public complaint · 2019. 12. 2. · b. relevant provisions of sima ... 109 turkey’s excess...

PUBLIC COMPLAINT

The Dumping and Subsidizing of Corrosion-Resistant Steel Sheet

Originating in or Exported from the Republic of Turkey, the

Socialist Republic of Vietnam and the United Arab Emirates

Submitted by: ArcelorMittal Dofasco G.P.

Counsel to

Telephone:

September 20, 2019

CONLIN BEDARD LLP

220 Laurier Ave West, Suite 700

Ottawa ON K1P 5Z9

Paul D. Conlin

Drew Tyler

Shannon McSheffrey

Lydia Blois

Greg Landry

ArcelorMittal Dofasco G.P.

613.782.5777

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PUBLIC COMPLAINT

The Dumping and Subsidizing of Corrosion-Resistant Steel Sheet Originating in or Exported

from the Republic of Turkey, the Socialist Republic of Vietnam and the United Arab Emirates

Table of Contents

Table of Contents ........................................................................................................................... i

Introduction ....................................................................................................................... 1

A. The Complainant ......................................................................................................... 1

The Product ....................................................................................................................... 3

A. Product Definition ....................................................................................................... 3

B. Corrosion Resistant Steel Cases .................................................................................. 5

C. Production Process ...................................................................................................... 6

D. Product Use ................................................................................................................. 7

E. HS Tariff Classification ............................................................................................... 7

F. Exporters to Canada .................................................................................................... 8

G. Importers ..................................................................................................................... 8

H. Domestic Producers and Domestic Industry ............................................................... 8

I. The Complaint is supported by the Domestic Industry ............................................. 10

J. Trade Unions ............................................................................................................. 11

K. Marketing and Distribution ....................................................................................... 12

Domestic Mills: ............................................................................................ 12

Imported COR .............................................................................................. 12

Import Discount Requirement...................................................................... 15

L. Domestic Market ....................................................................................................... 15

M. Like Goods and Single Class of Goods ..................................................................... 18

Like Goods ................................................................................................... 18

Single Class of Goods .................................................................................. 18

N. Period of Investigation and Inquiry ........................................................................... 19

Evidence of Dumping ...................................................................................................... 19

A. Export Prices ............................................................................................................. 20

B. Section 15 .................................................................................................................. 20

C. Section 16(2)(c): A Particular Market Situation Exists in Turkey ............................ 21

D. Section 19 .................................................................................................................. 21

Turkey .......................................................................................................... 22

The Dumping and Subsidizing of

Corrosion-Resistant Steel Sheet PUBLIC COMPLAINT

Page ii

UAE ............................................................................................................. 24

Vietnam ........................................................................................................ 25

Summary of Dumping Margins ................................................................... 26

E. Section 20: Vietnam is a Non-Market Economy ....................................................... 26

Evidence and information required to initiate a section 20 inquiry ............. 27

The Section 20 conditions ............................................................................ 29

Proposed Surrogate Country and Section 20 Methodology ......................... 30

Section 20 Dumping Margins ...................................................................... 31

Evidence of Subsidization .............................................................................................. 31

A. Introduction ............................................................................................................... 31

B. Relevant provisions of SIMA .................................................................................... 32

C. Margins of Subsidization ........................................................................................... 34

Evidence of Injury........................................................................................................... 35

A. Volume of Subject Goods ......................................................................................... 36

B. Price Depression ........................................................................................................ 38

Turkey .......................................................................................................... 38

Vietnam ........................................................................................................ 39

UAE ............................................................................................................. 41

C. Lost Sales .................................................................................................................. 42

D. Lost Sales and Price Depression: Stelco’s experience .............................................. 42

E. Price Undercutting ..................................................................................................... 46

Head-to-Head Price Undercutting ................................................................ 46

Price Undercutting: Subject Goods vs. All Imports..................................... 47

Price Undercutting: AMD vs. Subject Goods. ............................................. 49

F. Lost Market Share ..................................................................................................... 50

A. Financial Results ....................................................................................................... 52

AMD ............................................................................................................ 52

Stelco............................................................................................................ 54

Summary ...................................................................................................... 56



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B. Capacity ..................................................................................................................... 57

C. Employment .............................................................................................................. 58

D. Investments ................................................................................................................ 58

E. Cumulation ................................................................................................................ 59

F. Conclusion ................................................................................................................. 59

Evidence of Threat of Injury ......................................................................................... 60

A. Introduction ............................................................................................................... 60

B. The rate of increase in the volume of subject goods imports .................................... 61

C. Overcapacity and Capacity Increases Globally and in the Subject Countries .......... 63

Global steel excess capacity......................................................................... 63

COR Overcapacity ....................................................................................... 66

D. International and Domestic Market Conditions ........................................................ 68

Global Economic Outlook for Steel ............................................................. 68

Turkey’s Domestic Market Situation Threatens to Injure the Domestic Industry ........................................................................................................ 69

Vietnam’s Domestic Market Situation Threatens to Injure the Domestic Industry ........................................................................................................ 77

The UAE’s domestic market situation threatens to injure the domestic

industry ........................................................................................................ 80

Canadian Domestic Market.......................................................................... 83

E. Pricing ....................................................................................................................... 85

Subject Good pricing has had a depressive effect and will lead to greater demand for Subject Good Imports ............................................................... 85

Canadian COR pricing is highly attractive to Subject Good producers and will lead to greater imports. ......................................................................... 87

F. Diversion ................................................................................................................... 88

AD/CVD Findings against the Subject Countries ....................................... 88

Section 232 Investigation in the US............................................................. 93

EU Safeguard ............................................................................................... 96

Conclusion ................................................................................................... 97



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G. Product Shifting ......................................................................................................... 97

H. Investment ............................................................................................................... 100

I. Resulting Impact on the Domestic Industry ............................................................ 100

J. Conclusion: Threat of Injury ................................................................................... 101

Conclusion ..................................................................................................................... 101

Appendix 1 – Particular Market Situation in Turkey ............................................... 103

A. Conditions for a Particular Market Situation .......................................................... 103

B. Government of Turkey’s Involvement in the Turkish COR Market ....................... 107

Government Economic Policy Plans affecting domestic selling prices..... 107

Government Support Programs.................................................................. 109

Turkey’s excess inflation ........................................................................... 110

Government intervention in Turkey’s monetary policy and the lack of central bank independence ......................................................................... 113

Conversion of foreign exchange denominated contracts to lira-denominated

contracts ..................................................................................................... 117

The Doubling of US section 232 measures on Turkish Steel drove down the domestic price of Turkish COR ................................................................. 118

The price difference between Turkish Cold-Rolled Steel and COR does not

reflect conversion costs .............................................................................. 120

Acquisition of production inputs from state-owned or state-controlled enterprises at non-market costs .................................................................. 121

C. Low-priced substrate imports .................................................................................. 127

D. Conclusion ............................................................................................................... 129

Appendix 2– Section 20 and Vietnam’s COR Industry ............................................. 130

A. GOV substantially determines prices of COR sold in Vietnam .............................. 130

Section 20 conditions exist with respect to COR substrate ....................... 130

Government Policies and Directives: The Steel Master Plan from 2007-2015............................................................................................................ 131

Government Policies and Directives: The Steel Master Plan from 2017-2025............................................................................................................ 132

Government Policies and Directives: Strategy on exports and imports for

2011-2020 .................................................................................................. 135

Policies and Directives: Industrial Development Strategy through 2025, vision on toward 2035 ................................................................................ 135

State-ownership of COR producers ........................................................... 136



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Price Stabilization by the GOV.................................................................. 137

The GOV Controls Construction Projects and Investments in the Steel Industry ...................................................................................................... 138

Vietnam’s steel industry is subsidized ....................................................... 139

Conclusion ................................................................................................. 139

B. Vietnamese COR prices are not substantially the same as in a competitive market 140

Appendix 3: Subsidies – Turkey .................................................................................. 140

A. Turk Eximbank Programs ....................................................................................... 142

Rediscount Program ................................................................................... 144

