2. Dumping Investigation
73. Section 3(1) of the Act states:
"Dumping", in relation to goods, means the situation where the export price of goods imported into New Zealand or intended to be imported into New Zealand is less than the normal value of the goods as determined in accordance with the provisions of this Act, and "dumped" has a corresponding meaning:
2.1 Introduction
74. This section of the report explains how the Ministry established whether galvanised wire from Malaysia was being dumped, and the extent of any dumping, in the POR.
75. The Ministry compared export prices and normal values on a transaction-to-transaction basis. The basis of comparison involves selecting (or, when no information was provided by the exporter, estimating) an appropriate domestic transaction value for comparison with each export transaction value. The Ministry was then able to compare the two values to establish whether or not each transaction was dumped and the extent of any dumping.
76. The Ministry uses a transaction-to-transaction basis for comparing export prices and normal values, rather than a weighted average-to-weighted average method, because this method identifies the individual transactions that are dumped. Under this method, in calculating the volume of dumped imports only those transactions found to be dumped are included (although in the case of a reassessment it is not necessary to calculate the volume of dumped imports). The Ministry considers this provides a more accurate representation of the extent of any dumping and is particularly suited to a small economy such as New Zealand where the number of transactions is relatively small.
77. According to data, over the POR, obtained from Customs there were xxxx shipments of galvanised wire originating from Malaysia that are classified under the 30 Tariff items as shown in paragraph 47. These shipments totalled xxxxkg.
78. As outlined in paragraph 60, in the absence of required information, section 6 of the Act provides for a decision to be made having regard to all available information. In view of the failure by SMI to provide all necessary information to determine the export price(s) and normal values(s) the Ministry has used a combination of information provided by SMI, its importer and Southern Wire.
79. The Ministry calculates export prices and normal values by making adjustments to a base price. The base price for establishing export prices has been determined in all cases in this reassessment using the price paid or payable by New Zealand importers. The base price for establishing normal values has been determined in all cases in this reassessment using the price paid for like goods in the ordinary course of trade for home consumption in the country of export.
80. Adjustments are made to base prices in order to allow a fair comparison to be made between export prices and normal values. This comparison is made at the same level of trade, normally at the ex-factory level and with due allowance made for differences which effect price comparability.
2.2 Export Prices
81. Export prices are determined in accordance with section 4 of the Act, which provides as follows:
(1) Subject to this section, for the purposes of this Act, the export price of any goods imported or intended to be imported into New Zealand which have been purchased by the importer from the exporter shall be-
(ii) Any other costs, charges, and expenses resulting from the exportation of the goods, or arising after their shipment from the country of export;
82. Section 6 of the Act states as follows:
(1) Where the [Chief Executive] is satisfied that sufficient information has not been furnished or is not available to enable the export price of goods to be ascertained under section 4 of this Act, or the normal value of goods to be ascertained under section 5 of this Act, the normal value or export price, as the case may be, shall be such amount as is determined by the [Chief Executive] having regard to all available information.
(2) For the purposes of subsection (1) of this section, the [Chief Executive] may disregard any information that the [Chief Executive] considers to be unreliable.
83. In the normal course of events, export prices are determined in accordance with section 4 of the Act. Export prices were established on this basis using information provided in submissions made by the relevant overseas exporters and New Zealand importers in response to the Ministry's questionnaires.
Southern Wire Industries (Malaysia) Sdn Bhd
Export Sales Distribution
84. Southern Wire exported xxxxkg of ARM and xxxxkg of HGW to [Text deleted due to confidentiality]. Southern Wire [Text deleted due to confidentiality] the subject goods to New Zealand from Malaysia.
85. The New Zealand customer advises Southern Wire of the goods it wishes to purchase. [Text deleted due to confidentiality] it will send a purchase order and Southern Wire will then send a sales order (S/O) to the New Zealand customer. [Text deleted due to confidentiality] Payment for exported goods is made in relation to the Bill of Lading (B/L) date i.e. 5 or 10 days after the B/L is issued. When the goods are sent to the New Zealand customer an invoice is issued which confirms the details of the S/O and demand is made for payment of the account.
Base Prices
86. Base prices have been established from the [Text deleted due to confidentiality] and [Text deleted due to confidentiality] invoiced prices in USD. Southern Wire together with the importer provided copies of all export sale invoices. The date of sale has been taken as the date of the S/O.
Adjustments
Inland Freight
87. The Ministry based its adjustment for inland freight on verified information. The cost of inland freight is made up of two components; transport by lorry from the factory to the Inland Cargo Terminal (ICT) and transport by railcar to the export port, Port Klang. A proportion of the charges relate to the number of containers with the remaining charges relating to the weight of the load. The Ministry has made an adjustment on the basis of each container holding 22 tonnes and the weight of the consignment. An adjustment of MYR[Text deleted due to confidentiality] per kg has been made to each export transaction for the cost of inland freight.
Export Packing
88. The Ministry based its adjustment for export packing on verified information. The Ministry has made an adjustment on export transactions of MYRxxxx per kg.
Handling Costs
89. The Ministry based its adjustment on verified information. The handling costs refer to the loading of coils into containers for ocean transport.
90. The Ministry has made an adjustment on export sales of MYRxxxx per kg.
Terminal and Processing Charge
91. The terminal and processing charges relate to electronic data interchange (EDI), B/L fee, terminal handling and "MT repositioning". The EDI, B/L fee and terminal handling relate to the charges incurred by Southern Wire at its export port, Port Klang. The repositioning charge refers to the need to move or reposition empty containers and Southern Wire is charged this cost in all instances. The Ministry has based an adjustment for each of these costs on verified information.
92. The cost of EDI and B/L has been allocated across the weight of each shipment. The adjustment for EDI ranges from MYRxxxx to MYRxxxx. The adjustment for B/L ranges from MYRxxxx to MYRxxxx per kg.
93. The terminal handling and repositioning charge is based on each container which holds 22 tonnes. The Ministry has made an adjustment for terminal handling and repositioning of MYRxxxx and MYRxxxx per kg respectively.
Bank Charges
94. Southern Wire incurs a bank charge in relation to the funds it receives on export sales. The process in receiving the funds differs between the importers consequently the bank charges are different. Based on verified information the Ministry has made an adjustment for each importer.
