26 Apr 2019

Department of Finance Announces Government’s “Intent to Enact Final Safeguards”

At the end of the day on Friday 26th April, the Department of Finance published a news release regarding the “Final Safeguards to be Imposed to Protect Canadian Steel Workers”.

Recalling the Canadian International Trade Tribunal’s finding that “final safeguards are warranted for imports of heavy plate and stainless steel wire”, the news release serves to announce the Government of Canada’s “intent to enact final safeguards on these two categories of steel”. No details are provided at this stage about the form of the safeguards or how they will be administered.

The news release also announces that, in response to the Tribunal’s rulings that safeguards are not warranted with respect to the other five categories of steel products that were subject to the inquiry (i.e., imports of concrete reinforcing bar (rebar), energy tubular products, hot-rolled sheet, pre-painted steel, and wire rod), the Government will hold “an intensive 30-day consultation with industry and workers, in order to determine what further protections are required”.

Canadian law does not permit the Government of Canada to impose definitive safeguards on imported products when the Tribunal finds that such measures are not warranted.

  • Subsection 56(2) of the Customs Tariff requires the order implementing the safeguard surtax to cease to apply “at the end of the two hundredth day after the day on which the order is made”, unless the Tribunal has found, on the basis of its inquiry, that the subject goods “are being imported … under such conditions as to cause or threaten serious injury to domestic producers of like or directly competitive goods”. Therefore, where the Tribunal has concluded — as it did for the five product categories referenced above — that the subject goods are not being imported in such conditions as to cause or threaten serious injury, the safeguard measures must cease to apply.
  • In this case, the Order was made on 10th October 2018 and the 200th day is 28th April 2019. Accordingly, the Canada Border Services Agency has acknowledged that the safeguard surtaxes imposed on imports of rebar, energy tubular products, hot-rolled sheet, pre-painted steel, and wire rod will only “remain in effect up to and including April 28, 2019” (see the update to Customs Notice 18-17 on 16th April 2019).
  • Further, subsection 55(5) of the Customs Tariff imposes a two-year “cooling off” period, prohibiting the Government of Canada from making any further orders to impose a safeguard surtax “with respect to goods that have already been the subject of an order … unless, after the expiry of the order and any related orders … there has elapsed a period equal to”, in this case, “two years”.

The news release also describes an ‘action plan’ for “the next few weeks”, in which the Government commits to “take every legal action at its disposal to protect Canadian jobs and industry from unfair trade practices”. This includes “new” measures relating to closer consultation and cooperation with the domestic industry and the development of stronger (i.e., more protectionist) policies and procedures for Canada’s trade remedies regime (i.e., anti-dumping and countervailing proceedings under the Special Import Measures Act). With respect to the latter, the first ‘action plan’ item is a “targeted review of dumping cases to boost protections through higher duties”.

One of the other ‘action plan’ items is consultation “with stakeholders on the framework for remission of surtaxes imposed on imports from the U.S. in order to further incentivize the use of Canadian-made steel products”. Canadian businesses who rely on imported U.S. steel products under remission orders (or who plan to apply for remission orders in the future) should contact the Department of Finance as soon as possible to ensure that they have an opportunity to participate in this consultation process. This “new measure” could indicate an intention on the part of the Government to impose more stringent eligibility criteria and restrict access to the remission of surtaxes.

The news release is silent on the topic of refunds for Canadian importers who paid the provisional safeguard surtaxes on the steel products for which the Tribunal has found that safeguard measures are not warranted.

The news release can be accessed here: https://www.fin.gc.ca/n19/19-046-eng.asp.

Tereposky & DeRose regularly provides advice on all Canadian trade matters, including safeguard actions and related procedures. 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