On December 8, 2017, in LE-2017-003, the Canadian International Trade Tribunal (“CITT”) decided to not initiate an expiry review (Canada’s sunset review) with respect to carbon steel welded pipe manufactured by Conares Metal Supply Ltd. (“Conares”) from the United Arab Emirates. The CITT found that an expiry review was warranted with respect to carbon steel welded pipe originating in or exported from Taiwan, India, Oman, South Korea, Thailand and the United Arab Emirates. Only Conares was excluded in the LE decision and expiry review.

Why was Conares excluded from the expiry review?  Because Conares received a 0% dumping margin in the original investigation.  Conares had participated fully in the original antidumping and countervailing duty investigation by the Canada Border Services Agency (“CBSA”) and was found by the CBSA to have not dumped any goods into Canada during the period of investigation and the goods shipped to Canada were not subsidized.  Conares also participated in the original injury investigation and had asked for a producer exclusion on the basis that the goods were not dumped or subsidized.  The CITT rejected Conares’ request for a producer exclusion and stated the following in its original injury decision:

“Conares requested a producer exclusion. The domestic industry objected to such a request on the grounds that it would be tantamount to providing Conares with a licence to dump. The Tribunal agrees and views such an exclusion, if granted, as a serious and imminent threat, in and of itself, that the domestic industry would thereby be threatened with injury in the foreseeable future. More generally, the Tribunal is of the view that this request offers the opportunity for it to reiterate that producer exclusions are typically not appropriate other than in the most specific set of circumstances.”

Antidumping duties have been imposed for 5 years against Conares’ carbon steel welded pipe.

This decision must be put into context – During the last 5 years, Chinese Taipei challenged the CBSA and CITT’s decisions in the carbon steel welded pipe case at the WTO and won.  In the DSB Report in DS482 – Canada – Antidumping Measures on Imports of Certain Carbon Steel Welded Pipe From the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, the DSB made the following findings:

• Paragraph 7.19: “…the reference to margin of dumping in Article 5.8 of the Anti-Dumping Agreement is a reference to the individual margin of dumping determined on an exporter-specific basis”;
• “Paragraph 7.21: “…Thus, a single investigation could be “terminated” in respect to some of those individual producers/exporters (even if it remains active for others)”;
• Paragraph 7.37: “We recall our view that the second sentence of Article 5.8, when read in light of the context of the phrase “margin of dumping” as used in other provisions of the Anti-Dumping Agreement, requires immediate termination of an investigation in respect of exporters that have an individual de minimis margins of dumping….”;
• Paragraph 7.76: “…The investigation in respect of those exporters should have been terminated immediately after final determinations of de minimis margins of dumping were made for those producers, and no anti-dumping measures should have been imposed on them…”;
• Paragraph 7.83: “… Article 5.8 effectively means that there is no legally cognizable dumping by an exporter with a final de minimis margin of dumping. As a result, imports from that exporter should not be treated as “dumped” for the purposes of the analysis and final determinations of injury and causation”;
• Paragraph 7.84: “The panel stated expressly that “an interpretation of ‘dumped imports’ in Article 3 which would allow an investigating authority to include in the volume of dumped imports for the purposes of injury analysis imports attributable to a producer/exporter for which a de minimis margin has been calculated is impermissible”; and
• Paragraph 7.88: “The application of Article 5.8 means that there is no legally cognizable dumping by an exporter with a final de minimis margin of dumping. Accordingly, imports from that exporter may not be treated as “dumped imports” for the purposes of the Article 3 injury analysis”.

After the DSB Panel Report was accepted by Canada, the Minister of Finance asked the CBSA and the CITT to review their decisions in the carbon steel welded pipe case with respect to exporters from Taiwan.  The CITT Order was terminated with respect to all exporters from Taiwan who had originally received a de minimis dumping margins. Conares was the only exporter who had originally received a 0% rate to be still subject to the CITT’s AD Order.

Conares participated in the reviews and the LE Proceeding.  In LE-2017-003, Conares asked the CITT to not commence an expiry review with respect to goods exported by Conares.  The CITT made the following observations:

1. An expiry review is not necessarily intended to be an all or nothing affair in all circumstances;
2. The CITT has broad discretionary authority to exclude goods from its findings and orders in extraordinary circumstances;
3. Where the CITT had discretionary authority, it must exercise such authority in a manner that is fair and that is consonant with Canada’s international obligations;
4. The treatment that Conares exports have received under SIMA has been contrary to the Anti-Dumping Agreement; they should never have been subject to a finding in the first place because they were not dumped nor subsidized;
5. There cannot be a reasonable indication that the expiry of the finding will result in the continued or resumed dumpnig of Conares goods given that they were not dumped in the first place; and
6. In any upcoming notice of expiry proceedings, the Tribunal will consider extending this treatment to other exporters who had insignificant margins of dumping (or amounts of subsidy). Those exporters should, as did Conares, bring their situation to the Tribunal’s attention in their submission on the initiation of an expiry review. If those exporters do not want to wait for the initiation of an expiry review, they can request a review from the Minister of Finance at an earlier time than that of the notice of expiry.

This CITT LE Proceeding decision is important for other exporters who received a de minimis dumping margin or subsidy rate.  Basically, the CITT has indicated that if you participate in the LE proceeding and originally received a de minimis dumping margin or subsidy rate, the CITT will consider your exceptional circumstances and exclude you from an expiry review.  A CITT AD/CVD Order against your goods will end.  Four cases are particularly relevant (there are others):

• Certain Carbon and Allow Steel Line Pipe (China) – three companies received de minimis subsidy rates;
• Certain Photovoltaic Modules (China) – a number companies received de minimis subsidy rates;
• Oil Country Tubular Goods (India, Indonesia, Philippines, South Korea, Taiwan, Thailand, Turkey, Ukraine, Vietnam) – one company received a de minimis dumping margin; and
• Hot-rolled Plate (Brazil, Denmark, Indonesia, Italy, Japan, South Korea) – one company received a de minimis dumping margin;

Some of these exporters may be inclined to request relief sooner.  The two options to waiting for the next LE proceeding are (a) request that the Minister of Finance ask the CITT to conduct a review or (b) request the CITT to conduct an interim review.  The CITT did receive a previous request to conduct an interim review in RD-2017-001 in which Barusan Mannesmann Boru requested an interim review into its exports of oil country tubular goods from Turkey. The CITT denied the request and indicated the recourse was to the Minister of Finance.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.  We should disclose that we acted for Conares in the original dumping investigation, injury inquiry and the LE proceeding.