Inquiries (Section 42)
FRESH ICEBERG (HEAD) LETTUCE ORIGINATING IN OR EXPORTED
FROM THE UNITED STATES OF AMERICA
Inquiry No.: NQ-92-001
TABLE OF CONTENTS
Ottawa, Monday, November 30, 1992
Inquiry No.: NQ-92-001
IN THE MATTER OF an inquiry under section 42 of the Special
Import Measures Act respecting:
FRESH ICEBERG (HEAD) LETTUCE ORIGINATING IN OR EXPORTED FROM
THE UNITED STATES OF AMERICA
The Canadian International Trade Tribunal, under the provisions
of section 42 of the Special Import Measures Act, has
conducted an inquiry following the issuance by the Deputy Minister
of National Revenue for Customs and Excise of a preliminary
determination of dumping dated July 31, 1992, and of a final
determination of dumping dated October 29, 1992, respecting the
importation of fresh Iceberg (head) lettuce, originating in or
exported from the United States of America, for use or consumption
in the province of British Columbia.
Pursuant to subsection 43(1) of the Special Import Measures
Act, the Canadian International Trade Tribunal hereby finds
that the dumping of the aforementioned goods from the United States
of America has caused, is causing and is likely to cause material
injury to the production in British Columbia of like goods,
excluding the periods January 1 to May 31 and October 16 to
December 31 in each calendar year (Member Coleman dissenting).
Sidney A. Fraleigh
Sidney A. Fraleigh
John C. Coleman
John C. Coleman
Michel P. Granger
Michel P. Granger
The statement of reasons will be issued within 15 days.
Ottawa, Tuesday, December 15, 1992
Inquiry No.: NQ-92-001
FRESH ICEBERG (HEAD) LETTUCE ORIGINATING IN OR EXPORTED FROM
THE UNITED STATES OF AMERICA
Special Import Measures Act - Whether the dumping of the
above-mentioned goods has caused, is causing or is likely to cause
material injury to the production in British Columbia of like
DECISION: The Canadian International Trade Tribunal
hereby finds that the dumping of the aforementioned goods from the
United States of America has caused, is causing and is likely to
cause material injury to the production in British Columbia of like
goods, excluding the periods January 1 to May 31 and October 16 to
December 31 in each calendar year (Member Coleman dissenting).
Place of Hearing: Vancouver, British Columbia
Dates of Hearing: November 2 and 3, 1992
Date of Finding: November 30, 1992
Date of Reasons: December 15, 1992
Tribunal Members: Sidney A. Fraleigh, Presiding Member
John C. Coleman, Member
Michèle Blouin, Member
Director of Research: Marcel J.W. Brazeau
Research Manager: Don Shires
Research Officer: Nancy Ross
Statistical Officer: Sonya McEachern
Counsel for the Tribunal: Brenda C. Swick-Martin
Hugh J. Cheetham
Registration and Distribution
Officer: Margaret J. Fisher
Participants: Marvin R.V. Storrow, Q.C., and
Margaret L. Eriksson
for B.C. Vegetable Marketing Commission
Marion I. Quesenbery
for Western Growers Association
George B. Rush
Cloverdale Lettuce & Vegetable Co-operative
Charles (Chuck) Amor
B.C. Vegetable Marketing Commission
Wayne Odermatt, B.S.A., P.Ag.
Provincial Fresh Vegetable Industry Specialist
Development and Extension
South Coastal Region
Ministry of Agriculture, Fisheries and Food
Province of British Columbia
Lorne Owen, P.Ag.
Provincial Farm Management Specialist
Horticulture Farm Management Branch
Ministry of Agriculture, Fisheries and Food
Province of British Columbia
R.J. (Jim) Alcock
Fruits and Vegetables
Ministry of Agriculture, Fisheries and Food
Province of British Columbia
Gerry A.P. Sprangers
Sprangers Farm Ltd.
Cloverdale Produce Farms Ltd.
Bill W. Dun, B.Sc.(Agr.)
Premier Produce Inc.
Law Pacific Vegetable Farms Ltd.
Produce Merchandising Manager
Canada Safeway Limited
Tom Yee Produce Inc.
Kenneth C. Gilliland
Western Growers Association
Address all communications to:
Canadian International Trade Tribunal
Journal Tower South
365 Laurier Avenue West
The Canadian International Trade Tribunal (the Tribunal), under
the provisions of section 42 of the Special Import Measures
Act  (SIMA),
has conducted an inquiry following the issuance by the Deputy
Minister of National Revenue for Customs and Excise (the Deputy
Minister) of a preliminary determination of dumping dated July 31,
1992, and of a final determination of dumping dated October 29,
1992, respecting the importation of fresh Iceberg (head) lettuce,
originating in or exported from the United States of America, for
use or consumption in the province of British Columbia. The Deputy
Minister's investigation into dumping covered importations of the
subject goods between July 1, 1991, and September 30, 1991.
The notices of preliminary and final determinations of dumping
were published in Part I of the August 15, 1992, and November 14,
1992, editions of the Canada Gazette, respectively. The
Tribunal's notice of commencement of inquiry issued on August 10,
1992, was published in Part I of the August 22, 1992, edition of
the Canada Gazette. The Tribunal's notice concerning the
time and location of the public hearing issued on September 16,
1992, was published in Part I of the September 26, 1992, edition of
the Canada Gazette.
As part of the inquiry, the Tribunal sent detailed
questionnaires to the B.C. Vegetable Marketing Commission (the
Commission) and to the growers' co-operatives and major importers
of the subject goods. From the replies to the questionnaires and
other sources, the Tribunal's research staff prepared a public
pre-hearing staff report.
The record of this inquiry consists of all Tribunal exhibits,
including the public and protected replies to questionnaires, all
exhibits filed by the parties at the hearing, as well as the
transcript of all proceedings. All public exhibits were made
available to the parties. Protected exhibits were made available
only to independent counsel who had given undertakings.
A public hearing was held in Vancouver, British Columbia,
starting on November 2, 1992. The complainant, the Commission, was
represented by counsel, submitted evidence and made arguments in
support of an injury finding. Counsel for the Western Growers
Association (the WGA) submitted evidence and made arguments in
support of a finding of no injury.
On November 30, 1992, the Tribunal issued a finding that the
dumping of the subject goods had caused, was causing and was likely
to cause material injury to the production in British Columbia of
like goods, excluding the periods January 1 to May 31 and October
16 to December 31 in each calendar year (Member Coleman
The product that is the subject of this inquiry is described in
the Deputy Minister's preliminary determination of dumping as fresh
Iceberg (head) lettuce originating in or exported from the United
States of America for use or consumption in the province of British
Iceberg lettuce is distinguished from other members of the
lettuce (Lactuca) genus by the arrangement of its leaves on
the plant. It is a large firm head with crisp, brittle and tightly
packed leaves. More than 80 percent of lettuce consumption in North
America is of the Iceberg type, and much of it is grown in
California, which accounts for over two thirds of U.S. production.
