Canada Border Services Agency
Symbol of the Government of Canada

ARCHIVED - Anti-dumping and Countervailing Directorate

Warning This page has been archived.

Archived Content

Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.

Ottawa, March 12, 2012

Dumping case number: AD/1390
Dumping file number: 4214-31

Subsidy case number: CV/127
Subsidy file number: 4218-30

STATEMENT OF REASONS

Concerning the making of final determinations with respect to the dumping and subsidizing of

CERTAIN PUP JOINTS ORIGINATING IN OR EXPORTED FROM THE PEOPLE'S REPUBLIC OF CHINA

DECISION

On March 12, 2012, pursuant to paragraph 41(1)(a) of the Special Import Measures Act, the President of the Canada Border Services Agency made final determinations of dumping and subsidizing respecting oil country tubular goods pup joints, made of carbon or alloy steel, welded or seamless, heat-treated or not heat-treated, regardless of end finish, having an outside diameter from 2 3/8 inches to 4 1/2 inches (60.3 mm to 114.3 mm), in all grades, in lengths from 2 feet to 12 feet (61 cm to 366 cm) originating in or exported from the People's Republic of China.

For a PDF version of the Statement of Reasons, please click on the following link.

If the following document is not accessible to you, please contact simaregistry-depotlmsi@cbsa-asfc.gc.ca for other appropriate format.



TABLE OF CONTENTS

  • Summary of events
  • Period of Investigation
  • Interested Parties
    • Complainant
    • Exporters
    • Importers
    • Government of China
    • Surrogate Countries
  • Product Definition
    • Additional Product Information
    • Classification of Imports
  • Canadian Industry
  • Imports into Canada
  • Investigation Process
  • Dumping Investigation
    • Section 20 Inquiry
    • Normal Value
    • Export Price
    • Results of Dumping Investigation
    • Hengshui Weijia
    • Hengshui Weijia – Margin of Dumping
    • All Other Exporters – Margin of Dumping
  • Summary of Results – Dumping
  • Representations Concerning the Dumping Investigation
  • Subsidy Investigation
    • Hengshui Weijia
    • All other Exporters - Amount of Subsidy
  • Summary of Results – Subsidy
  • Representations Concerning The Subsidy Investigation
  • Decisions
  • Future Action
  • Retroactive Duty on Massive Importations
  • Publication
  • Information
  • Appendix 1 – Summary of Margins of Dumping and Amounts of Subsidy
  • Appendix 2 – Dumping and Subsidy Representations
  • Appendix 3 - Subsidy Programs Not Used by the Cooperative Exporter

Summary Of Events

[1] On July 22, 2011, the Canada Border Services Agency (CBSA) received a written complaint from Alberta Oil Tool (AOT), a division of Dover Corporation (Canada) Limited of Edmonton, Alberta, (hereafter, "the Complainant") alleging that imports of certain pup joints originating in or exported from the People's Republic of China (China) are being dumped and subsidized and causing injury to the Canadian industry.

[2] On August 12, 2011, pursuant to paragraph 32(1)(a) of the Special Import Measures Act (SIMA), the CBSA informed the Complainant that the complaint was properly documented. The CBSA also notified the government of China (GOC) that a properly documented complaint had been received and provided the GOC with the non-confidential version of the subsidy portion of the complaint, which excluded sections dealing with normal value, export price and margin of dumping.

[3] On September 9, 2011 consultations were held with the GOC in Ottawa pursuant to Article 13.1 of the Agreement on Subsidies and Countervailing Measures. During these consultations, China made representations with respect to its views on the evidence presented in the non-confidential version of the subsidy portion of the complaint.

[4] On September 12, 2011, pursuant to subsection 31(1) of SIMA, the President of the CBSA (President) initiated investigations respecting the dumping and subsidizing of certain pup joints from China.

[5] On September 13, 2011, the Canadian International Trade Tribunal (Tribunal) commenced a preliminary injury inquiry, pursuant to subsection 34(2) of SIMA, into whether the evidence discloses a reasonable indication that the alleged dumping and subsidizing of certain pup joints from China have caused injury or retardation or are threatening to cause injury to the Canadian industry producing the goods. On November 14, 2011, pursuant to subsection 37.1(1) of SIMA, the Tribunal determined that there is evidence that discloses a reasonable indication that the alleged dumping and subsidizing of certain pup joints have caused injury or retardation or are threatening to cause injury to the domestic industry.

[6] On December 12, 2011, the CBSA made preliminary determinations of dumping and subsidizing with respect to certain pup joints originating in or exported from China pursuant to subsection 38(1) of SIMA, and began imposing provisional duties on imports of the subject goods pursuant to subsection 8(1) of SIMA.

[7] On December 13, 2011, the Tribunal initiated a full inquiry pursuant to section 42 of SIMA to determine whether the dumping and subsidizing of the above mentioned goods have caused injury or retardation or are threatening to cause injury to the Canadian industry.

[8] The CBSA continued its investigations and, on the basis of the evidence, the President is satisfied that certain pup joints originating in or exported from China have been dumped and subsidized and that the margins of dumping and the amounts of subsidy are not insignificant. Consequently, on March 12, 2012, the President made final determinations of dumping and subsidizing pursuant to paragraph 41(1)(a) of SIMA.

[9] The Tribunal’s inquiry into the question of injury to the Canadian industry is continuing. Provisional duties will continue to be imposed on the subject goods until the Tribunal renders its decision. The Tribunal has announced that it will issue its finding by April 10, 2012.

Period Of Investigation

[10] Each of the two investigations has its own separate Period of Investigation (POI).  The dumping POI includes shipments of subject pup joints released into Canada from July 1, 2010 to June 30, 2011, while the subsidy POI includes shipments of subject pup joints released into Canada from January 1, 2010 to June 30, 2011.

Interested Parties

Complainant

[11] The Complainant accounts for a major proportion of the production of like goods in Canada. The Complainant’s goods are produced at manufacturing facilities in Edmonton, Alberta.

[12] The name and address of the Complainant are:

Dover Corporation (Canada) Limited – Alberta Oil Tool Division
9530 – 60th Avenue
Edmonton, Alberta
T6E 0C1

[13] Of the other producers certified to produce the like goods in Canada, only Tenaris Canada (Tenaris), of Sault Ste. Marie, Ontario, confirmed that they are manufacturing them. Tenaris produces like goods which are premium pup joints in relatively small quantities and provided a letter supporting the complaint.[1]

Exporters

[14] At the initiation of the investigations, the CBSA identified 109 potential exporters and producers of the goods under investigation. The CBSA sent a Dumping Request for Information (RFI) to each potential exporter and section 20 and subsidy RFIs to each potential exporter and producer in China.

[15] The CBSA received two responses, but one company’s response was determined to involve only non-subject goods.[2] One exporter, Hengshui Weijia Petroleum Equipment Manufacturing Co., Ltd. (Hengshui Weijia), provided responses to the three RFIs (dumping, subsidy and section 20). This exporter also provided additional information to supplement and clarify their responses.[3]

Importers

[16] At the initiation of the investigations, the CBSA identified 17 potential importers of the subject goods from information provided by the Complainant and CBSA import documentation over the period of January 1, 2010 to June 30, 2011.

[17] The CBSA sent an importer RFI to each of these parties and four importers provided substantially complete responses.[4]

Government of China

[18] For the purpose of these investigations, “Government of China” refers to all levels of government, i.e. federal, central, provincial/state, regional, municipal, city, township, village, local, legislative, administrative or judicial, singular, collective, elected or appointed. It also includes any person, agency, enterprise, or institution acting for, on behalf of, or under the authority of, or under the authority of any law passed by, the government of that country or that provincial, state or municipal or other local or regional government.

[19] At the initiation of the investigations, the CBSA sent subsidy and section 20 RFIs to the GOC. The GOC provided responses to both RFIs. The CBSA reviewed the responses and while some of the information requested was provided, some of the GOC’s responses were limited.

[20] The GOC provided an incomplete response to the subsidy RFI as information in respect of only the subsidy programs attributable to the sole cooperating exporter, Hengshui Weijia, was provided but was not provided for non-participating exporters that shipped subject goods during the POI.

[21] The GOC’s section 20 RFI response, discussed in greater detail below, was also fundamentally insufficient as they provided limited responses to questions which required more detail. In short, the GOC indicated that their seminal macro-economic policies in respect of the Chinese steel industry, which are most notably the National Steel Policy (NSP) and 2009 Steel Revitalization/Rescue Plan[5] remain unchanged and, as a result, the status quo remains for the Chinese steel industry. Further details regarding the GOC’s section 20 submission is provided in the “Section 20 Inquiry” section of this document.

Surrogate Countries

[22] As part of the section 20 inquiry, RFIs were sent to all known producers of pup joints in other countries (excluding China). This list of certified producers was obtained directly from the American Petroleum Institute (API). Although seven producers indicated their intention to provide a response, no complete response to the Surrogate RFI was ever received.

Product Definition

[23] For the purpose of the investigations, the subject goods are defined as:

“Oil country tubular goods pup joints, made of carbon or alloy steel, welded or seamless, heat-treated or not heat-treated, regardless of end finish, having an outside diameter from 2 3/8 inches to 4 1/2 inches (60.3 mm to 114.3 mm), in all grades, in lengths from 2 feet to 12 feet (61 cm to 366 cm) originating in or exported from the People's Republic of China.”

Additional Product Information

[24] Pup joints are oil country tubular goods (OCTG) made from carbon or alloy steel pipes used for the exploration and exploitation of oil and natural gas. These pipes may be made by the electric resistance welded (ERW) or seamless production method, and are supplied to meet API specification 5CT or equivalent standard.[6]

[25] Pup joints are primarily used for the purpose of adjusting the depth of strings or down hole tools, particularly where exact depth readings in a well are required for any given purpose, such as setting valves, packers, nipples or circulating sleeves. Pup joints are also used with down hole pumps. The number and lengths of pup joints may vary widely from well to well, depending on the various equipment and performance requirements established by engineers of the purchasing end users.

[26] Pup joints may range from 2 feet to 12 feet in length with a permitted tolerance of plus or minus three inches. The sizes are generally 2, 4, 6, 8, 10 and 12 feet in length.

[27] The pup joints subject to these investigations are, by virtue of the characteristics such as the outside diameter range, essentially short lengths of OCTG tubing.

Production Process

[28] Pup joints are manufactured in Canada by the Complainant using plain end tube as an input. For J55 grade pup joints, a length of J55 OCTG tubing is employed. For L80 grade pup joints, the input is an A-519 mechanical tube with the appropriate steel chemistry for L80 OCTG. The L80 input tube does not qualify for the API 5CT designation until it has been tested in accordance with API requirements. The Complainant performs the testing required.

[29] The Complainant acquires the input tubes for all its pup joints through arms length suppliers.

[30] The production process of the input pipe itself is virtually identical to that employed for OCTG tubing and casing. There are, however, significant subsequent costs associated with transforming the input tubing into pup joints including: cutting to length, end finishing, threading, and testing to meet the certification required.

[31] For J55 grade pup joints, the Complainant produces an upset end by heating (upset forging) and butting to thicken the end of the pipe diameter for threading. J55 tubing is cut 8 inches longer than the required pup joint length to accommodate this process. In the case of L80 grade pup joints, the production process uses profiling rather than upset ends, and accordingly only 1/4 inch of additional length is needed to accommodate finishing. Profiling refers to machining the pipe towards the ends of the pipe so it is thicker at the far ends. This process is used instead of upsetting because upsetting a pipe with steel chemistry for an L80 grade would require the producer to heat-treat the pipe again.

[32] Testing includes drift testing which is an assessment of the straightness within the hollow part of the tube, to ensure no bends or kinks exist after the pup joint was forged, and hydrostatic testing which assesses the pup joint’s ability to withstand internal pressure.

[33] For further information on the production process of the input tubes, see the CBSA’s Initiation Statement of Reasons for Certain Oil Country Tubular Goods (September 8, 2009).[7]

Classification of Imports

[34] The subject goods are usually classified under the following Harmonized System (HS) classification codes:

  • 7304.29.00.51
  • 7304.29.00.59
  • 7304.29.00.61
  • 7304.29.00.69
  • 7304.29.00.71
  • 7304.29.00.79


[35] The listing of HS codes is for convenience of reference only. The HS codes listed may include non-subject goods. Also, subject goods may fall under HS codes that are not listed. Refer to the product definition for authoritative details regarding the subject goods.

Canadian Industry

[36] The Complainant accounts for the major proportion of known domestic production of like goods.

[37] The only other identified Canadian producer, Tenaris (Canada) Ltd., officially stated their position of fully supporting the complaint in their letter dated September 1, 2011.[8]

Imports into Canada

[38] During the final phase of the investigations, the CBSA refined the total volume of imports based on data from its internal information system, CBSA import documentation and other information received from the cooperative exporter and importers.

