Canada–US Trade Tensions Continue to Intensify with Imposition of a Second Layer of Lumber Tariffs

On June 26, 2017, the U.S. Department of Commerce (Commerce) announced its affirmative preliminary  determination of dumping in the antidumping duty (AD) investigation of imports of softwood lumber from Canada. The AD investigation has been proceeding alongside a countervailing duty (CVD) investigation. The CVD investigation resulted in an affirmative preliminary determination of subsidization on April 24th and the imposition of preliminary countervailing duties ranging from 3-24% on imports of softwood lumber from Canada. The latest determination imposes an additional layer of antidumping duties ranging from 4.59% to 6.87% on those imports.  Thus, the combined duties applied to imports of Canadian softwood lumber now range from approximately 7% to 31%.

Similar to the CVD investigation, Commerce also made a preliminary finding that “critical circumstances” exist with respect to companies subject to the “all others rate” (i.e., all companies other than Canfor, Resolute, Tolko, and West Fraser, the four mandatory respondents). Consequently, the provisional AD duties will be imposed retroactively on entries of softwood lumber from Canada going back 90 days prior to the publication of the preliminary determination in the Federal Register (i.e., back to the end of March).

Finally, Commerce made a preliminary determination that certain softwood lumber products certified by the Atlantic Lumber Board as being first produced in the Provinces of Newfoundland and Labrador, Nova Scotia, or Prince Edward Island (the Atlantic Provinces) from logs harvested in these three provinces should be excluded from both the AD and CVD investigations.

Additional details on the softwood lumber investigation can be found at:

http://enforcement.trade.gov/download/factsheets/factsheet-canada-softwood-lumber-ad-prelim-062617.pdf

Contact:

Jennifer Radford
613.903.7015, ext. 103
jradford@tradeisds.com

Dan Hohnstein
613.903.7015, ext. 104
dhohnstein@tradeisds.com

The Consent of the Domestic Industry is Not Enough to Secure an Exclusion from Anti-Dumping Protection

The Canadian International Trade Tribunal recently concluded its inquiry to determine whether dumping of certain fabricated structural steel components (“FISC”) by China, Korea and Spain (and the subsidizing of these goods by China) caused injury or was threatening to cause injury to the Canadian domestic market.

In the inquiry, the Tribunal received requests from six parties to exclude products from a potential finding of injury or threat of injury. After concluding that the dumping of FISC from China, Korea and Spain and subsidizing of it by China had caused injury to the domestic market, the Tribunal went on to consider the exclusion requests. In explaining its findings regarding whether to grant the requests, the Tribunal set out the general principles governing such requests.

The Special Import Measures Act (SIMA) implicitly authorizes the Tribunal to grant exclusions from the scope of a finding.  Exclusion requests are granted at the Tribunal’s discretion, when it is satisfied that the exclusions will not cause injury to the domestic industry. The underpinning rationale is this: despite the general conclusion that the dumping and/or subsidizing of the goods has caused injury to the domestic industry, there may be case-specific evidence that imports of particular products captured by the definition of the goods have not caused injury.

In determining whether an exclusion is likely to cause injury to the domestic industry, the Tribunal considers factors such as whether the domestic industry produces, actively supplies or can produce like goods in relation to the subject goods for which the exclusion is requested.

The onus falls on the requester to demonstrate that imports of the specific goods for which the exclusion is requested will not result in injury. The evidentiary burden is on the requestor to file evidence in support of its request. In turn, if no consent is provided by the domestic industry, the domestic industry must file evidence to rebut the evidence filed by the requester.

The Tribunal clarified that it will exercise its discretion to grant product exclusions based on its assessment of the totality of the evidence on the record. Consents to exclusions, or lack of them, are not evidence.  Moreover, consents do not fetter the Tribunal’s discretion in making such determinations.  Notwithstanding that the domestic industry consented, the Tribunal denied the requests that were not also substantiated with sufficient evidence.

The Tribunal’s findings serve as a strong reminder of the necessity of filing evidence to assist the Tribunal in its assessment of exclusion requests. Domestic industry consent is not enough.

Tereposky & DeRose regularly assists domestic industries, manufacturers, exporters, and importers in navigating the investigation and inquiry processes into dumping and subsidizing.  Should you have any questions regarding this inquiry or dumping and subsidizing issues more generally, we would be pleased to assist you.

Contact:

Jennifer Radford
613.903.7015, ext. 103
jradford@tradeisds.com

Dan Hohnstein
613.903.7015, ext. 104
dhohnstein@tradeisds.com