Dispute Settlement
U.S. Trade Remedy Law: The Canadian Experience
IV United States Anti-Dumping Duty Investigations regarding Imports from Canada: Case Histories, 1985–1999
- 1 Rock Salt from Canada
- 1.1 Original Investigation
- 1.2 Key Issue
- 1.3 Canadian Government Activity
- 2 Heavy Walled Rectangular Welded Carbon
Steel Pipes from Canada
- 2.1 Original Investigation
- 2.2 Key Issues
- 2.3 Canadian Government Activity
- 3 Iron Construction Castings from Canada (and
Brazil, India and People’s Republic of China)
- 3.1 Original Investigation
- 3.2 Key Issues (Original Investigation)
- 3.3 Canadian Government Activity
- 3.4 Canada–U.S. Free Trade Agreement Panel Review
- 3.5 Administrative Reviews
- 3.6 Changed Circumstances Reviews
- 3.7 Sunset Review
- 4 Oil Country Tubular Goods from Canada
(and Argentina and Taiwan)
- 4.1 Original Investigation
- 4.2 Key Issues (Original Investigation)
- 4.2.1 Algoma
- 4.2.2 IPSCO
- 4.2.3 Welded Tube
- 4.2.4 Sonco
- 4.3 Canadian Government Activity
- 4.4 Canada–U.S. Free Trade Agreement Panel Review
- 4.5 Administrative Reviews
- 4.6 Sunset Review
- 5 Brass Sheet and Strip from Canada
(and Brazil, France, Italy, South Korea,
Sweden and West Germany)
- 5.1 Original Investigation
- 5.2 Key Issues (Original Investigation)
- 5.3 Anti-Circumvention Inquiry
- 5.4 Administrative Reviews
- 5.5 Canadian Government Activity
- 5.6 NAFTA Binational Panel Review
- 5.7 Sunset Review
- 6 Fresh Cut Flowers from Canada (and
Chile, Colombia, Costa Rica, Ecuador,
Kenya, Mexico and Peru)
- 6.1 Original Investigation
- 6.2 Key Issues (Original Investigation)
- 6.3 Canadian Government Activity
- 6.4 Administrative Reviews
- 7 Colour Picture Tubes from Canada
(and Japan, Korea and Singapore)
- 7.1 Original Investigation
- 7.2 Key Issues
- 7.3 Canadian Government Activity
- 7.4 Administrative Reviews
- 7.5 Anti-Circumvention Inquiry
- 7.6 NAFTA Panel Review
- 7.7 Sunset Review
- 8 Potassium Chloride from Canada
- 8.1 Original Investigation
- 8.2 Canadian Government Activity
- 8.3 Sunset Review
- 9 Certain Welded Carbon Steel Line Pipe
from Canada
- 9.1 Original Investigation
- 9.2 U.S. Court of International Trade Review
- 9.3 Canadian Government Activity
- 10 Fabricated Structural Steel from Canada
- 10.1 Original Investigation
- 10.2 Canadian Government Activity
- 11 New Steel Rails from Canada
- 11.1 Original Investigation
- 11.2 Key Issues (Original Investigation)
- 11.3 Canadian Government Activity
- 11.4 Canada–U.S. Free Trade Agreement Panel Review
(Dumping)
- 11.4.1 Commerce’s Rejection of Algoma’s Cost Data
- 11.4.2 The Issue of Notice
- 11.4.3 Selection of the Best Information Available
- 11.5 Canada–U.S. Free Trade Agreement Panel Review (Injury)
- 11.5.1 Whether the ITC May Consider Threat of Material Injury
- 11.5.2 ITC Threat Determination
- 11.5.3 ITC Negative Injury Determination
- 11.5.4 Changed Circumstances / Administrative Reviews
- 11.6 Sunset Review
- 12 Thermostatically Controlled Appliance Plugs
and Internal Probe Thermostats from Canada
(and Hong Kong, Japan, Malaysia and Taiwan)
- 12.1 Case History
- 12.2 Key Issues
- 12.3 Canadian Government Activity
- 13 Generic Cephalexin Capsules from Canada
- 13.1 Case History
- 13.2 Key Issues
- 13.3 Canadian Government Activity
- 14 Limousines from Canada
- 14.1 Case History
- 14.2 Key Issues
- 14.3 Canadian Government Activity
- 15 Magnesium from Canada (and Norway)
- 15.1 Case History
- 15.2 Key Issues
- 15.3 Canada–U.S. Free Trade Agreement Panel Review
(Dumping)
- 15.4 Canada–U.S. Free Trade Agreement Panel Review (Injury)
- 15.5 Administrative Reviews
- 15.6 Sunset Review
- 15.6.1 Pure Magnesium
- 15.6.2 Alloy Magnesium
- 15.7 Canadian Government Activity
- 16 Ball Bearings, Mounted or Unmounted,
from Canada (and Argentina, Austria,
Brazil, Hong Kong, Hungary, Mexico,
People’s Republic of China, Poland, Korea,
Spain, Taiwan, Turkey and Yugoslavia)
- 16.1 Case History
- 16.2 Canadian Government Activity
- 17 Nepheline Syenite from Canada
- 17.1 Case History
- 17.2 Key Issues
- 17.3 Canadian Government Activity
- 18 Steel Wire Rope from Canada
- 18.1 Case History
- 18.2 Key Issues
- 18.3 Canadian Government Activity
- 19 Potassium Hydroxide, Liquid and Dry, from
Canada (and Italy and United Kingdom)
- 19.1 Case History
- 19.2 Canadian Government Activity
- 20 Medium Voltage Underground Distribution
Cable from Canada
- 20.1 Case History
- 20.2 Canadian Government Activity
- 21 Certain Flat-Rolled Carbon Steel Products
from Canada (and 19 Other Countries)
- 21.1 Case History: Original Investigation
- 21.2 Changed Circumstances Reviews
- 21.3 Scope and Anti-Circumvention Inquiries
- 21.4 Canadian Government Activity / Key Issues
- 21.5 Sunset Review: Plate and Corrosion-Resistant Steel
- 22 Certain Steel Wire Rod from Canada (and
Brazil, Japan, and Trinidad and Tobago)
- 22.1 Case History
- 22.2 Key Issues
- 22.3 Canadian Government Activity
- 23 Certain Steel Wire Rod from Canada
(and Germany, Trinidad and Tobago,
and Venezuela)
- 23.1 Case History
- 23.2 Key Issues
- 23.3 Canadian Government Activity
- 24 Certain Stainless Steel Plate from Canada
(and Belgium, Italy, Korea, South Africa
and Taiwan)
- 24.1 Original Investigation
- 24.2 Key Issue
- 24.3 Canadian Government Activity
- 25 Certain Stainless Steel Round Wire Rod
from Canada (and India, Japan, Korea,
Spain and Taiwan)
- 25.1 Case History
- 25.2 Key Issues
- 25.3 Canadian Government Activity
- 26 Cattle from Canada
- 26.1 Case History
- 26.2 Key Issues
- 26.2.1 Date of Sale
- 26.2.2 Reimbursement of Anti-Dumping Duty Deposits
- 26.3 Other Issues
- 26.3.1 Schaus
- 26.3.2 JGL Group
- 26.3.3 Pound-Maker
- 26.4 Canadian Government Activity
On January 25, 1985, the International Salt Company filed a petition alleging
injurious dumping of rock salt from Canada. An investigation was initiated by the
U.S. Department of Commerce on February 26, 1985. On March 20, 1985, the
U.S. International Trade Commission issued a preliminary affirmative determination,
finding a reasonable indication that an industry in the United States was
materially injured by reason of allegedly dumped imports of Canadian rock salt.
On July 15, 1985, Commerce issued a preliminary affirmative determination and
ordered the suspension of liquidation of subject imports from Canada. This was
followed by a December 4, 1985, affirmative final dumping determination by
Commerce, in which it found anti-dumping duty margins of 8.15% and 4.39%
respectively for the two Canadian producers specifically investigated (Domtar and
Morton). The average rate was 6.35%. On January 24, 1986, the ITC made a final
negative injury determination. Citing increasing levels of production, relatively
high capacity utilization, an increasing number of workers and rising labour
productivity, as well as improving financial conditions, the ITC concluded that the
U.S. domestic rock salt industry was not materially injured or threatened with
material injury by dumped imports from Canada. The petitioner had alleged the
existence of a regional market. On this point, the ITC found that while the
proposed region satisfied the statutory criteria for a regional industry, the particular
circumstances of this industry were such that it was not appropriate to apply
a regional industry analysis. The ITC found that the alleged regional industry was
discretionary and shifted in response to particular conditions.
The Canadian respondents argued that Commerce should use a weighted average
rather than a transaction-by-transaction method to calculate U.S. prices. Respondents
alleged that the statutory criteria had been met since the investigation
involved an extraordinarily large number of individual sales and a significant
number of complex adjustments. Commerce rejected this argument, finding that
section 777A (a) did not require a departure from normal methodology but was
intended to expand the instances in which the administering authority could use
sampling and averaging techniques in order to reduce costs and administrative
burden. In this regard, Commerce did not find the number of sales or adjustments
to be so large as to make a transaction-by-transaction analysis of U.S. price an
onerous burden.
Aside from monitoring and providing general advice to industry representatives
involved in the investigation, no specific interventions were made by the Canadian
government.
On March 25, 1985, a petition alleging injurious dumping of certain welded
carbon steel pipes from Canada was filed by the following companies: Bull Moose
Tube; Copperweld Tubing Group; Kaiser Steel Corp.; Maruichi American Corp.;
UNR-Leavitt; and Welded Tube Co. of America. On April 22, 1985, Commerce
initiated the investigation.
On May 15, 1985, the ITC issued a preliminary affirmative determination, finding
that there was a reasonable indication that an industry in the United States was
materially injured by reason of allegedly dumped imports of Canadian carbon
steel pipes. On September 10, 1985, Commerce released a negative preliminary
determination, with only two Canadian respondents under investigation being
assessed de minimis dumping margins. On November 22, 1985, Commerce
released an affirmative final determination. Foreign market value for Titan Industrial
Corp., whose exports accounted for approximately 80% of the products under
investigation, was based on constructed value as there were insufficient sales in
the home market or in third countries to provide viable comparisons. The margin
for Titan was calculated to be barely over the de minimis level at 0.65%. A voluntary
questionnaire response submitted by Welded Tube of Canada was rejected
because it was found to be untimely and inadequate.
On February 12, 1986, the ITC released a negative final determination. Because of
continuing improvement in the U.S. industry—including an increase in domestic
production, an increase in capacity utilization, an improvement in the general
financial condition of the industry, a declining level of market share held by
imports, a lack of an overall pattern of underselling by imports and the extremely
low dumping margin found—the ITC concluded that dumped imports of the
subject goods were not causing or threatening to cause injury to the U.S. industry.
In its preliminary determination, Commerce calculated constructed value for
Titan based on costs incurred for fiscal year 1984. For its final determination,
Commerce followed its normal practice and used costs incurred for the sales of
the product during the period of investigation, which involved part of the 1985
fiscal year. Under a long-term contract with a third-party tube converter and
exporter affiliate of Titan, Dominion Steel was required to pay a penalty if it did
not order a specific amount of fabrication work each year. Dominion argued that
this penalty payment should not be included in the cost of production because it
had no effect on its income during the period of investigation. Commerce rejected
the argument and included the penalty in the “cost of manufacture” since it was
directly related to production.
On April 8 and May 1, 1985, the Canadian Embassy in Washington, D.C., made
written representations to Commerce regarding the general weakness of the
injury allegation as well as a Commerce decision to enlarge the product scope of
the investigation on initiation.
On May 13, Commerce and the ITC received a petition filed by the Municipal
Castings Fair Trade Council, which is a trade association representing 15 U.S.
producers of iron construction castings. On June 7, 1985, Commerce initiated an
investigation against all four named countries.
On July 3, 1985, the ITC issued a preliminary affirmative determination, finding
a reasonable indication that U.S. industry was materially injured by reason of
allegedly dumped imports of certain heavy and light iron construction castings
from all four countries, including Canada. On October 28, 1985, Commerce
issued a preliminary affirmative determination and ordered the suspension of
liquidation of imports from all four countries. On January 16, 1986, Commerce
issued its final affirmative determination, finding that certain iron construction
castings from Canada were being sold, or were likely to be sold, in the United
States at less than fair value. This was followed by the February 16, 1986, release
of the final ITC affirmative determination. The ITC found that U.S. industry was
materially injured and threatened with material injury by reason of dumped
imports of heavy iron construction castings. On March 5, 1986, Commerce
published its anti-dumping duty order. Anti-dumping duty margins were assessed
as follows:
Manufacturer |
Weighted Average Margin |
Mueller Canada Inc. |
9.8% |
LaPerle Foundry Ltd. |
3.9% |
Bibby Ste. Croix Foundries |
8.6% |
All Others |
7.0% |
On September 25, 1986, Commerce amended the margin for LaPerle to
4.4% because of clerical errors made in the final determination. As a result, the
“all others” rate was also amended to 7.5%.
Commerce agreed to the petitioner’s request not to use average U.S. prices for
Bibby. The petitioner’s position was that the legislative history of section 777A of
the Tariff Act of 1930 did not require the use of weighted-average U.S. prices when
weighted-average foreign market value is used. Commerce asserted that it had the
authority to use sampling and averaging methodologies at its discretion.
Commerce also refused to consider light and heavy construction castings as two
distinct products, again citing its discretion to define the “class or kind” of
merchandise subject to an investigation.
The Canadian Embassy in Washington, D.C., made several representations on
behalf of Canadian producers/exporters. It submitted a formal diplomatic note
shortly after the receipt of the petition, presenting arguments against the injury
allegations advanced by the petitioners. The Embassy also supported Canadian
industry’s 1994 request for a changed circumstances review with representation
and advice. In addition, the Embassy made specific representations with respect
to several administrative reviews.
On June 20, 1991, LaPerle Foundry and Mueller Canada filed a request for a
review of the final determination in the administrative review covering the period
1985–1987 by a panel established under Chapter 19 of the Free Trade Agreement
(FTA). On July 1, 1991, both Canadian producers filed a Notice of Motion
Requesting Dismissal of the Panel Review. All parties consented to this motion
and the panel review was terminated.
Administrative reviews were conducted by Commerce for the periods of 1985–
1987, 1987–1988, 1991–1992, 1992–1993, 1997–1998 and 1999–2000. As a
result of the last initiated review concerning the period between March 1, 1999,
and February 28, 2000, Commerce released a preliminary determination on
December 7, 2000. The ITC determined that the dumping margin concerning the
imports of one producer, Canada Pipe Company Limited, amounted to 7.07%.
On June 8, 1994, the four Canadian producers formally requested that Commerce
review its anti-dumping duty order in light of changed circumstances, pursuant to
section 751 (b) of the Tariff Act of 1930. The Canadian petitioners maintained
that a large share of the market was closed to foreign producers because of the
subsequent extension of the “Buy America” provisions. Since U.S. producers were
protected from import injury through Buy America, the Canadian petitioners
argued that the anti-dumping duty orders directed against Canada and possibly
other countries should be revoked. On August 25, 1994, the respondents’ request
was denied because Commerce concluded that there was a lack of evidence of
changed circumstances having a significant impact on the market.