The Salinas/Watsonville district of California accounts for over 50
percent of California production, and this production comes to
market at about the same time as the B.C. marketing season for
Lettuce is a sensitive crop to grow because of the effects
different growing conditions can have on quality and yields. In
recent years, B.C. growers have converted from Ithica, a small
variety, to a Salinas variety to better compete with U.S. imports.
The Salinas variety grown in British Columbia is said to be wetter
and lighter than its California counterpart largely because of
differences in growing conditions. In California, the climate is
dry, and growers use trough irrigation to supply the plant with
water and thus avoid the head getting wet. In British Columbia,
unpredictable rainfalls can contribute to deterioration caused by
wetness, thereby shortening the shelf life of B.C.-grown
Lettuce matures quickly and must be harvested promptly or
destroyed because mature lettuce is susceptible to certain viruses
that may spread to younger plants and affect subsequent lettuce
crops. Growers have a three- to five-day period in which they must
The perishability of lettuce has established its use in fresh
form. This characteristic also makes the product susceptible to
short-term surpluses and shortages, thereby causing significant
price swings, sometimes over a matter of a few days.
Without cooling, lettuce will only last two to three days.
Properly cooled lettuce may be successfully stored for up to two
weeks. In British Columbia, the Cloverdale Lettuce & Vegetable
Co-operative (Cloverdale) operates a vacuum cooling facility on its
premises. The Island Vegetable Co-operative Association (Island)
cools its products in a refrigerated warehouse. In California, some
growers do the packing, cooling and wrapping in the field.
Harvested lettuce is graded according to packaging unit. There
are five packaging units common to the North American market. The
industry standard is the carton 24-naked (naked-24s), which is a
waxed carton containing 24 unwrapped heads in 2 layers weighing
roughly 50 lbs. Over 75 percent of the lettuce grown in British
Columbia is marketed in this type of packaging unit. Other
packaging units include the carton 30-naked, carton 24-cello wrap
and carton 30-cello, all of which weigh approximately 50 lbs, and
bulk or bin units which weigh between 800-1,000 lbs.
The importers of the subject goods are fresh produce
wholesalers, the wholesale purchasing divisions of the major retail
grocery chains and foodservices operations. Most are members of the
B.C. Fruit Wholesalers' Association and purchase a great variety of
local and imported fruits and vegetables. Independent wholesalers
are the major suppliers to the hotel, restaurant, institutional and
California is the major exporting state to British Columbia. In
its initial investigation, the Department of National Revenue,
Customs and Excise, identified 58 exporters to British Columbia, of
which 56 were located in California. Of these, 35 were located in
the Salinas Valley, which is the largest principal growing area of
California during the B.C. crop year.
The WGA represents virtually all of the fresh produce growers,
packers and shippers located in California and Arizona.
The period of investigation chosen by the Deputy Minister
covered imports of the subject goods during the period July 1,
1991, to September 30, 1991.
In his final determination of dumping dated October 29, 1992,
the Deputy Minister found that 87.5 percent of the goods exported
to British Columbia had been dumped by a weighted average margin of
The B.C. lettuce industry consists of some 21 growers who grow
lettuce in rotation with other crops. Most are located in the
southern coastal region of the province. These growers, who account
for over 95 percent of B.C. production, sell through two authorized
sales agencies - Cloverdale, which represents eighteen growers, and
Island, which sells for the other three producers. In addition,
approximately twelve smaller unregulated growers sell directly to
local grocery stores and through roadside stands.
The co-operatives derive their authority from the Commission
which, under the B.C. Vegetable Scheme enacted in 1980 under the
Natural Products Marketing (BC) Act,  is empowered to promote, control and
regulate the production, transportation, packing, storage and
marketing of vegetables in the province. The Commission delegates
certain of its powers to Cloverdale and Island, which act as sales
agents for growers in their respective regions. A quota system is
applied to lettuce for the purpose of regulating the flow of
product to the marketplace, not its production.
The pricing of fresh Iceberg lettuce is determined by the
Commission. It subscribes to "Pronet," an electronic information
service which provides daily shipping point availability and prices
for U.S. fruits and vegetables, and utilizes F.O.B. information
that is available 24 hours a day by telephone and provided by the
United States Department of Agriculture in Salinas, California. On
the basis of these services, the Commission can determine prices
and availability of U.S. lettuce on a daily and weekly basis. By
factoring in the appropriate duty, freight and other importing
costs, as well as the exchange rate, it can estimate a landed
Vancouver price at any given time. Once this import price is
determined, the Commission and sales agencies discuss prevailing
market conditions within the province and agree upon a final price
for B.C. lettuce, usually for the coming week. This price is
primarily based upon the landed Vancouver price of U.S. imported
lettuce coming into British Columbia from the Salinas region of
California, adjusted to reflect local supply conditions.
The co-ops sell mostly to the wholesale produce trade that
supplies the retail grocery trade, particularly the larger chains,
which can readily switch from local to imported lettuce, depending
on availability and price. The hotel, restaurant and institutional
trade appears to prefer the heavier and drier California lettuce
which better meets its storability requirements.
The B.C. market for Iceberg lettuce grew from 449,000 cartons in
crop year 1988 to 661,000 cartons in 1990, an increase of 47
percent. It grew marginally to 664,000 cartons in 1991. Growth
accelerated during June and July 1992, increasing 16 percent over
the corresponding period in 1991, from 268,000 to 312,000
During crop year 1988-89, total imports entering the B.C.
market, all from the United States, increased 125 percent, from
177,000 to 398,000 cartons. They grew another 5 percent to 417,000
cartons in 1991. They advanced by a further 53 percent during June
and July 1992 over the same period in 1991.
From 1988 to 1990, sales by domestic producers declined by 3
percent, from 272,000 to 263,000 cartons. In 1991, they declined a
further 6 percent to 247,000 cartons. During June and July 1992,
shipments by B.C. growers were 16 percent lower than in the
corresponding period in 1991.
The market share held by B.C. producers has declined from 60
percent in 1988 to 40 percent in 1990, 37 percent in 1991 and 32
percent during June and July of 1992. In 1988, California accounted
for 36 percent of the B.C. market while other states had 3 percent.
By July 1992, California had increased its share of the B.C. market
to 56 percent while other states increased their share to 12
Marketable production (production available for sale) declined
steadily from 321,000 cartons in 1988 to 300,000 cartons in 1990,
then increased by 30 percent, to 390,000 cartons, in 1991. Total
grower shipments declined steadily from 316,000 cartons in 1988 to
295,000 in 1990 and 282,000 in 1991. Volume not harvested due to
plough downs was reported as being equivalent to 97,500 cartons in
B.C. producers' weighted average selling prices increased from
$7.31 per carton in crop year 1988 to $7.94 in 1990 before dropping
by 25 percent, to $5.92, in 1991. During the first six weeks of the
1992 crop year, prices averaged $7.61 per carton. By the end of
July, they were up to $10.77 and, by September 5, had climbed to
$14.10. Since 1988, average U.S. F.O.B. selling prices, in Canadian
funds, went from a $5.00-$6.00 range to roughly $8.00 in 1990, then
back below $6.00 in 1991. They started the 1992 crop year at about
$3.60 per carton. They remained in the $3.60-$4.80 range until
about August 1 when they more than doubled within a week to over
$8.00. Prices then climbed to almost $12.00 the following week and
have been mostly in the $10.00-$13.00 range since. The price spread
between B.C. growers' prices and the price of imports was less than
$1.00 in 1988, but rose to between $2.00 and $2.75 per carton in
crop years 1989 to 1991.
