The Federal Court of Appeal has recently provided direction on the application of the non-market economy provisions of Canadian anti-dumping legislation. The Court upheld the decision of the Canada Border Services Agency (“CBSA”) that the Chinese market for seamless petroleum casing was not operating under “market conditions.”

In Tianjin Pipe (Group) Corporation v. TenarisAlgomaTubes Inc. (Court File A-104-08), the Applicant, Tianjin Pipe (Group) Corporation, (“TPCO”) sought judicial review of the anti-dumping determination of the CBSA. The principal issue addressed by the Court was whether Canada’s non-market economy provisions in subsection 20(1) of the Special Import Measures Act (“SIMA”) were properly applied by the CBSA.

Subsection 20(1) states that recourse may be had to that section where “in the opinion of the [CBSA] President, domestic prices are substantially determined by the government of that country and there is sufficient reason to believe that they are not substantially the same as they would be if they were determined in a competitive market.” Where these conditions apply, pricing and cost information from the Chinese market cannot be relied upon, and alternate methodologies for the determination of “fair” market pricing must be employed.

The Applicant TPCO argued that there was no evidence that the Government of China directly set prices of seamless casing in the Chinese market. The Court of Appeal was of the view that the expression “substantially determined” necessarily implied something less than the direct setting of prices. The Court continued on to indicate that the phrase supported the view that governments can exert an influence on pricing directly or indirectly.

The Applicant TPCO had also argued that the “substantially determined” threshold was a jurisdictional issue upon which the CBSA had to be correct to satisfy the standard of judicial review. The Court of Appeal disagreed, noting that the subsection in question included the qualifying words, “in the opinion of the [CBSA] President,” which indicated that Parliament had expressly conferred discretion on the President to make that decision. The Court concluded that the issue as to whether prices in China were substantially determined by government was an “intensely factual question.”

It should be noted that the definition of government under SIMA is very broad, and does not mean only a central government. Government is defined to include provincial, state, municipal or any other local or regional government authority, as well as any person, agency or institution acting for, or on behalf of, or under the authority of, or under the authority of any law passed by any level of government, in the country of export.

The decision of the Federal Court of Appeal confirms the methodology of the CBSA whereby foreign government intervention in their domestic markets may be established through indirect influences by the actions of a wide range of potential government actors.

The Court also heard a companion judicial review of the CBSA determination that TPCO had received countervailable subsidies. (Refer to Tianjin Pipe (Group) Corporation v. TenarisAlgomaTubes Inc., A-103-08). The Court of Appeal again upheld the decision of the CBSA.