In response to an April 30, 1998, request by the U.S. petitioner, Commerce initiated
a changed circumstances review. Based on the lack of further interest by
domestic parties, Commerce initially issued a preliminary determination of its
intent to revoke the order with respect to light iron construction castings. On
September 17, 1998, Commerce released its final determination, revoking the
order as it applied to all entries of light iron construction castings.
On November 2, 1998, a five-year sunset review of the order was initiated. The
ITC determined that it would conduct a full review, while Commerce conducted
an expedited review. On June 7, 1999, Commerce made a final determination that
revocation of the anti-dumping duty order would be likely to lead to the continuation
or recurrence of dumping. This determination was based upon a finding of
dumping margins above de minimis in each of the administrative reviews
conducted by Commerce, the existence of continuing deposit rates above
de minimis and the fact that respondent interested parties waived their right to
participate in the review. Commerce determined that the margins calculated in
its original investigation (4.40% to 9.80%) were probative of the behaviour of
Canadian producers and exporters of certain iron construction castings. On
October 20, 1999, the ITC made an affirmative determination that revocation of
the order would be likely to lead to a continuation or recurrence of injury to the
U.S. industry by reason of dumped imports. As a result, the order was continued.
On July 22, 1985, Lone Star Steel and CF& I Steel filed a petition alleging injurious
dumping of oil country tubular goods (OCTG) from three countries, including
Canada. Oil country tubular goods are hollow steel products of circular crosssections
intended for use in the drilling for oil and gas. These products include oil
well casing, tubing and drill pipe of carbon or alloy steel, whether welded or seamless,
manufactured to either American Petroleum Institute (API) or non-API (such
as proprietary) specifications, and are in either finished or unfinished condition.
Commerce initiated an investigation concurrent with a countervailing duty investigation
on August 19, 1985.
On September 11, 1985, the ITC issued a preliminary affirmative determination,
finding a reasonable indication that U.S. industry was materially injured by
reason of allegedly dumped and subsidized imports of oil country tubular goods
from the three countries. On January 7, 1986, Commerce issued a preliminary
affirmative determination and ordered the suspension of liquidation of imports of
OCTG from Canada and Taiwan. Commerce issued a preliminary determination
of dumping with respect to imports from Argentina on January 27, 1986. On April
22, 1986, Commerce issued an affirmative final determination of dumping
regarding imports from Canada and Taiwan. The investigation regarding
Argentina was terminated after a negative final determination. In its final determination,
Commerce found that “critical circumstances,” as alleged by petitioners,
did not exist with respect to OCTG from Canada as imports during the
period subsequent to receipt of the petition were not massive when compared to
recent import levels. On June 11, 1986, the ITC made an affirmative final injury
determination regarding imports from Canada and Taiwan. Based on the existence
of a general decline in the domestic industry, an apparent decline in the
U.S. consumption level for 1985 (31% below the 1982 level), a 22% decrease in
U.S. production, a 41.9% decrease in the number of U.S. workers, over $100
million in operating losses for the three years of 1983, 1984 and 1985, imports
accounting for a substantial and growing market share, and evidence of underselling, the ITC concluded that the U.S. industry was being materially injured by
dumped and subsidized imports from Canada and dumped imports from Taiwan.
The anti-dumping duty order was issued on June 18, 1986, and then amended on
October 10, 1986. The final anti-dumping margins for imports from Canada were
as follows:
Manufacturer |
Estimated Dumping Margins |
Algoma |
13.09% |
Ipsco |
38.78% |
Sonco |
3.18% |
Welded Tube |
0.00% (excluded from order) |
All Others |
18.65% |
For most respondents, the allocation of costs for prime and non-prime OCTG was
a matter of considerable concern. The Court of International Trade in Ipsco Inc.
and Ipsco Steel Inc. v. United States (1989) eventually directed Commerce to
“find a reasonable means of allocating the combined costs of production between
[prime and non-prime OCTG] which takes into account differences in value.”
On a related issue, Commerce did not treat off-spec or non-prime goods any
differently in terms of its calculation of normal values or in its treatment of costs.
In addition, Commerce calculated respondents’ freight costs using average costs
because only average costs could be verified. Commerce rejected the petitioners’
position that the responses submitted by some Canadian producers were so deficient
that they should be disregarded and instead best information available be
used. Commerce stated that where responses were deficient, it sought and
obtained the clarification necessary to make a determination. Many other
company-specific issues arose during the investigation.
Commerce found that Algoma had improperly reclassified certain manufacturing
expenses as part of selling, general and administrative expenses. In this regard,
such expenses were associated with the production of OCTG and should be
treated as manufacturing overhead. Within its expense calculations, Algoma had
also improperly allocated expenses between different varieties of OCTG.
Commerce further determined that Algoma must include interest on long-term
debt in SGA. Commerce determined that Algoma’s depreciation, fixed overhead
costs and SGA should be included in the U.S. manufacturing cost adjustment.
Commerce rejected Algoma’s assertion that long-term interest expenses should be
excluded, finding that the debt was incurred as part of the corporate long-term
capitalization. Therefore, an allocation of the expense was included in the final
determination. Commerce stated that in determining whether there are differences
in sales at varying levels of trade affecting price comparability, information
must be submitted and verified substantiating that the differences in the price
were the result of differences in the cost of selling. Algoma’s claim for an adjustment
in this regard was therefore disallowed.
In determining whether to disregard below-cost sales in the home market.
Commerce relied upon recent cases as precedents. In such cases, below-cost sales
were disregarded when they amounted to 10% or more of the home market sales.
More than 10% of the home market sales were below cost for several of Algoma’s
products. Consequently, they were disregarded in the calculation of foreign
market value.
Commerce disallowed IPSCO’s bad debt expense adjustment to fair market value
because Commerce’s practice was to only consider bad debt losses when the
company wrote them off in accordance with its own practices. In IPSCO’s case,
the debt in question was to be settled in court and was therefore not considered
a loss. IPSCO incurred abnormally high costs for certain products that it had
recently started producing. Commerce stated that while it may make allowances
for extraordinary costs, the normal costs data submitted by IPSCO were not sufficiently
substantiated.
Commerce adjusted Welded Tubes’ cost of production data by re-allocating labour
and overhead costs to accurately account for the differences in costs of producing
pipe products of different diameters.
A Sonco raw material supplier, Algoma, was not found to be a related party,
despite the fact that Algoma had an option to purchase 50% to 100% of Sonco’s
shares. Because of this relationship, the petitioner had asserted that Commerce
should not presume that sales occurred at arm’s-length prices and that Commerce
should therefore use best information available. Commerce did find, however,
that the raw material prices were valid and supported by documentation. On a
related issue, Commerce did not use Sonco cost allocations because they did not
reflect the firm’s usual cost allocation practices. As a result, best information
available was used. In accordance with established practice, Commerce treated
cash discounts offered to U.S. customers not as an offset to credit expenses as
calculated by the respondent but as reductions in price. Commerce determined
that Sonco improperly allocated several expenses incurred in further processing
its materials in the United States, resulting in an understatement of costs.
Since a countervailing duty investigation regarding oil country tubular goods from
Canada was initiated simultaneously with the anti-dumping duty investigation,
it is difficult to isolate Canadian government representations related solely to
the anti-dumping investigation. That being said, the Canadian Embassy in
Washington, D.C., made a number of interventions with U.S. authorities:
- In August 1985, the Embassy discussed with Commerce the reconciliation
of U.S. and Canadian statistics regarding OCTG to deal
mainly with misclassification problems. Commerce subsequently
revised its statistics.
- Ambassador Gotlieb wrote Secretary of Commerce Baldridge to
propose an expedited review of the issue of the treatment of prime
and non-prime material in the investigation.
- In February 1988, the scope of the anti-dumping duty order was
raised by the Embassy with Commerce and U.S. Customs. In this
regard, the scope was first expanded and then reduced by
Commerce.
- In March 1988, the Embassy raised the matter of delays in the
conduct of administrative reviews of the order by Commerce. On
August 17, 1988, the Embassy met with Commerce about delays in
the conduct of reviews.
- About delays more specifically, the Embassy wrote Commerce in
December 1988 concerning reviews for Christianson Pipe.
- On June 21, 1989, the Embassy submitted a diplomatic note
regarding Commerce’s April 13, 1988, scope ruling, which had
placed a heavy documentation burden on Canadian exporters.
- Ambassador Burney wrote Secretary of Commerce Mosbacher on
October 6, 1989, again concerning delays in administrative reviews.
On November 5, 1990, Stelco filed a request for an FTA Chapter 19 Panel Review
of Commerce’s notice clarifying the scope of the order and abolishing the end-use
certification procedure. The panel review was eventually terminated. On May 16,
1991, Algoma also filed a request for panel review of the scope ruling. On August 8,
1991, Algoma’s request to have the panel review terminated was accepted.
Eight administrative reviews were conducted with respect to the anti-dumping
duty order on OCTG, the most active exporters being Christianson Pipe and
IPSCO. In September 1996, after IPSCO received its third successive zero
dumping margin, the order was revoked for that company.
On May 3, 1999, a five-year sunset review of the order was initiated. The ITC
determined that it would conduct a full review, while Commerce conducted an
expedited review. On December 1, 1999, Commerce made a final determination
that revocation of the anti-dumping duty order would be likely to lead to the
continuation or recurrence of dumping. However, on July 22, 2000, the ITC determined
that the revocation of the anti-dumping duty order would not be likely to
lead to a continuation or recurrence of material injury to an industry in the
United States within a reasonably foreseeable time. The order was therefore
revoked.
On March 10, 1986, Commerce and the ITC received a petition filed by American
Brass, Bridgeport Brass, Chase Brass & Copper, Hussey Metals Div (Copper Range
Co.), Miller Co., Olin Corp., Revere Copper Products and several industrial
unions, all alleging injurious dumping of brass sheet and strip from seven countries,
including Canada, as well as subsidized imports from Brazil. An investigation
was initiated on April 7, 1986. On May 1, 1986, the ITC issued a preliminary
affirmative determination, finding that there was a reasonable indication that an
industry in the United States was materially injured by reason of allegedly
dumped imports of brass sheet and strip.
On August 22, 1986, Commerce issued a preliminary affirmative determination
and ordered the suspension of liquidation of subject imports. On December 9,
1986, Commerce made its final affirmative determination of dumping. On
December 31, 1986, the ITC made an affirmative final determination of injury.
Because of a sharp decline in the U.S. industry’s financial condition from 1983 to
1985—as indicated by significant declines in sales, gross profit, operating income,
cash flow, employment and domestic prices—the ITC concluded that subsidized
imports from Brazil and dumped imports from Brazil, Canada and Korea were
injuring the domestic industry. On February 26, 1987, the ITC made affirmative
determinations regarding imports from the other four countries of France, Italy,
Sweden and West Germany. The anti-dumping duty order regarding Canada was
issued on January 12, 1987, with the following margins being assessed:
Manufacturer/Exporter |
Estimated Dumping Margins |
Arrowhead |
2.51% |
Noranda |
11.54% |
All Others |
8.10% |
Canadian respondents requested Commerce to exclude “tolled” sales from its
calculation because they were only performing a conversion service rather than
selling a finished product. Where U.S. purchasers provide material for the manufacture
of the merchandise under investigation, Commerce considers it appropriate
to include such sales in its investigation notwithstanding that they may
arguably be sales of service.
Commerce refused to accept Ratcliffs’ voluntary response, submitted in order to
allow for a calculation of a company-specific margin. In its refusal, Commerce
cited regulations that require the examination of only 60% of merchandise
exported to the United States during the period of investigation. Exports from
Arrowhead and Noranda constituted more than 60% of exports to the United
States. Voluntary responses from other affected exporters are accepted provided
there are no deficiencies. Citing deficiencies in Ratcliffs’ response, Commerce
rejected it.
Noranda claimed that a level of trade adjustment should have been made based
on prior differential between customers who slit the material and those who do
not. Level of trade adjustments may be made under certain circumstances in
order to compare sales at the same commercial level of trade in the United States
and the home market. Here, however, Commerce determined that sales were
made at the same commercial level of trade in both markets.
On June 18, 1993, Commerce determined that a Canadian brass producer and a
U.S. brass importer were circumventing the anti-dumping order by importing
Canadian brass plate (a product not included within the order) into the United
States, where it was then rolled into brass sheet and strip. Commerce determined
that the difference in value between the imported brass plate and the brass sheet
and strip sold in the United States was insignificant. Accordingly, it determined
that brass plate used in the production of brass sheet and strip fell within the
scope of this order. The respondents requested Commerce to calculate the difference
in value on the basis of fabrication costs alone, contending that the price of
the base material was such a significant component that, if included, it would
distort the value calculations. Commerce rejected this request, stating that both
statute and practice required them to include the value of the metal and the fabrication
when calculating the value of a single product.
There were nine administrative reviews between 1988 and 1999. On November 8,
1991, an administrative review determined that the dumping margin for Ratcliffs
was 0.46%, a de minimis rate. Because Ratcliffs had sold merchandise covered by
the order at not less than foreign market value for a period of three consecutive
years and there was no information to suggest that the company was likely to sell
at dumped prices in the future, the anti-dumping duty order was revoked with
respect to Ratcliffs.
The order as it applied to Noranda and Wolverine Tube, Noranda’s successor
company, was also subject to nine complete administrative reviews. The reviews
for Wolverine covering 1994 and 1995 found de minimis rates. The preliminary
determination in the review for 1996 was also found de minimis (0.042%). As a
result, Commerce made a preliminary determination to revoke the order as it
applied to Wolverine based on three consecutive years of no sales below normal
value. Further, Commerce rejected the petitioner’s request that the respondent be
obligated to provide additional data covering its activities over the past five years
in support of its request for revocation. However, in its final determination for the
1996 review, which was released on June 17, 1998, Commerce determined that a
dumping margin of 0.67% existed for Wolverine for 1996. Commerce therefore
determined not to revoke the anti-dumping duty order as it applied to Wolverine.
However, Commerce acknowledged that it had inadvertently failed to make certain
adjustments in calculating cost of production, thereby incorrectly calculating an
above de minimis margin. Despite strong representations by both Wolverine and
the Canadian government, Commerce would not amend its determination.
During the course of the original investigation, the Canadian government made a
formal representation questioning the basis for initiation of the investigation. It
also made a number of representations regarding various administrative reviews
on a number of issues, including delays in conducting administrative reviews, the
use of unverified information in calculating cost of production, the information
burden on respondents requesting revocation, and Commerce’s failure to make a
timely correction in its final determination in the 1996 review. The most recent
representation was submitted to Commerce on March 9, 2000, with respect to
Wolverine Tube.
On July 15, 1998, Wolverine Tube filed a request for a NAFTA Panel Review of
Commerce’s final determination in the administrative review determination
for the 1996 period. While Commerce acknowledged its calculation error on
remand and lowered the margin for the 1996 period to below the de minimis
level, it did not partially revoke the order because the 1997 review for
Wolverine, the review for the immediate subsequent period, had resulted in an
above de minimis finding (0.71%).