Average net returns to B.C. growers, per carton of naked-24s,
went from $6.45 in 1988 to $7.09 in 1990, dropped by 28 percent, to
$5.09, in 1991, then recovered to about $7.30 in June and July
Financial losses were reported in 1988 and 1989. In 1990, a
marginal profit was declared. Substantial losses were incurred in
1991. By August 1992, the industry was once again in a profitable
position because of substantial increases in prices.
The total cost of producing a carton of naked-24s, which is the
industry standard, was estimated by the Ministry of Agriculture,
Fisheries and Food, Province of British Columbia (the Ministry) at
$7.92 (of which $4.18 is the estimated cost of harvesting) based on
a target yield of 750 cartons per acre. This includes direct costs
of $3.56, overhead of $2.09 and co-op charges and carton costs of
$2.26, but not cooling costs of $0.75 per carton. The break-even
point is reached at $8.67 per carton.
Counsel for the complainant argued that the Tribunal should find
that the dumping of the subject Iceberg lettuce has caused, is
causing and is likely to cause material injury to the production of
like goods in the province of British Columbia. Counsel submitted
that injury from dumping has appeared in the form of price erosion
and suppression, lost sales and reduced market share, loss of
profitability, lost crops and a decrease in the number of growers
cultivating the subject lettuce.
Counsel stated that the case for injury for lettuce was stronger
than in previous cases involving potatoes, onions and apples where
the Tribunal found injury. The survival of the industry is at
stake, and the imposition of an anti-dumping duty cannot be harmful
to U.S. producers.
Counsel argued that British Columbia is a regional market for
purposes of subsection 42(3) of SIMA and that all the conditions of
Article 4 of the GATT Anti-Dumping Code  (the Code) have been met. Also, B.C.
and U.S. Iceberg lettuce are like goods within the meaning of
subsection 2(1) of SIMA as they have the same characteristics and
qualities, have the same end use and can be substituted for one
Concerning price levels, counsel referred to the evidence of one
industry witness who summarized the downward trend in U.S. prices
between 1988-91. Counsel pointed out that, in each year, U.S.
prices were extremely low on several occasions during the B.C. crop
year and that, in 1991, these low prices persisted for most of the
season. F.O.B. selling prices in 1991 were in the US$3.45-US$4.50
per carton range during the B.C. crop year. According to counsel,
average selling prices for B.C.-grown lettuce declined from $7.94
to $5.92 per carton, from 1990 to 1991, in response to dumped
Counsel noted that the 1991 selling price of $5.92 per carton
was below the growers' cost of production which was estimated at
$7.92 per carton by the Ministry.
At an F.O.B. price of US$3.00 a carton, California lettuce lands
in British Columbia at about CAN$6.75. Counsel submitted that, at
this price, growers incur a substantial loss per carton.
In 1989, according to counsel, B.C. producers incurred a loss.
In 1990, the industry achieved a marginal profit on rising selling
prices. In 1991, the industry incurred severe losses. Production
was profitable in only one week out of twenty. Between June 1 and
August 31, 1992, growers made a profit in seven out of thirteen
weeks. The severity of the losses incurred in 1991 was exacerbated
by the ploughing down of equivalent to some 75,000 cartons (later
revised to 97,500 cartons). This ploughing under of marketable
lettuce in such quantities was, according to counsel, indicative of
the plight of growers.
Counsel argued that the losses incurred in 1991 because of low
prices, and ploughing under were the result of producers having to
compete with cheap U.S. dumped imports which filled the "pipeline."
Counsel also presented evidence of individual grower losses due to
low prices and ploughing under, and submitted that a number of
growers were either forced out of business or had to reduce acreage
devoted to lettuce production because of dumping.
On the questions of like goods and quality differences, counsel
pointed to the evidence of witnesses regarding the characteristics,
qualities and substitutability of U.S. and B.C. Iceberg
Counsel submitted that California Iceberg lettuce producers
overproduced in 1991 and that this led to the dumping found by the
Deputy Minister. On the question of future injury, counsel
contended that California producers have been overproducing during
the past four years and that there is no evidence that this will
not continue in the future. The demise of the California Lettuce
Commission, in 1991, left the California industry without an
organization capable of planning appropriate production volumes.
Without the protection of anti-dumping duties, there is every
likelihood, according to counsel, that the United States will
continue to dump its products in the B.C. market during the
harvesting season, thereby causing injury.
Finally, counsel for the complainant submitted that anti-dumping
duties must be imposed on all packs of fresh Iceberg lettuce
imported from the United States. Otherwise, exporters will ship
low-priced fresh Iceberg lettuce in other than naked-24s
In its submission and at the hearing, the WGA took the position
that it was not the importation of the subject goods that was
causing injury to B.C. growers. Rather, other factors affected the
production and marketing of B.C.-grown Iceberg lettuce.
Counsel for the WGA contended that California growers did not
overproduce in 1991, as evidenced by information in the record, and
that the loss of market share experienced by B.C. producers during
the review period was the result of their not expanding production
sufficiently to meet increasing demand. Counsel noted that B.C.
growers did increase production in 1991, but their inability to
sell their lettuce was a function of oversupply due to an early
maturing crop which came to market when the pipeline was full.
It was argued that the B.C. product is of inferior quality, as
evidenced by sales under cost of production as well as below landed
cost of U.S. lettuce, and by preference for the California product
by some wholesalers.
Counsel argued that the financial losses experienced by B.C.
growers in 1991 were the result of overproduction, unsatisfactory
quality and selling below the landed cost of U.S. imports. In
counsel's view, even the 1991 plough downs were due more to other
factors such as weather conditions than to imports.
Counsel contended that California and B.C.-grown Iceberg lettuce
are not like goods because the B.C. product is not acceptable to
some market segments for reasons of quality and shelf life.
Counsel held that, in 1992, average selling prices for
B.C.-grown lettuce increased, the industry became profitable and
profit levels achieved by B.C. growers in 1992 offset the losses
incurred in 1991. Counsel also submitted that, in view of rising
market prices, the provisional anti-dumping duty had no effect on
B.C. Iceberg lettuce price levels in 1992.
In counsel's view, bulk and cello-wrapped lettuce should not be
an issue as B.C. production of these goods was so negligible that
material injury could not have occurred. Also, according to the
WGA, B.C. growers should be able to make a profit even at an F.O.B.
price of US$3.00 per carton as this price translates into a landed
duty-paid price of CAN$7.90 per carton.
Finally, it was the position of the WGA that, if anti-dumping
duties have to be assessed, they should apply only during the B.C.
