LE CHÂTEAU INC.
(WOVEN POLYESTER FABRIC)
Request No. TR-2007-007
Tuesday, December 2, 2008
TABLE OF CONTENTS
Pasquale Michaele Saroli, Presiding Member
Diane Vincent, Member
André F. Scott, Member
Counsel for the Tribunal:
Please address all communications to:
Canadian International Trade Tribunal
Standard Life Centre
333 Laurier Avenue West
REPORT TO THE MINISTER OF FINANCE
1. 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.2
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.
2. On March 14, 2008, pursuant to the Minister’s reference, the
Tribunal received a request from Le Château Inc. (Le Château)
of Montréal, Quebec, for the removal, for an indeterminate period
of time, of the customs duty on importations from all countries of
woven dyed fabric, consisting of 97 percent non-textured and
textured polyester filaments mixed with 3 percent elastomeric
filaments, with a satin weave, used in the manufacture of dresses,
skirts, vests, blouses, tops and scarves.
3. On September 24, 2008, being satisfied that the request was
properly documented, the Tribunal issued a notice of commencement
which was distributed to those who might
have an interest. The fabric under investigation is woven fabric,
satin weave, dyed, of yarns of non-textured polyester filaments in
the warp and of textured polyester filaments and elastomeric yarn
in the weft, of a weight not exceeding 132 g/m2, of
tariff item No. 5407.69.90 of the schedule to the Customs
for use in the manufacture of dresses,
skirts, vests, blouses, tops and scarves (the subject fabric).
4. As part of the investigation, the Tribunal’s research staff
sent questionnaires to potential domestic producers of fabric
identical to or substitutable for the subject fabric and a request
for information to potential users and importers of the subject
fabric. It also requested the Canada Border Services Agency (CBSA)
to provide a complete description of the physical characteristics
of the fabric sample submitted by Le Château, an opinion on whether
the requested tariff relief would be administrable and suggested
wording to describe the subject fabric should tariff relief be
recommended. The CBSA indicated that there would be no additional
costs, over and above those that it normally incurs, to administer
the tariff relief should it be granted.
5. Letters were also sent to the Department of Foreign Affairs
and International Trade and the Department of Industry, requesting
information that could assist the Tribunal in its
6. A staff investigation report was not necessary for the
purposes of this investigation, since there was no opposition to
7. On October 29, 2008, the Tribunal indicated that it intended
to issue a report to the Minister concerning the request based on
the information on the record.
8. A public hearing was not held for this
9. Le Château imports the subject fabric from the People’s
Republic of China and the Republic of Korea. It submitted one
fabric sample with its request for tariff relief. The sample was a
dyed fabric, satin weave, consisting of non-textured polyester
yarns in the warp and textured polyester yarns and elastomeric
yarns in the weft. The fabric weighed 126 g/m2.
10. As of January 1, 2008, the subject fabric is classified for
customs purposes under tariff item No. 5407.69.90 and is
dutiable at 14 percent ad valorem under the
Most-Favoured-Nation Tariff and the Costa Rica Tariff, and is duty
free under the United States Tariff, the Least Developed Country
Tariff, the Mexico Tariff, the Canada-Israel Agreement Tariff and
the Chile Tariff.
Position of the Clothing
11. Le Château, one of
Canada’s largest apparel manufacturers, first opened its production
facilities in Montreal in 1984. Garments manufactured by Le Château
are cut in these facilities and then sent out to be assembled and
sewn by independent contractors in Quebec and Ontario.
12. Le Château claimed that no Canadian textile manufacturers
were able to produce fabric that is identical to or substitutable
for the subject fabric.
13. Le Château uses the subject fabric in the manufacture of
dresses, skirts, vests, blouses, tops and scarves. Le Château
indicated that the subject fabric is readily available in multiple
colours from its overseas suppliers at competitive prices that help
Le Château maintain its Canadian production. Le Château stated that
the subject fabric is very light, yet resistant to tearing or
ripping, and has an elegant look, feel and style.
14. As for the anticipated benefits of tariff relief, Le Château
stated that, to remain competitive in the retail market, it has had
to continuously increase its imports of finished garments, while
scaling back on its local production. Eliminating the customs duty
on imports of the subject fabric would provide Le Château an
additional reason to continue manufacturing garments at its
Montreal production facilities.
15. Le Château requested that tariff relief be retroactive to
January 1, 2005.
Position of the Textile
16. Domestic fabric producers did not oppose the request for
17. 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
18. Le Château claimed that there is no domestic production of
fabric identical to or substitutable for the subject fabric. This
claim was not contested by any domestic fabric producers.
Therefore, 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 fabric. On the basis
of the information available to the Tribunal, tariff relief would
result in yearly benefits to users of the subject fabric in excess
of $45,000. In summary, the Tribunal finds that the tariff relief
requested by Le Château would provide net economic gains for
19. As for Le Château’s request for retroactive tariff relief,
the Tribunal has stated in previous cases that it will not consider
recommending such relief other than in exceptional circumstances.
Le Château has provided no evidence to warrant such a
recommendation. However, it is the Tribunal’s view that the
commencement of tariff relief as soon as possible is warranted.
20. In light of the foregoing, the Tribunal hereby recommends to
the Minister that tariff relief be granted as soon as possible, for
an indeterminate period of time, on importations from all countries
of woven fabric, satin weave, dyed, of yarns of non-textured
polyester filaments in the warp and of textured polyester filaments
and elastomeric yarn in the weft, of a weight not exceeding 132
g/m2, of tariff item No. 5407.69.90, for use in the
manufacture of dresses, skirts, vests, blouses, tops and
Pasquale Michaele Saroli
Pasquale Michaele Saroli
André F. Scott
André F. Scott
. The terms of reference were last modified on October 27,
. R.S.C. 1985 (4th Supp.), c. 47.
. C. Gaz. 2008.I.2739.
. S.C. 1997, c. 36.
. Pursuant to rule 25 of the Canadian
International Trade Tribunal Rules, S.O.R./91-499, the
Tribunal has the authority to proceed by way of written