Opportunity Knocks: Canadian Public Procurement Opportunities for EU Suppliers

For decades, Canada has implemented international trade agreements that require federal government procurement to be conducted in in an open, transparent, and non-discriminatory manner. The recently implemented Canada-European Union Comprehensive Economic and Trade Agreement (CETA) is, however, the first international free trade agreement that guarantees market access and non-discriminatory treatment by sub-central governments (provincial, territorial and municipal governments and entities). This represents significant opportunities for EU suppliers.

It is advisable that EU suppliers familiarize themselves with the general legal principles and rules applicable to government procurement opportunities in Canada prior to investing significant resources in the Canadian market. While the CETA is new, procurement-related trade agreements have been judicially considered in Canada for over 25 years.  A notable aspect of Canadian procurement law is that, in many procurements, the judiciary will impose a “duty of fairness” on government purchasers. That duty of fairness creates an obligation to treat all participants in the procurement process equally and fairly.

The range of issues that EU suppliers may face could include:

  • Whether onerous terms and conditions such as unlimited liability or perpetual assignment of IP rights are commercially acceptable;
  • Whether the winning bidder submitted a technically compliant proposal;
  • Whether the procuring entity is permitted to repair minor errors or irregularities;
  • Whether the evaluators properly evaluated the proposals in accordance with the terms and conditions of the solicitation;
  • Whether the evaluators introduced undisclosed evaluation criteria into the evaluation process;
  • Whether a bidder was in a conflict of interest, or was otherwise afforded an unfair advantage;
  • Whether the specifications are improperly biased towards a single bidder;
  • Whether the government purchasing authority permitted an improper “bid repair”, i.e., by allowing a bidder to supplement or ‘fix’ their non-compliant proposal through revised or additional submissions after the bid closing date;
  • Whether the winning proposal was submitted after the bid closing period. In Canada, proposals that are submitted after the time and date at which a bid period closes must, as a general proposition, be rejected;
  • Whether evaluators ignored vital information contained in the proposal; and
  • Whether the government purchasing authority undertook improper “bid shopping” by negotiating with two or more bidders after the submission of their respective proposals.

These examples demonstrate the range of issues that an EU supplier may face when competing in Canada.

On a final point, most jurisdictions in Canada require bidders to raise concerns as soon as possible. For instance, at the federal level, most procurements are subject to a limitation period of 10 working days to commence procurement challenges. This is another reason why EU suppliers must understand their rights in advance of bidding – because failure to immediately identify a breach may preclude the EU supplier from challenging the procurement.

The lawyers at Tereposky & DeRose have significant experience advising domestic and foreign suppliers on the full range of issues that arise in Canadian procurement processes including formulation of procurement strategies, analysis of solicitation documents, preparation of teaming agreements and subcontracting agreements, assessments of contractual terms and conditions, the development of procurement proposals and representing suppliers in bid challenge disputes.

If you would like to discuss any aspect of Canadian procurement under the CETA, please contact Vince DeRose at:

Vince DeRose
613.237.8862
vderose@tradeisds.com

CANADA ANNOUNCES NEW MEASURES TO PREVENT TRANSSHIPMENT AND DIVERSION OF STEEL AND ALUMINUM

On March 27th, 2018, the Government of Canada announced new measures aimed at preventing the transshipment and diversion of steel and aluminum into Canada to avoid recently imposed United States tariffs on the metals. These measures will be subject to a 15-day consultation period through the Canada Gazette.

Amongst the regulatory changes suggested is the creation of new anti-circumvention investigations that will allow the Canada Border Services Agency (CBSA) to identify and stop companies that try to dodge duties (for example, by slightly modifying products or assembling them in Canada or a third country for further shipment to the United States). The CBSA will also be granted greater flexibility in determining whether prices in the exporter’s domestic market are reliable or distorted.

