Tax & Trade Blog
Provisional Duties on Upholstered Domestic Seating
Effective May 5, 2021, as a result of an anti-dumping investigation that began in December 2020, imports of items of Upholstered Domestic Seating originating in, or exported from, China or Vietnam will be subject to provisional anti-dumping duties of 206.36% for China, and 89.77% for Vietnam for imports where the exporter has not been issued a specific rate. Provisional countervailing duties of 89.54% for imports from China and 11.73% for imports from Vietnam are also applicable.
Keep reading for more about what anti-dumping duties are, and what will happen next with Upholstered Domestic Seating
What are Anti-dumping Duties / Countervailing Duties?
Anti-dumping duties are duties imposed by the Canada Border Services Agency (the "CBSA") under either section 38 (provisional determination) or section 41 (final determination) of the Special Import Measures Act ("SIMA") on goods which are being sold to importers in Canada at a price that is lower than the selling price of comparable goods in their country of export. CBSA determines anti-dumping duties following an investigation which is initiated by a complaint from the domestic industry.
Countervailing duties are similar, but imposed by CBSA on goods that benefit from foreign government assistance termed "subsidies" (for example, loans on preferred rates, grants, tax incentives).
In both cases the legislative regime for anti-dumping/countervailing duties is based on World Trade Organization (WTO) standards, and other countries around the world generally have parallel rules. The legislative regime stipulates strict deadlines that are applicable to the CBSA investigation, and which in turn result in very strict deadlines on importers to answers CBSA questionnaires. Consistent with WTO rules, an anti-dumping investigation is normally concluded within 9 months.
What are the next steps for Upholstered Domestic Seating?
CBSA is currently reviewing information it has received from importers and exporters and is determining what the final anti-dumping and countervailing duties will be. These are expected to be announced by August 3, 2021, with a final Statement of Reasons issued by August 18, 2021.
Exporters who have fully cooperated with CBSA's investigation will likely be issued specific normal values in respect of their goods. In other words, an ex-factory price at which they can sell to importers into Canada without the application of anti-dumping duties. Exporters who do not provide the requested information on a timely basis do not receive specific normal values. Rather, they will be subject to the general anti-dumping/countervailing duties referred to as a ministerial specification – this is typically much higher than for "cooperating" exporters.
Canada has approximately 50 anti-dumping/countervailing orders currently in force. Whether because of the COVID pandemic or otherwise, there appears to be an increasing frequency of the CBSA initiating new anti-dumping investigations.
Click here to see the page for Upholstered Domestic Seating, which will be updated at some point after August 3rd with the names of exporters who have normal values.
Parallel to the CBSA's work, the Canadian International Trade Tribunal (the CITT) is determining whether the Canadian industry has been materially injured by the dumping/subsidies the CBSA has identified. The CITT is expected to issue their final decision by September 2, 2021.
Unless the CITT finds there has been no material injury, the anti-dumping/ countervailing duties finally determined by CBSA will be applicable for at least the next five years.
Can these duties be reduced/eliminated?
Although importers are the ones responsible for paying the anti-dumping/countervailing duties, often there may be little they can do to reduce or eliminate anti-dumping duties without cooperation from the exporter and other parties.
If you are caught up in the Upholstered Domestic Seating matter or in any of the new investigations being initiated by the CBSA, you should consider contacting a lawyer as soon as possible to discuss your options.