Reviews (Section 76)
CERTAIN DUMPED INTEGRAL HORSEPOWER INDUCTION MOTORS, ONE
HORSEPOWER (1 HP) TO TWO HUNDRED HORSEPOWER (200 HP) INCLUSIVE,
WITH EXCEPTIONS, ORIGINATING IN OR EXPORTED FROM THE UNITED STATES
OF AMERICA; AND DUMPED POLYPHASE INDUCTION MOTORS, ONE HORSEPOWER
(1 HP) TO TWO HUNDRED HORSEPOWER (200 HP) INCLUSIVE, ORIGINATING IN
OR EXPORTED FROM BRAZIL, JAPAN, MEXICO, POLAND, TAIWAN AND THE
UNITED KINGDOM; AND SUBSIDIZED SUBJECT GOODS, ORIGINATING IN OR
EXPORTED FROM BRAZIL
Review No.: RR-89-013
TABLE OF CONTENTS
Ottawa, Wednesday, October 10, 1990
Review No.: RR-89-013
IN THE MATTER OF a review, under section 76 of the Special
Import Measures Act, of the finding of material injury of the
Anti-dumping Tribunal dated April 15, 1983, and of the finding of
material injury of the Canadian Import Tribunal dated October 11,
CERTAIN DUMPED INTEGRAL HORSEPOWER INDUCTION MOTORS, ONE
HORSEPOWER (1 HP) TO TWO HUNDRED HORSEPOWER (200 HP) INCLUSIVE,
WITH EXCEPTIONS, ORIGINATING IN OR EXPORTED FROM THE UNITED STATES
DUMPED POLYPHASE INDUCTION MOTORS, ONE HORSEPOWER (1 HP) TO
TWO HUNDRED HORSEPOWER (200 HP) INCLUSIVE, ORIGINATING IN OR
EXPORTED FROM BRAZIL, JAPAN, MEXICO, POLAND, TAIWAN AND THE UNITED
KINGDOM; AND SUBSIDIZED SUBJECT GOODS, ORIGINATING IN OR EXPORTED
The Canadian International Trade Tribunal, under the provisions
of section 76 of the Special Import Measures Act, has
conducted a review of:
- the finding of material injury of the Anti-dumping Tribunal
dated April 15, 1983, concerning the dumping in Canada of integral
horsepower induction motors,* one horsepower (1 hp) to two hundred
horsepower (200 hp) inclusive, excluding vertical-shaft pump motors
generally referred to as vertical P-base or vertical P-flange
motors, originating in or exported from the United States of
America, but excluding:
1) single phase motors;
2) submersible pump motors for use in oil and water wells;
3) arbor saw motors; and
4) integral induction motors for use as replacement parts
i) absorption cold generator pumps manufactured by The Trane
ii) Centravac Chillers manufactured by The Trane Company,
iii) semi-hermetic compressors and hermetic compressors
manufactured by The Trane company; and
*(For greater certainty, the expression "integral horsepower
induction motors" is to be construed as referring to induction
motors constructed in three-digit frames.)
- the finding of material injury of the Canadian Import Tribunal
dated October 11, 1985, concerning the dumping in Canada of
polyphase induction motors, 1 hp to 200 hp inclusive, originating
in or exported from Brazil, Japan, Mexico, Poland, Taiwan and the
United Kingdom and the subsidizing of the same goods originating in
or exported from Brazil.
Pursuant to subsection 76(4) of the Special Import Measures
Act, the Canadian International Trade Tribunal hereby:
- continues the finding dated April 15, 1983, in respect of the
goods originating in or exported from the United States of America
with an amendment to exclude the subject goods that are imported
into Canada from the United States by Trane Canada for installation
into equipment manufactured by Trane Canada for export from Canada
to the United States, in accordance with the Inward Processing
provisions of the Customs Tariff (Member Bertrand dissenting
from the exclusion); and
- continues the finding dated October 11, 1985, in respect of
the dumping of the subject goods originating in or exported from
Brazil, Japan, Poland, Taiwan and the United Kingdom and in respect
of the subsidizing of the subject goods by Brazil, and rescinds the
said finding with respect to the subject goods originating in or
exported from Mexico.
Arthur B. Trudeau
Arthur B. Trudeau
Robert J. Bertrand, Q.C.
Robert J. Bertrand, Q.C.
Robert J. Martin
Robert J. Martin
Special Import Measures Act - Whether to continue, with
or without amendment, or rescind the findings of the Anti-dumping
Tribunal and the Canadian Import Tribunal relating to the
above-mentioned goods - Timeliness of Tribunal review pursuant to
subsection 76(5) - Supplier-specific orders pursuant to subsection
43(1) - Assembly from imported parts - Price sensitivity -
Investment for production facilities.
The Canadian International Trade
Tribunal continues the above-mentioned findings with an amendment
to exclude certain goods imported from the United States by Trane
Canada and rescinds the finding with respect to goods originating
in or exported from Mexico. Dumping on the part of suppliers of
goods originating in or exported from each of the countries subject
to these findings, with the exception of Mexico, is likely to
continue or resume, and subsidizing of the same goods originating
in or exported from Brazil is likely to continue. This is evidenced
by the behavior demonstrated by the major exporters and by the
level of price competition in the domestic market (Member Bertrand
dissenting from the exclusion).
The Tribunal finds that, without the imposition of anti-dumping
or countervailing duties, dumping and/or importation of subsidized
goods would likely cause material injury to the domestic industry.
The material injury to the domestic industry would be in the form
of lower prices, reduced market share, marginal or negative returns
and a reduced ability to invest in the capital necessary to remain
Place of Hearing: Ottawa, Ontario
Dates of Hearing: June 4 to 18, 1990
Date of Order and Reasons: October 10, 1990
Tribunal Members: Arthur B. Trudeau, Presiding Member
Robert J. Bertrand, Q.C., Member
Michèle Blouin, Member
Director of Research: M. Brazeau
Research Managers: D. Chatterson/D. Kemp
Statistical Officer: N. Burroughs
Distribution Clerk: L.E. Pharand
Participants: Simon V. Potter,
Jean G. Bertrand and
for The Electrical and Electronic Manufacturers
Association of Canada, Westinghouse Motor
Company Canada Ltd. and Moteurs
Leroy-Somer Canada Limitée/Leroy-Somer
Richard G. Dearden and
for General Electric Canada Inc.
Darrel H. Pearson
for Brook Crompton (Canada) Inc., Brook
Crompton International Ltd., MagneTek Canada
Ltd. and Century Electric Inc.
B. Erik Furstrand, P. Eng.
For Madison Industrial Equipment Ltd. and Teco
Electric & Machinery Co. Ltd.
C.J. Michael Flavell and
Geoffrey C. Kubrick
for Toshiba Corporation and
Toshiba International Corporation
Peter Clark, Peter Burn,
Mary Ellen Murdock and Keith Flavell
for V.J. Pamensky Canada Inc. and
Ministry of Economy, Finance and Planning,
Government of the Federative Republic of
Peter Clark and Peter Burn
for WEG Exportastora S.A. and
WEG Motores Ltda.
William R. Herridge, Q.C.
for John Wilson Electric (Fordwich) Ltd., Duke
Electric (1977) Limited, XYZ Dynamo Ltd. and
TME Delta Inc.
Terrence A. Sweeney and
for Baldor Electric Company, Dryden Agencies Ltd.
and Canada Electro Drives (1982) Ltd.
A. de Lotbinière Panet, Q.C.,
Richard A. Wagner
and Edith Bramwell
for Trane Canada, Division of WABCO Standard
Trane Inc. and The Trane Company of La Cross
Richard S. Gottlieb and
Peter E. Kirby
for ABB Motores S.A. de C.V.
Alex Fleming, P.Eng.
for B.C. Hydro
Vice-President General Manager,
Leeson Electric (Canada) Ltd.
Marketing and Medium Motor
Westinghouse Motor Company Canada Ltd.
Jeff B. Irish
Program Manager - Component Motors Industrial Drive
James D. McAnsh
Manager - International Trade Services Corporate Law
Diretor de controle
Consultoria de Comércio Exterior S/C Ltda
S.& A. Business Consultants
Leroy-Somer Canada Ltée
President and General Manager
Director and General Sales Manager
Director of Finance Administration
B. Erik Furstrand, P.Eng
Madison Industrial Equipment Ltd.
Westinghouse Sales and
Vice-Preisdent - Finance
Westinghouse Motor Company Canada Limited
Manager - Construction Purchasing
Howe Sound Pulp and Paper Limited
A. (Brian) Besteman
H.A. Simons Ltd.
Alan R. Fraser
National Service Manager
Charles P. LeMone
Vice-President and Chief Engineer
Toshiba International Corporation
Carl H. Leippi, P.Eng.
Hampton Power Products
John Wilson Electric (Fordwich) Ltd.
Ing. Héctor Cardenas N.
ABB Motores, S.A. de C.V.
Peter R. Richard
Large AC Drive and Rectifiers
Asea Brown Boveri Inc.
J.E. (Jim) Dryden
Dryden Agencies Ltd.
Machinery and Transportation
Address all communications to:
Canadian International Trade Tribunal
Journal Tower South
365 Laurier Avenue West
The Canadian International Trade Tribunal (the Tribunal) has
completed a review, under section 76 of the Special Import
Measures Act (SIMA), of the findings of material injury made by
the Anti-dumping Tribunal (ADT) on April 15, 1983, and the Canadian
Import Tribunal (CIT) on October 11, 1985, concerning certain
induction motors imported from the United States, Brazil, Japan,
Mexico, Poland, Taiwan and the United Kingdom.
In conducting a review of a finding of material injury caused by
dumping and/or importation of subsidized goods, the Tribunal looks
for evidence concerning such factors as the recent behavior of
exporters and market conditions in the countries of origin, Canada
and elsewhere that make imports of dumped and/or subsidized goods
likely or unlikely to resume in the foreseeable future. The
Tribunal also considers evidence pertaining to such factors as
changes in import shares, market conditions and the health of the
industry to determine whether a resumption of dumping and/or
importation of subsidized goods is likely to cause material injury
to producers in Canada.
