15 May 2019

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