Consultation on measures to strengthen and improve access to Canada’s trade remedy system

Join in: Open until September 26, 2021

Canada's trade remedy system provides recourse to Canadian producers injured, or threatened to be injured, by dumped or subsidized imports, or by a surge in imports. Maintaining a robust trade remedy system will help ensure that Canadian businesses can mitigate the impacts of unfairly traded imports and fully participate in the economic recovery.

In Budget 2021, the government announced its intention to launch public consultations on potential legislative and regulatory amendments to strengthen Canada's trade remedy system, and to improve access for workers and small and medium-sized enterprises (SMEs).

The government is seeking stakeholder views with respect to potential amendments to the Special Import Measures Act (SIMA) and the Canadian International Trade Tribunal Act (CITT Act), and to related regulations, as well as potential measures to improve access for SMEs to Canada's trade remedy system.

Background

Under Canada's trade remedy system, Canadian producers can request the initiation of an investigation against specific countries whose exporters are alleged to be selling dumped or subsidized goods into the Canadian market. Where an investigation shows that dumping or unfair subsidization has occurred and resulted in injury or threat of injury to the domestic industry or retardation of the establishment of an industry in Canada, anti-dumping or countervailing duties can be applied.

In addition, the Canadian government can also impose safeguard measures if an inquiry finds that a surge in imports has caused, or threatens to cause, serious injury to the domestic industry. Unlike anti-dumping and countervailing duties, safeguards are intended to be applied on a global basis and are intended to address imports that are not alleged to be dumped or subsidized.

The Department of Finance Canada holds policy and legislative responsibility for Canada's trade remedy system. The bifurcated system is jointly administered by the Canada Border Services Agency (CBSA), which is responsible for subsidy and dumping investigations and for the administration of measures in force, and the Canadian International Trade Tribunal (CITT), which conducts injury inquiries and safeguard inquiries.

SIMA and the CITT Act implement Canada's rights and obligations under the World Trade Organization's (WTO) Anti-Dumping Agreement (ADA), Agreement on Subsidies and Countervailing Measures (ASCM), and Agreement on Safeguards. These agreements set out the multilateral rules governing the use of anti-dumping, countervailing, and safeguard measures. All investigations are conducted in an independent, non-political manner, in accordance with WTO rules.

In comparison, the U.S. maintains a similar bifurcated trade remedy system whereby the Department of Commerce is responsible for subsidy and dumping investigations and the International Trade Commission conducts injury and safeguard investigations. The U.S. Customs and Border Protection is also responsible for the enforcement of trade remedy duties. In recent years, Canada has implemented legislative and regulatory amendments to strengthen its trade remedy system, including by aligning with certain U.S. practices.

Our objective

This consultation seeks feedback on potential measures in five areas. 

1. Increase participation of unionized workers in trade remedy proceedings 

Measures are being considered to increase the participation and consideration of unionized workers in trade remedy proceedings.

Overview

World Trade Organization (WTO) rules provide that trade remedy investigations are either self-initiated by investigating authorities or initiated on the basis of complaints filed by the domestic industry, which can include employees or their representatives. In certain jurisdictions (e.g., the United States, the European Union, and Australia), both domestic producers (or associations acting on their behalf) and unionized workers can file such complaints. The concept of domestic industry is also relevant when assessing whether imports have resulted in injury, threat of injury, or retardation to the domestic industry.

Current Canadian law and practice

As announced in Budget 2017, unions have been granted full participatory rights in Canadian trade remedy proceedings. As a result, legal counsel of union representatives now have access to confidential case documents and are able to make arguments in support of workers' interests. However, unions currently do not have the explicit right to file trade remedy complaints. In fact, while SIMA does not prescribe the identity of the person filing a complaint, investigations have so far only been initiated based on complaints from domestic producers or associations representing them, or on the CBSA's own initiative. With respect to safeguards, the CITT Act provides that complaints can only be filed by a domestic producer or a person or association acting on behalf of such domestic producer.

With respect to SIMA injury inquiries, the Special Import Measures Regulations (SIMR) prescribe separate sets of factors to be considered when assessing injury, threat of injury, or whether the expiry of SIMA duties is likely to result in injury (when assessing whether trade remedy measures should be extended). While threat of injury factors do not include any references to workers, injury and expiry review factors include consideration of employment and wages as they affect the domestic industry, which is generally not understood as including workers. Terms and conditions of employment (e.g., hours worked, pension levels, training and safety) are also not specifically included in the injury and threat of injury factors. The Canadian International Trade Tribunal Regulations (CITTR) provide a non-exhaustive list of economic factors to consider during safeguards inquiries. These factors include employment and wages to the extent they have bearing on domestic producers, but not on workers.