In the matter of the review of the 1985 finding against Brazil,
Japan, Mexico, Poland, Taiwan and the United Kingdom, the evidence
shows that, while overall imports have declined, the amount of
countervailing duties assessed and collected on imports from
Brazil, the overall margins of dumping and the percentage of goods
dumped have all increased to substantial levels over the past two
years. Imports from Brazil have increased considerably and the
Government of Brazil has not ceased subsidizing. Since the finding
in 1985, a substantial volume of imports from Taiwan, Poland and
the United Kingdom have been supplanted by motors produced in
Canada by new non-integrated producers that import parts from the
same overseas factories that formerly exported the completed motors
and that, in some cases, continue to export completed motors to
Canada. Given the evidence concerning this new production and the
global trend to world-scale production facilities, the Tribunal
questions the viability of this non-integrated production were the
finding to be rescinded. Imports from Mexico dropped to a
negligible level after the finding and have not been a factor in
the market since that time.
The Tribunal acknowledges the evidence presented concerning the
dumping of induction motors in Australia by Brazil, the United
Kingdom, Taiwan and Poland. In addition, the Tribunal considers the
evidence respecting the behavior exhibited in the so-called large
motor case to be relevant to this case because it was heard only
last year, and the bulk of the goods (200- to 800-hp motors)
involve the same producers, production processes, marketing
channels and customers.
The Tribunal heard considerable evidence pertaining to the
softening of the domestic market and price sensitivity. Given the
market situation, the likelihood of increased pricing pressures and
the demonstrated behavior of the subject countries, the Tribunal
concludes that dumping by the subject countries is likely to
resume, with the exception of Mexico, in the event of a rescission
of the finding.
Regarding a resumption of dumping and/or the continued
importation of subsidized goods being likely to cause material
injury to the domestic industry, the Tribunal notes that, while the
performance of the industry has improved during the buoyant market
of the past few years, the industry remains unprofitable overall.
Although the share of the market held by domestic producers has
increased since the finding in 1985, almost all of the increase is
accounted for by the non-integrated producers that have become
established since the 1985 finding and that sell motors produced
largely from parts imported from countries subject to the finding.
The integrated producers, Westinghouse Motor Company Canada Ltd.
(Westinghouse), Leroy-Somer Canada Limitée (Leroy-Somer) and
General Electric Canada Inc. (GE Canada), have been able to
maintain their share of the market over the past several years,
although several other integrated producers have exited the
industry during the past five years.
The industry is in the process of rationalizing and
restructuring and is faced with vigorous competition in its home
market. Pricing pressures on all suppliers are expected to increase
over the near term. Due to its protracted loss situation and its
large investment outlays, GE Canada is particularly susceptible to
a market downturn and/or lower prices that would result from a
resumption of dumping. The Tribunal concludes that a resumption of
dumping and/or the continued importation of subsidized goods is
likely to cause material injury to the domestic industry in the
form of lower prices, reduced market share, marginal or negative
returns and a reduced ability to invest the capital necessary to
In the matter of the review of the 1983 finding against the
United States, the evidence shows that imports from the United
States have increased significantly since 1986 and now exceed the
combined imports from the six countries subject to the 1985
finding. The average margin of dumping and the percentage of goods
dumped are significant and increasing. The US industry is in the
midst of a substantial reorganization and rationalization. While
some plants have closed and some firms have exited the industry,
other major US producers have excess capacity or were planning to
increase their capacity. The Tribunal heard evidence that Toshiba
International Corporation (Toshiba) has made considerable inroads
into the end-user market segment through a strategy of aggressive
pricing. The Tribunal is also aware of the margins of dumping and
the percentages of goods found to have been dumped from the United
States during the large motor inquiry last year. In view of the
above and in light of the evidence concerning the price sensitivity
of a market that is softening, the Tribunal is of the view that,
without the imposition of anti-dumping duties, producers in the
United States are likely to continue or resume dumping.
The Tribunal considers that the observations made in respect of
the impact that resumed dumping and subsidizing by the countries
subject to the 1985 finding is likely to have on domestic
production are also pertinent to the impact of resumed dumping by
US producers. In fact, the likelihood of material injury is
considered to be even greater due to the growth in imports from the
United States, the share of the market held by these imports, the
more established distribution and marketing of US goods in Canada
and the aggressive pricing behavior by Toshiba that has resulted in
a successful penetration of the end-user market segment.
The Tribunal, therefore, continues the finding of October 11,
1985, in respect of Brazil, Japan, Poland, Taiwan and the United
Kingdom and rescinds the said finding with respect to Mexico. The
Tribunal also continues the finding of April 15, 1983, with an
amendment to exclude the subject goods that are imported into
Canada from the United States by Trane Canada for installation into
equipment manufactured by Trane Canada for export from Canada to
the United States, in accordance with the Inward Processing
provisions of the Customs Tariff.
This review, conducted under section 76 of SIMA, encompasses the
findings of material injury made by the ADT on April 15, 1983, and
the CIT on October 11, 1985, concerning certain induction motors
described as follows.
Inquiry No. ADT-8R-78 (April 15, 1983)
Integral horsepower induction motors, one horsepower (1 hp) to
two hundred horsepower (200 hp) inclusive, excluding vertical-shaft
pump motors generally referred to as vertical P-base or vertical
P-flange motors, originating in or exported from the United States
of America. 
Inquiry No. CIT-6-85 (October 11, 1985)
Polyphase induction motors, 1 hp to 200 hp inclusive,
originating in or exported from Brazil, Japan, Mexico, Poland,
Taiwan and the United Kingdom.
The Tribunal issued a notice of review on November 28, 1989.
This notice was sent to all known interested parties and was
published in Part I of the December 9, 1989, edition of the Canada
Gazette. In March 1990, detailed questionnaires were sent to all
known Canadian producers of the subject goods and to over 60
importers. From replies to these questionnaires and from
information obtained from other sources, the Tribunal's research
staff prepared public and protected pre-hearing staff reports.
Prior to the hearing, Tribunal staff members visited several
producers and importers located in Quebec, Ontario and British
Columbia, while Members of the Tribunal visited the premises of two
producers in Ontario.
The record of this review consists of all relevant documents and
materials, including the original findings, the notice of review,
correspondence with interested parties, replies to questionnaires,
the pre-hearing staff reports, and submissions and argument filed
by interested parties. All public exhibits were made available to
interested parties, while protected exhibits were made available
only to independent counsel who had filed an undertaking of
non-disclosure. Public and in camera sessions were held in
Ottawa from June 4 to June 18, 1990.
Westinghouse and Leroy-Somer, integrated domestic manufacturers
of the subject goods, were represented by the Electrical and
Electronic Manufacturers Association of Canada (EEMAC) and by
counsel at the hearing. Evidence was submitted and argument made in
support of continuing both findings.
GE Canada, another integrated domestic manufacturer, was
represented by counsel at the hearing. Evidence was submitted and
argument made in support of continuing both findings for a period
of three years or, alternatively, continuing both findings except
against Baldor Electric Company (Baldor) and any importers that
qualify for inward processing remission orders or, alternatively,
continuing the 1985 finding and amending the US finding to cover
only exports by Toshiba.
Leeson Electric (Canada) Ltd. (Leeson), a domestic producer and
importer, submitted a brief in support of continuing both findings
and was called as a witness by EEMAC.
Brook Crompton (Canada) Inc. (Brook Crompton), a domestic
producer and importer, and its parent company in the United
Kingdom, Brook Crompton International Ltd., were represented by
counsel at the hearing and submitted evidence and made argument in
support of rescinding the finding in Inquiry No. CIT-6-85 or,
alternatively, excluding the subject motors from the United Kingdom
or excluding certain classes of induction motors (vertical hollow
shaft, two-digit frame size and wound rotor).
Madison Industrial Equipment Ltd. (Madison), a domestic producer
and former importer, was represented by the president of the firm.
Madison submitted evidence and made argument in favor of rescinding
the finding in Inquiry No. CIT-6-85 or, alternatively, excluding
imports from Taiwan or excluding imports by Madison from Teco
Electric & Machinery Co. Ltd. (Teco), Taiwan.
An exporter from the United States, Toshiba, and four of its
Canadian distributors, John Wilson Electric (Fordwich) Ltd. (John
Wilson), Duke Electric (1977) Limited (Duke Electric), XYZ Dynamo
Ltd. and TME Delta Inc. were all represented by counsel at the
hearing. They submitted evidence and made argument in support of
rescinding the finding in Inquiry No. ADT-8R-78 against the United
Another exporter from the United States, Baldor, and two of its
Canadian representatives, Dryden Agencies Ltd. (Dryden) and Canada
Electro Drives (1982) Ltd., were represented by counsel at the
hearing. Evidence and argument were submitted in support of
rescinding the finding in Inquiry No. ADT-8R-78.
An importer, MagneTek Canada Ltd. (MagneTek) and its supplier in
the United States, Century Electric Inc. (Century), were
represented by counsel at the hearing. They submitted evidence in
support of rescinding the finding in Inquiry No. ADT-8R-78 or,
alternatively, excluding motors exported by Century and imported by
MagneTek or, alternatively, rescinding both findings.
An importer from the United States, Trane Canada (Trane), was
represented by counsel at the hearing. Counsel submitted evidence
and made argument in support of rescinding both findings. In the
event of a continuation of the findings, it was submitted that the
current exclusions concerning certain classes of motors imported by
Trane be continued and that the subject goods, imported by Trane
under an inward processing remission order and subsequently
exported, be excluded from application of the findings.
Another importer, V.J. Pamensky Canada Inc. (Pamensky) and its
supplier in Brazil, WEG Motores Ltda (WEG), were represented by
counsel at the hearing. They submitted evidence and made argument
in support of rescinding the 1985 finding against the six countries
in Inquiry No. CIT-6-85.
A manufacturer in Mexico, ABB Motores S.A. de C.V. (ABB
Motores), was represented by counsel at the hearing. Counsel
submitted evidence and made argument in support of the Tribunal
declaring that the finding does not apply to goods produced and
exported by ABB Motores or, alternatively, that goods produced and
exported by ABB Motores are excluded from the finding.
The ambassador of Mexico made a written submission requesting
that exports from Mexico be excluded from the finding.
