REPORT TO THE MINISTER OF FINANCE
REQUEST FOR TARIFF RELIEF BY GIBSON TEXTILE DYERS LTD. REGARDING
JULY 31, 2002
TABLE OF CONTENTS
Request No. TR-2001-001
Pierre Gosselin, Presiding Member
Paul R. Berlinguette
Counsel for the Tribunal:
Address all communications to:
Canadian International Trade Tribunal
Standard Life Centre
333 Laurier Avenue West
On July 14, 1994, the Canadian International Trade Tribunal (the
Tribunal) received terms of reference1
from the Minister of Finance
(the Minister) pursuant to section 19 of the Canadian
International Trade Tribunal Act.
The Minister directed the
Tribunal to investigate requests from domestic producers for tariff
relief on imported textile inputs for use in their manufacturing
operations and to make recommendations in respect of those requests
to the Minister.
On September 10, 2001, pursuant to the Minister's reference, the
Tribunal received a request from Gibson Textile Dyers Ltd.
(Gibson), of Toronto, Ontario, for the removal, for an
indeterminate period of time, of the customs duty on importations,
from all countries, of plain woven fabrics, solely of acrylic
staple fibres, for use in the manufacture of retractable awnings
and sun umbrellas. Gibson also sought tariff relief retroactive to
January 1, 1997.
On December 21, 2001, Gibson filed further information with
respect to its request. On January 31, 2002, being
satisfied that the request was properly documented, the Tribunal
issued a notice of commencement of investigation,3
distributed to known interested parties. The fabrics under
investigation were described in the notice as "plain woven fabrics,
solely of acrylic staple fibres made from 2-ply yarns, having
a decitex per single yarn of 295 or more but not exceeding 315
decitex, of a weight of 280 g/m2 or more but not
exceeding 320 g/m2, of subheading No. 5512.29, for use
in the manufacture of retractable awnings [and] sun umbrellas (the
As part of the investigation, the Tribunal's research staff sent
questionnaires to potential producers of fabrics identical to or
substitutable for the subject fabrics. A request for information
was also sent to potential users and importers of the subject
fabrics. A letter was sent to the Canada Customs and Revenue Agency
(CCRA), requesting a complete description of the physical
characteristics of a sample submitted by Gibson, an opinion on
whether the tariff relief is administrable and suggested wording
should tariff relief be recommended. Letters were also sent to a
number of other government departments requesting information and
A staff investigation report summarizing the information
received from the CCRA and other government departments, Gibson,
questionnaire respondents and other interested parties was provided
to those that had become parties to the proceedings by filing
notices of appearance in the investigation. Following distribution
of the staff investigation report, Cavalier Textiles Inc.
(Cavalier) and Gibson filed submissions with the Tribunal.
Given that there was sufficient information on the record, the
Tribunal decided that a public hearing was not required for this
The subject fabrics, imported from Austria, are used in the
manufacture of retractable awnings and sun umbrellas. Gibson
performs the entire cutting, sewing, finishing and quality control
of the end products at its facility in Scarborough, Ontario.
As of January 1, 2002, the subject fabrics, classified for
customs purposes under classification No. 5512.29.00.00 of the
schedule to the Customs Tariff,4
are dutiable at 16
percent ad valorem under the MFN tariff and are duty free
under the United States tariff, the Mexico tariff, the
Canada-Israel Agreement tariff and the Chile tariff. The MFN tariff
will remain at 16 percent ad valorem until December 31,
2002, and then will be reduced to 15 percent ad valorem and
14 percent ad valorem on January 1, 2003, and January 1,
Gibson was founded in 1929. It currently manufactures
retractable awnings and sun umbrellas. It is also a dye house and a
commission finishing house and acts as a distributor of finished
fabrics for other awning manufacturers and boat cover
In its request for tariff relief, Gibson claimed that identical
or substitutable fabrics were not available in Canada and that
foreign suppliers are able to offer the subject fabrics in 145
different patterns and colours. Gibson indicated that the quantity
of acrylic fabrics required by the Canadian market does not justify
Canadian production of these fabrics. Gibson stated that tariff
relief would enable it to reduce costs thereby allowing it to
compete more effectively against imports of finished products from
the United States, France and Italy. This, according to Gibson,
would result in more sales. Gibson also stated that the duty
savings would be used to increase marketing efforts in the sale of
awnings and sun umbrellas.
Barrday, of Cambridge, Ontario, indicated that it does not
produce acrylic fabrics and that it does not intend to do so in the
Cavalier, of Saint-Laurent, Quebec, is a producer of specialized
spun yarns and strand5
yarns. Cavalier opposed the request for
tariff relief because it supplies yarns to Shuford Mills Inc.
(Shuford), a weaver and distributor of acrylic fabrics, located in
Hickory, North Carolina.
Cavalier stated that it began research and development work on
the above-mentioned yarns some three years ago in close
co-operation with Shuford. In 2000, Cavalier began selling
substantial quantities of yarn to Shuford. Cavalier stated that
tariff relief on the subject fabrics would negatively affect its
Canadian production of yarns destined for the United States.
