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Anti-dumping and Countervailing Program
OTTAWA, May 2, 2002
4264-60
AD/1278
STATEMENT OF REASONS
Concerning a preliminary determination of dumping pursuant to subsection 38(1) of the Special Import Measures Act regarding
THE DUMPING OF AUTOMOTIVE LAMINATED WINDSHIELDS FOR THE AUTOMOTIVE REPLACEMENT MARKET OF ALL SIZES AND SHAPES EXPORTED FROM OR ORIGINATING FROM THE PEOPLE'S REPUBLIC OF CHINA
DECISION
Pursuant to subsection 38(1) of the Special Import Measures Act (SIMA), the Commissioner of Customs and Revenue has today made a preliminary determination of dumping regarding automotive laminated windshields for the automotive replacement market of all sizes and shapes, exported from or originating from the People's Republic of China.
Cet énoncé des motifs est également disponible en français.
CONTENTS
- Product definition
- Product description and manufacturing process
- Excluded products
- Use of the product
PROVISIONAL DUTIES TO BE IMPOSED
STATEMENT OF REASONS
On December 18, 2001, the Commissioner of Customs and Revenue (Commissioner) initiated an investigation respecting the alleged injurious dumping of replacement windshields exported from or originating from the People's Republic of China. The investigation was initiated in response to a complaint filed by PPG Canada Inc. (PPG) of Toronto, Ontario.
On receiving notice of the investigation, the Canadian International Trade Tribunal (Tribunal) started its preliminary injury inquiry. On February 15, 2002, the Tribunal made a preliminary determination that the evidence disclosed a reasonable indication that the alleged dumping of the subject goods has caused injury to the domestic industry.
On March 11, 2002, pursuant to paragraph 39(1)(a) of the Special Import Measures Act (SIMA), the Commissioner extended to 135 days the time period for rendering a preliminary determination or for terminating the investigation in whole or in part, due the complexity or novelty of the issues presented by the investigation.
As a result of the Canada Customs and Revenue Agency's (CCRA) preliminary investigation, the Commissioner is satisfied that the subject goods have been dumped, that the margins of dumping are not insignificant and that the volume of dumped goods is not negligible. Accordingly, the Commissioner has made a preliminary determination of dumping in accordance with subsection 38(1) of SIMA.
Complainant and the Canadian industry
The complainant, PPG Canada Inc., is located in Toronto, Ontario. Another Canadian producer of replacement windshields, Lamiver Inc., of Montreal, Quebec, supports the complaint. These two manufacturers account for the entire Canadian production of the subject goods. Their names and addresses are provided in Appendix 1.
During the preliminary stage of the investigation, the CCRA identified 16 exporters and 1 vendor of the subject goods.
The importer in Canada is liable for the payment of the SIMA duty. Subsection 2(1) of SIMA states that the "importer, in relation to any goods, means the person who is in reality the importer of the goods." The importer of record may or may not be the importer in reality under SIMA. The following factors are considered when making a decision as to who is the importer:
- (a) the substance rather than the form of the transaction;
- (b) the initiation of the purchase order and the acceptance of the order; and
- (c) to whom are the goods sent.
During the preliminary stage of the investigation the CCRA identified 35 importers of the subject goods in the period of investigation (December 1, 2000 - November 30, 2001).
On September 20, 2001, PPG filed a formal complaint with the CCRA, alleging that the dumped imports of automotive laminated windshields for the automotive replacement market of all sizes and shapes exported from or originating from the People's Republic of China were causing injury to domestic producers.
On November 27, 2001, the CCRA notified PPG that its complaint file was complete and notified the government of the People's Republic of China that a complaint had been received regarding the alleged dumping of goods. On December 18, 2001, the Commissioner initiated a dumping investigation and notified the Tribunal of that decision. The Tribunal subsequently initiated a preliminary injury inquiry into whether the evidence discloses a reasonable indication of injury, retardation or threat of injury caused by the dumping of the goods. On February 15, 2002, the Tribunal made a preliminary determination that the evidence disclosed a reasonable indication that the alleged dumping of the subject goods had caused injury.
On March 11, 2002, pursuant to paragraph 39(1)(a) of the SIMA, the Commissioner extended to 135 days the time period for rendering a preliminary determination. The extension was required in order to review in detail the information provided by the government of China and exporters of the subject goods to determine whether the replacement windshield industry is operating under market economy conditions. The multitude of replacement windshield categories (hundreds of models) manufactured by the 16 identified producers also presents a difficult obstacle.
