THE MINISTER OF FINANCE
REQUEST FOR TARIFF RELIEF BY
ACTON INTERNATIONAL INC.
WOVEN FABRIC OF
HIGH TENACITY YARNS
FEBRUARY 27, 1997
TABLE OF CONTENTS
Request No.: TR-96-004
Tribunal Members: Anthony T. Eyton, Presiding Member
Robert C. Coates, Q.C., Member
Desmond Hallissey, Member
Research Director: Réal Roy
Research Manager: Anis Mahli
Counsel for the Tribunal: David M. Attwater
Distribution Officer: Claudette Friesen
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 reference  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.
Pursuant to the Minister’s reference, the Tribunal received, on
June 10, 1996, a request from Acton International Inc. (Acton) of
Acton Vale, Quebec, for the permanent removal of the customs duty
on importations of a woven fabric of high tenacity yarns for use as
a stabilizing/reinforcing fabric in the manufacture of
unvulcanized, calendered rubber, used in the production of
snowmobile track and industrial track (the subject fabric).
On October 18, 1996, the Tribunal, being satisfied that the
request was properly documented, issued a notice of commencement of
investigation, which was distributed and published in the October
26 , 1996, edition of the Canada Gazette, Part I. 
As part of the investigation, the Tribunal’s research staff sent
questionnaires to potential producers of identical or substitutable
fabrics. Questionnaires were also sent to firms identified as
potential importers and users of the subject fabric. A letter was
sent to the Department of National Revenue (Revenue Canada)
requesting information on the tariff classification of the subject
fabric, and samples were provided for laboratory analysis. Letters
were also sent to a number of other government departments for
information and advice.
A staff investigation report, summarizing the information
received from these government departments, Acton and firms that
responded to the Tribunal’s questionnaires, was provided to the
parties that had filed notices of appearance for this
investigation. These parties are Acton, Barrday, Inc. (Barrday) and
the Canadian Textiles Institute (CTI).
A public hearing was not held for this investigation.
In the notice of commencement of investigation, the subject
fabric was defined as a woven fabric, coated or impregnated with
styrene-butadiene rubber, styrene rubber  or butadiene rubber, of high tenacity
yarns solely of nylon filaments or of high tenacity yarns of
polyester filaments and nylon filaments, weighing less than 1,000
g/m2, for use as a stabilizing/reinforcing fabric in the
manufacture of unvulcanized, calendered rubber, used in the
production of snowmobile track and industrial track.
Revenue Canada analyzed the samples of the subject fabric
provided by Acton and concluded that, on the basis of the
laboratory analysis, it was a woven fabric, coated or impregnated
with styrene-butadiene rubber, made of high tenacity yarns solely
of nylon filaments or of high tenacity yarns of polyester filaments
and nylon filaments, and that, for customs purposes, the subject
fabric is classified under tariff item No. 5906.99.20 of Schedule I
to the Customs Tariff. 
Under tariff item No. 5906.99.20, the subject fabric is dutiable
in 1997 at 17.5 percent ad valorem under the MFN tariff; at
11.0 percent ad valorem under the GPT; at 2.5 percent ad
valorem under the US tariff; and at 9.9 percent ad
valorem under the Mexico tariff.
In 1995, total imports of woven fabrics made of high tenacity
yarns by weight of rubberized textile fabrics, which are classified
under tariff item No. 5906.99.20, were reported by Statistics
Canada to have amounted to 3.6 million kg, with an estimated value
of $25.3 million. Because the major proportion of this volume was
imported for the manufacture of other than snowmobile track and
industrial track, Acton’s share of this total volume was
negligible. The majority of these imports originated in Europe and
the United States.
Acton coats the subject fabric exclusively for Camoplast
Rockland, Ltd. (Camoplast) for incorporation into industrial track
and snowmobile track manufactured in Plattsburgh, New York. Acton
also manufactures rubber boots, shoes and bottoming materials (i.e.
Acton submits that, until the end of 1992, it purchased its
requirements of fabric from the Dominion Textiles Inc. plant in
Drummondville, Quebec. However, after this plant relocated to the
United States in 1993, Acton was unable to source the fabric
domestically, even from producers of industrial high tenacity
fabrics, such as Goodyear Canada Inc. and Firestone Textiles Co., a
Div. of Bridgestone/Firestone Canada Inc.
