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Anti-dumping and Countervailing Program
Preliminary Determination - Xanthates
OTTAWA, November 4, 2002
4240-50
AD/1282
STATEMENT OF REASONS
Concerning the preliminary determination of dumping pursuant to subsection 38(1) of the Special Import Measures Act regarding
CERTAIN XANTHATES ORIGINATING IN OR EXPORTED FROM THE PEOPLE'S REPUBLIC OF CHINA
DECISION
Pursuant to subsection 38(1) of the Special Import Measures Act, the Commissioner of
Customs and Revenue has today made a preliminary determination of dumping regarding xanthates of all grades in dry or liquid forms, excluding cellulose xanthates, originating in or exported from the People's Republic of China.
This Statement of Reasons is also available in French. Please refer to the "Information" section.
Cet énoncé des motifs est également disponible en français. Veuillez consulter la section « Information ».
TABLE OF CONTENT
- Product Definition
- Product Description
- Product Information and Uses
- Production Process
- Classification of Imports
Provisional Duty To Be Imposed
Summary
On June 21, 2002, the Commissioner of Customs and Revenue (Commissioner) initiated an investigation respecting the alleged injurious dumping of certain xanthates originating in or exported from the People's Republic of China (China). The investigation was initiated in response to a complaint filed by Charles Tennant & Company (Canada) Limited (Charles Tennant) of Fort Saskatchewan, Alberta.
On receiving notice of the investigation, the Canadian International Trade Tribunal (Tribunal) started its preliminary injury inquiry. On August 20, 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.
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 the Special Import Measures Act (SIMA).
Interested Parties
Complainant
Charles Tennant is the only known Canadian producer of xanthates. Its manufacturing division, Prospec Chemicals Division (Prospec), produces the goods in Fort Saskatchewan, Alberta. Charles Tennant's head office is located at 34 Clayson Road, Weston, Ontario.
Exporters
At the time of the initiation, the CCRA identified twelve possible exporters or vendors of subject goods. During the preliminary stage of the investigation, the CCRA confirmed that four exporters and two vendors were involved in exports of subject goods during the period of investigation (POI) (January 1, 2001 - March 31, 2002).
Importers
At the time of the initiation, the CCRA identified six possible importers of subject goods. During the preliminary stage of the investigation the CCRA confirmed that there were three importers of subject goods during the POI.
Background
On May 6, 2002, Charles Tennant filed a formal complaint with the CCRA, alleging that the dumped imports of certain xanthates originating in or exported from China were causing injury to domestic producers. On May 27, 2002, the CCRA notified Charles Tennant that its complaint was properly documented and notified the Government of China that a complaint had been received regarding the alleged dumping of certain xanthates.
On June 21, 2002, 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 August 20, 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 August 28, 2002, pursuant to paragraph 39(1)(a) of SIMA, the Commissioner extended to 135 days the time period for rendering a preliminary determination of dumping or terminating the investigation.
Product
Product Definition
For the purpose of this investigation, the subject goods are defined as:
"xanthates of all grades in dry or liquid forms, excluding cellulose xanthates, originating in or exported from the People's Republic of China."
Product Description
Xanthates are water-soluble chemicals that are used primarily in the mining industry. Other names for xanthates include xanthogenates, carbondithioates, dithiocarbonates and sodium or potassium salts of xanthanic (or dithiocarbonic) acids.
The subject goods include all grades of sodium or potassium salts of ethyl, butyl (isobutyl, normal butyl, secondary butyl), propyl (isopropyl, normal propyl) and amyl (isoamyl, normal amyl, secondary amyl) xanthates, in dry forms, such as powder, granules, pellets, tablets or flakes, or liquid forms, such as solution or slurry. Xanthates in dry forms and liquid forms are interchangeable products. The subject goods do not include cellulose xanthates, which are produced as intermediates in the production of viscose (rayon) and cellophane.
