On May 16, 2019, the Canadian International Trade Tribunal (CITT) announced that it was initiating a Product Exclusion Review to determine whether any imports of stainless steel wire or heavy plate should be excluded from safeguard measures imposed on imports of these products. Although the CITT will only grant product exclusions in extraordinary circumstances, any interested party that imports or wants to import stainless steel wire or heavy plate into Canada from countries now subject to safeguard measures should consider the possibility of requesting a product exclusion to avoid those measures. On April 3, 2019, the CITT issued its Report in the Steel Safeguard Inquiry (CITT File Nbr. GC-2018-001). The CITT found that imports of stainless steel wire and heavy plate caused serious injury to domestic producers and recommended that the Minister of Finance impose safeguard measures on those goods. On May 9, 2019, the Minister of Finance imposed safeguard measures on those products imported from all countries except United States, Mexico, Chile, Israel, Korea, Colombia, Honduras, Panama, Peru and all countries benefitting from the General Preferential Tariff. The safeguard measures became effective on May 13, 2019 and will remain in effect until October 24, 2021. During this period the safeguard measures will be phased out in three stages: May 13, 2019 to May 12, 2020 Heavy Plate 20% surtax on imports over 100,000 mt Stainless Steel Wire 25% surtax on imports of 2,800 mt May 13, 2020 to May 21, 2021 Heavy Plate 15% surtax on imports over 110,000 mt Stainless Steel Wire 15% surtax on imports of 3,080 mt May 13, 2021 to October 24, 2021 Heavy Plate 10% surtax on imports over 54,699 mt Stainless Steel Wire 5% surtax on imports of 1,532 mt Details of the safeguard measures on heavy plate and stainless steel wire, including the list of countries benefitting from GPT, are set out in the Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods (Final Safeguards), which can be found at www.cbsa-asfc.gc.ca/publications/cn-ad/cn19-08-eng.html. The CITT may recommend that the Minister issue product exclusions so that safeguard measures only apply to imported products that cause serious injury to domestic...
Read MoreCanada’s Announced Support for its Steel Producers will hurt Canadian Steel Importers, Manufacturers and End-Users
Canadian steel importers, and manufacturers and end-users who use imported steel, will be affected by the Government’s latest moves to support Canada’s steel producers because the Government’s actions promise to restrict steel imports and to increase their cost to the detriment of importers, manufacturers and end-users. On April 3, 2019, the Canadian International Trade Tribunal (CITT) concluded its safeguard inquiry into seven steel products, finding that imports of heavy plate and stainless steel wire caused serious injury to domestic producers while concrete reinforcing bar, energy tubular products, hot-rolled steel, pre-painted steel and wire rod did not. Based on those findings, the CITT recommended that the Minister of Finance impose safeguard measures on imports of heavy plate and stainless steel wire, but declined to make any remedy recommendation for the other products. After considering the CITT’s recommendation, the Minister took the only action legally available to him and withdrew provisional safeguard measures on concrete reinforcing bar, energy tubular products, hot-rolled steel, pre-painted steel and wire rod and only imposed ongoing safeguard measures on heavy plate and stainless steel wire. However, the Canadian Steel Producers’ Association (CSPA) was not happy with the CITT’s decision and came out swinging. In the weeks leading up to the Minister’s decision, the CSPA lobbied the government to ignore the CITT’s decision and impose safeguard measures on the seven steel products considered in the CITT’s safeguard inquiry anyway. The CSPA claimed that Canada’s steel producers had been seriously injured by imported of all these steel products and told the Minister that in light of the new reality of growing protectionism and U.S. duties on Canadian steel and aluminum, the Minister had the right to ignore the CITT and to impose surtaxes and import restrictions on all seven of the steel imports. Thankfully, the Minister refused to follow their advice and violate Canadian law and international trade rules by imposing safeguard measures on steel imports that were found to have not seriously injured Canadian steel producers. However, the Minister has clearly decided to take steps to support Canadian steel producers and this includes making changes to Canada’s current anti-dumping system. First, in response to the five steel...