For the purpose of this investigation, the subject goods are defined as follows:
Automotive laminated windshields for the automotive replacement market of all sizes and shapes, exported from or originating from the People's Republic of China, whether they are clear or tinted, whether coated or not, whether or not they include among other things, antennae, ceramics, mirror buttons, VIN notches, and whether or not they are encapsulated.
Product description and manufacturing process
There are two markets for automotive laminated windshields: the original equipment manufacturer (OEM) market and the replacement windshield market. These latter windshields are commonly referred to in the industry as "auto replacement glass windshields (ARG)." In French, these goods are referred to by the term "pare-brise d'automobile en verre feuilleté pour l'après fabrication ou le marché de remplacement."
The manufacturing process for replacement windshields begins by the cutting out of two flat pieces of glass, which will eventually become the inside and outside of the laminated windshield. The glass is then washed to remove all the debris that may have adhered to it and is prepared for curving using a mould that is heated in a furnace called a calcar. Each mould is designed to take on the specific curvature of a particular model of windshield. It takes only a few minutes for the glass, heated to 1,000 degrees Fahrenheit, to take the shape of the mould.
After a compliance inspection (curve of the glass according to the mould used) when the glass is removed from the calcar, a sheet of polyvinyl butyral is inserted between the two layers of glass.
This sheet, which can be transparent or tinted, helps to prevent injury when large, irregular pieces of glass are broken. In most countries, this safety glass is required by law for the forward openings of automobiles. This step requires a meticulously clean environment to prevent dust and particles from accumulating on the laminated windshield as well as control over the level of humidity because too much humidity may damage the final product. The polyvinyl butyral sheet has a tinted strip, which is the tinted part at the top of the windshield. After a final inspection to ensure the optical quality, the windshields are wrapped in cardboard for shipping.
Manufacturing replacement windshields requires a specialized assembly line, which involves a major investment of money. Whereas manufacturing windshields in the past required a lot of manual labour, the complainant's plant contains specialized, automated windshield assembly lines.
A complete list of specifications can be found in the National Auto Glass Specifications (NAGS). The NAGS is an independent body that publishes data on the replacement windshield market. The specification catalogue lists the windshield of each vehicle that is sold in North America using a standard numbering system, which is used by all players in the replacement windshield market.
The complaint does not include:
- Laminated windshields made especially for the original equipment market (OEM).
- Tempered glass used in the automobile industry for the side and rear windows and for sunroofs.
- Laminated windshields for railway vehicles, aircraft, vessels, armoured vehicles and spacecraft.
Replacement windshields are used to replace damaged windshields on assembled vehicles. They are the product of reverse engineering, that is, a manufacturing method based on the analysis of the individual part. This development usually requires three months. The replacement windshield distribution network comprises the manufacturer, who ships the goods to distributors who, in turn, ship the goods to installers. Installers are the ones who ultimately do business with consumers needing to replace a damaged windshield on their vehicle.
Replacement windshields are classified using the following tariff classification number of the Harmonized System:
7007.21.00.21 Safety glass, consisting of toughened (tempered) or laminated glass of size and shape suitable for incorporation in vehicles, aircraft, spacecraft or vessels windshields.
There have been no changes in the structure of the Canadian industry since the investigation was initiated. There are two known producers of replacement windshields in Canada. Appendix 1 contains the complete addresses of the corporations. The CCRA did not identify in the preliminary investigation stage other corporations that make replacement windshields.
Information on Canadian production of the subject goods from 1997 to 2001 was obtained from the two Canadian manufacturers but cannot be disclosed because of confidentiality concerns. The estimate of the apparent Canadian market is based on this information as well as information from Statistics Canada reports on imports.
Information on the value of imports can be obtained because a tariff number is specifically provided for the subject goods, that is, 7007.21.00.21. The quantity and value of the imported subject goods was determined by means of import statistics from Statistics Canada reports based on this 10-digit Harmonized System tariff number. Information on the value of imports is provided in the appendix of the Statement of Reasons published at the time of the investigation's initiation which can be found on the CCRA Web site, go to: http://http://www.cbsa-asfc.gc.ca/sima-lmsi/i-e/menu-eng.html.
At the time of the initiation of the investigation, the CCRA requested all importers to provide the total quantity and value of the subject goods imported from China during the period from
December 1, 2000, to November 30, 2001. After examining the information received, internal reports and import documentation, the CCRA confirms the trend in the aggregate volume of imports that was emerging at the initiation of the investigation.