Product Information and Uses
Xanthate is the common name for chemical reagents used in the flotation of base and precious metals, which is the standard method for separating valuable minerals, such as gold, copper or zinc (referred to as "values"), from non-valuable minerals, such as limestone or quartz.
To extract values, conditioned ores are mixed in a solution of water and xanthates and then agitated in flotation cells, which resemble large washing machines. Xanthates may be added in liquid or solid form. The xanthates cause the minerals to attach themselves to air bubbles and then float to the top of the flotation cell. As values reach the surface, the bubbles form a froth that overflows into a trough for collection. The residual may be reused for additional recovery or removed for disposal. Most of the xanthate is consumed in the process.
Several separate flotations are typically required for different ores. Since each ore is unique, there is no standard flotation procedure and no standard grade or type of xanthate used to extract specific values. Each producer has its own grades for xanthate composition, including purity, which is stated as a minimum percentage up to 100 per cent, and moisture.
Four types of xanthates (ethyl, butyl, propyl and amyl) are produced in various combinations with sodium and potassium, which are stabilizers in the chemical formula.
Mine operators may use different xanthates to extract the same value. Certain xanthates are stronger than others, for example, potassium amyl xanthate (PAX) versus potassium ethyl xanthate (PEX). PAX is therefore used to produce high-grade concentrates or to promote the flotation of difficult-to-float minerals. A mine operator may however decide to use PEX if a cost benefit can be made.
Xanthates are also used as defoliants, herbicides, insecticides and fungicides in agricultural production and as additives in the curing and vulcanization of rubber and as high-pressure lubricant additives. Reported new uses of xanthates include inhibition of fertilizer nitrogen transformation and colour development for image-recording materials.
Production Process
Xanthates are prepared by reacting sodium or potassium hydroxide with an alcohol and carbon disulphide. In most commercial processes, the end product of the reaction is a wet mixture, which is then dried, normally in a vacuum dryer to allow the lowest temperature possible to be used. Since the decomposition of xanthate increases with temperature, the lower the temperature, the higher are the quality and yield.
Classification of Imports
The goods in question are usually classified under the following Harmonized System classification numbers:
2930.10.10.10
2930.10.10.20
2930.10.10.90
2930.10.90.00
Canadian Industry
There have been no changes in the structure of the Canadian industry since the investigation was initiated. Charles Tennant is the only known Canadian producer of xanthates. Its manufacturing division, Prospec Chemicals Division, located in Fort Saskatchewan, Alberta, produces the goods.
Canadian Market
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 POI. After examining information received from importers and import documentation, the CCRA has adjusted the estimated size of the xanthates market in Canada. The only other imports of xanthates originated in Mexico, a non-subject country.
The CCRA is unable to publish the specific figures regarding the Canadian market since there is only one Canadian producer and the release of this information would result in the disclosure of confidential information.
The Investigation
The dumping investigation involved all subject goods that were released into Canada during the POI, that is, from January 1, 2001, to March 31, 2002.
Generally, a normal value is based on the domestic selling prices of the goods in the country of export, or the total cost of the goods (cost of production, administrative, selling and all other costs), plus an amount for profits. However, where in the opinion of the Commissioner, the government of an export country has a monopoly of its export trade and substantially determines the domestic prices of like goods similar to those subject to the investigation, the normal value of the goods is generally calculated based on the domestic selling price or on the full costs of like goods in a surrogate country operating under market conditions, or on the re-sale price in Canada of like goods produced in and imported from a surrogate country.
The export price of subject goods shipped to Canada is normally the lesser of the exporter's ex-factory selling price or the importer's purchase price. When the export price is less than the normal value, the difference is the margin of dumping.
For purposes of SIMA, the CCRA has traditionally considered China as being a non-market economy country. Various publications including reports in respect of other countries' investigating authorities taking trade actions involving China, and the WTO's Report of the Working Party on the Accession of China, available to the CCRA at the time of the initiation of the investigation, contained comments which supported the CCRA's traditional treatment of China in anti-dumping investigations. Information was requested from the Government of China and exporters of subject goods in order to assess whether the xanthate industry is operating under market conditions. The Government of China provided a detailed submission within the required time frame.
