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An extract from The International Trade Law Review, 8th Edition

Recent changes to the regime

The following summarises recent changes to and ongoing developments in Canada's trade remedy regime.

Following the WTO panel report in Canada – Anti-dumping measures on imports of certain carbon steel welded pipe from the separate customs territory of Taiwan, Penghu, Kinmen and Matsu (CSWP), Canada implemented legislation allowing the CBSA to terminate its dumping and countervailing investigations against individual exporters even if countrywide margins or amounts of subsidy are not de minimis.6 This has had a number of implications for the CBSA's investigations as well as the CITT's injury inquiries. For example, since the WTO ruling in CSWP, the CITT routinely does not consider the goods of an exporter with a de minimis margin or amount of subsidy to be dumped or subsidised goods for any part of its injury analysis. However, some implementation issues remain. The CBSA can no longer terminate investigations on the basis of a de minimis countrywide margin or amount but must still calculate a countrywide margin to advise the CITT of that amount for the purposes of its cumulation decision.7 The CITT, in its injury analysis, continues to face the issue of how to treat an exporter that has a de minimis margin but a significant amount of subsidy and vice versa.

The CBSA has also recently been commencing exporter-specific normal value reviews as opposed to its previous practice of conducting a (normal value) reinvestigation regarding all exporters. Further, the CBSA conducts normal value reviews automatically when an importer appeals an assessment of anti-dumping duties after importation. In 2021, the CBSA conducted normal value reviews on 10 types of subject goods from 26 exporters; in the first half of 2022, it conducted normal value reviews on five types of subject goods from 13 exporters.

Other amendments to SIMA have added a suite of new measures to the CBSA's jurisdiction, including the ability to conduct anti-circumvention proceedings and scope rulings. These procedures, which were previously administrative and discretionary in nature, have now been formalised with statutory recognition in Canadian legislation.

In March 2020, the CITT transitioned its trade remedies process to provide virtual hearings. These arrangements will continue until at least July 2022 and very likely beyond that date.

In a related development, the CITT expanded its electronic filing in 2020 to include electronic service with virtual access to other parties' filings, including confidential information, in a system similar to that used by the United States International Trade Commission. (As always, confidential information is only available to independent counsel who have signed appropriate undertakings and taken appropriate steps to safeguard the information.) Electronic service is a very significant step for truly remote conduct of the submissions phase of hearings.

The concept of a particular market situation (PMS) was introduced into SIMA in 2017.8 Subsequent regulatory changes were made in 2019 to enable the CBSA to disregard actual input costs of an exporter if a PMS is found to exist in the country of export. The CBSA's SIMA Handbook at page 315 describes the PMS provisions of the SIMA as follows:

In its final decisions in January 2021 with respect to the dumping and subsidising investigations of certain decorative and other nonstructural plywood originating in or exported from China, the CBSA decided that there was no PMS in the Chinese decorative plywood market. Specifically, the CBSA stated that:

Similarly, in its final decision with respect to dumping of rebar from Algeria, Egypt, Indonesia, Italy, Malaysia, Singapore and Vietnam, the CBSA did not form the opinion that a PMS existed in Vietnam that affects domestic sales such that they do not permit a proper comparison with sales to importers in Canada. Finally, in its final decision with respect to dumping and subsidising of certain upholstered domestic seating (UDS) from China and Vietnam, the CBSA did not form the opinion that a PMS existed in the UDS market in China or Vietnam.

The CBSA's application of its PMS mandate is currently the subject of judicial review in the Federal Court of Appeal (FCA) in Canadian Hardwood Plywood and Veneer Association v. Attorney General of Canada10 along with other cases. A decision from the FCA regarding the above-mentioned issue has not been released.

Significant legal and practical developments

There have been a number of significant legal and practical developments in injury analysis in recent years. The two main developments are outlined below.

During the preliminary injury inquiry phase of Upholstered Domestic Seating from China and Vietnam, the CITT stated that it would conduct its preliminary injury analysis on the basis that domestically produced UDS, limited to the specifications listed in the product definition (essentially, motion and leather seating), were like goods in relation to the subject goods.11

However, the CITT called for submissions on this issue during its final injury inquiry, in particular whether to broaden the like goods to domestically produced goods equivalent to the goods excluded from the scope of the investigation (i.e., fabric-upholstered stationary seating). In its decision on 16 June 2021, the CITT determined that co-extensiveness (i.e., the requirement that the domestically produced goods meet the product definition of the subject goods) should not apply in this particular case 'as the domestically produced goods that fall within the scope of the product definition are not “identical in all respects” to the subject goods'.