Issues for consultation

In line with its inclusive approach to trade, the government recognizes that labour unions have an important perspective to bring to trade remedy investigations. Therefore, the government is seeking views on: (1) potential amendments to SIMA and/or policy changes to provide that unionized workers are included in the meaning of "complainant" for the purposes of filing anti-dumping and countervailing duty complaints; and (2) potential amendments to the CITT Act to specify that unionized workers can file safeguard complaints.

The government is also seeking views on potential amendments to the SIMR and CITTR to clarify that, in anti-dumping, countervailing and safeguard inquiries, the assessment of impacts on the domestic industry includes impacts on its workers. The potential amendments would further ensure that the CITT not only consider the impacts of the imports on employment and wages, but also more broadly on the terms and conditions of employment, including hours worked, pension levels, benefits, and worker training and safety.

Questions

  1. Should legislative amendments to SIMA and the CITT Act, and/or policy changes to administrative practices, be introduced to provide unionized workers with the explicit right to file trade remedy complaints?
  2. Should regulatory changes be introduced to SIMR and the CITTR to include impacts on workers as one of the factors that may be considered in injury analyses? If so, what impacts would be most relevant to include as part of the factors to consider in injury analyses? In addition, should injury to workers be considered as injury to the domestic industry?
  3. Do you have any other comments on the proposed changes or additional suggestions to ensure the interests of workers are considered in trade remedy and safeguard proceedings? 
2. Investigations into the circumvention of duties

A measure is being considered to clarify the applicable standard to initiate anti-circumvention investigations under SIMA.

Overview

Under SIMA, the CBSA may conduct anti-circumvention investigations to determine whether trade and business practices have been altered to specifically avoid the liability for SIMA duties under existing anti-dumping or countervailing measures. For example, if SIMA duties were in place for the importation of a good exported from a certain country, parts could be shipped to another country for assembly and subsequent export to Canada in an attempt to circumvent otherwise applicable SIMA duties. If a finding of circumvention is made, the CITT will amend the measure to extend duties to the goods that were found to be circumventing the measure.

Certain Canadian trading partners also have similar mechanisms in place to address circumvention. For example, under U.S. law, the Department of Commerce may conduct an anti-circumvention inquiry when evidence suggests that merchandise is circumventing existing anti-dumping or countervailing duties by being completed or assembled in the U.S. or third countries from parts and components imported from the country subject to the duties.

Current Canadian law and practice

Generally, an anti-circumvention investigation is initiated as a result of the submission of a formal complaint. The complaint must provide information substantiating the allegations of circumvention, to the extent that this information is reasonably available to the complainant. In accordance with subsection 72(1) of SIMA, if the CBSA is of the opinion that there is evidence that circumvention is occurring, based on prescribed anti-circumvention factors, the CBSA will initiate an investigation. The CBSA will notify exporters, importers, the government of the exporting country, the complainant (if any) and domestic producers of the investigation, and consider relevant facts and arguments with respect to determining the existence of circumvention. Where the CBSA makes a finding of circumvention, the CBSA will notify the CITT who will in turn extend SIMA duties to those goods subject to the circumvention finding.

Issue for consultation

The government is seeking views on a potential amendment to SIMA that would clarify the applicable standard to initiate anti-circumvention investigations. This amendment would align the standard for initiating circumvention investigations more closely with the standard for initiating dumping and subsidy investigations.  

Questions

  1. Should SIMA be amended to clarify the applicable standard to initiate anti-circumvention investigations?
  2. Are there existing challenges in bringing or responding to claims of circumvention that the proposed amendments could address?
  3. Do you have any other comments on the proposed measure or other elements of Canada's anti-circumvention framework, including standards and requirements for finding that anti-circumvention has occurred and imposing duties?
3. Massive importations

Measures are being considered to change how massive importations are treated under SIMA, including with respect to: the i) collection of relevant data by the CITT, ii) the applicable standard, and iii) timeframes for the notification of trade remedy complaints to foreign governments.