At the outset of the hearing, counsel for Toshiba Corporation
and Toshiba presented a motion requesting that the Tribunal declare
itself out of time and without jurisdiction to conduct this review
as it pertains to the ADT finding of April 15, 1983, respecting the
United States, in Inquiry No. ADT-8R-78. By virtue of subsection
108(8), a transitional provision in SIMA,  findings already in effect when SIMA
became law in 1984 were deemed to have been made on the date the
new legislation came into force, i.e., December 1, 1984. Counsel
argued that the French version of subsection 76(5) of SIMA requires
that the Tribunal complete its review and make an order or finding
within five years of the previous finding, i.e., November 30,
The question is whether, as counsel contended, the French
version of subsection 76(5) means that a review must be completed
within five years of the original finding or order. The English
version of subsection 76(5) states that an order or finding expires
within five years, "Where the Tribunal has not initiated a review
..., " whereas the French version states, "À défaut de
réexamen... ". Counsel argued that the French version was more
consistent with the spirit of SIMA, which was seen as setting a
maximum limit of five years for any order or finding.
Counsel also argued that subsection 76(4): "À la fin du
réexamen visé au paragraphe (2), le Tribunal rend une
ordonnance... " and "On completion of a review pursuant to
subsection (2) ... the Tribunal shall make an order ... " means
that the order (ordonnance) is part of the review and, thus,
must be issued within the five-year period.
Finally, counsel argued that accepting the English version of
subsection 76(5) could result in an absurd situation where the
Tribunal had only to initiate a review within five years of the
original order and then might leave the matter unresolved for an
indefinite and, possibly, lengthy period.
In a ruling from the bench, the Tribunal refused to grant
counsel's motion and
asserted its jurisdiction, stating:
... this panel concludes that it has jurisdiction to conduct
this review and to issue a valid order as it pertains to the
finding respecting the United States. This review was initiated
before the five-year expiry date.
In reaching this conclusion, this panel adopts as its reasons
those set out by the Tribunal in the Statement of Reasons of the
Order dated May 1, 1990 in Review RR-89-006 Carbon and Alloy Steel
The reasons set out in that review and adopted by this panel are
Firstly, all provisions of section 76 must be read together,
in both languages, to derive their general meaning and intention.
Subsection 76(2) states that a review may be conducted "at any
time" following the original order or finding and it provides no
deadline for the review to be initiated or completed with reference
to the five years referred to in subsection 76(5). A review is not
conducted in a trice. It takes weeks or months to complete,
starting with staff work before the Notice of Review and continuing
through staff research, public hearings and the issuing of a
finding with reasons by the Tribunal. Parliament could not
logically have required in subsection 76(5) that the review be
completed before the expiration of five years from the original
order when it has already empowered the Tribunal to initiate a
review "at any time" during that period.
Secondly, the Tribunal considers that the plain meaning in
both languages of subsection 76(4) is that the Tribunal must make
an order immediately following the completion of a review. The
order sets out the conclusions reached in the review.
Thirdly, the Tribunal considers that the overall purpose of
SIMA is to ensure that Canadian production of like goods is
protected from material injury caused by dumping and subsidizing,
subject to review to ensure that such special protection is still
justified. Such a review may be initiated at any time after the
making of an order or finding, but not later than five years.
Subsection 76(5) is only meant to ensure that the order or finding
be deemed to have expired if the Tribunal has not initiated a
review within five years of having made such an order or
Parliament did not provide for the specific duration of an
order or finding made by the Tribunal under section 43. This is
because it is not possible to predict how long dumping or
subsidizing, and the injury from it, will continue. If parliament's
overriding purpose was to ensure that an injury finding last no
more than five years, it would have said so in SIMA. Instead,
parliament placed the five-year provision in the context of the
section 76 review procedures. The spirit of SIMA and the thrust of
section 76 as a whole is neatly expressed in the English version of
subsection 76(5). The French phrase "À défaut de réexamen... " that
is, "unless there is a review ... ," reflects the fact that a
review is a process and not a brief moment in time.
Finally, a party which considered that the Tribunal, having
initiated a review, was taking too long to conduct it and issue its
decision, could seek appropriate remedies elsewhere.
At the hearing, counsel for ABB Motores, a manufacturer of the
subject goods in Mexico requested that the Tribunal declare that
the CIT decision under review, Inquiry No. CIT-6-85, does not apply
to ABB Motores. ABB Motores was not an exporter of the subject
goods either at the time of the dumping investigation by the Deputy
Minister of National Revenue, Customs and Excise (the Deputy
Minister) or during the CIT's inquiry held in 1985. Indeed, ABB
Motores did not exist under that corporate name until 1986 when it
was formed by the merger of two companies. One of the founding
companies was from Mexico and had been producing the subject goods
since 1964. However, that company was not an exporter of the
subject goods at the time of either the dumping investigation or
the material injury inquiry.
Counsel based the request on these circumstances, stating that
ABB Motores was neither a party to the dumping investigation
preceding the CIT's material injury inquiry nor a party before that
tribunal during its material injury inquiry. In counsel's view, the
CIT could make a finding of material injury only to
producer-exporters that had been investigated and found to have
dumped goods in Canada. Counsel for ABB Motores contends that this
conclusion flows from the scope of the Tribunal's powers as set
forth in subsection 43(1) of SIMA.
After having examined the jurisprudence and the scheme and
intention of SIMA, the Tribunal concludes that it cannot accede to
counsel's request. First, the Supreme Court of Canada decision in
Hitachi et al. v. the Anti-dumping Tribunal et al.  makes it quite clear that
the scope of a material injury finding is not delineated to
encompass only those producer-exporters found to have dumped goods
in Canada at the time of the dumping investigation or material
In the Hitachi case, which involved the dumping of color
television sets in Canada from Japan, other Asian countries and the
United States, the ADT had evidence that only three of twelve
Japanese exporters were underselling the domestic product. Further,
of these three, only one of them had sales of any consequence.
Despite the fact that only a few Japanese exporters were dumping
goods comparable to the domestic product, the ADT stated as
... The willingness of some Japanese exporters to
undersell the domestic product is of concern, and is likely to
increase in volume if dumping were permitted to continue.
Accordingly, the ADT concluded that the dumping of the goods in
issue, which were exported from Japan, was likely to cause
material injury to the production in Canada of like goods. That is,
the ADT did not limit the scope of the finding of material injury
only to those exporters found to have dumped color televisions in
Canada at the time of the dumping investigation or material injury
inquiry. Rather, the finding was country-wide in its
The ADT's finding was made in accordance with subsection 16(3)
of the Anti-dumping Act,  the relevant portion of which reads as
... The Tribunal ... shall declare to what goods or
description of goods including, where applicable, from what
supplier and from what country of export, the order or finding
applies. (Emphasis added)
The empowering provisions of subsection 43(1) of SIMA at the
time that the CIT made the finding challenged in this review by ABB
Motores read as follows:
... The Tribunal ... shall declare to what goods, including,
where applicable, from what supplier and from what country of
export, the order or finding applies.
Hitachi eventually appealed the decision of the ADT to the
Supreme Court of Canada on the following question of law:
... when the Anti-dumping Tribunal made a finding of material
injury or likely material injury [pursuant to subsection 16(3)] in
respect of exports of television sets from Japan, was it required
to relate its finding to each exporter, or could it make such a
finding in respect of all goods from Japan, irrespective of
whether in the case of some exporters there was no evidence
of injury or likely injury. (Emphasis added)
The Supreme Court dismissed the appeal stating that the ADT was
empowered by subsection 16(3) to make the finding that was
challenged in the appeal proceedings.
In view of the substantial similarity between subsection 16(3)
of the Anti-dumping Act and subsection 43(1) of SIMA, the
Tribunal reads the Hitachi decision as meaning that a
finding rendered under subsection 43(1) is not required to be
exporter-specific or applicable only to those exporters found to
have dumped goods in Canada at the time that the dumping
investigation or material injury inquiry was conducted. Indeed, the
finding may be made country-wide in application. In the Tribunal's
view, this finding accords with the scheme of SIMA and the
intention of Parliament in enacting the legislation.
According to that scheme, when any goods are imported into
Canada subsequent to a finding, a customs officer may determine,
for the purposes of assessing anti-dumping duty, several things:
(1) whether the imported goods are goods of the same description as
goods to which the finding applies; (2) the export price of the
imported goods that are of the same description as goods to which
the finding applies; or (3) the normal value of the exported
Counsel argued that the CIT finding only applies to exporters
found to have dumped goods at the time of the dumping investigation
or material injury inquiry. Since the above-noted determinations
relate to goods that are of the same description as goods to which
the finding of the CIT applies, it follows from counsel's reasoning
that these determinations would be applicable only to goods
supplied by exporters named in the CIT finding.
The Tribunal cannot accept this reasoning because an exporter,
not identified in a finding, could dump goods with impunity, even
though the exporter was supplying the same dumped product from the
same country that was the subject of the material injury finding.
It is well expounded that the prime purpose of SIMA is to protect
Canadian manufacturers and producers from unfair import competition
arising from dumping and/or importation of subsidized goods causing
material injury. 
Clearly, this parliamentary intention could be easily circumvented
if the scope of a dumping inquiry was limited only to those
exporters found to have dumped goods in Canada at the time of the
dumping investigation or material injury inquiry.
On January 9, 1979, the ADT found that the dumping of certain
integral horsepower induction motors, one horsepower to two hundred
horsepower inclusive, originating in or exported from the United
States, had caused, was causing and was likely to cause material
injury to the domestic production of like goods.
In its consideration of material injury, the ADT noted that the
Canadian industry comprised producers of widely varying size,
orientation and product range. Overall, the industry was able to
produce virtually the entire range of the subject goods to an
acceptable standard of quality, although it was criticized for its
slow response to specialized market segments, as well as its
distribution and service practices.
Imports from the United States were found to be a major and
rapidly growing factor in the Canadian market. Over three quarters
of the imports investigated by the Deputy Minister were found to
have been dumped with a substantial margin of dumping. This
prevented the Canadian industry from sharing in the substantial
growth in the Canadian market during the late 1970s, as it was
unable to raise prices sufficiently to offset increased costs. As a
consequence, the domestic industry lost market share and suffered
declines in employment, capacity utilization and profitability.
The ADT noted that the price was a significant factor, if not
always the determining one, in purchasing decisions. As such, the
ADT concluded that dumped prices were the major reason for the
market success of the motors from the United States and,
accordingly, that such dumping was responsible for the injury
incurred by the Canadian industry. Several classes of induction
motors, not produced in Canada, were excluded from the finding.