[39] The following table presents the CBSA’s calculation of the volume of imports of pup joints for purposes of the dumping final determination:

Imports of Pup Joints (July 1, 2010 – June 30, 2011)

Imports of Pup Joints (July 1, 2010 – June 30, 2011)
Countries Total Import Volume Metric Tonnes) % of Total Import Volume
China (subject goods) 368.3 71.7%
United States 126.7 24.6%
All Other Countries 18.9 3.7%
Total Imports 513.9 100%

Investigation Process

[40] Regarding the dumping investigation, information was requested from known and potential exporters, vendors and importers, concerning shipments of subject pup joints released into Canada during the dumping POI of July 1, 2010 to June 30, 2011.

[41] Regarding the subsidy investigation, information related to potential actionable subsidies was requested from known and potential exporters and the GOC concerning financial contributions made to exporters or producers of subject pup joints released into Canada during the subsidy POI of January 1, 2010 to June 30, 2011.

[42] In addition, known and possible exporters and producers of pup joints, along with the GOC, were requested to respond to the section 20 RFI for the purposes of the section 20 Inquiry.

[43] As previously stated, Hengshui Weijia was the lone responding exporter. After reviewing their responses to the RFIs, supplemental RFIs were sent to clarify information submitted by the company.[9] Responses to those supplemental RFIs were provided by Hengshui Weijia in advance of the close of the record.[10] The company’s responses were considered sufficient for the purposes of calculating amounts of subsidy on the basis of information provided by the exporter.

[44] As previously stated, the GOC’s section 20 RFI response was found to be fundamentally insufficient for the purposes of the section 20 inquiry. Further details regarding the GOC’s section 20 submission is provided in the “Section 20 inquiry” section of this document.

[45] Similarly, the GOC’s subsidy RFI response was also found to be incomplete. The GOC made no further response to the subsidy RFI following the CBSA notification of incompleteness on January 19, 2012.[11]

[46] Further details regarding the GOC’s subsidy response can be found in the “Subsidy Investigation” section of this document.

[47] In summary, 80 subsidy programs were reviewed and two of the subsidy programs were determined to be conferring benefits to the cooperative exporter during the subsidy POI.

[48] As part of the final stage of the investigations, case briefs were provided by the legal representatives of the Complainant, Hengshui Weijia and the GOC.[12] Reply submissions were provided by the legal representatives of the Complainant and the GOC.[13] Details of all representations can be found in Appendix 2 to this document.

Dumping Investigation

Section 20 Inquiry

[49] Section 20 is a provision under the Special Import Measures Act (SIMA) that is applied to determine the normal value of goods in a dumping investigation where certain conditions prevail in the domestic market of the exporting country. In the case of a prescribed country[14] under paragraph 20(1)(a) of SIMA, section 20 is applied where, in the opinion of the President, the government of that country substantially determines domestic prices and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market. Where section 20 is applicable, the normal values of goods are not determined using domestic prices or costs in that country.

[50] For purposes of a dumping proceeding, the CBSA proceeds on the presumption that section 20 of SIMA is not applicable to the sector under investigation absent sufficient information to the contrary. The President may form an opinion where there is sufficient information that the conditions set forth in paragraph 20(1)(a) of SIMA exist in the sector under investigation.

[51] The following are guidelines that the CBSA considers when examining factors that suggest domestic prices may be substantially determined by the government of an exporting country under investigation.

[52] These are factors which would suggest that the government directly determines pricing:

  • the government or a government body sets minimum and/or maximum (floor or ceiling) price levels in respect of certain goods which permits prices to be established no lower or no higher than the minimum or maximum price levels;
  • the government or a government body sets absolute pricing levels for certain goods;
  • the government or a government body sets recommended or guidance pricing at which it is expected that sellers will adhere to within a certain range above and/or below that value;
  • there are government or regulatory bodies which are responsible for establishing the price levels and for regulating and enforcing these price levels;
  • there are government-owned or controlled enterprises that set the price of their goods in consultation with the government or as a result of government-mandated pricing policies and, because of their market share or dominance, become price-leaders in the domestic market.

[53] Governments can also indirectly determine domestic prices through a variety of mechanisms that can involve the supply or price of the inputs (goods and services) used in the production of the subject goods or by influencing the supply of the subject goods in order to affect their price. For example:

  • governments can control import and export levels through licensing, quotas, duties or taxes to maintain domestic prices at a certain level;
  • governments can subsidize producers by providing direct financial subsidies or low-priced inputs in order to maintain the selling price of the product at a certain level;
  • governments can purchase goods in sufficient quantities to raise the domestic price of the goods or they can sell stockpiled goods to put downward pressure on prices;
  • through taxation or other policies, governments can regulate the level of profits that a company can earn which will affect selling prices;
  • the government can regulate or control production levels or the number of producers or sellers permitted in the market in order to affect domestic prices.

[54] The CBSA is also required to examine the price effect resulting from substantial government determination of domestic prices and whether there is sufficient information on the record for the President to have reason to believe that the resulting domestic prices are not substantially the same as they would be in a competitive market.

[55] The Complainant requested that section 20 be applied in the determination of normal values due to the alleged existence of the conditions set forth in paragraph 20(1)(a) of SIMA. In their complaint, the Complainant provided information to support these allegations concerning the steel industry in China including the OCTG sector, which includes pup joints.[15]

[56] At the initiation of the dumping investigation, the CBSA had sufficient information from the Complainant, the CBSA’s own research and previous CBSA section 20 opinions to support the initiation of a section 20 inquiry to examine the extent of GOC involvement in pricing in the OCTG sector, which includes pup joints. The information indicated that domestic prices in China have been influenced by various GOC industrial policies concerning the Chinese steel industry including the OCTG sector, which includes pup joints.

[57] Consequently, the CBSA sent section 20 RFIs to the GOC and all known Chinese OCTG producers/exporters to obtain information on the matter.

[58] In response to the section 20 RFIs, the CBSA received a substantially complete and timely response from one exporter, Hengshui Weijia.

[59] In respect of the GOC’s section 20 submission, the GOC provided some of the information requested but some of the GOC’s responses were limited. As a result, the GOC’s submission is considered to be insufficient and incomplete.

[60] As part of the CBSA’s examination of the OCTG sector in China, which includes pup joints, the GOC was requested to provide information concerning the Chinese manufacturers of OCTG by region, the type of products produced (i.e. welded versus seamless) and their respective steel production capacities. In addition, the GOC was requested to indicate the ownership structure of each manufacturer along with information pertaining to OCTG manufacturers that are State-Owned Enterprises (SOE).

[61] In response, the GOC provided OCTG sector information that was limited to the sole cooperating exporter in China, Hengshui Weijia. The GOC provided no further details on the other producers in the Chinese OCTG sector. In its response, the GOC indicated that:

“The GOC does not have detailed official statistics of OCTG producers…Other information would presumably come from public sources and is available to the CBSA. The GOC cannot vouch for its accuracy.”[16]

[62] It is the CBSA’s understanding from previous verifications conducted with the GOC, that production figures and other statistics are submitted to the GOC through timely monthly submissions to the Chinese National Bureau of Statistics by the producers of OCTG.

[63] Furthermore, according to recent legislation passed by the GOC, through the Criterion for the Production and Operation of Steel Industry – GY [2010] No. 105,[17] there is an application process that requests this information from producers along with additional detailed information concerning output value, sales revenue, profits etc. At minimum, the GOC has the information available from its SOEs, which comprise a substantial proportion of the top OCTG producers in the sector. This indicates that the information requested by the CBSA is available to the GOC and current information from the GOC regarding the OCTG sector in China, which includes pup joints, would have been useful to the CBSA in its analysis.

[64] This is the same sector that was examined in the CBSA’s investigations of certain Seamless Steel Casing (2008) and certain OCTG (2010). Each of those section 20 inquiries concluded that domestic prices in the OCTG sector in China are substantially determined by the GOC and that there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market.

[65] The following is the CBSA’s analysis of the relevant factors that prevail in the Chinese steel industry, which subsequently affect the OCTG sector, which includes pup joints.

Industrial Policies

[66] As cited in previous section 20 inquiries, The Development Policies for the Iron and Steel Industry – Order of the National Development and Reform Commission [No. 35], [18] (National Steel Policy - NSP) was promulgated on July 8, 2005 and outlines the GOC’s future plans for the Chinese domestic steel industry. The major objectives of the NSP are:

  • The structural adjustment of the Chinese domestic steel industry;
  • Industry consolidations through mergers and acquisitions;
  • The regulation of technological upgrading with new standards for the steel industry;
  • Measures to reduce material and energy consumption and enhance environmental protection;
  • Government supervision and management in the steel industry.

[67] On March 20, 2009, the GOC promulgated the Blueprint for the Adjustment and Revitalization of the Steel Industry issued by the General Office of the State Council (2009 Steel Revitalization/Rescue Plan).[19]

[68] This macro-economic policy was the GOC’s response to the global financial crisis and is also the action plan for the steel industry for the 2009 through 2011 period. This plan includes the following major tasks:

  • Maintain the stability of the domestic market and improve the export environment;
  • Strictly control the total output of steel and accelerate the process of eliminating what is backward (obsolete);
  • Enhance enterprise reorganization and improve the industrial concentration level;
  • Spend more on technical transformation and promote technical progress;
  • Optimize the layout of the steel industry and overall arrangements of its development;
  • Adjust the steel product mix and improve the product quality;
  • Maintain stable import of iron ore resources and rectify the market order;
  • Develop domestic and overseas resources and guarantee the safety of the industry.

[69] There are common measures between these two GOC policies, as the 2009 Steel Revitalization/Rescue Plan is an acceleration of the major objectives of the NSP. In the 2009 plan, the GOC asserts its strict control over new or additional steel production capacity, promotes new GOC directed mergers and acquisitions to reform the Chinese steel industry into larger conglomerates, along with an increased emphasis on steel product quality.

[70] The 2009 Steel Revitalization/Rescue Plan also applies to the OCTG sector in China, which includes pup joints. There is evidence on the record confirming that the GOC specifically directed one of the cooperating exporters in the OCTG (2010) investigation, which was one of the largest SOE producers, and possibly the largest seamless OCTG manufacturer, to reorganize with another company.[20]

[71] In the CBSA’s supplemental section 20 RFI to the GOC, the CBSA requested the GOC to provide the 12th Five-Year Plan: Iron and Steel along with an English translation. The GOC subsequently provided this document.[21]

[72] On November 7, 2011, the GOC’s Ministry of Industry and Information Technology released the 12th Five-Year Plan: Iron and Steel (Development Plan for the Steel Industry). For the preliminary phase of the section 20 inquiry, the CBSA had a summary of the draft plan that had been published in May 2011 by KPMG, an international accounting firm. A review of the official 12th Five Year Development Plan for the Steel Industry indicates that the KPMG details in the draft were similar to the final official GOC document. The 12th Five-Year Development Plan for the Steel Industry serves as the guiding document for the development of the Chinese steel industry for the 2011-2015 period and its directives include:

  • Increased mergers and acquisitions to create larger, more efficient steel companies;
  • GOC restrictions on steel capacity expansion;
  • Upgrading of steel industry technology;
  • Greater GOC emphasis on high-end steel products;
  • GOC directed relocation of iron and steel companies to coastal areas.[22]

[73] Also included in this plan are minimum requirements for steel production in order to eliminate smaller players in the market. Through this plan, the GOC is continuing its reform and restructuring of the Chinese steel industry. The GOC’s target is that by 2015, China’s top 10 steel producers will represent 60% of the country’s total steel output. According to the NSP (2005), the long-range GOC target for mergers and acquisitions is to have the top 10 Chinese steel producers account for 70% of total national steel production by 2020.[23] This plan is the next development stage of GOC directives aimed at achieving this long-range 2020 target.

[74] The 12th Five-Year Development Plan for the Steel Industry addresses existing issues in the steel industry with the directive to strictly control expansion of steel production capacity, accelerate the development of new material for steel and producer service and to continue to advance mergers and restructuring.[24]

[75] According to the plan, the more highly concentrated steel industry will reduce overcapacity, decrease pollution and will improve Chinese steel producers’ bargaining power when negotiating prices on iron ore imports. In addition, through the 12th Five-Year Development Plan for the Steel Industry, the GOC is progressing with its initiative in the 2009 Steel Revitalization/Rescue Plan to move Chinese steel production facilities to China’s coast. By the end of this GOC directed plan in 2015, 40% of China’s steel production will be relocated to the coast.[25]

[76] In this 12th Five-Year Development Plan for the Steel Industry, the GOC’s policies and measures include:

  • Improve the industry management system. This would include the GOC’s Criterion for the Production and Operation of the Steel Industry (Steel Operations Standards) released in 2010;
  • Create an environment for fair competition, strengthen and improve macro adjustment and control;
  • Regulate the production and operation of the steel industry;
  • Standardize the operation of the industry;
  • Strengthen the macro guidance of the policy;
  • Promote international exchange and co-operation;
  • Improve industry information flow, capital flow and material flow. Support enterprise groups to establish and improve the information system in different regions;
  • Improve planning by regional authorities of industries to develop the steel industry, combine the regional mergers and reconstruction and eliminate obsolete construction. Related enterprises should put forward the planning scheme corresponding to the foregoing plan. The China Iron and Steel Industry should assist and put forward advice on the policy.