Verification meetings were held with representatives of the Government of China in Beijing as well as representatives at the provincial and municipal level in Jinan, Shandong. The purpose of the meetings was to verify information submitted in response to the CCRA's Request for Information (RFI) as well as to obtain additional information with respect to the xanthate industry in China.
At the initiation of the investigation, the CCRA had also requested information from companies identified as possible exporters or possible importers of the subject goods.
Only one exporter, Qixia Tongda Flotation Reagent Co. Ltd. (Tongda), submitted a complete response to the CCRA's RFI. Verification meetings were held with Tongda representatives in Qixia and Yantai, Shandong.
The three remaining confirmed exporters did not provide complete responses to the CCRA's RFI. One of the three exporters ceased operations during the POI.
Complete responses were received from three importers of subject goods, Aslchem International Inc. (Aslchem), Sumitomo Canada Ltd. and Cominco Ltd. Verification meetings were held with representatives of Aslchem in Richmond, B.C. One of the companies identified as a possible importer at initiation advised the CCRA that it had not imported the subject goods during the POI. It was determined that the other two importers identified at the initiation of the investigation were in fact vendors of subject goods.
Information was also requested from producers of xanthates in India and Mexico in the event that the Chinese xanthate industry was not considered to be operating under market conditions. Only one producer located in Mexico provided information to the CCRA.
Results Of The Investigation
While the Government of China provided a response to the CCRA's RFI and verification meetings were held with the various levels of government in China, the information before the CCRA at this time contains conflicting data, incomplete details and inaccuracies. Therefore, for purposes of this phase of the investigation, the CCRA is maintaining the position that the xanthate industry in China is not operating under market conditions. It should be noted that the Government of China will be provided with a list of outstanding issues and will be afforded an opportunity to provide additional information.
Given that the CCRA is maintaining the position that the xanthate industry in China is operating in conditions described in section 20 of SIMA, the estimate of the normal value would usually have been based on the selling price; or the full cost of production, including an amount for general, selling and administrative expenses and an amount for profits, of like goods in a surrogate country; or on the re-sale price in Canada of like goods produced in and imported from a surrogate country. In anticipation of this possibility, the CCRA had contacted producers in India and Mexico. Only one producer in Mexico provided a response to the CCRA's RFI. This response was deemed to be incomplete; therefore, the Commissioner could not take the information into account. However, even with a complete response, the rules of confidentiality would have precluded the CCRA from using information from a single party.
The final method for calculating normal value under section 20 is the re-sale price in Canada of like goods produced in and imported from a surrogate country. The use of this information by the CCRA would have also resulted in the release of confidential information.
Following the verification of the information submitted by the exporter in China who did provide a complete response to the CCRA's RFI, it was determined that not all costs incurred for the production of like goods sold domestically in China and goods sold to Canada were reported by the company. Consequently, the CCRA would not have been able to use information from Tongda for purposes of estimating normal values for the preliminary decision regardless of its position with respect to the market conditions under which the xanthate industry operates in China.
Estimated Normal Value
In view of the circumstances described above, for purposes of the preliminary decision, normal values were estimated based on the best information available to the CCRA. The information provided in the complaint for the initiation of the investigation which contained detailed cost estimates for the production of xanthates in China, was considered to be the best information available.
The estimated normal values for the subject goods exported by Tongda were based on the full costs of specific xanthate products manufactured in China as estimated by the complainant. The CCRA adjusted the complainant's estimated cost of production based on information gathered during the preliminary phase of the investigation. A reasonable amount for profits, based on historical profit levels earned by the complainant on sales of xanthates, was also included in the calculation.
