The Canadian International Trade Tribunal (the “Tribunal” or “CITT”) has been taking steps to address the evidence required to grant a product exclusion, as well as the burden of proof that applies between the parties. Although the Tribunal has made some comments on the subject, their explanation of the requisite evidence has not quite gone far enough. It would be beneficial to all parties if the Tribunal used its decisions to more clearly outline the type of evidence required to support a product exclusion request.
The right to impose anti-dumping and/or countervailing measures on imported goods is an exception to the rule that imported goods may not be subject to duties in excess of the bound rate. Anti-dumping or countervailing measures can only be imposed if the Tribunal finds that dumped and/or subsidized imported goods have caused or threaten to cause injury to domestic producers of like products. The Tribunal’s implicit authority to grant product exclusions, which allows those goods to enter Canada free of anti-dumping or countervailing measures, arises in the context of the right to impose those measures on dumped or subsidized goods. Specifically, since goods subject to product exclusions have been found to not cause or threaten to cause injury, there is no reason to apply anti-dumping or countervailing measures on those goods. Thus, product exclusions are an important element of the trade remedies system that allows non-injurious imports that fall within the product definition set by the Canada Border Services Agency to continue to enter Canada subject only to ordinary customs duties.
The Tribunal only grants product exclusions in exceptional circumstances, when it considers that the exclusion will not cause material injury to the domestic industry. In making this determination, the Tribunal usually considers whether the domestic industry produces, actively supplies or is capable of product a substitutable or competing product. The Tribunal obviously needs evidence to determine whether or not to grant a product exclusion, but the difficulty with the current process arises in the burden of proof imposed on parties requesting a product exclusion.
In Aluminum Extrusions (RR-2013-003), the CITT clarified its approach to the burden of proof, at paragraph 192, by saying, “there is an evidentiary burden on the requester to file evidence in support of its request”. In Concrete Reinforcing Bar, (NQ-2014-001), the CITT stated, at paragraph 255, that the requester has the burden of filing “probative and compelling evidence” in support of its request. Consequently, the requesting party must file “probative and compelling evidence” establishing that the good at issue in its request will not cause or threaten to cause material injury to domestic producers of like products. In addition, the requesting party must file “probative and compelling evidence” demonstrating that the domestic producers do not produce and are not capable of producing goods that are substitutable for, or that compete with the good at issue in the product exclusion request. Only after having filed evidence required to establish these points does the burden of proof shift back to the domestic producers to rebut the case brought by the requester. While this approach is similar to the burden of proof applied in the domestic courts in civil litigation, it differs in the important respect that requesters are required to file evidence that proves a negative; that the domestic producers are not capable of producing substitutable or competitive products and that imports of their good will not cause or threaten to cause injury. This is problematic because you can’t prove a negative.
It is unreasonable to set an impossible evidentiary burden for any proceeding. A party requesting a product exclusion should not be barred from having its request considered simply because it did not have access to evidence held by the domestic producers concerning their production capabilities. In such a case, it should be sufficient for the requester to file evidence showing that the domestic producers have not produced the good or offered it for sale in the market and then have the burden shift to the domestic producers, who have the evidence at hand, to demonstrate that they have the ability to produce an equivalent good. Likewise, the “probative and compelling evidence” required to establish that imports would not cause or threaten to cause injury should not be set at such a high standard that it cannot reasonably be met.
Based on its decision to clarify the burden of proof in Aluminum Extrusions and its additional clarification in Concrete Reinforcing Bar, the Tribunal appears to be trying to address this problem. Because each case must be decided on its own merits, there is no quick and easy solution. However, it would be very helpful if the Tribunal could outline the type of evidence that should have been filed to meet the burden of proof. For example, in Fasteners (RR-2014-001) the Tribunal considered product exclusion requests filed by Kwantex Research Inc. The Tribunal found, at paragraph 204, that Kwantex provided no cogent evidence concerning the non-injurious effects of the fasteners that they wanted to import and also noted that Kwantex indicated that it had no information about the domestic industry. The Tribunal noted, at paragraphs 205 and 206, that the domestic producer Leland filed positive and uncontroverted evidence in response establishing that it was capable of producing the same product. That Leland filed this evidence should not be surprising. As the producer, Leland had evidence concerning its production capabilities at hand. Whether the Tribunal’s decision to deny the product exclusions requested by Kwantex was the correct decision is not the issue. The issue is that the Tribunal had an opportunity to explain in greater detail the evidence that should have been available to Kwantex to file in support of its request.
The Tribunal is not required to provide detailed reasons in support of its decisions and, on the face of the Statement of Reasons in Fasteners, it could not be criticized by a court for its disposition of the Kwantex requests. However, it would be beneficial to all parties, including the Tribunal, if it clearly defined the evidence required to meet the burden of proof because, over time, these decisions would better define the scope of “probative and compelling evidence.” Any party that appears before the Tribunal should put its best case forward at the earliest opportunity. By providing a more detailed explanation of evidentiary requirements for a product exclusion, all parties will have a better understanding of what has to be filed to everyone’s benefit.