Cavalier indicated that Canadian awning manufacturers export their
products, particularly to the states bordering the Great Lakes
region. Cavalier stated that tariff relief would also affect the
ability of its U.S. customers to sell fabrics in the Canadian
market, consequently impacting its own business.
While acknowledging that there is no Canadian manufacturer of
acrylic fabrics, Cavalier indicated that, under the North
American Free Trade Agreement,6
U.S.-made fabrics can enter
Canada duty free. Cavalier submitted that it has invested a
significant amount of money, time and resources to develop this
business. Cavalier stated that it chose to produce these
specialized yarns because it had the highly qualified labour force
required and that these products would be less susceptible to
import pressure. Therefore, it would be unfair to face duty-free
competition from outside NAFTA, as Cavalier is about to reap the
benefits of its investment.
Shuford stated that it is a major manufacturer of 100 percent
acrylic fabrics. It buys the yarns to produce these fabrics from
Cavalier. Shuford stated that it began manufacturing these fabrics
three years ago. Shuford submitted that tariff relief on the
subject fabrics would negatively affect its current business in the
United States and, in turn, that of Cavalier, since Canadian awning
manufacturers export their products to the United States,
particularly to the Great Lakes region. Shuford stated that tariff
relief would also affect its ability to enter the Canadian
While acknowledging that there is no Canadian producer of
acrylic fabrics, Shuford stated that, under NAFTA, U.S.-produced
fabrics can enter Canada duty free. Shuford indicated that Cavalier
has developed the expertise to produce the yarns that are required
in the manufacture of these high-quality fabrics. Shuford is
concerned about the potentially damaging impact that this proposed
tariff relief would have on one of its most valued suppliers.
J. Ennis Fabrics Ltd.
Ennis, of Edmonton, Alberta, is a distributor of acrylic fabrics
for many manufacturers of awnings, sun umbrellas, boat tops, boat
covers and outdoor furniture. It indicated that acrylic fabrics are
not manufactured in Canada. Ennis supported Gibson's request for
tariff relief on the basis that it should not be end-use specific,
thus enabling all importers/users to purchase all imported acrylic
fabrics duty free that are classified in subheading No.
According to Ennis, this would be fair and
create a level playing field. Ennis indicated that, because acrylic
fabrics are produced using solution-dyed fibres that give them
extreme ultra-violet light resistant properties, they are used in a
number of applications.
Ennis stated that, should tariff relief be granted as requested,
there would be no benefit or cost to its firm. It would just mean
that more acrylic fabrics would be purchased from Europe than from
the United States and Mexico. Ennis also indicated that, if only
selected countries or importers were given duty relief, it would
face fabric costs higher than those of its competitors and that its
customers would be put in an unfair situation. Ennis stated that
Gibson has proprietary rights to the "Sattler" product8
should tariff relief be granted, this would give Gibson an unfair
advantage over its competitors. In this connection, Ennis indicated
that Gibson could import acrylic fabrics for its own production,
while its competitors would be buying from distributors that had
paid duty on similar fabrics.
In its final submission of May 14, 2002, Cavalier indicated that
its yarns are sold for fabrics used in the manufacture of boat
covers, tarpaulins, awnings, outdoor furniture, sun umbrellas and
convertible car tops. Cavalier submitted that granting duty-free
access to the subject fabrics from all countries would seriously
affect its current business and the growth potential with its U.S.
customers. Cavalier indicated that there are already low-priced
fabrics being imported from France, Spain, the People's Republic of
China (China) and the Republic of Korea (Korea), and that removing
the duty would make these products much cheaper than those imported
from the United States.
In its response submission of May 24, 2002, Gibson stated that
Shuford, a small producer, produces acrylic fabrics in two weights
and in solid colours only, whereas European manufacturers offer a
variety of fabrics with different stripes and patterns. As such,
Shuford's product is not the same as the subject fabrics. Gibson
stated that it is not aware of any sales made by Shuford in Canada.
Gibson indicated that, in the Great Lakes region, Shuford is a
business competitor of Glen Raven Inc. (Glen Raven), of North
Carolina. With its Sunbrella® fabric,9
Glen Raven has
approximately 70 to 80 percent of the acrylic fabric market in
Gibson submitted that tariff relief helps domestic producers
reduce or eliminate duty on textile inputs not available from
Canadian manufacturers. In this regard, Gibson indicated that
Cavalier's yarns are used in the manufacture of acrylic fabrics in
the United States and do not affect the Canadian industry.
On the issue of pricing, Gibson stated that U.S. prices for
acrylic fabrics have no bearing on its case since it is catering to
the market with a European flair. Gibson indicated that imports of
acrylic fabrics from Spain, China and Korea represent less than 2
percent of the market and that fabrics produced in low-wage
countries such as China and Korea would, obviously, have a lower
The Department of Foreign Affairs and International Trade
(DFAIT) informed the Tribunal that Canada does not maintain quota
restraints on the subject fabrics.
