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ORGANIZATION 29January 1996
(96-0312)
Original: English Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
REPLIES TOQUESTIONS POSED BYHONG KONG1CONCERNING
THE NOTIFICATION OFCANADIAN LAWS AND REGULATIONS2
Thefollowing communication, dated 11January 1996, hasbeenreceived fromthePermanent
Mission ofCanada.
_______________
1. Article 4.2oftheWTO A-DAgreement specifies thatwhen thedomestic industry has
beeninterpreted asreferring totheproducers inacertain area, anti-dumping duties shall
belevied onlyontheproducts inquestion consigned forfinalconsumption tothatarea.
When"domesticindustry"isdefinedonthebasisofregionalmarkets,wouldCanadaclarify
whether ornottheprovision inrespect ofthelevying ofanti-dumping duties assetout
inArticle 4.2oftheWTO A-DAgreement would beobserved? What administrative or
statutory means havebeenputinplace toensure compliance bytheCanadian authorities?
Where afinaldetermination ofinjury isbased onregional markets, theDeputy Minister of
National Revenue willonlyimpose duties ongoods described inaninjury finding. Thiswillnormally
apply togoods which areconsigned forfinalconsumption intheregional market identified inthefinding.
Administrative practices areinplace toensure thatduties areonlylevied inrespect ofgoods consigned
forfinalconsumption intheregional market, including theissuance ofinstructions toregional offices
regarding dutyliability. Public notices, (i.e., "Statements ofReasons" )issued atthepreliminary and
finaldeterminations willoutline theliability fordutyintheevent ofapositive finaldetermination in
suchcases. Appeal provisions arefound inSIMA which provide aremedy ifduties havebeenassessed
ongoods thatarenotdescribed intheorder.
2. Section 2(1)oftheSIMA contains thedefinition of"negligible" .Thephrase "goods that
areofthesame description asthedumped goods" isused, replacing theterm"likeproduct"
usedintheWTO A-DAgreement. Does Canada contemplate that"goods thatareofthe
same description asthedumped goods" maybedifferent from "like goods" ?Ifso,how
would Canada reconcile thisprovision withitsobligations under Article 5.8oftheWTO
A-DAgreement?
"Like product" isdefined inArticle 2.6oftheA-DAgreement tomean: "aproduct which
isidentical, i.e.alikeinallrespects totheproduct under consideration, orintheabsence ofsucha
product, another product which, although notalikeinallrespects, hascharacteristics closely resembling
1G/ADP/W/133-G/SCM/W/142.
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those oftheproduct under consideration". Inaccordance withtheAgreement, theSIMA uses"like
goods" inreference togoods solddomestically inthecountry ofexport andinrelation togoods produced
bythedomestic industry, and"goods thatareofthesamedescription asthedumped goods" inreference
totheimported goods thatarethesubject ofinvestigation, (i.e., the"product under consideration" ).
3. Section 3(1)oftheSIMA provides fortheimposition ofduties onalldumped goods
imported intoCanada where afinding hasbeenmade thatthedumping of"goods ofthe
same description" hascaused injury orretardation oristhreatening tocause injury.
Section 55(1) oftheActfurther states thatafter afinal determination ofdumping has
beenmade, adesignated officer shall becaused todetermine, inrespect ofcertain goods
already imported, whether thegoods areinfact"goods ofthesame description" asgoods
described intheorder orfinding. Would Canada elaborate onthemeaning ofthephrase
"goods ofthesame description" ?
Thephrase "goods ofthesame description asgoods described intheorder orfinding" refers
toimported goods thatfallwithin thecategory ofgoods covered bytheorder orfinding. Thisphrase
hastheeffect ofnarrowing theapplication ofthefinding since "likegoods" alsoincludes goods which
"closely resemble" theother goods whereas "goods ofthesame description" mustspecifically beof
thesame description tothose referred tointheorder orfinding. [Please alsorefertotheresponse
toquestion number two].
4.(a) Could Canada alsosubject theparts andcomponents ofallegedly dumped goods toan
anti-dumping investigation?
Investigation canbeinitiated withrespect tofinished goods including thepartsandcomponents
thereof. Ifpartsandcomponents arenotincluded atthetimeofinitiation, suchgoods could onlybe
brought intotheinvestigation byinitiating anewinvestigation specifically inrespect ofparts and
components. Thetwoseparate investigations canbejoined, pursuant tosection 38ofSIMA Regulations.