[77] The GOC’s direction of the steel industry includes enabling regional or provincial governments to combine enterprises across boundaries. Furthermore, as a result of the GOC’s administration of steel production capacity, the Chinese steel industry is very much under the purview of the GOC.

[78] In its supplemental section 20 RFI response, the GOC stated:

“We would like to draw the attention of the CBSA to the fact all these three Five-Year Plans (National 12th Five-Year Plan, 12th Five-Year Plan for Hebei and 12th Five-Year Plan: Iron and Steel) we submitted above are only instructive and guiding rather than compulsory binding to the steel industry and companies.”[26]

[79] Only one of the Five-Year Plans referenced by the GOC in the above quote was provided in their entirety and this was the 12th Five-Year Plan: Iron and Steel. An examination of this document indicates that the “Basic Principles” include to:

“strictly control expansion of production capacity, accelerate the development of new material for steel and producer service, continue to advance merger and restructuring and further enhance industrial clustering.”[27]

[80] Together with the GOC’s recent legislation: Criterion for the Production and Operation of Steel Industry – GY [2010] No. 105[28] and Several Observations of the General Office of the State Council on Further Strengthening Energy-saving and Emission Reduction Efforts, as well as the Accelerating of Restructuring of Steel Industry – GBF (1010) No. 34,[29] these plans set out the detailed requirements for existing production and operations of steel enterprises in China. For construction and renovation projects in the steel industry, the GOC’s development policies for the steel industry apply (i.e. the 12th Five-Year Plan: Iron and Steel and 2009 Steel Revitalization/Rescue Plan).

[81] Should steel enterprises not acquiesce to the GOC’s requirements, laws and industrial policies, there are repercussions which include the withdrawal of steel production licenses and credit support. In respect of new construction or renovation of Chinese steel enterprises, the GOC’s steel development policies also apply.

[82] The above GOC statement that the Five-Year Plans are merely instructive and guiding are inconsistent with the reality of the GOC’s macro-economic policies/measures that support the GOC’s stated objectives. The GOC’s measures, notices and observations as addressed in this section 20 inquiry serve to illustrate the fact that the GOC is closely administering the steel industry in China.

[83] Based on the information on the record, the scope of the GOC’s macro-economic policies/measures provide a compelling factual basis that the GOC is influencing the Chinese steel industry including the OCTG sector, which includes the pup joints under investigation.

[84] One of the factors that indicate section 20 conditions exist is when the government administers control of production capacity of the goods in the specified sector. The CBSA considers a government's regulation or control of production levels in an industry as an influence on the supply of goods that indirectly affects the price of the goods. This factor is indicative that section 20 conditions are present when prices are not substantially the same as they would be if they were determined in a competitive market. The CBSA’s section 20 inquiry concerning the OCTG sector in the Seamless Steel Casing investigation confirmed that the GOC’s control of new or additional steel production capacity extended to the OCTG sector.[30]

[85] In its second supplemental section 20 RFI response, the GOC provided the document, Several Observations of the General Office of the State Council on Further Strengthening Energy-saving and emission Reduction Efforts as well as Accelerating of Restructuring of Steel Industry- GBF (2010) No. 34.[31]

[86] The intent of this legislation is to further support and carry out the 2009 Steel Revitalization/Rescue Plan, to achieve the energy-saving and emission targets, in addition to the restructuring of the steel industry in China as approved by the State Council. One main objective of the State Council is to “resolutely suppress the excessive growth of steel production capacity” and “strictly implement the approval and review process of steel projects.”[32]

[87] In addition to the GOC’s actions to eliminate obsolete steel production and reduce energy-emissions, the GOC has clearly identified its plans for mergers and acquisitions. The GOC calls for provincial, autonomous regional and municipal governments to focus on formulating and reporting 2010-2011 iron and steel enterprise merger and restructuring plans to be organized, upon approval by the Ministry of Industry and Information Technology. The GOC directs that the implementation/improvement of policies for promoting mergers and restructuring be improved. These are compelling facts that the GOC is in charge of the reform of the Chinese steel industry.

[88] Information on the record further illustrates that GOC macro-economic policies/measures are compulsory and followed by local governments, with substantive impacts on the commercial decisions of producers of pup joints.[33]

China Steel Pipe Industry 12th Five-Year Plan

[89] The “China Steel Pipe Industry 12th Five-Year Plan” was released by the Steel Pipe Branch of the China Steel Construction Society.[34] In its response to the section 20 RFI, the China Iron and Steel Association (CISA) stated that the Steel Pipe Branch is one of its member institutions.[35] The CBSA considers CISA to be “Government” as it is under the administration of SASAC as per its Articles of Association. This plan directs that the output of steel pipe should be controlled at 67-75 million metric tonnes (mmt). The scope of the GOC’s reform of the Chinese steel industry thus extends to the Chinese pipe sector, with the industry concentration targets through mergers and acquisitions to be attained by the end of 2015. Additional details of the China Steel Pipe Industry 12th Five-Plan were addressed in the Statement of Reasons for the preliminary determination.

[90] In respect of the OCTG sector, one of the GOC directives under this plan is to expand the development of OCTG products such as high collapse, anti-corrosion pipe.[36] These GOC objectives are likely to conflict with the commercial interests of OCTG producers, affecting production volumes and ultimately prices.

Domestic Prices

[91] Wuxi Forest Petroleum Technology Co., Ltd. (Wuxi Forest) had provided a response to the CBSA’s dumping RFI which had Chinese domestic sales of pup joints.[37] Wuxi Forest is a Chinese trading company and is not a manufacturer of pup joints. The company’s exports to Canada were subsequently found to be non-subject to the investigation. Wuxi Forest had purchased pup joints in China for re-sale during the POI. The acquisition cost of these pup joints represent actual Chinese domestic sales of pup joints. These Chinese domestic sales are all grade P110 pup joints which is a high-end API 5CT specification.[38] The CBSA used these Chinese domestic selling prices of pup joints for the following analysis.

[92] Firstly, the CBSA compared the overall average selling price of these P110 goods sold in China, with U.S. selling prices of High Collapse P110 (HCP) as reported by Pipe Logix during the POI.[39] Pipe Logix does not report U.S. domestic selling prices for ordinary P110 grade product, as it is not normally sold in the US domestic market. However, P110 is required for some applications in the Canadian oilfield where there are sour gas environments. HCP pipe is not an equivalent grade but a very comparable specification to the P110. A comparison of the HCP to the P110 grades based on like outside diameters (OD) and nominal weights of 11.6 pounds per foot (lbs/ft) for the Chinese and U.S. products indicates that the selling price of Chinese P110 pup joints was less than the selling prices of standard length HCP casing in the U.S. (likely about a 30 foot length), on a metric tonne basis.

[93] To put this in perspective, if the Chinese domestic pup joints were all of 10 foot lengths, there would be approximately 19 pup joints in a metric tonne with each end piece finished and tested according to the API 5CT specification. [40] In contrast, the reported U.S. Pipe Logix selling price, on a metric tonne basis, is comprised of average standard lengths of about 30 feet, meaning each tonne would comprise roughly six 30 foot lengths with finished and tested ends according to the API 5CT specification.[41] With the same OD and 11.6 lbs/ft nominal weight in each example, the Chinese domestic prices do not reflect the additional cost and resulting incremental value in selling price for the additional 13 finished end pieces of pup joints. This is a conservative example in respect of the Chinese selling price. One metric tonne of the Chinese goods could alternatively be comprised of 63 three foot pup joints, each with finished and tested ends according to the API 5CT specification.[42] This would illustrate an even greater cost and a substantial selling price differential.

[94] In a second comparison, the CBSA considered P110 pup joint selling prices from the
United States to Canada during the POI.[43] In this comparison, the CBSA did not have sales of P110 in the same OD and lbs/ft as the Chinese goods but both were similar. The OD and nominal weight for the US selling prices were 3.5 inches and 9.3 lbs/ft compared to the Chinese product of 4.5 inches and 11.6 lbs/ft, which are sufficiently similar for comparison purposes. The lengths of the pup joints were the same at six feet. This comparison of selling prices indicates that the Chinese pup joints were 86% below that of the U.S. selling price. Consequently, in this comparison, the Chinese pup joint price is markedly lower than competitive market pricing for the same grade and same length of pup joint.

[95] In a third comparison, the CBSA compared the overall average domestic Chinese P110 pup joint selling price with the lowest U.S. selling prices of the lowest grade of API 5CT specification, J55, as per the Pipe Logix report over the POI.[44] The Chinese selling price was 34% lower than the U.S. J55 selling price.

[96] Each of the CBSA’s comparisons indicates that Chinese domestic pup joint selling prices are substantially below corresponding competitive market prices. Based on the CBSA’s price analysis, the evidence indicates that Chinese domestic OCTG pup joint prices are not substantially the same as they would be if they were determined in a competitive market.

Section 20 Inquiry Conclusion

[97] The wide range and material nature of the GOC measures have resulted in significant influence on the Chinese steel industry including the OCTG sector, which includes pup joints. The conditions described in paragraph 20(1)(a) of SIMA exist in this sector. Domestic prices are substantially determined by the GOC, and there is sufficient reason to believe that the domestic prices of pup joints are not substantially the same as they would be in a competitive market.

[98] Based on the above analysis, for the purposes of the final determination, the President affirmed the opinion rendered at the preliminary determination that the conditions described in paragraph 20(1)(a)apply in the OCTG sector in China, which includes pup joints.[45]

Normal Value

[99] Normal values of goods sold to importers in Canada are generally calculated based on the domestic selling prices of like goods in the country of export pursuant to section 15 of SIMA, or based on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits pursuant to paragraph 19(b) of SIMA. Where, in the opinion of the President, sufficient information has not been furnished or is not available, normal values are determined pursuant to a ministerial specification under subsection 29(1) of SIMA.

[100] For purposes of the preliminary determination, normal values could not be calculated on the basis of domestic selling prices in China or on the full cost of goods plus profit, as the President formed the opinion that the conditions described in section 20 exist in the OCTG sector, which includes pup joints.

[101] At the preliminary determination, normal values were calculated by advancing the export price of the goods by 32.4%. This was the average margin of dumping estimated from information provided in the complaint filed by AOT.

[102] Where section 20 conditions exist, the CBSA may determine normal values using the selling price, or the total cost and profit, of like goods sold by producers in a surrogate country designated by the President pursuant to paragraph 20(1)(c) of SIMA. However, sufficient surrogate country data on the necessary domestic pricing and costing information relating to the goods under investigation was not provided to the CBSA.

[103] Alternatively, normal values may be determined on a deductive basis starting with an examination of the prices of imported goods sold in Canada, from a surrogate country designated by the President, pursuant to paragraph 20(1)(d) of SIMA. However, sufficient information was not submitted by importers in response to the importer RFI to allow for the application of paragraph 20(1)(d).

[104] Accordingly, the CBSA has used an alternative method to determine normal values for the cooperative exporter for the purposes of the final determination, pursuant to a ministerial specification under subsection 29(1) of SIMA.

[105] While the CBSA does not have sufficient pricing, costing or import data available relating to a surrogate country, it does have pricing information for pup joints imported into Canada from, and originating in, the United States. This information was acquired from internal import data and from brokers representing the importers of these goods.[46] For the purposes of the final determination, normal values were determined on the basis of these prices.

[106] The normal values for each subject good exported to Canada by Hengshui Weijia over the period of investigation was based on the price of imported pup joints from the United States which matched the major characteristics used to identify these goods. Where such a match was not possible on a given transaction, the difference between the total normal value and the total export price for all other transactions for which matches were made, expressed as a percentage of this total export price, was used to establish the normal value.

Export Price

[107] The export price of goods sold to importers in Canada is generally calculated pursuant to section 24 of SIMA based on the lesser of the adjusted exporter’s sale price for the goods or the adjusted importer’s purchase price. These prices are adjusted where necessary by deducting the costs, charges, expenses, duties and taxes resulting from the exportation of the goods as provided for in subparagraphs 24(a)(i) to 24(a)(iii) of SIMA. Where, in the opinion of the President, sufficient information has not been furnished or is not available, export prices are determined pursuant to a ministerial specification under subsection 29(1) of SIMA.

[108] For purposes of the final determination, export prices for the cooperative exporter were determined using their reported export price of the goods. For all other exporters, import pricing information available from the CBSA’s internal information systems and, where applicable, importer RFI responses, were used for the purposes of determining export prices.

Results of Dumping Investigation

[109] The CBSA determined the margin of dumping for the cooperative exporter by comparing the total normal value with the total export price. When the total export price is less than the total normal value, the difference is the margin of dumping.

