Government of Canada Announces Refunds of Provisional Steel Safeguard Surtax

On Wednesday 29th May 2019, the Government of Canada published an Order in Council that grants a refund of the provisional steel safeguard surtax of 25 percent that was paid by importers on shipments of concrete reinforcing bar (rebar), energy tubular products, hot-rolled steel sheet, pre-painted steel, and wire rod entering Canada between 25th October 2018 and 28th April 2019. Although the Order entered into force on 9th May, it was not published until 29th May.

The Surtax on the Importation of Certain Steel Goods Refund Order, SOR/2019-129, and the accompanying “Regulatory Impact Analysis Statement” are available online in the 29th May edition (no. 11) of Volume 153 of the Canada Gazette, Part II. The Regulatory Impact Analysis Statement provides that the refund process will be implemented and administered by the Canada Border Services Agency (CBSA), and that “[d]epending on the volume and complexity of transactions for which refunds must be issued, the CBSA strives to achieve a 90-day processing standard”.

The same day, the CBSA published an update to Customs Notice 18-17 (Provisional Safeguard Measures Imposed on the Importation of Certain Steel Goods) to address the refund procedure. The update explains that the CBSA “will automatically process refunds without the need for importers to submit a B2 – Canada Customs – Adjustment Request”, although it may contact importers and request supporting documentation, “where required”, to “ensure that the proper amount is refunded”.

Tereposky & DeRose regularly provides advice on Canadian trade matters, including safeguard actions. Should you have any questions regarding this matter, we are at your disposal.

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Vincent DeRose
613.237.8862
vderose@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Legislation to Implement the CUSMA / USMCA / T-MEC Introduced in the Parliament of Canada for First Reading

On Wednesday 29th May 2019, the Honourable Chrystia Freeland, Canada’s Minister of Foreign Affairs, presented a “ways and means” motion to the House of Commons that paved the way for Prime Minister Justin Trudeau to introduce Bill C-100, “An Act to implement the Agreement between Canada, the United States of America and the United Mexican States” (the “CUSMA Implementation Act”), for First Reading.

The provisions of Bill C-100 set out the changes that need to be made to federal statutes and regulations in order to give effect under Canadian law to the negotiated outcomes of the new Canada-US-Mexico free trade agreement (referred to as the CUSMA in Canada, the USMCA in the United States, and the T-MEC in Mexico). This includes repealing the provisions that have long implemented the North American Free Trade Agreement (NAFTA) and replacing them with provisions implementing the rights and obligations of the new Agreement.

The progress of the proposed legislation can be tracked online at the Parliament of Canada’s LEGISinfo website (link here).

Once Bill C-100 receives Royal Assent, the CUSMA Implementation Act will become law, and the Government of Canada will be in a position to formally ratify the agreement. This is done by providing written notification to the United States and Mexico that Canada “has completed the internal procedures required for the entry into force” of the Agreement.

The provisions of the CUSMA Implementation Act will enter into force on the same date that the Agreement itself enters into force, which will be “on the first day of the third month following the last notification” (see paragraph 2 of the Protocol replacing the North American Free Trade Agreement with the Agreement between Canada the United States of America, and the United Mexican States).

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

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Vincent DeRose
613.237.8862
vderose@tradeisds.com

Agreement to Eliminate the U.S. Section 232 Tariffs on Canadian Steel and Aluminum and Canada’s Retaliatory Countermeasures on U.S. Steel, Aluminum and Other Goods

On the afternoon of Friday 17th May 2019, the United States and Canada issued a joint statement to announce that the U.S. tariffs imposed on Canadian steel and aluminum products under section 232 of the Trade Expansion Act of 1962 (the “section 232 tariffs”) and the countermeasures imposed by Canada in the form of retaliatory tariffs on U.S. steel, aluminum and “other goods” will be eliminated over the weekend (i.e., within two days).

As part of the bilateral agreement, Canada will terminate its WTO claims against the United States regarding the section 232 tariffs (in US – Certain Measures on Steel and Aluminum Products, DS550), and the United States will do the same in its claims against Canada regarding the retaliatory tariffs (in Canada – Additional Duties on Certain Products from the United States, DS557).

Canada and the United States have also agreed to: (i) each strengthen their trade remedies measures against dumped and subsidized imports of steel and aluminum products from third countries; and (ii) work together to prevent steel and aluminum products originating in third countries from being transhipped from Canada to the United States and vice versa.

In addition, Canada and the United States have agreed to establish a process that will monitor for surges between them in steel and aluminum trade. In applying this process, “either country may treat products made with steel that is melted and poured in North America separately from products that are not”. This indicates that, for the purposes of identifying a “surge” in trade volumes, either or both countries may impose a higher standard for determining the origin of steel and aluminum products than the standards set out in the product-specific rules of origin that currently apply pursuant to the North American Free Trade Agreement (NAFTA).

Where imports of steel or aluminum products are found to be surging “meaningfully beyond historic volumes of trade over a period of time”, the importing country may impose duties on the “individual product categories” from the exporting country that are involved in the surge. The agreed rates are 25 percent for steel products and 10 percent for aluminum products. Such duties may only be imposed after the countries have held consultations on the matter, and the exporting country may retaliate “only in the affected sector” (i.e., steel and/or aluminum). In this regard, Canada has given up the right to impose countermeasures against “other goods” from the United States. This was arguably one of Canada’s most effective sources of leverage. In response to the United States’ section 232 tariffs, for example, Canada’s retaliatory tariffs covered not only U.S.-origin steel and aluminum products, but also a range of other goods, including processed foods, cosmetics, appliances, and furniture.