TheCITT willthenissue aninjury determination forthesubject goods including itsparts and
components. TheCITT cannot expand thescope ofaninvestigation; itmayonlynarrow itbygranting
exclusions forcertain specific products orexporters.
(b) Ifparts andcomponents areincluded, isitnecessary fortheTribunal toenquire into
whether injury hasbeencaused tothedomestic industry ofparts andcomponents before
anyanti-dumping duties canbelevied ontheparts andcomponents?
Inaccordance withsection 42ofSIMA, theCanadian International Trade Tribunal isrequired
tomake anenquiry astothequestion ofinjury inrespect ofanygoods towhich thepreliminary
determination applies. Therefore, ifthepreliminary determination alsocovers partsandcomponents,
theCanadian International Trade Tribunal isrequired toexamine thequestion ofinjury resulting from
thedumping orsubsidizing ofthese goods.
5.(a) How would theliability ofanti-dumping duties bedetermined forgoods released after
theCanadian International Trade Tribunal 'sOrder?
Canadaleviesanti-dumpingdutiesonaprospectivebasis.Assuch,theTribunal'sOrderpermits
thelevying ofdefinitive anti-dumping duties inrespect ofthesubject goods. Thedumping margin
iscalculated foreachshipment based onthenormal value andexport price ofthegoods. Thisisthe
finalliability foranti-dumping duties.G/ADP/W/265
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(b) Incaseofduties paidinexcess, what aretherefund procedures?
Once afinal injury determination ismade, investigating authorities automatically invoke
Section 55oftheSIMA toreview theprovisional dutypaid. Ifthemargin ofdumping when thefinal
liability isdetermined forgoods imported during theprovisional period islessthanthatdetermined
atthepreliminary determination, thedifference would berebated inaccordance withArticle 10.3of
theA-DAgreement.
(c) HowdoesCanada implement itsobligations under Article 9.3oftheWTO A-DAgreement?
Paragraphs 57(a)and59(a)oftheSIMA authorize adesignated officer andtheDeputy Minister,
respectively, tore-determine, upon request, adetermination ofdefinitive duties. Where duties have
beenpaidinexcess, paragraph 60(1)(b) oftheActprovides forthereturn, inwhole orinpart,ofthe
dutythatwasnotproperlypayable.Theseprovisions,andthetime-framesinwhichthere-determinations
must bemade, areinaccordance withArticle 9.3.2 oftheA-DAgreement.
6.(a) Anumber ofrestrictions have been imposed ontheuseofdomestic sales forthe
computation ofnormal value. How does Canada reconcile these restrictions with its
obligations under Article 2oftheWTO A-DAgreement and,inparticular, Footnote 2?
Anumber oftheconditions setoutinSection 15oftheSIMA regarding theselection ofdomestic
salesforthepurpose ofdetermining normal value areintended toensure "faircomparisons" ,consistent
withtheintent ofArticle 2oftheA-DAgreement. Inaddition, several oftheconditions provided
forinsection 15referto"particular market conditions "which mustbesatisfied inrespect ofthesales
selected fornormal value purposes.
(b) Why doestheCanadian legislation notstipulate theprimacy oftheuseofdomestic sales
tocompute normal value where suchsalesconstitute atleast5percentofsalestoCanada?
Infact,theSIMA, through theoperation ofsection 15andsubsection 16(1), makes every effort
tobasenormal values onhome market sales. The5percentstandard infootnote 2isintended asa
general guideline andnotaninflexible standard, andtheprovision clearly envisages thepossibility
ofadifferent ratio, where warranted. Thedetermination bytheDeputy Minister ofNational Revenue
ofwhether thereareasufficient number of(home market) salesoflikegoods topermit afaircomparison
ofnormal values andexport prices willdepend upon thecircumstances ofeachcase. Inmaking this
determination, theDeputy Minister willbeguided, among other things, byfootnote 2toArticle 2.2
oftheA-DAgreement. Inaccordance withinternal procedures, anydeviation bytheDeputy Minister
from the5percentstandard willbeaccompanied byanexplanation oftherationale.