Investment Credit for Exports and Export-Oriented Working Capital Credit

.................................................................................................................... 145

Pre-Shipment Export Credit Program ........................................................ 146

Post-Shipment Rediscount Program .......................................................... 146

Export Credit Insurance Program .............................................................. 146

Specific Export Credit Program ................................................................. 147

B. TURQUALITY Brand Promotion Incentive Program ............................................ 147

C. Support to Offset Costs Related to Trade Remedy (AD/CVD/SG) Investigations . 147

D. Export Freight Supports .......................................................................................... 148

E. Deduction of Export Revenue from Taxable Income ............................................. 148

F. Investment Zones .................................................................................................... 149

Organized Industrial Zones ........................................................................ 150

Free Zones (“FZs) ...................................................................................... 151



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G. Building Tax Exemption ......................................................................................... 153

H. Inward Processing Regime ...................................................................................... 153

I. Project-Based Government Support for Investment Program ................................. 155

J. Research and Development - Tax Breaks and other Assistance ............................. 157

K. Exemption from Banking and Insurance Transactions Tax (BITT) ........................ 157

L. Provision of Hot-Rolled Steel for Less than Adequate Remuneration ................... 158

M. Social Security Premium Incentive under Law No.6486 ........................................ 160

N. R&D Operations and Investment Programs ............................................................ 160

O. TUBITAK Industrial R&D Projects Grant Program ............................................... 161

P. Provision of cooking coal for less than adequate revenue ...................................... 161

Q. Conclusion ............................................................................................................... 162

Appendix 4: Subsidies - UAE ....................................................................................... 163

Appendix 5: – Vietnamese Countervailable Subsidies .............................................. 164

A. Vietnam’s notification to the WTO regarding subsidies ......................................... 165

Preferential Import Tariff Rates ................................................................. 165

Incentives on Non-agricultural land use tax .............................................. 167

B. Previous CBSA Decisions on Vietnamese Steel Subsidies..................................... 168

C. Potential Countervailable Subsidy Programs .......................................................... 170

Land rent reduction/exemption for exporters and land use fees or leases exemptions/reductions ............................................................................... 170

Interest rate support program under the State Bank of Vietnam ............... 171

Decree 51 programs or Decree 108 Programs ........................................... 172

Preferential Lending to Exporters .............................................................. 174

Income Tax Preferences under Chapter V of Decree 24 ........................... 175

Income Tax Preferences under Chapter IV of Decree 124 ........................ 176

Export Factoring ........................................................................................ 177

Financial Guarantees by VietninBank and VietcomBank for Export Activity

.................................................................................................................... 177

Export Promotion Program ........................................................................ 179

Export and Import Support in the Form of Preferential Loan Guarantee and

Factoring .................................................................................................... 179

Enterprise income tax preferences, exemptions and reductions ................ 180

Accelerated Depreciation of Fixed Assets ................................................. 181



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Assistance to Enterprises Facing Difficulties due to Objective Reasons .. 182

Other Subsidy Programs ............................................................................ 182

Table of Authorities .................................................................................................................. 184

List of Attachments ................................................................................................................... 188

PUBLIC COMPLAINT

The Dumping and Subsidizing of Corrosion-Resistant Steel Sheet Originating in or

Exported from the Republic of Turkey, the Socialist Republic of Vietnam and the United

Arab Emirates

Introduction

1. This Complaint is filed by ArcelorMittal Dofasco G.P. (“AMD”) with the Canada Border

Services Agency (“CBSA”) pursuant to section 31 of the Special Import Measures Act

(“SIMA”) regarding the dumping and subsidization of certain Corrosion-Resistant Steel

Sheet (“COR”) originating in or exported from the Republic of Turkey (“Turkey”), the

Socialist Republic of Vietnam (“Vietnam”), and the United Arab Emirates (“UAE”) (the

“Subject Countries”). This Complaint is supported by Stelco Inc. (“Stelco”).

2. It is submitted that the aforementioned dumped and subsidized goods have caused injury

to Canadian producers of like goods and are also threatening Canadian producers with

injury. The Complainant therefore requests that the President of CBSA initiate an

investigation into the injurious impact of the dumping and subsidizing of COR

originating in or exported from the Subject Countries.

A. The Complainant

3. This Complaint is filed by AMD. The address of the Complainant is:

ArcelorMittal Dofasco G.P.

1330 Burlington Street East,

Hamilton, ON L8N 3J5

Attention: Mr. Henry Wegiel

Telephone: 905.548.7200

Facsimile: 905.548.4648

4. All notices related to this Complaint should be sent to:

Conlin Bedard LLP

220 Laurier Ave West, Suite 700

Ottawa ON K1P 5Z9

Attention: Paul D. Conlin

Telephone: 613.782.5777

Facsimile: 613.249.7226



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5. AMD is part of the ArcelorMittal group of companies and is one of North America’s

most progressive and efficient steelmakers. AMD is a market leader in an industry that

continues to be a cornerstone of the Canadian manufacturing economy. By working

closely with its customers and using the latest technologies, AMD produces

technologically advanced, innovative, value-added steel that meets their exact needs.

6. As Canada’s largest manufacturer of flat-rolled steel, AMD’s products include hot-rolled,

cold-rolled and corrosion-resistant steel as well as tinplate. AMD supplies these products

to the automotive, construction, packaging, manufacturing, pipe and tube, and steel

distribution markets.

7. AMD’s operational hub is its 750-acre steelmaking complex and head office in Hamilton,

Ontario. These state-of-the-art facilities are some of the most efficient, flexible and

technologically advanced in North America. They include two coke plants, three

operating blast furnaces, a basic oxygen steelmaking furnace, an electric arc furnace, two

slab casters, a hot-strip rolling mill, pickling lines, cold-rolling mills, annealing and

tempering facilities, galvanizing lines, and Canada’s only electrolytic tinning lines.

8. AMD plays a key role in North America’s advanced manufacturing supply chain,

working with the top automotive, energy, packaging and construction brands to develop

lighter, stronger and more sustainable products – from cans to cars. Founded in 1912,

AMD is one of Canada’s Top 100 Employers and Hamilton’s largest private sector

company with more than 5,000 employees shipping 4.1 million metric tonnes of high

quality flat carbon and alloy steel annually, with approximately [ ]% sold into the

Canadian market.

9. AMD is a Canadian company, and its primary focus is on the Canadian market. AMD’s

mandate is to leverage its platform in Canada to maximize shareholder value. To this end,

the companies in the ArcelorMittal family pursue a coordinated approach to the sale and

marketing of COR and other products. Within this framework, AMD’s mandate is to

service the Canadian market. ArcelorMittal affiliates in other countries follow the same

strategy and strive to maximize profitability in their respective home markets. Exports by



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ArcelorMittal affiliates to markets in which other ArcelorMittal affiliates operate are

coordinated to avoid negative impacts.

The Product

A. Product Definition

10. The goods that are the subject of this Complaint are defined as (the “Subject Goods”):

Corrosion-resistant flat-rolled steel sheet products of carbon steel

including products alloyed with the following elements:

• Boron (B) not more than 0.01%,

• Niobium (Nb) not more than 0.100%,

• Titanium (Ti) not more than 0.08%, or

• Vanadium (V) not more than 0.300%

in coils or cut lengths, in thicknesses up to 0.168 in. (4.267 mm) and

widths up to 72 inch (1,828.8 mm) with all dimensions being plus or

minus allowable tolerances contained in the applicable standards, with or

without passivation and/or anti-fingerprint treatments, originating in or

exported from the Republic of Turkey, the Socialist Republic of

Vietnam, and the United Arab Emirates, and excluding:

• corrosion-resistant steel sheet products for use in the manufacture of passenger automobiles, buses, trucks, ambulances or hearses or chassis therefor, or parts

thereof, or accessories or parts thereof;

• steel products for use in the manufacture of aeronautic products;

• steel sheet that is coated or plated with tin, lead, nickel, copper, chromium, chromium oxides, both tin and lead (“terne plate”), or both chromium and

chromium oxides (“tin free steel");

• stainless flat-rolled steel products;

• corrosion-resistant steel sheet products that have been pre-painted, including with lacquers or varnishes, or permanently coated in plastic;

• galvanized armouring tape, which is narrow flat steel tape of 3 in. or less, that has been coated by a final operation with zinc by either the hot-dip galvanizing or the

electrogalvanizing process so that all surfaces, including the edges, are coated;

• perforated steel,

• and tool steel.