[110] For the exporters that did not respond to the RFI, the normal values were determined under a ministerial specification pursuant to section 29 of SIMA.

[111] The determination of the volume of dumped goods was calculated by taking into consideration each exporter’s net aggregate dumping results. Where a given exporter has been determined to be dumping on an overall or net basis, the total quantity of exports attributable to that exporter (i.e. 100%) is considered dumped. Similarly, where a given exporter’s net aggregate dumping results are zero, then the total quantity of exports deemed to be dumped by that exporter is zero.

[112] In calculating the margin of dumping for the country, the margins of dumping found in respect of each exporter were weighted according to each exporter’s volume of subject goods exported to Canada during the dumping POI.

[113] Based on the preceding, 100% of the subject goods from China were dumped by a weighted average margin of dumping of 144%, expressed as a percentage of the export price.

[114] Under paragraph 41(1)(a) of SIMA, the President shall make a final determination of dumping when he is satisfied that the goods have been dumped and that the margin of dumping of the goods of a country is not insignificant. Pursuant to subsection 2(1) of SIMA, a margin of dumping of less than 2% is defined as insignificant. The margin of dumping of certain pup joints from China is not less than 2% and is, therefore, not insignificant.

[115] For purposes of a preliminary determination of dumping, the President has responsibility for determining whether the actual and potential volumes of dumped goods are negligible. After a preliminary determination of dumping, the Tribunal assumes this responsibility. In accordance with subsection 42(4.1) of SIMA, the Tribunal is required to terminate its injury inquiry in respect of any goods if the Tribunal determines that the volume of dumped goods is negligible.

[116] A summary of the margins of dumping determined for this investigation is found in Appendix 1.

Hengshui Weijia

[117] The company’s response to the exporter and section 20 RFIs were received by the October 19, 2011 deadline.[47] The company also cooperated in responding to several supplemental RFIs.[48]

[118] Hengshui Weijia was the second largest known exporter of subject goods to Canada during the dumping POI.[49]

[119] A review of the information submitted by Hengshui Weijia revealed that the company had no domestic sales during the POI. All Hengshui Weijia production is for export and all products are pup joints.

[120] Normal values for Hengshui Weijia were determined pursuant to a ministerial specification under subsection 29(1) of SIMA. The normal values for each subject good exported to Canada by Hengshui Weijia over the period of investigation was based on the price of imported pup joints from the United States which matched the major characteristics used to identify these goods. Where such a match was not possible on a given transaction, the difference between the total normal value and the total export price for all other transactions for which matches were made, expressed as a percentage of this total export price, was used to establish the normal value.

[121] Hengshui Weijia exported the subject goods to its related importer in Canada, and consequently the exporter and importer are considered associated persons in accordance with subsection 2(2) of SIMA. As such, a reliability test is conducted in order to determine whether the export price under section 24 (the lesser of the importer's purchase price or exporter's selling price) is reliable within the context of SIMA. This test is conducted by comparing the section 24 export price with the section 25 “deductive” export price based on the importer's resale price of the imported goods in Canada to unrelated purchasers, less deductions for all costs incurred in preparing, shipping and exporting the goods to Canada, all costs incurred in reselling the goods (including duties and taxes), and an amount representative of the average industry profit in Canada.

[122] The amount for profit used in the reliability test was determined in the manner described in paragraph 22(b) of the SIMR, based on the profit information derived from three submissions on the record.[50]

[123] The importer provided additional documentation to verify the re-sale prices as reported in their submission.[51]

[124] The results of the reliability analysis revealed that 96% of Hengshui Weijia’s export prices determined pursuant to section 24 of SIMA were reliable. As such, the export prices were determined pursuant to section 24 of SIMA, based on the ex-works price of the goods reported by Hengshui Weijia, which was equal to the price paid by the importer of the goods in Canada.

Hengshui Weijia – Margin of Dumping

[125] The total normal value, as calculated in the manner described above, was compared with the total export price for all subject goods imported into Canada during the dumping POI. It was found that the goods exported by Hengshui Weijia were dumped by a weighted average margin of dumping of 80.2%, expressed as a percentage of the export price.

All Other Exporters – Margin of Dumping

[126] For all other exporters, import pricing information available from the CBSA’s internal information systems was used for the purposes of calculating the export price. The normal value and related margin of dumping was determined by advancing export prices by the highest amount by which the normal value exceeded the export price on an individual transaction (173.4%) for the cooperating exporter in accordance with the ministerial specification.

Summary of Results – Dumping

Period of Investigation - July 1, 2010 to June 30, 2011
Country Dumped Imports as Percentage of All Subject Imports Country Margin of Dumping Imports as Percentage of All Country Imports Dumped Imports as Percentage of All Country Imports
China 100% 144% 71.7% 71.7%

[127] A summary regarding the margins of dumping for this investigation are provided in Appendix 1.

Representations Concerning the Dumping Investigation

[128] Following the January 26, 2012 close of the record, a series of case briefs and reply submissions were received from counsel for the Complainant, the exporter Hengshui Weijia and the GOC.

[129] Issues raised by participants through case arguments and reply submissions pertaining to the dumping investigation and the CBSA’s response to these issues are provided in Appendix 2.

Subsidy Investigation

[130] In accordance with section 2 of SIMA, a subsidy exists if there is a financial contribution by a government of a country other than Canada that confers a benefit on persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of goods. A subsidy also exists in respect of any form of income or price support within the meaning of Article XVI of the General Agreement on Tariffs and Trade, 1994, being part of Annex 1A to the World Trade Organization (WTO) Agreement that confers a benefit.

[131] Pursuant to subsection 2(1.6) of SIMA, there is a financial contribution by a government of a country other than Canada where:

  1. practices of the government involve the direct transfer of funds or liabilities or the contingent transfer of funds or liabilities;
  2. amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due to the government are forgiven or not collected;
  3. the government provides goods or services, other than general governmental infrastructure, or purchases goods; or
  4. the government permits or directs a non-governmental body to do anything referred to in any of paragraphs (a) to (c) where the right or obligation to do the thing is normally vested in the government and the manner in which the non-governmental body does the thing does not differ in a meaningful way from the manner in which the government would do it.

[132] Where subsidies exist, they may be subject to countervailing measures if they are specific in nature. According to subsection 2(7.2) of SIMA, a subsidy is considered to be specific when it is limited, in a legislative, regulatory or administrative instrument, or other public document, to a particular enterprise within the jurisdiction of the authority that is granting the subsidy; or is a prohibited subsidy.

[133] The following terms are defined in section 2 of SIMA. A “prohibited subsidy” is either an export subsidy or a subsidy or portion of subsidy that is contingent, in whole or in part, on the use of goods that are produced or that originate in the country of export. An export subsidy is a subsidy or portion of a subsidy contingent, in whole or in part, on export performance. An “enterprise” is defined as also including a group of enterprises, an industry and a group of industries.

[134] Notwithstanding that a subsidy is not specific in law pursuant to subsection 2.7(2) of SIMA, a subsidy may also be considered specific having regard as to whether:

  1. there is exclusive use of the subsidy by a limited number of enterprises;
  2. there is predominant use of the subsidy by a particular enterprise;
  3. disproportionately large amounts of the subsidy are granted to a limited number of enterprises; and/or
  4. the manner in which discretion is exercised by the granting authority indicates that the subsidy is not generally available.

[135] For purposes of a subsidy investigation, the CBSA refers to a subsidy that has been found to be specific as an “actionable subsidy,” meaning that it is subject to countervailing measures if the persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, export or import of goods under investigation have benefited from the subsidy.

[136] At initiation, the CBSA identified 80 potential subsidy programs in the following eight categories:

  1. Special Economic Zones (SEZ) and other Designated Areas Incentives;
  2. Grants;
  3. Equity Programs;
  4. Preferential Loan Programs;
  5. Preferential Income Tax Programs;
  6. Relief from Duties and Taxes on Materials and Machinery;
  7. Reduction in Land Use Fees; and
  8. Goods/Services Provided by the Government at Less than Fair Market Value.

[137] Details regarding these potential subsidies were provided in the Statement of Reasons issued for the initiation of this investigation. Appendix 3 to this Statement of Reasons has been updated to reflect the programs found not to have been used by the cooperative exporter.

Results of the Subsidy Investigation

[138] As previously stated, the information submitted by the GOC for the purposes of the subsidy investigation was considered to be incomplete. The GOC did not provide the CBSA with sufficient information to enable a proper analysis of the programs for the final determination.

[139] Due to the status of the GOC submission, subsidy amounts for all exporters have been determined under a ministerial specification pursuant to subsection 30.4(2) of SIMA. However, amounts of subsidy were calculated for the cooperative exporter, in consideration of the level of cooperation received from them, which enabled the CBSA to perform the necessary calculations.

[140] With respect to calculations of amounts of subsidy for the non-cooperative exporters, the CBSA has no information, or incomplete information, regarding benefits received by the non-cooperative exporters. Therefore, the CBSA was unable to calculate specific amounts of subsidy for those exporters. As a result, for the non-cooperative exporters, the CBSA has determined an amount of subsidy under a ministerial specification pursuant to subsection 30.4(2) of SIMA, the details of which are described in the following section.

Hengshui Weijia

[141] Of the total 80 potential actionable programs, the following programs were found at the preliminary determination to benefit the cooperative exporter, Hengshui Weijia:

Program 1: Preferential Tax Policies for Enterprises with Foreign Investment (FIEs);

Program 32: Grants for Export Activities;

Program 74: Exemption of VAT on Purchases of Equipment

[142] A further review during the final phase of the investigation resulted in a calculation revision to Program 1: Preferential Tax Policies for Enterprises with Foreign Investment (FIEs) established in Special Economic Zones (SEZ), excluding Shanghai Pudong Area. A further review during the final phase of the investigation also demonstrated that Program 32: Grants for Export Activities, as reported by Hengshui Weijia, did confer benefits to them during the subsidy POI, while the CBSA removed from consideration Program 74: Exemption of VAT on Purchases of Equipment.

[143] Consequently, on the basis of the available information, Programs 1 and 32 constitute financial contributions pursuant to subsection 2(1.6) of SIMA.

Program 1: Preferential Tax Policies for Enterprises with Foreign Investment (FIEs):

[144] During the preliminary phase of the investigation, the CBSA reviewed documents submitted for the record and determined that Hengshui Weijia had received benefits under Program 1: Preferential Tax Policies for Enterprises with Foreign Investment (FIEs) Established in Special Economic Zones (excluding Shanghai Pudong Area).

[145] After the preliminary determination, Hengshui Weijia made a submission contesting that they are not established in any Special Economic Zones (SEZ) and as such are not a recipient of Preferential Tax Policies for Enterprises with Foreign Investment in any SEZ.[52]

[146] Furthermore, the exporter challenged the CBSA’s calculation on the income tax amount stating that: “The CBSA’s flawed methodology resulted from its application of the 25% enterprise income tax rate to Hengshui Weijia's operating income (otherwise known as its accounting income) rather than to its taxable income.”[53]

[147] The CBSA acknowledges that the program title used for the purposes of the preliminary determination is not completely accurate. However, the CBSA investigation has determined that Hengshui Weijia is a recipient of preferential tax policies.

[148] In the final phase of the investigation, the CBSA requested that the exporter provide information about the law which determined its taxable income as a percentage of its total revenue. In response, the company provided a copy of The issue of the circular of the state administration of taxation on the procedures for verification and collection of enterprise income tax (trial implementation), which states the following: [54]

Taxable Income = Taxable Revenue * Taxable Income Rate

Payable Income Tax = Taxable Income * Applicable rate

[149] The circular further states that “the taxable income rate shall be determined in accordance with the standards at ranges in the following table:”

Industry Taxable Income rate (%)
Agriculture, Forestry, Husbandry and Fishery 3-10
Manufacturing 5-15
Wholesaling and Retailing 4-15
Transportation 7-15

[150] Hengshui Weijia pays income tax at the applicable rate of 25% and its taxable income rate, as evidenced from its income tax forms, is substantially less. Given the range in the manufacturing sector of 5% - 15%, the CBSA sent supplemental RFIs to Hengshui Weijia requesting that they explain why its taxable income rate was a comparatively lower rate.[55] In the absence of a satisfactory answer, the highest taxable income rate of 15% was used to calculate the subsidy benefit.

[151] The amount of subsidy was calculated under ministerial specification pursuant to subsection 30.4(2) of SIMA by distributing the benefit received by the exporter represented by the exemption in tax payable, over the total quantity of goods to which the benefit was attributable.

[152] The benefit from this program resulted in an amount of subsidy of 454.2 RMB/MT.

Program 32: Grants for Export Activities

[153] Hengshui Weijia and the GOC each acknowledged that Hengshui Weijia received benefits from the government in the form of a grant for market promotion and trade development.