Background

The WTO agreements and SIMA allow for the imposition of retroactive duties for up to 90 days prior to the date of application of provisional measures when it is necessary to do so because of massive importations (i.e., increased importations in the period preceding the application of provisional measures). The government is consulting on potential amendments to SIMA related to three specific aspects of massive importations determinations: (1) the collection of relevant data; (2) the applicable standard; and (3) timeframes for the notification to the government of the country of export that a properly documented complaint has been received.

i) Collection of relevant data

Overview

To determine whether massive importations are occurring, the CITT needs to assess whether there was a surge in imports in the period preceding the application of provisional measures. It does so by comparing the volume of imports during two representative periods: (1) a period within the period beginning 90 days before the date of initiation of the investigation and ending on the date of the CBSA’s preliminary determination; and (2) a period within the period of investigation.

Current Canadian law and practice

The CITT can rely on all evidence on the record to assess whether massive importations are occurring. In practice, information on imports during the period of investigation is collected through the CITT importers’ questionnaire and is made available to all parties to the proceedings. However, information on imports occurring in the period beginning 90 days before the date of initiation of the investigation and ending on the date of CBSA’s preliminary determination is not systematically collected. Parties to the proceedings can make Requests for Information to obtain this information from importers.

Issue for consultation

The government is seeking views on a potential amendment to SIMA introducing a requirement for the CITT to collect information from importers on the volume, value, and inventory of imports occurring during the period beginning 90 days before the date of initiation of the investigation and ending on the date of the CBSA’s preliminary determination. It is envisioned that this information could be collected through the existing CITT importers’ questionnaire. This information could be made available to all parties to the proceedings in the CITT Investigation Report.

By allowing the CITT and parties to the proceeding to have access to better and more timely information on import trends, this amendment could make it easier for parties to make or respond to claims of massive importations and for the CITT to evaluate such claims.

Questions

  1. Should SIMA be amended to introduce a requirement for the CITT to collect information on imports occurring during the period beginning 90 days before the date of initiation of the investigation and ending on the date of the CBSA’s preliminary determination?
  2. Are there existing challenges in bringing or responding to claims of massive importations that the proposed amendment could address?
  3. Do you have any other comments on the proposed measure, including with respect to mechanisms for implementing it?

ii) Applicable standard

Overview

When massive importations are occurring, retroactive duties should only be imposed if it is justified given the circumstances of the case. To that end, the WTO Agreement on Subsidies and Countervailing Measures provides that retroactive duties should only be imposed when it is deemed necessary in order to preclude the recurrence of the injury and the WTO Agreement on Anti-Dumping provides that retroactive duties should only be applied when massive importations are likely to seriously undermine the remedial effect of the duties.

Current Canadian law and practice

One of the requirements found in section 42 of SIMA is that retroactive duties should only be applied when it appears necessary to the CITT that duties be assessed on the imported goods in order to prevent the recurrence of injury. In practice, a key factor that has been considered by the CITT to determine whether it is necessary that duties be assessed is whether there is evidence of stockpiling of the goods imported before the CBSA’s preliminary determination.

Issue for consultation

The government is seeking views on a potential amendment to section 42 of SIMA to change one of the requirements for the imposition of retroactive duties as follows:

Current requirement

Retroactive duties are necessary in order to prevent the recurrence of injury

Proposed new requirement

The massive importations are likely to seriously undermine the remedial effect of the duties

This new standard would be similar to the one found in the WTO Agreement on Anti-Dumping and in the domestic law of some of Canada's trade partners, such as the United States. It is envisioned that this new standard would ensure that retroactive duties continue to only be imposed when the circumstances justify it, while giving greater flexibility to the CITT to consider any relevant factor.

Questions

  1. Should SIMA be amended to replace the standard found in section 42 with a determination as to whether the massive importations are likely to seriously undermine the remedial effect of the duties?
  2. What are the relevant factors that should be considered by the CITT to determine if the circumstances of a given case justify the imposition of retroactive duties?
  3. Do you have any other comments on the proposed measure?

iii) Notification of the government of the country of export

Overview

Investigating authorities normally notify the government of the country of export when they receive properly documented subsidy or dumping complaints. This facilitates the full participation of the government in an eventual investigation. This notification is particularly important for subsidy complaints because the WTO Agreement on Subsidies and Countervailing Measures grants to the government of the country of export the right to be invited for consultations before the investigating authority decides whether to initiate an investigation. Such consultations do not take place for dumping complaints because they involve pricing practices of private companies instead of subsidies provided by a government.

Current Canadian law and practice

In accordance with subsection 32(1) of SIMA, the CBSA determines whether a complaint is properly documented within 21 days of receiving the complaint. If the complaint is properly documented, the CBSA notifies both the complainant and the government of the country of export. Following this determination, the CBSA has 30 days to decide whether to initiate an investigation. This means that the government of the country of export is normally notified 30 days before the initiation of the investigation.