11. The product definition includes corrosion-resistant steel sheet where the substrate is

coated with a corrosion-resistant material such as zinc, aluminum, and other alloys. The

coating may be applied by a variety of processes including hot-dip galvanizing or electro-

galvanizing.

12. The product definition includes galvannealed steel. Galvannealed steel is produced by

passing the steel through an annealing furnace after it completes the hot-dip galvanizing



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process and while the zinc is still liquid. This causes the iron and zinc layers to diffuse

into each other, creating a zinc-alloy layer at the surface.

13. Passivation refers to a material becoming “passive”, that is, less affected or corroded by

the environment of future use. Passivation involves creation of an outer layer of shield

material that is applied as a micro-coating, created by chemical reaction with the base

material, or allowed to build from spontaneous oxidation in the air. As a technique,

passivation is the use of a light coat of a protective material, to create a shell against

corrosion.

14. Corrosion-resistant steel with anti-fingerprint coatings (whether as part of a passivation

treatment or separate) are also included within the product definition.

15. Corrosion-resistant steel sheet is usually produced from cold-rolled carbon steel sheet

(“CRS”) and sometimes from hot-rolled carbon steel sheet (“HRS”). However, additions

of certain elements, such as titanium, vanadium, niobium or boron, during the steel-

making process enable the steel to be classified as alloy steel. Therefore, corrosion-

resistant steel produced from either carbon steel or alloy steel is included in the definition

of the Subject Goods.

16. The Subject Goods (and like goods produced by the domestic industry) are manufactured

to meet certain ASTM1, SAE2 or equivalent specifications, including, but not limited to:

• ASTM A653/653M

• ASTM A792/A792M

• SAE J403

• SAE J1392

• SAE J2329

• SAE J1562

17. The product definition excludes corrosion-resistant steel for use in automobiles and

automobile parts, hereafter referred to as “Automotive”. Automotive end users include

1 Confidential Attachment 1: ASTM Specifications for COR. 2 Confidential Attachment 2: SAE Specifications for COR.



Page 5

Original Equipment Manufacturers (“OEMs”) and auto part producers. Such excluded

goods may fall under Customs Tariff item 9959.00.00.

18. The product definition excludes pre-painted steel and steel permanently coated in plastic.

Pre-painted steel is steel on which paint has been applied by coil coating at the

manufacturing facility. The paint may be applied to one or both sides. The paint may be

applied as a liquid, paste, powder, varnish or lacquer. Paints may include, but are not

limited to, primers, finishing coats, polyesters polymers, plastisol paints, polyurethanes,

polyvinylidene fluorides, and epoxy. Steel permanently coated in plastic is steel to which

plastics, including films or laminates, are permanently attached.

19. The product definition and like goods includes “seconds”. Seconds are goods that do not

meet some aspect of the original specification. This could include dimensions, grade, or

coating. It could also include a coil that has been damaged. Seconds are sold at a

discount. Seconds may meet ASTM, SAE or other specifications or may be re-certified to

meet a standard. For example, a coil that is damaged along the edge may be a “second”.

However, if the damaged edge is slit and the damage is removed the coil could be

classified as a primary coil produced to the new width. Seconds are graded and sold on a

scale of five.

B. Corrosion Resistant Steel Cases

20. AMD filed a complaint with the CBSA regarding the dumping of COR from China,

Chinese Taipei, India and Korea (the “COR1 Countries”) on June 5, 2018. Both the

CBSA and the CITT made positive preliminary findings, and preliminary duties were put

into place on October 24, 2018. The CITT held a hearing in January 2019, and on January

22, 2019, the CBSA made final determinations of dumping against all four countries.3

The CITT made a positive final injury determination on February 21, 2019, finding that

3 Corrosion-resistant Steel Sheet (6 February 2019), COR 2018 IN, Final Determinations, Statement of Reasons

(CBSA).



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the Subject Goods were threatening to cause injury to the domestic industry.4 Throughout

the present Complaint, “COR1” will be used in reference to this case.

C. Production Process

21. As discussed above, COR is usually produced from cold-rolled carbon steel sheet and

sometimes from hot-rolled carbon steel sheet. The steel sheet to be coated is commonly

referred to as steel substrate. Hot-dip galvanizing and electro-galvanizing are the two

processes that can be used to coat the substrate steel sheet with zinc, aluminum, or other

alloys. AMD uses hot-dip galvanizing.

22. In the hot-dip galvanizing process, the first step is to clean the surfaces to improve the

adhesion of the coating. After cleaning, the substrate enters a continuous annealing

furnace. The furnace heats the substrate to the temperature necessary to develop the

desired metallurgical properties of the final product. The substrate is then placed in a

molten coating bath and, as it emerges from the bath, an air, nitrogen or steam wipe is

used to control the thickness of the coating. The galvanized steel sheet is then cooled in a

cooling tower.

23. In some cases, the galvanized steel is further processed into galvannealed steel sheet. The

first step in galvannealing is to reduce the thickness of the coating. This can be done

either by “wipe-coat galvannealing”, in which thick pads are used to wipe the sheet as it

emerges from the molten coating bath, or by an air/nitrogen wiping process. The

galvanized sheet then passes through a galvannealing furnace, with the heat from the

furnace causing the iron from the substrate to combine with the zinc coating to produce a

thin zinc-iron alloy. Because of its thinner coating, galvannealed steel sheet is easier to

weld and paint than galvanized steel sheet.

24. In the electro-galvanizing process charged steel passes through a plating bath and

opposite electrical charges cause the zinc solution to coat the steel. Cold-rolled steel coils

are batch annealed in multi-stack furnaces or in off-line continuous annealing process,

4 Corrosion-resistant Steel Sheet (8 March 2019), NQ-2018-004, Statement of Reasons (CITT).



Page 7

often skin passing on a temper mill, before being electro-galvanized with a thin coating of

zinc on a continuous processing line. The electrogalvanizing process costs approximately

$[ ]/MT to $[ ]/MT more than the hot-dipped galvanized process.5

25. Hot-dip galvanizing is the dominant form of COR production in the Subject Countries. In

2019, hot-dip galvanizing represents [ ]% of corrosion-resistant steel production in

Turkey, and [ ]% in both UAE and Vietnam.6

D. Product Use

26. Common applications for COR falling within the product definition include, but are not

limited to, production of farm buildings, grain bins, culverts, garden sheds, roofing

material, siding, floor decks, roof decks, wall studs, drywall corner beads, doors, door

frames, ducting (and other heating and cooling applications), flashing, hardware products

and appliance components.

E. HS Tariff Classification

27. The Subject Goods are imported into Canada under certain Harmonized System (“HS”)

product codes. The specific tariff provisions under which COR may be imported are:

7210.30.00.00 7210.69.00.10 7225.91.00.00

7210.49.00.10 7210.69.00.20 7225.92.00.00

7210.49.00.20 7212.20.00.00 7226.99.00.10

7210.49.00.30 7212.30.00.00

7210.61.00.00 7212.50.00.00

28. In addition, Subject Goods may have been imported under HS Code 7212.50.00.14

during the early parts of the CITT period of inquiry.

5 Confidential Attachment 3: Confidential Statement of Evidence of Paul Osborne at para 11. 6 Confidential Attachment 4: CRU Steel Sheet Market Outlook: Capacity (April 2019).



Page 8

29. The tariff items listed above may also include non-subject goods, and Subject Goods may

also fall under additional tariff classifications.

F. Exporters to Canada

30. Public Attachment 5 lists producers and exporters of COR from the Subject Countries.7

Where available, exporters’ addresses and contact information are included.

