissioner made a final determination of dumping pursuant to paragraph 41(1)(a) of SIMA.

Future Action

The Canadian International Trade Tribunal's inquiry concerning the question of injury to production in Canada is continuing. The Tribunal will issue its finding by July 16, 2003.

Subject goods imported during the provisional period will continue to be assessed provisional duty as determined at the time of the preliminary determination. The provisional period began on March 18, 2003, the date of the preliminary determination of dumping, and will end on the date on which the Tribunal issues its finding. Further information on the application of provisional duty is provided in the Statement of Reasons issued at the time of the preliminary determination, which can be found on the CCRA Web site at: www.cbsa-asfc.gc.ca/sima-lmsi/.

If the Tribunal finds that the dumped goods have not caused injury or do not threaten to cause injury, all proceedings relating to the investigation will be terminated. In such a case, all provisional duty collected or security posted by importers will be returned and future imports of the subject goods will not be subject to anti-dumping duty.

If the Tribunal finds that the dumped goods have caused injury, the CCRA will finalize the anti-dumping duty payable on the subject goods released from Customs possession during the provisional period, pursuant to section 55 of SIMA. Imports released from Customs possession after the date of the Tribunal's finding will be subject to anti-dumping duty equal to the margin of dumping. In that event, the importer in Canada shall pay all such duty. The Customs Act applies, with any modification that the circumstances require, with respect to the accounting and payment of the anti-dumping duty.

Specific normal values for the subject pipe nipples have been provided to BBPM, the only exporter which cooperated in the CCRA investigation. If the Tribunal makes an injury finding, these normal values will come into effect on the day after the date of the injury finding. The normal value of future importations of subject goods produced and exported by all other exporters shall be determined pursuant to section 29 of SIMA and shall be equal to the export price as determined under sections 24, 25 or 29 of SIMA, plus an amount equal the highest margin of dumping found in this investigation, by product class, excluding anomalies. The advances for the uncooperative exporters, by product class are, 153 per cent for pipe nipple, 74 per cent for threaded couplings and 117 per cent for adaptor fittings.

Publication

Notice of this final determination is being published in the Canada Gazette pursuant to paragraph 41(3)(a) of SIMA.

Information

This Statement of Reasons has been provided to persons directly interested in these proceedings. It is also posted at the Directorate's Internet website at the address below. For further information, please contact Richard Pragnell or Edith Trottier-Lawson as follows:

Mail:

Canada Customs and Revenue Agency
Anti-dumping and Countervailing Directorate
191 Laurier Avenue West, 16th Floor
Ottawa, Ontario
Canada
K1A 0L5

Telephone:

Richard Pragnell: (613) 954-0032
Edith Trottier-Lawson: (613) 954-7182

Telefax:

(613) 941-2612

Email:

Richard.Pragnell@ccra-adrc.gc.ca
Edith.Trottier-Lawson@ccra-adrc.gc.ca

Website:

www.ccra-adrc.gc.ca/sima

Suzanne Parent

Director General
Anti-dumping and Countervailing Directorate

Appendix 1 - Margins of Dumping

SUMMARY OF FINAL DETERMINATION MARGINS OF DUMPING FOR CERTAIN CARBON STEEL PIPE FITTINGS1

(January 1, 2002, to September 30, 2002)

Carbon Steel Pipe Nipples

Exporters

% of Goods Dumped

Range of Margins of Dumping

(% of Export Price)

Weighted Average Margin of Dumping

(% of Export Price)

       

BBPM

100%

59% to 158%

96%

All other exporters2

100%

153%3

153%

Total for China

100%

 

150%

Carbon Steel Threaded Couplings

Exporters

% of Goods Dumped

Range of Margins of Dumping

(% of Export Price)

Weighted Average Margin of Dumping

(% of Export Price)

       

All exporters4

100%

9% to 74%5

50%

Total for China

100%

 

50%

Carbon Steel Adaptor Fittings

Exporters

% of Goods Dumped

Range of Margins of Dumping

(% of Export Price)

Weighted Average Margin of Dumping

(% of Export Price)

       

