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Notice of conclusion of expedited review: Upholstered Domestic Seating (UDS 2022 XR1)

Home News Notice of conclusion of expedited review: Upholstered Domestic Seating (UDS 2022 XR1)

Notice of conclusion of expedited review: Upholstered Domestic Seating (UDS 2022 XR1)

The Canada Border Services Agency (CBSA) has today concluded the expedited review of certain upholstered domestic seating (UDS), exported to Canada from China by Eterno Co. Ltd. (Eterno) and Zhe Jiang Shengli Furniture Co., Ltd. (Shengli), in accordance with the Special Import Measures Act (SIMA).

The expedited review was initiated on January 21, 2022 and is part of the CBSA’s enforcement of the Canadian International Trade Tribunal’s (CITT) finding of injury issued on September 2, 2021, respecting the dumping and subsidizing of UDS from China and Vietnam.

The product definition and the applicable tariff classification numbers of the goods subject to the CITT finding can be found on the CBSA’s Measures in force.

Period of investigation

The period of investigation (POI) and the profitability analysis period (PAP) for the expedited review were from January 1, 2021 to December 31, 2021.

Expedited review process

At the initiation of the expedited review, the CBSA sent dumping and subsidy requests for information (RFIs) to the exporters Eterno, Shengli and Chateau d’Ax, USA, Ltd. (Chateau), and importer RFIs to importers, to solicit information on the costs and selling prices of subject and like goods. The information was requested for the purposes of determining the normal values, export prices and amounts of subsidy for subject goods imported into Canada.

Responses to the dumping and subsidy RFIs were received from Eterno and Shengli and a response to the Dumping RFI was received by Chateau.

Counsel on behalf of Eterno, Shengli and Chateau submitted case arguments after the close of record.

No reply submissions were received by any party.

Representations

Counsel for Eterno and Shengli submitted case arguments which are summarized as follows:

Counsel for Eterno and Shengli argued that the normal values should be calculated based on paragraph 19(b) of the SIMA, while costs of production should be determined in accordance with paragraph 11(1)(a) of the Special Import Measures Regulations (SIMR). Similarly, counsel asserted that the amount for SG&A and Net Interest Expenses should be determined under subparagraph 11(1)(c)(i) of the SIMR. Counsel for Eterno and Shengli further submitted that the the amount for profit as provided in the Ministerial Specification could be used.

Counsel for Eterno and Shengli submitted that for the purposes of SIMA, the factory is in fact the exporter. In this case, Eterno and Shengli should be the exporters. Counsel also submitted that export prices must be calculated under section 24 of SIMA.

Counsel for the participating exporters submitted that exporter-specific margins of dumping for Eterno and Shengli should be calculated as well as exporter specific amounts of subsidy for new models.

Counsel argued that Eterno and Shengli either did not receive any subsidies or that the amount of subsidies received is insignificant as defined in SIMA.

Counsel for the participating exporters submitted that Shengli and Eterno cooperated fully in the investigation and provided all of the information requested by the CBSA. As such, the CBSA should not determine export prices, normal values, or amounts of subsidy by applying the Ministerial Specification.

CBSA response

The information submitted in these case arguments were given due consideration by the CBSA.

The CBSA considered all of the representations made with regards to the issuance of normal values for future shipments. Normal values, export prices and amounts of subsidy calculated as a result of the expedited review were determined in accordance with both SIMA and SIMR.

The CBSA examined the involvement of each separately incorporated entity to determine the identity of the exporter.

The CBSA does not determine a margin of dumping during an expedited review, under 13.2(1) of SIMA, the expedited review is a review of the normal value and export price of the subject goods. Similarly, the expedited review is a review of the amounts of subsidy of the subject goods. Therefore, the CBSA does not determine if an amount of subsidy is insignificant.

The CBSA found Eterno’s and Shengli’s submissions to be complete and reliable, and there was sufficient information on the record to determine normal values, export prices, and amounts of subsidy using the information submitted.

Normal values, export prices and amounts of subsidy for future shipments

Eterno Co., Ltd. (China)

Eterno is a producer and exporter of subject goods, located in Dongan Science and Technology Park, Nantong Binhai Industrial Park, Jiangsu Province, China. Eterno sells subject goods to Canada via an unrelated, intermediary vendor. For the portion of subject goods originating in and exported from China and shipped directly to Canada, the CBSA found Eterno to be the exporter, as it acted as the principal in the transaction, and is located in the country of export, China.

During the course of the expedited review, Eterno provided responses to the CBSA’s dumping and subsidy RFIs, as well as supplemental RFIs (SRFIs) and verification RFIs.

Eterno did not have any domestic sales of like goods during the PAP, and as a result, normal values could not be determined in accordance with section 15 of SIMA.

