3. Evidence of Dumping
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:
74. Information was provided in the application concerning the normal values and the export price of goods which are subject to the application. The following is an assessment of the information provided.
3.1 Export Prices
75. Export prices are determined in accordance with section 4 of the Act.
Base Prices
76. Tasman was not able to provide actual export prices of the subject goods. In the absence of actual export prices Tasman provided an export price which was calculated by deducting costs from prices quoted for the imported product for installation in New Zealand. Tasman stated that the importer is a wholesaler (Premier does not sell the goods to the retail market) and an installer of glass wool insulation. Wholesale prices were not available, so export price adjustments were deducted from the average installed price from quotations provided in the application. The Ministry has calculated the export price in Table 3.1 below using the applicant's information and where necessary other information available to it.
Import Data
77. Tasman provided New Zealand import statistics from Statistics New Zealand which was the best information reasonably available to it. The data is on a monthly basis and contains the overseas port, the New Zealand port, the gross weight of the shipment (in kilograms), the value for duty (VFD) and the cost, insurance and freight (CIF). The Ministry notes that this is the only data available which gives the weight (gross) of each shipment. Tasman provided the import statistics from 1 July 1999 to 31 May 2002.
78. The data was provided to the 10 digit level for tariff item 7019.39.00.01 which covers glass fibres, webs, mattresses, boards and similar non-woven products excluding mats and thin sheets, and fibreglass insulation. There are, therefore, other products covered by this tariff description but Tasman has estimated that the subject goods would be in excess of 90 percent of the total goods entering under this description. The Ministry has compared the Statistics New Zealand's data with Customs' data of a similar period and agrees that this is a reasonable assumption.
Conversion from Kilograms to Metres Squared
79. Tasman stated that the import statistics are available in kilograms while domestic sales figures are mainly available in square metres and therefore a conversion factor would be required to enable a comparison of the products. The conversion factor supplied by Tasman used in this report is 1 kilogram is equal to 0.75 meters squared. This rate of conversion will be tested in any investigation.
Customs' Import Data
80. Customs' import data was obtained to compare with the data supplied by the applicant. As noted above the VFD and CIF values may not be representative of the subject goods. The Ministry has taken into account Customs' data on import entries over the period 1 June 2001 to 31 May 2002 and considers that the average VFD and the CIF values are satisfactory to use as an approximation of the actual values for the subject goods.
Exchange Rates
81. Tasman provided the Customs' two weekly exchange rate data from 14 May 2001 to 8 July 2002, which it used to convert Chinese Taipei dollars (TWD) to NZD.
82. The Ministry has updated the Customs' exchange rates to 31 August 2002. Where necessary the Ministry has used the averaged annual exchange rate for the period 1 September 2001 to 31 August 2002. For the period this was 15.14 for the TWD against the NZD. The Ministry averaged the Customs' exchange rates giving an annual rate for the same period for the United States dollar (USD) to the NZD. This was USD0.43 to the NZD and was used to convert USD shipping rates into NZDs.
Adjustments
83. Tasman provided information which has been used in the calculation of the export price. The export price was calculated by deducting costs from the first price in the New Zealand market based on quotations for an installed price by Premier. The adjustment amounts were based on similar costs incurred by Tasman; cost estimates based on Tasman's experience, or quotes obtained by Tasman in the market.
Installation Charge
84. Tasman provided a price list showing the installation charge for the product by the importer, Premier. An amount charged for installing the product was based on the charge for installation from Tasman's price list to distributors of NZD [Text deleted due to confidentiality]/m² and an adjustment for this amount has been made to calculate the export price.
Wholesalers' Margin
85. Tasman provided an estimate of the margin the importer, acting as a wholesaler might take, based on its knowledge of what could be considered to be a reasonable expectation in the building industry. An adjustment of [Text deleted due to confidentiality] percent of the sale price of the product uninstalled has been made to calculate the export price.
Importers Overhead Costs
86. Tasman provided estimated business costs covering administration and overheads, which included insurance, cost of storage and credit. These costs were estimated by the company based on its own experience of these costs. They were not itemised separately but were included in one amount. This combined cost was estimated at NZD [Text deleted due to confidentiality]/m². This amount has been deducted when calculating the export price.
