2. New Zealand Industry
23. Section 3A provides the definition of "industry":
| 3A. Meaning of "industry"-For the purposes of this Act, the term "industry", in relation to any goods, means- |
| (a) | The New Zealand producers of like goods; or |
| (b) | Such New Zealand producers of like goods whose collective output constitutes a major proportion of the New Zealand production of like goods. |
"Like goods" is defined in section 3 of the Act:
| "Like goods", in relation to any goods, means- |
| (a) | Other goods that are like those goods in all respects; or |
| (b) | In the absence of goods referred to in paragraph (a) of this definition, goods which have characteristics closely resembling those goods: |
2.1 Like Goods
24. In order to establish the existence and extent of the New Zealand industry for the purposes of an investigation into injury, and having identified the subject goods, it is necessary to determine whether there are New Zealand producers of goods which are like those goods in all respects, and if not, whether there are New Zealand producers of other goods which have characteristics closely resembling the subject goods.
The Imported Goods
25. The subject goods have been identified in section 1.4 of this report as:
Glass wool insulation, with a resistance to heat flow rating in the range of R1.5 to R2.2 (inclusive).
New Zealand Production
26. Tasman manufactures Pink™ Batts® and other glass wool insulation, building membranes and specialist insulation materials.
27. Tasman considers that the glass wool insulation it manufactures with R-values from R1.6 to R2.2 are like products to the imported subject goods and are directly substitutable for the subject goods. An R-value is a measure of the resistance to heat flow of a given component of a building element. It is a widely accepted measure of thermal resistance and is used by the New Zealand Building Industry. The New Zealand Building Code records that an R-value is "equal to the temperature difference (ºC) needed to produce heat flux (W/m²) through unit area (m²) under steady conditions. The units are ºCm²/W" where W = Watts.
28. Tasman has provided the following details of the glass wool insulation it manufactures that it considers to be like product to the imports.
| Product | R-value (ºCm²/W) | Thickness (mm) | Piece Size (mm) | Price per NZD/m² |
|---|
| R1.6 Ceiling | 1.6 | 75 | 1220x432 | xxxxx |
| R1.6 Wall | 1.6 | 75 | 1140x580 | xxxxx |
| R1.8 Ceiling | 1.8 | 75 | 1220x432 | xxxxx |
| R1.8 Wall | 1.8 | 75 | 1140x580 | xxxxx |
| R1.9 | 1.9 | 75 | 8000x1200 | xxxxx |
| R2.2 Ceiling | 2.2 | 94 | 1220x432 | xxxxx |
| R2.2 Wall | 2.2 | 94 | 1140x580 | xxxxx |
| R2.2 Narrow Wall | 2.2 | 94 | 1140x380 | xxxxx |
| Handy Pack | 2.2 | 94 | 610x432 | xxxxx |
29. In addition to the sizes of Pink™ Batts® listed above, Tasman also makes a range of glass wool insulation with other R-values outside of this range. These, it argues, are not directly substitutable with the imports as the Building Code's minimum requirements are for R1.5 product.
30. Tasman also manufactures other types of insulation, which compete in the insulation market, but these are not made of glass wool fibres.
Imported Goods
31. Tasman has advised that the glass wool insulation imported from Chinese Taipei is most likely to be of R1.8 and about 75mm thick. Tasman has provided the Ministry with a sample of this material.
Like Goods Considerations
32. In deciding like goods issues the Ministry takes into account the following considerations:
- physical characteristics, which covers appearance, size and dimensions, components, production methods and technology.
- function/usage. This covers consumer perceptions/expectations, end uses, and will lead to any conclusions on the issue of substitutability where relevant.
- pricing structures.
- marketing issues such as distribution channels and customers' advertising.
- other. This can include tariff classification if applicable, and any other matters which could be applicable in the circumstances.
33. This framework will be used to consider what goods produced in New Zealand are like goods to the allegedly dumped imports.