Under section 42 of SIMA, the Tribunal is required to determine
whether the dumping of fresh (head) Iceberg lettuce, as found by
the Deputy Minister, has caused, is causing or is likely to cause
material injury to the production in British Columbia of like
The Tribunal must consider three main issues in this inquiry.
First, the Tribunal must determine whether B.C. producers of
Iceberg lettuce represent a separate regional industry. Second, the
Tribunal must determine whether B.C.-produced Iceberg lettuce and
U.S.-produced Iceberg lettuce are like goods. Third, the Tribunal
must determine whether the dumping of subject imports has caused,
is causing or is likely to cause material injury to domestic
production of like goods.
At the outset, the Tribunal must address the issue of whether
B.C. producers constitute a separate regional industry. In an
anti-dumping case, pursuant to paragraph 42(3)(a) of SIMA,
the Tribunal must take fully into account paragraph 1 of Article 4
of the Code, which sets out the definition of domestic industry.
Paragraph 1(ii) of Article 4 provides:
[I]n exceptional circumstances the territory of a Party may,
for the production in question, be divided into two or more
competitive markets and the producers within each market may be
regarded as a separate industry if (a) the producers within such
market sell all or almost all of their production of the product in
question in that market, and (b) the demand in that market is not
to any substantial degree supplied by producers of the product in
question located elsewhere in the territory. In such circumstances,
injury may be found to exist even where a major portion of the
total domestic industry is not injured provided there is a
concentration of dumped imports into such an isolated market and
provided further that the dumped imports are causing injury to the
producers of all or almost all of the production within such
In the view of the Tribunal, paragraph 1(ii) of Article 4 of the
Code involves a two-part analysis. First, producers within a
particular geographic market may be considered as a regional
industry where: (i) they sell all, or almost all, of their
production within that market; and (ii) the demand in that market
is not supplied to any substantial degree by producers outside that
market. In other words, a separate regional industry may be found
to exist provided there is an isolated market. Second, where a
regional industry exists, injury may be found to exist only if: (i)
there is a concentration of dumped imports into the isolated
market; and (ii) the dumped imports are causing injury to producers
of all, or almost all, of the production within that market.
The Tribunal finds that the complainant represents a separate
regional industry in this case. With respect to the first
requirement, the evidence shows that, since 1988, B.C. producers
have sold in excess of 88 percent of their Iceberg lettuce
production in British Columbia. Therefore, the Tribunal is
satisfied that the first requirement is met, i.e. that the
producers sell all, or almost all, of their production in the
As regards the second requirement for an isolated market, the
evidence indicates that no Iceberg lettuce produced in the rest of
Canada was shipped into British Columbia during the review period.
The Tribunal, therefore, considers that demand in British Columbia
for Iceberg lettuce is not supplied to any substantial degree by
producers located elsewhere in Canada.
Having established that there is an isolated market, the
Tribunal concludes that B.C. producers of Iceberg lettuce may be
regarded as a separate regional industry within the meaning of
paragraph 1(ii) of Article 4 of the Code.
Having determined that B.C. producers represent a separate
regional industry, the two mandatory conditions concerning injury
to that industry need to be examined. The first element is whether
there is a "concentration" of dumped imports into the B.C.
In the past, the Tribunal and its predecessor, the Canadian
Import Tribunal (the CIT), have used several alternative tests in
determining whether or not there is concentration. These have been
identified as the "density" test, the "distribution" test and the
"ratio" test, which is a variant of the distribution test.
The density test compares the volume of dumped imports within
the regional market to total regional market volume. The
distribution test compares the volume of imports into the regional
market to the volume of imports into the national territory. The
ratio test compares British Columbia's share of the subject imports
into Canada to its share of total Iceberg lettuce consumption in
In the CIT Recreational Vehicle Entrance Doors  case, it was stated that
there were two alternative tests that could be used in determining
the concentration issue: (1) the "penetration test" (hereinafter
referred to as the "distribution test"), which compares the volume
of imports used in the regional market to the volume of imports
used in the national territory as a whole; and (2) the "density
test," which compares the volume of dumped imports within the
regional market to total regional market volume. In that case, the
CIT found both tests to be met.
The Tribunal observes that industries and their relevant markets
vary tremendously. Therefore, the concentration of dumped imports
into a regional market must be assessed according to the
circumstance of each case.
In this case, the application of the density test reveals that,
in 1991, dumped imports accounted for 56 percent of the B.C.
market, which is eight times greater than the share held by
non-dumped subject imports and is one and one-half times greater
than the share held by local growers.
In support of the density test, the distribution test reveals
that, for the 1991 crop year, 17 percent of the total subject
imports were consumed in British Columbia. In addition, the ratio
test indicates that, for the 1991 crop year, British Columbia's
share of total subject imports into Canada was 1.22 times British
Columbia's share of total Canadian consumption of Iceberg lettuce.
In the view of the majority of the Tribunal, the distribution and
ratio tests take on added significance given that dumped subject
imports accounted for 56 percent of the total B.C. market in the
1991 crop year.
For the foregoing reasons, the majority of the Tribunal
concludes that there is a concentration of dumped imports into the
The Tribunal determines that the complainant represents "all, or
almost all, of the production" within British Columbia. Sales of
fresh Iceberg lettuce by the complainant represent producers who
account for over 95 percent of domestic production of like goods in
British Columbia. Whether all, or almost all, of these producers
have been injured by the dumped imports is a question that the
Tribunal considers later in its analysis of material injury and
Under subsection 42(1) of SIMA, the Tribunal must inquire into
whether the dumping of goods is causing material injury to the
"production in Canada of like goods." Therefore, as part of its
task in determining material injury to production in Canada, the
Tribunal must determine what like goods are, within the meaning of
subsection 42(1) of SIMA.
During the hearing, the issue was raised of whether domestically
produced Iceberg lettuce and imported fresh Iceberg lettuce are
"like goods." Counsel for the WGA argued that B.C. lettuce and
imported lettuce are not like goods because of differences in
quality, shelf life and end use. Counsel for the complainant
submitted that domestic and imported lettuce are like goods.
Subsection 2(1) of SIMA defines "like goods" in relation to
other goods, as:
(a) goods that are identical in all respects to the other
(b) in the absence of any goods described in paragraph (a),
goods the uses and other characteristics of which closely resemble
those of the other goods.
In the opinion of the Tribunal, all lettuce is not identical in
all respects within the meaning of paragraph (a) of the
definition of "like goods" under subsection 2(1) of SIMA.
Consideration must therefore be given to whether the uses and other
characteristics of imported and domestic Iceberg lettuce closely
resemble one another, including the degree of substitutability
The Tribunal is of the view that the uses and characteristics of
imported and domestic Iceberg lettuce closely resemble each other
and are, therefore, like goods. Domestic and imported Iceberg
lettuce have similar physical characteristics in that they have a
large firm head with crisp, tightly packed leaves, and are both of
the Salinas type or variety. Consumers do not make a distinction
between B.C.-grown and imported Iceberg lettuce. B.C. and U.S.