Normal values are based on the domestic selling price of the goods in the country of export or on the full cost of the goods plus an amount for profit.
The export price of goods shipped to Canada is generally the lesser of the exporter's selling price, from the point of direct shipment, or of the importer's purchase price in Canada. When the export price is less than the normal value, the difference is the margin of dumping.
Section 20 of SIMA establishes the normal value of a good where the government of an export country has a monopoly of its export trade (paragraph 20(1)(a)) and substantially determines the domestic prices of like goods similar to those subject to the investigation (paragraph 20(1)(b)). To determine the normal value of goods, the exporters and the government of China must provide the CCRA with detailed submissions. If these two conditions are met, paragraph 20(1)(c) stipulates that the normal value of goods may be calculated based on information provided by producers of a surrogate country, whereas paragraph 20(1)(d) stipulates that, if this information is unavailable to determine the normal value of the goods as provided in paragraph 20(1)(c), the normal value of goods may be calculated based on information on imports from a foreign country, provided such information is adjusted to reflect the differences in terms and conditions of sale and taxation.
The dumping investigation involved all subject goods that were released into Canada during the period of investigation, that is, from December 1, 2000, to November 30, 2001.
At the initiation of the investigation, the CCRA requested information from the government of China in order to form an opinion whether the replacement windshield industry is operating under market economy conditions or whether the provisions under section 20 of SIMA apply. The government of China provided a detailed submission within the prescribed time frame.
The CCRA also requested information from identified exporters and importers on sales and costs in order to determine the normal values and export prices of the subject goods. Responses to the information requests were received from four exporters within the established time frame:
- Fuyao Glass Industry Group Limited of Fuqing, Fujian,
- Shenzhen Benxun Automotive Glass Co. Ltd. of Shenzhen, Shelou,
- Xinyi Automotive Glass (Shenzhen) Company of Henggang Town, Shenzhen, Shelou, and
- Dongguan Kongwan Automobile Glass Limited of Dong Guan, Guangguan, whose parent company is Peaceful City Limited of Hong Kong.
A response was also received from an American vendor of goods produced in China, Greenville Glass Industries Inc., located in Piedmont, South Carolina. This vendor, which ships goods directly to Canada from China, is a company affiliated with one of the manufacturers in China: Fuyao Glass Industry Group Limited.
After reviewing the information provided by the government of China, as well as exporters and vendors of automotive replacement glass (ARG) windshields produced in China, the CCRA prepared supplementary requests for information in each case. All the cooperating parties from China responded to these supplementary information requests within the prescribed time frame.
At the initiation of the investigation, the CCRA also requested information from replacement windshield producers in a country with a market economy, in this case India, to determine the normal value of the goods in the event that the CCRA forms an opinion that the ARG windshield industry in China is not operating under market conditions.
None of the producers in India responded to the request for information issued at the initiation of the investigation. The CCRA subsequently identified other surrogate countries and, on March 12, 2002, sent additional requests for information to ARG windshield producers in Indonesia, Colombia, Peru, South Africa and Thailand. No information has been received from producers in these countries to date.
On March 13, 2002, the CCRA sent a request for information to importers of ARG windshields from the above-mentioned countries to obtain data to calculate the normal value, in the event that, in the opinion of the Commissioner, sufficient information has not been furnished or is not available to enable the determination of the normal value of subject goods from surrogate countries.
In view of the amount of information provided, the CCRA has not completed its analysis and cannot at this time, form an opinion as to whether section 20 of SIMA is applicable to exports from China. Verification visits to the government, exporters and vendors of the subject goods will be made at the earliest opportunity to obtain clarification deemed essential to enable the Commissioner to form an opinion on the matter. The examination of all the information collected so far in addition to the further clarifications will allow the Commissioner to form an opinion on whether sections 20, 15 to 19, or 29 of SIMA apply to the calculation of the normal value of ARG windshields.
In this section, the margins of dumping are expressed as a percentage of the normal value.
Estimates of normal values, export prices and margins of dumping are discussed in this section. For exporters that did not provide complete responses to the requests for information, the normal value of the goods was estimated based on the export price of the goods plus an advance representing the highest estimated margin of dumping found for a cooperative exporter, expressed as a percentage of the export price.
For purposes of the preliminary determination of dumping, the CCRA maintained its position that the replacement windshield industry in China is not operating under market conditions. Section 20 of SIMA is applicable in determining normal values when the government of a country has a monopoly on its export market and substantially determines the domestic prices of the industry.