95. The adjustment for bank charges on export transactions to [Text deleted due to confidentiality] ranges from MYRxxxx to MYRxxxx per kg.
96. The adjustment for bank charges on export transactions to [Text deleted due to confidentiality] ranges from MYRxxxx to MYRxxxx per kg.
Cost of Credit
97. The Ministry verified a selection of payment dates on export sales. The Ministry calculated in each transaction the number of days between the date of the S/O (date of sale) and the date of payment. The number of days of credit range from xxxx (before S/O issued) to xxxx days from the date of S/O.
98. An adjustment for the cost of credit has been made on domestic transactions to reflect the difference in the cost of credit between export and domestic sales. This is discussed at paragraphs 141 to 144.
Overseas Freight and Insurance
99. The Ministry based its adjustment for overseas freight and insurance on verified information.
100. An adjustment has been made for overseas freight for export transactions to [Text deleted due to confidentiality] of MYRxxxx] per kg. In relation to overseas insurance the Ministry has made an adjustment for sales to [Text deleted due to confidentiality], of MYRxxxx per kg, (which is [Text deleted due to confidentiality]). This is the same amount that applied in the Malaysian investigation.
Fumigation
101. Exports of HGW, to [Text deleted due to confidentiality], [Text deleted due to confidentiality]. Customs requires the container to be fumigated at a cost to the exporter. The Ministry has made an adjustment to these export transactions only based on verified information of MYRxxxx per kg.
Export Price
102. Ex-factory export prices were established by deducting the adjustments outlined above from the base prices.
103. The range of export prices for Southern Wire are shown in Table 2.2 and Table 2.3.
Aspac Alliance Steel Sdn Bhd
104. Over the POR there was no record that Aspac supplied the subject goods to New Zealand.
105. A questionnaire was sent to Aspac requesting information that would enable the Ministry to reassess the anti-dumping duty that is imposed on galvanised wire exported by Aspac. However, the Ministry has not received a submission.
106. In the Malaysian investigation Aspac sourced its galvanised wire for export to New Zealand from [Text deleted due to confidentiality]. Aspac has not been a customer of [Text deleted due to confidentiality]'s for calendar years 2004 and 2005.
SMI Wire Sdn Bhd
Export Sales Distribution
107. SMI exported directly to the New Zealand importer. Over the POR it exported xxxxkg of [Text deleted due to confidentiality]. Customs data shows these imports occurred [Text deleted due to confidentiality].
Base Prices
108. Base prices have been established from the [Text deleted due to confidentiality] invoiced prices in USD. SMI provided copies of all export sale invoices. The date of sale has been taken as the date of the invoices.
Adjustments
Inland Freight
109. SMI provided the cost of inland freight on a per tonne basis from the factory at Johor Bahru to the export port, Pasir Gudang but no evidence to substantiate these costs was provided. The export port is 35 km east of Johor Bahru. According to information from Southern Wire, its inland freight expense is charged on the basis of the weight of the goods and the distance to its destination. The cost advised by SMI of USDxxxx per tonne is similar to Southern Wire's inland freight expense per tonne but it is higher on a per km basis. While the information is not ideal in all respects the Ministry has nevertheless used the information provided by SMI to make an adjustment for the inland freight of MYRxxxx per kg.
Export Packing
110. According to SMI's questionnaire response the packing cost is the same on export sales as it is for domestic sales. No adjustment, therefore, has been made regarding export packing.
Handling Costs
111. The Ministry considers that given the information supplied and verified at Southern Wire and in the absence of information to the contrary, an adjustment for the cost of handling the goods should be made.
112. The Ministry has made an adjustment on export of MYRxxxx per kg for export transactions, based on information provided by Southern Wire.
Terminal and Processing Charge
113. No information regarding Malaysian customs terminal and processing charge(s) has been provided by SMI. An adjustment has been made for terminal and processing charges based on information provided by Southern Wire. The adjustment is collectively MYRxxxx per kg.
Bank Charges
114. No information regarding bank charges has been provided by SMI. According to the questionnaire response and the importer's questionnaire response, sales to [Text deleted due to confidentiality] are made on an [Text deleted due to confidentiality] basis and the terms of payment are [Text deleted due to confidentiality] ([Text deleted due to confidentiality])
115. According to information supplied and verified at Southern Wire there is a bank charge in relation to [Text deleted due to confidentiality] of funds. The Ministry considers it is appropriate to make an adjustment for bank charges. On the basis of the quantity exported the Ministry has made an assumption that each sale relates to one container of goods. An adjustment has been made of MYRxxxx per kg, based on information provided by Southern Wire.
Export Prices
116. Ex-factory export prices were established by deducting the adjustments outlined above from the base prices.
117. The range of export prices for SMI is shown in Table 2.4.
2.3 Normal Values
118. Normal values are determined in accordance with section 5 of the Act. Sections 5(1) and (3) of the Act provide as follows:
(1) Subject to this section, for the purposes of this Act, the normal value of any goods imported or intended to be imported into New Zealand shall be the price paid for like goods sold in the ordinary course of trade for home consumption in the country of export in sales that are arm's length transactions by the exporter or, if like goods are not so sold by the exporter, by other sellers of like goods.
(3) Where the normal value of goods imported or intended to be imported into New Zealand is the price paid for like goods, in order to effect a fair comparison for the purposes of this Act, the normal value and the export price shall be compared by the [Chief Executive]-
(b) In respect of sales made at as nearly as possible the same time; and
(c) With due allowances made as appropriate for any differences in terms and conditions of sales, levels of trade, taxation, quantities, and physical characteristics, and any other differences that affect price comparability.
119. Where sufficient information has not been provided or is not available in an investigation, normal values can be established under section 6 of the Act. The provisions of section 6 allow the Chief Executive to ascertain normal values having regard to all available information.
Southern Wire Industries (Malaysia) Sdn Bhd
Domestic Sales Distribution
120. Southern Wire provided detailed information about its domestic activities. Southern Wire sells HGW, lightly galvanised wire (LGW) and ARM to a variety of domestic customers. Almost all of the HGW and LGW is low tensile. The relevant domestic customers of like goods were manufacturers that further processed the goods before reselling them.
121. The purchase process is essentially the same on the domestic market as that which applies to export sales. For sales within Peninsula Malaysia a delivery order is provided to the customer when the goods are delivered. Payment terms for customers within Peninsula Malaysia are based on the date of the delivery order. Sales to East Malaysia (Sabah and Sarawak) incur the same ex-factory distribution costs as export sales as they are transported via container and shipped to their destination.