On November 2, 1998, a five-year sunset review of the order was initiated. The
ITC determined that it would conduct a full review, while Commerce conducted
an expedited review. On June 7, 1999, Commerce made a final determination that
revocation of the anti-dumping duty order would be likely to lead to the continuation
or recurrence of dumping. This determination was based upon a finding of
dumping margins above de minimis in each of the four administrative reviews
conducted by Commerce, the existence of continuing deposit rates above de
minimis for all respondents and the fact that respondent interested parties
waived their right to participate in the review. Commerce determined that the
margins calculated in its Department’s original investigation (4.40% to 9.80%)
were probative of the behaviour of Canadian producers/exporters of brass sheet
and strip.
On October 29, 1999, the ITC made an affirmative determination that revocation
of the order would be likely to lead to a continuation or recurrence of injury to
the U.S. industry by reason of dumped imports. One of the primary issues that the
ITC had to address in this review was whether to cumulate imports from all countries
subject to the review. While cumulation is discretionary in a five-year review,
the ITC is directed by statute not to cumulate imports if it determines that such
imports are likely to have no discernible impact on the domestic industry. In view
of the low countervailing duties found to prevail, as well as the fact that imports
from India had increased over the life of the order, imports from India—which
had been subject to a countervailing duty order since 1980—were not cumulated
and the order was revoked. It is interesting to note that of the three remaining
countries subject to cumulation, the anti-dumping duty margins found for Canada
were well below those for Brazil (5.95% to 58.73%) and China (92.74%).
The ITC found that imports from Canada, which showed by far the largest volume
among the countries under investigation, had increased significantly in the years
immediately preceding the order but that, along with imports from Brazil and
China, the Canadian-source imports fell over the life of the order, probably
reflecting the remedial effect of the order. On the other hand, the ITC found that
all three countries (Brazil, Canada and China) had ample production capacity to
increase shipments to the United States absent the order. In addition, the ITC
found that there was no evidence that all three countries would not resume significant
exports to the United States if the order was revoked. Regarding price
effects, the ITC found that it was likely, given the price competitiveness of the
market, that all three countries would price aggressively to regain lost market
share, depressing and suppressing prices in the market. In assessing material
injury, the ITC found that, while the domestic industry had shown some
improvement during the period in which the orders were in place, six of the 15
domestic producers reported operating losses over that period despite increases
in domestic consumption, production and shipments. Furthermore, the domestic
share of the market in 1998 was comparable with the domestic share recorded in
1983, the beginning of the period under review.
In conclusion, the ITC found that the likelihood of increased imports, combined
with expected adverse price effects of such imports, would have a significant
adverse impact on the production, shipments, sales and revenue levels of the
domestic industry. Accordingly, the ITC concluded that, if the anti-dumping duty
orders were revoked, subject imports would be likely to have a significant adverse
impact on the domestic industry within a reasonably foreseeable time. As a result
of this finding, the order was continued.
On May 21, 1986, the Floral Trade Council of Davis, California, filed a petition
alleging dumping of fresh cut flowers from Canada and other countries. On June
17, 1986, an anti-dumping duty investigation was initiated. Countervailing duty
investigations were initiated at the same time.
On July 16, 1986, the ITC issued a preliminary affirmative determination, finding
a reasonable indication that an industry in the United States was materially injured
by reason of allegedly dumped imports of fresh cut flowers from all eight countries.
On November 3, 1986, Commerce issued a preliminary affirmative determination
of dumping and ordered the suspension of liquidation of subject imports. Regarding
imports from Canada, the questionnaire responses submitted to Commerce by the
three Canadian growers exporting subject flowers to the United States during the
period of investigation were determined to be deficient. Commerce requested additional
information from the three companies with a deadline of October 28, 1986.
The amended responses were not received by Commerce until November 20,
1986. As the stated deadline had passed, Commerce used best information available
for both the U.S. price and foreign market value in making its final determination,
which it issued on January 20, 1987.
On March 19, 1987, the ITC issued its final injury determination. Standard carnation
imports were determined to be causing material injury to a U.S. industry,
while imports of miniature carnations were found not to be causing injury.
Despite apparent U.S. consumption increases and increases in U.S. producers’ net
sales and total income, the ITC concluded that declines in domestic price
increases coupled with a decline in U.S. producers’ income and market share
(from 33.5% in 1983 to 28.8% in 1985) resulted in injury to the domestic industry
attributable to underselling by dumped and subsidized imports from Canada,
Chile, Colombia, Costa Rica and Ecuador. On the same day, March 19, 1987,
Commerce amended its anti-dumping duty margin on imports from Canada to
7.76%, revised from the 6.80% margin found in its January 20, 1987, final
dumping determination. The amendment to the anti-dumping duty margin was
made pursuant to the decision in Badger-Powhatan v. United States (U.S. Court
of International Trade, April 2, 1986), in which Commerce was required to recalculate
the weighted-average dumping margin for the remaining products by
excluding that portion of the margin attributable to the products for which the
ITC had made a negative injury determination.
The information contained in the petition was used to calculate the foreign
market value because Commerce had determined that Canadian respondents had
not provided full and complete responses to the anti-dumping duty questionnaires.
As a result, there were few, if any, additional issues to be considered in the
investigation.
Since a countervailing duty investigation on flowers from Canada was initiated
simultaneously with the anti-dumping duty investigation, it is difficult to isolate
Canadian government representations related solely to the anti-dumping investigation.
That being said, the Canadian Embassy in Washington, D.C., in particular
made the following interventions with U.S. authorities:
- The Embassy provided trade statistics to the ITC in an effort to
correct data indicating that Canadian exports to the United States
totalled approximately $250,000 annually. The actual figure was
under $50,000; the difference was due to an “origin” misclassification
by U.S. Customs.
- Representations were made to the U.S. Trade Representative in
October 1987 suggesting that the finding in this case was inconsistent
with U.S. obligations under the GATT in view of the negligibility
of the imports involved. The issue was also raised on a number of
occasions in the GATT Subsidies Committee in both 1986 and 1987.
On June 18, 1993, the anti-dumping duty order was revoked. Since administrative
reviews had not been requested for four successive years, Commerce
concluded that the order was no longer of any interest to the parties.
On November 26, 1986, a petition alleging the injurious dumping of colour picture
tubes (CPTs) from four countries was filed by the following: the International
Association of Machinists & Aerospace Workers; the International Brotherhood of
Electrical Workers; the International Union of Electronic, Electrical, Technical,
Salaried & Machine Workers, AFL-CIO-CLC; the United Steelworkers of America;
and the Industrial Union Department of the AFL-CIO. On December 22, 1986, an
investigation directed against all four countries was initiated.
On January 22, 1987, the ITC issued a preliminary affirmative determination,
finding a reasonable indication that U.S. industry was materially injured by
reason of allegedly dumped imports of colour picture tubes from the four countries.
On June 30, 1987, after two postponements, Commerce issued a preliminary
affirmative determination and ordered the suspension of liquidation of
imports from all four countries. On November 18, 1987, Commerce made its final
dumping determination. This was followed by the December 22, 1987, release by
the ITC of its affirmative final determination of injury. The ITC concluded that
the U.S. colour picture tube industry was suffering material injury by reason of
dumped imports from the four named countries. The finding was based on the
following indicators: a decline in U.S. capacity and capacity utilization from 1985
to 1987, a steady decline in intra-company shipments, a rise in U.S. inventories,
declines in the number of workers and hours worked, substantial operating and
net losses over the entire period of investigation, a near doubling of imports, an
increase in import market penetration from 8.2% to 12.4%, and a decline in
average prices for all screen sizes between 1984 and 1986.
As noted, on November 18, 1987, Commerce had issued its final affirmative
determination. However, counsel for the Canadian producer/exporter Mitsubishi
had pointed out several clerical and computer errors made by Commerce. As a
result, a duty rate of 0.63% for Mitsubishi and all other exporters from Canada was
assessed and published on January 7, 1988.
Petitioners argued that CPTs shipped and imported, together with all parts necessary
for assembly into a complete television set or receiver (i.e. as a “kit”), should
be included in the order. Commerce disagreed and excluded such CPTs from the
scope of the order. Kits and fully assembled televisions were considered by
Commerce to be a separate class or kind of merchandise if: (1) the CPT is “physically
integrated” with the other television receiver components in such a manner
as to constitute one inseparable amalgam; and (2) the CPT does not constitute a
significant portion of the cost or value of the items being imported.
The Canadian Embassy in Washington, D.C., filed a diplomatic note challenging
the allegation of injury caused by imports from Canada to the U.S. industry. The
government also monitored the investigation and provided general advice to
Canadian exporters.
At the request of U.S. petitioners, there were two administrative reviews initiated
with respect to the order as it pertained to Canada. They covered the 1993 and
1995 review periods, respectively. Both were terminated at the request of the petitioners
before determinations were made.
On August 27, 1990, upon the request of the petitioners, Commerce initiated an
inquiry to determine whether Mitsubishi Electronics Industries Canada was
circumventing the anti-dumping duty order by means of use of assembly facilities
in Mexico. After a negative preliminary determination, on March 7, 1991,
Commerce issued a negative final determination in the circumvention inquiry. At
issue was the methodology Commerce used to measure the difference in value
between the colour picture tubes imported into Mexico and the value of the
finished television sets exported from Mexico to the United States. Commerce
rejected the petitioners’ request to measure the value of a CPT as an incomplete
television assembly. Commerce also found that differences in the value between
the tube and the completed television set ranged from 55% to 70%. As a result,
these differences in value were not found to be small, which is a necessary
element for a finding of circumvention.
On July 5, 1995, Mitsubishi filed a request for Panel Review under Chapter 19 of
NAFTA. The panel was asked to consider Commerce’s May 25, 1995, determination
not to revoke the anti-dumping duty order. On June 14, 1996, the panel
affirmed Commerce’s determination not to revoke the order. The panel found that
as five years had passed since the imposition of the order without an administrative
review, Commerce was required, by regulation, to publish a Notice of Intent
to Revoke by January 1, 1993, the month of the fifth anniversary of the publication
of the order. If there were no objections at that point, the order would be
lifted. However, Commerce did not publish the required notice until December
28, 1994. The trade union petitioners at that point objected to the revocation, and
on May 25, 1995, Commerce published a Notice of Determination Not to Revoke
the anti-dumping duty order. Mitsubishi argued that because no interested party
objected by the last day of the month of the fifth anniversary, the order should
have been revoked regardless of the fact that the necessary notice was not
published. On the other hand, Commerce and the unions argued that notice of
intent to revoke must be published in order to give interested parties an opportunity
to object prior to revocation.
The panel based its decision on the language of the relevant regulations and the
decision of the Court of Appeals for the Federal Circuit in Kemira. The regulations
and the Kemira case both suggest that the complainant has the burden of demonstrating
significant prejudice directed against its interests as a result of the error,
a burden that was not discharged in the opinion of the panel. Furthermore,
evidence suggested that the demonstrated vigilance of the unions would have
resulted in a timely objection had the notice been published in a timely manner.
On March 1, 1998, a five-year sunset review of the order was initiated. The ITC
determined that it would conduct a full review, while Commerce conducted an
expedited review. On August 27, 1999, Commerce made a final determination
that revocation of the anti-dumping duty order would be likely to lead to the
continuation or recurrence of dumping. In this context, Commerce accepted the
petitioners’ arguments that, in view of the fact that imports of subject goods fell
steadily since the imposition of the order, they could not be imported without
being dumped. However, on March 30, 2000, the International Trade Commission
found that revocation of the order would not lead to continuing injury to the
domestic industry. The order was therefore revoked.
On February 10, 1987, Lundberg Industries and New Mexico Potash Corp. filed a
petition alleging injurious dumping of potassium chloride (potash) from Canada.
On March 5, 1987, Commerce initiated an investigation.
On April 2, 1987, the ITC issued a preliminary affirmative determination, finding
a reasonable indication that an industry in the United States was materially
injured by reason of allegedly dumped imports of potassium chloride from
Canada. On August 26, 1987, Commerce released an affirmative preliminary
determination. Commerce also determined that critical circumstances did not
exist as alleged by the petitioner, finding no evidence of massive imports over a
relatively short period. In its preliminary determination, Commerce found
preliminary margins of 51.90% for the Potash Corporation of Saskatchewan,
9.14% for International Minerals & Chemical Corporation, 29.27% for
PPG/Kallum, 85.60% for Central Canada Potash, and 77.44% for Potash of
America. The provisional all-others rate was 36.62%.
On January 19, 1988, Commerce suspended its investigation because an agreement
had been reached with the Canadian producers/exporters accounting for
substantially all of the known imports of potassium chloride from Canada. The
Canadian producers/exporters agreed to revise their prices so as to eliminate the
injurious effects of exports of the merchandise to the United States. At the request
of the Olin Corporation (a U.S. interested party), Commerce excluded potassium
chloride from Canada containing 0.5% or less of sodium chloride (“low-sodium
potash”) from the scope of the investigation.
The Canadian Embassy in Washington, D.C., was very active in facilitating discussions
among the parties regarding the conclusion of a suspension agreement. The
Embassy also made several representations on the standing of the petitioners to
request an investigation.
On April 1, 1999, Commerce and the ITC initiated a five-year review of the
suspended investigation in order to determine whether termination would be
likely to lead to continuation or recurrence of dumping and material injury to the
domestic industry within a reasonably foreseeable time. On May 28, 1999,
Commerce published notice that it was terminating the investigation because no
domestic interested party had responded to the notice of initiation. The order was
therefore revoked.
On February 11, 1987, a petition was filed by Tex-Tube Div., Cyclops Corp.
(Houston, Texas) and Maverick Tube Corp. (Chesterfield, Missouri), all alleging
the injurious dumping of certain welded carbon steel line pipe from Canada.
Commerce initiated the investigation on March 10, 1987. On April 8, 1987, the
ITC made a negative preliminary injury determination and the investigation
was terminated. The ITC found that there was no reasonable indication that an
industry in the United States was materially injured or threatened with material
injury, or that the establishment of an industry in the United States was
materially retarded, by reason of imports from Canada. In particular, Commissioners
Lodwick and Rohr considered that although some of the essential
economic indicators showed declines over the period of investigation, these
declines had to be viewed in the context of the declining market for line pipe.
Furthermore, the ITC found that the domestic industry enjoyed relative
stability and increasing market share.
In addition, the data clearly indicated that Canadian imports were not the cause
of any material injury that might have been suffered, being stable and low in
absolute and relative terms with no indication of price suppression or depression.
In fact, the small increases in imports were due to the shutdown of a number of
U.S. mills and the close proximity of Canadian mills. Other alleged lost sales arose
from special market circumstances, including industry-wide restructuring and a
lengthy work stoppage at USX. In addition, ITC Chairman Liebler employed a
rebuttable presumption (which was never rebutted) that cumulated import penetration
of less than 2.5% of U.S. consumption was too insignificant to be a cause
of material injury.
The ITC negative determination was appealed to the U.S. Court of International
Trade. On May 24, 1988, the CIT rendered its decision in Maverick Tube Corp.
v. United States, sustaining the negative determination.
Prior to initiation of the investigation, the Canadian Embassy in Washington,
D.C., submitted a diplomatic note challenging the injury allegation by the
petitioners.
On January 11, 1988, the American Institute of Steel Construction, Inc. filed a
petition on behalf of U.S. producers of fabricated structural steel, alleging injurious
dumping of fabricated structural steel from Canada. On February 5, 1988,
Commerce initiated an investigation.