Eterno provided sufficient costs of production and administrative, selling and all other costs to determine normal values pursuant to paragraph 19(b) of SIMA. However, the CBSA was unable to determine an amount for profits under paragraph 11(1)(b) of the SIMR.

As such, normal values were determined pursuant to section 29 of SIMA using a method similar to that of paragraph 19(b), 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 (31.92%), determined by ministerial specification.

For the subject goods exported by Eterno to Canada, export prices are determined in accordance with section 24 of SIMA.

Eterno provided a response to the subsidy RFI. Eterno reported that it did not receive any subsidies during the POI, and the CBSA found no evidence of subsidies for Eterno.

Zhe Jiang Shengli Furniture Co., Ltd. (China)

Shengli is a producer and exporter of subject goods, located in Lingxia Industrial Function Zone, Lingxia Town, Jindong District, Jinhua City, Zhejiang Province, China. Shengli sells subject goods to Canada via an unrelated, intermediary vendor. For the portion of subject goods originating in and exported from China and shipped directly to Canada, the CBSA found Shengli to be the exporter, as it acted as the principal in the transaction, and is located in the country of export, China.

During the course of the expedited review, Shengli provided responses to the CBSA’s dumping and subsidy RFIs, as well as supplemental RFIs (SRFIs) and verification RFIs.

Shengli did not have any domestic sales of like goods during the PAP, and as a result, normal values could not be determined in accordance with section 15 of SIMA.

Shengli provided sufficient costs of production and administrative, selling and all other costs to determine normal values pursuant to paragraph 19(b) of SIMA. However, the CBSA was unable to determine an amount for profits under paragraph 11(1)(b) of the SIMR.

As such, normal values were determined pursuant to section 29 of SIMA using a method similar to that of paragraph 19(b), 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 (31.92%), determined by ministerial specification.

For the subject goods exported by Shengli to Canada, export prices are determined in accordance with section 24 of SIMA.

Shengli provided a response to the Subsidy RFI. Shengli was found to have received countervailable benefits from the following 7 subsidy programs:

  • Program 7: Export development and performance grants
  • Program 18: Municipal/local income or property tax reductions
  • Program 28: Grants/Awards – Subsidies Related to Company/Enterprise Development and Innovation
  • Program 29: Grants/Awards – Subsidies Related to Employment, Training and Recruitment
  • Program: 32: Grants/Awards – Subsidies Related to Science and Technology
  • Program: 35: Grants/Awards – Subsidies to Provide Business Support
  • Program 39: Preferential Income Tax Reduction for Small and Low profit Enterprises

The amount of subsidy found for Shengli was 36.34 CNY per piece.

Eterno’s and Shengli’s specific normal values, export prices and amounts of subsidies for future shipments are effective today, October 27, 2023. The normal values, export prices and amounts of subsidies determined as a result of this expedited review may be applied to any requests for re-determination of importations of subject goods that have not been processed prior to the conclusion of this review, regardless of the date that the requests were received. The normal values and export prices determined as a result of this review may be applied retroactively where the conditions described below are met.

Exporter responsibility

Please note that exporters with normal values are required to promptly inform the CBSA in writing of changes to domestic prices, costs, market conditions or terms of sale associated with the production and sales of the goods. If there are changes to the exporter’s domestic prices, costs, market conditions or terms of sale associated with the production and sales of the goods, and where the CBSA considers such changes to be significant, the normal values and export prices will be updated to reflect current conditions. All parties are cautioned that where there are increases in domestic prices, and/or costs as noted above, the export price should be increased accordingly to ensure that any sale made to Canada is not only above the normal value but at or above selling prices and full costs and profit of the goods in the exporter’s domestic market. If exporters do not properly notify the CBSA of any such changes, do not adjust export prices accordingly, or do not provide the information required to make any necessary adjustments to normal values and export prices, retroactive assessments will be applied where such action is warranted.

Importer responsibility

Importers are reminded that it is their responsibility to calculate and declare their anti-dumping duty liability. If importers are using the services of a customs broker to clear importations, the brokerage firm should be advised that the goods are subject to SIMA measures and be provided with sufficient information necessary to clear the shipments. To determine their anti-dumping liability, importers should contact the exporter(s) to obtain the applicable normal values. For further information on this matter, please refer to Memorandum D14-1-2, Disclosure of Normal Values, Export Prices, and Amounts of Subsidy Established under the Special Import Measures Act.

The Customs Act (Act) applies, with any modifications that the circumstances require, with respect to the accounting and payment of anti-dumping duties. As such, failure to pay the duties within the prescribed time will result in the application of the interest provisions of the Act.

Should the importer disagree with the determination made on any importation of goods, a request for re-determination may be filed. For more information on how to file a request for re determination, please refer to the Guide for appealing a duty assessment.

Source: Canada Border Services Agency (CBSA)


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