In such circumstances, normal values are generally based on the domestic prices or on the full cost of the subject goods in the surrogate country operating under market conditions. The CCRA contacted several windshield producers in six surrogate countries to obtain the information necessary to establish normal values. None of the producers have responded to date.
For purposes of the preliminary determination of dumping, the estimated normal values were based on the best information available, that is, the information provided in the complaint at the time of the initiation of the investigation. The normal values were obtained from a calculation made based on two windshield producers in a country operating under competitive market conditions, in this case India. The estimated normal value was based on the method in section 19 of SIMA, that is, adding the costs of raw material, labour cost, manufacturing costs, a reasonable amount for administrative and selling costs, and a reasonable amount for profits. The normal value estimated is $58.03 per square metre. During the final stage of the investigation, the CCRA will continue its efforts to obtain the information necessary to establish the normal values and will determine them based on all the information collected since the initiation of the investigation.
The export price is generally the lesser of the importer's purchase price or the exporter's ex-factory selling price in Canada less all costs, charges, and expenses resulting from the exportation of the goods.
The CCRA relied on the information provided in the responses from exporters and importers, where these were found to be acceptable. In other cases, the CCRA drew on data from customs documentation to estimate export prices. All export prices were estimated in accordance with section 24 of SIMA, based on the export price of goods sold to importers, after deducting freight charges, brokerage fees and all other costs, charges and expenses resulting from the exportation of the goods, where applicable.
The margin of dumping is the difference between the normal value of a good and its export price. For purposes of the preliminary determination of dumping, the estimated margin of dumping was obtained by comparing the estimated normal values with the estimated export prices.The CCRA's investigation of imports from China between December 1, 2000, and
November 30, 2001, revealed that 99 per cent of the total volume of subject goods imported was dumped. The estimated margin of dumping ranged from 1 to 66 per cent, when expressed as a percentage of the normal value. The weighted average margin of dumping is 35 per cent, when expressed as a percentage of the normal value, or 54 per cent, when expressed as a percentage of the export price.
The other twelve companies that were identified as exporters of subject goods to Canada during the period of investigation did not provide a response to the CCRA's request for information. For these exporters, normal values were estimated on the basis of an advance over the export price, based on the highest margin of dumping found for a cooperative exporter during the investigation. Export prices were estimated pursuant to section 24 of SIMA, which stipulates that this figure should be an amount equal to the lesser of the exporter's selling price or the importer's purchase price.
Before making a preliminary determination of dumping, the Commissioner must be satisfied that the actual or potential volume of dumped goods is not negligible and that the estimated margins of dumping are not insignificant. If the volume of dumped goods from a country is less than 3 per cent of the total volume of like goods released into Canada from all countries during the period of investigation, the volume is considered to be negligible. The total volume of all imports of dumped subject goods from China during the period of investigation exceeded 34 per cent of the total volume of all windshields released into Canada from all countries.
Subsection 2(1) of SIMA stipulates that the estimated margin of dumping is considered to be insignificant if it is less than 2 per cent of the export price of the goods. As shown in Appendix 2, the estimated margins of dumping are not negligible since they exceed 2 per cent.
Based on the preliminary results of the investigation, the Commissioner is satisfied that the subject goods originating from China have been dumped, that the volume of goods is not negligible, and that the estimated margin of dumping is not insignificant.
Accordingly, on May 2, 2002, the Commissioner has made a preliminary determination of dumping pursuant to subsection 38(1) of SIMA.
PROVISIONAL DUTIES TO BE IMPOSED
In order to prevent further injury from dumped imports, provisional duty will be applied to all subject goods imported into Canada from China on or after May 2, 2002, as per subsection 8(1) of SIMA.
The amounts of provisional duty are based on the estimated margins of dumping found during the period of investigation. The duty to be collected is provided in Appendix 2.
Provisional duty is payable by the importer and is applied on all subject imports until the day the Tribunal makes its final ruling on injury. However, if the investigation is terminated by the CCRA or there is an undertaking arrangement, provisional duty will no longer be applied to the imported goods.
Importers are required to pay provisional duty in cash or by certified cheque. Alternatively, they may post security equal to the amount payable. Importers should contact their regional Customs Office if they require further information on the payment of provisional duty or the posting of security.
