April 08, 2013 (Ottawa, ON) – The Canadian International Trade Tribunal (CITT) has refused a request for an interim review on the anti-dumping duties on some bicycles imported from Taiwan and China – duties that have been in place for over 20 years, an unprecedented term we believe.
The duties were implemented in Dec. 1992 and currently affect lower-end imported bicycles with a retail cost of approximately $400. The subject of heated debate at times, these duties are there ostensibly to protect Canadian bicycle manufacturers from off-shore dumping and other unfair trade practices. In Dec. 2012 the CITT renewed the duties for an additional five years but things looks promising for an interim review in the coming months as the situation in Canada will soon change.
Canadian bicycle production is now very minimal with one major manufacturer, Raleigh, still producing lower-end bicycles at its plant in Waterloo, QC but it will close the facility this year. As previously reported, Raleigh announced in January its plans to permanently stop Canadian production in June – read more HERE.
The request to the CITT was made by Outdoor Gear Canada (OGC) and by Trek Bicycle Corporation in light of Raleigh’s plant closure hoping to remove the duties in time for the 2014 production season. Raleigh Canada, the Centrale des syndicats démocratiques (CSD) which represents Raleigh’s employees, and Action Traders (an importer of bikes from China), argued that an interim review was premature as the plant is still producing bikes.
The order issued by the CITT on March 27 reads in part that, “On January 22 and 30, 2013, Outdoor Gear Canada and Trek Bicycle Corporation, respectively, filed requests for an interim review of the order made by the Canadian International Trade tribunal in Expiry Review No. RR – 2011- 002 in respect of the dumping of bicycles, assembled or unassembled, with wheel diameters of 16 inches (40.64 cm) and greater, originating in or exported from Chinese Taipei and the People’s Republic of China, excluding bicycles with an FOB [freight on board value] Chinese Taipei or the People’s Republic of China selling price exceeding CAN$225 and excluding bicycles with foldable frames and stems.”
“Pursuant to subsections 76.01(3) and (4) of the Special Import Measures Act, the Canadian International Trade Tribunal has decided not to conduct an interim review of the above order.”
The CITT’s reasoning for its decision, however, also seems to open the door to reconsider what OGC and Trek are asking for. At a later point in the March 27 order, the text reads:
“Raleigh’s and Action Traders’ opposition to the initiation of an interim review was principally based on the claim that the requests for an interim review were premature, considering that there is ongoing domestic production that will continue at least until the end of June 2013. Raleigh submitted that, as long as there continues to be production in Canada of like goods, anti – dumping measures must remain in place to counteract injurious dumping. In support of its position, Raleigh referred to the Tribunal’s decision in Copper Pipe Fittings where the Tribunal held that actual termination of production in Canada, and not mere plans to terminate such production, was required to justify an interim review. In this regard, Raleigh indicated that it plans to produce 135,000 units in 2013.
“The Tribunal therefore finds that the current requests for an interim review are premature. This, however, does not foreclose the possibility of a future request for interim review on the basis of the circumstances prevailing at that time, including the actual cessation of Raleigh’s domestic production of like goods.”
Pedal contacted OGC president David Bowman for his reaction to the ruling. “We’re disappointed with the decision of the CITT,” commented Bowman. “Raleigh had announced they were terminating production in June and that both sellers and buyers’ had already made their commitments irrevocably for the 2013 model year so our goal was really to end the anti-dumping regime for the 2014 production season by which time there will be no manufacturing in Canada of the subject goods. We do intend to reapply to the CITT once Raleigh officially ceases production.”
“As far as I know, bicycle production in North America is now largely limited to the manufacture and/or assembly of higher-priced models. Opus Bicycles maintains an assembly operation in Montreal for all models that retail for approximately $1,000 and up. As Opus sales continue to grow (about 33% in 2012), so does the output of our assembly operation and we hope that will continue. At the same time, I think it’s unrealistic to think that less expensive bikes can still be made in North America. The continuation of anti-dumping duties simply increases the prices Canadian bike dealers and consumers have to pay for lower-priced bicycles.”
As mentioned this is a longstanding battle for the cycling industry in Canada, almost all of which is now supplied by imports. While for many these duties have been a thorn in their side for over 20 years, the widespread opposition to them has helped bring together different elements in Canada’s bicycle industry to form a coherent voice.
“The CITT first ruled on the dumping of bicycles from China and Taiwan in 1992, the hearing last year [Dec. 2012] was the 5th so if it stays in place until the end of the 5-year period it will be in effect for at least 25 years,” Kona’s Jacob Heilbron told Pedal. Heilbron has been involved with Canadian Association of Specialty Bicycle Importers (CASBI) as a founder and spokesman since 1991 and was a key player in bringing together the industry to fight the duties. For various reasons, CASBI didn’t see the need to get involved in the latest round of hearings.
“We were involved in the first three hearings, the initial series was the most important as our government wanted to protect low-end makers but speciality bicycles were going to get caught in the same net. We were able to mobilize Canadian retailers and consumers to help convince the CITT that there were two separate markets for bicycles in Canada – speciality and mass. This kept bicycles under $800 from an unwieldy import situation that could have increased prices on many bikes by as much as 150%.”
“One of the really useful by-products of these initial hearings was that it unified and mobilized the Canadian bicycle industry and the net result was the formation of the Bicycle Trade Association of Canada (BTAC).”
“During the 2nd round of hearings in 1996, CASBI and other participating importers were able to convince the CITT that the threshold should be lowered to around $600 retail which is where it remains.”
“In 2005 there was another dangerous flare-up for the sport and business of bicycles when Raleigh and Procycle proposed a surtax as high as 50% on all price points to protect their low-end production. Once again, retailers and consumers mobilized at the grass roots level along with CASBI to keep bicycles at affordable levels, and although the CITT ruled in support of the surtax, Jim Flaherty [Finance Minister] used his ministerial authority to overrule this outrageous plan. Once again the positive benefit of having a common enemy helped to unite suppliers and retailers, turning BTAC into a more inclusive organization that began to support our sport through advocacy as well as their business-oriented programs for dealers and suppliers.”
Heilbron also drew attention to another important duty and tariff issue that is brewing. “BTAC has recently taken the initiative to create awareness of the 13% duty that has remained in effect throughout this entire period, in spite of the fact that such products as cars, most electronic products and even nuclear reactors are rated as duty-free. CASBI’s members believe this type of grass roots action to include bicycles in the same category as other sporting goods exemptions announced in the 2013 Federal budget, has the best potential to keep bicycles affordable at servicing dealers in Canada,” he concluded.
Read the CITT decision HERE.