On March 2, 1988, the ITC made a negative preliminary injury determination and
the case was terminated. It found that there had been a 12% increase in domestic
shipments from 1984 to 1986, and a 13% increase in the value of shipments from
1984 to 1985, followed by 3% increases in 1986 and 1987; there had also been a
rise in capacity utilization, increased net sales, low import volumes, a recent rise
in domestic producers’ market share and correspondingly decreasing import
market penetration. For these reasons the ITC held that there was no reasonable
indication that the U.S. industry was materially injured by reason of allegedly
dumped imports from Canada.
A diplomatic note was filed by the Canadian Embassy in Washington, D.C., prior
to initiation, asserting that the petition did not contain sufficient information of
injury or dumping to warrant an investigation.
On September 26, 1988, Commerce and the ITC received a petition filed by Bethlehem
Steel Corporation, alleging that dumped imports of new steel rails were
injuring U.S. industry. On October 21, 1988, an investigation was initiated. A
countervailing duty investigation was initiated at the same time.
On November 23, 1988, the ITC issued a preliminary affirmative determination,
finding a reasonable indication that an industry in the United States was materially
injured by reason of allegedly dumped imports of new steel rails from Canada.
On March 13, 1989, Commerce issued a preliminary affirmative determination
and ordered the suspension of liquidation of subject imports. On August 3, 1989,
Commerce issued a final affirmative determination.
On September 8, 1989, the ITC issued a final affirmative determination with
respect to the threat of material injury. Based upon net income and operating
losses, declining employment, declining wages between 1986 and 1988, a negative
return on assets throughout the period of investigation and a negative cash flow
through 1988, the ITC found a threat of material injury from Canadian imports.
The ITC did not, however, make any finding with respect to present material
injury, despite a substantial increase in imports and market share. There was little
evidence of price underselling as the initial Canadian price in most instances was
in the mid-range of U.S. domestic bid prices. On September 15, 1988, an antidumping
duty order was issued with margins as set out below. Because of the ITC
finding that U.S. industry was threatened with material injury, all provisional antidumping
duties collected subsequent to the determination of preliminary
dumping were refunded.
Manufacturer/Exporter |
Estimated Dumping Margins |
Algoma Steel Corp. Ltd. |
38.79% |
All Others |
38.79% |
Commerce rejected the information provided by Algoma with respect to cost of
production, and instead used best information available as submitted by the petitioner.
Specifically, Commerce alleged that Algoma misinterpreted Commerce’s
questionnaire and provided the wrong cost data, and that the company developed
unverifiable and undocumented information for the investigation rather than
using an existing cost accounting system. Furthermore, the reported costs were
not tied to the company’s financial records and could not be reconciled with the
company’s actual inventory costs. Algoma categorically denied all of Commerce’s
allegations, contending that it used the most reliable information available and
kept Commerce fully informed of its approach throughout the response and verification
process.
Since a countervailing duty investigation regarding new steel rails from Canada
was initiated simultaneously with the anti-dumping duty investigation, it is difficult
to isolate Canadian government representations related solely to the antidumping
investigation. The Canadian Embassy in Washington, D.C., in particular
made a number of interventions with U.S. authorities:
- On October 13, 1988, a diplomatic note was filed with U.S. authorities
concerning the anti-dumping investigation. It was the Canadian
position that U.S. import statistics used by Commerce and the ITC
contained information on scrap rail. This overestimated sales and
undervalued prices. The note also argued that declining use of rail
service affected demand.
- In January 1989, representations were made objecting to Commerce’s
consideration of late allegations by the petitioner.
- In correspondence dated September 18, 1989, the Embassy
suggested that Algoma had not been given an opportunity to address
any alleged or apparent deficiencies uncovered during or after
verification.
On September 1, 1989, both Algoma Steel Corp. and Sydney Steel Corp. filed a
request for an FTA Panel Review of the ITA’s final affirmative determination of
dumping. On August 30, 1990, the binational panel affirmed Commerce’s final
dumping determination. Details on the specific issues under consideration by the
panel follow.
Commerce had rejected the cost of production (COP) information submitted by
Algoma and used best information available to construct a home market value.
Commerce alleged that Algoma had misinterpreted Commerce’s questionnaire,
therefore providing cost data based on unverifiable and undocumented information
as opposed to using a standard cost accounting system. Furthermore,
Commerce alleged that costs reported by Algoma were not tied to the company’s
financial records, were unreconcilable with the company’s actual inventory costs
and were based on data for times outside the period of investigation.
Algoma had categorically denied all of Commerce’s allegations, contending that it
used the most reliable information available and had kept Commerce fully
informed of its approach throughout the response and verification process.
The panel found that Commerce could not verify that Algoma’s reported costs
were accurate reflections of the actual costs of producing each product. In effect,
Algoma’s inability to provide documentation establishing how these standard
costs were derived constituted non-compliance with an information request,
which in turn was judged to be sufficient reason to reject the submission. The
panel therefore found that Commerce had acted in accordance with law in
rejecting Algoma’s standard cost data as the basis for costs of production.
Algoma asserted that Commerce had failed to provide timely notice that its cost
information data was inadequate. The panel found that there was a great deal of
confusion surrounding the issue but that Algoma had adequate notice that it was
required to produce verifiable cost data. Algoma was also made aware that if the
data did not conform to the request, Commerce would resort to best information
available. Furthermore, the panel rejected Algoma’s claim that Commerce did not
give the company a reasonable opportunity to correct the alleged inadequacies,
noting that in its brief Algoma itself conceded that verification of a second cost
submission would have been impossible.
Algoma contended that after Commerce rejected its cost information, Commerce
should have used inventory values as the most reasonable form of best information
available rather than relying on the petitioner’s data. The panel found no
basis for reversing Commerce’s selection of the petitioner’s data. Here, it was
noted by the Panel that best information available does not need to be the “best”
of all information available but need only be supported by substantial evidence on
the record. Algoma presented no evidence that cast doubt on the reliability of the
petitioner’s data, and had itself detailed problems with using the inventory values
as a basis for foreign market value.
On October 11, 1989, a request for a review of the ITC final affirmative determination
of injury was filed by Sydney Steel Corp. On August 13, 1990, the binational
panel affirmed the ITC’s final affirmative threat of injury and negative material
injury determinations, including cumulation of dumped and subsidized imports
(Sydney Steel). Other issues considered by the panel included the following:
Algoma argued that the U.S. legislation mandates the ITC to find that either a U.S.
industry is materially injured or that a U.S. industry is threatened with material
injury, i.e. that it cannot find both. Therefore, if the ITC finds that an industry has
been materially injured by causes other than the subject imports, the ITC is
precluded from finding that the industry is threatened with material injury.
The panel found that while Algoma’s argument could be supported by the statutory
language, it was not supported by legislative history and Congressional
intent, which is to provide relief from dumped or subsidized imports before material
injury actually occurs. The panel also held that an affirmative finding by the
ITC that an industry in the United States is experiencing material injury, without
regard to its causation, does not preclude consideration of whether the industry
is threatened with material injury.
For a finding of threat of material injury to be legitimate when there is no finding
of material injury by reason of imports, the record must reveal, in the absence of
any evidence of deterioration in the condition of the domestic industry, the effect
of the imports on that industry. In order to prevail, the appellants have the burden
of demonstrating that the threat finding is not based on substantial evidence of
record or is not otherwise in accordance with law. The panel found the ITC
reasoning to be adequate in this regard. The panel also found that it had not been
demonstrated that the ITC had erred in determining that the unused capacity of
the Canadian producers had increased substantially. Furthermore, the panel
agreed with the ITC finding that over the period of investigation, an increasing
proportion of Canadian production was dedicated to export to the United States,
and market conditions in Canada would continue to exert pressure to increase
exports to the United States. In addition, the panel rejected Algoma’s argument
that imports must rise in order for there to be a valid determination that there is
a threat of material injury.
Petitioner Bethlehem Steel challenged the ITC finding that any material injury
was not by reason of the subject imports. The panel affirmed the determination
of the ITC. Because the ITC did not explain its findings as required by U.S. law,
Bethlehem asserted that a remand to the ITC was required. The panel agreed with
the ITC position that there is no Congressional intent to require the Commission
to discuss every factor or argument presented in an investigation. The panel found
that there was no inconsistency in the ITC opinion regarding the possibility of
future price suppression and price depression, and the absence of present causation
of material injury.
Bethlehem further alleged that the pricing data reported by railroads, and later
used by the ITC, were inconsistent with the pricing data reported by producers.
The panel found that there was nothing unusual about conflicting data of record in
an investigation; so long as the ITC made reasonable choices among the conflicting
data, the fact that the data might support other choices in a new review was immaterial.
Bethlehem asserted that the ITC had committed errors in its analysis of the
volume of imports and in the market share held by the Canadian imports, and that
it had failed to take into account the margins of dumping and subsidization. On the
latter point, the panel found that U.S. law permits the ITC to examine the margins
of dumping and subsidization, but does not require it to do so.
In November 1990 and May 1993, administrative reviews for the periods 1989–
1990 and 1991–1992 were initiated and then terminated at the request of the
respondent Algoma. In 1996, two changed circumstances reviews were conducted.
One resulted in a determination to revoke the anti-dumping order as it applies to
a specific variety of new steel rail (100 pounds per yard [100ARA-A]), excepting
light rail. The other review was terminated after a scope clarification was issued.
On June 1, 1999, Commerce and the ITC initiated a sunset review of the antidumping
and countervailing duty orders on steel rails from Canada. Both
Commerce and the ITC determined that they would conduct expedited reviews
since neither body received a substantive response from any respondent party. On
December 29, 1999, Commerce made a final determination that revocation of the
anti-dumping duty order would be likely lead to the continuation or the recurrence
of dumping. This determination was based upon a finding that although Algoma
had ceased to produce new steel rail, Sydney Steel still was doing so; Commerce
noted that about 40% of Sydney Steel’s production went into rail, and that its fiveyear
business plan called for an increase in rail production and rail exports.
Furthermore, Commerce noted that there was a significant drop in exports to the
United States after the order and that there had been no increase since,
suggesting that Sydney could not export to the United States without dumping. As
for the magnitude of the margin that Commerce took into account, the original
margin of 38.79% was used because there had been no administrative review
concluded since the order went into force in 1989.
On January 13, 2000, the ITC made an affirmative determination that revocation
of the order would be likely to lead to a continuation or recurrence of injury to the
U.S. industry by reason of dumped imports. The order was therefore continued.
On April 15, 1988, Triplex Inter Control (USA) Inc. of St. Albans, Vermont, filed
a petition alleging injurious dumping of appliance plugs and internal probe thermostats
from Canada. On June 8, 1988, the ITC issued a preliminary affirmative
determination, finding a reasonable indication that an industry in the United
States was materially injured by reason of allegedly dumped imports of appliance
plugs and internal probe thermostats from the named countries.
On September 28, 1988, Commerce issued a preliminary affirmative determination
and ordered the suspension of liquidation of imports from all five named
countries. On December 13, 1988, Commerce released an affirmative final determination
with the following anti-dumping margins for imports from Canada.
Manufacturer/Exporter/Seller |
Estimated Dumping Margins |
ATCO Controls |
9.27% |
All Others |
9.27% |
On February 1, 1989, the ITC released a negative final determination. Despite the
petitioner’s mixed record of profitability during the period of investigation, the
domestic production of thermostats increased from 1.70 million units in 1985 to
2.32 million in 1987, and capacity utilization rose from 38% in 1985 to 52% in
1987; also increasing were wages, hours worked and productivity. This led the
ITC to rule that the domestic industry was not threatened by reason of dumped
imports from Canada. The ITC also found that, as the majority of the domestic
producers also purchased the subject imports themselves and/or did not compete
with the imports for open market sales, it could not conclude that direct competition
existed between importers and domestic manufacturers.
Commerce rejected the respondents’ request for a suspension agreement,
finding that such an arrangement would not be in the public interest, nor
would effective monitoring of the suspension agreement be practicable. ATCO
stated that its Canadian sales fell into two categories: (1) certain models
meeting Canadian technical specifications were sold to Canadian appliance
manufacturers and packaged with small appliances to be sold in Canada; and
(2) other models meeting U.S. specifications were sold to Canadian appliance
manufacturers and packaged with small appliances to be sold in the United
States. Commerce refused ATCO’s request to treat the second category as sales
to the United States for fair market value purposes because the subject
merchandise as such was sold in Canada, while the products ultimately sold to
the United States were small appliances, and thus were merchandise not
covered by this investigation.
A diplomatic note dated May 4, 1988, expressed the Canadian government’s
concern over the apparent low initiation standard. The note also objected to the
potential use of constructed value in anti-dumping investigations when Canadian
home market prices were available. The government also assisted the company in
its unsuccessful attempt to obtain a suspension agreement.
On October 27, 1988, Commerce and the ITC received a petition filed by Biocraft
Laboratories of Elmwood Park, New Jersey, and an investigation was initiated. On
December 12, 1988, the ITC issued a preliminary affirmative determination,
finding a reasonable indication that an industry in the United States was materially
injured by reason of allegedly dumped imports of generic cephalexin capsules
from Canada.
On April 12, 1989, Commerce issued a preliminary affirmative determination and
ordered the suspension of liquidation of imports. On June 26, 1989, Commerce
released an affirmative final determination with the following rates:
Manufacturer/Exporter/Seller |
Estimated Dumping Margins |
Novopharm, Ltd. |
7.50% |
All Others |
7.50% |
On August 16, 1989, the ITC released a negative final determination. The ITC
concluded that—given increased competition between generic cephalexin
producers, increased consumption, dramatically increased capacity after 1987,
increased employment and profitability—the domestic industry had not suffered
material injury as a result of dumped imports from Canada. The Canadian producer
was found to have higher levels of capacity utilization than its U.S. counterparts,
with no evidence of intended product shifting. Evidence of mixed selling with trends
toward overselling provided no proof of price suppression or depression.
The petitioner argued that because of the dominant buying role played by the
Canadian government in the home market (i.e. sales to government agencies and
hospitals), such sales should be excluded from face market value calculation
because they were not made under “free market conditions.” Commerce rejected
this argument, finding that there is no foundation for finding “state control” of
only certain sales to certain purchasers in a market economy.
The respondent argued that its payments to a distributor in its home market
should be categorized as rebates, not commissions as originally reported.
Commerce agreed with the respondent because the payment to the distributor
was a fixed percentage of the original invoice and was made regardless of whether
the merchandise was resold.
The respondent requested Commerce to make allowances for quantity discounts.
U.S. regulations require the respondent to prove that it has granted comparable
quantity discounts on at least 20% of its home market sales, and to show that the
discounts are related to economies of scale associated with larger production
quantities. Commerce chose to compare sales of home market buying groups and
government agencies with sales to purchasers of large quantities in the United
States, and did not apply a quantity discount adjustment.
The petitioner argued that Commerce should exclude variable factory overhead,
and direct labour and materials costs from the adjustment for physical differences
between merchandise sold in the United States and in the home market.
Commerce adjusted only for the net variable costs associated with differences in
the costs of materials, finding that the respondent was unable to demonstrate that
other cost variables were associated with physical differences in merchandise.