All exporters6

100%

4 to 117%7

74%

Total for China

100%

 

74%

1) If the Tribunal determines that there is one class of goods, the margins of dumping, expressed as a percentage of export price, would range from 4 per cent to 158 per cent. The overall weighted average margin of dumping would be 147 per cent.
2) Margin of dumping based on the highest margin of dumping found, excluding anomalies, for this class of good.
3) This amount represents the highest margin of dumping found, excluding anomalies, for this product class.
4) No exporters cooperated for this class of good; accordingly the margin of dumping was determined using facts available.
5) This amount represents the highest margin of dumping found, excluding anomalies, for this product class.
6) No exporters cooperated for this class of good; accordingly the margin of dumping was determined using facts available.
7) This amount represents the highest margin of dumping found, excluding anomalies, for this product class.

Appendix 2 - Product Information

The subject goods include: carbon steel pipe nipples manufactured to conform with ASTM1 specification A733, including pipe nipples greater than 12 inches in length referred to as "ready cut pipe"; carbon steel threaded couplings manufactured to conform with ASTM specification A865, carbon steel electrical conduit nipples and threaded couplings manufactured to conform with UL2 6 or CSA3 C22.2 No. 45-M1981 specifications and carbon steel adaptor fittings consisting of combination nipples, hose menders, male adapters and insert couplings. The subject goods are available in a variety of finishes.

The subject goods are normally produced to ASTM, UL or CSA specifications, or specifications in other recognized designation systems, or to a proprietary specification or standard.

Pipe nipples are manufactured in accordance with ASTM specification A733 from carbon steel pipe complying to: ASTM A53 type F (welded), grade A; ASTM A53 type E (electric resistance welded), grades A and B; ASTM A53 Type S (seamless), grades A and B; ASTM A106 (seamless), grades A and B or ASME4 SA53 type F (welded), grade A; ASME SA53 type E (electric resistance welded), grades A and B; ASME SA53 type S (seamless), grades A and B and ASME SA106 (seamless), grades A and B. In addition, they are manufactured in various wall thicknesses of carbon steel pipe, namely schedule 40, schedule 80, schedule 160 or standard, XS (extra strong) and XXS (double extra strong), XH (extra heavy) and XXH (double extra heavy). For further clarity, carbon steel seamless pipe nipples manufactured for high pressure applications are not covered by the definition of subject goods.

The lengths of the pipe nipples begin at "close" through to 72 inches long. A "close" pipe nipple is the shortest length and is threaded from each end with the thread meeting in the middle. Pipe nipples up to 24 inches in length typically increase in inch to 1 inch increments depending on the nominal diameter. In addition, pipe nipples greater than 12 inches in length are sometimes referred to as "ready cut pipe" and typically increase in 6 inch to 12 inch increments. However, custom lengths are available. The configuration on either end of a pipe nipple could be taper pipe threaded, square cut, reamed and chamfered, grooved or any combination of the aforementioned. Threads are right hand on each end unless otherwise specified. Left hand threads or plain ends or combinations are available. All threads conform to ANSI5/ASME standard B1.20.1. The pipe nipples are available in a variety of finishes, typically black or galvanized coatings.

Threaded couplings are manufactured in accordance with ASTM specification A865. They can be produced from solid carbon steel bar, welded carbon steel tube or seamless carbon steel tube. The nominal diameters for the couplings range from 1/8 inch to 6 inches and they can be manufactured in full and half coupling variations. They are internally threaded at both ends to ANSI/ASME standard B1.20.1 and can be either straight pipe threaded or taper pipe threaded. The couplings are available in a variety of finishes, typically black, rust preventative oil, phosphate or galvanized coating.

Electrical conduit nipples and couplings are manufactured to UL 6 or CSA C22.2 No. 45-M1981 specifications. They are normally produced from welded carbon steel tube. Nominal diameters range from inch to 6 inches for both the conduit nipples and couplings. For the electrical conduit nipples the nominal lengths begin at "close" through to 12 inches long, typically increasing in inch increments and each end has a tapered pipe thread conforming to ANSI/ASME standard B1.20.1. The internal threads of the electrical conduit couplings are straight pipe threads that conform to ANSI/ASME standard B1.20.1. The electrical conduit nipples and couplings are finished with a protective zinc or alternative corrosion-resistant coating.

