Given the current climate of international trade, it's a good time to remember how Canadian industries can assert their rights under international trade law to protect against injurious and unfairly traded goods imported from abroad.
The Special Import Measures Act ("SIMA") reflects Canada's implementation of the World Trade Organization ("WTO") agreements on anti-dumping and subsidies. SIMA helps protect Canadian industries against unfair competition from imported goods by providing a mechanism to apply specific duties to "dumped" or "subsidized" goods that are imported into Canada at artificially low prices.
This post provides a high-level overview of the primary anti-dumping and countervailing proceedings provided for in SIMA.
What is Dumping and Subsidizing?
SIMA provides specific rules for determining whether a good is dumped or subsidized, but in short:
- A good is dumped when it is sold to Canadian importers at a price lower than the price at which comparable goods are sold in the exporting country or at a price that is unprofitable.
- A good is subsidized when it benefits from financial assistance of a foreign government.
Overview of Dumping and Subsidizing Investigations
If domestic producers believe that dumped or subsidized goods are being imported into Canada and causing injury, they can submit a complaint to the Canada Border Services Agency ("CBSA"). A complaint must be supported by a sizeable portion of the domestic industry, namely Canadian producers who together represent (i) more than 50% of the total production of like goods by those who express either support or opposition for the complaint, and (ii) at least 25% of the total production of like goods in Canada. The CBSA can initiate an investigation on its own initiative, but this is very rare.
If a complaint is properly documented and supported by sufficient evidence, it will result in an investigation and inquiry process. The process includes a number of steps but primarily involves two main stages:
- The CBSA will first investigate and determine whether the goods are dumped or subsidized and by how much;
- If the CBSA finds dumping or subsidizing in sufficient amounts, then the Canadian International Trade Tribunal ("CITT") will assess whether the dumping or subsidizing "has caused injury or retardation or is threatening to cause injury". The Tribunal assesses injury based on a number of factors, such as reduced prices, lost sales, impacts on Canadian jobs, and other effects on the domestic industry.
The CBSA and CITT each gather information from importers, domestic producers, foreign exporters, and foreign governments. The CBSA also typically conducts site visits at the exporter's premises to verify their submitted information.
The proceeding may be terminated if the CBSA finds there has been no dumping or subsidizing or that the margin of dumping and/or amount of subsidy (as the case may be) is "insignificant" (SIMA defines an insignificant margin of dumping as less than 2% of the export price of the goods and an insignificant amount of subsidy as less than 1% of the export price). The proceeding may also be terminated if the CITT finds there is no injury or threat of injury, or if the volume is negligible.
However, if both the CBSA and CITT stages result in affirmative determinations (i.e., there has been sufficient dumping and/or subsidizing of the goods in question and this is causing or threatening to cause injury to the domestic producers), then anti-dumping and countervailing duties can be imposed on the goods imported from the subject countries. The duties that can be imposed are equal to the amount by which the goods were found to be dumped and/or subsidized. In other words, they are intended to level the playing field.
The CBSA website provides additional information on Canada's anti-dumping and countervailing investigative processes.
Aitken Klee has represented Canadian and international clients in numerous dumping and subsidizing investigations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