G. Importers

31. Confidential Attachment 6 identifies enterprises that the Complainant believes are

importing Subject Goods into Canada.8 Further information that may identify additional

importers is available from import documentation filed with CBSA by importers of

Subject Goods.

H. Domestic Producers and Domestic Industry

32. AMD and Stelco are the two major producers of COR in Canada.

33. AMD is currently operating a total of six galvanizing lines, and one line is idle. Four of

the six lines are located in Hamilton (#3, #4, #5, #6), one line is located in Windsor,

Ontario, and one line is located in Coteau-du-Lac Quebec. #1 Line, located in Hamilton,

was idled in June 2017, but could be restarted. Current market conditions, with the

increased level of unfairly traded imports, have impacted AMD’s decision to temporarily

idle this line. While several lines are primarily devoted to automotive production, any line

is capable of producing COR and, generally, each of the six lines will produce some COR

in a calendar year.

34. Stelco is currently operating two galvanizing lines at its facility in Hamilton, Ontario.

One line is dedicated to COR production. The other produces both COR and automotive-

corrosion-resistant steel.

7 Public Attachment 5: List of potential Exporters. 8 Confidential Attachment 6: List of potential Importers.



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35. Continuous Colour Coated Limited (“CCCL”), formerly known as Material Sciences

Corp. and Metal Koting, operates a continuous electro-galvanizing line in Rexdale

Ontario. Its corrosion-resistant steel output capacity is estimated at approximately 41,000

MT.9 However, CCCL produces and sells pre-painted sheet, for which electro-galvanized

steel is used as the substrate. Further, electro-galvanized steel is often used in automotive

applications. The Complainant is not aware of how much COR, automotive corrosion-

resistant steel, and pre-painted steel CCCL produces and sells from steel produced on its

electro-galvanizing line. In COR 1, the Tribunal concluded “…even if its activities did

constitute domestic production, it would only represent a very small portion of the total

domestic production by AMD and Stelco.”10

36. CCCL’s address is:

Continuous Colour Coated Limited 1430 Martin Grove Road

Rexdale, Ontario

M9W 4Y1

37. No domestic service centre has a hot-dip galvanizing or electro-galvanizing mill or line.

38. AMD submits that service centres and other facilities that slit or cut coiled COR to length

do not form part of the domestic industry. This is consistent with the Tribunal’s decision

with respect to HRS in expiry review RR-2015-002.11 It is also consistent with the

Tribunal’s determination in the recent COR1 case.12

39. Given the fact that the vast majority of COR sales by domestic mills and COR imports

are in coil form, the service centres’ relevant role in this proceeding is as a customer, and

in some cases as an importer of the goods at issue, and not as a producer. In particular,

the COR purchased by service centres from domestic or foreign producers is already

finished COR that falls within the definition of Like or Subject Goods. Further processing

9 Public Attachment 7: International Zinc Association, “North American Zinc, Zinc-Alloy, Aluminum Continuous

Coating Lines”, accessed at . 10 Corrosion-resistant Steel Sheet (8 March 2019), NQ-2018-004, Statement of Reasons (CITT), at para 35. 11 Flat Hot-rolled Carbon and Alloy Steel Sheet and Strip (26 August 2016), RR-2015-002, Statement of Reasons

(CITT), at paras 43-44. See also Cold-rolled Steel (24 July 2018), PI-2018-002, Statement of Reasons (CITT), at

para 45. 12 Corrosion-resistant Steel Sheet (8 March 2019), NQ-2018-004, Statement of Reasons (CITT), at para 36.



Page 10

operations (e.g., cutting or slitting) can add value to the already finished product, but do

not transform COR into another finished product. The domestic or imported coil that the

service centre cuts to length is already Like or Subject Goods, and as such, the service

centre does not transform the COR into Like or Subject Goods.

40. Service centres are, however, significant purchasers of COR and do influence the COR

market. In particular, the availability of low-priced COR imports to service centres has a

direct influence on domestic pricing of COR.

41. There may be other domestic firms that have the ability to batch galvanize finished or

semi-finished steel products (e.g. fabricated steel products, pieces, and parts), but none

have the continuous galvanizing system necessary to make COR in coils. To the extent

that any such firm with batch galvanizing capability can hot-dip galvanize or electro-

galvanize flat-rolled sheet cut from coil (whether cold-rolled or hot-rolled), their

production would be on a custom basis and would be insignificant vis-à-vis steel mills

with continuous hot-dip and electro-galvanizing lines. As such, batch galvanizers are not

part of the domestic industry.

42. SIMA defines “domestic industry” as “[…] the domestic producers as a whole of the like

goods or those domestic producers whose collective production of the like goods

constitutes a major proportion of the total domestic production of the like goods […]”

(emphasis added).13 As such, for the purposes of this complaint, the domestic industry

comprises AMD and Stelco, which represent a “major proportion” of total domestic COR

production.

I. The Complaint is supported by the Domestic Industry

43. This Complaint is supported by the domestic industry. Public Attachment 8 contains a

letter of support from Stelco.14

13 Special Import Measures Act, R.S.C., 1985, c. S-15, s. 2(1) (SIMA). Note: on the issue of standing to bring a

complaint, subsection 31(3) of SIMA defines “domestic industry” as meaning “the domestic producers as a whole of

the like goods”. 14 Public Attachment 8: Letter of support from Stelco Inc., the Complainant Supporter.



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44. Federal Court of Appeal and Tribunal jurisprudence has long held that “major” means

“significant” and does not prescribe a precise mathematical threshold of 50 percent plus

1.15 As set out at Table 1, domestic COR production by AMD and Stelco was [ ]

MT in 2016 and [ ] MT in 2017. In 2018, it declined slightly to [ ] MT.

Over the Dumping POI it was [ ] MT. Even if CCCL was operating at 100%

capacity and all of its production was COR (i.e. no automotive corrosion-resistant steel or

pre-painted steel), its COR production would be [ ]% of AMD and Stelco’s combined

domestic COR production in 2018.

45. Firms that may batch galvanize flat-rolled sheet cut-from-coil would likely produce a

fraction of CCCL’s annual COR production. AMD and Stelco therefore constitute a

“major proportion” of Canada’s domestic like goods production, represent the “domestic

industry” and satisfy the requirements for standing to file a complaint in accordance with

subsection 31(2) of SIMA.

Table 1: AMD and Stelco COR Domestic Production (MT)16

2016 2017 2018 2019 H1 POI

AMD [

Stelco

Combined ]

J. Trade Unions

46. The Complainant’s employees involved in the production of COR are not represented by

a trade union.

15 Galvanized Steel Wire (8 April 2013), PI-2012-005, Statement of Reasons (CITT), at para 37; Japan Electrical

Manufacturers Assn. v. Canada (Anti-dumping Tribunal), [1986] FCJ 652, 32 DLR (4th) 222 at para 7; China –

Anti-dumping and countervailing duties on certain automobiles (US), (23 May 2014), WTO Doc WT/DS440/R,

Panel Report, at para 7.207. 16 Confidential Attachment 9: AMD Financials, Employment and Capacity; Confidential Attachment 10: Stelco

Financials and Capacity.



Page 12

47. Stelco’s employees involved in the production of COR are represented by the United

Steel Workers. The contact information for their representative is:

K. Marketing and Distribution

Domestic Mills:

48. Domestic producers sell COR directly to end-users and to steel service centres. Steel

service centres may further process the steel and supply smaller end-users and

contractors. The domestic industry markets its COR to customers across Canada.

Imported COR

49. COR is imported either by traders for resale to end-users and steel service centres, or

directly by end-users, and steel service centres. COR is generally not imported by

domestic producers. Steel trading companies either receive inquiries from domestic users

or solicit orders. Customers for imported COR are essentially the same as for

domestically produced Like Goods. Subject and Like Goods are distributed through the

same channels. The same conditions of competition apply to this fungible product

whether produced in the Subject Countries or by the domestic Canadian industry, or from

any other import source. Like HRS and CRS, COR is a commodity product that competes

with like goods largely on the basis of price.17

50. The Complainant has not imported COR from the Subject Countries.

17 Flat Hot-rolled Carbon and Alloy Steel Sheet and Strip (15 August 2011) RR-2010-001, Statement of Reasons

(CITT), at paras 89-90, citing Flat Hot-rolled Carbon and Alloy Steel Sheet and Strip (18 August 2006), RR-2005-

002, Statement of Reasons (CITT), at para 50.