Base Prices
122. For comparison with sales of HGW to [Text deleted due to confidentiality], base prices for domestic sales have been established by using the invoiced price to [Text deleted due to confidentiality] of the nearest product type and diameter and as near as possible to the same date of the export transaction. Where sales to [Text deleted due to confidentiality] are not sufficiently close to the dates of export sales and choosing these would have a material effect on the price, sales to [Text deleted due to confidentiality] have been used as a base price. [Text deleted due to confidentiality] and [Text deleted due to confidentiality] are manufacturers of wire mesh and other wire products.
123. For comparison with sales of ARM to [Text deleted due to confidentiality], base prices for domestic sales have been established by using the invoiced price to [Text deleted due to confidentiality] of the nearest product type and as near as possible to the same date of the export transaction. [Text deleted due to confidentiality] is a cable manufacturing company.
124. For comparison with sales of HGW to [Text deleted due to confidentiality] base prices for domestic sales have been established by using the invoiced price to [Text deleted due to confidentiality] of the nearest product type and as near as possible to the same date of the export transaction. [Text deleted due to confidentiality] is company specialising in geo-stability products and design, which also manufactures gabions.
Adjustments
Levels of Trade
125. The Ministry made no adjustment for levels of trade in the interim report.
126. Pacific Wire, in its submission on the interim report proposed that an adjustment be made for the difference in levels of trade between the domestic customers, used to establish normal values, and export customers. Pacific Wire said it understood the domestic customers were manufacturers and considered the main importer to be a distributor. Pacific Wire contended that "usual market structure would see a manufacturer pay a lower price for a good that it intends to further process, than a distributor, who does minimal or nil further processing". Based on this assertion Pacific Wire proposed that normal values be adjusted upwards.
127. Pacific Wire also made subsequent submissions to the Ministry on this matter after a meeting to discuss Pacific Wire's initial submission on the interim report. These submissions generally reiterated Pacific Wire's earlier position and called on the Ministry to make an adjustment for differences in levels of trade.
128. Pacific Wire submitted that it believed there were distributor customers in Malaysia and that they would pay a higher price than domestic manufacturing customers but provided no evidence supporting this statement.
129. Pacific Wire also proposed that the appropriate interpretation of the Act is that allowance be made under Section 5(3)(c) for differences that would affect price comparability.
130. Section 5(3)(c) requires the Ministry to make due allowance "… as appropriate for any differences in terms and conditions of sales, levels of trade, … and any other differences that affect price comparability" (emphasis added).
131. The Ministry interprets Section 5(3)(c) to consist of a two step test. Both steps must be satisfied in order to warrant an adjustment for levels of trade to the prices compared in terms of Section 5(3)(a) and (b):
- there must be a difference in the levels of trade between export and domestic transactions; and
- that difference in the levels of trade must affect price comparability.
132. Because both steps must be satisfied to warrant an adjustment there can be no presumption that any difference in levels of trade should, of itself, result in an adjustment. Any difference must affect price comparability to warrant adjustment. Section 5(3)(c) clearly provides that allowance be made for differences "that affect price comparability". The Ministry believes there should be no presumption in favour of an adjustment where a difference exists that might or could affect price comparability.
133. The Ministry agrees with Pacific Wire that an export customer and the domestic customers used for establishing normal values appear to be at different levels of trade i.e. the position the relevant companies occupy in the market in Malaysia and in New Zealand appears to be different to the extent that the Malaysian companies are manufacturers while of the New Zealand companies only one can be described primarily as a manufacturer. The other, Euro, is primarily a distributor, although undertakes some "manufacturing" processes such as recoiling. Consequently some sales appear to be to companies at different levels of trade. Where the domestic and export customer appear to be at a different level the Ministry believes the enquiry should be thorough, however it does not believe there should be a presumption, for the reasons above, that a difference has affected price comparability, necessitating an adjustment.
134. The second part of the test requires that the difference affect price comparability, i.e. the difference results in customers receiving different prices. At paragraph 30 of the verification report the Ministry noted that Southern Wire describes [Text deleted due to confidentiality] as a "manufacturer who adds value by recoiling or fabricating before selling… ". The Ministry also notes in the same paragraph that Southern Wire stated that "[Text deleted due to confidentiality] are not too dissimilar to its domestic customers". The Ministry is satisfied that Southern Wire considers the customers used to establish normal values and its New Zealand export customers to be at sufficiently similar levels of trade so as not to motivate Southern Wire to offer these customers different prices based on the different levels of trade they occupy in their respective markets.
135. In order to consider further whether differences in level of trade might affect prices the Ministry has compared the prices Southern Wire charged to [Text deleted due to confidentiality] distributor) and [Text deleted due to confidentiality] manufacturer) for the same product, 2.50 mmHTHGW, at a date as close as possible to the same time. After removing [Text deleted due to confidentiality] costs from the price to [Text deleted due to confidentiality], the price to [Text deleted due to confidentiality] is still between [Text deleted due to confidentiality] to [Text deleted due to confidentiality] percent cheaper than the price to [Text deleted due to confidentiality] These levels of discount are slightly larger than those the Ministry observed when comparing sales of two domestic customers who purchased similar volumes to [Text deleted due to confidentiality] and [Text deleted due to confidentiality]. Both domestic customers are manufacturers. Pacific Wire has proposed that usual market structures would result in manufacturers receiving lower prices. If this were so, the Ministry might expect to see a smaller difference between the prices paid by [Text deleted due to confidentiality].
136. The preceding comparison indicates that differences in the levels of trade between [Text deleted due to confidentiality] do not appear to have any discernible affect on the price that they receive rather that the differences in price are attributable to differences in quantities.
137. The Ministry is satisfied that Southern Wire has not discriminated on price due to any differences in levels of trade between export and domestic customers. The Ministry also reached the same conclusion during the Malaysian investigation.
138. Footnote 7 to Article 2.4 of the Agreement states that some of the factors for which a fair comparison adjustment may be required "may overlap, and authorities shall ensure that they do not duplicate adjustments that would have been already made under this provision".