Tereposky & DeRose regularly provides advice on Canadian trade matters. Should you have any questions regarding this matter, we are at your disposal.

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Vincent DeRose
613.237.8862
vderose@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Exclusion Inquiry Commenced Concerning Heavy Steel Plate and Stainless Steel Wire Covered by the Final Safeguards

On Thursday 16th May 2019, the Canadian International Trade Tribunal published a notice of the commencement of an inquiry regarding exclusion requests concerning certain heavy steel plate and stainless steel wire products subject to the final safeguard measures that were imposed on Monday 13th May.

This notice is further to an Order in Council made Thursday 9th May on the recommendation of the Minister of Finance (Order Referring to the Canadian International Trade Tribunal, for Inquiry into and Reporting on, the Matter of the Exclusion of Certain Steel Goods from the Order Imposing a Surtax on the Importation of Certain Steel Goods (Exclusions Inquiry Order), PC number 2019-0476) which directs the Tribunal to conduct the exclusion inquiry and sets out the terms of its mandate.

Importers of heavy steel plate products or stainless steel wire products should consider participating in this inquiry. If the Tribunal recommends that a specific product should be excluded from the final safeguard measure, and the Minister of Finance grants the exclusion, then the safeguard duties will not be applied to imports of that product.

The time limits in this inquiry are very short, requiring interested parties to file their notices of participation by Monday 27th May and to submit their exclusion requests by noon on Friday 7th June. The schedule of the proceedings is as follows:

  • 16 May – Notice of commencement of inquiry
  • 27 May – Last date to file notices of participation, declarations and undertakings
  • 7 June by 12:00 noon – Deadline for submission of the exclusion requests
  • 19 June by 12:00 noon – Deadline for responses to the exclusion requests (i.e., from the domestic producers)
  • 15 July – The Tribunal will issue its decision and issue a report to the Minister of Finance

The Tribunal has posted the specific form that parties requesting a product exclusion must complete and submit, and it is available online for download here: http://www.citt-tcce.gc.ca/en/forms.

Tereposky & DeRose regularly provides advice on Canadian trade matters, including safeguard actions, and has a proven track record of successfully obtaining product exclusion requests on behalf of importers. Should you have any questions regarding this matter, we are at your disposal.

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Vincent DeRose
613.237.8862
vderose@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Final Safeguard Measures Imposed on Imports of Heavy Steel Plate and Stainless Steel Wire

Further to the report issued by the Canadian International Trade Tribunal on 3rd April 2019 in Safeguard Inquiry No. GC-2018-001 (Certain Steel Goods), final safeguard measures were imposed on imports of heavy steel plate products and stainless steel wire products as of Monday 13th May.

The final safeguard measures were not announced until Friday 10th May in a customs notice published by the Canada Border Services Agency (CBSA) and a notice to importers issued by Global Affairs Canada. The measures are in the form of tariff rate quotas (TRQs), and the quotas are being administered in the following three stages:

  • First Stage: from 13th May through 2nd June 2019, quota is being allocated through shipment-specific import permits issued on a first-come, first-served basis.
    • The quantities of in-quota volume available during this period are less than 5.74 million kg of stainless steel plate and only 161,000 kg of stainless steel wire.
  • Second Stage: from 3rd June 2019 through 31st January 2020, quota will be allocated through two pools of quota that will be administered in different ways: (i) an allocation pool will be available to applicants based on their historical import volumes during a 12-month reference period from 1st July 2017 through 30th June 2018; and a “residual pool” will be available on a first-come, first served basis to those who do not hold allocations from the first pool.
    • The quantities of in-quota volume available during this period are about 66.67 million kg of heavy steel plate and about 1.87 million kg of stainless steel wire.
  • Third Stage: from 1st February 2020 through 24th October 2021, quota will be allocated through an administrative method that has not yet been determined, but that “will be informed by public consultations”.

As of Wednesday 15th May — within just three days of the new TRQs opening on 13th May on a first-come, first-served basis — 98.9 percent of the first-stage quota for heavy steel plate had been filled and 75.7 percent of the first-stage quota for stainless steel wire had been filled. This is one of the reasons why the Tribunal considered in its Report that the “first-come first-served method for administering [quota] has caused considerable disruption and uncertainty in the market” and made the recommendation that “the Governor in Council should consider alternative methods of allocation” for the final safeguard measures.

For importers with a historical record of import volumes during the one-year reference period, applications are currently being accepted by Global Affairs Canada for second-stage quota allocations. Applications must be made using “Application Form 3145” and submitted no later than 24th May 2019 to email address steel-acier@international.gc.ca. These allocations should provide greater certainty to importers who rely on well-established supply chains to serve the needs of their Canadian customers under long-term contracts by providing them with a guaranteed in-quota volume regardless of when their shipments arrive in Canada.

When heavy steel plate and stainless steel wire products that are subject to the final safeguard measures are imported without a shipment-specific import permit or a quota allocation, a “safeguard surtax” (i.e., an additional amount of duty) will be applied as follows:

  • For heavy steel plate:
    • 20 percent until 12th May 2020;
    • 15 percent from 13th May 2020 through 12th May 2021; and
    • 10 percent from 13th May 2021 through 24th October 2021.
  • For stainless steel wire:
    • 25 percent until 12th May 2020;
    • 15 percent from 13th May 2020 through 12th May 2021;
    • 5 percent percent from 13th May 2021 through 24th October 2021.

Tereposky & DeRose regularly provides advice on Canadian trade matters, including safeguard actions. Should you have any questions regarding this matter, we are at your disposal.

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Vincent DeRose
613.237.8862
vderose@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com