7. Indetermining dumping, paragraph 16(1)(c) oftheSIMA allows Canada tocompare export
sales byonecompany withhome market sales byadifferent company. Would Canada
explain howthisprovision isconsistent withArticle 2.2oftheWTO A-DAgreement?
Thisisconsistent withArticle 2.1oftheA-DAgreement, which onlyrefers totheprice of
thelikeproduct when destined forconsumption intheexporting country anddoesnotindicate that
suchsalesnecessarily havetobemade bytheexporter ofthegoods toCanada. Theuseofothervendors
doesnot,therefore, contradict theprovision inArticle 2.2since theuseof"other vendors" iswithin
thescope ofArticle 2.1oftheA-DAgreement. Thisprovision isnormally usedwhere there isa
relationship between theexporter andproducer (i.e.theproducer 'shome market sales would be
substituted inplace oftheexporter 's).G/ADP/W/265
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8.(a) Under what specific circumstances willsubsection 29(1) oftheSIMA beinvoked?
Subsection 29(1) willbeusedtodetermine normal value orexport price where theDeputy
Minister isoftheopinion thatsufficient information hasnotbeenfurnished ortheverification ofthe
information hasnotbepermitted ortheinformation isnotavailable todetermine thenormal value or
export price ofthegoods.
(b) Would Canada provide more details onhowtheMinister willdetermine thenormal value
orexport price under subsection 29(1)? Arethere anyrequirements consistent with
Annex IIoftheWTO A-DAgreement governing theuseofBIA?
Theinvestigating authorities will,under subsection 29(1), determine thenormal value orexport
priceaccording totheguidelines setoutinRevenue Canada 's"Statement ofAdministrative Practices ".
These guidelines areconsistent withAnnex IIoftheWTO A-DAgreement.
(c) Arethere anyprovisions consistent withArticle 6.1oftheWTO A-DAgreement which
requires thatallinterested parties inananti-dumping investigation begiven notice ofthe
information which theauthorities require andample opportunity topresent inwriting
allevidence which theyconsider relevant?
Subsection 34(1) ofSIMA fulfils Canada 'sobligations under Article 6.1oftheAgreement.
Guidelines concerning therequest forinformation frominterested parties (e.g.exporters, importers,
foreign governments) arecovered inRevenue Canada 's"Statement ofAdministrative Practices for
SIMA".These guidelines aredulyreflected inDepartmental administrative practices.
9.(a) Would Canada explain howsubsection 30.2(2) isconsistent withArticle 2.4.2 oftheWTO
A-DAgreement?
Subsection30.2(2)oftheSIMAexpresslyincorporatesthepre-conditionssetoutinArticle2.4.2
oftheA-DAgreement fortheuseofanormal value established onaweighted average basistoindividual
export transaction comparisons and,assuch, isconsistent withthatArticle.
(b) Would subsection 30.2(1) beapplicable inestablishing thedumping margins inrelation
toindividual sales?
Subsection 30.2(1) would notbeapplicable inestablishing thedumping margins inrelation
toindividual sales. Inthisregard, while available under Canadian law,there isnointention touse
atransaction-to-transaction methodology toestablish dumping margins.
(c) When section 30.3(2) applies, would theCanadian authorities provide anexplanation to
parties concerned astowhylike-with-like comparison cannot beusedtotakeintoaccount
appropriately thedifferences inexport prices?
While SIMA doesnotexpressly require theDeputy Minister ofNational Revenue toprovide
anexplanation ofwhyalike-with-like comparison wasnotusedtodetermine themargin ofdumping,
since thecircumstances justifying theuseofsubsection 30.2(2) aresetoutintheprovision itself, an
explanation willbeprovided intheDeputy Minister 's"Statement ofReasons".G/ADP/W/265
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10. Subsection 30.3(1) oftheSIMA authorizes theuseofsampling iftheauthorities consider
itimpracticable totakeintoaccount allgoods under consideration because ofthenumber
ofexporters, producers orimporters, thevariety orvolume ofgoods, "oranyother reason" .
Why hasCanada introduced thecondition "oranyother reason" intotheActwhich is
notcontained intheWTO A-DAgreement?
Thewords "oranyother reason" wereincluded insubsection 30.3(1) ofSIMA simply tocover
anyother instances, (e.g., inordinately complicated cases), where sampling might berequired inorder
tocomplete theinvestigation within thestatutory timeframe.