139. The Ministry has considered below whether an adjustment is required for differences in quantities and where the evidence is sufficient to justify an adjustment, an adjustment has been made. The Ministry considers that the evidence available shows that Southern Wire has not discriminated on price because of differences in levels of trade between the relevant domestic and export customers but did in some cases discriminate on price between these customers on the basis of differences in quantities. This discrimination on the basis of quantities may coincide with differences in levels of trade but did not result from levels of trade differences per se. The Ministry considers that to make a further adjustment for differences in levels of trade over and above the adjustment already made for differences in quantities would be duplicating an adjustment already made and therefore contrary to Footnote 7 of Article 2.4.
Discount
140. Southern Wire offers a xxxx percent discount if a customer pays within xxxx days from the date of the invoice. Southern Wire advised that of the customers selected above only [Text deleted due to confidentiality] takes advantage of this discount. The Ministry verified the discount amount and in instances where sales to [Text deleted due to confidentiality] were used to compare with export transactions a discount of xxxx percent was applied.
Cost of Credit
141. Southern Wire advised that as from September 2003 the base lending rate (BLR) is xxxx percent and it provided a statement from its bank to confirm this amount.
142. With regards to actual receipt of payment on domestic sales Southern Wire did not provide this information. Payment terms on domestic sales are either [Text deleted due to confidentiality] days credit and the payment method is either [Text deleted due to confidentiality]. Payment terms are based on the date of the delivery order.
143. The Ministry does not hold information on the date of the delivery order. To determine the date of the delivery order the Ministry has added to the S/O date [Text deleted due to confidentiality] which represents the average time advised by Southern Wire that it takes from confirmation of the sale (S/O date) to delivery of the goods to the customers. In instances where the domestic sale is made on a [Text deleted due to confidentiality] basis the Ministry has added an extra xxxx days which represents the difference in the time the goods leave the factory to the time [Text deleted due to confidentiality]. From the estimated delivery order date the Ministry has added the payment term shown on the invoice and by this method has established that the number of days credit on domestic sales ranges from xxxx to xxxx days.
144. The Ministry has made an adjustment for the cost of extending credit based on the difference between the number of days of credit on export sales and the number of days of credit on the domestic sales. The difference is between xxxx to xxxx days of credit. The cost of credit adjustment is based on the BLR of xxxx percent and it ranges from MYRxxxx to MYRxxxx per kg. Where domestic sales to [Text deleted due to confidentiality] were used to establish normal values, no cost of credit adjustment applies as the same terms apply to this customer as those that apply to the export customer.
Inland Freight
145. Southern Wire said the cost of freight is based on the distance from the factory to the customer and the weight of the goods.
146. Where sales to [Text deleted due to confidentiality] were used to establish base normal values the Ministry has made an adjustment for inland freight based on an average of the verified freight cost to [Text deleted due to confidentiality] of MYRxxxx per kg.
147. Where the Ministry has used normal value transactions that relate to sales to [Text deleted due to confidentiality] the Ministry has made an adjustment for the cost of inland freight based on an average of the verified freight cost to these companies of MYRxxxx per kg.
148. In instances where sales to [Text deleted due to confidentiality] were used the Ministry has made an adjustment of MYRxxxx per kg, based on the verified freight cost to this company.
Packing
149. An adjustment of MYRxxxx per kg was made for domestic overland transactions. For normal value transactions where the sale relates to [Text deleted due to confidentiality] an adjustment of MYRxxxx per kg has been made, which is the same verified adjustment that is made for export transactions.
Handling Costs
150. For overland sales the coils are loaded onto lorries. An adjustment has been made for overland domestic sales of MYRxxxx per kg. Sales to [Text deleted due to confidentiality] incur overseas handling costs, the same as that for export sales. The Ministry has made an adjustment where sales to [Text deleted due to confidentiality] have been used to establish normal values of MYRxxxx per kg which is the same as for export transactions.
Terminal Handling and Processing Charges
151. For sales to [Text deleted due to confidentiality] it has been assumed that the processing charges at the port are the same as those for export sales. The Ministry has not seen any evidence to suggest that these charges would differ from export sale transactions. Some of these charges are based on the number of containers with the remainder of the charges made according to the weight of the consignment. The Ministry has made an assumption that all charges relate to one container (22 tonne) and made a collective adjustment, based on verified information, for EDI (MYRxxxx), B/L (MYRxxxx), terminal handling (MYRxxxx) and repositioning charges (MYRxxxx) of MYRxxxx per kg. The overall effect of adjusting these transactions on both export and normal value is a net nil adjustment for terminal handling and processing charges where sales to [Text deleted due to confidentiality] were used to establish normal values.
Bank Charges
152. For sales to [Text deleted due to confidentiality] the terms of sale are [Text deleted due to confidentiality] which is the same terms as the corresponding New Zealand customer. The Ministry assumes that since payment is made on the same basis as the corresponding export sale the same charge applies and has made an adjustment where sales to [Text deleted due to confidentiality] have been used to establish normal values of MYRxxxx or MYRxxxx per kg. The overall effect, where sales to [Text deleted due to confidentiality] have been used to establish normal values is a net nil adjustment. No adjustment was made to sales to other domestic customers as they were located within peninsula Malaysia and did not incur bank charges specific to the sale.
Quantities
153. Southern Wire advised that the volume a customer purchases can have an effect on prices. The Ministry asked if this could be quantified. Southern Wire advised that [Text deleted due to confidentiality].
154. The Ministry compared a sample of prices to domestic customers. Because domestic prices are on a [Text deleted due to confidentiality] or [Text deleted due to confidentiality] basis this comparison necessarily requires the deduction of [Text deleted due to confidentiality] costs to allow a fair comparison. The results of these comparisons are shown in the following table:
Table 2.1: Comparison of Domestic Customers Purchasing Power| Company | Date | Price MYR |
|---|
| 2.70 mmHGW Low Carbon (LC) | | |
|---|
| xxxx | 6/04/2004 | xxxx |
|---|
| xxxx | 3/03/2004 | xxxx |
|---|
| Difference | -34 days | xxxx% |
|---|
| 2.20 mmHGWHC | | |
|---|
| xxxx | 14/01/2005 | xxxx |
|---|
| xxxx | 8/01/2005 | xxxx |
|---|
| Difference | -6 days | xxxx% |
|---|
| 2.00 mmARM (LC) | | |
|---|
| xxxx | 31/08/2004 | xxxx |
|---|
| xxxx | 25/08/2004 | xxxx |
|---|
| Difference | -6 days | xxxx% |
|---|
155. The above table shows comparable prices to [Text deleted due to confidentiality] were xxxx percent and xxxx percent cheaper per tonne than prices to [Text deleted due to confidentiality]. [Deleted due to confidentiality] purchased xxxx tonnes over the POR while [Text deleted due to confidentiality] purchased xxxx tonnes. The table also shows that comparable prices to [Text deleted due to confidentiality] were cheaper than prices to [Text deleted due to confidentiality]. [Deleted due to confidentiality] purchased 416 tonnes over the POR while [Text deleted due to confidentiality] purchased xxxx tonnes. These comparisons confirm that larger customers receive lower prices.