Mark Rowlinson, Assistant to the National Director

234 Eglinton Avenue East, 8th Floor Toronto, Ontario Canada M4P1K7 Telephone: 416-487-1571



Page 13

51. The HS Codes for Subject Goods and Like Goods may also apply to non-Subject and

non-Like Goods, in particular, corrosion-resistant steel for automotive end uses. While

Customs Tariff item 9959.00.00 provides an HS Code for corrosion-resistant steel (and

other goods) for automotive end-uses, it is the Complainant’s belief and understanding

that some importers use the chapter 72 HS Codes when importing corrosion-resistant

steel for automotive end-uses.

52. The Statement of Evidence of Paul Osborne explains the methodology used by the

Complainant to analyze Statistics Canada import data and isolate Subject Good and Like

Good import volumes and values by removing corrosion-resistant steel for automotive

end uses.18 The Statement also explains the methodology used to isolate domestic

producers’ sales of Like Goods. Table 2 sets out the estimated volume of COR imports

from 2016 through H1 2019.19 Table 3 sets out the estimated volume of COR imports

from 2018 Q1 to 2019 Q2.

Table 2: Estimated COR Imports (MT) 2016-2019 and % of Imports20

2016 2017 2018 2019

(H1) 2016 2017 2018 2019

(H1)

Subject

Countries 6,233 28,798 90,302 161,905 2% 7% 20% 76%

Turkey 2,536 11,580 77,293 46,328 1% 3% 17% 22%

United Arab

Emirates 251 11,530 10,188 16,319 0% 3% 2% 8%

Vietnam 3,447 5,688 2,822 99,258 1% 1% 1% 47%

COR 1

Countries 217,201 274,837 290,221 8,289 66% 69% 63% 4%

Other

Countries 103,476 93,800 77,575 42,690 32% 24% 17% 20%

United States 75,521 71,393 63,195 32,847 23% 18% 14% 15%

18 Confidential Attachment 3: Confidential Statement of Evidence of Paul Osborne at paras 16-18. 19 Confidential Attachment 11: Import and Market Tables. 20 Confidential Attachment 11: Import and Market Tables.



Page 14

2016 2017 2018 2019

(H1) 2016 2017 2018 2019

(H1)

Other 27,954 22,406 14,381 9,843 9% 6% 3% 5%

Total Imports 326,910 397,434 458,099 212,885 100% 100% 100% 100%

Table 3: Estimated COR Imports (MT): Dumping POI21

2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2

Dumping

POI

%

Imports

(Dumping

POI)

Subject

Countries 4,789 4,447 14,705 66,360 76,390 69,885 227,341 48%

Turkey 0 3,160 10,993 63,140 25,700 20,081 119,914 25%

United

Arab

Emirates 2,381 1,059 3,588 3,160 8,542 6,953 22,243 5%

Vietnam 2,408 228 125 60 42,148 42,851 85,184 18%

COR 1

Countries 58,310 68,632 142,797 20,482 4,500 2,897 170,677 36%

Other

Countries 18,582 19,792 22,484 16,717 20,549 17,653 77,404 16%

United

States 17,092 19,547 12,977 13,579 15,521 13,307 55,384 12%

Other

Offshore 1,490 245 9,508 3,138 5,029 4,346 22,020 5%

Total 81,681 92,871 179,987 103,560 101,439 90,435 475,421 100%

53. The above tables show that for the period of inquiry, the volume of COR imports from

each of the Subject Countries exceeded the negligibility threshold of 3%.22

21 Confidential Attachment 11: Import and Market Tables. 22 SIMA, s. 35.



Page 15

Import Discount Requirement

54. COR offshore imports are only attractive to domestic COR purchasers if the price is

lower than the price offered by Canadian or US mills. The reason for this is that offshore

purchases carry additional risks, such as longer lead times, greater exposure to price

volatility on account of longer lead times, and the need to inventory a single large

shipment. In contrast, Canadian and US mills have shorter lead times and can deliver an

order over several months. The magnitude of the discount sits within a range that varies

according circumstances internal and external to the customer, such as price volatility,

inventory requirements, and other market conditions.23 In unusual market circumstances,

such as when there is great uncertainty about global price fluctuations, when inventories

desperately need to be replenished, or when pricing is clearly trending in one direction,

the required discount may fall outside the range.

L. Domestic Market

55. Below are annual and quarterly COR market tables. The import data is the same as that

reported at Table 2 and Table 3 above. The domestic data is sourced from AMD and

Stelco’s sales.24 The domestic volumes are exclusively for COR Like Goods (i.e.

domestically produced goods that otherwise meet the COR product definition).

23 Confidential Attachment 3: Confidential Statement of Evidence of Paul Osborne at para 29. 24 Confidential Attachment 3: Confidential Statement of Evidence of Paul Osborne at para 9; Confidential

Attachment 11: Import and Market Tables.



Page 16

Table 4: Domestic Market: COR (MT) and % of Market (Annual) 25

2016 2017 2018 2019 H1 2016 2017 2018 2019

(H1)

Subject

Countries 6,233 28,798 90,302 161,905 [

Turkey 2,536 11,580 77,293 46,328

United

Arab

Emirates

251 11,530 10,188 16,319

Vietnam 3,447 5,688 2,822 99,258

COR 1

Countries 217,201 274,837 290,221 8,289

Other

Countries 103,476 93,800 77,575 42,690

United

States 75,521 71,393 63,195 32,847

Other

Offshore 27,954 22,406 14,381 9,843

Total

Imports 326,910 397,434 458,099 212,885

Domestic

Sales

Total

Market ] 100% 100% 100% 100%

25 Confidential Attachment 11: Import and Market Tables; Confidential Attachment 9: AMD Financials,

Employment and Capacity; Confidential Attachment 10: Stelco Financials and Capacity.



Page 17

Table 5: Domestic Market: COR (MT) and % of Market (Quarterly) 26

2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 Dumping

POI

Dumping

POI (%)

Subject

Countries 4,789 4,447 14,705 66,360 76,390 69,885 227,341 [

Turkey 0 3,160 10,993 63,140 25,700 20,081 119,914

United

Arab

Emirates

2,381 1,059 3,588 3,160 8,542 6,953 22,243

Vietnam 2,408 228 125 60 42,148 42,851 85,184

COR 1

Countries 58,310 68,632 142,797 20,482 4,500 2,897 170,677

Other

Countries 18,582 19,792 22,484 16,717 20,549 17,653 77,404

United

States 17,092 19,547 12,977 13,579 15,521 13,307 55,384

Other

Offshore 1,490 245 9,508 3,138 5,029 4,346 22,020

Total

Imports 81,681 92,871 179,987 103,560 101,439 90,435 475,421

Domestic

Sales

Total

Market ]

26 Confidential Attachment 11: Import and Market Tables; Confidential Attachment 9: AMD Financials,

Employment and Capacity; Confidential Attachment 10: Stelco Financials and Capacity.



Page 18

M. Like Goods and Single Class of Goods

Like Goods

56. Subsection 2(1) of SIMA defines “like goods” in relation to any other goods as “... (a)

goods that are identical in all respects to the other goods, or (b) in the absence of any

[such] goods ..., goods the uses and other characteristics of which closely resemble those

of the other goods.” In considering the issue of like goods, the Tribunal typically looks at

a number of factors, including the physical characteristics of the goods, their method of

manufacture, their market characteristics and whether the domestic goods fulfill the same

customer needs as the Subject Goods.