Cartage to Store and Clearance
87. Tasman provided a combined amount for cartage from the wharf to the importer's store and the administration for the clearance through Customs of the goods. Tasman provided a shipping invoice showing an Import Documentation Fee of NZD [Text deleted due to confidentiality] and a New Zealand Port Service Charge of NZD [Text deleted due to confidentiality] for a container of product. There was no information supplied about the cost of cartage to store, however, the company had allocated NZD [Text deleted due to confidentiality]/m² to cover these costs based on its own experience, which included an amount for cartage. An amount of NZD [Text deleted due to confidentiality]/m² has been deducted when calculating the export price.
Import Duty
88. Tasman stated a rate of import duty of 5 percent in its application. This has been amended to reflect that Chinese Taipei attracts the normal rate of duty of 6.5 percent. The normal duty is calculated on the Customs' Value for Duty amount (VFD), which is equivalent to the Free on Board value (FOB). The average FOB value of the subject goods has been used to calculate the duty. An amount of NZD [Text deleted due to confidentiality] has been deducted when calculating the export price.
Overseas Freight
89. A quotation for the shipping costs for a container was provided by Tasman to support its calculation for the amount it allocated for overseas freight. The quotation was for a 40 foot, High Cube container, from the ports of Keelung and Kaohsiung Chinese Taipei, to Auckland and was USD [Text deleted due to confidentiality]. Tasman has calculated that a container of this size has an approximate capacity for R1.8 insulation of 4,500 metres squared (or 6000 kilograms).
90. An amount of NZD [Text deleted due to confidentiality]/m² for ocean freight has been used to calculate the export price.
Emergency Bunker Surcharge
91. The Ministry has also included an amount (USD [Text deleted due to confidentiality]) for the Emergency Bunker Surcharge that was included in the shipping quotation. This is equal to an amount of NZD [Text deleted due to confidentiality]/m² and this amount has been deducted when calculating the export price.
Costs Incurred in Chinese Taipei
92. No adjustments have been made to the export price for the following items, as these items are for amounts which are a cost, charge or expense incurred in preparing the goods for shipment to New Zealand, according to section 4(1)(a)(i) of the Act. Any costs, charges or expenses that are additional to those costs, charges and expenses generally incurred on sales for home consumption, can be taken into account in any investigation that may be initiated.
Wharfage
93. Tasman provided an amount for the cost of wharfage for Chinese Taipei. Tasman referred to the quotation for shipping costs, which contained an Import Documentation Fee and a New Zealand Port Service charge. The company did not have information available to it stating the actual costs of wharfage in Chinese Taipei, but used New Zealand costs as the basis for these costs being NZD [Text deleted due to confidentiality]/m².
Cartage to Wharf
94. Tasman has estimated an amount of NZD [Text deleted due to confidentiality] for cartage from the factory to the wharf in Chinese Taipei based on its own experience of cartage costs.
Vacuum Packing for Export
95. Tasman provided an amount for the cost of vacuum packing for the export of the product to New Zealand. Tasman stated in its application that this amount was based on the cost of vacuum packing in New Zealand. Tasman's New Zealand cost was stated as being NZD [Text deleted due to confidentiality] or NZD [Text deleted due to confidentiality]/m².
Export Price
96. The table below shows the export price calculations.
Table 3.1: Export Price Calculations (NZD per m²)
| Average Price at First Point of Sale | | 4.20 |
| Less: | | |
| Installation Charge | xxxxx | |
| Material Charge | | xxxxx |
| Less: | | |
| Importers Margin (xxxxx%) | xxxxx | |
| Cost into Importers Store | | xxxxx |
| Less: | | |
| Importers Overhead Costs | xxxxx | |
| Cartage to Store & Clearance | xxxxx | |
| Overseas Freight | xxxxx | |
| Emergency Bunker Charge | xxxxx | |
| Duty (6.5%) | xxxxx | |
| Export Price (NZD) | | xxxxx |
| Export Price (@15.14 = TWD/m²) | | xxxxx |
97. The table shows the calculation for the export prices for the allegedly dumped goods calculated by deducting costs from the first point of sale in New Zealand.