The Canadian Embassy in Washington, D.C., filed a diplomatic note dated
November 14, 1988, with U.S. authorities expressing the view that the petitioner
did not represent the industry and that the petition did not contain sufficient
evidence of injury to the U.S. industry. Embassy officials wrote in July 1989 urging
the ITC not to cumulate Canadian exports with those of Israel and Portugal,
152
arguing that cumulation without prior investigation was in violation of the GATT.
On July 24, 1989, Southampton Coach Works, Ltd. of Farmingdale, New York,
filed a petition alleging injurious dumping of limousines from Canada. Commerce
initiated an investigation. A concurrent countervailing duty investigation was also
initiated. On September 13, 1989, the ITC issued a preliminary affirmative
determination, finding a reasonable indication that an industry in the United
States was materially injured by reason of allegedly dumped imports of limousines
from Canada.
On January 9, 1990, Commerce issued a preliminary affirmative determination
and ordered a suspension of liquidation of imports. On March 26, 1990,
Commerce released an affirmative final determination with the following rates:
Manufacturer/Exporter/Seller |
Estimated Dumping Margins |
A.H.A.Manufacturing, Ltd. |
5.76% |
All Others |
5.76% |
In response to a request from the petitioner, the investigation was terminated on
April 9, 1990.
The petitioner contended that critical circumstances existed because the respondent
had entered receivership following the preliminary determination and was
likely to liquidate existing inventory at “fire sale” prices. However, Commerce
found that none of the three necessary conditions for a finding of critical circumstances
existed.
AHA claimed that those limousines it manufactured using U.S.-origin Lincoln Town
Car and Cadillac chassis were outside the scope of the investigation because they
were “non-Canadian” in origin. Commerce found that AHA performed a sophisticated
limousine conversion process, which transformed the base vehicle into a new
and different article of merchandise with an increase in value of over 100%.
AHA contended that its U.S. fleet sales were made at the same level of trade as
sales to distributors in Canada. However, Commerce found that the fleet
customers were a type of end-user, while distributors acted as wholesalers and
therefore were at a different level of trade. As such sales made up a small proportion
of AHA’s U.S. sales and there was a lack of comparable sales in Canada, they
had not been included in the final determination.
The petitioner argued that Commerce should disallow deductions from the
foreign market price for expenses related to AHA’s after-sales service plan and
after-sales rebates. Commerce found the service plan to be part of the total
package purchased by the customer and therefore directly related to the sales
under consideration, while the rebates were consistent with AHA’s practice prior
to the petition and did not constitute an attempt to circumvent the anti-dumping
investigation.
As this was also a countervailing duty investigation, it is difficult to isolate Canadian
government representations related solely to the anti-dumping investigation.
However, in its diplomatic note of April 9, 1989, the Canadian Embassy in Washington,
D.C., questioned aspects of the petition as it applied to anti-dumping.
On September 5, 1991, the Magnesium Corporation of America filed a petition
alleging the injurious dumping and subsidization of imports of magnesium from
Canada, as well as dumping from Norway. On September 25, investigations were
initiated.
On October 30, 1991, the ITC issued a preliminary affirmative determination,
finding a reasonable indication that an industry in the United States was materially
injured by reason of allegedly dumped imports of Canadian magnesium. On
February 20, 1992, Commerce issued an affirmative preliminary determination.
Norsk Hydro Canada Inc. (NHCI) did not complete a portion of Commerce’s questionnaire,
resulting in the use of best information available as provided by the
petitioner. For the other Canadian respondent, Timminco, home market sales
were considered insufficient to determine foreign market value; accordingly, sales
to a third country, Japan, were used to establish fair market value.
On July 13, 1992, Commerce issued an affirmative final determination with
respect to Canadian producers of pure magnesium. The portion of the investigation
relating to alloy magnesium was terminated because the evidence supporting
the petitioner’s dumping allegations was found to be insufficient. In the course of
its investigation, Commerce determined that pure and alloy magnesium constituted
two separate classes of merchandise. Commerce determined that similar
channels of distribution existed for the two products, but that the product characteristics,
ultimate uses and customer expectations demonstrated that pure and
alloy magnesium were two distinct classes of merchandise.
Commerce found that critical circumstances existed with regards to NHCI, as the
company’s dumping margin exceeded 25% and there existed evidence of a massive
surge in NHCI’s imports of pure magnesium over a relatively short period of time.
The final anti-dumping duty margins were determined as follows:
Manufacturer/Producer/Exporter |
Estimated Dumping Margin |
Timminco Ltd. |
00.00% (excluded) |
Norsk Hydro Canada Inc. (NHCI) |
31.33% |
All Others |
31.33% |
On August 26, 1992, the ITC issued an affirmative final injury determination.
Unlike Commerce, the ITC determined that pure and alloy magnesium constitute
one like product, not two distinct products. This conclusion was based on a
finding of physical similarities, similar core production processes and similar
distribution channels. It was found that the volume and market penetration of the
subject imports increased dramatically during the period of investigation. Coincident
with this large increase, U.S. producers’ domestic shipments and market
share declined steadily in both quantity and value. Correspondingly, the prices
for both U.S.- and Canadian-produced magnesium steadily declined during the
period of investigation.
With regard to critical circumstances, the ITC was required to determine whether
an imposition of duties, applied on a 90-day retroactive basis from the date of the
final determination, was necessary to prevent the recurrence of material injury
caused by a massive import surge over a relatively short period of time. While
such a surge occurred in the three-month period beginning with the month the
petition was filed (September 1991), the retroactive imposition of duties would
not have covered most of the imports that accounted for the post-petition surge.
Therefore, the ITC concluded that the effectiveness of the anti-dumping order on
pure magnesium would not be materially impaired by a failure to impose retroactive
duties, and it accordingly made no determination.
The petitioner represented only 22% of the U.S. magnesium industry and there
was no showing of support by other industry members. Despite these factors,
Commerce decided that the petition was filed “on behalf of” the domestic
industry. Commerce asserted that neither statute nor legislative history indicated
the degree of support that must be shown before Commerce may accept a petition
as filed on behalf of domestic industry. Furthermore, judicial decisions have
in the past upheld Commerce’s interpretation of “on behalf of” as a permissible
interpretation of the statute. (This issue would be settled with the implementation
of the Uruguay Round Agreements Act on January 1, 1995.)
Norsk Hydro argued that pure and alloy magnesium should be separated into two
classes of merchandise. According to Norsk Hydro, its argument was supported by
the factors typically considered by Commerce when making a class or kind determination:
(1) physical appearance and characteristics; (2) ultimate use; (3) channels
of distribution; and (4) customer perception. The petitioner maintained that
pure and alloy magnesium should remain one class or kind. While the two-class
argument was successful on the Commerce side, the ITC rejected it for purposes
of determining injury.
On August 10, 1992, NHCI filed a request for a Binational Panel Review of
Canada’s final dumping determination. The company identified constructed value
calculations for: material costs; depreciation expenses; average wage rates; and
selling, general and administrative expenses. After the parties filed their respective
briefs for this review, the panel remanded the final determination back to
Commerce, upon Commerce’s request, in order to address the issues raised by
NHCI. On May 27, 1993, Commerce filed its Redetermination Pursuant to
Remand, in which the anti-dumping duty was reduced from 31.33% to 21%. NHCI
was satisfied with respect to redetermined material costs and depreciation
expenses, and restricted its appeal to the appropriate wage rates and SGA attributed
to NHCI. Best information available was used to calculate these expenses as
NHCI had failed to complete the relevant parts of Commerce’s questionnaire.
NHCI did not challenge the use of BIA but argued that Commerce should adjust
certain elements in the petitioner’s constructed value calculations because they
were not reasonably quantified or valued.
On October 6, 1993, the panel upheld Commerce’s BIA methodology, stating that
since NHCI chose not to answer the questionnaire, Commerce was justified in
making a “reasonable adverse inference” with regard to NHCI’s costs. Furthermore,
a determination based on BIA should be upheld if there was reasonable
evidentiary support in the record for the BIA.
On September 25, 1992, a Binational Panel Review of the ITC’s final affirmative
injury determination was requested by NHCI and the Government of Quebec. The
Government of Canada subsequently filed a notice of appearance in support of
Quebec and NHCI, as the review also related to the simultaneous countervailing
duty investigation.
On August 27, 1993, the panel concluded that pure and alloy magnesium constituted
two classes of merchandise, and that the record did not support the ITC’s
determination that there are significant physical and price similarities between
pure and alloy magnesium. Furthermore, the existence of similar distribution
channels was found to be of no significance. The panel did concur with the ITC’s
determination with regard to the similarities of the core production processes, but
it found this similarity insufficient to reasonably conclude that only one like
product existed. The panel also took issue with the ITC’s alternative conclusion
that, even if two separate products existed, it would have reached an affirmative
material injury determination with respect to each of these industries; the panel
held that the conclusion was not supported by adequate analysis concerning the
impact of imports on the domestic industry. The determination was remanded to
the ITC for separate injury determinations for pure and alloy magnesium.
On January 27, 1994, the panel upheld the ITC’s remand finding of injury with
regard to pure magnesium. The ITC also found, on remand, that there was no
injury with respect to alloy magnesium as it applied to dumping. The panel found
that the ITC’s determination, which stated that there was an absolute increase in
imports from Canada relative to consumption and a steady decline in prices for
both U.S.- and Canadian-produced alloy magnesium, was adequately stated and
supported by substantial evidence. With regard to the impact of imports on
domestic producers, the ITC based its determination on several factors: (1) the
injury caused by imports from Canada to the U.S. industry as indicated by a high
degree of substitutability between imported and domestic magnesium; (2) the
relatively inelastic demand for the product; and (3) the significant increase in
such imports, coinciding with a decline in market share and revenues for U.S.
producers. The complainants argued that non-price factors in the market were
responsible for the growth in imports from Canada and the difficulties experienced
by U.S. producers. The panel conceded that there was evidence to support
this position, but it held that the ITC had properly acted within its discretion in
finding that non-price factors did not negate the significance of price in buyers’
purchasing decisions.
Seven administrative reviews have been completed. During the first two administrative
reviews, cumulatively covering the period 1992–1994, no U.S. sales were
made and thus Commerce determined that there was no basis for re-assessing
duties on these entries. Margins for the last three administrative reviews, cumulatively
covering the period 1994–1999, were found to be in the de minimis range
for NHCI.
Based on three consecutive years of no dumping, NHCI requested that the order
be revoked with respect to its exports of pure magnesium. On March 16, 1999, in
its final determination of the administrative review covering the period 1998–
1999, Commerce concluded that NHCI did not qualify for revocation of the order
on pure magnesium. Commerce determined that NHCI did not sell the subject
merchandise in the United States in commercial quantities in any of the three
years cited by NHCI to support its request for revocation. Specifically, NHCI made
one sale in two of the relevant years and two sales in the other. A volume of one
or two sales to the United States during a one-year period was not consistent with
NHCI’s selling activity prior to the order, nor was it consistent with NHCI’s selling
activity in the home market. The abnormally low level of sales activity did not
provide a reasonable basis for determining that the discipline of the order was no
longer necessary to offset dumping.
The last administrative review was conducted in May 2000; the period examined
was August 1, 1998, to July 31, 1999. Commerce determined that magnesium
sales from NHCI had not been made below normal value.
On August 2, 1999, Commerce and the ITC initiated a sunset review of the antidumping
and countervailing duty orders on pure and alloy magnesium from
Canada. Both Commerce and the ITC determined that they would conduct a full
review. On July 5, 2000, Commerce made a final determination that a revocation
of the countervailing and anti-dumping duty orders would be likely to lead to the
continuation or recurrence of subsidization and dumping.
With respect to dumping, Commerce determined that Norsk Hydro had eliminated
dumping over a period of four consecutive administrative reviews, but it
also noted that imports of pure magnesium had declined by 97% in the first year
of the order from import levels of pre-order years, and since then had never
reached more than 10% of pre-order levels. In accordance with statute and regulation,
Commerce found that the existence of a zero dumping margin did not
require Commerce to find that revocation would not lead to continuation or
recurrence of dumping. As for the 21.0% duty rate that it reported to the ITC,
Commerce noted that it was directed by the Statement of Administrative Action
(Uruguay Round Agreements Act of 1994) to select a rate reflecting the behaviour
of exporters without the discipline of the order. Since import volumes had
declined so significantly as of the date of the order and since the dumping margin
from the original investigation was the only margin calculated for a period in
which Norsk was shipping commercial quantities, Commerce concluded that it
was necessary to select that specific margin.
As directed by statute, the ITC investigated the likely impact of subject imports
on the domestic industry if the orders were revoked. As in the original investigation,
the ITC segregated its examination into pure and alloy magnesium, although
it did note that both pure and alloy magnesium are very similar and are produced
at common production facilities, and that production can easily be switched
between the two.
The ITC found that revocation of the anti-dumping and countervailing duty order
as it applied to pure magnesium would be likely to lead to continuation or recurrence
of injury to the domestic industry. The ITC noted that there had been
significant changes in the U.S. industry with the exit of the largest producer, Dow
Chemical, from the market, leaving only two producers, Northwest Alloys and the
petitioner, Magcorp. However, the ITC also found that conditions in the U.S.
market, which it described as price-competitive, had not changed since the original
investigation. Further, it found that while imports from third countries had
increased, a number of factors (including availability, price and quality) limited
the ability of such imports to be substitutable for North American products. The
ITC also noted the imminent entry of Canadian firm Magnola into the market,
which at full capacity would be the largest North American producer, and it
observed that Magnola had already began to solicit U.S. customers. Regarding
likely volume of imports, the ITC noted the significant market share that Norsk
Hydro was able to achieve prior to the order, the substantial additional capacity
to be added by Magnola and Norsk (with plans by the latter to double capacity
within two years), the two companies’ ability to shift from alloy to pure magnesium,
and their proximity to the U.S. market; according to the ITC, all these
factors supported the view that imports would increase significantly absent the
order. Regarding price, the ITC noted the significant price declines prior to the
imposition of the original orders, the likelihood that Magnola would lower prices
to gain U.S. customers, and the recent trend toward contracts of no more than
one year. All of these trends led the ITC to conclude that revocation would be
likely to lead to underselling and price suppression. As for the impact of these
factors on the U.S. industry, which had made recent efforts to improve its competitiveness,
the ITC concluded that price and volume declines by U.S. producers,
combined with a stagnant U.S. market for pure magnesium, would have a
negative effect on the industry’s production, sales and revenue levels, as well as
its ability to raise capital and employment levels.
The ITC found that the flexibility of Canadian producers, enabling them to switch
from pure to alloy magnesium, was such that if the order on one product was
revoked, they would simply increase exports of that product. The significant
market presence of subject imports from Canada, the stated focus of both Norsk
and Magnola on the alloy market, their ability to shift production from one
product to another, their size and proximity all argued for the conclusion that
there would be a significant increase in imports from Canada if the order was
revoked. Regarding price, the ITC repeated much of the reasoning used in its
analysis for the pure magnesium market but added that a small change in pricing
would have an effect. As for the overall impact of imports from Canada, the ITC
concluded, as it did regarding pure magnesium, that revocation of the orders
would result in losses in sales by the domestic industry and price suppression in
the U.S. market. Revocation, the ITC concluded, would adversely impact the
industry’s production, sales and revenue levels, which in turn would have an
adverse effect on the industry’s profitability, its ability to raise capital, and ultimately
employment levels.