57. In a previous finding concerning COR, the Tribunal concluded that domestically

produced corrosion-resistant steel sheet constituted like goods to the Subject Goods.27

58. Therefore, the “Like Goods” are COR, as described in the product definition, and do not

include those goods excluded from the product definition. In Unitized Wall Modules, the

Tribunal held that “like goods” must be coextensive with the “product under

consideration”, that is, the subject goods as defined in the product definition.28 In that

case, it excluded other types of building envelope systems on the basis that they were

excluded from the product definition. This legal determination was followed by the

Tribunal in Fabricated Industrial Steel Components.29 It follows that in this case, Like

Goods do not include corrosion-resistant steel for automotive end-uses.

Single Class of Goods

59. In addressing the issue of classes of goods, the Tribunal “typically examines whether

goods potentially comprising separate classes of goods constitute “like goods” in relation

to each other, in which case they will be regarded as comprising a single class of

27 Corrosion-resistant Steel Sheet, (8 March 2019), NQ-2018-004, Statement of Reasons (CITT), at paras 24-25. 28 Unitized Wall Modules (27 November 2013), NQ-2013-002, Statement of Reasons (CITT), at para 34. 29 Certain Fabricated Industrial Steel Components (9 June 2017), NQ-2016-004, Statement of Reasons (CITT) at

para 45.



Page 19

goods”.30 In other words, the Tribunal uses the same factors as those discussed above.

The Tribunal has previously determined that non-automotive COR constitutes a single

class of goods.31 In this case, Like and Subject Goods, including COR in coils and cut-to-

length sheets, are commodity products that compete with one another in the Canadian

marketplace, and are fully interchangeable. Therefore, there is a single class of goods.

N. Period of Investigation and Inquiry

60. The Complainant submits that the appropriate period of investigation for a dumping and

subsidy investigation is July 1, 2018 through June 30, 2019 (the “Dumping POI”). As

demonstrated in Table 3 above, the volume of imports from Turkey, Vietnam and the

UAE exceed the applicable 3% negligibility threshold over this period.

61. The Complainant submits that the appropriate period for the Tribunal’s Preliminary

Injury Inquiry is January 1, 2016 through June 30 2019 for past injury (“Injury POI”)

and the next 18 to 24 months for threat of injury.

Evidence of Dumping

The Complainant has calculated normal values and dumping margins in accordance with

section 15 of SIMA for Turkey, Vietnam and the UAE. However, for the reasons described

in this Complaint, the Complainant submits that normal values for Turkey should be

calculated in accordance with section 16 (2) of SIMA, based on a constructed cost

methodology that addresses the particular market situation that exists in Turkey. Further,

the Complainant submits that dumping margins for Vietnam should be calculated using

section 20 of SIMA.

30 Hot-Rolled Steel Plate (4 June 2014), NQ-2013-005, Statement of Reasons (CITT), at para 41; Corrosion-

resistant Steel Sheet (8 March 2019), NQ-2018-004, Statement of Reasons (CITT), at para 23. 31 Corrosion-resistant Steel Sheet (18 July 2001), NQ-2000-008, Statement of Reasons (CITT), at para 10.



Page 20

A. Export Prices

The Complainant calculated the ex-works export price based on customs data available

from Statistics Canada. The data used was specific to the HS codes listed above in this

Complaint. The Complainant has adjusted Statistics Canada import volumes and values to

exclude steel for automotive end-uses.32

In a limited number of cases, COR imports will arrive in Canada and be sold off the dock.

In most cases, however, an order for offshore COR is placed, the goods are produced and

then the goods are shipped to Canada.33 Consequently, there is typically a lag of three to

five months between when a purchase is made at a set price and when that purchase arrives

in Canada and is accounted for in customs data.34 As a result, the value of goods imported

likely reflect costs and pricing from three or more months prior to the arrival of the goods.

To properly account for this discrepancy, dumping margins calculated based on export

prices derived from import statistics have been calculated by comparing the export price

(i.e., import value) for a particular quarter with the normal value for the previous quarter.

B. Section 15

Section 15 of SIMA provides for the calculation of dumping margins based on home

market pricing in the country of export.

The Complainant was unable to locate exporter specific home market pricing.

Consequently, the Complainant has not calculated estimated section 15 dumping margins.

The only home market pricing available to the Complainant is published third-party

pricing. 35 The third-party data is a general average for corrosion-resistant steel pricing and

may only include base prices. Alternatively, it may include a variety of non-Subject Goods,

such as tool steel, as well as COR for automotive applications. Further, the average value

is not appropriate because it does not compare relatively similar sales volumes.

32 Public Attachment 3: Public Statement of Evidence of Paul Osborne at paras 14-18. 33 Public Attachment 3: Public Statement of Evidence of Paul Osborne at para 32. 34 Public Attachment 3: Public Statement of Evidence of Paul Osborne at para 32. 35 Confidential Attachment 12: Metal Bulletin, Hot Roll Pricing Excerpt, (June 2019); Confidential Attachment 13:

CRU Steel Sheet Quarterly Market Outlook (July 2019) at Table S.39.



Page 21

Consequently, normal values and dumping margins should not be calculated based on this

data.

C. Section 16(2)(c): A Particular Market Situation Exists in Turkey

67. The Complainant submits that normal value for Turkish COR should be calculated under

Section 16(2)(c) of SIMA, the particular market situation provision. More specifically, the

Complainant submits that there exists a particular market situation in Turkey, such that

neither domestic sales of COR in Turkey, nor Turkish exporter costs permit a proper

comparison with the sale to the importer in Canada.

68. There is a high degree of turmoil in the Turkish COR market which makes domestic sale

prices an unreliable comparator for the purposes of calculating normal values. There is

unprecedented government involvement in the Turkish COR market in the form of

regulations and government support programs affecting domestic selling prices. Further,

recent government intervention in Turkey’s monetary policy, and an unorthodox fiscal and

monetary response to the lira’s depreciation, have created a particular market situation in

Turkey which has distorted domestic selling prices. Lastly, the continued application of US

section 232 tariffs on Turkish steel has depressed the domestic price of COR, exacerbating

existing home market distortions.

69. These developments and the corresponding section 16(2)(c) analysis are contained at

Appendix 1.

D. Section 19

Section 19 provides for the calculation of dumping margins based on constructed costs. In

accordance with paragraph 19(b) of SIMA, normal values may be calculated as the

aggregate of the cost of manufacturing, a reasonable amount for administrative, selling and

other costs, and a reasonable amount for profit.

For each Subject Country, the Complainant calculated a dumping margin for the POI by

calculating a quarterly normal value and export value and then comparing the aggregate of



Page 22

the quarterly normal values and export price values over the POI. Quarterly export price

values were calculated by multiplying the average unit import price for the quarter by the

import volume. In order to adjust for the use of Statistics Canada import prices for export

prices, and the consequence that import prices likely reflect sales made in the previous

quarter, the quarterly normal values were calculated by multiplying the volume of imports

in a quarter by the calculated unit normal value for the previous quarter. The calculated

normal value is the aggregate of the following unit costs:

1) Substrate – the cold-rolled coil price in the Subject Country as published by a third-party publication;

2) Other Materials – the Complainant’s “other material costs” for the conversion of cold-rolled coil into COR. It is assumed that these other material costs are the same

regardless of a producer’s location;36

3) Labour – the Complainant’s labour cost to convert cold-rolled coil into COR, adjusted based on third-party data.37

4) Overhead—The Complainant’s overhead costs to convert cold-rolled coil into COR. The complainant is a highly efficient producer and it is assumed that its

overhead costs are likely the minimum overhead costs for any other producer,

regardless of location;38

5) SG&A, Financial Expenses, and Profit – The Complainant calculated these expenses based on the ratio of these expenses relative to cost of goods manufactured

in the Subject Country. Subject Country ratios were calculated based on annual

reports available from a producer operating in the Subject Country.

Turkey

As discussed above, it is the Complainant’s position that a particular market situation exists

in Turkey.