156. Section 5(3)(c) of the Act provides that the Ministry must give due allowance for differences that effect price comparability including differences in quantities. The Ministry concludes from the above information that if the export customer purchases a substantially different quantity of goods from that purchased by the comparable domestic customer the export customer may receive a different price. Therefore the Ministry has considered whether adjustments for differences in quantities are appropriate.
157. The Ministry concluded that sales to the largest export customer [Text deleted due to confidentiality] will be compared to domestic sales to [Text deleted due to confidentiality]. Over the POR[Text deleted due to confidentiality] and [Text deleted due to confidentiality] purchased a very similar quantity of products from Southern Wire. Consequently it is unnecessary to make an adjustment for any differences in quantities between [Text deleted due to confidentiality] and [Text deleted due to confidentiality].
158. The Ministry concluded that export sales to the smaller export customer [Text deleted due to confidentiality] should be compared to domestic sales to [Text deleted due to confidentiality], for [Text deleted due to confidentiality]and [Text deleted due to confidentiality] for HGW. During the POR[Text deleted due to confidentiality] purchased 416 tonnes while [Text deleted due to confidentiality] purchased 317 tonnes from Southern Wire. [Deleted due to confidentiality] purchased xxxx tonnes over the POR. In the Ministry's interim report it was stated that precise discounts could not be quantified so no adjustment was made at that stage.
159. Pacific Wire, in its submission on the interim report, proposed that the Ministry should make an adjustment for quantity where relevant and that this should be done by assuming that the adjustment should be the higher "small upward adjustment that [the Ministry] is aware of". Pacific Wire suggested the adjustment should be the higher amount because Southern Wire did not provide the information necessary to make such an adjustment.
160. Where a party had actively withheld information from the Ministry, making accurate adjustment impossible, the Ministry might consider using a higher adjustment, as suggested by Pacific Wire. The Ministry does not believe that such an assumption should be made in this case as Southern Wire complied with the Ministry's requests and provided a large sample of sales with which to allow comparisons to be made between prices to different customers.
161. From the information available a simple discount percentage by volume can be established. The discount percentage is based on information provided by Southern Wire and provides a good approximation of the likely discount in the absence of a mathematical model or formula. The discount percentage is established by calculating the percentage difference in price (discount) received by one customer when comparing their price with another customer who only purchased a small amount over the POR. Because the volume of sales to [Text deleted due to confidentiality] is 57 tonnes over the POR the Ministry has assumed that this customer receives no discount and its prices could be considered a "list price". When prices to [Text deleted due to confidentiality] were compared to [Text deleted due to confidentiality] (416 tonnes) a discount of xxxx percent to [Text deleted due to confidentiality] is observed. This gives a discount ratio of one percent discount for every xxxx tonnes purchased (416 tonnes / xxxx percent discount = xxxx). Applying the same discount ratio to other customers means xxxx discount is xxxx percent and Olex would receive a discount of xxxx percent off the hypothetical "list price".
162. The problem with this function is that it is linear and when comparing prices between [Text deleted due to confidentiality] and [Text deleted due to confidentiality], as discussed above, it is apparent that the discount rates are not linear. However, it is likely that the actual function is close to linear within the range that is relevant for making an adjustment which is between [Text deleted due to confidentiality] and 416 tonnes. In the absence of information capable of allowing quantification of the relationship between volume and discount the Ministry propose that this simple formula be used.
163. The Ministry has made an upward adjustment to base prices to [Text deleted due to confidentiality] of xxxx percent and an upward adjustment to base prices to [Text deleted due to confidentiality] of xxxx percent
Physical Characteristics
Differences in Diameter
164. Southern Wire exported to New Zealand four different diameters of galvanised wire which are either 2.00 mm, 2.50 mm, 3.15 mm and 4.00 mm. Of the four diameters Southern Wire stated that there were [Text deleted due to confidentiality] equivalent types sold on the domestic market that were not exactly the same in diameter. The differences are 0.20 mm and 0.05 mm. Southern Wire did not seek an adjustment for the differences in diameter but it did reserve its position should the Ministry determine a difference between export sales and normal values that exceed 0.20 mm. In the Malaysian investigation no adjustment was made for the differences in diameter as Southern Wire stated that it was unable to be quantified.
165. The Ministry based its normal value transactions firstly on the domestic customer/sale then its sale of the closest diameter to that exported to New Zealand. Over the POR the difference in diameters between export and domestic transactions ranged from -0.70 mm to 1.30 mm with a weighted average of 0.18 mm. As the weighted average is less than 0.20 mm, no adjustment for the difference in diameters was made in the interim report.
166. Pacific Wire, in its submission on the interim report, did not accept that an adjustment for difference in diameter could not be made. Pacific Wire requested that the Ministry provide substantive reasons why the cost difference cannot be quantified.
167. Because the average diameter of the transactions used to calculate normal values is smaller than the average diameter of the export transactions any adjustment would result in a reduction in normal values. Southern Wire advised that any adjustment for differences in diameter that was less than 0.20 mm would be negligible and therefore did not consider it necessary to provide the information required to make the adjustment. The Ministry is satisfied that the likely quantum of the adjustment would be negligible, and consequently no adjustment has been made.
Differences in Zinc Coating
168. All export sales are HGW and normal values are mainly sales of HGW with some transactions of low galvanised wire (LGW).
169. The average cost of zinc per kg over the POR was verified at MYRxxxx per kg. To establish the difference in the cost of zinc between HGW and LGW the Ministry used the average kg of zinc per metric tonne for HGW and LGW as seen in the Australian and New Zealand Standard (ANZS) 4534:1998. On this basis the Ministry established a difference in the cost of zinc for each of the different diameters.