In response to submissions by other parties, Acton claims that,
based on the information in the case files, Barrday has not
demonstrated to the Tribunal that it can supply a substitutable
fabric of good and consistent quality at competitive prices. Acton
adds that Barrday produces only a fabric woven of nylon filaments,
while the subject fabric is woven of nylon filaments or of
polyester filaments and nylon filaments.
Acton submits that, although tariff relief would improve its
market share and competitiveness at home and abroad, it would not
offset its 1996 monetary losses which resulted from the
restrictions on duty drawbacks as a result of the North American
Free Trade Agreement  implemented on January 1, 1996. Acton further
submits that the subject fabric, which benefited from full duty
relief in 1995, did not benefit from any duty relief in 1996.
Finally, Acton points out that, unless the Tribunal recommends
tariff relief retroactive to January 1, 1996, Acton will not recoup
its 1996 monetary losses.
Soucy International Inc. (Soucy) submits that it uses the
subject fabric in the production of low- and high-performance
snowmobile track at its manufacturing facility in Drummondville.
Soucy adds that, of about 150,000 snowmobile tracks produced for
the Canadian market, about two thirds is produced by Camoplast and
the balance is produced by Soucy. Soucy indicates that it sources
most of its fabric requirements from the United States and
Soucy states that, during 1993 and 1994, subsequent to the
closure of the Dominion Textiles Inc. plant in Drummondville in
1993, it tested a substitutable fabric woven of high tenacity yarns
solely of nylon filaments produced domestically by Barrday. Soucy
states that, because of elongation, shrinkage and peeling problems,
it eventually stopped testing the substitutable fabric and began to
purchase its fabric requirements from offshore suppliers. Soucy
adds that, although it did not buy any fabric from Barrday in 1995,
it retested Barrday’s fabric in 1996 and was generally pleased with
the test results.
Soucy submits that, although it was satisfied with the
preliminary test results obtained in 1996, to switch sourcing its
requirements of fabric of nylon filaments from offshore sources to
Barrday, Barrday would have to supply a substitutable fabric of
good and consistent quality at competitive prices. Soucy further
submits that, for the company to remain competitive with domestic
and offshore suppliers of snowmobile track, it must be able to buy
a reliable fabric with a long-standing reputation at competitive
Finally, Soucy supports Acton’s request for tariff relief on
imports for the subject fabric.
Barrday manufactures specialty industrial and textile-based
finished products at its plant in Cambridge, Ontario. These include
protective products, filtration products, recreational products and
industrial products. According to production data submitted by
Barrday, as a ratio of total plant production, the production of
the substitutable fabric accounted for a negligible amount.
Barrday submits that, on March 15, 1993, it approached Camoplast
to determine if it would be interested in establishing a business
relationship between the two companies. Barrday further submits
that, because Camoplast insisted on having Barrday sign an
exclusive confidentiality agreement, Barrday decided instead to
work with Soucy.
Barrday opposes Acton’s request for tariff relief because it
states that Barrday is able to weave and presently weaves a
substitutable fabric at the Cambridge facility with yarns spun in
Canada and has the fabric treated in the United States. Barrday
adds that it is well capitalized and, accordingly, to expand
capacity, additional equipment could be readily purchased, if
necessary. Barrday concludes that, with its existing equipment, it
would be able to supply a major proportion of the users’ current
Finally, Barrday asks the Tribunal to turn down Acton’s request
for tariff relief because the removal of duty on imports of the
subject fabric will hurt Barrday.
The CTI, which represents the major proportion of domestic
textile producers, although not Barrday, does not oppose Acton’s
request for tariff relief.
The terms of reference direct the Tribunal to evaluate the
economic impact that reducing or removing a tariff would have on
domestic textile producers and downstream producers and, in so
doing, to consider all relevant factors, such as the
substitutability of the subject fabric with a domestic fabric, the
ability of domestic fabric producers to serve the Canadian
downstream industries and the competitiveness at home and abroad of
those downstream industries. Consequently, the Tribunal’s decision
to recommend tariff relief is based on the extent to which it
considers that such tariff relief would provide net economic gains
Barrday is the only domestic textile producer that opposed the
request for tariff relief on the subject fabric on the grounds that
it presently weaves a substitutable fabric in its Canadian facility
with yarns made in Canada. The Tribunal notes that, during the
first quarter of 1996, Soucy tested a small volume of Barrday’s
fabric and, while it was generally pleased with test results,
 the production
volume was nonetheless negligible, and the price at which Barrday
sold its fabric was still in contention. Because Barrday’s selling
price of the substitutable fabric sold to Soucy for testing was
markedly higher than that of the subject fabric, Soucy indicated
that it would switch from sourcing its fabric requirements from
offshore sources to domestic sources only if Barrday offered its
fabric at a competitive price.