Canada’s measures are the result of the new tariffs on steel and aluminum imposed by the U.S., which came into effect on March 23rd, 2018. U.S. President Donald Trump imposed tariffs of 25 percent on steel and 10 percent on aluminum, the result of a Section 232 investigation conducted by the U.S. Commerce Department which found that such imports pose a threat to national security.

The biggest exporters of steel to the U.S., including Canada, Mexico, Australia, Argentina, Brazil and South Korea, have received exemptions valid until May 1 to negotiate “satisfactory alternative means,” according to the White House. Ottawa’s new measures may be part of an effort to convince Washington to grant a more long-term, or permanent, exemption to the tariffs.

Various commentators posit that the above-mentioned nations are not the target of the tariffs. In fact, China is the largest producer of steel globally, accounting for half of the world’s production. Due to numerous trade remedies covering an estimated 90 percent of steel from China, however, such imports represented just two percent of total imports to the U.S. in 2017.

Statements by the Trump administration indicate concern with Chinese steel imports. On March 8th, 2018, President Trump stated “Transshipping, frankly, is a big deal. China says it’s got 2 percent, but it sends much more.” The practice of transshipping entails one country exporting a product to another country by using a third country as a conduit. This practice is illegal if the intention of the exporting company is to falsify or disguise the product’s country or origin and evade tariffs and duties.

Trade experts, however, cite several factors that challenge the Trump administration’s claims about the extent of this problem. First, transshipment is difficult to measure, and even if there is a practice of falsification of origin, it is not significant enough to make Chinese exports to the U.S. sizable. Second, experts contend that China’s practice of shipping metals to its Asian neighbours, where they undergo slight modifications, does not constitute transshipment, as the end product has been altered from its original form.

While the main target of the tariffs may be China, other countries in addition to Canada have taken steps to ensure that the United States remains an open market for their steel exports. South Korea, which supplied about ten percent of steel imports to the United States in 2017, offered to lower barriers to entry for American automobiles. It also agreed to adhere to a quota of 2.68 million tonnes of steel exports to the United States a year, roughly 70 percent of recent annual volumes. Time will tell how the United States’ “carrot and stick” approach to steel and aluminum tariffs as an invitation for simultaneous trade negotiations affects the global trading order.

Tereposky & DeRose advises and represents private sector clients — including industry associations, large corporations, and small and medium-sized businesses — as well as government entities on the full range of issues arising in cross-border trade. Should you have any questions regarding this matter, we are at your disposal.

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Stephanie Desjardins
613.237.0483
sdesjardins@tradeisds.com

U.S. DOC ISSUES PRELIMINARY DETERMINATION ON UNCOATED GROUNDWOOD PAPER FROM CANADA

On March 13, 2018, the United States Department of Commerce (“U.S. DOC”) issued its preliminary determination in the antidumping duty investigation regarding imports of uncoated groundwood paper from Canada (the “subject goods”). The petitioner, North Pacific Paper Company (WA), alleged that exporters from Canada have sold subject goods in the United States at 23.45% to 54.97% less than fair value.

The subject goods covered by the investigation certain paper used in newsprint, book publishing, and printing and writing papers. In 2016, U.S. imports of uncoated groundwood paper from Canada were valued at USD$1.27 billion (2.3 million metric tons).  The subject goods are classifiable under the following subheadings of the Harmonized Tariff Schedule of the United States:

  • 4801.00.0120
  • 4801.00.0140
  • 4802.61.1000
  • 4802.61.2000
  • 4802.61.3110
  • 4802.61.3191
  • 4802.61.6040
  • 4802.62.1000
  • 4802.62.2000
  • 4802.62.3000
  • 4802.62.6140
  • 4802.69.1000
  • 4802.69.2000
  • 4802.69.3000
  • 4805.91.5000
  • 4805.91.7000
  • 4805.91.9000

The U.S. DOC preliminarily determined that imports of uncoated groundwood paper from Canada are sold in the U.S. at less than fair value. The preliminary margins of dumping were calculated as follows:

CANADIAN EXPORTER/PRODUCER MARGIN OF DUMPING
Catalyst Pulp and Paper Sales, Inc./Catalyst Paper General Partnership 22.16%
Resolute FP Canada Inc/Donohue Malbaie Inc. 0.00%
White Birch Paper Canada Company/Papier Masson WB LP/FF Soucy WB LP/Stadacona WB LP 0.00%
All other Canadian exporters/producers 22.16%

 The U.S. DOC is scheduled to announce its final determination in this investigation by August 2, 2018. The U.S. International Trade Commission (“USITC”) is scheduled to issue its final determination by September 17, 2018. In the event of an affirmative final determination of dumping by the U.S. DOC and an affirmative final injury determination from the USITC, the U.S. DOC will issue an antidumping order by September 24, 2018.

Tereposky & DeRose offers in-depth trade remedy expertise, including anti-dumping, countervailing duty, and safeguard investigations. Should you have any questions regarding this matter or anti-dumping and countervailing issues more generally, we are at your disposal.

Vincent DeRose
613.237.8862
vderose@tradeisds.com

Stephanie Desjardins
613.237.0483
sdesjardins@tradeisds.com

IT’S A DEAL! TPP-11 MEMBER COUNTRIES SIGN THE CPTPP

On March 8th, 2018, the Honourable François-Philippe Champagne, Minister of International Trade, along with trade ministers from the other ten TPP-11 member countries, signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in Santiago, Chile.

The text of the CPTPP was released to the public on February 20th (available online here). The text is very concise, consisting of only seven articles and one brief annex. The text of the side instruments involving Canada, which provide the more substantive negotiated outcomes of the CPTPP, were released yesterday (available online here). The core issues negotiated in the side letters include:

  • Cultural industries, including requirements regarding Canadian content development and restrictions on access to on-line foreign audio-visual content;
  • Wine and spirits, including covenants from Canada with regard to mark-ups, cost of service differentials and other pricing measures;
  • Commitments in respect of geographical indications; and
  • Agreements on rules of origin for motor vehicles.

In concluding the agreement, Canada continues to expand and diversify its major regional trade agreements beyond the North American Free Trade Agreement (NAFTA), which is currently undergoing difficult negotiations with uncertain outcomes. Notably, the CPTPP updates the terms of trade between Canada and Mexico.

Tereposky & DeRose LLP regularly provides advice on international trade agreements, including the NAFTA, the CETA, and the forthcoming CPTPP.  Should you have any questions regarding potential opportunities under these trade agreements or any other trade related issues, we are at your disposal.

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Stephanie Desjardins
613.237.0483
sdesjardins@tradeisds.com

UPDATE: CANADA AND MEXICO TEMPORARILY EXEMPTED FROM US TARIFFS ON STEEL AND ALUMINUM

At about 3:30pm EST on March 8th, 2018, U.S. President Donald Trump signed the Section 232 proclamations on steel and aluminum imports. Tariffs of 25 per cent on steel imported to the U.S. and 10 per cent on aluminum will take effect in 15 days. Canada and Mexico will not initially be subject to the duties in light of the North American Free Trade Agreement negotiations. President Trump has also indicated that other countries could eventually be exempt from the new tariffs. Earlier today, he tweeted that the U.S. would show “great flexibility and cooperation toward those that are real friends and treat us fairly on both trade and the military”.

Tereposky & DeRose advises and represents private sector clients — including industry associations, large corporations, and small and medium-sized businesses — as well as government entities on the full range of issues arising in cross-border trade. Should you have any questions regarding this matter, we are at your disposal.

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Stephanie Desjardins
613.237.0483
sdesjardins@tradeisds.com

USITC ISSUES PRELIMINARY DETERMINATIONS ON LARGE DIAMETER WELDED PIPE

On March 6, 2018, the United States International Trade Commission (“USITC”) issued its preliminary determination in its antidumping and countervailing duty investigations regarding large diameter welded pipe from Canada, China, Greece, India, Korea and Turkey (the “subject goods”). It is alleged that the subject goods are sold in the United States at less than fair value, and that the goods originating in China, India, Korea and Turkey are subsidized.