Read MoreSteel Safeguards: The First Test of Canada’s Membership in the Alliance for Multilateralism
The Government’s response to the Canadian International Trade Tribunal’s (“CITT”) decision in Steel Safeguards will be Canada’s first test as a new member of the France – Germany coalition to support international cooperation and a rules-based world trading system. Will Canada support international trade rules or will it give in to pressure from the Canada Steel Producers Association (“CSPA”) and impose safeguard measures on imported steel products in violation of those rules? On April 3, 2019, the CITT concluded its safeguard inquiry into seven steel products, finding that imports of heavy plate and stainless steel wire caused serious injury to domestic producers while concrete reinforcing bar, energy tubular products, hot-rolled steel, pre-painted steel and wire rod did not. Based on those findings, the CITT recommended that the Minister of Finance impose safeguard measures on imports of heavy plate and stainless steel wire, but declined to make any remedy recommendation for the other products. The Minister is now considering the CITT’s recommendations on heavy plate and stainless steel wire and has indicated that the provisional safeguard measures currently imposed on the remaining products will be lifted on April 28, 2019 and any surtaxes that have been paid will be returned. Safeguards is a mechanism used to protect domestic producers from a surge in imports of fairly-traded goods from all sources. Permanent safeguard measures can only be imposed following a CITT inquiry that finds that goods were being imported into Canada in increased quantities and under conditions that cause or threaten to cause serious injury to domestic producers of like or directly competitive goods. If the CITT finds serious injury, it can recommend that the Minister impose safeguard measures, in the form of a surtax, an import restriction or both, to restrict imports. The CITT’s recommendation is non-binding; the Minister can ignore, impose or amend the CITT’s recommendation as he sees fit in the circumstances. However, the CITT’s no injury finding is binding; the Minister cannot ignore a no injury finding and impose safeguard measures regardless without violating Canadian and international law. Since the CITT concluded its inquiry, the CSPA has lobbied the Canadian government asking that it impose safeguard measures...
Read MorePossible Canadian Safeguard Action Against Steel Imports: Steel Importers, Distributors Consumers and End-Users Should Take Action
Canadian firms that import, distribute, or use steel and Canadian consumers who buy products that contain steel should pay close attention to the Government of Canada’s announcement that it is considering safeguard action, including the possibility of provisional safeguards, against imports of steel plate, concrete reinforcing bar, energy tubular products, hot-rolled sheet, pre-painted steel, stainless steel wire, and wire rod imported from all countries. In most cases, if safeguard measures are adopted, duties or quotas or both would be assessed against these steel imports after a safeguard inquiry has been held. But, in certain circumstances provisional safeguard measures could go into effect immediately while that inquiry is conducted. Because the measures would restrict imports and increase costs, they would likely have a negative impact on importers, distributors, end-users and consumers. On August 14, 2018, the Government of Canada announced public consultations to seek views on whether it should take safeguard action, including potential provisional safeguards, against imports of the seven steel products. The Government is taking this action to address concerns that the recent 25% U.S. additional duties on steel products will divert foreign steel destined for the U.S. to Canada and that this could result in an increase in steel in the Canadian market that will injure Canada’s domestic producers. Canada is seeking views on whether safeguard action is warranted and, if so, on the appropriate remedy. A copy of the Invitation to Submit Views can be found at https://www.fin.gc.ca/n18/data/18-071_1-eng.asp. Canada can take safeguard action to protect domestic producers. Typically, if the Government believes that goods are being imported in increased quantities and under such conditions that they cause or threaten to cause serious injury to domestic producers the Canadian International Trade Tribunal will be directed to conduct a safeguard inquiry. If the Tribunal finds that safeguards are warranted at the conclusion of that inquiry, it will make a recommendation on a remedy (i.e., duties, quotas or both) to the Minister of Finance who may then take action. In these cases, safeguard measures would usually be imposed on all imports regardless of origin, but only after the inquiry has been conducted and all sides have been given an...
Read MoreNegotiation, Not Litigation is the Way to NAFTA Modernization
Rather than just negotiate NAFTA modernization, the United States is trying to use additional illegal tariffs on steel and aluminum, and now WTO litigation, to force Canada to accept its NAFTA position. The additional tariffs on Canadian aluminum and steel are illegal because they exceed the U.S. WTO and NAFTA bound duty rates (i.e., the highest duty agreed between the Parties) and, thus, violate those Agreements. Canada retaliated against these U.S. tariffs with its own “dollar-for-dollar” tariffs on U.S. imports to rebalance the concessions made in the WTO and NAFTA Agreements which the U.S. additional tariffs have upset. Canada has also challenged the U.S. decision to impose these additional tariffs at the WTO. The U.S. has responded with its own request for WTO Dispute Settlement against Canada’s retaliatory duties. However, the U.S. litigation is futile because the possibility of outright U.S. success is so slim that even a U.S. win would result in any change in Canada’s tariffs. At the end of this process, the parties will be no further ahead and both will be hurt by this “tit-for-tat” protectionism. The current U.S. approach to trade appears to be based on the erroneous view that the WTO guarantees equality of outcome rather than equality of opportunities. This error seems to be why the U.S. Administration focuses on trade flows as a measure of success with trade deficits as evidence of unbalanced trade. However, the WTO, like all other trade agreements, does not guarantee that exporters or importer will engage in international trade or that they will make a profit. Instead, trade agreements aim to liberalize trade between the Parties by reducing barriers to trade. This trade liberalization is reflected in reduced tariff barriers between the partners and controls on non-tariff barriers that could be erected in their place. Trade liberalization does not mean that all tariffs will be reduced to zero, although that may be an outcome. Trade liberalization simply moves the parties in that direction through negotiation. For example, the U.S. claim that Canada has high tariffs of up to 275% on some dairy products is correct. The U.S. also has high tariffs, such as 350% duties on...
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