Posted by Gordon LaFortune on Feb 16, 2017

The February 13, 2017 Washington meeting between President Trump and Prime Minister Trudeau was a success with respect to trade relations between the two countries. Rather than taking an aggressive anti-NAFTA stance, as some had feared, President Trump noted that the United States has an “outstanding trade relationship with Canada” and stated that his goal was to “tweak” the NAFTA with regard to Canadian trade. The apparent result of the meeting was an implicit agreement to change the NAFTA in a way that increases the benefits for Canada and the United States; the best result that could be expected at this time. While this was a positive outcome, any change to NAFTA will result in winners and losers and more so if the simple tweak is not that simple. President Trump’s positive tone should not have come as a surprise. Although most Canadians tend to see Canada as the weak partner relative to the United States, available data shows that a healthy bilateral trade relationship has developed between Canada and the United States under NAFTA. Canadian officials point out that Canada – U.S. trade is worth approximately $2 billion per day and that Canada is the largest export market for 35 U.S. states. While this is impressive, it is more important to consider the U.S. perspective to gauge its view of the value of Canadian trade. Canada’s value as a trade partner can be gleaned from U.S. – Canada Trade Facts published by the U.S. Trade Representative, which reported that in 2015: Trade in goods between Canada and the U.S. was worth approximately USD $575 billion with Canada enjoying a USD $15 billion trade surplus. Although Canada was the United States’ second largest trade partner, it was the largest export market for U.S. goods with total exports to Canada worth approximately USD $280 billion. Although this was down approximately 10% over 2014 figures, total U.S. exports to Canada since NAFTA have increased 179% and account for approximately 18.5% of total U.S. exports. Trade in services between Canada and the United States was worth approximately USD $87.5 billion with the U.S. enjoying a USD $27.1 billion surplus. The value of...

Posted by Gordon LaFortune on Oct 27, 2016

The dumping inquiry into Gypsum Board from the United States has just been complicated by a Cabinet Order directing the Canadian International Trade Tribunal (“CITT”) to consider whether anti-dumping duties will cause economic harm to Canada and Canadian gypsum board users. As a result of the Order, the CITT must now simultaneously conduct two separate inquiries into U.S. gypsum board imports. While this requirement will make the CITT process more difficult overall, it gives Canadian users and consumers an important voice at an early stage and represents a step forward for Canadian interests The anti-dumping inquiry started with a Complaint filed by a Canadian producer who claimed that imports of gypsum board from the United States into the Western Canadian market were dumped and caused or threatened cause material injury to domestic producers. The Canada Border Services Agency (“CBSA”) accepted the Complaint as properly documented and began its dumping investigation. On September 21, 2016, the CBSA issued its Preliminary Determination which found dumping margins for cooperating exporters ranging from 105.2% to 143.6% and 276.5% for non-cooperating exporters. The Canadian International Trade Tribunal (“CITT”) conducted a Preliminary Injury Inquiry which concluded, on August 22, 2016, with a finding that the evidence disclosed a reasonable indication that U.S. gypsum has caused or threatened to cause injury to domestic producers in Canada. As a result of these findings, the CBSA is continuing its investigation and the CITT initiated an Injury Inquiry to determine whether U.S. gypsum board dumped into the Western Canadian market has actually caused or threatens to cause material injury to domestic producers. On October 13, 2016, the Federal Cabinet issued an Order directing the CITT to conduct a separate inquiry to determine whether imposing dumping duties on U.S. gypsum board exported to the Western Canadian market is contrary to Canada’s economic, trade or commercial interests. Specifically, the CITT is directed to determine whether imposing anti-dumping duties on U.S. gypsum imports would substantially reduce competition in the Western Canadian market or would cause significant harm to consumers and businesses that use gypsum. If the Preliminary Duties found by the CBSA are maintained through the CBSA’s Final Determination, it is hard...

Posted by Gordon LaFortune 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...