Based on this analysis, the ITC made an affirmative determination and the order
was continued.
The Government of Canada invested most of its efforts in helping the Government
of Quebec and Norsk Hydro to present a defence of the government programs
involved in the concurrent countervailing duty investigation. It also assisted in
attempts to negotiate a suspension agreement and to have a changed circumstances
investigation initiated. In the years after the order went into effect, the Government
of Canada made a number of specific representations regarding elements of the
various administrative reviews conducted by Commerce on Norsk Hydro.
On February 13, 1991, Commerce and the ITC received a petition filed by
Torrington Co. of Torrington, Connecticut, alleging injurious dumping of ball
bearings from Canada. After investigation was initiated, the ITC released a negative
preliminary determination on April 10, 1991, and the investigation was
subsequently terminated with respect to all countries. The ITC found that
increases in shipments, employment, compensation and consistent profitability
demonstrated that the U.S. ball bearing industry was in good condition. This was
confirmed by the lack of any serious erosion of the industry’s market share
despite significant increases in imports. Moreover, the industry was able to devote
increasing sums to capital and R& D expenditures, and had significantly increased
capacity in recent years. On the basis of these factors, the ITC concluded that
there was no reasonable indication of material injury to the domestic industry.
For the purposes of threat analysis, the ITC did not cumulate imports from the 14
subject countries, citing the lack of uniformity in pricing trends and the
extremely low market shares of the majority of the countries. Canadian penetration
of the U.S. market decreased during the period of investigation, and the
prices of imported Canadian ball bearings generally increased substantially. In
light of the downward trend in market penetration, high capacity utilization rates
and the lack of a discernible effect on U.S. prices, the ITC concluded that there
was no reasonable indication of a threat by reason of dumped imports from
Canada.
The Canadian Embassy in Washington, D.C., filed a diplomatic note supporting
the position that there was no evidence of harm caused to the U.S. industry by
imports from Canada.
On July 12, 1991, Commerce and the ITC received a petition filed by Feldspar
Corporation of Asheville North Carolina. After an investigation was initiated, the
ITC issued a preliminary affirmative determination on September 5, 1991, finding
a reasonable indication that an industry in the United States was materially
injured by reason of allegedly dumped imports of nepheline syenite from Canada.
On September 19, 1991, Unimin, the respondent, proposed a suspension agreement.
On November 20, 1991, Unimin submitted a draft suspension agreement
for Commerce to consider. A suspension agreement was not ultimately concluded.
On December 27, 1991, Commerce issued a preliminary affirmative determination
and ordered a suspension of liquidation of imports. Pittsburgh Corning, an
interested party in the investigation, claimed that the petitioner lacked standing
because it was not a manufacturer of a like product, despite the ITC’s finding to
the contrary. Commerce agreed that it was not bound by the ITC’s determination
of like product but it found no basis to disagree with the ITC’s determination.
On March 17, 1992, Commerce released a final affirmative determination.
Commerce amended the scope of the investigation after soliciting comments from
interested parties. The following margins were issued:
Producer/Manufacturer/Exporter |
Weighted Average Margin |
Unimin Corp. |
9.36% |
All Others |
9.36% |
On May 6, 1992, the ITC released a negative final determination, and the investigation
was subsequently terminated. A portion of the hearing was held in camera
because most of the information collected by the ITC was business proprietary
information. Because of the presence of “appropriate circumstances” (as previously
identified by Commerce), the ITC conducted a regional industry analysis.
Such circumstances involve injury in an industry located in an area in which
production is necessarily isolated and insular. Canadian imports were found to be
sufficiently concentrated within the Northeast Corridor region to warrant a
regional industry injury determination. Unlike the case of a national industry
analysis, in order for the ITC to arrive at a finding of injury, “all, or almost all” of
the production within the region must be materially injured by reason of the
subject imports.
Despite the historically high volume of imports in the Northeast Corridor region,
there was no indication that dumped imports depressed or suppressed domestic
prices, reduced domestic volume or resulted in lost sales. Therefore, the regional
industry was not materially injured by reason of dumped imports. There was found
to be no threat of material injury to the regional industry because Unimin’s share of
the regional market had declined overall, while exports to non-U.S. markets
accounted for an increasing share of its shipments. Nothing on the record indicated
that there would be a change in this consistent trade pattern. Furthermore,
Unimin’s production capacity had increased slightly while its inventory levels were
nearly non-existent throughout the period of investigation. There was no indication
that future imports would have a discernible adverse impact on domestic prices.
The petitioner asserted that commission payments made by Unimin to its U.S.
parent should be the basis for a price adjustment because they were directly
related to the sales in question. Petitioner argued that the payments met the
arm’s-length transaction test set by the U.S. Court of Appeal, which requires
consideration of the full circumstances of the transaction in question. Commerce
did not deduct the commission in question as there was no evidence to suggest
that the commission was in fact an arm’s-length payment for services rendered.
Commerce rejected the petitioner’s argument that Unimin improperly allocated
leased railcar costs by allocating the total lease cost over total tonnage shipped,
rather than by allocating total cost over the number of days that leased cars were
in service. Commerce concluded that it would be unduly burdensome to require
Unimin to provide the information in the manner proposed by the petitioner.
The Canadian Embassy in Washington, D.C., filed a diplomatic note supporting
the position that there was no evidence of injury to the U.S. industry caused by
imports from Canada.
On June 28, 1991, the Committee of Domestic Steel Wire Rope and Speciality
Cable Manufacturers filed a petition alleging injurious dumping of steel wire rope
from Canada.
After an investigation was initiated, on August 21, l991, the ITC released a negative
preliminary determination and the investigation was subsequently terminated.
The ITC found that capacity, production, capacity utilization, domestic
shipments and employment indicators were all basically steady throughout the
review period, with slight dips and rises from year to year. At the same time, the
domestic industry’s financial indicators improved steadily. Although a comparison
of the interim 1990 and 1991 data showed some downward movement, these
changes were marginal and seen as typical of the slight up-and-down trend during
the three-year period of investigation.
Furthermore, the ITC found no causal link between the condition of the domestic
industry and the cumulated subject imports from Canada and the six other countries
subject to concurrent investigations. The cumulated market share of the
subject imports was relatively small and any increase during the period of investigation
was attributable to displacement of Korean products, which were not
subject to investigation. The ITC concluded that although there was evidence of
underselling by the subject imports, there was no reasonable indication of material
threat by reason of allegedly dumped imports from Canada. There was no
indication that the imports would have a depressing or suppressing effect on U.S.
prices, which in fact increased during the period of investigation. Furthermore,
the record did not indicate that there had been sales lost, or revenues reduced, as
a result of Canadian imports.
Based on the commonality of production processes and facilities, the overlap of
general uses, and employee/producer/customer perceptions, the ITC determined
that the like product consisted of all steel wire rope regardless of composition
or end use. The domestic industry was found to be composed of all
producers of steel wire rope.
The Canadian Embassy in Washington, D.C., filed a diplomatic note supporting
the position that there was no evidence of injury to the U.S. industry caused by
imports from Canada.
On January 2, 1992, LinChem, Inc. of Ashtabula, Ohio, filed a petition alleging
injury from dumped imports from three countries. After an investigation was initiated,
on February 26, 1992, the ITC released a negative preliminary determination
and the investigation was subsequently terminated.
The ITC found that increases in domestic production, shipments, consumption,
compensation and overall profitability demonstrated that the U.S. industry was in
good condition. The expansion by some domestic producers increased competition
and had an adverse effect on other domestic potassium hydroxide producers. Moreover,
the industry overall had devoted significant sums to capital expenditures.
The ITC found that even if the domestic industry had been injured, such injury
was not “by reason of” cumulated allegedly dumped imports from Canada, Italy
and the United Kingdom. Most important, market penetration levels were very low
and subject imports were not significant in volume. In addition, the collected
pricing data did not show any significant import underselling. On the basis of
these factors, the ITC concluded that there was no reasonable indication of material
injury to the domestic industry. Furthermore, it found no reasonable indication
that future imports would have a discernible adverse impact on domestic
prices in the near future. Accordingly the ITC concluded that there was no
reasonable indication of threat of material injury.
Aside from monitoring and general advice to industry representatives involved
in the investigation, no specific interventions were made by the Canadian
government.
On January 31, 1991, Commerce and the ITC received a petition filed by the U.S.
Cable Trade Action Group, a trade association. After an investigation was initiated,
on March 25, 1992, the ITC released a negative preliminary determination
and the investigation was subsequently terminated. During the period of investigation,
decreases occurred in net sales, operating income, U.S. producers’
domestic shipments and employment. However, the ITC attributed these declines
to the poor state of the U.S. housing market rather than Canadian imports; it
noted that the domestic producers’ market share remained consistently greater
than 95%. The majority of the responding domestic producers stated that Canadian
imports had not had any actual negative effects on their investment, ability
to raise capital, or existing development and production efforts. Furthermore, the
Canadian producers had little capacity to increase their level of exports to the
United States. The ITC concluded that the record as a whole contained clear and
convincing evidence that there was neither material injury nor threat of material
injury by reason of allegedly dumped imports from Canada.
Aside from monitoring and general advice to industry representatives involved
in the investigation, no specific interventions were made by the Canadian
government.
On June 30, 1992, Commerce and the ITC received a petition filed by the
following companies: Armco Steel Co., L.P.; Bethlehem Steel Corp.; Geneva Steel;
Gulf States Steel, Inc. of Alabama; Inland Steel Industries, Inc.; Laclede Steel Co.;
LTV Steel Co., Inc.; Lukens Steel Co.; National Steel Corp.; Sharon Steel Corp.;
USX Corp./U.S. Steel Group; and WCI Steel, Inc. All alleged that the dumping
and subsidization of imports of four specific flat-rolled steel products
153 from
20 countries,154
including Canada, were injuring U.S. industry. The investigations
were initiated on July 20, 1992.
On August 21, 1992, the ITC issued a preliminary affirmative determination,
finding that there was a reasonable indication of material injury to the U.S.
industry by reason of allegedly dumped imports of all four carbon steel flat
products from all named countries, including Canada.
On February 4, 1993, Commerce released an affirmative preliminary dumping
determination, which it subsequently amended on March 18, 1993. Five Canadian
companies,155
representing at least 60% of the subject merchandise exported
from Canada during the period of investigation, were individually investigated and
assessed individual preliminary anti-dumping duty margins.
On June 21, 1993, after several postponements, Commerce released its final affirmative
dumping determination. Commerce collapsed Stelco with its related party,
Continuous Colour Coat (CCC), and collapsed Dofasco with its related party,
Sorevco. Further, because of the inadequacy of questionnaire responses, best
information available was used for Stelco’s plate sales, and partial BIA was applied
with respect to the company’s cold-rolled, hot-rolled, and corrosion-resistant steel
sales. Partial BIA was also applied to certain sales of cold-rolled steel by Cold
Metal Products, certain of Sidbec-Dosco’s hot-rolled, cold-rolled and corrosionresistant
steel sales, and certain of IPSCO’s hot-rolled steel sales. Following allegations
by petitioners, cost-of-production investigations were conducted with
respect to all of the companies.
On August 18, 1993, the ITC made its final injury determination. While it found
that the U.S. industry was injured or threatened with injury by reason of dumped
imports of cut-to-length steel plate and corrosion-resistant sheet from Canada, it
made a negative finding with respect to imports of hot-rolled and cold-rolled steel
from Canada.
For both plate and corrosion-resistant steel, the ITC determined that it was appropriate
to cumulate the exports from all of the investigated countries because it
found a reasonable overlap in competition between the imports of the various
countries and the domestic like product. On plate, the ITC found evidence of
significant underselling and price depression or suppression by the cumulated
imports. Unit production costs for domestic plate producers rose steadily while
the market prices for plate declined, resulting in significant loss of profitability for
the domestic industry. The underselling and increasing volume of imports
contributed to the inability of U.S. producers to increase their prices.
On corrosion-resistant steel, the ITC found that while the recession of the early
1990s had had some effect on the performance of the U.S. industry, prices for corrosion-
resistant plate continued to decline even after the recession began to recede.
Because of the significant volume and price effects of the cumulated imports, the
ITC found the domestic industry to be materially injured by reason of the cumulated
imports. The ITC rejected the respondents’ argument that Canadian imports,
which are sold primarily in the automotive and appliance sector, did not compete
in the same channels of distribution as the imports of the other investigated countries.
The ITC also rejected the respondents’ argument that purchasers preferred
Canadian over U.S. products because of differences in quality.
Average margins were calculated of 61.95% for plate and 22.29% for corrosionresistant
steel; Stelco (plate and corrosion-resistant), Dofasco (corrosionresistant)
and IPSCO (plate) were assessed specific margins. Following review by
a Binational Panel established under Chapter 19 of the Canada–U.S. Free Trade
Agreement, average margins were revised to 61.88% for plate and 18.71% for
corrosion-resistant steel.
Following the original finding on corrosion-resistant steel, there has been a
succession of administrative reviews and other proceedings, including scope
determinations, remand determinations further to FTA/NAFTA panel findings,
and partial revocations. The most recently completed administrative review of the
order regarding corrosion-resistant steel covered the period from August 1997 to
July 1998, and was issued on March 30, 2000. It assessed the following margins
for that period: 1.01% for Continuous Colour Coat, 0.20% for Dofasco, 5.65% for
National Steel, and 4.24% for Stelco. On September 8, 2000, Commerce published
the preliminary results of its administrative review for the period from August
1998 to July 1999. It determined dumping margins of 2.94% for Continuous
Colour Coat and 0.51% for Dofasco. No other specific margins for National Steel
and Stelco were calculated in this review, both companies having requested that
the review be rescinded with respect to their sales.
On November 3, 1995, Sidbec-Dosco and Canberra Industries requested that
Commerce conduct a changed circumstances administrative review to determine
whether to partially revoke the order with regard to cobalt-60-free cut-to-length
carbon steel plate. On November 13, 1995, the petitioners informed Commerce
that they did not object to the changed circumstances review. On November 30,
1995, Commerce published a notice of initiation and preliminary result of a
changed circumstances anti-dumping duty administrative review to determine
whether to revoke the order in part. Commerce received no comments from interested
parties, and consequently revoked the order in part on February 28, 1996.
Pursuant to a subsequent request by a U.S. product, Commerce revoked the order
in part with respect to Canadian imports of other types and sizes of certain cutto-
length carbon steel plate that is free of cobalt-60 and other radioactive nuclides
(cobalt-60-free carbon steel plate), on March 29, 1999. The petitioners indicated
that they had no interest in the importation or sale of this particular product.
On March 14, 1997, Commerce initiated a scope inquiry to determine whether
certain cut-to-length carbon steel plate used to make grader blades and draft keys
containing small amounts of boron (approximately 0.0016% by weight) fell within
the scope of the order on certain cut-to-length carbon steel plate from Canada. On
January 16, 1998, Commerce concluded that, because the petition relied on the
Harmonized Tariff Schedule (HTS) definition of carbon steel, which excluded
other-alloy steel (i.e. steel containing more than 0.0008% boron), and because the
petition equated the term “carbon steel” with the HTS term “non-alloy steel,”
variants of grader blade and draft key steel containing at least 0.0008% boron by
weight fell outside the scope of the order.