[154] The amounts of subsidy were calculated under ministerial specification pursuant to subsection 30.4(2) of SIMA, by distributing the benefit received by the exporter represented by the grant received, over the total quantity of goods to which the benefit was attributable.

[155] The benefit from this program resulted in an amount of subsidy of 109.7 RMB/MT.

Program 74: Exemption of VAT on Purchases of Equipment

[156] As previously stated, the CBSA did not include Program 74: Exemption of VAT on Purchases of Equipment as part of its subsidy calculations for the final determination. In response to the supplemental RFI, the exporter explained that the VAT refund was due to the difference in the input VAT rate of 17% and the export VAT rate of 13%. The VAT tax return form provided by Hengshui Weijia demonstrated that the refund was lower then the amount the company paid for input VAT and thus, the refund did not constitute a benefit.[56] After reviewing the responses provided by Hengshui Weijia to the supplemental RFIs, the CBSA excluded the program from its subsidy calculations.

Hengshui Weijia – Amount of Subsidy

[157] Expressed as a percentage of export price, the amounts of subsidy as determined by the CBSA for the cooperative exporter, Hengshui Weijia, is 2.5%. Expressed in RMB per metric tonne, the cooperative exporter’s amount of subsidy was determined to be 563.9 RMB/MT.

All other Exporters - Amount of Subsidy

[158] For all other exporters, the amount of subsidy was determined under a ministerial specification, pursuant to subsection 30.4(2) of SIMA, based on:

  1. the amount of subsidy (RMB/MT) estimated for each of the two actionable subsidy programs for the cooperative exporter located in China; plus;
  2. the subsidy amount per metric tonne for the actionable subsidy program in (1) above which was identified by both the GOC and the cooperative exporter, applied to each of the remaining 78 potentially actionable subsidy programs for which information is not available or has not been provided.

[159] Using the above methodology, the amount of subsidy calculated for non-cooperative exporters is 9,125.6 RMB/MT. The total amount of subsidy for non-cooperative exporters expressed as a percentage of the export price is 44.7%.

[160] In summary, 100% of the goods from China are subsidized and the amount of subsidy is 31.4%, as a percentage of the export price.

Summary of Results – Subsidy

Period of Investigation - January 1, 2010 to June 30, 2011
Country Subsidized Goods as Percentage of Country Imports Amount of Subsidy as Percentage of Export Price Country Imports as Percentage of Total Imports Subsidized Goods as Percentage of Total Imports
China 100% 31.4% 74.4% 74.4%

[161] A summary regarding the amounts of subsidy for this investigation are provided in Appendix 1.

[162] In making a final determination of subsidizing under subsection 41(1) of SIMA, the President must be satisfied that the subject goods have been subsidized and that the amount of subsidy on the goods of a country is not insignificant. According to subsection 2(1) of SIMA, an amount of subsidy that is less than 1% of the export price of the goods is considered insignificant.

[163] However, according to section 41.2 of SIMA, the President is required to take into account Article 27.10 of the WTO Agreement on Subsidies and Countervailing Measures when conducting a subsidy investigation. This provision stipulates that a countervailing duty investigation involving a product from a developing country should be terminated as soon as the authorities determine that the overall level of subsidies granted upon the product in question does not exceed 2% of its value calculated on a per unit basis.

[164] SIMA does not define or provide any guidance regarding the determination of a “developing country” for purposes of Article 27.10 of the WTO Agreement on Subsidies and Countervailing Measures. As an administrative alternative, the CBSA refers to the Development Assistance Committee List of Official Development Assistance Recipients (DAC List of ODA Recipients) for guidance.[57] As China is included in the listing, the CBSA will extend developing country status to China for purposes of this investigation. As the preceding table illustrates, the amount of subsidy found during this investigation is not insignificant.

[165] For purposes of the preliminary determination of subsidizing, the President has responsibility for determining whether the actual or potential volume of subsidized goods is negligible. After a preliminary determination of subsidizing, the Tribunal assumes this responsibility. In accordance with subsection 42(4.1) of SIMA, the Tribunal is required to terminate its inquiry in respect of any goods if the Tribunal determines that the volume of subsidized goods from a country is negligible.

Representations Concerning The Subsidy Investigation

[166] Following the January 26, 2012 close of the record, a series of case briefs and reply submissions were also received from counsel for the Complainant, the exporter Hengshui Weijia and the GOC.

[167] Issues raised by participants through case arguments and reply submissions pertaining to the subsidy investigation and the CBSA’s response to these issues are provided in Appendix 2.

Decisions

[168] On the basis of the results of the investigation, the President is satisfied that certain pup joints originating in or exported from the People’s Republic China, have been dumped and that the margin of dumping is not insignificant. Consequently, on March 12, 2012, the President made a final determination of dumping pursuant to paragraph 41(1)(a) of SIMA respecting the subject goods.

[169] Similarly, on the basis of the results of the investigation, the President is satisfied that certain pup joints originating in or exported from the People’s Republic of China have been subsidized and that the amount of subsidy is not insignificant. As a result, the President also made a final determination of subsidizing pursuant to paragraph 41(1)(a) of SIMA respecting the subject goods on this same date.

[170] Appendix 1 contains a summary of the margins of dumping and amounts of subsidy relating to the final determinations.

Future Action

[171] The provisional period began on December 12, 2011, and will end on the date the Tribunal issues its finding. The Tribunal is expected to issue its decision by April 10, 2012. Subject goods imported during the provisional period will continue to be assessed provisional duties as determined at the time of the preliminary determinations. For further details on the application of provisional duties, refer to the Statement of Reasons issued for the preliminary determinations, which is available on the CBSA Web site at: www.cbsa-asfc.gc.ca/sima-lmsi/menu-eng.html

[172] If the Tribunal finds that the dumped and subsidized goods have not caused injury and do not threaten to cause injury, all proceedings relating to these investigations will be terminated. In this situation, all provisional duties paid or security posted by importers will be returned.

[173] If the Tribunal finds that the dumped and subsidized goods have caused injury, the anti-dumping and/or countervailing duties payable on subject goods released by the CBSA during the provisional period will be finalized pursuant to section 55 of SIMA. Imports released by the CBSA after the date of the Tribunal’s finding will be subject to anti-dumping duty equal to the margin of dumping and countervailing duty equal to the amount of subsidy.

[174] The importer in Canada shall pay all applicable duties. If the importers of such goods do not indicate the required SIMA code or do not correctly describe the goods in the customs documents, an administrative monetary penalty (AMP) could be imposed. The provisions of the Customs Act[58] apply with respect to the payment, collection or refund of any duty collected under SIMA. As a result, failure to pay duty within the prescribed time will result in the application of interest.

[175] Normal values and the amount of subsidy have been provided to the cooperating exporter for future shipments to Canada in the event of an injury finding by the Tribunal. The normal values and amount of subsidy will come into effect the day after the date of the injury finding, if there is one. Information regarding normal values of the subject goods should be obtained from the exporter.

[176] Exporters who were not cooperative in the dumping investigation will have normal values established by advancing the export price by 173.4% based on a ministerial specification pursuant to section 29 of SIMA. Anti-dumping duty will apply based on the amount by which the normal value exceeds the export price of the subject goods. Similarly, exporters who were not cooperative in the subsidy investigation will be subject to a countervailing duty amount of 9,125.6 Renminbi per metric tonne, based on a ministerial specification pursuant to subsection 30.4(2) of SIMA.

Retroactive Duty on Massive Importations

[177] Under certain circumstances, anti-dumping and countervailing duty can be imposed retroactively on subject goods imported into Canada. When the Tribunal conducts its inquiry on injury to the Canadian industry, it may consider if dumped and/or subsidized goods that were imported close to or after the initiation of the investigations constitute massive importations over a relatively short period of time and have caused injury to the Canadian industry. Should the Tribunal issue a finding that there were recent massive importations of dumped and/or subsidized goods that caused injury, imports of subject goods released by the CBSA in the 90 days preceding the day of the preliminary determinations could be subject to anti-dumping and/or countervailing duty.

[178] However, in respect of importations of subsidized goods that have caused injury, this provision is only applicable where the President has determined that the whole or any part of the subsidy on the goods is a prohibited subsidy. In such a case, the amount of countervailing duty applied on a retroactive basis will equal the amount of subsidy on the goods that is a prohibited subsidy.

Publication

[179] A notice of these final determinations of dumping and subsidizing will be published in the Canada Gazette pursuant to paragraph 41(3)(a) of SIMA.

Information

[180] This Statement of Reasons has been provided to persons directly interested in these proceedings. It is also posted on the CBSA’s Web site, in both English and French, at the address below. For further information, please contact the officers identified as follows:

Mail SIMA Registry and Disclosure Unit
Anti-dumping and Countervailing Directorate
Canada Border Services Agency
100 Metcalfe Street, 11th Floor
Ottawa, Ontario K1A 0L8
CANADA
Telephone Andrew Manera 613-946-2052
Barbara Chouinard 613-954-7399
Fax 613-948-4844
E-mail SIMARegistry@cbsa-asfc.gc.ca
Web site www.cbsa-asfc.gc.ca/sima-lmsi/menu-eng.html

Caterina Ardito-Toffolo

A/Director General

Anti-Dumping and Countervailing Directorate

Attachments

Appendix 1 – Summary of Margins of Dumping and Amounts of Subsidy

Exporter Margin of Dumping (as Percentage of Export Price) Amount of Subsidy (Renminbi per metric tonne) Amount of Subsidy(as Percentage of Export Price)
Hengshui Weijia 80.2% 563.9 2.5%
All Other Exporters 173.4% 9,125.6 44.7%
China Overall 144% 5,295.1 31.4%

Appendix 2 – Dumping and Subsidy Representations

The details of representations made to the CBSA with respect to the dumping and subsidy investigations, including case arguments and reply submissions from Hengshui Weijia, the GOC and the Complainant are listed below. Following the representations on the issues is a response explaining the position of the CBSA. Since there are at times common positions from multiple parties, the CBSA may make specific reference to only one or two parties when documenting the issue raised.

Given that the CBSA's final determination supersedes any decision made at the preliminary determination stage of the investigation, the CBSA will only address issues raised within the context of the preliminary determination to the extent that these issues carry relevance for the final determination.

The CBSA’s International Obligations

Counsel for the GOC made representations identifying the CBSA’s obligations under the WTO’s Anti-Dumping Agreement and Agreement on Subsidies and Countervailing Measures as it relates to both the procedures and methodologies employed in the respective anti-dumping and countervailing investigations. In identifying these obligations, counsel has alleged a number of CBSA violations of these agreements including, but not limited to, the CBSA’s determination that the GOC’s response to the subsidy and section 20 RFIs was incomplete.[59]

CBSA Response:

The CBSA acknowledges its obligations to the WTO Agreements and believes it has met the standards set forth in both the Anti-Dumping Agreement and the Agreement on Subsidies and Countervailing Measures.

With this said, the CBSA’s anti-dumping and countervailing investigations were conducted under the authority of the Special Import Measures Act (SIMA). The CBSA’s responsibility is to administer and follow the relevant Canadian legislation in the form of SIMA. The CBSA believes it has adhered to the standard set forth in SIMA in the conduct of these investigations.

The CBSA’s Process and GOC Involvement

Counsel for the GOC stated that the “CBSA’s denial of an extension of the deadline to file RFIs past October 19, 2011 was unreasonable.” [60] Counsel further suggested that “any information deemed as insufficient or limited by the CBSA could have been addressed or cured by providing sufficient time to respond or by issuing supplemental questionnaires.”[61] Counsel for the GOC concluded by stating that “Canada’s refusal to grant an extension of the deadlines to file RFI responses denied China the opportunity to meaningfully participate in this proceeding.[62]

Counsel for the GOC also disagreed with the CBSA’s determination that the GOC’s subsidy RFI response was incomplete. Counsel stated that this determination denied the “GOC’s right to fully participate in the investigation” and objected to the CBSA characterizing the GOC’s RFI response as providing some information but being otherwise “limited” in its responses. Counsel also objected that the CBSA did not verify the GOC’s RFI responses. [63]

Counsel for the Complainant rebutted the GOC’s characterization of its RFI response, as well as the lack of verification of the response by stating that there “is no point in verifying an incomplete response. Further, verification is not a requirement of Canadian Law.”[64]

As part of their allegation that the CBSA denied the GOC’s participatory rights in this investigation, counsel for the GOC also identified documents which the CBSA had marked “Protected” on the administrative record, preventing, according to counsel, its client’s ability to be “reviewed and/or confirmed by competent Chinese government officials.”[65]

CBSA Response:

The CBSA does not believe that its denial of the deadline extension request from the GOC in respect of its RFI responses in any way denied the GOC its right to meaningfully participate in the investigations. The CBSA in fact afforded the GOC the opportunity to provide information right up until the close of the record, which was January 26, 2012, which is far beyond the RFI deadline of October 19, 2011. This is consistent with the CBSA’s handling of similar requests in other investigations involving the GOC.