Iceberg lettuce have the same general use, namely, that it is sold
for human consumption, whether in the retail, hotel, restaurant or
Upon reviewing the evidence, the Tribunal is also satisfied that
imported and domestic Iceberg lettuce compete directly with one
another in the marketplace and can be substituted for one
Having found a regional industry, the next step is to consider
whether that industry has suffered material injury caused by the
dumped imports. The Tribunal proposes to address the issues of
material injury and causality by reviewing the events that have
occurred in the B.C. marketplace since 1988. Such a review is
necessary to discern the movements and trends in the marketplace
respecting market shares, prices and profitability. A number of
other issues come into play in this case and will be discussed in
the following pages.
In addressing the issues, the Tribunal has looked at events on a
crop-year basis, which is defined as the period from June to
October of each year. Secondly, the financial analysis is based
primarily on data provided by Cloverdale, which accounts for well
over 90 percent of industry sales. Moreover, profitability was
measured on the basis of a cost-of-production (COP) model created
by the Ministry for crop year 1991 and applied to all years under
review. Lastly, market data were converted to cartons of naked-24s
equivalents, as this is the industry's standard (marketing unit)
and accounts for the vast majority of sales by the two sales
agencies authorized by the Commission to market the subject lettuce
in British Columbia. Furthermore, the naked-24s is the predominant
The Tribunal recognizes that California is the price setter for
lettuce throughout North America, as it is by far the major
producing region on the continent. In British Columbia, as
elsewhere, price for the local product is generally established on
the basis of landed costs of imports from California, adjusted to
take into consideration local marketing conditions. The Tribunal
also notes that California prices are subject to free market supply
and demand conditions and may fluctuate widely within very short
periods of time, reflecting changes in growing, harvesting and
In 1988, B.C. Iceberg lettuce growers produced over 320,000
cartons of marketable product. In that crop year, growers
experienced normal losses from cullage and plough downs of some
10,000 cartons. Of the balance, over 270,000 cartons, more than 80
percent, were sold on the B.C. market. The industry's market share
was approximately 60 percent. The balance of the market was
supplied by imports from the United States, of which more than 90
percent came from California. The average selling price for
B.C.-grown Iceberg lettuce was $7.30 per carton in 1988. U.S.
prices tended toward the low end of the US$3.00 to US$7.00 per
carton range in that year. On sales of over $1.9 million, the B.C.
industry recorded a loss of about $0.62 per carton.
In 1989, B.C. marketable production declined marginally to just
over 314,000 cartons. B.C. producers sold about 268,000 cartons to
the local market, a slight drop from the previous year. However, in
1989, the total B.C. market grew by 20 percent, from 449,000
cartons in 1988 to about 538,000 cartons. This growth was supplied
entirely by U.S. imports. Consequently, B.C. producers' market
share fell from 60 percent to about 50 percent, while California
took almost 9 of the 10 points of market share gained by the U.S.
U.S. prices firmed considerably in 1989, particularly in the
July to October period. Consequently, average selling prices for
B.C.-grown Iceberg lettuce also improved, rising more than $0.50
per carton to $7.83 per carton. On the strength of those higher
prices, the B.C. industry's financial losses declined to about
$0.09 per carton in 1989.
In 1990, the industry produced approximately the same marketable
volume as in 1989. Reported losses from cullage and plough downs
doubled in 1990. The effect was a slight decline in total sales
volume to 263,000 cartons. The total B.C. market for Iceberg
lettuce increased again by about 23 percent in 1990, to 661,000
cartons. As in the previous year, U.S. imports supplied all of the
growth in demand. Imports increased by some 128,000 cartons or 47
percent. The market share held by U.S. imports rose to
approximately 60 percent, a gain of almost 21 percent over two
years. The B.C. producers' market share declined to just under 40
U.S. prices increased again in 1990, particularly from August to
the end of the B.C. harvesting season. As in the previous year,
prices for B.C.-grown Iceberg lettuce responded to rising U.S.
prices, increasing, on average, to $7.94 per carton, a gain of
$0.11 over 1989. The combination of rising prices and a reduction
in average carton costs from approximately $1.73 per carton to
$1.48 per carton resulted in a small profit for the industry
despite another substantial loss of market share.
In 1991, there was a dramatic increase to 389,000 cartons (24
percent over 1990) in marketable production by B.C. growers. A
number of events help to explain this surge in production. The
strengthening of prices through 1990 and the early 1991 crop year
and the industry's return to profitability were strong incentives.
Forecasts of possible water shortages in California may have led to
expectations of a shortfall in U.S. supply and higher prices. There
may also have been expectations of improved competitiveness as the
industry completed its conversion from the Ithica to the Salinas
variety of Iceberg lettuce.
In May and early June 1991, U.S. prices were considerably higher
than those experienced during the same period in the previous three
years and were comparable to the high prices recorded through
September 1990. Early June prices for B.C.-grown lettuce were
similarly high. These initial price levels appeared to reflect the
positive market trends anticipated by B.C. growers when they made
their 1991 planting decisions. Over the month of June, however,
U.S. prices plummeted from a high of over US$12.00 per carton to a
low of US$3.00 and remained low until late October. This had
disastrous effects on the prices of B.C. lettuce, which invariably
follow U.S. prices. Average selling prices of B.C. lettuce dropped
by more than $2.00 per carton in 1991 to $5.92 per carton. This
price erosion led to a financial loss of over $400,000, or about
$2.00 per carton sold, for the crop year, based on the Ministry's
average cost of production of $7.92 per carton. The Tribunal
observes that the Deputy Minister found that U.S. imports were
dumped by an average of 31 percent during the period from July to
To compound the industry's difficulties, the B.C. market
remained flat in 1991. B.C. producers' sales actually declined by
about 16,000 cartons, or 6 percent, while U.S. imports increased by
19,000 cartons, or almost 5 percent. This had two effects on the
First, the B.C. industry's share of market declined to 37
percent from 40 percent in 1990, while the share held by U.S.
imports rose to 63 percent. The Tribunal notes that, initially,
B.C. producers improved their market share in 1991, which increased
to approximately 48 percent for the June and July period from a
40-percent share for crop year 1990. This coincided with very high
U.S. selling prices in June. However, as prices declined, the B.C.
producers' market position also deteriorated. By the end of 1991,
the industry's share of market had declined to 37 percent, from 60
percent in 1988.
Second, as dumped imports improved their position in the B.C.
market and the anticipated market growth did not materialize, B.C.
growers were faced with a substantial excess volume of marketable
lettuce. The industry's estimate of 75,000 cartons ploughed down,
subsequently revised to 97,500 cartons, resulted in an additional
and substantial financial loss for the year.
During the inquiry, different views were expressed by the
parties as to what the actual B.C. landed cost of U.S. lettuce was
in 1991. The Tribunal observes that the F.O.B. price was indeed in
the range of US$3.00 to US$4.50 per carton throughout the better
part of the 1991 B.C. harvesting season. The record indicates
additional costs of CAN$3.25 to CAN$3.50 (including exchange) to
land U.S. lettuce in British Columbia, resulting in landed costs in
the range of $6.25 and $8.00 per carton. These prices are well
below the estimated cost of production of $8.67 for B.C.