During the hearing, the meaning of the phrase "integral
horsepower" was a contentious issue. The industry relates
"integral" to motors having a three-digit frame code, while
"fractional" relates to two-digit frame codes. However, fractional
motors with two-digit frames may range up to five horsepower, while
integral motors with three-digit frames may be rated at less than
one horsepower. Although the ADT did not explicitly define the
meaning of "integral horsepower" during the hearing, it did
indicate, in its statement of reasons, that the goods in issue were
induction motors of one to two hundred horsepower and constructed
in three-digit frames.
Certain importers made application, under section 28 of the
Federal Court Act, for review of the ADT's decision to the
Federal Court of Appeal, arguing that, because the goods at issue
were defined subsequent to the hearing, they were deprived of the
opportunity to submit evidence and make argument specifically
directed to the class of goods that the ADT found to be the subject
of the inquiry. The Federal Court of Appeal, in its decision dated
July 20, 1982, agreed that the failure to afford this opportunity
to all parties constituted a denial of natural justice and directed
the ADT to rehear the matter.
The rehearing was held on January 24, 1983, and evidence was
adduced with respect to the particular class of goods found to be
the subject of the inquiry, namely, induction motors constructed in
three-digit frames having horsepower ratings from one to two
hundred inclusive. The ADT determined that motors with three-digit
frames constituted close to 70 percent of the total market for one
to two hundred horsepower integral induction motors. The ADT came
to the same conclusion that it had reached in the original inquiry
and issued a finding on April 15, 1983, with the same exclusions as
in the original finding. The latter finding and the 1985 finding
are the subject of this review.
On October 11, 1985, the CIT found that the dumping in Canada of
polyphase induction motors, 1 hp to 200 hp inclusive, originating
in or exported from Brazil, Japan, Mexico, Poland, Taiwan and the
United Kingdom and the subsidizing of the same goods from Brazil
had caused, were causing and were likely to cause material injury
to the production in Canada of like goods. On November 26, 1985,
the CIT issued a finding of no material injury respecting imports
of the same class of motors originating in Romania. 
In its consideration of material injury, the CIT noted that the
Canadian industry was profitable in 1981, but with the arrival of
the 1982-83 recession, it experienced sharply reduced sales and net
losses. Market demand increased in 1984 and 1985, but the industry
continued to lose market share and to report net losses.
In assessing the cause of this injury, the CIT noted that it
could not be attributed to poor quality, delivery or service.
Indeed, the consensus was that the quality of the domestically
produced motors was considered equal to, or better than, that
offered by foreign competitors. Furthermore, the injury was not
attributable to changes in foreign exchange rates, to
intra-industry competition or to the industry's restructuring in
the face of expected continued competition from world-scale plants
in other countries. The CIT concluded that, although these factors
were adversely affecting the domestic industry to some degree,
material injury in the form of loss of market share and price
suppression, which led to operating losses, was caused by the
cumulative effect of dumped and subsidized imports.
The products described in the findings under review are:
- integral horsepower induction motors, one horsepower (1 hp) to
two hundred horsepower (200 hp) inclusive, excluding vertical-shaft
pump motors generally referred to as vertical P-base or vertical
P-flange motors, single phase motors, submersible pump motors for
use in oil and water wells, arbor saw motors and integral induction
motors for use as replacement parts in certain products
manufactured by The Trane Company, originating in or exported from
the United States of America, in Inquiry No. ADT-8R-78, and
- polyphase induction motors, 1 hp to 200 hp inclusive,
originating in or exported from Brazil, Japan, Mexico, Poland,
Taiwan and the United Kingdom in Inquiry No. CIT-6-85.
In both cases, the subject motors are polyphase alternating
current motors as distinct from single phase and direct current
motors. These motors are generally used to provide mechanical
torque to move solids, liquids and gases and are typically used in
fans, blowers, pumps, compressors, conveyors and machine tools.
Within the 1- to 200-hp range, the subject motors are normally
sold in three enclosure types: open drip-proof (ODP), totally
enclosed fan cooled (TEFC) and totally enclosed explosion proof
(TEXP). These enclosures can be made of cast iron, cast aluminum or
rolled steel. For the most part, rolled steel is used for ODP
enclosures, cast iron, cast aluminum and rolled steel are used for
TEFC enclosures, and cast iron is used for TEXP enclosures.
Polyphase induction motors have two main components: the stator,
or stationary component, and the rotor, or rotating component. When
an electric current is applied to the stator and rotor, opposing
magnetic fields that produce torque are created. This torque then
turns the rotor and motor shaft. In an induction motor, the field
produced in the rotor windings is induced by creating a voltage
across the gap surrounding the rotor.
A relatively new phenomenon in the marketplace is the emergence
of a demand for high-efficiency induction motors that use less
electricity than a standard-efficiency motor to produce the same
horsepower, thereby reducing the energy cost of operating the motor
and reducing its pay-back period. The pulp and paper, mining and
chemical industries account for an estimated 60 to 70 percent of
the high-efficiency motors sold in Canada. B.C. Hydro and Ontario
Hydro offer rebates to purchasers of high-efficiency motors to
encourage their use. High-efficiency motors are available in all
motor sizes in the 1- to 200-hp range and in each of the three
In Inquiry No. ADT-8R-78, EEMAC was the complainant,
representing six of its member companies: Brown Boveri Canada
Limited, Canadian General Electric Company Limited (now GE Canada),
Etatech Industries Inc. (Etatech), Leroy-Somer, Lincoln Electric
Company of Canada Limited (Lincoln) and Westinghouse.
In Inquiry No. CIT-6-85, EEMAC was again the complainant,
representing four of its member companies: GE Canada, Westinghouse,
Leroy-Somer and Lincoln. Two other companies, Etatech and Franklin
Electric of Canada Ltd. (Franklin), responded to the manufacturer's
questionnaire, but were not represented by EEMAC.
In this review, evidence and argument were presented by EEMAC on
behalf of two of its member companies, Westinghouse and
Leroy-Somer. Another EEMAC member, GE Canada, elected to present
evidence and argument on its own. These three firms have accounted
for the bulk of Canadian production and sales throughout the
1985-90 period of review.
Westinghouse is a subsidiary of Westinghouse Motor Company (US),
a joint venture between Westinghouse Electric Corporation (US) and
Teco (Taiwan). Westinghouse manufactures the subject goods in an
integrated manufacturing facility in Hamilton, Ontario, in
conjunction with larger motors and some specialty products. It is
fully responsible for the design and manufacture of the subject
goods. Westinghouse's main motor product is a TEFC cast iron motor
that it produces in all sizes in the 1- to 200-hp range.
Westinghouse distributes its products through a separate but
related company, Wesco Sales and Service Co. (Wesco) that services
all levels of the market, including original equipment
manufacturers (OEMs), end users and sub-distributors.
Leroy-Somer is owned by Leroy-Somer SA of France. In December
1989, Emerson Electric Co. (US) tendered an offer to purchase all
shares of Leroy-Somer SA and became the majority shareholder. About
60 percent of the firm's production is aluminum frame TEFC motors.
A large proportion of the firm's output is exported to the United
GE Canada is owned by General Electric Company (US). It produces
a full range of the subject motors at its production facility
located in Peterborough, Ontario. It sells the subject goods
domestically and for export through its own sales force.
The structure of the domestic industry has changed considerably
since 1985, with several firms ceasing production and some new
firms entering the market. The smaller producers, Franklin, Etatech
and Lincoln, all ceased domestic production of the subject motors.
Although Lincoln stopped production, it is maintaining its sales of
motors in Canada through importations from its US counterpart.
Since 1987, a new type of producer has appeared in the domestic
market. These companies had previously competed in the market as
importers but, since the finding in 1985, began importing motor
parts and assembling the parts into motors in Canada. These parts
are typically imported from the same sources that had exported
completed motors prior to the finding. These so-called
non-integrated manufacturers, and the countries from which they
import, are as follows: Brook Crompton (formerly Hawker Siddeley) -
United Kingdom; Leeson Electric (Leeson) - Taiwan, United States,
China; U.S. Electrical Motors, a division of Emerson Electric
Canada Ltd. (Emerson) - United States; Madison Industrial Equipment
(Madison) - Taiwan; Milton Electric - Taiwan; and Dalimpex -
Although the integrated manufacturers (Westinghouse, Leroy-Somer
and GE Canada) continue to dominate the production of alternating
current induction motors in Canada, the non-integrated
manufacturers have shown significant growth in their production of
these goods. As a group, the integrated manufacturers sell the
complete spectrum of motors under review, with Leroy-Somer
dominating the production of motors under 26 hp, while GE Canada
and Westinghouse show relative strength in the production of motors
over 100 hp. These firms sell to OEMs, to and through distributors,
and to end users. The non-integrated manufacturers also report
production in all size ranges, but their relative strength lies in
the 6- to 100-hp range. Generally, these firms sell to OEMs and
distributors throughout Canada.
Since 1985, the industry has invested nearly $12 million of
capital equipment. Throughout the period of review, Westinghouse,
Leroy-Somer and GE Canada accounted for most of the investment
activity, but in recent years, newcomers such as Brook Crompton,
Leeson and Emerson have also made capital investments in the
production of the subject motors. Except for a minor drop in 1986,
overall capital expenditures have increased annually, with the
greatest single-year increase estimated for 1990. GE Canada, with
significant expenditures relating to new equipment and an upgrade
of its test facility, is projected to account for a considerable
portion of the reported industry outlay on capital in 1990.
Two of the three major manufacturers of the subject goods in
Canada, Westinghouse and Leroy-Somer, were represented by EEMAC.
Despite protection from most dumped and subsidized imports, EEMAC
claimed that the industry continues to face strong competition in
the marketplace and has undertaken sizeable financial investments
and undergone substantial reorganization to continue to improve its
efficiency and to meet this competition. The findings have recently
provided the market with some much needed stability. Although
several manufacturers have exited the industry over the past
several years, the traditional manufacturers have been able to
maintain their market share while new producers have gained share.
Not all manufacturers have returned to profitability.
Counsel argued that, despite the two findings, it was only after
a re-investigation by Revenue Canada in 1987 that the industry
began to receive adequate protection from dumped and subsidized
motors. In addition, counsel argued that dumping has continued to
occur and subsidizing by Brazil will continue.
The industry noted that Japan, in the past, was found to be
dumping induction motors in Canada, the United States and Australia
and, more recently, was found to be dumping large motors in Canada.