Physical Characteristics
Subject Goods
34. The subject goods are described as glass wool insulation, with a resistance to heat flow rating in the range of R1.5 to R2.2 (inclusive). The goods are imported in various physical dimensions such as rolls and pieces. No information was available on the overall size dimensions of the imports other than their being 75mm in thickness. Their appearance resembles thick mats of very fine layered fibres. The product is quite light by weight in comparison to its volume. The imported Chinese Taipei product is dyed yellow.
35. The process used to produce glass wool insulation around the world is similar, but the machine technology used varies. Tasman has indicated that there are about three different types of technology which produce glass wool insulation, and that the allegedly dumped goods and the New Zealand manufactured goods are produced by "different proprietary manufacturing equipment". The production process allows the end product to be easily varied in the density or number of fibres in a given area and the final thickness of the product.
36. Described simply, the general process is that the glass, the predominant raw material, is melted down (with additives such as a bonding agent of phenol formaldehyde thermosetting resin), is then passed into a spinner which spins off fine glass fibres. These are collected into a blanket form. Tasman stated that both the imports and the domestic product are produced as a blanket and this may be further processed into pieces or rolls as required. The product is compression packed in either piece or roll form. When a package or bale of product is opened, the goods "recover" to a thickness that provides the claimed resistance to heat flow, and gives the level of heat insulation specified.
New Zealand Industry
37. The glass wool insulation made by Tasman is very similar in its appearance to the subject goods. It is available in similar forms to the imported product. The only obvious difference in general appearance between the industry's product and the subject goods is the colour. The like goods are dyed pink as part of Tasman's license agreement with Owens Corning.
38. Tasman produces a range of product with different R-values and therefore a range of sizes and thickness. Tasman's product is available in sizes to fit current New Zealand joist, truss and stud spacings.
39. Tasman uses the same general manufacturing process as the subject goods. Tasman stated that its North Island production plant uses about [Text deleted due to confidentiality] percent recycled glass and about [Text deleted due to confidentiality] percent recycled glass in the South Island.
Function and Usage
40. Glass wool insulation is designed and produced primarily as a building insulation. It is used for insulating residential and non-residential buildings.
41. The manufactured blankets are cut after manufacture to requirements. It is a simple process to cut the material into specific sizes and shapes for sale. Further cutting and shaping can be done if necessary while being installed. The product does not usually have to be fixed in place. Pieces of the material can be laid side by side and do not have to be joined. Insulation effectiveness can be increased by laying a second layer of insulation on top of a layer that's already in place. The industry's like product can be used in exactly the same way as the imports.
42. As previously noted, the measure of an insulation's performance is its R-value and reflects the insulation's resistance to heat flow. The higher the R-value the greater the insulating properties. For a more detailed description see paragraph 27.
43. The imports from Chinese Taipei are possibly all of the same specification with an R-value of R1.8 and a thickness of approximately 75mm. As the R-value is determined by the physical properties of the product, a higher R-value may mean a greater thickness of product with the same characteristics. Both the subject goods and the domestically produced product provide similar thermal performance for a similar thickness of material and have the same function.
44. Tasman stated that glass wool insulation is best described by its insulation effectiveness (rather than relying on thickness which can be variable) so should be described in the description of the goods by its R-value only.
45. The Ministry concludes that the function and use of the industry's like product is at least similar if not the same as that of the goods being imported.
Pricing Structures
46. Tasman claims that it is being undercut in the Auckland market where Premier operates. Information provided by Tasman about Premier's prices are for the installed product. Tasman only supplies distributors in the New Zealand domestic market and has provided the Ministry with the prices to its distributors including a recommended standard amount charged for installation.
47. The importer appears to be selling R1.8 as the predominant product in the Auckland market. Tasman claims that insulation in the range of R1.5 to R2.2 can be directly substituted by R1.8, without conflicting with the New Zealand Building Code requirements which have a minimum requirement of R1.5. The industry's product appears on average to be undercut on price in the market segment defined by the like goods. Tasman has stated that glass wool insulation outside of this range competes in different market segments.
48. On the basis of the information available the Ministry is of the view that the pricing of the industry's like product and the imported goods compete in the same market segment.
Marketing Issues
49. It is understood that Premier sells directly to companies which build houses in the Auckland area and also appears to install the product for these companies. It does not appear to sell to retail customers or to individual builders. It is not clear whether or not it sells to other insulation companies, which then install the product.