Issue for consultation

The government is seeking views on a potential amendment to SIMA to provide that the government of the country of export shall be notified of the receipt of a subsidy complaint no later than 20 days before the initiation of a countervailing duty investigation and notified of the receipt of a complaint regarding the dumping of goods no later than 7 days before the initiation of a dumping investigation. In practice, it is envisioned that concurrent subsidy and dumping complaints would be notified together 20 days before the initiation of investigations.

It is anticipated that, by notifying the government of the country of export later than is currently the case, the risks that exporters will become aware of a potential investigation before it is initiated will be minimized. This could help prevent a surge of importations in the period preceding the CBSA's preliminary determination.

The proposed amendment would also ensure that the government of the country of export would continue to have sufficient time to engage in meaningful consultations with Canada on subsidy complaints and it would be consistent with Canada's international commitments on the transparency of its trade remedy system.

Questions

  1. Should SIMA be amended to provide that the government of the country of export shall be notified of subsidy complaints no later than 20 days before the initiation of an investigation and of dumping complaints no later than 7 days before the initiation of an investigation?
  2. Do you have any other comments on the proposed measure?
4. Expiry reviews

A measure is being considered to streamline the expiry review process by providing that expiry reviews shall automatically be initiated by the CITT before a trade remedy order expires.

Overview

The WTO Agreements provide that anti-dumping and countervailing duties can be imposed for a maximum of 5 years, unless investigating authorities determine in a review that the expiry of the duties would be likely to lead to continuation or recurrence of subsidization or dumping, and injury. Accordingly, Canadian anti-dumping and countervailing duty orders are valid for a duration of 5 years and the CITT has the ability to initiate a review before they expire.

Current Canadian law and practice

Section 76.03 of SIMA provides that the CITT can initiate an expiry review on its own initiative or on the request of an interested party if the CITT is satisfied that a review is warranted. The CITT's practice is to issue an expiry notice before a trade remedy order expires inviting comments on whether an expiry review is warranted. Based on the comments received during that phase (known as the "expiry proceeding"), the CITT decides whether an expiry review is warranted. In the absence of an expiry review, the trade remedy order expires.

Issue for consultation

The government is seeking views on a potential amendment to SIMA requiring that the CITT automatically initiate expiry reviews of all trade remedy orders before they expire. In practice, this would mean that the CITT would not issue an expiry notice to receive comments on whether an expiry review is warranted before initiating an expiry review. The process and standards used to conduct the expiry review itself would remain unchanged. This amendment is expected to streamline the current system by removing one step of the expiry review process (the "expiry proceeding" phase) and reduce administrative burden on all users of the trade remedy system as well as on the CITT itself.

Stakeholders' views are also being sought on the desirability of amending SIMA to provide that the CITT can decide to terminate an expiry review if it becomes apparent that there is no support from the domestic industry for the review. In the absence of an expiry proceeding phase, this would allow the CITT to terminate a full expiry review when it is not warranted because of a lack of interest from the domestic industry.

Questions

  1. Should SIMA be amended to require that the CITT automatically initiate expiry reviews of all trade remedy orders before they expire?
  2. Should SIMA be amended to provide that the CITT can decide to terminate an expiry review if it becomes apparent that there is no support from the domestic industry for the review?
  3. Do you have any other comments on the proposed measures?
5. Improving access for SMEs to Canada’s trade remedy system 

The government is seeking views from stakeholders on potential measures to improve access for SMEs to Canada’s trade remedy system.

Overview

WTO rules recognize that SMEs may encounter difficulties in supplying the information requested by investigating authorities in anti-dumping and countervailing duty proceedings, and allow for the provision of any assistance practicable. By their nature, SMEs are structurally less organized and resourced to embark on the inherently expensive, complex, and uncertain trade remedy investigation process. Over the years, other jurisdictions (e.g., the United States and Australia) have implemented measures to provide further assistance and information to companies, including SMEs. Such measures improve access to and awareness of the trade remedy system, both for domestic producers and importers.

Current Canadian law and practice

In 2003, the CBSA Trade and Anti-dumping program created a SME “virtual unit” to provide direct assistance to SMEs. This unit consists of SIMA investigators that have additional training to better address the needs of SMEs. Since 2003, the SME unit has assisted SMEs – defined as producers with less than 500 employees – in gathering the information and making an informed decision regarding the filing of a complaint. However, the unit has had a limited role, given the need to maintain the CBSA’s independence and impartiality in conducting dumping and/or subsidizing investigations. The role of the unit is also limited to pre-complaint counseling and, as such, does not provide information or assistance through other phases of the investigation or through the duty assessment phase or subsequent reviews. The unit also does not provide assistance to Canadian importers affected by trade remedy duties.