Despite the finding, Japan continues to dump motors in Canada.
Mexico was identified as a source of parts and the home of nine
producers and potential exporters of induction motors. Poland was
said to have been able to maintain volume without paying
anti-dumping duty. Counsel noted that European Economic Community
(EEC) motor producers, including Brook Crompton (UK), successfully
complained about the dumping of motors from Eastern European
countries, including Poland. Brazil has had very high subsidy
levels and although it was submitted that the subsidies have been
or will be eliminated, no proof of this was made. Counsel argued
that the subsidies received have not been fully countervailed.
Counsel noted that imports of motors from the United Kingdom and
Taiwan have both been largely replaced by motors assembled in
Canada from imported parts. It was suggested that the manufacturers
in these two countries have world-scale plants that would likely
resume exporting completed motors at dumped prices in the event of
Counsel noted that US exports account for as much as the six
countries subject to the 1985 finding combined and that dumping
continues. Toshiba, for example, exports motors at values no higher
than the normal values provided by Revenue Canada, an indication of
the price sensitivity of the market.
The industry mentioned that several parties provided substantial
evidence that the market cycle has crested and that demand is
declining. This decline increases the likelihood of dumping and the
vulnerability of the domestic industry. Counsel also noted the
evidence respecting expansions or planned expansions of capacity on
the part of US exporters.
Counsel asserted that there are numerous suppliers to the
Canadian market that supply similar goods and compete primarily on
price. Several importers expressed concerns regarding their current
inability to respond to lower prices. The price sensitivity of the
market is such that a small change in price can result in
substantial changes in market share, with other producers thereby
forced to follow the low price leaders in the market. Counsel
argued that the industry's profit levels are thin and that any
renewed dumping would quickly lead to lower prices, reduced
profitability, reduced investment and significant material injury
to the domestic industry.
GE Canada argued that the United States and the other six
subject countries have a propensity to dump. Counsel submitted that
anti-dumping and countervailing duties assessed and collected,
margins of dumping and amounts of subsidy and the proportion of
dumped or subsidized imports, especially in the case of Brazil,
have all increased significantly over the two-year period leading
up to the review hearing. It was argued that the behavior exhibited
over the past two years, while the findings were in place,
indicates what the behavior would be if the findings were
Counsel also submitted that importers continually seek low-cost
sources of supply and that if the findings were rescinded,
importers would quickly switch back to dumping countries such as
Taiwan, the United Kingdom and Mexico. The newer production
facilities in Canada, set up to circumvent the findings, would be
replaced by the world-scale facilities in Taiwan and the United
Kingdom. Imports from Mexico and Poland would quickly revert to the
levels prior to the finding.
GE Canada noted evidence of a market downturn that was suggested
as another indicator of propensity to dump. Counsel recounted
evidence submitted by numerous parties that indicated that a
substantial downward price pressure exists that would lead prices
downward if the findings were rescinded. It was also noted that
manufacturers in the United States and the United Kingdom have
Propensity to export dumped or subsidized goods on the part of
specific exporters was also addressed. Toshiba has been willing to
price below the market and was thereby able to win five of eight
large end-user contracts over the past two years. It was noted that
Revenue Canada recently decided to assess anti-dumping duties on
these contracts. Additionally, in the large motor case, Toshiba in
Houston and Toshiba Corporation in Japan, as well as Teco in
Taiwan, were found to have high margins of dumping and a high
percentage of dumped imports. Counsel argued that the large motor
case is relevant as it occurred last year, and the bulk of the
goods (200 to 800 hp) involve the same firms, production processes,
marketing channels and customers. Counsel also argued that subsidy
programs in Brazil have been suspended, not eliminated, and that
both WEG from Brazil and Teco from Taiwan have used low prices to
take direct aim at the user market.
The issue of whether or not renewed dumping is likely to cause
material injury was also addressed. The penetration of the user
market by Toshiba, WEG and Teco has seriously affected GE Canada's
financial results in the form of lost orders, lower prices and
seriously eroded margins. It was argued that the firm's
difficulties would be exacerbated if resumed dumping caused
Canadian market prices to drop rapidly to US levels, instead of the
more gradual decline expected if the findings were continued. It
was noted that GE Canada has made major investments to enable it to
become a member of the global GE team as opposed to a branch plant.
It was submitted that the second phase of the investment plan,
which would enable the firm to obtain cost reductions over the next
three years and make the transition from a high-cost, low-volume
producer to a global player, has not yet been approved. It was
argued that rescission would lead to renewed dumping, lower prices,
financial haemorrhaging and an inability to obtain necessary
investment that would result in GE Canada's exit from the
Brook Crompton argued that there is no propensity to dump on the
part of UK exporters. Counsel submitted that dumping margins were
incorrectly determined at the time of the preliminary and final
determinations and that Brook Crompton (UK) has effectively not
dumped since the finding in 1985. Brook Crompton's production in
Canada was described as a substantial and continuing operation that
was initiated in response to unfavorable exchange rates and not as
a means of avoiding the finding. It was also noted that Brook
Crompton (UK) has a high rate of capacity utilization and that its
exports complement production in Canada.
Counsel for the firm also argued that renewed dumping by its
parent company, the sole UK producer of the subject goods, could
not cause material injury to the industry, in light of the volume
of exports and the absence of any demonstrated propensity to dump.
Counsel also claimed that Brook Crompton does not consider itself
vulnerable to renewed dumping from any source.
Madison submitted that it has ceased importing the subject
goods, commenced production in Canada and plans on continuing this
production. As a producer, it considers that it can compete with
all sources of supply and does not seek dumping protection. Madison
also noted that imports from other producers in Taiwan have
Leeson produces a wide range of motors in the 20- to 200-hp
range in Canada, although it continues to import motors in the 1-
to 15-hp range from its US parent company and from Taiwan. Leeson
submitted that it would prefer the continuation of the finding
against the United States if that ensured that the unfair price
competition from offshore producers, other than Brook Crompton in
the United Kingdom, would not return into the marketplace.
Counsel for Toshiba International Corporation argued that the
firm's behavior demonstrates an absence of any propensity to dump.
Counsel submitted that Toshiba attempts to sell at the normal
values set by Revenue Canada and that anti-dumping duties are
negligible, equating to about one percent of total sales. Only when
the normal values are revised, after the goods are imported, do
Toshiba's prices deviate from the normal values. Toshiba claimed
that it has no intention of seeing its prices or profits decline
and insisted that Toshiba would not dump if the finding were
rescinded. Counsel argued that Toshiba has a high level of capacity
utilization and US producers overall do not have much excess
capacity. In addition, it was submitted that the dumping found by
Revenue Canada in the large motor investigation is irrelevant to
Counsel submitted that Toshiba has been successful in the market
because of non-price elements such as inventory, delivery, quality
and efficiency. Counsel said GE Canada was concerned with
competitive Toshiba products rather than dumped Toshiba products.
Counsel suggested that GE Canada has more to fear from Westinghouse
than from Toshiba and that Leroy-Somer is not often in direct
competition with Toshiba, as it does not make aluminum motors.
Counsel submitted that the Canadian industry is capable, after the
exits of several producers over the past few years, of competing in
the North American market and is earning oligopolistic profits in
Counsel submitted that, while the findings served a worthwhile
purpose in the early to mid-1980s, competitive circumstances have
changed and the United States no longer poses a significant threat
to the Canadian industry. Counsel suggested that the Tribunal
reward Toshiba for obeying the law respecting dumping either by
granting it an exemption or by rescinding the finding.
Counsel for four Toshiba distributors, John Wilson, Duke
Electric, XYZ Dynamo Ltd. and TME Delta Inc., submitted that the
industry's case is weak on two important grounds. First, the
industry, except for GE Canada, is healthy, has been increasing its
market share and profits, and is not vulnerable to renewed dumping.
The poor performance of GE Canada is due to internal cost problems
and competition from other domestic producers. Furthermore, because
Leroy-Somer produces aluminum motors that are not produced by the
two larger US exporters, it cannot be injured by such imports.
Second, there is no indication that there will be renewed dumping
from the United States. For these reasons, and in view of the 11
years of protection that the industry has received, the Tribunal
was requested to rescind the US finding.
Counsel for the Brazilian exporter, WEG, and its Canadian
importer, Pamensky, claimed that almost all the subsidies
previously available to the exporter have been withdrawn and are no
longer available. It was also claimed that the margins of dumping
on Brazilian exports are caused by exchange rates failing to keep
up with inflation. WEG was described as a low-cost producer whose
exports to Canada have been supervised by Revenue Canada. It was
argued that, while the Canadian industry is globalizing, it has
been slow to restructure and wants managed trade in the Canadian
market. Counsel argued that the industry's transition will continue
with or without the findings. In light of the above and since the
findings have outlived their usefulness, the 1985 finding
applicable to Brazil should be rescinded.
Counsel for Baldor and its Canadian representative, Dryden,
noted that Baldor has complied with the finding with only a
negligible amount of anti-dumping duty assessed over the past
several years. Counsel argued that Baldor has no propensity to dump
and would not compete if prices dropped too low. It was noted that
no complaints against Baldor's pricing were raised during the
hearing and that GE Canada consented to an exclusion for Baldor.
Counsel further noted that Baldor does not compete in the end-user
market and, therefore, is not in competition with Westinghouse or
GE Canada in this market.
Counsel argued that the Canadian industry is not vulnerable to
renewed dumping, but rather is confronted with problems unrelated
to the dumping of the subject goods, namely, an inability to
compete against undumped goods from the named countries and subject
goods from unnamed countries, difficulties in competing with the
new producers in Canada, uncompetitive high-efficiency motors, and
competition among the members of the Canadian industry.
As noted earlier in these reasons, counsel for ABB Motores of
Mexico submitted legal argument to the effect that the finding
under review does not apply to motors produced by ABB Motores.
Counsel also submitted that, if the Tribunal decides that the
finding does have application, there is no evidence of any
propensity to dump by ABB Motores, and the firm should be excluded
from any continued finding. It was noted that ABB Motores has never
dumped the subject goods in Canada and that another firm in the ABB
group was not found to have dumped large motors from Finland.
Counsel argued that the evidence of propensity put forward by
the industry concerning high tariffs in Mexico, and the existence
of nine other producers in Mexico capable of exporting the subject
goods, is illogical and is mere speculation rather than evidence.