50. With regard to advertising and promotion, Tasman stated it is not aware of any market development work that Premier may have been involved in, such as any widespread advertising or product promotion.
51. Tasman has factories in Auckland and Christchurch. Its distributors sell to the retail market and to the building trade. Tasman states that the market increased significantly from 2000 to 2001 due in part to Tasman's own promotion, and other promotions in the marketplace for higher insulation levels in all types of buildings.
52. The Ministry considers that there appears to be some difference in the distribution channels used by Tasman compared with those used by Premier. However, both the industry and Premier are competing for the same large volume customers in the Auckland market.
Other
Tariff Classification
53. The tariff classification for the subject goods includes other goods as well as the subject goods. The import statistics, therefore, may not accurately reflect imports of the subject goods.
54. On the information available the New Zealand industry's product and the imported subject goods would be classified in the same tariff item and statistical key.
Other Glass Wool Insulation Products
55. In order for the product produced in New Zealand to be considered to be like goods to the subject goods, it must meet the criteria in Article 2.6 of the WTO Anti-Dumping Agreement. This Article provides that:
the term "like product " ... shall be interpreted to mean a product which is identical, i.e. alike in all respects to the product under consideration, or in the absence of such a product, another product which, although not alike in all respects, has characteristics closely resembling those of the product under consideration.
56. Tasman produces a range of other glass wool insulation for the building trade that is outside of the range that competes directly with the glass wool insulation that is being imported. These other insulation goods are also types of Pink™ Batts® and have either lower or higher R-values than the subject goods. The prices of the other insulation products are generally sufficiently different and so not to compete directly with the subject goods.
57. Examples of Tasman's other glass wool products other than Pink™ Batts® are the green/gray acoustic insulation which reduces noise levels [Text deleted due to confidentiality], and glass wool insulation for ovens. [Text deleted due to confidentiality]. These goods are not, therefore, considered to be like goods under the above like goods definition of Article 2.6.
Other Types of Insulation
58. Tasman and other New Zealand companies make a range of other types of insulation which compete in the insulation market, but these are not considered to be like goods under Article 2.6 because they are not made of glass wool.
Conclusions Relating to Like Goods
59. The range of Tasman's Pink™ Batts® brand products which are outside of the range of R1.5 to R2.2, differ from the subject goods in terms of appearance (colour), thickness, performance effectiveness, pricing and market distribution. These Pink™ Batts® products are, however, similar in terms of production process, and some aspects of function and usage and tariff classification. From the information available these other Pink™ Batts®, i.e. those outside the range of R1.5 to R2.2, do not have characteristics closely resembling the subject goods.
60. The acoustic insulation and other glass wool insulation that Tasman produces differs from the subject goods [Text deleted due to confidentiality]. From the information available these products do not have characteristics closely resembling the subject goods and therefore are not covered by the definition of like goods.
61. The types of insulation, other than glass wool, that are made by Tasman and other companies in New Zealand are similar in some aspects of function and usage. They differ in physical characteristics, components, technology, size and dimensions, and pricing structures. From the information available these insulation products do not have characteristics closely resembling the subject goods and therefore are not covered by the definition of like goods.
62. The glass wool insulation produced by Tasman that is in the range of R1.5 to R2.2 is not identical to the glass wool insulation being imported from Chinese Taipei. It is, however, similar in terms of physical characteristics, process of manufacture, heat insulation properties, function and usage, pricing, is competing in the same market, and has the same tariff classification. It is not similar to the subject goods in its colour, and distribution channels.
63. The Ministry, therefore, considers that glass wool insulation, with a resistance to heat flow rating in the range of R1.5 to R2.2 (inclusive), while not identical have characteristics closely resembling the subject goods and are therefore the like goods which will be the subject of any investigation.
2.2 New Zealand Industry
64. An investigation may not be initiated unless the Chief Executive is satisfied that the requirements of section 10(3) of the Act are met. These requirements are that the collective output of those New Zealand producers who have, in writing, expressed support for the application constitutes:
- Twenty-five percent or more of the total New Zealand production of like goods produced for domestic consumption (assessed during the most recent representative period, being not less than six months); and
- More than 50 percent of the total production of like goods produced for domestic consumption (as so assessed) by those New Zealand producers who have, in writing, expressed support for or opposition to the application.