In 1992, in response to severe financial losses incurred in
1991, three major producers ceased their Iceberg lettuce
production. The Tribunal heard evidence that other growers reduced
their plantings in 1992. In total, the area planted in Iceberg
lettuce in 1992 was reduced by approximately 40 percent.
Consequently, marketable production in the 1992 June to July period
was down by about 37 percent. Total shipments declined by
approximately 23 percent compared to the same period in 1991.
The B.C. market for the subject goods increased by 16 percent in
the June and July period of 1992 over the same period in 1991.
During this two-month period, domestic sales declined by 22
percent, while U.S. imports increased by 53 percent over the
corresponding period in 1991. By the end of July 1992, U.S. imports
had 68 percent of the B.C. market as compared to 32 percent for
U.S. prices, in June and July 1992, were at about the same low
level as in 1991, but B.C. prices were higher during the first two
months of the 1992 crop year, in part, because of the support
received from some wholesalers to assist the industry. Both U.S.
and domestic prices firmed considerably, starting in late July
coincident with the imposition of anti-dumping duties by the Deputy
Minister. B.C. selling prices were significantly higher in August
1992 than in June and July because of higher prices in the United
States and because of the imposition of the anti-dumping duty on
U.S. imports. The industry returned to a profitable position in
late July 1992.
In summary, between 1988 and July 1992, the B.C. Iceberg lettuce
industry lost 28 points of market share to U.S. imports. Prices in
the marketplace firmed in 1989 and 1990, enabling the industry to
become marginally profitable in 1990 after incurring losses in 1988
and 1989. The year 1991 was a disastrous one for B.C. growers as
sales declined substantially in both volume and value, reflecting
the low prices prevailing throughout the crop year. Substantial
financial losses were incurred in 1991 as a result of price erosion
caused by dumped imports and the industry's inability to sell a
significant volume of lettuce which had to be ploughed under.
B.C. producers have steadily lost market share in absolute and
relative terms since 1988, when they satisfied 60 percent of market
demand despite growing a product, the Ithica variety, which is
acknowledged to be of a lesser quality than the Salinas variety now
grown in British Columbia. By 1991, the share of market held by
U.S. imports had increased by 23 percentage points to 63 percent.
The Deputy Minister's final determination of dumping established
that, in 1991, 87.5 percent of these imports into British Columbia
were dumped, and at a weighted average margin of 31.0 percent.
Therefore, 55 percent of the B.C. market was held by dumped
imports, 8 percent, by undumped imports, and 37 percent, by local
In light of the foregoing, the Tribunal is satisfied that the
dumping of the subject imports has caused and is causing material
injury to the producers and production of like goods in British
Columbia as all, or almost all, of the B.C. industry has been
materially injured by the dumped imports. The Tribunal is therefore
satisfied that the fourth condition relating to regional industry
is now met.
With regard to the future, the evidence on pricing persuades the
majority of the Tribunal that material injury is likely to occur
without the imposition of anti-dumping duties. The record shows
that, during every crop year since 1988, imports have frequently
been sold at very low prices, which have been found to be dumped at
significant margins. The majority of the Tribunal is of the opinion
that, if anti-dumping duties are not kept in place, U.S. exporters
will resume dumping. The majority of the Tribunal therefore finds
that the dumping of the subject goods is likely to cause material
injury to the production in British Columbia of like goods.
The B.C. industry has requested protection from dumping during
the period from June 1 to October 15 of each year because this
period coincides with the harvesting season of B.C. Iceberg
lettuce. The evidence indicates that, each year, the B.C. product
generally comes to market on or about June 1 and that the last
local product is usually not readily available after October 15.
Given the perishability of fresh Iceberg lettuce, it is obvious
that B.C. growers cannot supply the domestic market during the full
Anti-dumping remedies under SIMA are usually applied on a
continuous basis while a finding of injury is in place. This is
less suitable when the subject goods are perishable in nature or
agricultural goods that cannot be stored for any length of time
beyond the harvesting season. In this case, any order under SIMA
must be tailored to meet the reality of the production cycle and
the marketplace in order to avoid penalizing end users during
periods when the industry is not in production and, therefore, does
not require the protection of anti-dumping measures.
Consequently, the Tribunal cannot find that imports of fresh
Iceberg lettuce, during a period when B.C. growers have not
traditionally supplied the marketplace, can have any material
effect on the growers' performance and, therefore, no injury can be
caused during those months of the year. In this respect, the
Tribunal excludes from its finding of material injury imports of
the subject Iceberg lettuce into British Columbia during the
periods January 1 to May 31 and October 16 to December 31 in each
The WGA claimed that bulk and cello-wrapped lettuce should not
be an issue as B.C. supply in these types of packaging units is
negligible. On the question of exclusions, the Tribunal has a
discretion which has been recognized in the past by the courts and
binational panels under the Canada-United-States Free Trade
In this case, the Tribunal, having had regard to the margins of
dumping and the price-sensitive nature of the B.C. lettuce market,
finds that the dumping of almost all imported Iceberg lettuce,
regardless of the type of packaging, has contributed to the price
erosion and material injury suffered by the industry. The Tribunal
is also of the opinion that the subject imported lettuce,
regardless of its packaging, is competitive with and substitutable
for domestic production. While the Tribunal recognizes that there
is limited availability of the subject goods in packaging other
than naked-24s, it is convinced that the removal of anti-dumping
duties on bulk and cello-wrapped lettuce would give rise to
circumvention of the injury finding.
In light of all of the foregoing, the Tribunal finds that the
dumping of fresh Iceberg (head) lettuce originating in or exported
from the United States of America, for use or consumption in the
province of British Columbia has caused, is causing and is likely
to cause material injury to the production in British Columbia of
like goods, excluding the periods January 1 to May 31 and October
16 to December 31 in each calendar year (Member Coleman
There are two important issues in this case on which I disagree
with my colleagues' decision. First, I do not consider that the
evidence demonstrates that British Colombia is a separate regional
industry, as defined by paragraph 1(ii) of Article 4 of the Code.
Second, I am not persuaded that there is a likelihood of material
injury in the future sufficient to justify the imposition of
anti-dumping duties for up to five years.
Paragraph 42(3)(a) of SIMA requires the Tribunal to take
fully into account paragraph 1 of Article 4 of the Code when
deciding, in each case, on the definition of the "domestic
industry" and, within that, on whether one or more separate
regional markets may be found. I agree with my colleagues that
paragraph 1(ii) of Article 4 of the Code involves a two-part
analysis and that B.C. producers of Iceberg lettuce may be regarded
as a separate regional industry. My difficulty lies with their
conclusion that there is a "concentration" of dumped imports into
the B.C. market.
My colleagues suggest that the Tribunal and its predecessor, the
CIT, have relied on two main tests in the past to define the
concept of concentration. The first is the "density" test, which
expresses the value of sales of dumped subject imports in the
region as a percentage of total sales of the subject goods in the
region. In the present case, the figure is impressive, compared to
previous cases for which we have numbers. Dumped imports of lettuce
accounts for 56 percent of the B.C. market for lettuce during the
1991 crop year, compared with percentages derived by the staff from
the public records of previous cases, of 33 percent for
Recreational Vehicle Entrance Doors, 37 percent for Solid
Urea,  and 8
percent for Beer. 
