On April 24, 2023, the Canadian International Trade Tribunal (CITT) initiated an inquiry to determine whether certain wind turbine towers from China are being sold at unfair prices in Canada and whether these goods are being subsidized, contrary to Canadian law and World Trade Organization (WTO) rules. The year 2022 was indeed a record year for the sale of wind turbines in Canada, with over $785 million in imports of wind turbine masts, towers and related components, including over $594 million from China.
Complainant – Domestic Producers
This inquiry follows a complaint filed by Marmen Inc. and Marmen Energy Inc. (“Marmen”), regarding allegedly injurious imports from China to the Canadian industry. The subject goods are being imported into Canada as wind turbine masts 50 metres or more in height and having a minimum rated electrical generating capacity of more than 100 kilowatts (kW).
What is the purpose of such a procedure?
On the basis of the information provided by stakeholders, the Canadian International Trade Tribunal (CITT) could find that the evidence indicates or not that the dumping and subsidizing of these goods have caused injury or are threatening to cause injury to the Canadian industry. Such a determination by the CITT could result in the imposition of anti-dumping (AD) and countervailing (CVD) duties totaling the sum of the estimated margin of dumping and amount of subsidy for each exporter. These duties could be imposed on every import of wind turbines from China, starting on July 20, 2023, and continuing for at least five years.
Has there been significant damage to the Canadian industry?
As a prerequisite to the imposition of anti-dumping duties (AD), the Tribunal must consider, among other things, whether material injury to the domestic industry has occurred primarily as a result of the underselling of wind towers from China, in the sense that Canadian producers would have actually lost sales to Chinese manufacturers as a result of pricing. In particular, sales in Canada must have been lost (both in situations of direct competition and in cases where the domestic industry did not bid) to imports of wind towers from China (and not from other countries).
For example, if the Canadian industry had been able to win certain contracts, the CITT will examine whether the domestic industry would have seen a significant improvement in terms of production, sales and capacity. The Tribunal must also consider whether factors other than dumping or subsidization have caused material injury or are threatening to cause material injury. These include, for example, Marmen’s actual production capacity to meet the demands, the existence of external factors such as the COVID-19 pandemic, or other reasons such as the United States International Trade Commission’s (USITC) order on Marmen’s exports to the United States since 2020 (applicable until 2025).
Wind farm developers as well as suppliers and distributors of wind towers are called upon
Wind farm developers, contractors and suppliers of wind towers in Canada may be interested in making their views known with respect to the Canadian market and imports from China. The various stakeholders are invited to make their interests and rights known until the Tribunal renders a decision on whether or not to impose anti-dumping and/or anti-subsidy duties on wind towers from China. While approximately 58% of Canada’s wind tower imports have come from China over the past three years, the imposition of anti-dumping (AD) and anti-subsidy (CVD) duties could limit the ability of suppliers to compete on sales and prices of wind towers in Canada and impact delivery times for certain projects.
What criteria will the Tribunal consider?
The question of whether imports of wind towers from China could cause or have caused injury to the Canadian industry will be a key factor in the Tribunal’s further inquiry. Based on information provided by stakeholders, the Tribunal will consider a variety of factors, including the physical characteristics of the goods, and their market characteristics, such as substitutability, prices, distribution channels, end uses, whether the goods meet the same needs of customers in Canada, as well as all relevant economic factors and indicators affecting this situation.
Canadian market context
In the context of the pursuit of energy objectives in Quebec and Canada, the numerous wind farm project submissions across the country show that wind turbine imports will continue to increase significantly in the coming years. For example, in Quebec, a series of wind farm development projects will see the light of day by 2026 for a combined capacity of more than 840 megawatts. In addition, Hydro-Quebec, which is bidding on various projects, recently reiterated its commitment to deliver an additional 160 megawatts by December 2026.
What would be the impact on the Canadian market?
One effect of imposing AD duties on Chinese wind turbines is to preserve the ability of the domestic industry to maintain or expand its operations and staffing levels. Conversely, the application of AD/CVD duties could make it difficult, if not impossible, for some suppliers in Canada to continue to import and distribute wind turbine masts from China, despite the growing demand from wind turbine project developers and sponsors. The purchase price of wind turbine masts could consequently be revised in the years to come and even have a direct impact on the profitability or bidding of certain projects that have or have not yet been announced.
You have questions, what to do?
If you, your association or your company have any questions regarding trade remedies, anti-dumping and/or anti-subsidy procedures, do not hesitate to contact the team at DS Avocats in order to assert your interests and rights.
Suppliers of wind towers in Canada, as well as stakeholders who may be interested in presenting their positions, must file a notice of participation with the CITT no later than May 4, 2023. Note that the Canada Border Services Agency (CBSA) is currently sending out questionnaires to Canadian importers with responses due by May 12, 2023.