11. Corresponding tosubsection 30.3(3) oftheSIMA, section 25.2oftheSIMA Regulations
setsoutthedetails forthedetermination ofthedumping margin ofgoods notcovered inthesample.
Paragraph (1)(b) allows alternative determination onthebasis ofdumping margins regarding
goods from allother countries whose goods areunder consideration andareincluded ina
percentage andsample. Subsection (1)(c) allows alternative determination inareasonable manner
based onavailable information. Would Canada explain whyitisnecessary andreasonable to
allow alternative determination ofthedumping margin inaccordance tosection 25.2(1)(b) and
(c)oftheSIMA Regulations? How would Canada reconcile these provisions withitsobligations
under Article 9.4oftheWTO A-DAgreement?
There could conceivably becaseswhere paragraph 25.2(a) oftheRegulations cannot beapplied
because alldumping margins inrespect ofgoods from aparticular country thatareincluded inthe
percentage/sample areeither zero, deminimus orbased onfactsavailable. Toaddress suchsituations
paragraph 25.2(1)(b) prescribes analternative methodology fordetermining individual dumping margins
forexporters/producers notincluded intheexamination.
Bybasing themargin ofdumping ongoods included inthepercentage/sample anddisregarding
margins determined onthebasis offactsavailable, paragraph 25.2(1)(b) isentirely consistent with
Article 9.4oftheA-DAgreement.
Finally, inaccordance withthehierarchical nature ofsubsection 25.2(1) oftheRegulations,
paragraph 25.2(1)(c) canonlybeapplied asalastresort, inthose rarecaseswhere neither paragraphs (a)
or(b)areapplicable.
12.(a) Would Canada clarify whether theauthorities require sufficient evidence ofdumping,
injury andacausal linktoinitiate aninvestigation without awritten complaint?
WhetherontheDeputyMinister'sowninitiativeorpursuanttoaproperlydocumentedcomplaint,
theDeputy Minister cannot initiate aninvestigation under subsection 31(1) oftheSIMA unless the
Deputy Minister hasevidence thatthegoods havebeendumped orsubsidized andthatdiscloses a
reasonable indication thatthedumping orsubsidizing hascaused injury orretardation oristhreatening
tocause injury.
(b) How dotheCanadian authorities verify therepresentativeness ofawritten complaint?
Toestablish themake-up andtheproduction levels ofthedomestic industry, theDepartment
ofNational Revenue investigating authorities willutilize independent, third-party sources (e.g.,
Department ofIndustry Canada, trade indices, andindustry associations) todetermine orverify such
data.G/ADP/W/265
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Todetermine thelevelofsupport forandopposition tothecomplaint, theDeputy Minister
will,where necessary, (e.g., where therequired levelofsupport isnotevident onthefaceofthepetition
itself), pollallknown domestic producers. Producers would beasked tosubmit theirproduction figures
inorder todetermine whether thecomplaint enjoys thenecessary levelofsupport.
(c) How isopposition toacomplaint measured?
Todetermine thelevelofsupport forandopposition tothecomplaint, theDeputy Minister
will,where necessary, (e.g., where therequired levelofindustry support isnotevident ontheface
ofthecomplaint itself), pollallknown domestic producers. Producers would beasked tosubmit their
production figures inorder todetermine whether thecomplaint enjoys thenecessary levelofsupport.
13.(a) Ifthedumping margin ofthegoods from anexporter isfound tobeinsignificant, would
Canada terminate theanti-dumping proceeding against thatexporter? Ifnot,howwould
Canada reconcile herdomestic legislation with herobligations under theWTO A-D
Agreement?
There isnothing inArticle 5.8thatexplicitly linksthedeminimis testtotheexporter level.
Inthisregard, SIMA applies thedeminimis standard atthecountry level inthesame manner as
Article 5.8hasdealtwiththenegligible volumes test.Accordingly, ifthedumping margin ofthegoods
fromanexporter isfound tobeinsignificant, theinvestigation willnotbeterminated inrespect ofthat
exporter provided thattheoverall margin ofdumping forthecountry isnotinsignificant. Thissatisfies
Canada 'sobligations under Article 5.8oftheWTO A-DAgreement.
