11 Oct 2018

Canada Announces Provisional Steel Safeguard Measures

On October 11, 2018, the Government of Canada announced that it will be imposing provisional safeguard measures on seven categories of steel products, including: heavy plate, concrete reinforcing bar (rebar), energy tubular products, hot-rolled sheet, pre-painted steel, stainless steel wire, and wire rod. The provisional safeguard measures, which will enter into force on October 25, 2018, will be implemented in the form of tariff-rate quotas (TRQs). A 25 percent surtax will be applied to all imports of covered goods that exceed the TRQ thresholds.

The Government of Canada has directed the Canadian International Trade Tribunal to conduct a public inquiry to determine whether final safeguards are warranted and, if so, to recommend appropriate remedies. The provisional safeguard measures will remain in place for up to 200 days pending the Tribunal’s findings and recommendations.

How will the provisional safeguard measures be implemented?

Global Affairs Canada will administer the TRQs by issuing shipment-specific import permits on a first-come, first-served basis. To facilitate this process, the products subject to provisional safeguards will be added to the Import Control List.

The TRQs will include:

Total quota volumes: For each product category, there is a limit on the total quantity of goods that may be imported surtax-free during the 200-day provisional safeguard period;

Quota periods: The total quota volume is separated into four 50-day periods. Once the quota for a steel product category in a particular period has been filled, imports of goods under that steel product category will be subject to a surtax for the remainder of that period. If there is unused quota remaining at the end of a 50-day period, it will be carried forward into the next 50-day period; and

Quantitative limits: For each product category, a limit is imposed on the share of the total quota that may be filled by a single country. If the volume of imports of a product category from a single country reaches the limit, then all subsequent imports of that product category from the country will be subject to the surtax for the remainder of the 200-day provisional safeguard period.

The TRQ volumes, periods, and quantitative limits for each product category will be as follows:

Heavy Plate

  • Quota for each 50-day period: 12,918 metric tonnes (MT)
  • Total quota volume for the 200-day provisional safeguard period: 51,672 MT
  • Maximum share for any single country: 23 percent

Concrete Rebar

  • Quota for each 50-day period: 35,332 MT
  • Total quota volume for the 200-day provisional safeguard period: 141,328 MT
  • Maximum share for any single country: 23 percent

Energy Tubular Products

  • Quota for each 50-day period: 64,348 MT
  • Total quota volume for the 200-day provisional safeguard period: 257,392 MT
  • Maximum share for any single country: 23 percent

Hot-rolled Sheet

  • Quota for each 50-day period: 15,299 MT
  • Total quota volume for the 200-day provisional safeguard period: 61,196 MT
  • Maximum share for any single country: 37 percent

Pre-painted Steel

  • Quota for each 50-day period: 11,635 MT
  • Total quota volume for the 200-day provisional safeguard period: 46,540 MT
  • Maximum share for any single country: 35 percent

Stainless Steel Wire

  • Quota for each 50-day period: 467 MT
  • Total quota volume for the 200-day provisional safeguard period: 1,868 MT
  • Maximum share for any single country: 25 percent

Wire Rod

  • Quota for each 50-day period: 11,513 MT
  • Total quota volume for the 200-day provisional safeguard period: 46,052 MT
  • Maximum share for any single country: 47 percent

Country-Specific Exemptions

As a general rule, the provisional safeguard measures apply to imports of the subject products from most countries. However, in accordance with Canada’s international trade obligations under various agreements, the provisional safeguard measures will not apply to:

The United States, Chile, and Israel: Imports of all product categories from these countries are exempt from the provisional safeguard measures.

Mexico: Imports of heavy plate products, rebar products, hot-rolled sheet products, pre-painted steel products, and stainless steel wire products from Mexico are exempt from the provisional safeguard measures. However, the measures apply to imports of energy tubular products and wire rod products from Mexico.

Developing countries:  Imports of all product categories from “developing countries” that are eligible for Canada’s General Preferential Tariff (GPT) are exempt from the provisional safeguard measures, with one exception: the measures will apply to imports of concrete rebar products from Vietnam.

How will the import permit process operate?

As noted above, the TRQs will be administered by way of shipment-specific import permits issued by the Trade Controls Bureau at Global Affairs Canada on a first-come, first-served basis. The application period for shipment-specific import permits will open on October 25, 2018.

The total TRQ volumes for the 200-day provisional period will be administered in the following four 50-day periods:

  • October 25 to December 13, 2018;
  • December 14, 2018 to February 1, 2019;
  • February 2 to March 23, 2019; and
  • March 24 to May 12, 2019

If the 50-day quota for a specific product category is filled, then import permits will no longer be issued for products within that category until the next 50-day period commences. During this time, such products may continue to enter Canada, but they will be subject to the 25 percent import surtax.

Additionally, if the volume of imports from any one country reaches the quantitative limit (the maximum percentage share of the TRQ that may be filled by a single country) in a specific product category, then import permits will no longer be issued for products from that country within that product category. Again, imports of such products may continue to enter Canada, but they will be subject to the 25 percent import surtax.

An importer may apply for a shipment-specific import permit up to five days in advance of their shipment’s arrival. However, the permit will be valid for only fourteen calendar days. This means that, in most cases, the shipment will be in transit before the importer can apply for a permit.

It is important to note that while the Government of Canada has allowed for the possibility of extending the validity of an import permit beyond 14 days, such an extension will only be granted if the shipment is delayed due to exceptional and unforeseen circumstances. In most cases, the import permit will be cancelled when it expires after 14 days.

Information about the permit application process, the monthly billing system, information required from applicants, and the permit application form, is available online at the Global Affairs Canada website: http://www.international.gc.ca/controls-controles/about-a_propos/impor/permits-licences.aspx?lang=eng.

Details regarding the scope of the steel product categories and the form of the countermeasures is available online at the Department of Finance website: https://www.fin.gc.ca/n18/data/18-090_2-eng.asp.

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