In no way did the CBSA prevent the GOC from participating in the investigation. There was ample time to submit a complete response to the RFI in advance of the close of the record, which was January 26, 2012. Furthermore, the CBSA is confident that the information requested was well within the GOC’s ability to provide within the timelines provided and was relevant to the proceeding and that the subsequent response from the GOC fell substantially short of the fulsome response required.

With respect to the issue raised by counsel for the GOC that the CBSA designated certain documents as “Protected,” which the GOC alleges prevented them from appropriately commenting on the information cited by the CBSA, the CBSA can find no record of a request from counsel to change any documentation from “Protected” to “Non-Confidential.” Each of the documents referenced by counsel for the GOC appears to have been placed on the CBSA’s administrative record on the date of initiation, September 12, 2011.[66]

Furthermore, counsel for the GOC has not explained how a review of these documents would have put the GOC in a better position to respond, given that counsel states that “many of the official versions of the documents were indeed provided by the GOC in the RFIs filed for this investigation.”[67]

The CBSA’s Consideration of the Facts

In their case arguments, counsel for the GOC made numerous denials concerning alleged conduct of the GOC as stated in the CBSA’s Statement of Reasons at the preliminary determination or in other documents on the record.[68] In general, counsel for the GOC objected to the CBSA’s reliance on its own evidence, denied that the GOC’s role includes any form of interference in the OCTG market respecting mergers and consolidations,[69] denied that the GOC has an approval process for OCTG producers who wish to make capacity additions,[70] and denied that the GOC has any direct/indirect influence on the “daily operations” of companies for which they are a shareholder (i.e. SOEs).[71]

In a critique of the CBSA’s consideration of the facts available, the GOC stated the following in regards to the CBSA’s preliminary determination:

“Instead of relying on (or at least considering) the GOC’s timely and verifiable evidence, the CBSA has, yet again, cast aside the detailed documentary evidence provided by the GOC in this investigation.”[72]

Similarly, the GOC protested that:

“It is difficult to be more emphatic than this in response to the CBSA’s queries but yet the CBSA continues to conveniently decide based on its own biases and preconceived, unverified assumptions.”[73]

With respect to their macro-economic measures, the GOC stated:

“The GOC specifically addressed these points in its RFI responses, wherein it states at Question B18 that it “does not request specific mergers or consolidations; furthermore there is no specific request put through to various regions to form mergers or consolidations.”[74]

With respect to the GOC’s arguments regarding the State Assets Supervision and Administration Commission (SASAC), the GOC stated that:

“In respect of the State Assets Supervision and Administration Commission (SASAC), the CBSA concludes that the ‘GOC’s mandates compete with market demands in corporate decisions.’ This conclusion is arrived at based on apparent “contradictory statements,” when in fact, again the GOC has emphatically stated that “in case a company is invested by the government, the government acts as an investor/shareholder, which has no direct or indirect influence on the company’s daily operation.”[75]

In addition to the issue of the role of SASAC, the GOC stated that:

“The mere fact that SASAC has a representative on a company’s board does not make that company a “public body.” Legal arguments on “public body” are provided below in Section III(a) and clearly establish that GOC mandates do not compete with market demands in corporate decisions since a government-invested entity is not a “public body.”[76]

Finally in reference to the China Steel Pipe Industry 12th Five-Year Plan,[77] the GOC stated that it:

“…could not identify the document requested by the CBSA. Despite this, the CBSA based its conclusions on a protected document that was never seen by competent officials of the GOC and concluded, with no substantiation whatsoever, that “Chinese OCTG producers are not motivated solely by commercial interests, but must operate and be attentive to the GOC’s objectives, which may conflict with commercial interests.” This bald-faced statement can be said of any enterprise operating in a market economy. It certainly cannot lead to the conclusion that macro-economic policies and measures result in significant influences on pricing within the Chinese steel industry.”[78]

With respect to the value of the evidence provided by the GOC in its RFI response, counsel for the Complainant characterized the GOC’s information as “an attempt to manipulate the outcome through the selective provision of information.”[79]

Counsel for the Complainant also made numerous specific references in case arguments to alleged incomplete responses, contradictory statements and inconsistencies in the GOC’s RFI responses, relative to other information on the record, which counsel believes provide the justification for the CBSA to use alternative information and consider the GOC’s responses incomplete.[80]

CBSA’s Response:

The information on the record does not support the GOC’s general position which asserts that detailed information was provided by them and should have been relied upon in place of other information on the record. The GOC has not taken into consideration the CBSA’s letter of January 3, 2012 concerning the incomplete items in the GOC’s submission.[81] In addition, the GOC did not provide additional information to rectify the incomplete responses by the closing of the record date on January 26, 2012.

The GOC’s statement in regards to mergers and acquisitions is inconsistent with the GOC’s macro-economic policies and legislation. For instance, the 2009 Steel Revitalization/Rescue Plan - Item 3 under Major Tasks states:

“We shall further give play to the role of Bao Steel. An-Ben Steel, Wu Steel and other large size enterprise groups as leaders of the industry, assist An-Ben Steel Group, Guangdong Steel

Group Guangxi Steel Group, Ilebei Steel Group and Shandong Steel Group in making a substantial reorganization for the unified management of production, supply and marketing as well as staff: property and materials within their groups, promote the trans-regional reorganization between An-Ben Steel and Pan Steel, Dongbei Special Steel as well as between

Baosteel Group and Baogang Group, Ningbo Iron & Steel Co., Ltd, and facilitate the regional reorganization between Tianjin Pipe and Tian Tie Group. Tianjin Iron & Steel Co., Ltd., Tianjin Metallurgy Company as well as between Taiyuan Iron & Steel (Group) Co., Ltd. and the steel enterprises within the same province (Shanxi). We shall do our best to form a few huge steel enterprises with a production capacity of 50 million tons or more and a relatively strong international competitiveness such as Baosteel Group, An-Ben Group and Wuhan Steel Group as well as a number of large-size steel enterprises with a production capacity of 10 million tons up to 30 million tons.”[82]

Furthermore, in the 12th Five- Year Development Plan: Iron and Steel under Accelerating Restructuring and Mergers, the GOC directs that it will:

“Mainly support large-scale steel enterprises to launch trans-regional and ownership, merger and restructuring. Perform the leading role of Bao Steel, Anshan Iron and Steel, Wuhan Iron and Steel, Shougang and other large-scale steel enterprises to form 3 to 5 enterprise groups of strong core competitiveness and international influence. Mainly promote and improve merger and restructuring of Anshan Iron and Steel, Panzhihua Iron and Steel, Benxi Iron and Steel, San’gang, and Bao Steel and Guangdong Steel, Wuhan and Yunnan, Guangxi Iron and Steel Company, Shougang and Jilin, Guizhou, Shanxi and other steel enterprises.”[83]

In respect of the GOC purporting that there is no approval process for additional or new production capacity the GOC in its case arguments stated:

“More specifically, in regards to operations or production capacity of companies in the OCTG sector, the GOC has stated unequivocally that there is no approval required concerning additional capacity and/or joint venture and that modifications on additions of capacity and/or joint ventures concerning OCTG are ultimately decided by the producers themselves.”[84]

The GOC’s propositions in the above statement to the CBSA are in direct conflict with the GOC’s macro-economic policies and legislation including:

  • National Iron and Steel Policy – July 2005 [85]
  • 2009 Steel Revitalization/Rescue Plan [86]
  • 12th Five-Year Development Plan: Iron & Steel [87]
  • China Steel Pipe Industry 12th Five-Year Plan [88]
  • Criterion for the Production and Operation of Steel Industry – GY [2010] No. 105 [89]
  • Several Observations of the General Office of the State Council on Further Strengthening Energy-saving and Emission Reduction Efforts as well as Accelerating of Restructuring of Steel Industry – GBF (2010) No. 34 [90]

In Particular, the GOC’s mandate in the National 12th Five-Year Development Plan: Iron and Steel for 2011-2015 for the administration of production capacity in the Chinese steel industry is clear as it directs to:

“Adhere to structural adjustment: take as the priorities of structural adjustment varieties expansion, quality enhancement, service improvement, steel usage reduction, energy conservation and emission reduction advancement, backwardness elimination, layout optimization; strictly control expansion of production capacity, accelerate the development of new material for steel and producer service, continue to advance merger and restructuring and further enhance industrial clustering level.”[91]

The GOC’s allegations in its case arguments are not supported by the GOC’s macro-economic policies and legislative actions. The evidence on the record demonstrates that the CBSA’s determinations have not been based on its own biases and preconceived, unverified assumptions as alleged by the GOC. The GOC’s arguments conflict with the information on the record, the latter of which is often sourced from the GOC’s own policy and legislation.

Regarding the GOC’s assertions on the role of SASAC and SOEs, when asked by the CBSA for a further explanation concerning the role, activities and responsibilities of the SASAC directors, the GOC responded that:

“According to the Company law of China, the SASAC director is a representative of the shareholder. SASAC guides and pushes the reform and restructuring of state-owned enterprises, as well as supervises the maintenance and appreciation of state assets value for those state-invested enterprises.”[92]

This response characterizes SASAC’s role as far more involved than the more passive voice suggested by the GOC in its case arguments above, where SASAC was described as having “no direct or indirect influence.”[93]

Regarding the comments made by the GOC in respect of the China Steel Pipe Industry

12t Five-Year Plan, the CBSA identified the GOC’s macro-economic policies along with legislative actions by the names commonly found in the public domain. At no point did the GOC request clarification on the title of the document and provided official translations of the seminal documents as per the CBSA’s request. The document referenced is produced by a CISA affiliated body. The GOC was cognizant of the references and the documents referenced. Consequently, the GOC’s arguments appear to be without basis in fact.

The CBSA’s Assessment of Subsidy Programs

In their case arguments, counsel for Hengshui Weijia contested the CBSA’s assessment of two of the subsidy programs estimated at the preliminary determination to confer actionable benefits upon the exporter.[94]

Counsel for Hengshui Weijia challenged the CBSA’s consideration of Program 74: Exemption of VAT on Purchases of Equipment claiming the arrangement is a non-actionable subsidy, in large part due to the fact that the 13% VAT refund on exported goods is a lower rate than the 17% rate assessed on purchases in the domestic market. Counsel also cited the following CBSA statement on this issue from the Seamless Steel Casing investigation:

“The Chinese VAT rebate system is consistent with the WTO Subsidies Agreement as long as the exemption or remission of indirect taxes on the production and distribution of exported goods is not in excess of the indirect taxes levied on the production and distribution of the same products sold in the domestic market.”[95]

Counsel for the Complainant rebutted the position of Hengshui Weijia in their reply submissions, providing an example which demonstrated that a simple comparison between the percentage of VAT paid versus the percentage of VAT refunded is insufficient to assess whether or not a net financial benefit has actually been received, given that the respective rates are applied to different values (i.e. VAT paid is on domestically purchased inputs, VAT refunded is a factor of export price). As stated by counsel for the Complainant:

“Quite simply, the VAT rate on inputs and the VAT on export are measured from different bases, and accordingly, the percentage amounts are not directly comparable; rather, it is the consequence of the relative price of inputs and the selling price which determines whether a subsidy has been accorded.”[96]

Counsel for Hengshui Weijia also contested the CBSA’s estimated subsidy amount at the preliminary determination for Program 1: Preferential Tax Policies for Enterprises with Foreign Investment (FIEs). Counsel challenged both the calculation and the basis for the calculation, stating that the CBSA lacked the specificity component required to consider a subsidy program actionable, as the rules under the “Income Tax Circular automatically apply to all enterprises in China and the criteria and conditions are strictly adhered to.”[97]

Counsel for the Complainant rebutted this argument by stating that:

“The very fact of the range of these differential tax computation rates indicate an economic benefit being given to a certain industry or industries, and further certain preferences given within an industry. The highest rate indicated is Article 8 [Income Tax Circular] is 30%. It is submitted that anything less than a 30% rate constitutes a countervailable subsidy, since it confers an economic benefit, and provides a benefit to a specific industry or industries relative to other industries.”[98]

CBSA Response:

In regards to Program 74: Exemption of VAT on Purchases of Equipment, for the purposes of the preliminary determination, this program addressed a VAT refund shown in the financial statements of the company. A further review by the CBSA since the preliminary determination revealed that the VAT refund was not related to the purchase of equipment. Rather, it was related to the VAT refunded on the export of the subject goods. As a result, the CBSA excluded the program from Hengshui Weijia’s subsidy calculations.