Counsel argued that the Tribunal requires real evidence of a
propensity to dump, not mere speculation.
Counsel for Trane noted that anti-dumping findings are not meant
to be permanent and requested that the findings be rescinded. If
not, it was submitted that the current exclusions covering certain
classes of motors imported by Trane be continued. Additionally, it
was submitted that motors imported by Trane under an inward
processing remission order, and subsequently exported, should also
be excluded from the finding. Counsel for EEMAC and for GE Canada
agreed to these exclusions.
The apparent domestic market for the subject goods, as measured
in units, grew by about 6 percent during the five-year period
ending in 1989. Producers in Canada increased their share of this
market by 9 points, reaching 46 percent in 1989. This growth,
however, is properly attributable to the new producers that entered
the industry after the 1985 finding. The traditional integrated
producers, GE Canada, Westinghouse and Leroy-Somer, gained only 1
point of market share over the period and ended with a combined
share of 30 percent.
The market share held by imports declined by 9 points over this
period to 54 percent in 1989. Imports from Japan, Mexico, Poland,
Taiwan and the United Kingdom underwent a significant retrenchment
after the 1985 finding with their combined market share declining
from 35 to 7 percent. Imports from the largest exporter in Japan,
Toshiba Corporation, were supplanted by imports from the firm's US
subsidiary, while Mexico's exports to Canada ceased. A substantial
volume of imports from Poland, Taiwan and the United Kingdom were
replaced with motors produced in Canada by firms that formerly
imported completed motors from these countries.
Countering this downward trend in import penetration, imports
from the United States gained 9 points of market share over the
five-year period, reaching a 23-percent share in 1989. Imports from
Brazil also grew, gaining 4 points to reach a 14-percent share.
Imports from countries not subject to these findings grew
substantially, from less than a 1-percent share prior to the 1985
finding to 9 percent in 1989.
The relative importance of different import sources has changed
significantly since the 1985 finding. While the share of total
imports accounted for by motors from the United States declined
through the early 1980s to a low of 23 percent in 1985, imports
grew rapidly after the finding was made against the six countries
in 1985 to account for 43 percent of total imports by 1989. Imports
from Brazil almost doubled in relative importance over the years
1985-89, reaching 23 percent of total imports in 1989. Imports from
the remaining five countries subject to the 1985 finding declined
from 59 percent of total imports in 1985 to 13 percent in 1989.
During the same period, imports from non-subject countries more
than tripled and accounted for 21 percent of total imports in
While the market expanded over the five-year period 1985-89, it
underwent a 2-percent contraction in 1989. Similarly, while prices
have increased about 5 percent per year, price increases appeared
to have softened in 1989. Most witnesses indicated that they
foresee a slowdown in the market in 1990, especially in the
forestry, pulp and paper, and mining end-user markets, and many
expect a concomitant softening in prices.
Considerable evidence brought forward during the hearing
characterized the Canadian market for the subject goods as
price-sensitive. OEMs appear to purchase the lowest cost motor that
meets their minimum standards. On the other hand, end users assess
suppliers on the basis of technical requirements, servicing
capabilities, delivery and price. While price was only one of
several factors assessed in the awarding of some of the end-user
contracts discussed at the hearing, price appeared to be the
deciding factor in the awarding of many of the contracts. Suppliers
respond to price pressures in different ways, but no one appears to
be immune to pricing pressure in the marketplace. Participants
generally agreed that domestic prices were higher than US prices,
but would decline over time to reach US levels as Canadian tariffs
declined under the Canada-United States Free Trade Agreement (the
Overall production in Canada increased by almost 25 percent over
the five years, with new producers accounting for over half of the
increase. Despite steadily increasing net sales values since 1984,
unit sales in 1989 by integrated producers are at about the same
level as in 1985. Losses continued to be incurred by the industry
until 1988 when marginal profits were reported. While some firms
also reported profits in 1989, the overall industry returned to a
loss position in 1989. During the period 1986-89, the industry
embarked on various rationalization programs, many of which will
extend into 1990 and beyond. Capital expenditures have increased in
each year since 1986, with 1989 expenditures exceeding 6 percent of
In a review of a finding of material injury to domestic industry
caused by dumping or subsidizing, the Tribunal must consider two
fundamental questions. Firstly, if the finding is rescinded, is
dumping or subsidizing likely to continue or resume? Secondly, if
dumping or subsidizing continues or resumes, is it likely to cause
material injury to the domestic industry?
In answering the first question, the Tribunal looks for evidence
concerning such factors as the recent behavior of exporters and
market conditions in the countries of origin, in Canada and
elsewhere that make dumping likely or unlikely to resume in the
foreseeable future. In addition, the Tribunal looks for evidence
respecting the subsidizing practices of the governments of
countries subject to the finding. In answering the second question,
the Tribunal considers evidence pertaining to many factors,
including changes in import shares, market conditions, the health
of the industry and any other changes in circumstances that might
render the industry likely to be materially injured.
Total imports of the subject goods from these countries have
declined over the past five years. However, the amount of
countervailing duty assessed and collected on imports from Brazil
and overall margins of dumping and the percentage of imports found
to have been dumped from the named countries have all increased to
substantial levels over the past two years. The individual behavior
of the six countries involved in this finding, however, has been
Of these countries, Brazil is the only one that has been able to
increase its volume and value of exports since the 1985 finding.
This growth in imports is overshadowed by the even more dramatic
increase in the amount of countervailing and anti-dumping duties
collected on these imports. These duties account for the majority
of duties collected under SIMA on imports of the subject motors.
WEG, the major Brazilian producer, obviously views Canada as an
important market in its overall export strategy.
The Tribunal heard evidence that the Government of Brazil has
made some movement towards suspending subsidies available to
exporters in Brazil. However, the Tribunal is not convinced, from
the evidence, that the subsidies have been eliminated and that
exporters in Brazil are, and will continue to be, ineligible for
countervailable subsidies. In the event that these subsidies are
eliminated at some future time, the Deputy Minister would,
consequently, cease collecting countervailing duties, and the
Tribunal would, then, be in a position to consider rescinding the
finding on the basis that the subsidizing had ceased.
With respect to the dumping of the subject goods from Brazil,
the percentage of goods dumped and the margins of dumping on these
goods have increased markedly over the past few years.
Evidence heard at the hearing indicates that motors from Brazil
are aggressively marketed in Canada, largely on the basis of price.
Several witnesses testified to the low pricing of these motors.
Evidence was adduced that a Canadian producer lost two contract
bids in the end-user market segment to Brazilian motors at prices
that were well below market levels.
The Tribunal also notes that Brazil was found to have been
dumping certain induction motors in Australia in 1982.
Additionally, WEG was found to have been exporting dumped and
subsidized induction motors over 200 hp to Canada in 1988 with 62
percent of imported goods being dumped with an average margin of
dumping of 25 percent and the amount of subsidy found to be 25
percent. The Tribunal is of the opinion that the behavior exhibited
in the so-called large motor case (Inquiry No. CIT-5-88) has some
relevance to this case, as the large motor case was heard only last
year, and the bulk of the goods (200- to 800-hp motors) involves
the same producers, production processes, marketing channels and
customers as this case. In fact, evidence adduced at the hearing
revealed that, at least in some instances, motors under 200 hp and
over 200 hp are covered by a single purchase order. In light of the
above, the Tribunal is of the view that the dumping of motors from
Brazil will continue.
Imports from three subject countries, the United Kingdom, Taiwan
and Poland, have all declined substantially since the finding and
have been replaced, in part, with motors assembled in Canada by
firms that formerly imported the subject goods. Imports from these
three countries declined from 50 percent of apparent imports in
1985 to 12 percent in 1989.
Despite declines in the volume exported, the margin of dumping
on goods imported from the United Kingdom remains significant.
Although Brook Crompton, whose parent company is now the sole UK
exporter, began producing motors in Canada in late 1987 to supplant
imports of the subject goods from the United Kingdom, its overall
sales in Canada have declined. The motors produced in Canada are
made largely from parts imported from the same factories in the
United Kingdom that still continue to export completed motors to
Brook Crompton UK purchased the UK operation of GEC
Electromotors last year and now operates five world-scale plants
having substantial capacity. Additional capacity expansions are
planned. The firm has been operating in Canada under different
names for a number of years and has a well-established and
reputable sales organization.
The Tribunal notes that certain induction motors from the United
Kingdom were found to have been dumped in Australia in 1979 and
1982. Additionally, a company related to Brook Crompton in the
United Kingdom was found to have been dumping 100 percent of its
exports of large motors in Canada in 1988 at an average margin of
dumping of 13 percent.
Imports from Taiwan have declined substantially, although the
percentage of goods dumped and the margins of dumping have remained
persistently high. Teco, one of the manufacturers in Taiwan,
operates a world-scale plant and is apparently constructing another
in Indonesia. Tatung, another producer in Taiwan, also operates a
large plant. Imports from both of these firms have been largely
replaced by motors produced in Canada, mostly from imported parts,
by former importers of the completed motors. These importers have
established reputations and distribution networks in Canada.
Madison, the non-integrated producer utilizing parts imported from
Teco, was identified during the hearing as an aggressive pricer.
Recently, Madison successfully penetrated the end-user market by
outbidding a domestic integrated producer.
The Tribunal notes that Taiwan was subject to the above-noted
Australian anti-dumping finding in 1982. In addition, Taiwanese
exports of induction motors over 200 hp were found to have been
dumped in Canada in 1988, with 81 percent of imports found to have
been dumped at an average margin of dumping of 18 percent.
Imports from Poland, while down from their 1985 high, have
stabilized over the past three years. Both the percentage of goods
dumped and the margin of dumping declined during this period with
no anti-dumping duties being assessed in 1989. The sole Canadian
importer of motors from Poland, Dalimpex, also began producing
motors from imported parts a few years ago. The importer chose not
to appear before the Tribunal and did not provide any argument or
evidence to permit the Tribunal to conclude anything other than
that the new production in Canada was prompted by, and is
maintained in Canada due to, the existence of the 1985 finding.
The Tribunal notes that Poland was also subject to the
aforementioned Australian anti-dumping finding in 1979. In
addition, Poland, along with several other Eastern European
countries, was found, in 1987, to have been dumping standardized
multiphase electric motors in the EEC.
Considerable evidence concerning the operations and intentions
of the new non-integrated producers was heard by the Tribunal.