36 See: Conversion Costs at Confidential Attachment 14: Turkey Dumping Calculation; 37 See: Conversion Costs at Confidential Attachment 14: Turkey Dumping Calculation; Public Attachment 15:

Kathy Chu and Bob Davis, “As China’s Workforce Dwindles, the World Scrambles for Alternatives”, Wall Street

Journal (23 November 2015). 38 See: Conversion Costs at Confidential Attachment 14: Turkey Dumping Calculation.



Page 23

The CBSA’s SIMA Handbook provides that where a particular market situation exists,

normal values will be calculated pursuant to section 19, where possible, or section 29.39

Section 5.4.2.1 provides that the preferred source of cost of production data are the records

kept by the exporter or producer, but that to use such data the records “have to reasonably

reflect the costs associated with the production and sale of the product under

consideration”.40 Section 11.2(2) of the Special Import Measures Regulation provides that

a particular market situation may exist where the cost of an input does not reasonably

reflect the actual cost of the input. For the reasons stated in Appendix 1, the Complainant

submits that as a result of the particular market situation in Turkey, Turkish producers’ and

exporters’ cost of production data do not reasonably reflect the cost of production and

therefore should not be used.

The Complainant has calculated section 19 normal values using the Metal Bulletin’s

Turkish cold-rolled price for substrate. However, the Complainant maintains that this

should not be used in light of the particular market situation in Turkey and the effects this

situation has on the costs of inputs, including energy and substrate. The Complainant has

also calculated an estimated normal value using Metal Bulletin’s Southern Europe cold-

rolled price for substrate. The Complainant submits that this substrate price should be used

to calculate normal values pursuant to SIMA sections 16(2)(c) and 19 and SIMR sections

11(1)(a) and 11.2(2)(e). It submits further that the Southern Europe price need not be

adjusted. The Southern Europe prices are reflective of normal market forces, and the

difference in price between the Turkish price for substrate and the Southern Europe price

is reflective of differences cause by the particular market situation. Put another way, if

CBSA adjusts the Turkish substrate price in accordance with paragraph 11.2(2)(e) of the

SIMR, the adjustment should be equal to the difference in price between the price in the

Turkish market and the Southern European price.

39 Canada, Canada Border Services Agency, Special Import Measures Act Handbook, updated September 17, 2019,

2019, at 5.2.2.9 (SIMA Handbook). 40 SIMA Handbook, updated September 17, 2019 at 5.4.2.1.



Page 24

Both substrate prices have been converted into Canadian dollars pursuant to the average

Bank of Canada exchange rate over the respective quarters. The Complainant was unable

to locate information on Turkey’s productivity adjusted manufacturing wage. As such, it

used the productivity adjusted wage for Poland as a proxy. A Wall Street Journal article

reports that Poland’s average productivity adjusted manufacturing wage cost is

US$17.17/hour, whereas Canada’s is $29.58.41 Therefore, AMD’s labour rate was adjusted

downwards by 42%. SG&A, Financial Expenses and Net Income were calculated as a ratio

of cost of goods manufactured based on the ratio between these expenses and cost of goods

sold for ArcelorMittal Belgium.42 SG&A was calculated as [ ]% of cost of goods, Financial

Expenses as [ ]% and Net Income as [ ]%.

UAE

The Substrate cost used for the UAE section 19 normal value estimate is Metal Bulletin’s

reported “UAE import cold rolled coil cfr Jebel Ali”, converted from US dollars into

Canadian dollars pursuant to the average Bank of Canada exchange rate over the quarter.

This was used as no domestic UAE pricing was located by the Complainant. The

Complainant was unable to locate a productivity adjusted wage rate for the UAE and

submits that using straight wage-to-wage comparisons that do not account for productivity

would be inappropriate. The Complainant has used Poland’s productivity adjusted wage

rate as a proxy, resulting in the Complainant’s labour rate being adjusted downwards by

42%.43

The Complainant’s commercial intelligence from domestic customers is that much of the

COR exported from the UAE to Canada is light gauge COR. Light gauge coils are more

expensive to produce and are higher priced than more standard coils. Because of the thinner

gauge, each MT of light gauge coil covers a larger area. This means there is additional

processing per MT. Further, the cost to coat light gauge material is more expensive. As

41 Public Attachment 15: Kathy Chu and Bob Davis “As China’s Workforce Dwindles, the World Scrambles for

Alternatives”, Wall Streel Journal (23 November 2015). 42 Confidential Attachment 16: ArcelorMittal Belgium 2018 Results on Corrosion-Resistant Steel. 43 Public Attachment 15: Kathy Chu and Bob Davis “As China’s Workforce Dwindles, the World Scrambles for

Alternatives”, Wall Streel Journal (23 November 2015)



Page 25

coatings are a uniform thickness, coating a light gauge coil, with a larger total area, requires

more material and process than a heavier gauge coil on a per MT basis. For example,

AMD’s gauge extra for light gauge coil is $254/MT for 0.012” and $276/MT for 0.009”.44

The G40 coating extras for light gauge range from $306/MT for 0.012” to $356/MT for

0.009”.

The section 19 normal value is based on AMD’s production cost, which includes a broader

mix of COR gauges. In order to account for the UAE imports being largely comprised of

higher priced light gauge, the Complainant has added $276/MT to the estimated cost of

manufacturing. This is 50% of AMD’s gauge and thickness extra for 0.012” material. The

Complainant submits that this adjustment is conservative and reasonable as 0.012” is at the

lower end of the price spectrum for light gauge material and the extras are discounted by

half.

The Complainant was unable to find any public financial statement for a flat-rolled steel

producer in the UAE. It was also unable to find any public financial information for a flat-

rolled steel producer in a neighbouring country that was reasonable and reliable. Turkey is

a reasonable proxy for the UAE given its geographic proximity. Because of the particular

market situation in Turkey, SG&A, Financial Expenses and Net Income were calculated as

a ratio of cost of goods manufactured based on the ratio between these expenses and cost

of goods sold for ArcelorMittal Belgium.45 SG&A was calculated as [ ]% of cost of goods,

Financial Expenses as [ ]% and Net Income as [ ]%.

Vietnam

The Substrate cost used for the Vietnam section 19 normal value estimate is the CRU

“Asia” price for cold-rolled coil, converted into Canadian dollars pursuant to the average

Bank of Canada exchange rate. The Complainant’s labour rate was adjusted downwards

by 80%. The Complainant was unable to locate information on Vietnam’s productivity

adjusted manufacturing wage. As such, it used the productivity adjusted wage for Thailand

44 Public Attachment 3: Public Statement of Evidence of Paul Osborne at para 41; Public Attachment 2 to the Public

Statement of Paul Osborne. 45 Confidential Attachment 16: ArcelorMittal Belgium 2018 Results on Corrosion-Resistant Steel..



Page 26

as a proxy. This is based on a Wall Street Journal article that reported that Vietnam’s

average productivity adjusted manufacturing wage cost is US$5.99/hour, whereas

Canada’s is US$29.58.46 SG&A, Financial Expenses and Net Income were calculated as a

ratio of cost of goods manufactured based on Hoa Sen Group’s Financial Statement,

ending September 30, 2018.47 SG&A was calculated as 2% of cost of goods, Financial

Expenses as 3% and Net Income as 8%.

For the reasons set out in the next section, the Complainant submits that Vietnam’s normal

value should be calculated using section 20 of SIMA, rather than section 19.

Summary of Dumping Margins

Table 6 is a summary of the Subject Country section 19 dumping margins calculated by the

Complainant.