The CBSA considered the Complainant’s argument concerning the percentage of VAT paid versus the percentage of VAT refunded and, based on the information provided by the exporter, the CBSA determined that the actual refunded amounts of VAT did not exceed the amounts of VAT paid.[99]

With regards to the subsidy calculation for Preferential Tax Policies, the CBSA found that Hengshui Weijia had not sufficiently responded to the question as to why their income tax rate was substantially below the standard rate for corporations in China. The company actually responded that for the CBSA to “assume that Hengshui Weijia should be aware of why its tax rate was [x%] instead of 10% or 15% is ludicrous.”[100]

The CBSA does not believe that the request was ludicrous. The reasoning for the rate should be well within the company’s ability to respond. As previously stated, in the absence of a satisfactory answer, the highest taxable income rate of 15% was used to calculate the subsidy benefit. The CBSA found that the difference in tax rates between the standard corporate rate and that received by Hengshui Weijia, along with the company’s inability to explain the preferential rate to be sufficient in satisfying the CBSA’s determination.

The CBSA’s Evidence in Support of the Application of Section 20

Counsel for the GOC stated that the CBSA’s reliance on section 20 is “misplaced.”[101] In making these comments, the GOC cited China’s Accession Protocol to the WTO as support to its position that Chinese prices and costs should be used as the primary methodology in making the necessary “pricing or costing comparisons involved in investigating dumping claims.”[102]

Counsel for the Complainant countered these arguments relating the Accession Protocol by drawing attention to the condition in Article 15 which states that the primary methodology alluded to above should be used:

“If the producers under investigation can clearly show that market economy conditions prevail in the industry.”[103]

It is the position of counsel for the Complainant that the producers in this investigation, of which there is only one respondent, have not so shown this.

Counsel for the GOC also emphasized the “two-fold test” to paragraph 20(1)(a) of SIMA, where domestic prices must be substantially determined by the government and those prices must not be substantially the same as they would be if they were determined in a competitive market in order to satisfy the basis of the President’s opinion.[104] To meet each of these requirements, counsel contended that “a modicum of rigor that prices differ from what they would otherwise be in a competitive market” must be used by the CBSA in its analysis.[105]

Counsel for the GOC further cited the CBSA’s public section 20 policy as requiring that investigations be initiated under the presumption that the conditions described in section 20 do not exist “unless there is evidence that suggests otherwise.”[106] Counsel stated that this presumption entails that any such evidentiary reliance must be “compelling and accurate” as section 20 is to be used only in exceptional circumstances.[107]

Counsel for the Complainant rebutted the allegations from the GOC’s counsel that the CBSA’s investigation into section 20 was unwarranted. In so doing, counsel referred to two previous CBSA section 20 determinations on the same industry in the Seamless Steel Casing (2008) and Oil Country Tubular Goods (2010) investigations, where the decision in the former was upheld by the Federal Court of Appeal.[108]

CBSA Response:

As part of the preliminary determination of dumping, the President formed the opinion that the conditions of section 20 exist in the Chinese OCTG sector, which includes pup joints.

The CBSA has undertaken extensive research into the GOC’s involvement in the steel industry, including the Chinese OCTG sector, which includes pup joints. The CBSA has formed the section 20 opinion on the OCTG sector in China in two previous investigations – Seamless Steel Casing (2008) and Oil Country Tubular Goods (2010). The full details of this research are available on the CBSA’s listing of exhibits.

It is important to note that RFI responses from interested parties form only part of the information on the record. The results of the CBSA’s analysis in this case are consistent with the evidence on the record and the President’s previous section 20 opinions regarding steel industry sectors, including OCTG.[109]

Further explanation of the CBSA’s position regarding its section 20 opinion can be found in the “Section 20 Inquiry” portion of this document. In addition, all other relevant evidence used to affirm the section 20 opinion can be found on the CBSA’s listing of exhibits.

The CBSA’s Determination of Normal Values

Counsel for the GOC objected to the CBSA using any methodology for calculating normal values that was not based upon the “timely filed, verifiable and accurate information governing the pup joints sector in China.”[110] The GOC also claimed that the “GOC and its producers have clearly established that market economy conditions prevail in the OCTG industry.”[111]

Counsel for the GOC further objected to the CBSA using a surrogate market such as the United States to establish normal values, alleging that such an effort is an “apples to oranges” comparison. Counsel for the GOC characterized normal values calculated using the United States as one that produces “aberrationally high normal values that cannot be compared to Chinese prices.”[112] Counsel further suggested that Brazil would be a more appropriate surrogate given its status as a major OCTG producer and consumer as well as having major oil production and refining capacities.[113]

CBSA Response:

At the time of the preliminary determination, the President formed the opinion that the conditions of section 20 exist in the OCTG sector, which includes pup joints. Where section 20 conditions exist, the CBSA may determine normal values using the selling price, or the total cost and profit, of like goods sold by producers in a surrogate country designated by the President pursuant to paragraph 20(1)(c) of SIMA or, failing that, paragraph 20(1)(d) of SIMA provides for calculating normal values using re-sales in Canada of goods imported from a third country. The CBSA was unable to obtain sufficient information for either of these two approaches and accordingly used an alternative method to estimate normal values for purposes of the preliminary determination.

In estimating normal values for the preliminary determination, the CBSA used margin of dumping estimates established in the CBSA’s complaint analysis for the initiation of the investigation.[114]

For the purposes of the final determination, a more comprehensive analysis using actual imports of goods matching the subject good characteristics from the United States were used as basis for normal values. These normal values were compared with the exported goods from the cooperative exporter. The CBSA considers this to be the best available information, given the lack of pricing information on the record, in spite of the CBSA’s efforts to obtain it from other producers of pup joints.

Furthermore, although counsel for the GOC suggested the use of Brazil as a more appropriate surrogate alternative to, for example, domestic selling prices in the United States, the CBSA notes that counsel provided no evidence of such prices for the CBSA’s consideration. In fact, all statements made in relation to Brazil in case arguments, regarding its production capability for both oil and OCTG etc. were without any reference to evidence on the record. Had counsel for the GOC or any other interested party submitted documentation to support these statements, the CBSA would have considered it as part of its surrogate country analysis. As such, the CBSA had very little information in regards to domestic selling prices in other countries for OCTG in general, let alone pup joints.

It is also worthy to note that at the initiation of the investigation, the CBSA did contact producers of pup joints in Brazil, requesting that they respond to the RFI provided to them for the purposes of a surrogate country analysis.[115] As stated earlier, no responses to the surrogate RFI were received.

The CBSA’s Consideration of Public Bodies

Counsel for the GOC submitted that the State Assets Supervision and Administration Commission (SASAC) does not carry out or enforce compliance with government mandates, that government mandates are not a priority for State-Owned Enterprises (SOEs), and that SASAC does not oversee, administer, or operate day-to-day company activities of SOEs. Consequently, counsel alleged that the CBSA did not satisfy the evidentiary burden for the treatment of SOEs as public bodies as set out by the WTO Appellate Body in DS379.[116]

In support of this allegation, counsel cited Article 7 of the Interim Measures for the Supervision and Administration of State-Owned Assets of the Enterprises, which states that:

“people’s governments at various levels shall strictly execute the laws and regulations on the administration of state-owned assets, shall observe the separation of the government’s function of administration of public affairs and the function as the contributor of state-owned assets, and ensure the separation of government bodies and enterprises and the separation of ownership and management power.”[117]

CBSA Response:

As previously stated, the CBSA’s investigation was conducted under the authority of SIMA. Subsection 2(1) of SIMA defines a government, in relation to any country other than Canada, to mean the government of that country, including:

“Any person, agency or institution acting for, on behalf of, or under the authority of, or under the authority of any law passed by, the government of that country or that provincial, state, municipal or other local or regional government.”

In order to assess the level of government authority over SOEs, the CBSA asked the GOC several questions on the legal status, ownership, function, and level of control that the government exercises with regard to SOEs. The CBSA also sent questionnaires to exporters that were to be passed on to input suppliers to help assess these same criteria, with the goal of establishing whether the SOEs possess, exercise, or are vested with government authority. The CBSA did not receive responses, or received inadequate responses, to these questions. Regardless, in this case, the CBSA did not assess any actionable subsidies against cooperative exporters stemming from inputs provided by public bodies or SOEs.

Counsel for the GOC submitted that the dual imposition of anti-dumping duties and countervailing duties on goods exported from a non-market economy, where normal values have been established based on surrogate sales or cost data that is not reflective of the effects of domestic subsidization which are reflected in export prices, results in double counting. Counsel argues that this double counting is in violation of international obligations and has the effect of levying excessive duties.[118]

CBSA Response:

With respect to the double counting issue, the CBSA is in the process of assessing any possible implications of the Appellate Body decision in DS379. Among the factors that we will be considering is how the United States, the subject of this appeal, implements the Appellate Body decision in its system. At this time we are not in a position to make any further comments.

Appendix 3 – Subsidy Programs Not Used By The Cooperative Exporter

The following programs were also included in the current investigation. Questions concerning these programs were included in the RFI sent to the GOC and to all known exporters of the goods in China. None of the cooperative exporters reported using these programs during the subsidy POI. Without a complete response to the subsidy RFI from the GOC and all known exporters, the CBSA does not have detailed descriptions of these programs; nor does it have sufficient information to determine that any of these programs do not constitute actionable subsidies. In other words, the CBSA does not have sufficient information to determine that any of these programs should be removed from the investigation for the purposes of the final determination.

I. Special Economic Zones (SEZ) and other Designated Areas Incentives

Program 2: Preferential Tax Policies for FIEs Established in the Coastal Economic Open Areas and in the Economic and Technological Development Zones

Program 3: Preferential Tax Policies for FIEs Established in the Pudong Area of Shanghai

Program 4: Preferential Tax Policies in the Western Regions

Program 5: Corporate Income Tax Exemption and/or Reduction in SEZs and other Designated Areas

Program 6: Local Income Tax Exemption and/or Reduction in SEZs and other Designated Areas

Program 7: Exemption/Reduction of Special Land Tax and Land Use Fees in SEZs and Other Designated Areas

Program 8: Tariff and Value-added Tax (VAT) Exemptions on Imported Materials and Equipment in SEZs and other Designated Areas

Program 9: Income Tax Refund where Profits Re-invested in SEZs and other Designated Areas

Program 10: Preferential Costs of Services and/or Goods Provided by Government or
State-owned Enterprises (SOEs) in SEZs and Other Designated Areas

II. Grants

Program 11: The State Key Technology Renovation Projects

Program 12: Reimbursement of Anti-dumping and/or Countervailing Legal Expenses by the Local Governments

Program 13: Repaying Foreign Currency Loan by Returned VAT

Program 14: Government Export Subsidy and Product Innovation Subsidy

Program 15: Export Assistance Grant

Program 16: Research & Development (R&D) Assistance Grant

Program 17: Innovative Experimental Enterprise Grant

Program 18: Superstar Enterprise Grant

Program 19: Awards to Enterprises Whose Products Qualify for “Well-Known Trademarks of China” or “Famous Brands of China”

Program 20: Export Brand Development Fund

Program 21: Provincial Scientific Development Plan Fund

Program 22: Technical Renovation Loan Interest Discount Fund

Program 23: Venture Investment Fund of Hi-Tech Industry

Program 24: National Innovation Fund for Technology Based Firms

Program 25: Guangdong – Hong Kong Technology Cooperation Funding Scheme

Program 26: Grants for Encouraging the Establishment of Headquarters and Regional Headquarters with Foreign Investment

Program 27: Innovative Small and Medium-Sized Enterprise Grants

Program 28: Product Quality Grant

Program 29: 2009 Energy-saving Fund

Program 30: Energy-Saving Technique Special Fund

Program 31: Grants to Privately-Owned Export Enterprises

Program 33: Grants for International Certification

Program 34: Liaoning High-Tech Products & Equipment Exports Interest Assistance

Program 35: Emission Reduction and Energy-saving Award

Program 36: Grant for Market Promotion and Trade Development

Program 37: Refund of Land Transfer Fee

Program 38: Grant – Assistance for Exhibition Booth Fees

Program 39: Grant – Patent Application Assistance

Program 40: Grant – State Service Industry Development Fund

Program 41: Grant – Changzhou Five Major Industries Development Special Fund

Program 42: Grant – Ecological Garden Enterprise Reward

Program 43: Grant – Municipal Construction Reward

Program 44: Grant – Cleaning-production Qualified Enterprise Reward

Program 45: Grant – Provisional Industry Promotion Special Fund

Program 46: Grant – Jiangsu Province Finance Supporting Fund

Program 47: Grant – Guaranteed Growth Fund

Program 48: Grant - Water Pollution Control Special Fund for Taihu Lake

Program 49: Grant – Provincial Foreign Economy and Trade Development Special Fund

Program 50: Grant – Subsidy from Water Saving Office

Program 51: Grant – Insurance Expense Compensation

Program 52: Grant – Industrial Science and Technology Breakthrough Special Fund

Program 53: Grant – Special Supporting Fund for Commercialization of Technological Innovation and Research Findings

Program 54: Grant – Changzhou City Key Supporting Industry Upgrading Special Fund

Program 55: Grant – Special Fund for Fostering Stable Growth of Foreign Trade in 2009

Program 56: Grant – Financial Subsidies from Wei Hai City Gao Cun Town Government

