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Woods LaFortune Submission in the SIMA Review

Posted by on Jul 13, 2016

The Department of Finance is currently conducting a review of the Special Import Measures Act (“SIMA”), the basis of Canada’s anti-dumping and countervailing duty system, and issued an Invitation to Interested Parties to submit their views on a “focused set of potential changes.” Although the SIMA review is intended to take all stakeholder interests into consideration, the issues raised in the Invitation focus on increased protection for domestic producers. For example, the Department has asked whether the current system provides sufficient protection to domestic producers and has proposed establishing scope and anti-circumvention inquiries and further restricting the CITT’s discretion to issue product exclusions; all of which will benefit domestic producers at the expense of other stakeholders. Periodic review of legislation is important, but legislation should only be amended when the amendments are necessary. In our view, amending SIMA to increase protection for domestic producers is questionable because they are well protected by the current system. That domestic producers benefit from the SIMA is clear from recent decisions which show that injury and threat of injury findings are made in the vast majority of cases, injury findings are generally extended following expiry reviews and the number of product exclusions granted is relatively low. Because domestic producers already receive more than sufficient protection from Canadian authorities, any additional protection is unnecessary and will raise trade barriers to the detriment of other stakeholders including other Canadian manufacturers, end-users and consumers and to the detriment of the Canadian economy overall. Because we believe that the proposed amendments to the SIMA would unnecessarily harm other Canadian stakeholders (i.e., manufacturers, importers, distributors, end-users and consumers) without providing any actual additional protection to domestic producers, we filed a submission in response to the Invitation to make the following points: i) We argued that the SIMA should not be amended to provide greater protection to domestic producers. ii) We argued that the proposed scope ruling process, which would allow parties to request an inquiry to determine whether an imported good is subject to an anti-dumping/countervailing duty finding, is not necessary. But, if the Department decides to institute this process, it should not be applied in a manner...

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SIMA Review? Maybe we can get the Right Balance This Time.

Posted by on May 30, 2016

The Department of Finance is seeking input on a “focused set of potential changes” to the Special Import Measures Act (SIMA)[1]. The potential changes would be made in three areas – calculation of normal values, enforcement and evidentiary standards – and would be considered from the perspective of: whether the system protects domestic producers from unfairly traded imports; whether the resulting changes would be transparent and could be effectively administered; whether the resulting changes would be consistent with international trade obligations; and whether the resulting changes would balance stakeholder interests including interests of producers, importers, users and consumers. Despite this broad description, the review’s purpose appears to be to determine whether the SIMA continues to protect domestic producers from unfairly-traded imports and what changes should be made to improve this protection. This approach is unlikely to address the broader question of whether trade remedies benefit the Canadian economy as a whole, including domestic producers, importers, end-users and consumers. To get to this issue, we should consider a slightly different set of questions. 1. Does the SIMA currently protect domestic producers from unfairly-traded imports? By any measure, the SIMA process continues to protect domestic producers from dumped and subsidized imports. A quick review of the CITT website shows that since Preliminary Injury Inquiries were introduced, the CITT has found in favour of domestic producers in almost every case, that between 2005 and 2015 the CITT made injury findings in approximately 77% of cases and that between 1990 and 2015 the CITT extended injury findings in approximately 85% of Expiry Reviews. In addition, product exclusions requested by importers and end-users are infrequently granted by the CITT and only in extraordinary cases when the requesting party can establish that product exclusion would not cause injury to domestic producers. The result is that domestic producers are far more likely to be protected by injury findings and that importers and end-users find it very difficult to obtain product exclusions. Consequently, the current trade remedy system continues to effectively protect domestic producers from unfairly-traded imports. 2. Are the proposals for scope and anti-circumvention processes necessary to ensure that injury findings are enforced? It is not...

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Did a New Brunswick Court Just End Barriers to Interprovincial Trade in Liquor? Don’t Count on it.

Posted by on May 6, 2016

On April 29, 2016, the New Brunswick Provincial Court struck down a fine issued to Gerard Comeau for possessing 15 cases of beer and 3 bottles of liquor that he had purchased in Quebec.  The Court found that Section 134(b) of the New Brunswick Liquor Control Act, which made it illegal to possess liquor not purchased from the New Brunswick Liquor Commission, was unconstitutional because it did not allow goods of other provinces to be admitted free into New Brunswick contrary to Section 121 of the Constitution Act 1867.  Section 121 requires that goods produced, grown or manufactured in any province be admitted free into every other province. Because the Court found that this New Brunswick measure regulating possession of alcoholic beverages within the province was an unconstitutional non-tariff barrier, the decision arguably supports the position that all similar Provincial measures are also unconstitutional.  If so, this decision could be a step on the road to eliminating barriers to interprovincial trade in alcoholic beverages and a range of other products.   However, it is far from certain that this decision will result in any change to alcoholic beverage regulations. First, the New Brunswick decision’s expansive reading of Section 121 contradicts the Supreme Court of Canada’s position that Section 121 only protects the movement of Canadian goods against customs duties and charges applied to goods at the provincial border.  The Supreme Court has never held that Section 121 prohibits regulatory measures applied within a province.  This interpretation has been applied for the past 95 years, but was not followed by the New Brunswick Court because it heard evidence that the Fathers of Confederation intended that Section 121 be applied broadly to ensure free trade among the provinces.  Since it concluded that this evidence was never presented to the Supreme Court, the New Brunswick Court decided not to apply the Supreme Court’s interpretation and suggested that it be reconsidered.  For the New Brunswick Court’s decision to be applied more broadly in Canada, other Courts will have to agree that the Supreme Court did not properly consider the issue and that the evidence presented to the New Brunswick Court requires an expansive reading...

