BACKGROUNDER: Re-investigation and Normal Value Review Policy – Memorandum D14-1-8 – Special Import Measures Act (SIMA)

On April 26, 2019, the Government announced an intensive consultation process with the steel industry to determine ways to improve Canada’s trade remedy and import monitoring regimes. As a result of this consultation process, the Canada Border Services Agency (CBSA) is making a series of improvements to its administrative policies to strengthen Canada’s anti-dumping regime to better protect Canadian industry from unfair trade practices. A number of these improvements are operationalized through changes to Memorandum D14-1-8, Re-investigation and Normal Value Review Policy – Special Import Measures Act (SIMA).

CHANGES TO CBSA ADMINISTRATIVE POLICY

The CBSA has updated Memorandum D14-1-8 to provide additional predictability and transparency regarding the CBSA’s re-investigative and normal value review processes.

The updated Memorandum contains the following improvements:

• lists the criteria for determining when to start an investigative process to update normal values;
• lists specific factors for determining whether to initiate a full re-investigation or a more streamlined normal value review;
• provides the CBSA greater flexibility in protecting the Canadian economy in an evolving international climate by including the ability to:
  • state normal values in a currency other than that of the country under investigation, and
  • make retroactive assessments in cases where exporters failed to adjust prices when their normal values became outdated due to changes in prices or costs of production; and
• clarifies that the CBSA will use a normal value review process to determine normal values requested pursuant to a redetermination or an appeal.

In addition, the CBSA has put in place a transparent process for stakeholders to make representations regarding the need to update normal values established through a previous investigative proceeding. Going forward, the CBSA will publish all representations on its website to allow other stakeholders to view and make submissions in response.

KEY CONCEPTS OVERVIEW

Dumping and/or subsidizing

In its administration of the Special Import Measures Act, the CBSA investigates whether products imported into the Canadian market are dumped or subsidized. Dumping occurs when the price of a product sold to a Canadian importer is lower than the price of that product when sold in the country it comes from (known as the exporting country). Subsidizing occurs when goods imported into Canada benefit from foreign government financial assistance, such as grants or tax incentives. Both dumping and subsidizing could confer an unfair price advantage for imported goods compared to the Canadian-produced equivalent.

Dumping or subsidizing product into the Canadian market could mean economic losses for Canadian industry. However, the price difference may be offset by applying anti-dumping duty (for dumping) or countervailing duty (for subsidizing). Imposing these duties helps Canadian industry compete on a level playing field. The amount of anti-dumping duty equals the amount by which the price of the product in the exporting country (normal value) exceeds the price at which it is sold in Canada (export price). The amount of countervailing duty is equal to the monetary value of the foreign government’s financial assistance.

Re-investigations and normal value reviews

Re-investigations are administrative procedures conducted periodically by the CBSA to:

• update existing normal values, export prices or amounts of subsidy (values);
• establish values for new exporters or new models of products; and
• ensure that the values in place accurately reflect current market conditions.

Re-investigations are conducted in respect of all the exporters from all the countries that were subject to the original dumping and/or subsidy investigation.

In June 2018, the CBSA implemented a new process called “normal value reviews.” These reviews are similar in purpose to re-investigations except each review is conducted in respect of a single exporter only and not the country or market as a whole. This enables the CBSA to update normal values in a more efficient and timely manner. More information on re-investigations and normal value reviews is available in Memorandum D14-1-8.

It is important to keep normal values up to date. When goods are sold below their normal value, duties are imposed to offset the price advantage and give Canadian industry an opportunity to compete fairly with the imported goods. If normal values are not up to date, duties may not be sufficient to restore fair competition and could result in injury to Canadian industry.