Importers used to Canada’s rules of origin may be surprised to discover that the Canadian International Trade Tribunal (CITT) has determined that those rules do not apply in anti-dumping and countervailing injury cases (SIMA cases taken under the Special Import Measures Act (SIMA) and Regulations) and has subsequently developed new rules of origin to apply in these cases. Because the CITT’s new rules may conflict with Canada’s other existing rules of origin, a company that determines the customs duties to apply to imported goods on the basis of an existing set of rules of origin may find that those goods are assessed SIMA duties on the basis of the CITT’s new rules. The issue arises when finished goods shipped to Canada are produced using inputs from a country that is subject to SIMA duties. This was the case in Ideal Roofing (AP-2013-008 and AO-2013-009) which concerned the origin of fasteners shipped to Canada from the U.S., and whether those fasteners would be subject to SIMA duties under a finding against fasteners from China and Chinese Taipei. The fasteners imported from the U.S. were described as fastener systems produced from duds/blanks imported from Chinese Taipei. While the duds/blanks were used as inputs in the U.S., they would have been subject to SIMA duties had they been shipped directly to Canada from Chinese Taipei. The importer argued that the processing in the U.S. transformed the Chinese Taipei-origin duds/blanks into U.S. – origin finished fastener systems that would not be subject to SIMA duties. The importer relied on Canada’s existing rules of origin, including NAFTA’s tariff shift rules and regional value content rules. The CITT rejected these arguments and noted that Parliament had not referred to any of these rules in the SIMA or SIMA Regulations and concluded that this meant that Parliament did not intend for these rules to be applied in SIMA cases. Therefore, the CITT developed its own rules of origin based on the definition of “origin” and “originate” in the Canadian Oxford Dictionary. The CITT noted that “origin” and “originate” mean the beginning or source of a thing. Relying on these definitions, the CITT began the process of...
Read MoreWTO Rules and Sanctions on Russian Trade
To the extent that they affect trade in goods, services or investments, the economic sanctions imposed on Russia and Russia’s retaliatory sanctions on Western products could give the World Trade Organization (“WTO”) Dispute Settlement Body an opportunity to consider the General Agreement on Tariffs and Trade (“GATT”) Security Exceptions that apply in the WTO. Russian Economy Minister Aleksey Ulyukaev’s September 12, 2014, comments to reporters that Russia is prepared to appeal the economic sanctions imposed to the WTO, seemed to point to a possible dispute. Since the economic sanctions imposed by the E.U., the U.S., Russia and other nations likely violate WTO obligations if they affect trade in goods or similar obligations, any of these sanctions could be challenged. In such a case, the Party maintaining the measure would likely have to resort to the Security Exception in GATT 1994 Article XXI to justify its sanction, thus giving the WTO the opportunity to interpret the extent and application of the Security Exceptions. However, President Putin’s more recent comment that the best way to respond to the sanctions is to develop the domestic market, coupled with Russia’s apparent decision to fight sanctions with sanctions, tend to point to political resolution of these measures rather than WTO dispute settlement. The Security Exceptions in GATT 1994 Article XXI have not been considered by the WTO and were not fully considered by the GATT. The Report of the only GATT Panel to consider the Security Exceptions, United States – Trade Measures Affecting Nicaragua (L/6053) (“Nicaragua Panel”), was never adopted and the Nicaragua Panel proceeded under terms of reference that precluded it from considering the validity of or motivation for the U.S. invocation of Article XXI(b)(iii). The Security Exception in Article XXI(a), which allows a WTO Member to refuse to furnish any information if it considers that the disclosure of the information would be contrary to its essential security interests, does not impose any restrictions on application of the exception. The WTO Member is free to define its essential security interests, does not impose any restrictions on application of the exception. The WTO Member is free to define its essential security interests and to refuse...
Read More