Despite having supplanted a substantial volume of imports from the
United Kingdom, Taiwan and Poland since the 1985 finding, these new
producers did not support continuation of the finding. This raises
the question as to whether these firms are committed to production
in Canada or if they, perhaps, prefer to be able to import
completed motors without dumping supervision.
The evidence indicates that a substantial number of parts and
components for these motors are sourced from the same factories
from which completed motors were exported prior to 1985. In
addition, this new post-finding production is concentrated on
subject goods, while non-subject, and in some cases subject,
induction motors continue to be imported from the same factories
that produce the parts for the subject motors. The planned and
expended investment in these new facilities is, on average, a small
fraction of that invested by the integrated producers. In light of
this evidence and evidence concerning the importance of world-scale
facilities in the motor industry of the 1990s, there is some doubt
in the Tribunal's mind that the new non-integrated production
facilities in Canada would retain their allure in the event the
finding were rescinded.
Imports from Japan have also declined since the finding,
although the margin of dumping remains significant and the
percentage of dumped goods remains very high. A portion of the
decline in imports is due to the transfer of production from
Toshiba Corporation, a major producer in Japan, to a US subsidiary.
The Tribunal is aware that Toshiba Corporation was also found to
have been dumping large motors in Canada, in 1988, from Japan, the
United States and Brazil. The percentage of its exports that were
found to have been dumped ranged from 100 percent (Japan) to 58
percent (United States) to 36 percent (Brazil), with the margins of
dumping found to be 38 percent (Japan), 16 percent (United States)
and 43 percent (Brazil).
Imports from Mexico, after peaking in 1984, dropped to a
negligible level after the finding. Although the industry expressed
some concern about a potential resumption of dumping by producers
in Mexico, evidence adduced at the hearing did not support this
concern. Furthermore, there does not seem to be any organization
actively marketing the goods in Canada.
In addition to the country-specific behavior noted above, the
Tribunal is also cognizant of the softening trend in the overall
market environment in Canada in which the above-mentioned behavior
was, is and will be demonstrated. Given the price sensitivity of
the market and the large number of suppliers, it is likely that one
or more suppliers will lead prices down in an attempt to maintain
or gain market share when the market is declining. This will result
in additional suppliers responding out of necessity. In considering
whether this pricing pressure would provoke a continuation or
resumption of dumping, the Tribunal is mindful that subsidized and
dumped imports have continued to enter Canada and, in fact, have
increased over the past four years, a time period during which the
domestic market has been generally expanding.
In light of the available evidence, the Tribunal concludes that
if the finding were rescinded, dumping by Brazil, Japan, Taiwan,
the United Kingdom, and Poland is likely to continue or resume.
Subsidizing by the Government of Brazil continues, although some
programs have been suspended. With regard to Mexico, the Tribunal
concludes that the evidence has not established that exporters in
Mexico are likely to resume dumping if the finding is rescinded
During the hearing, an issue arose that concerned the propriety
of calling an official of Revenue Canada to provide reply evidence.
Counsel for EEMAC, Leroy-Somer and Westinghouse wanted to call an
official of Revenue Canada to present evidence that it had
investigated five contracts in which Toshiba was involved. The
contracts were for certain subject goods imported from the United
States into Canada during the period 1988-89.
The purpose of these investigations was to evaluate whether to
re-determine the normal values of the subject goods exported to
Canada in fulfilment of the respective contracts. Counsel sought to
introduce the evidence in response to Toshiba's testimony that it
had no propensity to dump the subject goods.
Counsel for Toshiba objected to the propriety of the Tribunal's
categorization of the evidence as being in reply. However, the
Tribunal ruled that it was prepared to hear the witness and have
him cross-examined. Counsel for Toshiba moved for an adjournment to
recall a witness to challenge the official's testimony. The
Tribunal did not grant the adjournment because it noted that the
reply evidence only indicated that the Deputy Minister had
undertaken investigations regarding the importations.
While the investigations have been completed, assessments of
anti-dumping duty have not been issued against the various
purchasers of Toshiba's products related to the investigated
contracts. Thus, at the time of the hearing, assessments of
anti-dumping duty against these purchasers did not in fact exist.
Because of this, the Tribunal chose not to consider the official's
evidence regarding these five contracts in determining whether to
rescind or continue the finding respecting goods originating in or
exported from the United States.
Imports from the United States have increased significantly
since 1986 and exceed imports from the other six subject countries
combined. The overall margin of dumping and percentage of dumped
goods increased substantially after the 1985 finding and then
declined in 1988, only to increase again in 1989. Over the past few
years, the two larger US exporters, Toshiba and Baldor, have had a
relatively low percentage of dumped exports and moderate margins of
dumping, but have indicated that they either already have excess
capacity or plan to increase their capacity. The Tribunal is aware
that the volume and value of imports from each of these exporters
now exceed the total volume and value imported from each of the six
other countries, except for Brazil.
Counsel for Baldor submitted evidence that the firm is a
responsible pricer that does not have a propensity to dump. Counsel
referenced testimony by GE Canada to the effect that it did not
oppose excluding Baldor from the application of the finding.
Westinghouse and Leroy-Somer do not share this view. The Tribunal
notes that Baldor does not compete directly with GE Canada in the
end-user market segment, but does compete with Westinghouse and
Leroy-Somer in the other market segments. In addition, the Tribunal
is conscious of the magnitude of Baldor's exports and of the fact
that its margin of dumping and the percentage of its exports that
are dumped are not negligible. Consequently, the Tribunal finds no
reason to exclude exports by Baldor from the application of this
Substantial evidence was adduced at the hearing concerning
Toshiba's marketing efforts, particularly in the end-user sector.
Toshiba has become a major force in this segment of the market over
the past several years through its demonstrated objective of
gaining market share through aggressive pricing. Toshiba has
essentially by-passed its distributors in bidding on large end-user
contracts and appears to attempt to offer the lowest price possible
without dumping. The anti-dumping duties assessed against Toshiba's
imports appear to result from Toshiba pricing too close to the
normal value price line.
Evidence provided during the hearing indicates that the US motor
industry has been undergoing a remarkable reorganization and
rationalization. Several plants have been closed, firms have exited
the industry, while others have been targets of leveraged buyouts
(LBOs). In an industry undergoing this type of
rationalization/reorganization, some firms will strive to obtain a
level of sales sufficient to produce the cash flow necessary to
finance operations and service their debt. This necessity increases
the likelihood of pricing to gain volume and market share by any
means necessary, including dumping. The Tribunal is conscious of
the fact that a significant percentage of imports of large motors
from the United States was found to have been dumped in 1988 with
significant margins of dumping.
In assessing whether dumping is likely to resume, the Tribunal
has considered, in addition to the above, the same factors as noted
in respect of the 1985 finding, i.e., the softening market, the
price sensitivity of the market and the prospect of suppliers
offering lower prices to which other suppliers will be forced to
respond. The Tribunal is of the view that exporters in the United
States are subject to at least the same level of pricing pressures
outlined above in respect of the countries subject to the 1985
finding. As such, and in light of the available evidence, the
Tribunal concludes that, if the finding were rescinded, dumping by
the United States would likely resume.
In 1985, the CIT determined that imports of dumped and
subsidized goods were causing material injury to the domestic
industry in the form of lost sales, loss of market share, price
suppression and operating losses. Since that time, the evidence
shows that, while the industry is in better overall health than at
any time since 1982, it is not overly strong. The traditional
integrated producers have maintained their market share, although
several producers have exited the industry over the intervening
years. The industry has also been able to improve its
profitability. Losses have been reduced substantially with some
producers earning a profit in the last few years. Output has
increased moderately, while exports have shown significant
improvement, although they did not show a profit in 1989.
The performance of the industry, as a whole, is not evenly
distributed among its members. During the buoyant market period of
the last two years, Westinghouse and Leroy-Somer have returned to
modest profitability and have had mixed success in regaining market
share. GE Canada has had poorer performance during this period with
declining output, decreased market share and substantial losses.
Much of this poor performance can be attributed to the recent
penetration of the end-user market by motors imported from the
United States, Brazil and Taiwan.
The Canadian industry is reorganizing and rationalizing. It has
made large capital expenditures in preparing for continued
competitive challenges. GE Canada is still in the midst of this
process and has been incurring, what it hopes are, short-term pains
for long-term gains. A major investment program resulting from a
North American mandate and the transfer of equipment from a plant
closed in the United States are nearing completion. GE Canada is
currently seeking approval for an additional three-year investment
program required for it to become a low-cost, higher volume
producer. In light of GE Canada's large outlays on investment and
its protracted loss situation, the firm is especially susceptible
to a market downturn and/or lower prices that would arise from a
resumption of dumping. These events would exacerbate the firm's
reduction in output and decline in market share and would further
erode its margins. In addition, the Tribunal is mindful of the
difficulty that GE Canada would have in obtaining approval from its
parent company for its investment program in the face of continued
losses resulting from a resumption of dumping.
The induction motor industry is in the midst of considerable
change worldwide. Evidence provided at the hearing revealed that
producers have been taken over by other producers, plants have been
closed and global capacity is being expanded through both plant
expansions and the overseas construction of new world-scale
factories. The trend appears to be toward fewer and larger
producers having continental or global product mandates. In
addition, the FTA will serve to eliminate tariffs between Canada
and the United States by 1998, and prices in Canada are expected to
decline to the lower US levels.
Evidence provided during the hearing attested to the vigorous
competition in the domestic market. New producers have supplanted
imports from some countries and have gained a significant share of
the market. Imports from non-subject countries are increasing.
Certain imports have made considerable inroads into the end-user
market over the past several years, competing primarily on price.
Continued dumping on the part of some countries and subsidizing by
Brazil have fostered energetic price competition.
Given the enlarged pricing pressures of a weaker market, the
Tribunal expects domestic producers to face strong pricing
pressures in the near future and that dumping by the exporters in
the named countries is likely to continue or resume. The Tribunal
concludes that a resumption of dumping is likely to cause material
injury to the industry in the form of lower prices, smaller market
shares, marginal or negative margins and a reduced ability to
invest the necessary capital to remain competitive.