Table 6: Section 19 Dumping Margin Estimates48

Country Dumping Margin

Estimate

Turkey (s. 19: Turkish Substrate) [ ]%

Turkey (s. 29: Northern European Substrate) [ ]%

UAE [ ]%

Vietnam [ ]%

E. Section 20: Vietnam is a Non-Market Economy

The Complainant submits that the President of the CBSA should apply section 20 of SIMA

to the determination of normal values for Vietnam. In particular, it is noted that the CBSA

46 Public Attachment 15: Kathy Chu and Bob Davis “As China’s Workforce Dwindles, the World Scrambles for

Alternatives”, Wall Streel Journal (23 November 2015) 47 Public Attachment 17: Hoa Sen Group, Income Statement, Morningstar.Com (accessed 30 April 2019). 48 Confidential Attachment 14: Turkey Dumping Calculation; Confidential Attachment 18: UAE Dumping and

Subsidy Calculations; Confidential Attachment 19: Vietnam Dumping Calculation



Page 27

recently determined that section 20 conditions exist in Vietnam with respect to cold-rolled

steel, a substrate used to produce COR.49 Substrate is a significant cost of production of

COR, ranging from [ ]% to [ ]%, and the non-market conditions that exist with respect

to cold-rolled steel have a determinative effect on the price of COR.50

Evidence and information required to initiate a section 20 inquiry

The CBSA relies upon a two-step test when determining whether to proceed with an inquiry

under section 20 of SIMA:

When evaluating information which suggests that section 20 conditions may

exist in a particular sector in new investigations and in re-investigations, the

CBSA will rely on a two-part threshold test to determine whether to proceed

with a section 20 inquiry. The first part of the test requires that the evidence

presented in support of an allegation be relevant and reasonably reliable. The

second part asks whether this evidence, if later found to be accurate, would

be capable of reasonably supporting a positive determination as to the

applicability of section 20.51

The evidence on the record prior to the initiation of the investigation is not required to

conclusively demonstrate that the section 20 conditions exist, but rather the evidence need

only suggest that the section 20 conditions may exist, subject to CBSA’s two-part analysis

described above. Indeed, the very purpose of the section 20 inquiry is to determine — after

the fact-finding investigation — whether the section 20 conditions, in fact, exist.

The CBSA’s SIMA Handbook also underscores that the threshold for an initiation does not

require dispositive proof that non-market economy conditions exist. Rather, a complainant

is expected to provide reasonably reliable facts to support its allegation and CBSA staff

may initiate a section 20 inquiry if the facts and evidence before them are capable of

reasonably supporting the initiation:

4.4.4.1 General

References to a “Section 20 inquiry”

49 Cold-rolled Steel (15 November 2018), CRS 2018 IN, Final Determinations - Statement of Reasons (CBSA), at

para 161. 50 See Conversion Costs at Confidential Attachment 14: Turkey Dumping Calculation. 51 Unitized Wall Modules (19 March 2013), AD/1399, CVD/135, Initiation of Investigations, Statement of Reasons

(CBSA), at para 68.



Page 28

…A section 20 inquiry is characterized by official notification to the

government of the country of export, exporters and domestic producers that

the President has reason to believe that the conditions of section 20 might

exist in the sector under investigation. …

… 4.4.4.3 General Policy and Procedures

Initiation of New Anti-dumping Investigations

If a written dumping complaint is received in which the complainant has

based the estimation of normal values on surrogate values because it is

alleged that the goods are exported to Canada from a country in which the

conditions of subsection 20(1) apply, the complainant is expected to

outline the facts on which this allegation is made and provide such

information that is available to support these facts.

… 4.4.4.4. Sufficiency of Evidence for Purposes of Initiating a Section 20

Inquiry

When evaluating information which suggests that subsection 20(1)

conditions may exist in a particular sector, staff is to rely on the following

test to determine whether to initiate an inquiry:

(1) Is the evidence presented, either by the complainant or the CBSA, in

support of an allegation regarding the applicability of section 20 relevant and

reasonably reliable?

(2) If so, would this evidence, if properly verified, be capable of reasonably

supporting a positive determination as to the applicability of section 20?

The first part of the test addresses the admissibility of the evidence

presented. Unless the evidence can be considered relevant and reasonably

reliable, it is to be disregarded when addressing the second part of the test.

Evidence is considered to be relevant where it has some tendency, as a

matter of logic and personal experience, to make the proposition for which it

is advanced more likely than that proposition would appear to be in the

absence of that evidence. In other words, evidence is considered to be

relevant if it tends to prove the subject at issue. As for the reliability criteria,

it serves to eliminate information that may have been obtained through

fraudulent, inaccurate, biased or uninformed sources.

The second part of the test addresses the strength or weight of the evidence

by simply asking whether this evidence is reasonably capable of supporting

the inferences necessary for making a positive determination. This helps to

avoid situations where the President may not be in possession of sufficient

information to form an opinion regarding the applicability of section 20. If

the response to the second part of the test is affirmative, then a section 20

inquiry should be initiated.

(Emphasis added)

As noted in the SIMA Handbook, the test at this stage is not whether the evidence

unequivocally demonstrates that the section 20 conditions exists, but rather whether the

evidence is reasonably capable of supporting the inferences necessary for making a positive

determination.



Page 29

There is nothing in SIMA itself which defines or describes a “section 20 inquiry”. Rather,

section 20 provides a methodology available to the CBSA when certain circumstances are

met. In this regard, and on the issue of the evidence necessary to initiate a section 20

inquiry, it is instructive to consider the information necessary for the CBSA to initiate an

anti-dumping investigation. Subsection 31(1) of SIMA provides that the President shall

initiate an anti-dumping investigation if the President “is of the opinion that there is

evidence (a) that the goods have been dumped…” and (b) that “discloses a reasonable

indication” that the dumping has caused injury or is threatening to cause injury. In other

words, the legal test to initiate an anti-dumping investigation is whether the President is of

the opinion that there is evidence that the goods have been dumped and whether the

evidence discloses a reasonable indication that the dumping has caused injury. The

President need not be satisfied that there has been dumping, but only that there is evidence

that the goods have been dumped. The purpose of the investigation itself is to determine

whether there has, in fact, been dumping. The Complainant submits that a similar approach

is appropriate in order to determine whether to commence a section 20 inquiry.

The Section 20 conditions

As noted above, the conditions for the application of the section 20 methodology are that:

…domestic prices are substantially determined by the government of that

country and there is sufficient reason to believe that they are not

substantially the same as they would be if they were determined in a competitive market…52 (Emphasis added)

The Federal Court of Appeal provided guidance on the scope of subsection 20(1), stating:

[9] In our view, the use of the expression “substantially determined”

necessarily implies something less than completely determined and as such,

Parliament did not intend the provision to be restricted to situations where a

foreign government directly sets the prices. Indeed, the phrase captures the

various ways in which governments can exert a determinative influence on

pricing, whether directly or indirectly.53 (Emphasis added)

52 SIMA, s. 20. 53 Tianjin Pipe (Group) Corporation v. Tenaris Algoma Tubes Inc., 2009 FCA 164 at para 9, [2009] FCJ 626.



Page 30

Indeed, in every investigation in which the President has found that the conditions of

section 20 apply, it has been the totality of government influence which has resulted in

those findings, as opposed to a direct form of price-setting.

There is sufficient evidence to form an opinion pursuant to section 20 of SIMA that the

Government of Vietnam (the “GOV”) substantially determines Vietnam’s domestic price

for COR, and that the domestic prices are not substantially the same as they would be in a

competitive market. Evidence and analysis regarding the existence of Section 20

conditions within the Vietnamese COR industry are discussed in Appendix 2. Some key

issues in this regard that are discussed in Appendix 2 include:

1) The GOV sets steel production and export targets through its Steel Master Plan;

2) The GOV controls the steel industry by taking action against producers who raise

prices;

3) There is significant state ownership in cold-rolled steel production and state-

ownership in COR production. VN Steel, a large Vietnamese steel producer whose

market share represents almost one-third of the Vietnamese cold-rolled market, is

a state-owned enterprise and has 5 executive positions that are appointed by the

GOV. VN Steel also owns, or is a joint-venture partner in, COR producers with a

10% share of the Vietnamese market;

4) The construction of steel projects and investments are controlled by the GOV to

influence demand and price of steel; and

5) The GOV indirectly controls COR prices by subsidizing COR producers and

exporters.

Proposed Surrogate Country and Section 20 Methodology

The President has a significant body of evidence that the GOV and local governments

substantially determine Vietnam

public complaint · 2019. 12. 2. · b. relevant provisions of sima ... 109 turkey’s excess...

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