In its finding and reasons, the CITT explained that the principle of co-extensiveness is not an imperative rule found in the SIMA, ADA or ASCM, and that there are circumstances in which the scope of the domestically produced like goods will be broader than the scope of the subject goods, particularly when there are no domestically produced goods 'identical in all respects' to the subject goods. Since the CITT found that domestically produced fabric-upholstered stationary seating was 'like' subject goods, its injury analysis considered the impact of the subject goods on domestic producers of both fabric-upholstered stationary seating and motion and leather seating meeting the product definition.

This decision will have important implications for future trade remedies cases in Canada. In particular, the CITT's significant narrowing (if not wholesale rejection) of co-extensiveness in Canadian trade remedies law clarifies that the impact of subject goods on a broader range of domestic like goods can be considered in dumping and subsidy inquiries, both at the dumping or subsidy determination and injury stages. It will be appropriate to do so when there are no domestically produced goods that are identical in all respects to the subject goods.

Until the WTO Appellate Body report in US – Carbon Steel (India) in late 2014, the CITT evaluated injury against goods from countries subject to dumping investigations cumulatively with goods from countries subject only to countervailing investigations (sometimes referred to as 'cross-cumulation').12 Following this case, the CITT seemed to develop a new approach to cumulation to comply with the WTO decision. This approach was to de-cumulate goods, where applicable, from countries subject to:

In its expiry review13 decision in Concrete Reinforcing Bar from China in October 2020, the majority of the CITT upheld and explained this practice in detail.14 Some of the majority's reasons were as follows.

The CITT decided that it could and had to look to the international agreements that are the source of Canada's international obligations, and seek context and guidance from those agreements and from the decisions that interpret the provisions of these agreements.

The CITT found that consideration of WTO panel and Appellate Body decisions is required when reviewing the context and interpretation of the WTO agreements as they impact the statutory interpretation of SIMA.

The CITT observed that the most important feature of the context provided by the ASCM and the ADA is that these are wholly separate agreements.

It added that the other agency tasked with administering trade remedies in Canada, the CBSA, conducts its anti-dumping duty and countervailing duty investigations concerning goods from different countries wholly separately, both in procedure and substance.

The CITT pointed out that an alternative solution to this approach would be for it to conduct completely separate anti-dumping and countervailing injury inquiries and reviews, which it viewed as presenting conceptual injury problems.

However, there was a dissenting opinion that favoured a return to the practice before US – Carbon Steel (India).15 The dissent mainly rested on the argument that the SIMA mandated the previous practice (i.e., did not permit WTO-mandated de-cumulation, and had not been amended in this respect since US – Carbon Steel (India)). Thus, it was not open to the CITT to implement the Appellate Body decision in the revised manner it had been doing since 2015.

It remains to be seen which view will be decisive in future decisions from the CITT.

Shortly after Concrete Reinforcing Bar from China, the CITT dealt with a different aspect of cumulation in Certain Small Power Transformers from the Republic of Austria (Austria), the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), and the Republic of Korea (South Korea).16 The issue was whether it was appropriate for the CITT to consider the cumulative effects of dumping of subject goods from Austria, Taiwan and South Korea in its assessment of injury. The CITT observed that it had considerable discretion to do so where the margins of dumping were not insignificant and the volumes of dumped goods were not negligible. Having so found, the CITT turned to assessing the conditions of competition prevailing in the three countries and the extent to which the impact of subject goods commingled, ultimately finding that it was appropriate to cumulate subject goods from Taiwan and South Korea, but not subject goods from Austria, which it considered separately.

In October 2018, the government imposed provisional safeguards for 200 days on imports of heavy plate, rebar, energy tubular products, hot-rolled sheet, pre-painted steel, stainless steel wire and wire rod. This decision was made partly in response to the US government's decision to impose a 25 per cent tariff on the import of certain steel products pursuant to Section 232 of the Trade Expansion Act of 1962.

Concurrently with the imposition of provisional safeguards, the government of Canada asked the CITT to conduct an inquiry to determine if longer-term final safeguards were warranted. The CITT issued its report on 3 April 2019, finding that final safeguards were warranted only for imports of heavy plate and stainless steel wire. The CITT has since conducted several exclusion inquiries, resulting in the exclusion of several plate and wire products from safeguard duties with the latest exclusion inquiry resulting in the exclusion of certain stainless steel knitting wire.17

The four investigations initiated in 2021 produced the following results:

One trade remedy investigation commenced in 2022 – Drill Pipe from China22 – has been decided; the CITT found no injury or threat of injury. The other investigation commenced in 2022 – Certain Mattresses from China23 – has not been decided at the time of writing:

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