The CCRA indicated that there would be no costs, over and above
those incurred by it to administer the tariff relief, should it be
The Minister's terms of reference direct the Tribunal to assess
the economic impact on domestic textile and downstream producers of
reducing or removing a tariff and, in so doing, to take into
account all relevant factors, including the substitutability of an
imported fabric for a domestic fabric and the ability of domestic
producers to serve the Canadian downstream industries.
Consequently, the Tribunal's decision on whether to recommend
tariff relief is based on the extent to which it considers that
such tariff relief would provide net economic gains for Canada.
Gibson's request for tariff relief covers acrylic fabrics for
use in the manufacture of retractable awnings and sun umbrellas.
Gibson claimed that there is no domestic production of fabrics
identical to or substitutable for the subject fabrics. Two textile
mills, namely, Cavalier and Shuford, opposed the request. Cavalier
submitted that it supplies yarns to Shuford, which is located in
North Carolina, and that tariff relief on the subject fabrics would
adversely affect its production of yarns destined for the United
States. Shuford indicated that its business, including its ability
to enter the Canadian market, would be negatively affected.
While it is uncontested that Cavalier sells acrylic yarns to
Shuford, which produces fabrics for use in the manufacture of
retractable awnings and sun umbrellas, it is unclear what effect,
if any, tariff relief would have on Cavalier's operations. The
evidence provided by Gibson indicates that, in the Great Lakes
region of the United States, Shuford's principal competition is
likely to come from Glen Raven's Sunbrella® fabric, which holds
approximately 75 percent of the acrylic fabric market, and not from
Gibson or any other Canadian producers. With respect to Shuford's
potential entry into the Canadian market, this is little more that
speculation, and no tangible evidence has been submitted.
Furthermore, Cavalier has provided no quantitative evidence of the
foreseen impact on its operation, should tariff relief be granted.
Consequently, the Tribunal is unable to conclude that Cavalier
would be negatively impacted if tariff relief were granted.
With respect to Ennis's contention that, if only selected
countries or importers were given duty relief, its costs would be
high and its customers would be put in an unfair situation, the
Tribunal notes that tariff relief, when granted, applies to all
countries, without discrimination. Moreover, any company engaged in
the purchase of the subject fabrics for use in the manufacture of
retractable awnings and sun umbrellas would benefit from any tariff
Other than the corresponding duty revenues forgone by the
government, the Tribunal does not believe that there will be any
direct commercial costs associated with the removal of the customs
duty on the importation of the subject fabrics. On the basis of the
information available to the Tribunal, tariff relief would result
in yearly benefits of less than $100,000 to Gibson and other
importers of the subject fabrics. In addition, tariff relief would
likely provide benefits to users in the form of cost reductions,
which would allow them to compete more effectively. In summary, the
Tribunal finds that the tariff relief requested by Gibson would
provide net economic gains for Canada.
As for Gibson's request for retroactive tariff relief to January
1, 1997, the Tribunal has stated, in previous cases, that it will
not consider recommending such relief other than in exceptional
Gibson has provided no evidence to warrant
such a recommendation.
In light of the foregoing, the Tribunal hereby recommends to the
Minister that tariff relief be granted, for an indeterminate period
of time, on importations from all countries, of plain woven
fabrics, solely of acrylic staple fibres made from 2-ply yarns,
having a decitex per single yarn of 295 or more but not exceeding
315 decitex, of a weight of 280 g/m2 or more but not
exceeding of 320 g/m2, of subheading No. 5512.29,
for use in the manufacture of retractable awnings and sun
1 . The terms
of reference were last modified in 1999.
2 . R.S.C.
1985 (4th Supp.), c. 47.
3 . C.
4 . S.C.
1997, c. 36.
5 . A
single fibre, filament or monofilament.
6 . 32
I.L.M. 289 (entered into force 1 January 1994) [hereinafter
7 . On
March 12, 2002, the Tribunal advised Ennis that it had decided not
to expand the scope of the investigation and that, should it wish
to obtain tariff relief for all other end uses, a new request would
have to be filed according to the Tribunal's Textile Reference
Guide. To expand the scope of the investigation at such a late
stage in the process, in order to cover all other end uses, would
have required the Tribunal to re-open its investigation and issue a
notice of amendment to the notice of commencement of investigation.
The Tribunal was of the view that to do so would unduly delay the
issuance of a recommendation in respect of Gibson's request for
Awning fabrics which are produced by Sattler AG, a leading
manufacturer of technical textiles and awning materials that is
based in Graz, Austria.
Glen Raven makes the Sunbrella® fabric in over 100 colours; it is
used in the manufacture of products such as awnings, boat covers
and furniture cushions.
See, for example, Re Request for Tariff Relief by Peerless
Clothing (1 October 2001), TR-2000-005 at 15;
Re Request for Tariff Relief by Ballin (9 March 2001),
TR-2000-004 at 6; Re Request for Tariff Relief by Tantalum
Mining (21 March 2001), TR-2000-003 at 4; Re Request for
Tariff Relief by Majestic Industries (12 January 2001),
TR-2000-002 at 4.
[Table of Contents
Initial publication: August 1, 2002