For the exporters that did not provide complete responses to the RFI's, the estimated normal value of the goods were based on the estimated export price of the goods plus an advance representing the highest estimated margin of dumping found for the co-operative exporter, expressed as a percentage of the estimated export price.
Estimated Export Price
For estimating export prices of subject goods from Tongda, the CCRA used the lower of the exporter's selling price or the importer's purchase price adjusted for inland freight and port charges.
For the three exporters who did not provide complete submissions to the CCRA, export prices were estimated based on the purchase price paid by importers adjusted for freight charges and all other costs resulting from the exportation of the goods. This was considered the best information available to the CCRA at the time the decision was made.
Estimated Margins of Dumping
The margin of dumping is the difference by which the normal value of a good exceeds 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 January 1, 2001, and March 31, 2002, revealed that 100 per cent of the total volume of subject goods imported was dumped. For Tongda, the estimated margins of dumping ranged from 3 to 49 per cent, when expressed as a percentage of the export price. The weighted average margin of dumping is 29 per cent for all goods when expressed as a percentage of the export price.
For all other exporters of subject goods to Canada during the POI, the weighted average margin of dumping is 49 per cent, when expressed as a percentage of the export price.
Summary of Results
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 represented 48 percent of the total volume of all xanthates released into Canada from all countries.
Subsection 2(1) of SIMA stipulates that the 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 1, the estimated margins of dumping are not negligible since they exceed 2 per cent.
Decision
Based on the preliminary results of the investigation, the Commissioner is satisfied that the subject goods originating in or exported 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 November 4, 2002, the Commissioner has made a preliminary determination of dumping pursuant to subsection 38(1) of SIMA.
Provisional Duty To Be Imposed
In order to prevent further injury from dumped imports, provisional duty will be applied to all subject goods imported into Canada on or after November 4, 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 provisional duty to be collected is provided in Appendix 1.
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. Should importers of these goods not complete the SIMA code as required or not describe the goods as required on Customs documents, an Administrative Monetary Penalty (AMP) may be issued. Goods imported into Canada are subject to the provisions the Customs Act. As such, failure to pay duties within the prescribed time will result in the application of the interest provisions of that Act.
Future Action
The CCRA
The CCRA will continue its investigation of the dumping and a final decision will be made by February 3, 2003. If the margin of dumping is insignificant, proceedings will be terminated 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 March 4, 2003.
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 that 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.
Undertakings
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 email 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.
Publication
Notice of this preliminary determination is being published in the Canada Gazette pursuant to paragraph 38(3)(a) of SIMA.
Information
This Statement of Reasons has been provided to persons directly interested in these proceedings. It is also posted at the Directorate's Internet website at the address below. For further information, please contact Denis Chénier or Michel Leclair as follows:
Mail:
Canada Customs and Revenue Agency
Anti-dumping and Countervailing Directorate
191 Laurier Avenue West, 16th Floor
Ottawa, Ontario
Canada
K1A 0L5
Telephone: Denis Chénier : (613) 954-7394
Michel Leclair: (613) 954-7232
Telefax: (613) 941-2612
Email: Denis.Chenier@ccra-adrc.gc.ca
Michel.Leclair@ccra-adrc.gc.ca
Website: www.ccra-adrc.gc.ca/sima
Suzanne Parent
Director General
Anti-dumping and Countervailing Directorate
Appendix 1
SUMMARY OF PRELIMINARY DETERMINATION
ESTIMATED MARGINS OF DUMPING
FOR CERTAIN XANTHATES
(January 1, 2001, to March 31, 2002)
|
Exporters |
% of Goods Dumped |
Range of Margins of Dumping (% of Export Price) |
Weighted Average Margin of Dumping (% of Export Price) |
Provisional Duty to be Imposed (% of Export Price) |
|---|---|---|---|---|
|
Qixia Tongda Flotation Reagent Co. Ltd |
100% |
3 to 49% |
29% |
29% |
|
All other exporters |
100% |
49% |
49% |
49% |
|
Total for China |
100% |
45% |
