Safeguards

A global safeguard measure is a trade remedy intended to protect domestic producers when a sudden increase in import volumes causes or threatens to cause “serious injury” to a country’s industry. In Canada, the questions of whether and to what extent such measures are warranted are determined through a public inquiry conducted by the Canadian International Trade Tribunal. Such inquiries are triggered by a direction from the Government of Canada (i.e., the Minister of Finance) or a written complaint submitted by a domestic producer. In conducting an inquiry, the Tribunal will consider written submissions and oral testimony from interested parties — including foreign exporters, importers, and end-users in Canada — and issue its findings in a published report.

Unlike anti-dumping and countervailing measures, global safeguard measures are not automatically imposed if the Tribunal makes a positive finding of injury or threat of injury. Rather, the ultimate decision to impose safeguard measures will be made by the Governor in Council (i.e., the Prime Minister and Cabinet). However, if the Department of Finance considers there to be “critical circumstances”, such that domestic producers require immediate protection, provisional safeguard measures may be imposed while the Tribunal conducts its inquiry.

Once imposed, global safeguard measures typically take the form of an import surtax or a “tariff rate quota” (TRQ) imposed on subject goods. The latter permits a limited quantity of subject goods to be imported under the normal tariff treatment, after which a surtax is imposed on all shipments that exceed this threshold. The TRQ allocations are ordinarily determined on the basis of average historic trade flows of the subject goods into Canada from each exporting country. This approach is intended to minimize the adverse impact of the safeguard measure on normal demand for imported goods in Canada, including supply chains that rely on international sources. However, it may be necessary to adjust the analysis in circumstances where special factors have had disruptive affects on historic trade flows.

Canada’s WTO obligations under the General Agreement on Tariffs and Trade 1994 and the Agreement on Safeguards require that a global safeguard measure must be applied to imports of a subject product “irrespective of its source” — that is, from all sources of supply. However, WTO Members may exclude imports from certain countries when the provisions of their regional free trade agreements require or permit them to do so.

For recent developments relating to Canadian global safeguard actions, see:

If your company has an interest in a Canadian safeguard action, please do not hesitate to contact us.

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Vincent DeRose
613.237.8862
vderose@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com