Adaptor fittings consist of combination nipples, hose menders, male adaptors and insert couplings. Combination nipples and hose menders are manufactured from welded or seamless carbon steel tube or pipe in nominal diameters from inch to 6 inches. Combination nipples have a tapered pipe thread on one end, which conforms to ANSI/ASME standard B1.20.1, the other end has hose serrations. Hose menders have hose serrations on both ends. These fittings are available in a variety of finishes, typically black or galvanized coatings.

Male adaptors and insert couplings are manufactured from either welded or seamless carbon steel tube or pipe in nominal diameters ranging from inch to 4 inches. Male adaptors are also referred to as "king nipples" and have a tapered pipe thread on one end, which conforms to ANSI/ASME standard B1.20.1 while the other end has tube serrations. Insert couplings have tube serrations on both ends. These fittings are typically finished in a galvanized coating.

1) American Society for Testing and Materials.
2) Underwriters Laboratories.
3) Canadian Standards Association (CSA International)
4) American Society of Mechanical Engineers.
5) American National Standards Institute.

Product Information and Uses

The subject carbon steel pipe fittings are used in a number of mechanical and building applications. Pipe nipples are used in the plumbing and heating industries, and normally direct the flow of liquid or gaseous media. They are also used in various industrial applications in mining, refineries, resource mills and oil exploration. Electrical conduit nipples are used in the building industry to protect electric wiring between electrical devices.

Threaded coupling are used for joining lengths of threaded pipe (either welded or seamless) in a variety of domestic and industrial applications. The electrical conduit couplings are used for connecting together lengths of electrical conduit or to connect electrical fittings to the conduit.

Adaptor fittings consist of combination nipples, hose menders, male adaptors and insert couplings. Combination nipples are used to transition from standard pipe to rubber hose, while hose menders are used to join together lengths of rubber hose or repair damaged rubber hose. Both are normally used in industrial applications, agricultural irrigation and domestic well

applications. Male adaptors are uses to transition from standard steel pipe to plastic tube and insert coupling are used to join together two pieces of plastic pipe or repair damaged pipe. These pipe fittings are normally used in industrial applications, agricultural irrigation and domestic wells.

PRODUCTION PROCESS

Pipe Nipples

Pipe nipples, including electrical conduit nipples, are manufactured from lengths of steel pipe. The pipe, after grading according to heat codes, is positioned on cut-off tables, where it is "saw" cut or "wheel" cut to specified lengths. Then, appropriate end configurations are machined at each end of the cut pipe. The most common operation is to thread both ends. The threading operation is achieved on one of three configurations of threading machines, depending on the diameter and length of the pipe.

The pipe nipple is then cleaned and a surface coating applied. This requires going through a "finishing line" process where the product is cleaned in an alkaline solution, then rinsed and coated with oil, or phosphated or electro-galvanized.

Threaded Couplings

The threaded couplings, including electrical conduit couplings, are manufactured from tubular steel. The tube is first processed through the cut-off machine where it is both cut to length and sized internally by reaming. The next operation is called the chamfering process, where the coupling blank is machined to length and has a chamfer machined into the inside diameter. At this operation, the outside edge of the coupling is also deburred and stamped with country of origin and manufacturers emblem. The internal portion of the coupling is either threaded by a process referred to as straight tapping or taper tapping.

The threaded couplings are then cleaned and a surface coating applied, through the same process as for pipe nipples and adaptor fittings. From there, the product goes to packing where it is labelled, painted, bar-coded or stamped prior to being packaged.

Adaptor Fittings

Adaptor fittings are also made from lengths of steel pipe. After the grading process, the pipe is cut utilizing the same processes as pipe nipples. In the next step, the pipe undergoes a cold forming operation by being pressed through a forming die under high pressure. The next operation is to have the ends machined. The normal configuration is to have the large end threaded and the small end serrated.