Inpractice, ifthedumping margin ofthegoods fromanexporter isfound tobeinsignificant
during aninvestigation, itisquite likely thattheexporter willnotincur aliability foranti-dumping
duties inrespect ofimportations made afterafinaldetermination ofdumping andinjury provided that
export pricing levels remain atlevels which donotresult inamargin ofdumping.
(b) Section 30.2oftheSIMA provides forthezeroing down ofnegative dumping margins
ofindividual exporters. What isthejustification forthezeroing down ofthenegative
dumping margins ofindividual exporters inthedetermination ofthedumping margin
ofacountry? What isthelegal basis intheWTO A-DAgreement forthezeroing down
practice?
Subsection 30.2(1) oftheSIMA provides forthedetermination ofthemargin ofdumping of
anygoods attheexporter level.
Foreachspecific category ofgoods under consideration inrespect ofanexporter, themargin
ofdumping isnormally calculated bysubtracting thetotalexport price from thetotalnormal value.
Thiswould result inanegative amount ifthetotalexport priceexceeded thecomparable normal value.
Inthecalculation, negative margins would, therefore, offset positive margins inorder todetermine
whether specific goods were being dumped during theperiod. However, when theoverall margin
ofdumping isbeing established fortheexporter, theproduct groupings thathavenegative margins
willbesetequal tozerotoensure thatnegative margins onspecific product categories arenotused
tooffset positive margins on"non-like" goods.
Thismethodology isconsistent withArticle 2.4.2 oftheA-DAgreement since themargins
ofdumping arecalculated attheproduct category levelbyadirect comparison between normal value
andtheexport price forthecomparable goods.G/ADP/W/265
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14. Would Canada clarify whether Section 42(3) oftheSIMA authorizes theassessment of
thecumulative effect ofbothdumped andsubsidised goods? Ifyes,what isthelegalbasis
intheWTO A-DAgreement forsuchcumulative assessment?
There isnothing intheSIMA which precludes acumulative assessment oftheinjurious effects
ofbothdumped andsubsidized goods.
With respect totheWTO legal basis forcross-cumulation, while Articles 3.3oftheA-D
Agreement and15.3oftheSCM Agreement, address cumulation within Agreements, theyaresilent
ontheissueofcumulationbetweenAgreements,(i.e.,cross-cumulation).Indeterminingwhethersilence
ontheissueofcross-cumulation should beconstrued aspermissive orprohibitive ofcross-cumulation,
onemust apply a"rule ofreason" approach andconsider thepurpose ofthese related Agreements -
i.e.,toprovide aremedy against unfair tradepractices causing injury toadomestic industry. Todeny
aremedy where thecumulative effect ofdumping andsubsidy practices isinjury toadomestic industry
would frustrate thepurpose ofthese Agreements. Viewed inthislight, silence must beinterpreted
aspermissive ofcross-cumulation. Thisview issupported, interalia,bythefactthat, regardless
ofwhether caused bydumping, subsidizing orboth, there isasingle price effect which isthecause
ofinjury tothedomestic industry.
15. What arethecriteria forremoving theA-Ddutypursuant tothereviews under subsections
76(2) and(5)oftheSIMA? Would theCanadian authorities review theexistence of
dumpingaccompanyingreviewspursuanttosubsections76(2)and(5)?WouldtheCanadian
authorities follow thesame criteria intheoriginal investigation? Forexample, would the
casebeterminated inthecaseofdeminimis dumping margins ornegligible imports?
Inaccordance withArticles 11.2and11.3oftheA-DAgreement, section 76oftheSIMA
provides fortwotypes ofreviews, i.e.: (i)arequest forreview filedinresponse totheTribunal 's
notice thatanorder isabout toexpire; and(ii)arequest forreview atanytimeafteranorder is
made/continued, based onchanged circumstances.
Indetermining whether anorder/finding should becontinued, theTribunal must, inaccordance
with Article 11.3 oftheA-D Agreement, besatisfied: (i)thatthere isalikelihood ofa
continuation/recurrence ofdumping from thesubject countries iftheorder/finding isrescinded; and
(ii)thecontinuation/recurrence ofdumping islikely tocause injury tothedomestic industry.