170. The Ministry has used only four domestic transactions to establish normal values which have a different level of galvanising to the comparable export transaction. For these four transactions, upward adjustments were made in the interim report of MYRxxxx for diameter xxxxmm and MYRxxxx for diameter xxxxmm.
171. In its response to the interim report, Pacific Wire submitted that the verification report contained an error where it referred to galvanised wire having "at least a coat weight of 215 g/mm²". The Ministry notes this quote from Southern Wire's verification report actually relates to galvanised wire of 1.50 mm in diameter only.
172. The Ministry has subsequently observed that the coat weight described in ANZS is a lighter weight to that advertised by Southern Wire in its brochure. For 2.50 mmHGW the coat weight used by the Ministry in the interim report, based on the ANZS, was 230 g/m², whereas Southern Wire's 2.50 HGW has a coat weight of 260 g/m²,according to the coat weight advertised in Southern Wire's brochure.
173. To re-calculate the adjustment for the difference in the cost of zinc the Ministry has applied a formula which was supplied during the Malaysian investigation, at the verification visit in March 2004, to determine the mass of zinc coating on a kilogram per metric tonne basis (kg/mt).
174. The formula reads as follows:
kg/mt = [(zinc coating(g/m²))/(bare wire diameter x 1962)] x 1000
175. The following bullet points describe the components of the formula:
- The zinc coating (g/m²) for LGW is the verified amount from the visit of March 2004 and the g/m² for HGW is the amount in Southern Wire's brochure (the brochure shows the g/m² for HGW only);
- For LGW the bare wire diameter is the same diameter as the finished product whereas for HGW the bare wire diameter is xxxxmm less than the total diameter. This information was also provided at the verification visit in March 2004; and
- The figure of 1962 is a constant in the formula.
176. The change in zinc coat weights from that used for the interim report results in a heavier coat weight over the range of diameters of on average 5 g/m² (LGW) and 30 g/m² (HGW). This change has resulted in a small increase in the adjustment to MYRxxxx for diameter xxxxmm and MYRxxxx for diameter xxxxmm.
Difference in Tensile Strengths
177. The Ministry has made an adjustment for the difference in the tensile strengths on the basis of the difference in the carbon content of the wire rod. In instances where the export transaction has high carbon content and the normal value transaction has low carbon content the Ministry has made an upward adjustment to the normal value based on the average difference of high carbon and low carbon content over the POR of MYRxxxx per kg. In instances where the export transaction and the normal value transaction have the same carbon content no adjustment has been made.
Complexity and Compliance Costs
Submission by Pacific Wire
178. In response to the interim report Pacific Wire submitted that the normal values are understated. The Ministry has not taken into consideration complexity and compliance costs incurred to manufacture and supply galvanised wire to New Zealand importers that comply with the NZS3471:1974 (NZS). Pacific Wire submitted that the Ministry should make an adjustment for complexity costs that relate to the manufacture of a one-off product and an adjustment for compliance costs that result from the cost(s) of testing each shipment of galvanised wire to the NZS. Pacific Wire submitted that complexity costs "in the normal course of events appear as a price premium" and proposed that an upward adjustment be made to normal values to reflect these costs. These costs are considered by Pacific Wire to be a cost of the type in accordance with Section (5)(3)(c) of the Act.
179. Relying on Euro's questionnaire submission (public file document #90) that HTHGW "is not sold on the Malaysian domestic market, and is only produced for export,…" and Southern Wire's submission dated 13 April 2004 (public file document #530 of the Malaysian investigation) which states that the wire products supplied by Southern Wire "are only unique to [blank] and nobody else…" Pacific Wire submitted that the galvanised wire exported by Southern Wire to Euro is a one-off product. Pacific Wire submitted, based on Southern Wire's submission in the Malaysian investigation that "… [Southern Wire] has no particular interest in seeking sales of one off products…", that Southern Wire would seek "…generous recompense in the selling price for any additional costs involved in the manufacture and administration of the same product sold for domestic consumption."
180. Pacific Wire supplied a copy of a label of galvanised wire sold by Euro. The label refers to 2.50 mm galvanised wire which states that it complies with the NZS. Pacific Wire stated that compliance with the standard requires meeting prescriptive testing regimes. Pacific Wire claimed that the prescriptive testing, which requires testing of a set number of samples, has high costs that are incurred on sales of galvanised wire to New Zealand but not on domestic sales.
181. Pacific Wire has asked the Ministry to assess the testing requirements of the NZS and verify the costs to carry out these tests. Pacific Wire submitted that a test certificate is required for every 50 coils of finished wire if coiled in Malaysia or one test for every 500 kg if the wire is imported from Malaysia in bulk form. Pacific Wire proposed the Ministry seek copies of test certificates relating to the requirements of the NZS to assess the cost of the prescriptive nature of the NZS testing requirements.
182. Pacific Wire argued that there is a one-off product made for a single customer. Pacific Wire proposed that such a product would incur additional administrative costs through scheduling the different product and would incur additional production costs through different operational set up, planned downtime to change the dies and re-threading the galvanised plant, together with extra testing relative to other products, a price premium over and above the standard price should apply. Pacific Wire submitted that this price premium could be quantified by using an example of a one off product (HTHGW[Text deleted due to confidentiality]) that Pacific Wire sold to one of its customers. Pacific Wire advised that the price premium charged to that customer for this one-off product, of which it sold approximately xxxx tonnes per month, was $xxxx per tonne or xxxx percent of the selling price over and above the price of standard HTHGW product.
Submission by Southern Wire
183. In response to an inquiry by the Ministry in regards to Pacific Wire's submission about complexity costs Southern Wire submitted that "there is nothing complex in changing jobs". Southern Wire submitted that generally no rethreading is required as wires are joined at the end of the line. Southern Wire noted also that the galvanising lines of its plant run for 24 hours a day, 12 months of the year. Southern Wire advised it sells on its domestic market the same diameters of wire that it supplies to New Zealand.
184. Southern Wire submitted that the wire drawing of low carbon wire rod uses the same die draftings as high carbon wire rod so a change of die is not necessary when changing from HT wire to LT wire. Southern Wire advised that when it is required to change the dies it takes less than half an hour so even if a change was required, the wage cost would "constitute negligible value which by no means commands any premium".