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TPP and CETA: What Comes Next?

Posted by on Nov 9, 2015

Over the past year, international trade agreements have been an issue in Canadian news and politics, and particularly the benefits that would flow from the Trans Pacific Partnership Agreement (“TPP”) and from the Comprehensive Economic and Trade Agreement (“CETA”) between Canada and the European Union.  Both Agreements have been signed by the Parties and, once implemented, will result in greater preferential market access for Canadian traders.  However, neither Agreement has yet to be implemented and, once they are, the potential benefits will only be realized if Canadian companies take advantage of the market opportunities offered by the Agreements.  Which begs the questions, what are the next steps in the implementation process, how long will the process take and how can Canada benefit from these Agreements? The first questions concern implementation and the time required to implement the Agreements.  In both cases, the Agreements are not self-executing and have to be put into effect by national and sub-national legislatures.  Implementation usually takes some time, particularly as the number of Parties to an Agreement an increase.  However, implementation may take longer in the case of these two Agreements. After the CETA was completed, some European member states signalled that they would need changes to the Agreement before they would agree to implementation, which signalled delay.  Furthermore, since the CETA was signed, the E.U. has started negotiating the Transatlantic Trade and Investment Partnership (“TTIP”) with the United States.  Regardless of European intentions with respect to the CETA, they are likely now fully engaged in negotiations with the U.S. and this may slow implementation of the CETA. The TPP raises its own issues with respect to implementation.  The new government has indicated that it intends to review the Agreement before signing off, which would be prudent since the text has not yet been released.  Some Canadian industries, such as Ford Canada, have already indicated that they are seeking amendments to the Agreement.  Requests to change the Agreement will likely result in delays in implementation but given the difficulties involved in coming to an agreement among 12 parties, it is unlikely that there could be significant changes to the Agreement at this point.  It...

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Has the CBSA Violated Canada’s WTO Obligations?  Questions from the ContainerWest Manufacturing Case

Posted by on Sep 21, 2015

The Canadian International Trade Tribunal’s (“CITT”) recent decision in ContainerWest Manufacturing (CITT File Nbr. AP-2014-025) points to the possibility that the Canada Border Services Agency (“CBSA”) has taken action which may violate Canada’s WTO obligations.  While the issue before the CITT concerned the question of whether the Appellant in that case filed documents required to benefit from General Preferential Tariff (“GPT”) treatment, the admissions the CBSA made in the case point to an administrative practice that may violate the WTO’s Most Favoured Nation (“MFN”) requirement set out in GATT 1994 Article I:1. The ContainerWest appeal concerned the CBSA’s decision to reject ContainerWest’s request for GPT treatment for 22 import transactions relating to 1,678 containers purchased by ContainerWest from its Hong Kong supplier.  The issue before the CITT was whether ContainerWest’s importations complied with the “direct shipment” requirement that must be met for GPT treatment.  Pursuant to Customs Act Section 17(1), ContainerWest had to provide a through bill of lading to prove direct shipment of goods to Canada. At paragraph 26 of its Statement of Reasons, the CITT noted that the CBSA argued that the GPT Regulations and the Customs Tariff both require a through bill of lading to prove direct shipment to Canada.  At paragraph 56, the CITT noted that the CBSA agreed that the MFN Regulations also require that goods be conveyed on a through bill of lading.  Consequently, pursuant to regulatory requirements, entitlement to GPT and MFN tariff treatment could only be accorded to importers who filed the required through bill of lading. Notwithstanding these regulatory requirements, at paragraph 29 of its Statement of Reasons, the CITT noted that the CBSA indicated that it has adopted an administrative exception with respect to the MFN tariff that allows importers to be accorded MFN tariff treatment regardless of whether they have the through bill of lading required by the Regulations.  Regardless of whether this administrative practice is consistent with the regulatory requirements, the result is that, due to the CBSA’s administrative practice, importers seeking MFN tariff treatment are granted the treatment regardless of whether they met the regulatory requirement of filing a through bill of lading while importers seeking...

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