The fittings are then cleaned in solution and a surface coating of oil or phosphate is applied or the fitting may be electrogalvanized. From there, the product goes to the packing operation where it is labelled, painted, bar-coded or stamped.

1 Special Import Measures Regulations, Section 17.1, which provides that for purposes of subsection 20(1) of SIMA, the customs territory of the People's Republic of China is a prescribed country, Section 17.1 ceases to have effect on December 11, 2016.

2 World Trade Organization, Protocol on the Accession of the People's Republic of China, Article 5, Right to Trade, page 4, and Annex 2B, pages 30 to 42, Products Subject to Designated Trading.

3 For the purposes of this investigation, all levels of government are regarded as part of the government, i.e. central, provincial/state, regional, township, village, local, legislative, administrative or judicial, singular, collective, elected or appointed. It also includes any person, agency or institution acting for, on behalf of, or under the authority of any law passed by, the government of that country or that provincial, state or municipal or other local or regional government.

4 European Economic Union, Council Regulation (EC) No. 1784/2000, August 11, 2000. United States of America, Import Administration, International Trade Administration, Department of Commerce, Federal Register, A-570-881, November 25, 2002, Volume 67, Number 227. The CCRA recognizes that non-market criteria used by anti-dumping authorities may differ from country to country.

5 World trade Organization, Accession of the People's Republic of China, WT/L/432, 23 November 2001, pages 64 to 67, Appendix 4, Products and Services Subject to Price Controls.

6 Provisions for the Control of Enterprises' Power to Engage in Import and Export Business, No. 370.

7 Statement of Reason, Final Determination - Cold-rolled Steel Sheet Products, September 10, 2001, File 4258-115, Case AD/1265. It was the opinion of the Commissioner that the steel sector in China was operating under conditions as described in section 20 of SIMA. Customs Notice, N-502, March 26, 2003, reinvestigation of normal values and export prices of certain flat hot-rolled carbon alloy steel sheet and strip products. The CCRA confirmed its position that the steel sector is continuing to operate under conditions as described in section 20 of SIMA.

8 Of the twelve producers and/or exporters identified by the CCRA during the investigation, one was identified as privately owned, four were identified as having some level of government ownership, four had no information on ownership and three were identified as joint ventures but no information was available concerning the ownership of the joint venture parties.

9 This submission was not received in adequate time to be reviewed for the preliminary determination.

10 Refer to footnote 2.

11 CCRA, Final Determination, Xanthates, February 3, 2003, File 4240-50, Case AD/1282.

12 The provisions of section 20 of the Special Import Measures Act (SIMA) were amended as a result of Bill C-50, "An Act to amend certain Acts as a result of the accession of the People's Republic of China to the Agreement Establishing the World Trade Organization". These amendments to section 20 came into effect September 30, 2002. Investigations that were commenced prior to September 30, 2002, were conducted under the previous Act.

13 If producers in China had provided sufficient information, it would have allowed the CCRA to perform a more accurate appraisal of the extent of these controls. The missing information was considered material in forming an opinion. As a result, the Commissioner did not have sufficient information on which to form the opinion referred to in section 20 of the SIMA.

14 BBPM non-confidential response, Part B, B1(a), page 7, "BBPM is not authorized to export and, therefore, exports through China East who has rights to export goods to Canada, including the subject goods".

15 In their complaint, dated November 6, 2002, Canvil noted that they could not compete with the foreign labour rates, and therefore when they estimated the normal values they removed the labour costs. Canvil commented that they were currently paying the world price for steel pipe and they assumed that exporters would be paying the world price. They made no other adjustments to their estimated normal values, non-confidential complaint, page 9.

16 Reserve Bank of India (RBI) Bulletin June 7, 2001, Combined Income, Value of Production, Expenditure and Appropriation Account of the selected 1,914 Public Limited Companies, 1998-2000.

17 Due to the cooperation of BBPM in the investigation, the weighted average margin of dumping was used.

18 Refer to footnote 15.

19 Refer to footnote 16.

20 Refer to footnote 15.

21 Refer to footnote 16.