185. Responding on the compliance costs matter Southern Wire advised that it is mandatory in Malaysia for its wire products to be tested. Southern Wire advised that it tests to the British Standard (BS) and the American Society for Testing and Materials (ASTM) Standard which exceeds the local Malaysian Standard. Southern Wire advised that all wire, whether for domestic or export sale is tested according to "BS443 and BS EN10244".
186. Southern Wire advised that all testing is done at its laboratory and that the test results are audited annually by Sirim Berhad (Malaysian Testing Authority). Southern Wire submitted that it does not need to test differently for the products it supplies to New Zealand as its test results would show that it exceeds and therefore conforms to the New Zealand standard.
Ministry's Consideration of the Issues
Complexity Costs
187. The Ministry interprets Pacific Wire's submission to mean that "complexity" cost/s are additional production and administration costs associated with supplying New Zealand importers with galvanised wire that Southern Wire does not supply to its own domestic market in Malaysia, and therefore an upward adjustment should be made to normal values to ensure a fair comparison with export prices that reflect these higher costs.
188. Pacific Wire contends that the goods supplied to one New Zealand customer are a "one-off" product. The Ministry interprets this to mean they are products which comply with the NZS, as opposed to the Standards of other countries. The Ministry is aware of at least one other customer, in New Zealand, who purchased the same products during the POR, and is aware that others have imported such products at other times.
189. Normal values have been established using predominantly LTHGW and some LTLGW. Over the POR all export sales are HGW of different tensile strengths therefore the difference in physical characteristics between these sales relates to the different tensile strength and galvanised coating. The Ministry has made adjustments for differences in these physical characteristics that affect price comparability.
190. Although the goods supplied to New Zealand importers have differences from the goods sold on the domestic market the Ministry is uncertain how the costs identified by Pacific Wire can mean that the good sold to New Zealand incurs complexity costs that other sales, domestic or otherwise, do not. The Ministry notes that most manufacturing facilities schedule a wide range of different products and production runs are organised to minimise down-time and unnecessary expense.
191. Pacific Wire stated that it charges an extra price premium of xxxx percent for supplying xxxx tonnes a month of a one-off product. On an annual basis this volume would be approximately xxxx tonnes which is significantly less than the volume supplied to New Zealand importers over the POR by Southern Wire and may affect the premium per tonne required to re-coup one off costs. However the pricing strategy of one company does not necessarily apply to another. The Ministry considers it is unrealistic to assume that Southern Wire charge a premium of the magnitude proposed by Pacific Wire and based on the Ministry's discussion above of the elements of complexity cost it seems most likely that no premium, or additional charge, to recover such costs is passed on to the New Zealand customers.
192. The Ministry has not seen any evidence that providing the type of galvanised wire supplied to New Zealand importers requires Southern Wire to incur additional production costs that affect price comparability other than those made for the difference in tensility and zinc coating. The Ministry is satisfied that no adjustment for complexity should be made.
Compliance Costs
193. Because Southern Wire's products are audited by the Malaysian testing authority, the Ministry is satisfied that Southern Wire does undertake tests that conform with the Standards that Southern Wire claims that its galvanised wire meets. At Pacific Wire's request, the Ministry assessed the respective testing requirements of NZS3471:1974 and the British Standards; BS443:1982, BS EN10244-2:2001, BS EN10244-1:2001 (which both supersede BS443:1982) and BS1052:1980 (the Standard disclosed in Southern Wire's brochure).
194. The Ministry's assessment of any differences in the testing requirements between the respective Standards has no bearing on this reassessment because Southern Wire has advised that the same tests are undertaken on all wire, irrespective of whether the wire is for domestic or export sale. Because the same level of testing is undertaken for the wire sold to New Zealand as the domestic sale there can be no difference in the cost of testing between the two sales. Consequently no adjustment needs to be made to either export price or normal value to allow a fair comparison.
Normal Values
195. The normal values were established by deducting or adding, as applicable, the adjustments outlined above from or to the base prices.
196. Normal values established on the basis set out above were able to be matched with export prices of galvanised wire that represented 100 percent of the galvanised wire manufactured by Southern Wire that was exported to New Zealand during the POR.
197. The ranges of normal values for Southern Wire are shown in Table 2.3 and Table 2.3.
SMI Wire Sdn Bhd
Domestic Sales Distribution
198. SMI sells galvanised wire on the domestic market to wholesalers and end users. These sales are LTHGW and standard galvanised wire. The costing information provided by SMI shows diameters from 2.00 mm to 4.50 mm inclusive.
199. SMI advised that all domestic sales are made on the basis of a seller and buyer only and there are no supply agreements or contracts with their domestic customers.
Base Prices
200. SMI provided copies of eight domestic invoices together with a sales price structure of the [Text deleted due to confidentiality] with diameters from 2.00 mm to 3.40 mm. SMI advised that it could not provide a sales price structure for [Text deleted due to confidentiality] with diameters between 4.00 mm to 4.50 mm as no domestic sales had been recorded over the POR. The breakdown of cost from list price to into store price is mainly based on sales to end users.
201. The invoices show the sale of various types of galvanised wire ranging in diameters from 2.00 mm to 3.40 mm. The invoices were issued in [Text deleted due to confidentiality].
202. The Ministry has used as its base price the invoiced price per tonne of MYRxxxx which refers to the sale of a [Text deleted due to confidentiality] of a diameter of xxxxmm to [Text deleted due to confidentiality] in [Text deleted due to confidentiality]. This sale is the closest in terms of the type of wire exported to New Zealand and is only [Text deleted due to confidentiality] than the export sales.
Adjustments
Levels of Trade
203. The customer chosen to establish normal values appears to be a manufacturer. The Federation of Malaysian Manufacturers website shows that the domestic customer is a manufacturer of, among other products, gabions and mattresses. The Ministry considers that the export customer is [Text deleted due to confidentiality], indicating that there is a difference in the levels of trade between the export and domestic customer. The Ministry has not received sufficient information from SMI to establish whether differences in levels of trade affect price comparability. However, based on the Ministry's assessment and verification of Southern Wire's business practices the Ministry considers that it is unlikely that SMI practices price discrimination due to differences in levels of trade. The Ministry has therefore not made an adjustment for levels of trade.