Based on the information that Barrday has provided on its
production, total sales and sales volumes and values to major
accounts of the allegedly substitutable fabric for the 1995-1996
period, the Tribunal is not persuaded that the substitutable fabric
which Barrday produces is currently acceptable by producers of
reinforced fabrics used in the production of snowmobile track and
The absence of concrete evidence of sales of the substitutable
fabric by Barrday suggests that, notwithstanding Barrday’s claim
that it produces a substitutable fabric, that fabric has failed to
gain acceptance in the segment of the market for snowmobile track
and industrial track. In the absence of such sales, it is difficult
to consider that the removal of the duty on imports of the subject
fabric would impose a cost on Barrday. It is apparently not selling
this fabric now and has few prospects for the near future.
Barrday has not demonstrated that it is, or will become, an
active supplier of a fabric identical to or substitutable for the
subject fabric in the end-use market specified in the request for
tariff relief. Furthermore, Barrday did not provide any concrete
evidence that would quantify the extent of its costs or losses,
should tariff relief be granted. Barrday did, however, provide
unsubstantiated assertions that the removal of the duty on the
subject fabric would hurt it.
In assessing the net economic gains for Canada, the Tribunal
notes that granting tariff relief will provide Acton and Soucy with
significant benefits as a result of lower costs of production (the
duty savings were estimated at over $450,000 in 1997). The duty
relief should offset some of the losses incurred by both Acton and
Soucy from the discontinuation of duty remissions. The savings
should also assist users of the subject fabric and the
manufacturers of snowmobile track and industrial track to remain
competitive with offshore imports by offering competitive prices to
Canadian snowmobile manufacturers. These competitive input costs
should, in turn, make Canadian snowmobiles and industrial machinery
very attractive in overseas markets.
Because the removal of the tariff provides significant benefits
to Acton, Soucy and manufacturers of snowmobile track and
industrial track without any tangible costs to the domestic
industry, the Tribunal believes that tariff relief will provide net
economic gains for Canada. Therefore, the Tribunal recommends that
tariff relief be granted.
If this tariff relief is granted and if, at a future date,
Barrday succeeds in obtaining market acceptance for its fabric, it
may then wish to request the commencement of an investigation under
subparagraph 19(1) of the Textile Reference Guidelines for the
purpose of recommending an amendment of the order of the Governor
in Council providing tariff relief. However, in order to ensure a
degree of purchasing and financial stability for Acton and Soucy or
any other producers that want to use the subject fabric, the
Tribunal recommends that the tariff relief be granted for an
indeterminate period of time.
In light of the above information and evidence before the
Tribunal in this matter, the Tribunal hereby recommends to the
Minister that the customs duty on importations of woven fabric,
coated or impregnated with styrene-butadiene rubber or butadiene
rubber, of high tenacity yarns solely of nylon filaments or of high
tenacity yarns of polyester filaments and nylon filaments, weighing
less than 1,000 g/m2 of tariff item No. 5906.99.20, for
use as a stabilizing/reinforcing fabric in the manufacture of
unvulcanized, calendered rubber, used in the production of
snowmobile track and industrial track, be removed for an
indeterminate period of time.
The Tribunal further recommends that the tariff relief be
effective as of the date of this report.
Anthony T. Eyton
Anthony T. Eyton
Robert C. Coates, Q.C.
Robert C. Coates, Q.C.
1. On March 20 and
July 24, 1966, the Minister revised the terms of reference.
2. R.S.C. 1985, c. 47
3. Vol. 130, No. 43 at
4. Subsequent to the
commencement of the investigation, on the recommendation of the
Revenue Canada laboratory chemist, Acton agreed to delete the
phrase “styrene rubber” because its inclusion in the product
definition was not germane to the subject fabric.
5. R.S.C. 1985, c. 41
6. Done at Ottawa,
Ontario, on December 11 and 17, 1992, at Mexico, D.F., on December
14 and 17, 1992 , and at Washington, D.C., on December 8 and 17,
1992 (in force for Canada on January 1, 1994).
7. According to Soucy,
small modifications to the fabric were requested.
[Table of Contents
Initial publication: February 27, 1997