Anti-Dumping & Countervailing Duties
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MILLAR KREKLEWETZ LLP is a boutique Canadian law firm with lawyers who have significant expertise in customs and trade matters involving the imposition of anti-dumping duties and countervailing duties, and the application of Canada's Special Import Measures Act (SIMA).
The following is a short introduction to the imposition of anti-dumping duties, countervailing duties, and the application of Canada's Special Import Measures Act (SIMA).
The Special Import Measures Act (SIMA), Canada's anti-dumping and countervailing legislation, protects Canadian manufacturers and producers from unfair competition from certain goods. Specifically, these sources of unfair competition are from harm or injury caused by the dumping or subsidization of goods imported into Canada.
Dumping of goods occurs when goods are imported into Canada at a lower price that its normal value (i.e., generally, the price that the good is sold in its home market or at a price below total cost). Subsidization of goods occurs when foreign governments give financial incentives, such as grants and tax incentives, to producers and manufacturers that allow them to export those goods into Canada at reduced prices.
Where it is established that goods coming into Canada are being dumped or subsidized, and that the dumping or subsidization has caused injury (or will cause injury) to a Canadian industry producing those goods, an anti-dumping or countervailing duty may be imposed by the Canadian government, which effectively increases the price of the goods to the value that they would have been expected to be, had there been no dumping or subsidization. The imposition of these duties is intended to put Canadian industry on an even competitive footing with the dumped or subsidized goods.
The procedure under SIMA for determining whether such duties are to be levied is divided into two stages:
Stage 1 - The first stage is carried out by the Canada Border Services Agency (CBSA) and generally involves an investigation into whether dumping or subsidizing has occurred.
Stage 2 - The second stage is an economic inquiry conducted by the Canadian International Trade Tribunal (CITT) and determines whether the dumping or subsidizing is causing injury.
The balance of this article provides an overview to the two stages involved in the SIMA process.
The SIMA Process
Stage 1: Finding of Dumping or Subsidizing
The SIMA process begins with the submission of a complaint to the Anti-dumping and Countervailing Directorate of the CBSA. This complaint must be made by domestic producers representing 25% or more of the total Canadian production of the goods. Further, the total production of Canadian producers in support of the complaint must be more than the total production of Canadian producers in opposition to the complaint.
Where there is evidence that discloses a reasonable indication that goods have been dumped or subsidized that is causing injury to the Canadian industry, the CBSA will initiate an investigation by sending requests for further detailed information to importers, exporters, and where applicable, foreign governments. Where dumping or subsidizing is found during the investigation, the CBSA will issue a preliminary determination, and provisional duties will be levied on dumped or subsidized imports until the end of the investigation (i.e., until a decision is given by the CITT). These provisional duties are based on the estimated margin of dumping or amount of subsidy.
In certain circumstances, and only before the CITT has issued a decision, the investigation may be suspended after a preliminary determination is issued if an undertaking has been given to the CBSA. An undertaking is a written agreement entered into by the CBSA and exporters to increase the selling price of the subject goods to eliminate either the dumping or injury to Canadian production. Where goods are subsidized by the foreign government, the undertaking must be entered into by that government to eliminate the subsidy or the injury caused by the subsidy.
Stage 2: Finding of Material Injury Caused by Dumping or Subsidizing
After a preliminary determination is made that dumping or subsidizing exists, the CITT must determine if the dumped or subsidized goods are causing material injury (or will cause material injury) to the Canadian industry. This is done by receiving representations and holding public hearings. In determining whether the dumped or subsidized goods have caused material injury, the CITT will consider, among others, the impact of the goods on prices, profitability, and market share. Other significant factors to this determination include the effect on cash flow, capacity utilization, employment, and inventories.
Where the CITT finds that there the dumping or subsidizing is causing injury, anti-dumping or countervailing duties will be made payable on importations made after the date of the CITTs decision. If the CITT finds that there has been no injury caused by the dumping or subsidizing, then all provisional duties collected after the preliminary determination are refunded to the importer. Where imports of the dumped goods have not caused injury, but are threatening to do so, duties will be levied only on goods imported after the date of the CITTs decision, and any provisional duties paid on goods before that date are refunded.
Findings by the CITT, and consequently the anti-dumping or countervailing duties imposed by those findings, expire in five years from the anniversary of their introduction. However, a review may be initiated before the expiry to determine whether there is likely to be a continuation of dumping or subsidization causing material injury.
Parties affected by the CITTs decision, as well as by a finding of dumping or subsidization by the CBSA, may appeal the decision to the Federal Court of Appeal, or to a binational dispute settlement panel under NAFTA where the decision involves goods from Mexico or the United States.
Stage "3": Expiry Reviews
While note techincally part of the initial two stages of the SIMA process discussed above, an important "third phase" occurs five years after the fact.
This follows the fact under SIMA, findings of injury or threat of injury and the associated special protection in the form of anti-dumping or countervailing duties expire five years from the date of the last order or finding, unless an expiry review has been initiated before that date.
The "Expiry Review" process is a process by which the anti-dumping or countervailing measures are reviewed by the CITT to determine if they are still required to advert the injury that would otherwise be caused to the domestic industry without them. In fact, it is not uncommon for the CITT's anti-dumping and countervailing measures to continue for several years by way of multiple expiry reviews, until the CBSA determines that the expiry of the measures is unlikely to result in the continuation or recurrence of the dumping or subsidizing, or the Tribunal determines that injury is unlikely to recur.
An expiry review at the request of any firm, organization, person or government will not be initiated unless the Tribunal decides that there is sufficient information to indicate that it is warranted. The pre-process (to determine if an Expiry Review is warranted) usually begins with a notice from the CITT, pursuant to subsection 76.03(2) of the SIMA that its prior order is scheduled to expire (usually at least 10 months prior to the expected expiry), and certain information about the subject order and subject goods. Thereafter a tight timetable is generally provided for (e.g., 2 weeks for interested firms, organizations, persons or governments to file notices of participation; 3 weeks for the filing of submissions with regard to the possible initiation of the Expiry Review, and 7 weeks to a final Decision on the matter).
Click here for the CITT's current list of Expiry Reviews.
If the CITT decides that an expiry review is not warranted, the particular order will expire on its scheduled expiry date.
If the Tribunal decides to initiate an expiry review, it will issue a Notice of Expiry review.
Click here for the CITT's Expiry Review Guidelines.
Once a Notice of Expiry Review is issued, the CBSA is required to first determine whether the expiry of the order or finding is likely to result in the continuation or resumption of dumping or subsidizing of the goods. If the CBSA determines that the expiry of the order or finding in respect of any goods is likely to result in the continuation or resumption of dumping or subsidizing, the CITT will then conduct an Expiry Review to determine if the continued or resumed dumping or subsidizing is likely to result in injury or retardation.
Overall Effect of Anti-Dumping and Countervailing Measures
Not unexpectedly, when anti-dumping or countervailing measures are in effect, imports of the dumped or subsidized goods tend to decrease--and, by contrast, Canadian shipments, related investments, and employment tend to increase.
Millar Kreklewetz LLP is well-placed to provide assistances with all customs related matters, and persons facing issues involving Anti-Dumping & Countervailing Duties, or simply wishing to better understand their obligations under Canada's SIMA are encouraged to use the form on this page to contact us for specific legal advice applicable to their unique fact situation.