Program 57: Grant – Policy on Value-added Tax for Recyclable Resources

Program 58: Grant – Large Taxpayer Award

Program 59: Grant – Resources Conservation and Environment Protection Grant

III. Equity Programs

Program 60: Debt-to-Equity Swaps

Program 61: Exemptions for SOEs from Distributing Dividends to the State

IV. Preferential Loan Programs

Program 62: Loans and Interest Subsidies Provided Under the Northeast Revitalization Program

V. Preferential Income Tax Programs

Program 63: Reduced Tax Rate for Productive FIEs Scheduled to Operate for a Period not Less Than 10 Years

Program 64: Preferential Tax Policies for Foreign Invested Export Enterprises

Program 65: Preferential Tax Policies for FIEs which are Technology Intensive and Knowledge Intensive

Program 66: Preferential Tax Policies for the Research and Development of FIEs

Program 67: Preferential Tax Policies for FIEs and Foreign Enterprises Which Have Establishments or Places in China and are Engaged in Production or Business Operations Purchasing Domestically Produced Equipments

Program 68: Preferential Tax Policies for Domestic Enterprises Purchasing Domestically Produced Equipments for Technology Upgrading Purpose

Program 69: Income Tax Refund for Re-investment of FIE Profits by Foreign Investors

Program 70: VAT and Income Tax Exemption/Reduction for Enterprises Adopting Debt-to-Equity Swaps

Program 71: Corporate Income Tax Reduction for New High-Technology Enterprises

VI. Relief from Duties and Taxes on Materials and Machinery

Program 72: Exemption of Tariff and Import VAT for the Imported Technologies and Equipment

Program 73: Relief from Duties and Taxes on Imported Material and Other Manufacturing Inputs

Program 74: Exemption of VAT on Purchases of Equipment

VII. Reduction in Land Use Fees

Program 75: Reduction in Land Use Fees, Land Rental Rates, and Land Purchase Prices

Program 76: Deed Tax Exemptions For Land Transferred through Merger or Restructuring

VIII. Goods/Services Provided by Government at Less than Fair Market Value

Program 77: Input Materials Provided by Government at Less than Fair Market Value

Program 78: Utilities Provided by Government at Less than Fair Market Value

Program 79: Acquisition of Government Assets at Less than Fair Market Value

Program 80: Coke Provided by Government at Less than Fair Market Value

[1] Dumping Exhibit 41 (NC). Subsidy Exhibit S7 (NC).

[2] Dumping Exhibit 67 (PRO). Wuxi Forest Petroleum Technology Co., Ltd. is an exporter and not a manufacturer. The reported goods were Seamless Carbon or Alloy Steel Oil and Gas Well Casing products subject to Tribunal Inquiry No. NQ-2007-001 Finding issued by the Tribunal on March 10, 2008.

[3] Subsidy Exhibits S59, S64, S68 and S96 (PRO). Dumping Exhibits 90 (PRO), 94 (PRO), 97 (NC) and 110 (PRO).

[4] Dumping Exhibits 69, 71, 73 and 75 (PRO).

[5] Dumping Exhibit 39 (PRO).

[6] Perforated pup joints are an exception as they do not meet API 5CT.

[7] Initiation Statement of Reasons for Certain Oil Country Tubular Goods, paragraphs 21-27, September 8, 2009.

[8] Dumping Exhibit 41 (NC). Subsidy Exhibit S7 (NC).

[9] Dumping Exhibits 84 (PRO), 96 (PRO) and 102 (PRO). Subsidy Exhibits S44 (PRO), S53 (PRO), S61 (PRO),
S70 (PRO).

[10] Dumping Exhibits 90 (PRO), 94 (PRO) and 110 (PRO). Subsidy Exhibits S48 (PRO), S54 (PRO), S64 (PRO),
S96 (PRO).

[11] Subsidy Exhibit S72 (PRO).

[12] Dumping Exhibits 139 (NC), 142 (NC) and 143 (NC).

[13] Dumping Exhibits 145 (NC) and 146 (NC).

[14] China is a prescribed country under section 17.1 of the Special Import Measures Regulations.

[15] Dumping Exhibit 1 (PRO).

[16] Dumping Exhibit 82 (NC) – GOC response to Part C 1(a)(b).

[17] Dumping Exhibit 107 (NC) – GOC supplemental RFI Response.

[18] Dumping Exhibit 38 (PRO) – Exhibit 1.

[19] Dumping Exhibit 38 (PRO) – Exhibit 3.

[20] Dumping Exhibit 38 (PRO) – Exhibit 3: Blueprint for the Adjustment and Revitalization of the Steel Industry issued by the General Office of the State Council on March 20, 2009 – Under Major Tasks detailed “The Regional reorganization between Tianjin Pipe and Tian Tie Group.”

[21] Dumping Exhibit 92 (NC) – Supplemental GOC Response – Exhibit 2.

[22] Dumping Exhibit 92 (NC) – Supplemental GOC Response – Exhibit 2.

[23] Dumping Exhibit 38 (PRO) – Exhibit 1.

[24] Dumping Exhibit 92 (NC) – Supplemental GOC Response – Exhibit 2.

[25] Dumping Exhibit 38 (PRO) – Exhibit 14: “Steel industry plan forged,” China Daily, Zhang Qi, January 27, 2011.

[26] Dumping Exhibit 92 (NC) – GOC response to B10(e).

[27] Dumping Exhibit 92 (NC) - Supplemental GOC Response 12th Five-Year Development Plans for the Steel Industry.

[28] Dumping Exhibit 92 (NC) - Supplemental GOC Response 12th Five-Year Development Plans for the Steel Industry.

[29] Dumping Exhibit 107 (NC) - Supplemental GOC Response.

[30] Final determination Statement of Reasons for Seamless Steel Casing – February 22, 2008.

[31] Dumping Exhibit 107 (NC) - Supplemental GOC Response.

[32] Dumping Exhibit 107 (NC) – Supplemental GOC Response.

[33] Dumping Exhibit 110 (PRO) – Hengshui Weijia Petroleum Equipment Manufacturing Co. Ltd response to 1(a).

[34] Dumping Exhibit 38 (PRO) – Exhibit 6: China Steel Pipe Industry 12th Five-Year Plan.

[35] Dumping Exhibit 82 (NC) – CISA response to Question D11.

[36] Dumping Exhibit 38 (PRO) – Exhibit 6: China Steel Pipe Industry 12th Five-Year Plan.

[37] Dumping Exhibit 67 (PRO) – Appendix 4A: Cost of Sales.

[38] Dumping Exhibit 68 (NC) – Response to Question D21(a) Regarding Acquisition Costs.

[39] Dumping Exhibit 140 (PRO) – Pipe Logix Prices over POI.

[40] 10 ft X 11.6 lbs/ft = 116 lbs. 2,204.6/116 = 19.

[41] 30 ft X 11.6 lbs/ft = 348 lbs. 2,204/348 = 6.3.

Note: using the shortest length of casing permitted under API 5CT (16 feet) would still only yield less than 12 lengths 16 X 11.6 = 186. 2,204/186 = 11.8.

[42] 3 ft X 11.6 lbs/ft = 34.8 lbs. 2,204.6/34.8 = 63.

[43] Dumping Exhibits 121 and 122 (PRO).

[44] Dumping Exhibits 121 and 122 (PRO).

[45] Preliminary determination Statement of Reasons for Pup Joints; December 28, 2011, paragraphs 87 and 88.

[46] Dumping Exhibit 122 (PRO).

[47] Dumping Exhibits 77 (PRO) and 79 (PRO).

[48] Dumping Exhibits 90 (PRO), 94 (PRO) and 97 (NC).

[49] There were no further exports from Hengshui Weijia in the incremental subsidy POI of Jan - Jun 2010.

[50] Dumping Exhibit 1 (PRO) – Complaint; Dumping Exhibit 69 (PRO) – Imex Importer RFI Response; Dumping Exhibit 71 (PRO) – WestCan Oilfield Importer RFI Response.

[51] Dumping Exhibit 113 (PRO).

[52] Subsidy Exhibit S100 (NC) – Submission from Hengshui Weijia contesting its preliminary determination subsidy results, pages 6-7.

[53] Subsidy Exhibit S100 (NC) – Submission from Hengshui Weijia contesting its preliminary determination subsidy results, page 9.

[54] Subsidy Exhibit S100 (NC) – Submission from Hengshui Weijia contesting its preliminary determination subsidy results – Exhibit IV.

[55] Subsidy Exhibit S96 (PRO).

[56] Subsidy Exhibit S96 (PRO) – Supplemental RFI Response from Hengshui Weijia Petroleum Equipment Manufacturing Co. Ltd.

[57] The Organization for Economic Co-operation and Development, DAC List of ODA Recipients as at
January 1, 2006, the document is available at: www.oecd.org/dataoecd/23/34/37954893.pdf

[58] Customs Act R.S.C. 1985.

[59] Subsidy Exhibit S103 – Case Arguments from GOC, pages 4 and 5.

[60] Subsidy Exhibit S103 – Reply Submissions from GOC, paragraph 15.

[61] Subsidy Exhibit S103 – Reply Submissions from GOC, paragraph 19.

[62] Subsidy Exhibit S106 – GOC reply submissions, paragraph 39.

[63] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraphs 38-42.

[64] Subsidy Exhibit S105 (NC) – Alberta Oil Tool reply submission, paragraph 20.

[65] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraphs 43-44.

[66] Dumping Exhibit 38 (PRO).

[67] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraphs 44.

[68] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraphs 48 and 55.

[69] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 49.

[70] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 50.

[71] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 51.

[72] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 37.

[73] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 50.

[74] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 49.

[75] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 51.

[76] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 54.

[77] Dumping Exhibit 38 (PRO) – Exhibit 6: China Steel Pipe Industry 12th Five-Year Plan.

[78] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 55.

[79] Subsidy Exhibit S105 (NC) – Alberta Oil Tool reply submission, paragraph 12.

[80] Dumping Exhibit 139 (NC) – Alberta Oil Tool case arguments, paragraphs 5 – 26.

[81] Dumping Exhibit 112 (PRO).

[82] Dumping Exhibit 82 (NC) – Exhibit 3.

[83] Dumping Exhibit 92 (NC).

[84] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 50.

[85] Dumping Exhibit 82 (NC) – Exhibit 2.

[86] Dumping Exhibit 82 (NC) – Exhibit 3.

[87] Dumping Exhibit 92 (NC) – Exhibit 2.

[88] Dumping Exhibit 38 (PRO).

[89] Dumping Exhibit 92 (NC) – Exhibit 3.

[90] Dumping Exhibit 107 (NC).

[91] Dumping Exhibit 92 (NC) – Exhibit 2.

[92] Dumping Exhibit 82 (NC) – response to Question C8(b).

[93] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 50.

[94] Subsidy Exhibit S102 (NC) – Hengshui Weijia case arguments.

[95] CBSA Seamless Steel Casing final determination Statement of Reasons, paragraph 211, February 22, 2008.

[96] Subsidy Exhibit S105 (NC) – Alberta Oil Tool case arguments, paragraph 45.

[97] Subsidy Exhibit S102 (NC) – Hengshui Weijia case arguments, paragraphs 42-43.

[98] Subsidy Exhibit S105 (NC) – Alberta Oil Tool reply submissions.

[99] Subsidy Exhibit S96 (PRO) – Hengshui Weijia SRFI response.

[100] Subsidy Exhibit S97 (NC) – Hengshui Weijia SRFI response.

[101] Dumping Exhibit 143 (NC) – GOC case arguments, Part III, page 6.

[102] Dumping Exhibit 143 (NC) – GOC case arguments, paragraph 18.

[103] Dumping Exhibit 145 (NC) – Alberta Oil Tool reply submissions, paragraph 14.

[104] Dumping Exhibit 143 (NC) – GOC case arguments, paragraph 24.

[105] Dumping Exhibit 143 (NC) – GOC case arguments, paragraph 26.

[106] Dumping Exhibit 143 (NC) – GOC case arguments, paragraph 28.

[107] Dumping Exhibit 143 (NC) – GOC case arguments, paragraph 29.

[108] Tianjin Pipe (Group) Corporation v. TenarisAlgomaTubes Inc., 2009 FCA 164.

[109] CBSA Pup Joints preliminary determination Statement of Reasons, paragraph 85.

[110] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 57.

[111] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 58.

[112] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 118.

[113] Subsidy Exhibit S103 (NC) – GOC case arguments, paragraphs 60-61.

[114] Dumping Exhibit 1 (PRO) – CBSA Complaint Analysis.

[115] Dumping Exhibit 57 (NC).

[116] Subsidy Exhibit S103 (NC) – GOC case arguments, page 23-26.

[117] Dumping Exhibit 82 (NC) – GOC Section 20 RFI Response, Question C4; as cited in Subsidy Exhibit S103 (NC) – GOC case arguments, paragraph 84.

[118] Subsidy Exhibit S103 (NC) – GOC case arguments, page 27.

.