The CCRA will continue its investigation of the dumping and will, by July 31, 2002, make a final decision. If the margin of dumping is insignificant, proceedings will be terminated in whole or in part, and any provisional duty paid or security posted will be returned to the importers, as appropriate.
The Canadian International Trade Tribunal
The Tribunal will now begin its full injury inquiry and conduct a public hearing into the question of injury. The Tribunal is required to issue its final decision not later than August 30, 2002.
If the Tribunal finds that the dumping has not caused injury or is not threatening to cause injury, then proceedings will be terminated and all provisional duties collected will be refunded. If a decision of injury is made, anti-dumping duty will be imposed on imports of the subject goods.
Retroactive duty on massive importations
Under certain circumstances, anti-dumping duty can be imposed retroactively on subject goods imported into Canada.
When the Tribunal conducts its inquiry on material injury to the Canadian industry, it may consider if dumped goods that were imported close to or after the initiation of the investigation constitute massive importations over a relatively short period of time and have caused injury to the Canadian industry. Should the Tribunal issue a finding that there were recent massive importations of dumped goods which caused injury, imports of subject goods released by the CCRA in the 90 days preceding the day of the preliminary determination could be subject to anti-dumping duty.
After a preliminary determination of dumping, the Commissioner may accept undertakings that eliminate the margin of dumping of the goods, or that eliminate the injury caused by the dumping. Acceptable undertakings must account for all or substantially all of the exports to Canada of the dumped goods. If undertakings are accepted, the imposition of provisional duty will be suspended.
In view of the time needed for consideration of undertakings, written undertaking proposals should be made as early as possible, and no later than 60 days after the preliminary determination of dumping.
The legislation allows all interested parties to make representations concerning any undertaking proposals. The CCRA will maintain a list of interested parties and will notify them should an undertaking proposal be received. Persons wishing to be notified must provide their name, address, telephone, fax, or e-mail address, to one of the officers listed below. Interested parties may also consult the Internet website noted below for information on undertakings offered in this investigation. A notice will be posted on the website when an undertaking proposal is received. Interested parties have nine days from the date the undertaking offer is received to make representations.
Notice of the initiation of this investigation is being published in the Canada Gazette pursuant to paragraph 38(3)(a) of SIMA.
This Statement of Reasons has been provided to persons directly interested in these proceedings. A free copy may be obtained upon request or from the CCRA's Web site at the address below. For further information, please contact Mr. Robert Veilleux or Ms. Barbara Chouinard, as follows:
Mail
Canada Customs and Revenue Agency
Anti-dumping and Countervailing Directorate
16th Floor, Sir Richard Scott Building
191 Laurier Avenue West
Ottawa, Ontario
Canada K1A 0L5
Telephone
Robert Veilleux: (613) 954-1666
Barbara Chouinard: (613) 954-7399
Fax
(613) 941-2612
Email
robert.veilleux@ccra-adrc.gc.ca
barbara.chouinard@ccra-adrc.gc.ca
Web site
www.ccra-adrc.gc.ca/sima-lmsi/
Alice Shields
Director General
Anti-dumping and Countervailing Directorate
CANADIAN MANUFACTURERS OF
AUTOMOTIVE LAMINATED WINDSHIELDS
PPG Canada, Inc.
834 Caledonia Road
Toronto, Ontario
M6B 3X9
Lamiver Inc.
3805 Dollard-Desjardins Street
Montreal, Quebec
H1B 5W9
SUMMARY OF PRELIMINARY DETERMINATION
ESTIMATED MARGINS OF DUMPING PER EXPORTER FOR CERTAIN AUTOMOTIVE LAMINATED WINDSHIELDS
(December 1, 2000, to November 30, 2001)
| Exporters | % of Dumped Goods | Range of Margins of Dumped Goods (% of Normal Value) | Weighted Average Margin of Dumping (% of Normal Value) | Provisional Duties to Be Imposed(% of the Export Price)1 |
|---|---|---|---|---|
Fuyao Glass Industry |
99% |
1% to 66% |
36% |
57% |
Shenzhen Benxun |
99% |
2% to 58% |
34% |
51% |
Xinyi |
99% |
1% to 49% |
27% |
36% |
Dongguan Kongwan |
100% |
1% to 34% |
29% |
40% |
Other exporters |
100% |
66%2 |
66% |
194% |
Total/Average PRC |
99% |
1% to 66% |
35% |
54% |
1 Margin of dumping expressed as a percentage of the export price.
2 Margin of dumping based on the highest estimated margin of dumping found for the preliminary determination