The USITC determined that there is a reasonable indication that an industry in the United States is materially injured by reason of imports from Canada, China, India, Korea, and Turkey. The UITC also determined that there is a reasonable indication that an industry in the United States is threatened with material injury by reason of imports from Greece. The USITC’s public report, which will be available after April 2, 2018, will provide additional information on the reasons for these determinations.

The subject goods are usually classified under the following Harmonized System codes of the Harmonized Tariff Schedule of the United States:

  • 7305.11.10
  • 7305.11.1060
  • 7305.11.50
  • 7305.12.10
  • 7305.12.50
  • 7305.19.10
  • 7305.19.50
  • 7305.31.40
  • 7305.31.60
  • 7305.39.10
  • 7305.39.50

As a result of the USITC’s affirmative determinations, the US Department of Commerce will continue its antidumping and countervailing duty investigations.  It will issue its preliminary countervailing duty determinations by April 16, 2018, and its antidumping duty determinations by June 29, 2018.

Tereposky & DeRose offers in-depth trade remedy expertise, including anti-dumping, countervailing duty, and safeguard investigations. Should you have any questions regarding this matter or anti-dumping and countervailing issues more generally, we are at your disposal.

Vincent DeRose
613.237.8862
vderose@tradeisds.com

Stephanie Desjardins
613.237.0483
sdesjardins@tradeisds.com

 

Expiry Review Decision Released for Certain Hot-Rolled Carbon Steel Plate

On March 2, 2018, the Canada Border Services Agency (CBSA) issued an expiry review decision pursuant to the Special Import Measures Act (SIMA) regarding the dumping of certain hot-rolled carbon steel plate originating in or exported from the People’s Republic of China (China).

Today’s report completes an expiry review investigation of a January 8, 2013 finding by the Canadian International Trade Tribunal (CITT) that certain hot-rolled carbon steel plate poses a risk to the domestic Canadian industry. The finding was supported by evidence submitted by domestic producers and importers of the subject goods, including Essar Steel Algoma Inc., Evraz Inc. NA Canada, and SSAB Central Inc. The CBSA has determined that the expiry of the finding will likely result in the continuation or resumption of dumping of such products originating in or exported from China.

The CBSA will issue a Statement of Reasons within 15 days providing further details.

The CITT will undertake an inquiry to assess whether the expiry of its 2013 findings is likely to result in injury to the Canadian industry, with a decision set to be released no later than August 9, 2018.

Tereposky & DeRose regularly provides advice on Canadian anti-dumping and countervailing matters.  Should you have any questions regarding this matter or anti-dumping and countervailing issues more generally, we are at your disposal.

Vincent DeRose
613.237.8862
vderose@tradeisds.com

Stephanie Desjardins
613.237.0483
sdesjardins@tradeisds.com

PRESIDENT TRUMP ANNOUNCES INTENTION TO IMPOSE NEW TARIFFS ON STEEL AND ALUMINUM

On March 1st, President Trump announced his intention to sign a document next week that will impose tariffs of 25 per cent on all steel imported to the U.S., and 10 per cent on all aluminum. Details on how tariffs will be applied and whether some countries will be exempted have not yet been released. Last year, Canada exported about CAD$ 9.3 billion of aluminum and CAD$ 5.5 billion of steel.

If he follows through with his announcement, President Trump will undoubtedly trigger a trade war with the United States’ key trading partners. Foreign Affairs Minister Chrystia Freeland issued a statement in response to the announcement indicating that Canada will take “responsive measures to defend its trade interests and workers” should restrictions be imposed on Canadian steel and aluminum products.

Tereposky & DeRose advises and represents private sector clients — including industry associations, large corporations, and small and medium-sized businesses — as well as government entities on the full range of issues arising in cross-border trade. Should you have any questions regarding this matter, we are at your disposal.

Vincent DeRose
613.237.8862
vderose@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com