98. The Ministry also calculated an alternative export price to compare with the export price in Table 3.1, by subtracting the relevant costs from the average annual VFD from Statistics New Zealand data, for imports from Chinese Taipei. A comparison of this export price with the above export price would indicate whether there was any significant difference in the average VFD due to other goods entering under the subject goods tariff classification. The export price using this method was calculated as NZD [Text deleted due to confidentiality] which is similar to the export price calculated in Table 3.1 above.
99. The Ministry considers that the information used to calculate the export price in Table 3.1 is sufficient for the purposes of considering initiation of an investigation.
3.2 Normal Values
100. Normal values are determined in accordance with section 5 of the Act.
Base Prices
101. Tasman provided ex-factory domestic prices for the subject goods for the Chinese Taipei manufacturer, Taita. The information was supplied by [Text deleted due to confidentiality]. Invoices or price lists were not available, however, information was provided on two categories of product only one of which is considered to be the subject goods.
102. Information about domestic market sales was also obtained by [Text deleted due to confidentiality] of Tasman Insulation New Zealand. These prices, however, were higher than the other prices, and would, if used, have given a higher dumping margin.
103. On the information provided the prices supplied appear to be arm's length transactions in the ordinary course of trade.
104. Tasman stated that delivery costs were not included in the ex-factory prices supplied.
Adjustments
Volume Discounts
105. Tasman supplied information that discounts were paid by Taita depending on the volume of goods sold. The discounts were the same whether the product was sold in rolls (blanket form) or boards, but were different for different volumes of the product. The rates of discount were [Text deleted due to confidentiality] percent for [Text deleted due to confidentiality], and [Text deleted due to confidentiality] percent for [Text deleted due to confidentiality] of product. The most compatible volume with that being exported to New Zealand is that of a [Text deleted due to confidentiality] domestic sale which would attract a discount of [Text deleted due to confidentiality] percent of the sales price.
106. An adjustment to the normal value has been made for [Text deleted due to confidentiality] percent of the sales price.
Defence Tax
107. The information provided shows that a "defence" tax of 5 percent is payable on domestic sales of these goods. The normal values have been calculated exclusive of this tax.
Conversion of Kilograms to Metres Squared
108. As referred to under export price in paragraph 79, where information is required to be converted from kilograms cubed to metres squared, Tasman provided a factor of 0.75 for R1.8 goods to use as a conversion factor. This is the same conversion factor as used under export price.
Normal Value
109. The table below shows that the normal value and adjustment calculations from the information that has been provided.
Table 3.2: Normal Value (TWD per Kilogram)
| Taita Price Ex-factory Price | xxxxx |
| Volume Rebate | xxxxx |
| Ex-factory Price | xxxxx |
| Ex-factory Price Converted to m² | xxxxx |
110. The Ministry considers that the information on normal values provided by Tasman is sufficient for the purposes of considering the initiation of an investigation.
3.3 Comparison of Export Price and Normal Value
Margins of Dumping
111. The table below shows the export price, normal value and dumping margin calculations.
Table 3.3: Dumping Margin (TWD per m²)
| Normal Value | xxxxx |
| Export Price (EP) | xxxxx |
| Dumping Margin (DM) | xxxxx |
| DM as a % of EP | 90% |
112. The evidence provided shows that the alleged dumping margins as set out above are not de minimis in terms of Article 5.8 of the Agreement.
3.4 Conclusions Relating to Dumping
113. Tasman based its calculation of export price on a deductive methodology to the ex-factory price in Chinese Taipei. The Ministry adopted a conservative approach using the deductive method to the FOB export price level, and compared the result with the relevant Customs data's average VFD. The comparison of export price and normal value in all cases showed a significant dumping margin. Therefore there is sufficient evidence that dumping appears to have occurred.
114. Any investigation will need to give consideration to the provisions of section 4 (export price) and section 5 (normal value) of the Act as they should apply, and in particular to the application of the appropriate adjustments required by section 4(1)(a)(i) and section 5(3).
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