On January 30, 1998, Kentucky Steel requested that Commerce conduct an anticircumvention
inquiry to determine whether imports of certain cut-to-length
steel plate—used to make grader blades and draft keys containing small amounts
of boron (approximately 0.0016% by weight), and falling within the physical
dimensions outlined in the scope of the order—were circumventing the antidumping
duty order on certain cut-to-length carbon steel plate from Canada.
According to Kentucky Steel, the inclusion of 0.0016% boron by weight in highcarbon
grader blade and draft key steel constituted a minor alteration. On May
20, 1998, Commerce initiated a formal anti-circumvention inquiry; this ended on
January 24, 2001, with a final determination stating that certain blade and draft
key steel were circumventing the anti-dumping duty order and therefore, were
included within the scope of the order.
Prior to the filing of the petitions on June 30, 1992, the Canadian government and
Canadian steel producers expended considerable effort to ensure that restrictions,
including anti-dumping duties, were not introduced at the border. Given the
scope and complexity of the investigations, key issues and government activities
are here discussed together. The issues involved the following elements:
- Ensuring that the U.S. administration and industry clearly understood
that Canada had no intention of acquiescing with either formal
or informal restraints on exports of steel to the United States, and
that in the integrated North American market envisaged by the Free
Trade Agreement, market forces alone should determine Canada’s
share of the U.S. steel market. This theme was aggressively pursued
with the administration and Congress at the highest levels.
- Efforts by the government, working closely with the Canadian
industry, to ensure that the then-new U.S. administration and
Congress were considering the steel issue on the basis of the facts of
the Canada–U.S. steel trade.
- Coordinated government-industry efforts to mobilize opposition in
the United States to restrictions on imports of steel from Canada.
This effort was coordinated through the Canadian consulates in the
United States.
In pursuing this action plan to safeguard access for Canadian steel to the U.S.
market, a number of specific themes were developed. They included the following:
- Trade restrictions on imports from Canada, whether formal or
informal, would be contrary to the provisions of the Canada–U.S.
Free Trade Agreement.
- Canadian steel exports were running at slightly over 3% of the U.S.
market—the same level as in 1984, when the voluntary restraint
agreements (VRAs) with many other countries were first concluded.
Canada had not been asked for a VRA in 1984, and the Canadian
industry had lived up to its commitment not to exploit a situation in
which other steel suppliers were restrained.
- In an integrated North American market, Canada’s share in the U.S.
market should be determined by market forces. A surge in Canadian
exports was, however, unlikely as the increased value of the Canadian
dollar had made our exports less competitive in the U.S. market.
- Blanket filings of unfair trade cases against the full range of Canadian
steel products would be flagrant abuse of legitimate trade remedy
action. Canada recognized, however, that a specific petition could be
brought against a particular Canadian product, and was prepared to
contest such a petition on its merits.
In the wake of the expiration of the U.S. Steel Program in the spring of 1992 (the
original 1984 program having been extended in 1988), prospects increased for the
massive filing of petitions for anti-dumping and/or countervailing duty action. To
persuade industries in both countries not to take such action or to discontinue
actions already initiated (between 1992 and 1994, the Canadian steel industry
successfully petitioned for trade action on the same flat-rolled steel products as
did its U.S. counterparts in 1992), industries in both countries were encouraged
to successfully conclude a North American Steel Sector Agreement, providing
new trade remedy rules for the steel trade between the two countries. Through
direct representations by both industries, their workers and the Government of
Canada, efforts were made to convince potential U.S. allies to discontinue the
trade actions. Contacted as principal advocacy targets were U.S. suppliers of
goods and services to the Canadian steel industry, U.S. customers for Canadian
steel, members of Congress and State legislatures representing districts benefiting
from the Canada–U.S. steel trade, and U.S. steel producers caught in the simultaneous
Canadian investigations.
Once the anti-dumping duty investigations themselves were initiated by
Commerce, there were numerous personal contacts by the Canadian Embassy in
Washington, D.C., with Commerce officials on key issues of concern to Canadian
exporters caught in the investigations.
Among the more notable representations, Minister Wilson and other ministers
(including the Prime Minister) raised the steel issue with their counterparts in
both the Bush and Clinton administrations on numerous occasions in the first six
months of 1992.
In addition to informal contacts between the Embassy and Commerce in particular,
the Government of Canada made a number of formal representations on
various elements of the steel investigations. These included the following:
- In a June 26, 1992, letter to Deputy U.S. Trade Representative
Moscow, the Canadian Embassy provided a document developed by
the Canadian steel industry on possible elements of a potential
Canada–U.S. steel accord.
- On July 17, 1992, the Embassy delivered a diplomatic note urging
Commerce to dismiss petitions for anti-dumping investigations on
imports of flat-rolled steel from Canada.
- On October 8, 1992, the Embassy submitted a letter to Commerce
supporting the Department’s proposal to exclude certain classes of
merchandise from the investigations.
- On October 14, 1992, the Embassy submitted a letter to Commerce
urging a deadline extension for submission of the questionnaire
responses.
- On December 8, 1992, the Embassy submitted a letter to Commerce
objecting to the proposed expansion of the scope of investigations to
include non-rectangular products.
- On December 11, 1992, Minister Wilson sent a letter to U.S. Trade
Representative Hills proposing a blue-ribbon binational panel on the
Canada–U.S. steel trade.
- On December 16, 1992, the Embassy submitted a letter to
Commerce urging the use of continuous entry bonds for imports
from Canada should preliminary determinations be made and provisional
duties be applied.
- On February 17, 1993, Minister Wilson submitted letters to U.S.
Trade Representative Kantor and Commerce Secretary Brown, again
proposing a binational panel on the Canada–U.S. steel trade.
- On February 19, 1993, the Embassy submitted a letter to Commerce
urging the issuance of amended preliminary determinations of
dumping in cases where ministerial errors had been made, and
seeking an extension of the deadline for responses to cost-of-production
questionnaires.
In addition, after the imposition of anti-dumping duties on U.S. imports of steel
plate and corrosion-resistant steel in 1993, the Canadian Embassy continued to
make representations regarding the conduct of subsequent administrative reviews
of the orders on plate and corrosion-resistant steel. Between 1995 and 2000,
almost two dozen such representations were made on issues such as the liquidation
of entries by resellers, verification standards and the treatment of transactions
between related parties.
On September 1, 1999, Commerce and the ITC initiated a sunset review of the
countervailing and anti-dumping duty orders on plate and corrosion-resistant
steel from a number of countries,156
including Canada, as part of a grouped review
of the 1993 orders on four flat-rolled steel products.157
Both Commerce and the ITC determined that they would conduct a full review of the anti-dumping duty
order on plate and corrosion-resistant steel from Canada.
On July 27, 2000, Commerce determined that revocation of the anti-dumping duty
order on imports of plate and corrosion-resistant steel from Canada would be likely
to lead to continuation or recurrence of dumping. In addition, Commerce determined
that while respondents’ anti-dumping duty margins had fallen significantly
since the assessment of margins in the original investigation, it still reported the
anti-dumping duty margins of the original investigation to the ITC.
According to Commerce, imports of corrosion-resistant steel decreased dramatically
immediately after the issuance of the order in 1993. Furthermore, it found
that the share of the U.S. market accounted for by Dofasco, which was responsible
for over 50% of the imports from Canada, had decreased and that Dofasco itself
had not demonstrated or argued that its market share had increased or even
remained constant despite the fact that its anti-dumping duty margin had fallen
to a de minimis level in the intervening years. Accordingly, on the basis mainly
of the declining market share achieved by Dofasco since the order went into
effect, Commerce concluded that the original margins reflected the behaviour of
the respondents absent the discipline of the order. Furthermore, Commerce
found that in the 1995–1996 and 1997–1998 administrative reviews, Dofasco
(1995–1996 only), Stelco and Continuous Colour Coat had absorbed duties.
Consistent with Commerce policy to adjust margins in sunset reviews to reflect
duty absorption findings, Commerce reported the original rates as those likely to
prevail if the order were revoked.
After its investigation, the ITC found that subject imports from all named countries
had remained in the U.S. market since the orders were imposed, that the
corrosion-resistant steel producers in the subject countries devoted considerable
resources to export markets, and that excess capacity was available in each of the
subject countries. It found that a likelihood existed that even a small post-revocation
increase in imports from each of these countries into the United States
would have a discernible impact on the domestic corrosion-resistant steel
industry. The ITC also found that the conditions of competition in the U.S.
market were not likely to change significantly in the foreseeable future and that
therefore the current market conditions for corrosion-resistant steel provided a
basis for assessing the likely effects of revocation of the anti-dumping duty orders
within the foreseeable future.
In its assessment of the likelihood of the recurrence of material injury, the ITC
first considered the likely volume of subject imports. It concluded that there was
substantial excess capacity in the subject countries, that the producers in the
subject countries relied heavily on export markets158
and had an incentive to utilize production because of high fixed production costs, and that they were
therefore likely to commence significant exports to the United States in the event
that the orders were revoked. Furthermore, the ITC concluded that the increased
sales of imported corrosion-resistant steel would most likely be achieved by
means of aggressive pricing. Cumulatively, the increased imports would result in
significant effects on domestic prices, including the significant underselling of the
domestic like products, and price depression and suppression.
The ITC examined the likely impact of the cumulated subject imports and
concluded that the domestic industry was vulnerable to material injury if the
orders were revoked. It examined net sales volumes and values, operating income,
capacity utilization, unit sales values, cost of goods sold, and operating margins. It
found that the domestic industry was in a weakened state. It concluded that the
price and volume declines that the domestic industry would be likely to experience
would have a significant adverse impact on the production, shipment, sales and
revenue levels of the domestic industry. This would affect the industry’s profitability,
ability to raise capital and ability to maintain the necessary level of capital
investments, and would be likely to result in commensurate employment declines.
On this basis, the ITC concluded that the revocation of the anti-dumping orders
concerning corrosion-resistant steel, including the order relating to Canada,
would be likely to have a significant adverse impact on the domestic industry
within a reasonably foreseeable time. The order was therefore continued with
regard to corrosion-resistant steel by the ITC determination of December 1, 2000.
However, on the same date the ITC determined that revocation of the antidumping
duty order on carbon steel plate was not likely to cause injury to an
industry in the United States within a reasonably foreseeable time. The order was
therefore revoked.
On April 23, 1993, Commerce and the ITC received a petition filed by the following
companies: the Connecticut Steel Corp. of Wallingford, Connecticut; North Star
Steel, Texas, Inc. of Beaumont, Texas; Keystone Steel & Wire Corp. of Peoria,
Illinois; Raritan River Steel Company of Perth Amboy, New Jersey; and Georgetown
Steel Corp. of Georgetown, South Carolina. After an investigation was initiated
on November 29, 1993, the ITC issued a preliminary affirmative determination
finding a reasonable indication that an industry in the United States was materially
injured by reason of allegedly dumped imports of steel wire rod from Canada,
Brazil and Japan (Trinidad and Tobago was dropped from the investigation).
On November 29, 1993, Commerce issued a preliminary affirmative determination
and ordered a suspension of liquidation of imports from Canada, Brazil and
Japan. On April 20, 1994, Commerce released an affirmative final determination
with respect to Canada, in which the following margins were established.
Producer/Manufacturer/Exporter |
Weighted Average Margin |
Ivaco Inc. |
10.25% |
Stelco Inc. |
13.20% |
All Others |
11.36% |
On February 9, 1994, Commerce released an affirmative final determination with
respect to Brazil and Japan. On April 6, 1994, the ITC released an affirmative final
injury determination with respect to Brazil and Japan.
On May 4, 1994, Commerce terminated the investigation regarding Canada upon
the petitioner’s withdrawal of the petition. On May 10, the ITC terminated its
investigation.
Ivaco and Stelco asserted that statute and judicial precedent required that, in
determining fair market value, if Commerce found sales of the identical or most
similar product to be below cost of production, Commerce should use the next
most similar product to determine fair market value, rather than immediately
resorting to constructed value. Commerce disagreed with the respondents, stating
that whether a model is sold in the home market at below-cost prices is not a
criterion for determining what is the most similar merchandise under the statute.
The Canadian Embassy in Washington, D.C., filed a diplomatic note questioning
the evidence of injury from Canadian imports included in the petition. The Canadian
government also monitored the investigation and gave general advice to
industry representatives involved in it.
On February 26, 1997, a petition alleging injurious dumping of steel wire rod from
Canada was filed by the following companies: Connecticut Steel Corp. of Wallingford,
Connecticut; North Star Steel Texas of Beaumont, Texas; Co-Steel Raritan of
Perth Amboy, New Jersey; Keystone Steel & Wire Co. of Peoria, Illinois; and GS
Industries of Georgetown, South Carolina. After an investigation was initiated, the
ITC issued a preliminary affirmative determination on April 30, 1997, finding a
reasonable indication that an industry in the United States was materially injured
by reason of allegedly dumped imports of steel wire rod from the named countries.
On October 1, 1997, Commerce issued a preliminary affirmative determination
and ordered the suspension of liquidation of imports from the named countries.
On February 23 and 24, 1997, Commerce released affirmative final determinations
with respect to the named countries. The dumping margins for Canadian
companies were as follows:
Producer/Manufacturer/Exporter |
Weighted Average Margin |
Ispat-Sidbec Inc. |
11.94% |
Ivaco Inc. |
6.95% |
Stelco Inc. |
0.91% |
All Others |
11.62% |
Ivaco’s rate was amended by Commerce on April 1, 1998, to account for the
exclusion of wire rod used for manufacturing Class III pipe wrapping wire from
the scope of the investigation.
On March 25, 1998, the ITC released a negative final determination with respect
to imports from all the named countries. For the purposes of its determinations
with respect to Canada, Germany, Trinidad and Tobago, and Venezuela, the ITC
cumulated dumped imports from all four subject countries. Despite the rising
volume and market share of imports, most notably between 1995 and 1996, the
ITC did not find the volume of imports or the increase in volume to be significant
either in absolute terms or relative to production or consumption in the United
States. Moreover, it found that the domestic industry was not able to satisfy all
domestic demand for certain steel wire rod. The ITC further concluded that there
was no causal connection between prices for subject imports and the declines in
domestic producers’ prices that occurred between mid-1995 and mid-1996.
The ITC did not find the frequency or the margins of underselling by the subject
imports to be significant, nor price always to be the determining factor in making
a sale. The ITC did not find that the subject imports depressed domestic prices
for wire rod to a significant degree. While the domestic industry’s financial
performance declined precipitously between 1995 and 1996, the ITC stated that
it could not attribute this condition to subject imports.
The ITC determined that the domestic industry was not threatened with material
injury by reason of subject imports on the basis of: (1) a continuous decline in
subject import volumes since 1996; (2) foreign producers’ lack of additional or
unused productive capacity; (3) lack of potential for product shifting; and (4) lack
of any other demonstrable adverse trends indicating the likelihood of material
injury to the domestic industry by reason of the subject imports.
Petitioners argued that Stelco reported home market sales of subject merchandise
that were neither made in commercial quantities nor made in the ordinary
course of trade. Commerce rejected the petitioners’ assertion, finding that in
fact over 10% of Stelco’s home market sales were of quantities comparable to the
sale of a product subject to the petition. Therefore, there was nothing aberrational
about such sales.