65. The application was submitted by Tasman, the sole manufacturer of the subject goods in New Zealand. Tasman therefore meets the domestic industry standing requirements of section 10(3) of the Act.
66. The Ministry's research has found no evidence of any other company in New Zealand that manufactures the like goods.
2.3 Imports of Glass Wool Insulation
67. Section 11(1) of the Act provides that where the Minister is satisfied in respect of some or all of the goods under investigation, that there is insufficient evidence of dumping or injury to justify proceeding with the investigation then the investigation shall be terminated. Section 11(2) of the Act provides that evidence of dumping shall be regarded as insufficient if the volume of imports of dumped goods, expressed as a percentage of total imports of like goods into New Zealand, is negligible, having regard to New Zealand's obligations as a party to the Anti-Dumping Agreement. The Agreement deals with the negligibility of dumped imports under Article 5:8 as follows:
5.8 An application under paragraph 1 shall be rejected and an investigation shall be terminated promptly as soon as the authorities concerned are satisfied that there is not sufficient evidence of either dumping or of injury to justify proceeding with the case. There shall be immediate termination in cases where the authorities determine that the margin of dumping is de minimis, or that the volume of dumped imports, actual or potential, or the injury, is negligible. The margin of dumping shall be considered to be de minimis if this margin is less than 2 per cent, expressed as a percentage of the export price. The volume of dumped imports shall normally be regarded as negligible if the volume of dumped imports from a particular country is found to account for less than 3 per cent of imports of the like product in the importing Member, unless countries which individually account for less than 3 per cent of the imports of the like product in the importing Member collectively account for more than 7 per cent of imports of the like product in the importing Member.
68. Tasman provided import data from Statistics New Zealand for the period 1 July 1999 to 31 May 2002. The statistics used to determine negligibility are those most recently available that contain volume data, specifically those of the 12 consecutive months to 31 May 2002. The volumes are recorded in the following Table:
Table 2.1: Share of Imports in 2002 (000 Kilograms)
| | Year to 31 May 2002 (000) | % |
|---|
| Chinese Taipei | 345 | 10.5% |
| Other Sources | 2,948 | 89.5% |
| Total | 3,293 | 100% |
69. The above table shows that the goods entering New Zealand from Chinese Taipei account for 10.5 percent of the total goods entering under the Customs' Tariff classification. Tasman, in its application noted that given the volume of "blanket material" known to be entering the New Zealand market, it estimated that in excess of 90 percent of the goods within the classification were the subject goods. The Ministry's assessment of the Custom's data shows that it is likely that [Text deleted due to confidentiality]. If the imports from Chinese Taipei are about 10 percent of the total imports and 90 percent of those are considered likely to be the subject goods (about 10 percent of total imports from all sources of like product), the volume of allegedly dumped imports is greater than 3 percent of total imports of like goods and is not negligible.
70. On the basis of the information, imports of the subject goods from Chinese Taipei are not negligible.
2.4 New Zealand Market
71. The import volumes of the goods are shown in the following table. Tasman stated that most but not all of the goods identified in the tariff item are goods subject to investigation.
Table 2.2: New Zealand Market for Year Ended December (Kilograms)
| | 2000 | 2001 | Estimate1 Dec 2002 |
|---|
| Chinese Taipei | 188,497 | 404,412 | 279,076 |
| Australia | 2,749,289 | 2,862,275 | 3,016,368 |
| Other Imports | 6,866 | 31,235 | 35,874 |
| Total Imports | 2,944,652 | 3,297,923 | 3,331,875 |
| NZ Industry Sales | xxxxx | xxxxx | xxxxx |
| NZ Market | xxxxx | xxxxx | xxxxx |
72. The New Zealand market is characterised by a high level of imports from Australia, which are increasing in volume. These imports will have to be taken into account in any assessment of other causes of injury if an investigation is initiated.
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