In addition, the CBSA website includes a dedicated page and contact information for SMEs. General information material regarding trade remedy proceedings is also included on the CBSA and CITT websites. On an ad hoc basis, federal government officials also organize and participate in activities to increase awareness of Canada’s trade remedy system.

Issue for consultation

While current efforts to assist SMEs have had some success over the years, navigating through the complexities of the trade remedy system remains a challenge for many companies. With a view to further advance the inclusiveness of Canada’s trade remedy system, the government is seeking views on the potential creation of a dedicated trade remedy counseling unit that would provide free-of-charge, non-mandatory assistance to companies affected by unfairly traded imports (or associations and unions representing them), as well as to importers and downstream companies impacted by trade remedy duties. For example, the unit could assist Canadian companies in the preparation of:

  • anti-dumping and countervailing duty complaints;
  • anti-circumvention complaints;
  • applications for scope rulings;
  • representations to request re-investigations and normal value reviews;
  • applications for duty assessment determinations; and
  • product exemption requests.

The potential trade remedy counseling unit would be separate from the CBSA Trade and Anti-dumping program, in order to avoid any interference with trade remedy proceedings. The proposed new unit would provide assistance to companies of all sizes, including step-by-step counseling for companies that require further support, such as SMEs. While officials would not draft complaints and submissions for companies, it could provide them with relevant information (e.g., examples from past cases, templates, publicly available data). Officials could also review draft complaints and submissions for deficiencies and provide comments to improve their quality.

Other potential measures include the provision of educational material dedicated to SMEs and other non-traditional users of the trade remedy system, such as online training and resources.

Finally, the government would also like to seek stakeholder views on any other potential measures they believe would be useful to provide further assistance to SMEs and/or improve their access to the trade remedy system. In assessing proposals, alignment with WTO rules (e.g., evidentiary requirements and procedural fairness) and resource constraints will be considered.

Questions

  1. Would the creation of a trade remedy counseling unit similar to the one described above be useful for your company or the companies you represent? Please explain why.
  2. What kind of information material and resources you think would be useful for SMEs (e.g., online training and educational material, provision of templates and examples from past cases, publicly available data)?
  3. In which trade remedy proceedings (e.g., pre-complaint, reviews, duty assessment, and product exclusions) or aspects (e.g., dumping, subsidizing, injury) you believe assistance would be the most valuable for SMEs?
  4. Should assistance be provided to all parties to trade remedy proceedings, including both domestic producers and importers?
  5. Should assistance be provided to companies of all sizes, with additional step-by-step guidance for SMEs, or should assistance be solely provided to SMEs? In such a case, how should SMEs be defined?
  6. Are there any other measures that would be useful to provide further assistance to SMEs or improve their access to the trade remedy system? Please explain.

Key considerations

In assessing potential legislative and regulatory amendments, the Department of Finance Canada will consider their impact on:

Who is the focus of this consultation?

We want to hear from users of Canada's trade remedy system and those affected by trade remedy duties, including domestic producers and importers of all sizes, workers, as well as other interested stakeholders. Members of the public are also welcome to provide input.

In submitting your comments, please include:

Participate through email

Due to COVID-19 public health considerations, email submissions are preferred. Comments can be sent to fin.simaconsult-lmsiconsult.fin@fin.gc.ca with "Trade Remedies Consultations" as the subject line. Should you wish to provide comments by mail, please direct your submission to the attention of the International Trade and Finance Branch.

Treatment of confidential information

The department may wish to quote from or summarize submissions in its public documents. Those providing comments are asked to indicate clearly the name of the individual or the organization that should be identified as having made the submission. In order to respect privacy and confidentiality, please advise when providing your comments whether you:

However, information received through this comment process is subject to the Access to Information Act and the Privacy Act.  Should you indicate that your comments, or any portions thereof, be considered confidential, the department will make all reasonable efforts to protect this information.

What's next?

Input received through this consultation will assist the government in developing potential amendments to the SIMA and the CITT Act, and to related regulations, and to develop measures to improve SMEs access to Canada's trade remedy system.

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Get in touch

fin.simaconsult-lmsiconsult.fin@fin.gc.ca

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