Posted by Gordon LaFortune on Apr 13, 2015

Recent reports on the Trans Pacific Partnership (TPP) negotiations have suggested that unless Canada makes changes to its supply management system for dairy, poultry and eggs, it will be asked to leave or will be forced out of the negotiations.  U.S. Chief Agricultural Negotiator, Ambassador Darci Vedder, has been quoted as saying that Canada has to make a substantive offer on supply management to remain in the negotiations.  Ambassador Vedder apparently noted, “it is difficult for me to see how we close a market access chapter with Canada that doesn’t include market access.” The response to the apparent move to force Canada to make substantial changes to supply management as the cost of joining the TPP has been entirely predictable and underlines one of the chief problems with discussions surrounding trade policy.  For the most part, public commentators can be divided into either free trade supporters or free trade opponents.  The actual agreement at issue becomes largely irrelevant as these groups tend to discuss free trade from the ideological perspective of whether or not the concept is a good one.  However, this dangerously narrow perspective ignores the more important question of whether a particular agreement is beneficial or not for Canada and how the Government of Canada should decide on this issue. Free Trade Agreements are generally intended to liberalize the conditions of trade between the parties to the agreement with the objective of increasing economic benefits.  The proposition that all Free Trade Agreements are good or bad is a simplistic analysis that adds no value to the dialogue.  The better approach is to consider whether a specific agreement is good or bad for the parties involved – a question that can only be answered by considering the terms and conditions of the agreement, or proposed agreement, in context. Taking the TPP and Supply Management as an example, the reports conclude that Canada is faced with the stark choice of either making concessions on supply management or withdrawing entirely from the TPP negotiations.  To make this decision, Canada must weigh the potential benefit of the agreement to the overall Canadian economy against the potential negative impact of offering concessions...

Posted by Gordon LaFortune on Mar 31, 2015

The February 2015 discovery of a single cow with mad cow disease (BSE) in Alberta, the first Canadian case since 2011, and the decision by some countries to close their borders to Canadian beef, raises the question of whether WTO Members only adopt sanitary and phytosanitary measures (SPS measures) to protect themselves from imported diseases or whether these measures are sometimes used to protect their domestic commercial interests instead. WTO members have the right to take action to prevent the transmission of disease through imported products.  GATT 1994 Article XX(b) allows Members to take action necessary to protect human, animal or plant life or health, but this is an exception to GATT rules that may only be applied to the extent necessary to achieve the legitimate objective of protecting human, animal or plant life or health.  In addition, these measures may not be applied in a manner that would constitute arbitrary or unjustifiable discrimination between countries where the same conditions prevail or raise a disguised restriction on international trade.  Thus, the purpose of Article XX(b) is to allow Members to protect human, animal or plant life or health without imposing unnecessary restrictions on trade. The WTO Agreement on the Application of Sanitary and Phytosanitary Measures (the SPS Agreement) expanded on GATT 1994 Article XX(b).  SPS Article 2provides that WTO Members have the right to take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health, but again only to the extent necessary to protect human, animal or plant life or health and not in a manner that discriminates between countries or raises disguised restrictions on international trade.  In addition, SPS Article 2(2) requires that the SPS measure not be maintained without sufficient scientific evidence, except as provided for in SPS Article 5(7), which imports the precautionary principle into the Agreement by allowing members to take action on the basis of available pertinent information when scientific evidence is not available.  SPS Article 5 also requires that Members ensure that their SPS measures are based on an assessment of the risks to human, animal or plant life or health.  Thus, the SPS Agreement confirmed the...

Posted by Gordon LaFortune on Mar 9, 2015

The recent procurement decision by the Canadian International Trade Tribunal (CITT) in 2040077 Ontario Inc. o/a FDF Group, CITT File Nbr. PR-2014-058 (FDF Group) raises the question of how long a complainant must wait for Public Works and Government Services Canada (PWGSC) to respond to an objection before filing a procurement complaint with the CITT, but provides no clear answer. In this case, FDF Group filed a bid in response to PWGSC procurement of urethane dumbbells for the Department of National Defence.  FDF Group considered that the contract, which was awarded to another supplier on January 28, 2015, did not meet the mandatory requirements in the Request for Proposals.  FDF objected to PWGSC on February 2, 2015 and asked that the bids be re-evaluated.  PWGSC responded on February 4, 2015 by saying that it was “looking into this”, but noted that it “[could not discuss the matter] any further at this time.”  Having received no further response from PWGSC, FDF Group filed a complaint with the CITT on February 19, 2015; 10 working days after PWGSC’s February 4, 2015 reply.  The CITT dismissed the complaint on February 27, 2015 finding that the complaint was premature because FDF Group had not properly waited for PWGSC to respond to its objection before filing its complaint. In its Statement of Reasons, the CITT noted that a potential supplier may file a complaint or object to the relevant government institution within 10 working days of the date on which it became aware of the basis for the complaint.  If the potential supplier chose to file an objection, it would then have ten working days from the date that the government institution denied the relief requested in its objection to file a complaint.  In this case, the CITT noted that PWGSC’s initial response indicated that it was looking into the matter, but that it could not discuss the matter with FDF Group at that time.  Based on this reply, the CITT found that PWGSC was looking into the matter and intended to respond at some future date.  Therefore, the CITT found that FDF Group’s decision to file the complaint prior to receiving a final...

Posted by Gordon LaFortune on Feb 20, 2015

The recent decision by the Canadian International Trade Tribunal (“CITT”) in Photovoltaic Modules and Laminates from China (CITT File Nbr. PI-2014-003), the “Solar Panels” case, has raised an apparent inconsistency in the Special Import Measures Act (“SIMA”), which begs the question whether it is time to review and amend the Act. In its Decision, the CITT found that the evidence disclosed a reasonable indication that the dumping and subsidizing of solar panels from China “have caused or are threatening to cause injury to the domestic industry”.  Having made that determination, the CITT noted, at paragraph 93 of its Statement of Reasons, that if the Canada Border Services Agency (“CBSA”) makes a preliminary determination that Chinese solar panels are dumped or subsidized, it will initiate an inquiry pursuant to SIMA Section 42 to determine whether the dumping or subsidization of the solar panels has caused or is threatening to cause injury to domestic producers in Canada. The purpose of the Preliminary Injury Inquiry is to allow the CITT to determine whether there is sufficient evidence to justify proceeding to a full Injury Inquiry.  The CITT applies the “reasonably discloses” threshold to determine whether the evidence presented by parties “reasonably discloses” that the imported subject goods caused or threatened to cause material injury to domestic producers in Canada.  If the CITT makes this finding, it will proceed to a full Injury Inquiry to determine whether those products actually caused or threaten to cause injury.  The “reasonably discloses” threshold applied in the Preliminary Injury Inquiry is significantly lower than the threshold applied in the Injury Inquiry and should be so; a complaint that is not supported by enough evidence to pass the “reasonably discloses” threshold could not meet the higher threshold applied in the Injury Inquiry.  Assessing the evidence on the basis of this lower standard allows the Preliminary Injury Inquiry process to be used as a gatekeeper to control which cases proceed to an Injury Inquiry. The apparent inconsistency raised by this case becomes obvious when we look behind the CITT’s Decision to the underlying findings set out in the CITT’s Statement of Reasons.  At paragraph 79 of the Statement of...

Posted by Gordon LaFortune on Feb 6, 2015

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...