Tax & Trade Blog
SIMA Expedited Review: Upholstered Domestic Seating
On October 27, 2023, the Canada Border Services Agency (“CBSA”) issued a notice of conclusion of Expedited Review in respect of certain Chinese upholstered domestic seating (“UDS”) from Eterno Co. Ltd. (“Eterno”) and Zhe Jiang Shengli Furniture Co., Ltd. (“Shengli”) (the “Exporters”).
The Canadian International Trade Tribunal (the “CITT”) concluded an Investigation into certain UDS from China and Vietnam, and issued a Finding on September 2, 2021 that the dumping and subsidizing of said UDS had caused injury to the domestic (Canadian) industry, resulting in the imposition of anti-dumping and countervailing duties subject to exclusions and inclusions specifically identified by CBSA.
CBSA determined Normal Values for thirty-six producers/exporters who cooperated with CBSA during the Investigation. Normal Values are generally determined based on the domestic selling price of like goods in the country of export and represent the minimum price at which the goods can be sold for export to Canada without attracting anti-dumping duties.
Obtaining Normal Values from CBSA is often the only realistic option for producers/exporters looking to keep their products competitive when faced with punishingly high anti-dumping duties (188% of the Export Price for UDS from China and 179.5% of the Export Price for UDS from Vietnam).
What is an Expedited Review?
Under subsection 13.2(1) of the Special Import Measures Act (“SIMA”), an exporter or producer may request the CBSA conduct an Expedited Review where they did not receive notice of, and were not associated with any other person who received notice of, any prior investigation. An Expedited Review generally results in the CBSA determining Normal Values, Export Prices, and the amounts of subsidy on an exporter’s goods that have been sold in Canada.
It is important to note that while an Expedited Review is ongoing, importers must still pay duties for the relevant goods set out in a ministerial specification, or potentially post a security for same.
Expedited Review Request & CBSA Decision
The Exporters requested an Expedited Review from the CBSA on January 21, 2022, and argued, inter alia, that Normal Values ought to have been calculated on paragraph 19(b) of SIMA, that Export Prices ought to be calculated under section 24 of SIMA and that neither received any subsidies from the Chinese government.
Because the Exporters did not product like goods for domestic consumption in China, CBSA determined normal value according to section 29 of SIMA based on the aggregate cost of production, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits (31.92%); Export Prices were determined according to section 24 of SIMA.
While CBSA agreed Eterno had not received any subsidies, Shengli was found to have received countervailable benefits from seven subsidy programs and accordingly CBSA determined an amount of subsidy of 36.34 CNY per piece.
Expedited Reviews are one way for producers/exporters who did not have notice of the initial Investigation to obtain Normal Values, and “level the playing field” against producers/exporters who previously cooperated with CBSA. That said, many producers/exporters are surprised to learn something referred to as an “Expedited” Review may take almost twelve months.