Withrespect totheissueofthelikelihood ofacontinuation/recurrence ofdumping, theTribunal
would consider suchfactors as,demonstrated propensity todump, product pricing trends relative to
otherrelevanteconomicindicators,andrelevantdatafromtheDepartmentofNationalRevenueincluding
theresults ofthemostrecent administrative review. Evidence ofdeminimis dumping margins and/or
negligible import volumes (e.g., fromtheDepartment ofNational Revenue 'smostrecent administrative
review) would betaken intoconsideration indetermining thelikelihood ofacontinuation/recurrence
ofdumping.
Inexamining theissue ofinjury, theTribunal would consider thevolume, price effect, and
industry impact factors applicable toinvestigations, assetoutintheA-DAgreement.
With respect tochanged circumstance reviews, theTribunal considers whether some keyfact
orcircumstance thatunderpinned anessential element ofthefinding under review haschanged so
fundamentally astomake thefinding nolonger valid.G/ADP/W/265
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16. Articles 6.1.1 -6.1.3 oftheWTO A-DAgreement stipulate thetimeframe forreply to
questionnaires byexporters under investigation andtherequirements onmaking the
evidence available toallinterested parties. Could Canada explain howshewould honour
herobligations under theWTO A-DAgreement.
Articles 6.1.1 to6.1.3 oftheWTO A-DAgreement, arecovered intheDepartment ofNational
Revenue 's"Statement ofAdministrative Practices fortheSIMA".
17. There appears tobenoprovisions intherelevant Canadian legislation oraccompanying
regulations withrespect toinvestigations outside theterritory ofCanada. Could Canada
explain howshewould honour herobligations under Article 6.7andAnnex IoftheWTO
A-DAgreement?
Theprocedures/guidelines inArticle 6.7andAnnex IoftheA-DAgreement have been
incorporated intoRevenue Canada 's"Statement ofAdministrative Practices fortheSIMA"andare
reflected inexisting Department ofNational Revenue practice.
18. Would thevarious public notices issued under Sections 34(1)(a), 38(3) and41(3) ofthe
SIMA contain theinformation required tobeincluded byArticle 12oftheWTO A-D
Agreement? How would Canada ensure herobligations under thepublic notice
requirements befulfilled?
Various administrative practices areinplace toensure conformity withthepublic notice and
transparency provisions oftheA-DAgreement. Forexample, withrespect toparagraph 34(1)(a) of
theSIMA, atthetimeofinitiation, theStatement ofReasons ,which discloses theessential elements
ofthecomplaint andisprovided toallknown interested parties, andtheofficial Canada Gazette notice,
invite interested parties tofilewritten submissions, byaspecified date, presenting facts, arguments
andevidence which theyconsider toberelevant tothealleged dumping, subsidizing and/or injury.
Inaddition, detailed requests forinformation aresentouttoexporters andimporters and,inthecase
ofasubsidyinvestigation,tothegovernment(s)concerned,whichsolicitthedetailedinformationrequired
todetermine specific margins ofdumping and/or amounts ofsubsidy.
With respect tosubsection 38(3) oftheSIMA, atthetimeofthepreliminary determination,
exporters areprovided withcorrespondence outlining themethodology pursuant towhich themargins
ofdumping hasbeencalculated andtheinformation usedtomake thesedeterminations. Revenue Canada
worksheets, which specifically detail thecalculations usedtoarrive atthedeterminations, aretypically
provided. During theinvestigation, exporters areadvised thattheymayrequest disclosure meetings,
heldinOttawa subsequent tothepreliminary determination, todiscuss theinformation inrespect of
theircompanies. Thedisclosure meeting affords acompany anopportunity toobtain afullunderstanding
ofthemethodology usedtodetermine normal value, export price andtheamount ofsubsidy, toask
anyquestions andtodefend itsinterests, (i.e., byclarifying information given totheDepartment or
byproviding further information), prior tothefinaldetermination ofdumping. These procedures are
setoutinRevenue Canada 'sStatement ofAdministrative Practices. Revenue Canada alsoissues a
publicly available Statement ofReasons toallknown interested parties atthetimeofthepreliminary
determination. Thisdocument provides anexplanation oftheinformation andmethodology usedto
make thedeterminations.
