5 Jul 2018

Protecting the Canadian Steel Industry: Is it Safe to Safeguard?

Word on the street in Ottawa is that Canada is going to commence a global safeguard inquiry to protect the Canadian steel industry. So long as done in accordance with the WTO Agreement on Safeguards, Canada is permitted to assist domestic producers that have suffered or are threatened by serious injury from increased levels of fairly traded imports. This type of inquiry has not taken place in Canada for over a decade.

The Canadian government may order the Canadian International Trade Tribunal (CITT) to conduct an inquiry to determine if increased imports of goods into Canada are causing or are threatening to cause serious injury to domestic producers of like or directly competitive goods. It is important to note it is not necessary for imports to have been dumped or subsidized for a safeguard inquiry to take place.

If the CITT makes an affirmative finding, the Canadian government is then entitled to apply “safeguard measures” on increasing imports to prevent or remedy the serious injury, or threat thereof, to domestic producers.

Bottom line – if you are a foreign steel producer that regularly imports into Canada, you must participate in such a safeguard inquiry.

What is the Process and How Can You Participate?

If the Canadian government issues a safeguard referral order to the CITT, the CITT will then issue a written notice of safeguard inquiry. That notice will describe the product(s), including tariff classification(s).

The CITT normally has 180 days to conduct a standard safeguard inquiry, but this can be extended to 270 days in complex cases. If Canada commences a steel safeguard case, and it is as complex as the previous case in 2002, then the inquiry will likely take 270 days.

The key events in a safeguard inquiry are as follows:

  • Issuance of notice of safeguard inquiry (with initial schedule of events);
  • Interested parties must file notices of participation;
  • Lawyers representing an interested party will be entitled to access all confidential information so long as they file appropriate undertakings;
  • The CITT will issue written questionnaires to domestic producers, foreign producers, importers and Canadian purchasers;
  • The Tribunal will prepare and distribute an Investigation Report;
  • Parties that support a finding of injury or threat of injury will file written submissions;
  • Parties that oppose a finding of injury or threat of injury will file written submissions;
  • Parties that support a finding of injury or threat of injury will be permitted to reply, in writing, to the written submissions of those opposed;
  • An oral hearing will be conducted,

After the oral hearing, the CITT will issue a written report to the Canadian government that describes its determination as to whether the goods subject to the safeguard inquiry are being imported into Canada in such increased quantities and under such conditions as to be a principal cause of serious injury, or thereat thereof, to domestic producers of like or directly competitive goods.

Safeguard measures are applied by the Canadian government after the CITT makes an affirmative determination. In this regard, the CITT is permitted to recommend to the government safeguard measures. Such a recommendation by the CITT is not binding upon the government. The imposition of a safeguard measure is at the discretion of the government, therefore, even if the CITT makes an affirmative finding it does not mean that safeguard measures will be imposed.

The Government may apply safeguard measures on imported goods in the form of an import surtax pursuant to the Customs Tariff or in the form of a restriction (import quota or tariff-rate quota) pursuant to the Export and Import Permits Act. The purpose is to limit imports in order to prevent or remedy the serious injury, or threat thereof, to domestic producers.

Provisional Safeguard Measures

In critical circumstances where delay would cause damage which would be difficult to repair, Canada is permitted under WTO rules to take a provisional safeguard measure pursuant to a preliminary determination that there is clear evidence that increased imports have caused or are threatening to cause serious injury. Canada’s laws require a formal report of the Minister of Finance in order to impose provisional safeguard measures. Where such a report is issued, provisional safeguard measures can be imposed prior to the CITT’s investigation.

Tereposky & DeRose regularly provides advice on Canada’s domestic trade remedies. Should you have any questions regarding this anticipated safeguard inquiry, or on Canada’s domestic trade remedies more generally, we are at your disposal.

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Vincent DeRose
613.237.8862
vderose@tradeisds.com