The second test which the Tribunal has applied measures
"distribution" by comparing the volume of subject imports into the
region with the volume of subject imports into the rest of the
national territory. In the present case, the figure is 17 percent,
compared with percentages for past cases where we have numbers of
75 percent for Recreational Vehicle Entrance Doors, 100
percent for Solid Urea, 23 percent for Yellow Onions,
 and 29 percent for
In the Beer case, the Tribunal used a "ratio" test to
supplement the distribution test. The ratio relates the region's
share of subject imports into Canada to the region's share of total
consumption of the subject goods in Canada. In my view, the ratio
test is valuable because it allows the Tribunal to judge how the
region is affected by the subject imports, compared to the national
territory as a whole. Applying the ratio test in this case gives a
figure of 1.22:1, compared to ratios for past cases for which we
have figures of 1.5:1 for Yellow Onions, and 2.9:1 for
While the Tribunal has discussed both the density and
distribution tests in past cases, it has applied both only in the
Recreational Vehicle Entrance Doors case. In the other
cases, Solid Urea, Beer and Yellow Onions, the
Tribunal relied on the distribution test alone. While the Tribunal
in the Beer case did not comment directly on the
appropriateness of the density test, it had this to say to explain
its sole reliance on the distribution test:
In this case, the Tribunal believes that it is appropriate to
apply the distribution test to determine whether there is a
concentration of dumped imports into the isolated market. A plain
reading of subparagraph 1(ii) of Article 4, which refers to "a
concentration of dumped imports into such an isolated
market," suggests that the issue of concentration is to be examined
by comparing the volume of imports into the regional market to the
volume of imports into the rest of the country.
I agree with the Tribunal's reasoning in Beer. Indeed, it
persuades me that the density test, by itself, is not useful or
relevant in assessing concentration in regional market cases. The
whole scheme of paragraph 1 of Article 4 of the Code requires that
various comparisons be made between the situation in the regional
market and the national territory as a whole. This is particularly
true of the last sentence setting out the concentration
requirement, where the opening phrase makes it clear that the
Tribunal may find injury in the regional market, "even where a
major portion of the total domestic industry is not injured." This
suggests that the Tribunal must have some understanding of the
situation of the entire domestic industry before it can come to a
judgement on concentration of dumped imports into the regional
Can the density test be of some use in measuring concentration,
either by itself or as support for the distribution test? In
particular, is it meaningful in this case that 56 percent of the
B.C. lettuce market is served by lettuce imported from the United
States? In my view, this number by itself is not helpful in judging
concentration. The number is of more interest in considering
material injury under Article 3 of the Code, but, here again, not
by itself. The high penetration of the B.C. lettuce market by
dumped imports from the United States is relevant to the
consideration of injury only if it can be shown that the
penetration is much higher than it was in some earlier period and
that the increase was caused by the dumped imports.
Where the density test can be helpful, I suggest, is as a check
on the distribution test, provided it is related to the density in
the rest of the national territory. Such a "market penetration"
test has been applied by the U.S. authorities. It relates the
market share of subject imports in the region to their market share
in the rest of the national territory. In the present case, Revenue
Canada has estimated that the share of dumped imports in the rest
of Canada is 44 percent, compared with 56 percent for British
Columbia. While such estimates must be used with caution, the high
reliability of import statistics in this industry, the fact that
88.7 percent of the subject imports into British Columbia were
found to be dumped, and the cost of production method of
calculating the margins of dumping which would give the same result
for dumped imports into the rest of Canada suggest that this
estimate is reliable. The ratio of dumped imports into British
Columbia to dumped imports into the rest of Canada, under this form
of the "market penetration" test is 1.3:1. This is slightly higher
than the ratio of 1.22:1 calculated according to the "ratio" method
used in the Beer case.
The question now is whether the Tribunal should be satisfied, on
the basis of either of these ratios, that the concentration
condition has been met. As the Tribunal observed in its reasons in
the Beer case, the Code speaks only of "a concentration" and
it may be supposed that the condition is satisfied if either of the
ratios considered above is greater than 1, which they are. However,
the Code also states that a separate regional industry finding may
be made only in "exceptional circumstances." To my mind, ratios
which show that the B.C. lettuce market is affected in the order of
20 percent to 30 percent more than the rest of Canada by imports of
dumped U.S. lettuce are not sufficient to lead to a conclusion that
exceptional circumstances exist in this case.
As can be seen from the figures cited earlier, the ratio test
for lettuce is considerably lower than the ratios for earlier cases
where injury was found. (There was a finding of no injury in the
Recreational Vehicle Entrance Doors case.) I would not wish
to suggest that any minimum ratio should apply to all cases,
because of the different facts in each case. However, I suggest
that the ratio of 2.9:1 on which the Tribunal relied in Beer
is consistent with the notion of "exceptional circumstances," and
that the ratio of 1.22:1 (or even the market penetration ratio of
1.3:1) in this case is not.
In my view, then, the concentration requirement is not met. This
requirement is no less essential than the other three criteria of
paragraph 1 of Article 4 of the Code. Accordingly, the first
mandatory condition in paragraph 1 of Article 4 concerning injury
to a regional industry cannot be met in this case. While my
difference of view with my colleagues on this issue is sufficient
to cause me to dissent from the entire finding, I would like also
to make some comments on the question of material injury in this
I agree with my colleagues that there are clear indications in
this case of material injury in the past, particularly with respect
to the disastrous year of 1991. However, I question whether there
is a strong likelihood of material injury from continued dumping in
the future. While Revenue Canada's dumping investigation
concentrated on the 1991 crop year when U.S. prices were at their
lowest, the Tribunal considered evidence relating to injury over
the five-year period from 1988 to 1992. To make a judgement about
future injury and the advisability of putting anti-dumping duties
in place for up to five years, it is necessary to consider market
developments in the past five years, with particular reference to
It is clear that B.C. lettuce production and market share have
slipped significantly in the past five years. Furthermore, as
measured by the B.C. Iceberg lettuce cost-of-production formula
which the industry presented to the Tribunal, the industry has been
in a loss position for much of the past five years. On the basis of
evidence tested at the hearing and confirmed subsequently by the
interested parties, per carton losses on sales were $0.62 in 1988,
$0.09 in 1989 and $2.01 in 1991. Profits were only $0.01 per carton
in 1990 and $0.24 in June and July 1992, though their average for
the entire 1992 crop year must have been considerably higher, given
the strong increase in prices which occurred in the remainder of
What is interesting is how the B.C. industry responded to the
negative or at best mediocre price and profit signals it was
receiving. During the crop years 1988 to 1991, the area planted in
lettuce in British Columbia increased by 17 percent, compared to a
3-percent decline in the rest of Canada. According to evidence
supplied by the B.C. industry, intended acreages in lettuce rose
from 526 for 1990 to 594 for 1991. In the same two years,
marketable production increased from approximately 300,000 cartons
to approximately 390,000. Of the 1991 marketable production, the
industry estimated that it had to plough down the equivalent of
97,500 cartons. That is, the plough downs were only slightly
greater than the increase in the domestic industry's marketable
production. Meanwhile, shipments to British Columbia from the
United States, in carton equivalents, increased by about 5 percent
During the hearing, industry witnesses were unable to give
complete explanations of why they planted so much lettuce in 1991.