Upon request during thecourse ofaninvestigation, Revenue Canada willalsoprovide interested
parties withcopies ofnon-confidential versions ofsubmissions. Thispermits anunderstanding ofthe
essential factsbeing considered byRevenue Canada priortothefinaldetermination andallows interested
parties tomake comments indefence oftheirinterests.G/ADP/W/265
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Upon receipt ofanotice ofpreliminary determination under subsection 38(3) oftheSIMA,
theCanadian International Trade Tribunal (theTribunal) initiates aninjury enquiry. Aspartofits
initiation, theTribunal publishes anotice intheCanada Gazette setting out,interalia,timeframes
forpreliminary submissions from interested parties.
These procedures fullysatisfy Canada 'sobligations under thepublic notice requirements of
theA-DAgreement.
19.(a) Regarding section 11(b), would theconditions stipulated insections 15and16SIMA lead
toexclusion ofactual data? How would Canada reconcile thiswithitsobligations under
Article 2.2.2(i) and(ii)oftheWTO A-DAgreement which doesnotrestrict theuseof
actual data?
Thedetermination ofprofit pursuant toparagraph 11(b) oftheSpecial Import Measures
Regulations isgoverned bythecriteria setoutinparagraph 13(a) oftheRegulations. Among these
isthatthesalesusedtoestablish profit pursuant toRegulation 11(b) arethose which "satisfy thegreatest
number ofconditions setoutinparagraphs 15(a) to(e)oftheAct,taking intoaccount subsection 16(1)
oftheAct." These provisions ensure thattheamount forprofit isbased onthemostappropriate data
topermit afaircomparison. Actual datacould beexcluded under anyofthemethods provided for
inparagraph 11(b) oftheRegulations ifthesalesdonotsatisfy thecriteria setforthinparagraph 13(a)
oftheRegulations. However paragraph 11(b) provides ahierarchy ofmethods bywhich todetermine
profit, allofwhich arebased onactual data. Thisisconsistent withArticle 2.2.2 since paragraph
11(b) isbased onactual amounts ofprofit incurred bytheexporter orproducer orother exporters and
producers, plus"any other reasonable method" asprovided forinArticle 2.2.2(iii) oftheA-D
Agreement.
(b) Would Canada explain howitwould consider theprofit amounts insubparagraphs 11(b)(v)
and(vi)suitable as"areasonable amount ofprofits" ?Why aresuchamounts notsubject
tothecapstipulated inArticle 2.2.2(iii) oftheWTO A-DAgreement?
Regulation 11(b) ishierarchical innature. Therefore, subparagraphs 11(b)(v) and(vi)cannot
beapplied ifthere aredomestic sales oflikegoods orgoods ofthesame general category thatcan
beusedtodetermine anamount forprofit. However, where suchsalesdonotexistorwhere such
salesdonotproduce aprofit, thensubparagraphs 11(b)(v) and(vi)permit theuseofdomestic sales
ofgoods ofthenextlargest group orrange ofgoods. While theconstruction ofsubparagraphs 11(b)(v)
and(vi)doesnotlogically lenditselftoacomparison totheprofit earned ongoods ofthesame general
category asprovided forinArticle 2.2.2(iii) oftheA-DAgreement, given that: (1)subparagraphs (v)
and(vi)arestillmaking reference toarange ofproducts thatwould include likegoods andgoods of
thesame general category; and(2)paragraph 13(c) oftheRegulations authorizes appropriate price
adjustments insuchcases; these methods forthedetermination ofareasonable amount forprofits are
consistent withthereference to"any other reasonable method" inArticle 2.2.2(iii) oftheA-D
Agreement.
(c) Regarding section 11(c), whyaretheconditions setoutinsections 15and16oftheSIMA
necessary? WhydoesCanada notadopt themethods inArticle 2.2.2 oftheA-DAgreement
incalculating SGA costs?
Sections 15and16ofSIMA areonlyapplicable inrespect ofRegulation 11(c)(i) where the
amount forSGA isbased onsales inthedomestic market oflikegoods bytheexporter. Relevant
sales areselected using thecriteria ofsection 15and16toensure thatthemost appropriate datais
selected topermit aproper comparison.G/ADP/W/265
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Regulation 11(c) provides twomethods bywhich areasonable amount forSGAandallother
costs canbedetermined. Thelanguage ofArticle 2.2.2, i.e.,"theamounts maybedetermined on
thebasis of...."doesnotrequire thattheexamples given in(i)and(ii)beadopted.