The rationale described above, in respect of material injury to
the domestic industry arising from resumed dumping on the part of
the countries subject to the 1985 finding, is also applicable to an
analysis of material injury likely to be caused to the industry
arising from resumed dumping on the part of the United States. In
fact, material injury is more likely to be caused due to the market
share held by imports from the United States, the more established
distribution and marketing of US goods in Canada and the aggressive
end-user market pricing demonstrated by Toshiba. In addition,
despite the contention of Toshiba and Baldor that they cannot cause
material injury to Leroy-Somer because they do not produce and
export aluminum motors, the Tribunal notes that the evidence
indicates that aluminum and cast iron motors compete directly in
In light of the above, the Tribunal concludes that resumed
dumping from the United States is likely to cause material injury
to the domestic industry in the form of lower prices, reduced
market shares, marginal or negative margins and a reduced ability
to invest the necessary capital to remain competitive.
Counsel for Trane requested that the subject goods imported from
the United States, for installation into equipment manufactured by
the firm for export from Canada to the United States, in accordance
with the Inward Processing provisions of the Customs Tariff,
 be excluded from
the application of the finding. Evidence submitted by Trane
indicates that, while the firm purchases Canadian-made motors for
equipment sold in Canada, it also imports some subject motors from
the United States. Trane is able to claim a drawback of the customs
and anti-dumping duties paid on most of these imported motors, as
they are incorporated into equipment that is subsequently exported
to the United States.
Trane presented evidence respecting its reasons for sourcing
motors in the United States. It stated that it incorporates US
motors into equipment that is exported to the United States because
of US market requirements. These requirements were described in
more detail in Trane's confidential submission. In summary, Trane
contends that these imports could not cause material injury to the
domestic production of like goods due to the modest quantities
involved and because these imports are eligible for a drawback.
Both Trane's public and confidential submissions were unchallenged
during the hearing.
Neither EEMAC nor GE Canada objected to the granting of any such
exclusion, and, in fact, GE Canada would not object to excluding
imports by any importers under the Inward Processing provisions.
EEMAC and Trane were of the view that only those firms that
requested such an exclusion should be eligible for the
The Tribunal is, therefore, of the view that induction motors
imported from the United States by Trane for installation into
equipement manufactured by Trane for export from Canada to the
United States, in accordance with the Inward Processing provisions
of the Customs Tariff, are not causing material injury to
the domestic industry, as the evidence indicates that such motors
are not sourced from domestic suppliers because of US market
requirements. Consequently, those motors will be excluded from the
application of the finding against the United States.
In view of the foregoing, the Tribunal has concluded that
dumping on the part of exporters in Brazil, Japan, Poland, Taiwan
and the United Kingdom is likely to continue, that subsidizing on
the part of Brazil has not ceased and that renewed imports of
dumped and/or subsidized goods would cause material injury to the
domestic industry. The finding in Inquiry No. CIT-6-85 is,
therefore, continued with respect to Brazil, Japan, Poland, Taiwan
and the United Kingdom, and the said finding is rescinded in
respect of the subject goods originating in or exported from
The Tribunal has also concluded, in view of the above, that
dumping by exporters in the United States is likely to continue and
that renewed dumping would cause material injury to the domestic
industry. The finding in Inquiry No. ADT-8R-78 is, therefore,
continued, with an amendment to exclude the subject goods that are
imported into Canada from the United States by Trane for
installation into equipment manufactured by Trane for export from
Canada to the United States, in accordance with the Inward
Processing provisions of the Customs Tariff (Member Bertrand
dissenting from the exclusion).
I agree with my colleagues on all aspects of the finding and
reasons thereof except with respect to the exclusion granted to
Trane. Based on my understanding of the facts of this case, I am
unable to conclude that such an exclusion is warranted, for the
Oral evidence, confidential testimony and argument presented on
behalf of Trane indicate that there are three "pillars" upon which
that request for exclusion is based. First, the domestic industry,
as represented by EEMAC and GE Canada, is not opposed to Trane
being granted an exclusion for those imported subject motors
subsequently exported under the Inward Processing provisions of the
Customs Tariff. Second, the subject goods imported by Trane,
and subsequently exported, are entitled to duty drawback pursuant
to the Goods Imported and Exported Drawback Regulations.
 The claimed
administrative and cash-flow burdens borne by Trane in complying
with the drawback regulations, and the claim by Trane that the
receipt of a duty drawback is evidence that there is no material
injury to the domestic industry by Trane's imports, furnish a
second reason, according to the company, for granting the
exclusion. Third, Trane claims that the US market requires that the
equipment sold by the company incorporate US-made motors for
reasons or purposes discussed in camera.
While the acquiescence of domestic producers to the granting of
an exclusion to Trane is a factor to be considered, it is not
because all the parties to a hearing agree to the exclusion that,
on that basis alone, the Tribunal should endorse that agreement. In
addition, the Tribunal must be convinced, by evidence presented,
that Trane's importation of the dumped motors is not likely to
cause material injury.
In my view, the existence and effect of the duty drawback
regulations, the burden involved in complying with those
regulations and the claim relating to market requirements, when
assessed in the light of the totality of the evidence, do not
justify the conclusion that the importation by Trane of dumped
subject goods, incorporated into equipment subsequently exported,
is not likely to cause material injury.
First, there is Trane's concerns about the claimed
administrative and cash-flow burdens borne by the company in
complying with the drawback regulations. While I sympathize with
Trane in this regard, I am unable to see the relevance of those
burdens and inconvenience to the Tribunal's consideration of
whether the dumped imports by Trane of the subject motors are
likely to cause material injury.
Second, with regard to the duty drawback regulations per se,
previous Tribunal jurisprudence has consistently held that such
regulations are not germane in examining the relationship between
dumped product and material injury. Thus, in the ADT's Inquiry No.
ADT-5-81, the Tribunal held that duty drawback provisions have
nothing to do with dumping and, as such, do not enter into the
question of causality between dumping and injury being incurred by
the Canadian industry at any given moment. Similar views were
expressed in Inquiry No. ADT-3-83.
Trane maintains that, to the extent that it could enjoy the
benefits of the Inward Processing provisions with respect to
regular customs duties on US motors to be subsequently exported, it
should be spared the extra burden of a refund claim with respect to
anti-dumping duties through the granting of an exclusion. Support
for that position may be found in the graphite electrode exclusion
granted in the CIT's Review No. CIT R-5-87. In my view, the present
situation is distinguishable on fundamental grounds. In the
graphite electrode review, the ownership of the electrodes remained
with the US exporter and the electrodes were brought into the
country only to be finished, the producer in Canada performing only
a tolling function. Given the unique position of the exporter,
there was no possibility that the importation of graphite,
electrodes in those circumstances would displace Canadian
production and cause injury to producers in Canada of finished
electrodes. Rather, production costs were reduced and margins and
cash flow were improved. Furthermore, the paper burden and
inconvenience experienced by Trane is no different from that of any
producer in Canada exporting equipment incorporating the subject
goods to the United States. The granting of an exclusion to Trane
on such grounds would create a precedent that, if followed, would
effectively broaden the scope of the Inward Processing provisions
to include anti-dumping duties when Parliament and the Governor in
Council have declined to do so.
The third "pillar" upon which Trane bases its exclusion request
involves the claim that US market requirements dictate the use of
US-sourced motors in equipment exported for sale in that market.
Unlike my colleagues, I am not convinced that the evidence
presented, viewed in the context of the totality of the evidence in
this inquiry, justifies an exclusion.
In considering evidence whether importations of dumped goods are
not likely to cause material injury and, thus, that an exclusion is
warranted, the Tribunal examines, amongst other things, whether the
domestic industry in issue is producing or could produce the
subject goods (or substitutes) for which the exclusion is
requested. If the domestic industry does not or is unable to
produce such goods, it cannot claim injury from importations of the
dumped goods sought to be excluded.
Taken in these terms, the substance of Trane's argument
regarding market consideration is that the domestic industry is not
producing or could not produce or supply motors that are like or
substitutable for the motors for which Trane seeks an exclusion. As
such, the Canadian industry cannot claim injury from the
importation of the dumped motors incorporated into equipment
subsequently exported. Trane, in effect, argues that US market
requirements create an impermeable barrier to Canadian-sourced
motors. Yet, the evidence presented at the hearing indicates
Motors sourced in the United States for incorporation into
Trane's exported equipment are no different from Canadian-produced
motors in terms of uniqueness of design, standard or specification.
When Trane manufactures, for sale in Canada, equipment identical to
that exported by the company to the United States, it sources
Canadian motors. In short, there is no evidence to indicate that
the necessity to source motors in the United States is grounded in
the subject motors per se. Rather, the difficulty is ascribed to US
market requirements, as explained in camera. Yet, evidence
was presented to the Tribunal indicating that domestic producers
export a substantial volume of a broad range of subject goods to
the United States. Further, there is no evidence that these
exported goods are considered unacceptable in that market or have
not satisfied the same market requirements described by Trane. In
other words, if the US market requirements, as perceived by Trane,
constitute a barrier between imported and locally produced motors,
it is a porous barrier, indeed, that domestic producers have not
encountered in their activities or dealings in that market.
Thus, even though the domestic industry has acquiesced to an
exclusion, I am not convinced, for the foregoing reasons, that
Trane should be granted an exclusion on the grounds of absence of
likelihood of material injury nor that it would be proper for the
Tribunal to bring into consideration the existence of the Inward
Processing provisions and to establish a precedent that would lead
to an expansion of the effect of such provisions beyond what was
intended in the legislation and the regulations.
1. This finding
resulted from a rehearing ordered by the Federal Court of Appeal in
DeVilbiss (Canada) Ltd. v. the Anti-dumping Tribunal ,  1
F.C. 706. The court had upheld an application for review under
section 28 of the Federal Court Act respecting a finding of
material injury, made in 1979 by the ADT, that arose from the
dumping of the same class of goods from the United States.
2. R.S.C., 1985, c.
3.  1 S.C.R.
4. Inquiry No.
ADT-4-75, at p. 16.
5. R.S.C., 1970, c.
6. Electrohome Limited
et al. v. the Deputy Minister of National Revenue for Customs and
Excise,  2 F.C. 344; Inquiry No. CIT-9-87 (Solid Urea).
7. In its reasons for
a finding of no material injury, the CIT noted that Romanian motors
had no brand-name recognition, no record of proven performance and
no established channels of distribution in Canada.
8. R.S.C., 1985, c. 41
9. SOR/86 - 795.
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Initial publication: August 22, 1997