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NO RETROACTIVE DUTIES ON PEA PROTEIN

DESPITE MASSIVE IMPORTATIONS, CITT RULES NO RETROACTIVE DUTIES

On December 4, 2024, the Canadian International Trade Tribunal (the “CITT”) announced its Finding in Inquiry NQ-2024-002, concluding that the dumping of certain pea protein from China (the “Subject Goods”) has caused injury to the domestic industry. 

While that may sound like a clear-cut finding, the CITT’s Finding held a twist: despite finding “massive importations” occurred during the investigation, the CITT determined it was unlikely to seriously undermine the remedial effect of the anti-dumping duties.  As a result, retroactive duties were not imposed.

This blog focuses on the massive importation framework under the Special Import Measures Act (the “SIMA”) and why a finding of massive importation does not always lead to retroactive duties.

Massive Importation Framework

The massive importation framework is set out under paragraph 42(1)(b) of SIMA.  Three conditions have to be met: (1) there has been considerable importation of dumped goods that caused or would have caused injury without anti-dumping measures, or the importer knew or should have known that the goods were dumped and such dumping would cause injury; (2) injury has been caused by the massive importation; and (3) the goods are likely to seriously undermine the remedial effect of SIMA duties.

Section 37.11 of the Special Import Measures Regulations outlines factors that may be considered in determining whether injury has been caused by a massive importation.  These include whether there has been at least 15% increase in imports and whether there has been a significant increase in domestic inventories of the goods.

CITT Analysis

Regarding the first condition, the CITT found that there had been considerable importation, citing a 203% increase in Q2 2024 compared to Q2 2023 (the investigation started October 21, 2024).  On the second condition, the CITT stated that it had “no difficulty” finding this considerable importation had caused injury to the domestic industry.

The third condition, however, was less straight forward.  The key question was whether the increase of the Subject Goods was likely to seriously undermine the impact of the SIMA duties.  To assess this, the CITT looked at how long it would take for the domestic market to absorb the extra inventory from the massive importation.  Despite the significant increase in imports, the CITT concluded that the market could absorb the excess inventory in “somewhere between three and seven days”.  Based on that, the CITT found that the goods were unlikely to undermine the effect of the anti-dumping duties.

As a result, no retroactive duties were imposed.

Takeaways

This case is a good reminder of how technical SIMA cases can be.  A significant 203% import increase and proven injury might suggest a straightforward outcome, but the legal framework requires a more rigorous and nuanced analysis. 

If you are dealing with a SIMA matter, specialized legal advice is strongly recommended.

For help with a SIMA investigation, click here.

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