20. Article 2.2.1.1 oftheWTO A-DAgreement requires theauthorities tocalculate costs on
thebasis ofrecords keptbytheexporter/producer under investigation. Itisnotapparent
thattheCanadian statute, either inparagraph 19(b) oftheSIMA orsection 11ofthe
Regulations, hasprovided forsucharequirement. Howwould Canada ensure compliance
ofthisobligation byitsauthorities?
Canada hasadopted administrative procedures thatrelate tothemethods ofdetermining costs.
Itshould benoted thattheauthorities willnormally calculate costs onthebasisofrecords keptbythe
exporter/producer under investigation provided thatsuchcosts, interalia,reasonably reflect thecosts
associated withtheproduction andsaleoftheproduct under consideration.
21. What arethereasons oflimiting thebenefits offootnote 6oftheWTO A-DAgreement
toonlycertain types ofstart-up operations affecting costs? Howwould Canada reconcile
thiswithitsobligations under Article 2.2.1.1 oftheWTO A-DAgreement which does
notdifferentiate between different types ofstart-up operations?
Thepurpose ofArticle 2.2.1.1 oftheAgreement istoensure thatcertain costsassociated with
start-up situations thatwould otherwise leadtohighmargins ofdumping areadjusted.
Section 23.1ofSIMA recognises twoclasses ofcosts --those thatareaffected bystart-up
andthose thatarenot. Forthepurposes ofcalculating dumping margins, onlythose costs thatare
affected bystart-up situations areadjusted.
Theadjustment forstart-up operations isonlyapplicable inrespect ofstart-up operations that
arecharacterized byalimitation onthelevelofproduction achieved during theperiod. Thisisnot
precluded byFootnote 6oftheA-DAgreement andithasbeendeemed necessary todosoinorder
tospecifically establish when adjustments should bepermitted forstart-up operations. Itisanticipated
thathigher costsincurred during astart-up period willbeattributable tothefactthatproduction levels
havebeenlimited duetotechnical difficulties associated withthestart-up process.
22. How would Canada ensure itsauthorities would evaluate themagnitude ofthemargin
ofdumping inexamining theimpact ofthedumped imports onthedomestic industry?
Inaccordance withthenon-exhaustive nature ofthelistoffactors inArticle 3.4oftheA-D
Agreement, paragraph (d)ofsubsection 37.1(1), which allows fortheconsideration ofanyotherfactors
thatarerelevant inthecircumstances, would capture "magnitude ofthemargin ofdumping" where
relevant. However, forgreater certainty, ourfinal regulations willinclude anamendment to
paragraph 37.1(1)(c) oftheRegulations toexpressly include "themagnitude ofthemargin ofdumping
oramount ofsubsidy inrespect ofthedumped orsubsidized goods" asafactor tobeconsidered.
23. Section 37.1(3) prescribes additional factors fordetermining whether thedumping has
caused orthreatened tocause injury, including whether acausal relationship exists between
thedumping ofgoods andinjury orthreat ofinjury "onthebasis of"alistoffactors largely
reproducing those inArticle 3.5. There appears notanyexplicit provisions prohibiting
attributionofinjuriescausedbythesefactorstothedumpedimports.HowwouldCanadian
authorities determine whether acausal relationship between thedumping ofgoods andG/ADP/W/265
G/SCM/W/275
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injury andthreat ofinjury onthebasis ofthese factors? How would Canada ensure its
authorities would notattribute injuries caused bythese factors tothedumped imports?
Investigative authorities willmake anassessment ofwhether dumping hascaused injury based
onaconsideration ofthetotality ofrelevant factors bearing upontheissueofcausality, including any
factors other thandumping (orsubsidizing) ofthegoods, which havecaused injury, retardation, or
arethreatening tocause injury.
Theinability toattribute injury caused byfactors otherthandumping todumped imports: (1)is
implicit insubsection 37.1(3) oftheregulations, which pertains to"causal" relationship between the
dumping andinjury, retardation orthreat ofinjury; and(2)exists byvirtue ofwell-established principles
ofadministrative law,which would render aninjury determination based onanimproper attribution
ofinjury caused byfactors other thandumping, todumped imports, subject tojudicial review.