204. In its response to the interim report, Pacific Wire submitted that the Ministry had advised in that report that SMI's customers were wholesalers and end users and later described them as manufacturers. The reference in the interim report that SMI's customers were wholesalers was based on a submission from SMI while the other reference in the interim report, that SMI's customers were manufacturers was the conclusion reached by the Ministry after its consideration of the domestic customers provided by SMI.
Handling Costs
205. An adjustment has been made for domestic sales of MYRxxxx based on information provided by Southern Wire.
Discounts
206. Terms of payment are xxxx days (eligible for a xxxx percent discount) xxxx or xxxx days. The Ministry has not made an adjustment for discounts as the credit term of [Text deleted due to confidentiality] is xxxx days.
Cost of Delivery
207. Domestic sales are made on a [Text deleted due to confidentiality] basis. SMI has not provided any information on the cost of delivering the galvanised wire to its customers. [Text deleted due to confidentiality] is located in [Text deleted due to confidentiality] which is approximately xxxx kilometres from the factory. Based on information provided by Southern Wire the Ministry has made an adjustment of MYRxxxx per kg. This amount is based on sales by Southern Wire to [Text deleted due to confidentiality] which is approximately the same distance from Southern Wire's factory as [Text deleted due to confidentiality] is from SMI's factory.
Cost of Credit
208. SMI provided details of receipt of payment by the importer. The days of credit on export sales are xxxx[Text deleted due to confidentiality]xxxx days from the date of the invoice. Domestic sales invoices show a credit term of xxxx days and therefore a greater length of credit is extended on domestic sales than on export sales.
209. According to information from Southern Wire the BLR on funds is xxxx percent per annum. The Ministry has calculated the cost of credit based on the difference of xxxx or xxxx days and made an upward adjustment of MYRxxxx or MYRxxxx per kg.
Quantities
210. Because the Ministry has minimal information about the nature of the chosen customer no adjustment can be considered for differences in quantities purchased by the export and domestic customers.
Physical Characteristics
Difference in Diameter
211. SMI provided a breakdown of the cost of materials and direct labour to manufacture diameters from xxxxmm to xxxxmm. SMI exported [Text deleted due to confidentiality] to New Zealand. The domestic sale chosen to establish normal values is xxxxmm which is a difference of xxxxmm.
212. The cost breakdown shows that it costs more to produce xxxxmm compared with xxxxmm. The cost of raw materials is an additional MYRxxxx per kg and direct labour is an additional MYRxxxx per kg. The total cost difference therefore is MYRxxxx per kg. The Ministry has made a downward adjustment of MYRxxxx per kg for the difference in the cost to produce the different diameter of wire.
Difference in Zinc Coating
213. Export sales by SMI were [Text deleted due to confidentiality] and the domestic sale chosen to establish normal values is [Text deleted due to confidentiality]. Because both sales relate to the same zinc coating no adjustment has been made.
Difference in Tensile Strength
214. Both the export sale and normal value sales are of the same tensile strength and therefore no adjustment is required.
Normal Value
215. The normal values were established by deducting or adding, as applicable, the adjustments outlined above from or to the base prices.
216. Normal values established on the basis set out above were able to be matched with export prices of galvanised wire that represented 100 percent of the galvanised wire manufactured by SMI that was exported to New Zealand during the POR.
217. The range of normal values for SMI is shown in Table 2.4.
2.4 Comparison of Export Price and Normal Value
Margins of Dumping
218. Export prices and normal values were compared at the ex-factory level, which is the normal point of comparison referred to in Article 2.4 of the Agreement. To arrive at the ex-factory values, the Ministry made a number of downward or upward adjustments from or to the base prices. The Ministry has also made adjustments to ensure that a fair comparison was made between export prices and normal values.
Southern Wire
219. There were xxxx transaction lines related to goods supplied by Southern Wire. Of these transactions xxxx transactions are dumped and xxxx transactions have a de minimis dumping margin i.e. the dumping margin is less than 2 percent. Of the xxxxkg supplied by Southern Wire xxxxkg were found to be dumped which is xxxx percent of total imports over the POR.
220. The following tables show the range of normal values, export prices and dumping margins expressed as a percentage of export prices for ARM and galvanised wire supplied by Southern Wire.
Table 2.2: Ranges of Data for Southern Wire (MYR per kg) (Armouring Wire)| Normal Values | xxxx |
|---|
| Export Prices | xxxx |
|---|
| Dumping Margins | xxxx |
|---|
| Margins as % of Export Price | Nil to 18.20 |
|---|
Table 2.3: Ranges of Data for Southern Wire (MYR per kg) (Galvanised Wire)| Normal Values | xxxx |
|---|
| Export Prices | xxxx |
|---|
| Dumping Margins | xxxx |
|---|
| Margins as % of Export Price | -32.17 to -1.67 |
|---|
SMI Wire Sdn Bhd
221. There were xxxx transaction lines relating to goods supplied to New Zealand by SMI. Over the POR SMI supplied xxxxkg of galvanised wire and 100 percent of the goods were dumped.
222. The following tables show the range of normal values, export prices and dumping margins expressed as a percentage of export prices for galvanised wire supplied by SMI.
Table 2.4: Ranges of Data for SMI (MYR per kg)| Normal Values | xxxx |
|---|
| Export Prices | xxxx |
|---|
| Dumping Margins | xxxx |
|---|
| Margin as % of Export Price | 11.21 to 11.39 |
|---|
2.5 Conclusions Relating to Dumping
223. The Ministry concludes that the ARM supplied by Southern Wire over the POR was dumped.
224. The Ministry concludes that the galvanised wire supplied by Southern Wire over the POR was not dumped.
225. The Ministry concludes that the galvanised wire supplied by SMI over the POR was dumped.
226. The Ministry notes that the absence of dumping in a situation where anti-dumping duties have been in place is not necessarily indicative of the likely dumping margins in the absence of anti-dumping duty. This is especially so in relation to duties imposed by the reference price method as the export prices are likely to be influenced by the existence of reference prices. The likelihood of a continuation or recurrence of dumping, should anti-dumping duties be removed, can only be established by way of a review.
227. Because this reassessment proposes that reference prices be set at the normal value level through the use of NV(VFDE) amounts, future imports into New Zealand of galvanised wire will not be subject to anti-dumping duty unless the VFD amount per kg (in NZD) is less than the reference price of that product (i.e. the goods are dumped).
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