Commerce agreed with Stelco that the company’s capital tax credit should be
included in the general and administrative expense calculation, but it did not
agree with Stelco that the total amount of the capital tax credit should be
included in the calculation of general and administrative expenses. Instead,
Commerce included the capital tax credit only to the extent of Stelco’s current
capital tax expenses.
Commerce conducted a level of trade adjustment with respect to Ivaco’s sales
after examining the selling functions performed by IRM and Sivaco (both owned
by Ivaco) at each stage in the marketing process and identifying substantial
differences in the services performed. Commerce concluded that these were
attributable to selling at different points in the chain of distribution. The LOT
methodology was applied to all above-cost home market sales. Commerce did
not perform a difference-in-merchandise adjustment, as requested by the
respondents, as LOT adjustments were intended to address differences in
services provided, not differences in products.
Since this case investigation also involved allegedly countervailable subsidies, it is
difficult to isolate Canadian government participation in the anti-dumping case.
Aside from monitoring and general advice to industry representatives involved in
the investigation, no specific interventions were made by the government.
On March 31, 1998, Commerce and the ITC received a petition filed on behalf of
the following companies: Armco, Inc. of Pittsburgh, Pennsylvania; J& L Specialty
Steel, Inc. of Pittsburgh, Pennsylvania; Lukens Inc. of Coatesville, Pennsylvania;
North American Stainless of Ghent, Kentucky; and the United Steelworkers of
America, AFL-CIO-CLC. The petition alleged material injury by reason of subsidized
and/or dumped imports of hot-rolled and cold-rolled steel from Belgium,
Canada, Italy, Korea, South Africa and Taiwan.
After an investigation was initiated, the ITC issued a preliminary affirmative
determination on June 4, 1998, finding a reasonable indication that an industry
producing certain hot-rolled stainless steel plate in coils in the United States was
materially injured by reason of imports of certain hot-rolled stainless steel plate
in coils from Belgium, Canada, Italy, Korea, South Africa and Taiwan. On
November 4, 1998, Commerce issued a preliminary determination of dumping
regarding imports from the named countries. On March 31, 1999, Commerce
issued its final determination of dumping, in which it assessed the following
margins (based entirely on “facts available” since the Canadian producer/exporter
refused to respond to the questionnaire):
Producer/Exporter |
Weighted Average Margin |
Atlas Stainless Steel |
15.35% |
All Others |
11.10% |
On May 12, 1999, the ITC made a final negative injury determination for imports
of certain cold-rolled stainless steel plate in coils from Belgium and Canada. The
ITC further made the determination that imports of cold-rolled stainless steel
plate from Italy, Korea, South Africa and Taiwan were negligible. The ITC determined
that during the period under investigation, both the Belgian and Canadian
producers operated at high rates of capacity utilization and had no plans for
capacity expansion in the near future. Consequently, the ITC found that further
dumped or subsidized imports were not imminent. The ITC did not find that the
subject imports (despite their rising volumes, large market share and declining
average unit values) had an adverse effect on the domestic industry.
The ITC did, however, find that the U.S. industry producing hot-rolled stainless
steel plate was materially injured by subsidized imports from Belgium, Italy and
South Africa, and by dumped imports from Belgium, Canada, Italy, Korea, South
Africa and Taiwan. The ITC found that over the period of investigation, the
volume of imports increased dramatically, outpacing the increase in consumption.
Even while domestic consumption increased over the period of investigation,
the ITC found that the U.S. industry’s market share did not increase. The ITC
found the volume of imports to be significant. The ITC also found that the price
of imports was lower at the end of its investigation than it was at the beginning,
reaching lowest levels for the period in 1998—the same time when the market
share of imports was at its peak. The ITC found that the imports caused domestic
sales values to decline. Imports forced the domestic industry to lower prices, to
such an extent that it was unable to maintain profitability.
The ITC did find a single domestic like product in its preliminary investigation,
but indicated at that time that it would reconsider the like product issue in its
final determination. In particular, it considered whether to include stainless steel
sheet and strip as domestic like product, and whether hot-rolled and cold-rolled
stainless steel plate should be considered separate domestic like products. The
ITC eventually concluded that, as no new information had been tabled since the
preliminary investigation, there was no basis for altering the preliminary determination
that stainless steel sheet and strip not be included in the scope of the
domestic like product.
With respect to hot- and cold-rolled stainless steel plate, the ITC concluded that
they should be considered separate domestic like products on the basis of its
application of a six-factor test. The six factors examined were: physical characteristics
and uses; interchangeability; channels of distribution; customer and
producer perceptions; manufacturing facilities, production processes and production
employees; and prices. Given the differences outlined in the six-factor test,
the ITC concluded that hot-rolled and cold-rolled plate were two separate
domestic like products for the purposes of its investigation.
The Government of Canada monitored the investigation. However, since the only
Canadian company with an interest in the investigation did not cooperate with or
make any responses to Commerce or the ITC, the government did not make any
representations on this basis.
On March 27, 1998, Commerce and the ITC received a petition filed by the
following companies: ACS Industries of Woonsocket, Rhode Island; Al Tech
Specialty Steel Corp. of Dunkirk, New York; Branford Wire & Manufacturing Co.
of Mountain Home, North Carolina; Carpenter Technology Corp. of Reading,
Pennsylvania; Handy and Harmen Specialty Wire Group of Cockeysville, Maryland;
Industrial Alloys of Pomona, California; Loos & Company of Pomfret,
Connecticut; Sandvik Steel Company of Clark Summit, Pennsylvania; Sumiden
Wire Products Corp. of Dickson, Tennessee; and Techalloy Company of Mahwah,
New Jersey. After an investigation was initiated on June 18, 1998, the ITC issued
a preliminary affirmative determination, finding a reasonable indication that an
industry in the United States was materially injured by reason of allegedly
dumped imports of steel round wire from all of the named countries.
On November 18, 1998, Commerce issued a preliminary affirmative determination
and ordered the suspension of liquidation of imports from Canada, India,
Japan, Spain and Taiwan. On April 9, 1999, Commerce released an affirmative
final determination with respect to Canada, India, Japan, Spain and Taiwan.
Canadian company dumping margins were as follows:
Producer/Manufacturer/Exporter |
Weighted Average Margin |
Central Wire |
10.25% |
Greening Donald |
13.20% |
All Others |
11.36% |
On May 26, 1999, the ITC released a negative final determination. The ITC cumulated
imports from all six named countries. The ITC found that although there
were sizeable increases in the volume and value of subject imports, such increases
were not significant. Domestic demand had increased by almost the same amount
as the cumulated subject imports between 1996 and 1998. While the prices for
subject merchandise and the domestic like product had decreased, there was also
evidence of underselling. Hence the ITC found that imports did not adversely
affect prices for the domestic like product to a significant degree. The ITC found
that all of the relevant indicators of the domestic industry’s performance changed
only slightly over the investigation period, and that many had improved.
The ITC also found that there was no threat of material injury to the domestic
industry because the rate of increase in subject imports had levelled off and a
further significant increase was unlikely. Furthermore, there was no indication of
increased capacity or excess production capacity in the subject countries, and
there was unlikely to be a significant degree of product shifting.
Respondents argued that the subject of stainless steel round wire did not originate
in Canada. The respondents contended that the wire was classified as both
“Canadian” and “foreign” under essentially identical Customs
159 and Commerce
substantial transformation tests. The respondents further contended that the rod
imported into Canada was not physically or chemically substantially transformed
into a Canadian product subject to dumping duties.
However, Commerce found that stainless steel wire rod imported into Canada
undergoes a cold-drawing process, which results in a product with physical properties
and end uses that are distinct from those of the stainless steel wire rod.
Furthermore, the stainless steel round wire industry is distinct from the stainless
steel wire rod industry, and the value added by the cold-drawing process is significant.
Therefore, for purposes of dumping duties, Commerce determined that
stainless steel wire rod was substantially transformed in Canada, making it a
Canadian product within the scope of the investigation.
The Canadian Embassy in Washington, D.C., filed a diplomatic note questioning the
evidence of injury to the industry. The Government of Canada also engaged in
monitoring and gave general advice to industry representatives involved in the
investigation. In addition, it made several representations to Commerce, supporting
the respondents’ request to exclude from the calculation of normal value any home
market sales said to be clearly outside the “ordinary course of trade.”
This investigation was instituted in response to a petition filed on November 12,
1998, by the Ranchers-Cattlemen Action Legal Foundation (R-Calf), and supporting
individuals and trade associations. On November 10, 1998, counsel for R-Calf had
withdrawn a petition it had filed several weeks previously. On November 12, 1998,
a second petition for anti-dumping and countervailing duty investigations was filed,
and the previous petition was incorporated by reference. On January 20, 1999, the
ITC issued a preliminary affirmative determination, finding a reasonable indication
that an industry in the United States was materially injured by reason of dumped
and subsidized imports of live cattle from Canada.
On June 30, 1999, Commerce issued a preliminary affirmative determination and
ordered the suspension of liquidation of imports from Canada. On July 23, 1999,
Commerce amended its preliminary affirmative determination on the basis of
revised data filed with Commerce. This amendment resulted in an increase in the
provisional anti-dumping duty rate. In its preliminary determination, Commerce
found that there were “reasonable grounds to believe or suspect” that sales of live
cattle from Canada were made below their respective cost of production. The
margin calculations in the petitions, as revised, indicated dumping margins
ranging from 6.42% to 10.72% for live cattle from Canada. On October 21, 1999,
Commerce released an affirmative final determination. Company-specific
dumping margins were established as follows:
Producer/ Exporter |
Weighted Average Margin |
Cor Van Raay |
4.53% |
Groenenboom |
3.86% |
JGL Group |
5.10% |
Pound-Maker |
0.62% (de minimis) |
Riverside/Grandview |
5.34% |
Schaus |
15.69% |
All Others |
5.63% |
On November 12, 1999, the ITC issued a negative injury determination, thereby
terminating the investigation. While the ITC found that the domestic industry had
experienced declines expected to improve as the industry consolidated, in a
number of key indicators it could not find that any injury to the industry was
caused or threatened by imports from Canada. It found that imports from Canada,
which had declined over the period of investigation both in absolute and marketshare
terms, were entering the United States in small volumes that did not significantly
depress or suppress domestic prices.
According to the respondents, Commerce regulations established a rebuttable
presumption for the use of the date of invoice as the date of sale; there was thus
no reason to depart from the use of the date of invoice (or, as appropriate, the date
of shipment) in this case. The respondents contended that contracts are entered
into for future delivery months in advance, and the month of delivery is an essential
factor in establishing the price of cattle. According to the respondents, two
contracts entered into on the same date would have different prices depending on
the month of delivery, since monthly cattle prices varied according to seasonal
trends. Furthermore, the respondents argued that the material terms of sale were
subject to change even after prices are “locked in.”
In their rebuttal comments, the petitioners argued that the respondents’ concerns
about monthly price fluctuations were irrelevant since Commerce’s practice in
anti-dumping investigations is to compare average prices. The petitioners
contended that if Commerce rejected the date of contract as the date of sale, it
should continue to rely on the date that prices were “locked in,” since the terms
of sale were specified on that date.
As in the preliminary determination, Commerce continued to rely on the lock-in
date as the date of sale for the transactions in question. Commerce continued to
believe that the lock-in date was the date on which the essential terms of sale were
set. Commerce regulations provide that the date of invoice is the presumptive date
of sale, except where the material terms of sale are established on some other date.
The petitioners alleged that U.S. packers were forcing Canadian producers and
exporters of subject merchandise to absorb the costs of anti-dumping duty
deposits, and that such deposits should be deducted in calculating export value.
According to the petitioners, Canadian producers of subject merchandise had
indicated at meetings in Canada that an anti-dumping duty order on cattle would
have no effect because the Canadian producers would absorb the cost of any
duties. The petitioners contended that reimbursement of the deposits would be
considered a reduction to price in any future review, and that the cash deposit
rate applied in the investigation should reflect such reimbursements even if they
did not occur during the period of investigation. The Canadian Cattlemen’s
Association (CCA) successfully argued that reimbursement concerns were not
applicable to investigations since reimbursement applied only to duties assessed
after the imposition of an anti-dumping duty order. According to the CCA, there
was no legal basis to adjust cash deposit rates at this stage of the proceedings in
order to account for alleged pricing changes after the investigation.
There were a number of company-specific issues on which Commerce was
compelled to make a determination. Selected examples follow.
Schaus was one of the six Canadian producers/exporters selected to be specifically
investigated by Commerce. The company submitted supplemental information
on which the Department was scheduled to make its preliminary determination.
Commerce had no opportunity to take account of the information in its
preliminary determination. After examining the information, Commerce revised
the rate for Schaus from 5.43% to 15.69%. Schaus then withdrew from participation
in the investigation. Commerce did not, however, allow the information
submitted by Schaus to be withdrawn, and continued to rely on it to calculate a
rate for Schaus and to use it in the calculation of the “all others” rate. Commerce
indicated that the information was reliable and that to do otherwise would be to
allow manipulation of the “all others” rate.
Commerce declined to use “facts available” to account for certain sales that were
excluded from the list of domestic sales. Commerce did not, however, differentiate
(as requested by the respondent) between feeder cows/bulls and regular cull
cattle in its determination. Commerce agreed to correct a unit price error that
overstated the normal value. Commerce also declined to establish separate rates
for cattle that JGL produced and cattle that it purchased and then resold.
Commerce also collapsed JGL and Kirk Sinclair.
Commerce disagreed with petitioners that certain sales of cattle should be subject
to an average rate of shrinkage, as opposed to the actual rate. Commerce did not,
however, adjust selling expenses to account for sales to affiliated parties.
Commerce did not apply adverse inference for errors made on reported sales.
Since a concurrent countervailing duty investigation was being conducted, it is
difficult to isolate Government of Canada activity with reference to the antidumping
duty investigation. It appears that specific representations on dumping
were not made. However, WTO consultations on the countervailing duty investigation
covered at least one issue relevant to the dumping investigation: that of
whether the petitioner had standing to request an investigation.
152 (Back) Biocraft also petitioned for an investigation into Portugese and Israeli exports.
This was terminated on August 9, 1989.
153 (Back) The products covered by this investigation were four separate “classes or kinds” of
merchandise: certain hot-rolled carbon steel flat products; certain cold-rolled carbon steel
flat products; certain corrosion-resistant carbon steel flat products; and certain cut-tolength
carbon steel plate.
154 (Back) The other countries were Argentina, Australia, Austria, Belgium, Brazil, Finland, France,
Germany, Italy, Japan, Korea,Mexico, the Netherlands, Poland, Romania, Spain, Sweden,
Taiwan and the United Kingdom.
155 (Back) Cold Metal Products,Dofasco, IPSCO, Sidbec-Dosco and Stelco.
156 (Back) Australia, Canada, France, Germany, Japan and Korea.
157 (Back) Plate, hot-rolled, cold-rolled and corrosion-resistant steel.
158 (Back) The record indicates that for Canada in 1999, 12.3% of the production of corrosionresistant
steel was exported.
159 (Back) NAFTA rules of origin did not confer origin to the transformation of wire from foreign
wire rod.
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