On April 28, 2023, the Canada Border Services Agency (“CBSA”) announced the retroactive assessment of $6.1 million in anti-dumping duties on imports of certain carbon and alloy steel line pipe from the Republic of Korea (“Korea”). This decision has implications for every exporter who relies on normal values issued by the CBSA to sell products into Canada that are subject to Canadian anti-dumping measures.
Canada has imposed definitive anti-dumping duties on imports of line pipe from Korea since January 2018. Several exporters were issued normal values from the CBSA, enabling them to continue to export the subject goods into Canada. Under the Canadian anti-dumping regime, the issuance of normal values provides exporters with a benchmark for determining whether their export prices are dumped and, if so, by how much (i.e., the “margin of dumping”). In principle, when an exporter sells a covered product into Canada at an export price that is equal to or greater than its normal value, dumping does not occur and no anti-dumping duty is applied (see “Calculating and paying the proper amount of SIMA duties“). If the export price is less than the normal value, then the margin of dumping is the difference between them, and this determines the amount of anti-dumping duty that is applied.
However, when relying in this way upon normal values issued by the CBSA, exporters must observe certain ongoing obligations. Specifically, the CBSA requires them to (i) promptly inform the CBSA of changes to the domestic prices, costs, terms of sale, and market conditions associated with their goods, and (ii) adjust their export prices to Canada to account for such changes. Where an exporter fails to do so, the CBSA may determine that the retroactive assessment of anti-dumping duty is warranted. The CBSA describes the rationale underpinning this policy as follows: “Where the CBSA’s analysis determines that changes to market conditions caused normal values to become significantly outdated and that the exporter failed to price up its exports in a timely manner, the CBSA may issue retroactive assessments to the exporter’s Canadian importers” (see CBSA Memorandum D14-1-8).
In this regard, the CBSA has cautioned exporters in recent years that: “where there are increases in domestic prices and/or costs …, the export price for sales to Canada should be increased accordingly to ensure that any sale made to Canada is not only above the normal value but at or above selling prices and full costs and profit of the goods in the exporter’s domestic market” (see e.g., OS 2022 RI, CSWP2 2020 UP1, GB 2018 RI, OTCG2 2018 UP 02).
In the case of line pipe from Korea, it was alleged during the recent re-investigation that “the CBSA should assess retroactive duties” because the exporters had “not adjusted the selling prices of subject goods sold to Canada to reflect increases in domestic selling prices and costs.” This prompted the CBSA to conduct an analysis following the conclusion of the re-investigation “to determine whether retroactive assessments are warranted.” Based on that analysis, the CBSA determined that “certain exporters did not notify the CBSA in a timely manner of changes to certain conditions as required and failed to adjust their selling prices accordingly”. This resulted in the retroactive assessment of anti-dumping duty on subject imports during a previous 18-month period (from July 2021 to December 2022).
Tereposky & DeRose regularly provides advice on Canadian trade remedies measures, including anti-dumping, countervailing, and safeguard matters. Should you have any questions regarding this matter or other trade remedies issues more generally, we are at your disposal.