Most mentioned the B.C. growers' belief that continued drought in
California would restrict supplies and keep prices high, though
California had been in drought for several years. There was also
testimony that the greatest part of B.C. growers' shift to the
Salinas variety of Iceberg lettuce took place in 1991. I think it
is possible that B.C. growers' plantings in 1991 were influenced by
the hope that the full-scale switch to the Salinas variety would
help them recover market share from U.S. producers. I think it is
also possible that the B.C. industry's cost-of-production formula
is on the high side, and that 1990 was quite a profitable year, not
just a break-even year as shown by the formula. Indeed, the British
Columbia Fruit Wholesalers Association submitted evidence based on
interviews of some producers that the break-even cost for B.C.
producers was approximately $7.00 a carton, not $7.92 as shown by
the formula submitted by the B.C. industry.
Whatever the reasons for the B.C. industry's overproduction in
1991, this factor clearly aggravated the material injury which the
industry suffered as a result of very low U.S. prices that year. In
reaction to the U.S. dumping and its own overproduction, the B.C.
industry cut back sharply lettuce acreage and production in 1992.
The cutback in 1992 production, in response to the difficulties of
1991, made it impossible for the industry to take full advantage of
the higher prices in 1992 and allowed U.S. lettuce sold that year,
at largely undumped prices, to make sizeable gains in market
In turning to the question of future injury, it is well to keep
in mind paragraph 6 of Article 3 of the Code, which reads as
A determination of threat of injury shall be based on facts
and not merely on allegation, conjecture or remote possibility. The
change in circumstances which would create a situation in which the
dumping would cause injury must be clearly foreseen and
In my view, "imminence" must relate to the likelihood of
injurious dumping affecting B.C. lettuce producers in the next year
or so, and not at any time over the five-year period which would be
covered by a finding of material injury. The chance of the 1993
crop year being as difficult as the 1991 crop year is probably no
more than one in five. While the first three years of the 1988-92
period were at best mediocre for the B.C. lettuce industry in terms
of profits, and worse in terms of market share, the industry
appeared to be adjusting to the pressures. For instance, it was
attempting to regain market share and reduce the price discounts it
had to give relative to the landed price of U.S. lettuce by
switching to the Salinas variety of Iceberg lettuce. The fifth
year, 1992, was profitable overall, despite the low production of
the B.C. industry. Indeed, prices rose throughout the summer. By
the time the preliminary determination of dumping went into effect
at the end of July, and anti-dumping duties began to be collected,
market forces had driven U.S. prices and hence B.C. prices, net of
duties, to levels which were very profitable for B.C.
In making short-term projections, that is in deciding what is
"imminent," it is normal to put particular weight on recent events.
On this basis, the pricing and profit situation in the 1992 crop
year might suggest little reason to predict a reversal in the
fortunes of the B.C. lettuce industry next year. In addition, the
B.C. industry has been successful, through switching to the Salinas
variety, in narrowing the price discount it must offer against the
landed price of U.S. lettuce. A narrowing of the discount was
noticeable even in 1991. Furthermore, the B.C. industry, with the
lesson of 1991 in mind, is unlikely to overplant as it did that
year. However, it must be recognized that agricultural markets are
notoriously volatile. Even if B.C. producers are careful, is it not
possible that the high prices in 1992 will induce producers in
California and other states to grow too much Iceberg lettuce and
drive prices to disastrous lows?
The experience in California, in the last few years, suggests
that there will not be a significant supply response to the firm
prices of 1992. From 1989 to 1991, lettuce acreage in California
declined by 9 percent. From 1988 to 1991, total lettuce production
in California increased by only 1.5 percent. Whether the high
prices of 1992 will bring on more production in the United States
depends on a lot of unknown factors such as the availability of
land, the attractiveness of other crops and the weather. Press
clippings on California production, supplied to the Tribunal by the
B.C. industry, suggest that California lettuce producers, despite
the recent collapse of the California Iceberg Lettuce Commission,
have not given up efforts to pursue orderly marketing activities.
An institutional example of this is the revitalization of the
Central California Iceberg Lettuce Cooperative, which groups half
of the state's Iceberg lettuce growers.
It is quite possible, in the absence of a finding of material
injury, in the course of the next five years, that the B.C. Iceberg
lettuce industry could be hit again by very low U.S. prices.
However, I do not consider that the purpose of the anti-dumping
legislation is to put a price floor under Canadian producers to
protect them from intermittent dumping. Dumping in this industry,
when it occurs, is the result of market forces driving prices down
below the cost of production in the exporting country.
Cost-of-production formulas for agricultural commodities are
notoriously high and industries concerned, such as the California
lettuce industry, operate and may even expand without always
selling at prices exceeding those given by a full
cost-of-production formula. Dumping arising from sales at prices
below full cost of production in a competitive market such as
lettuce is inadvertent and not part of any long-range plan to
eliminate production in the importing country. Furthermore, such
dumping, when it occurs, may not be of such magnitude as to cause
material injury to production in Canada. For these reasons, great
caution should apply to decisions on the likelihood of material
injury in agricultural commodity cases of this sort.
1. R.S.C. 1985, c.
2. R.S.B.C. 1979, c.
3. Agreement on
Implementation of Article VI of the General Agreement on Tariffs
and Trade , signed in Geneva on April 12, 1979.
Vehicle Entrance Doors, Produced or Exported by, or on Behalf of,
Elixir Industries, Gardena, California, United States of America,
for Use or Consumption in the Provinces of Alberta and British
Columbia , Canadian Import Tribunal, Inquiry No. CIT-12-87, March
18, 1988;  16 C.E.R. 174.
5. Canada Treaty
Series , 1989, No. 3 (C.T.S.), signed on January 2, 1988.
6. Solid Urea
Originating in or Exported from the German Democratic Republic and
the Union of Soviet Socialist Republics for Use or Consumption in
Eastern Canada (Canadian Territory East of the Ontario - Manitoba
Border) , Canadian Import Tribunal, Inquiry No. CIT-9-87, December
24, 1987;  15 C.E.R. 277.
7. Certain Beer
Originating in or Exported from the United States of America by or
on Behalf of Pabst Brewing Company, G. Heileman Brewing Company
Inc. and The Stroh Brewery Company, their Successors and Assigns,
for Use or Consumption in the Province of British Columbia ,
Canadian International Trade Tribunal, Inquiry No. NQ-91-002,
October 2, 1991.
8. Fresh, Whole,
Yellow Onions, Originating in or Exported from the United States of
America, for Use or Consumption in the Province of British Columbia
, Canadian International Trade Tribunal, Review No. RR-91-004, May
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Initial publication: July 16, 1997