The Special Import Measures Act (SIMA), which governs the conduct of anti-dumping and countervailing duty investigations in Canada, is administered by the Canada Border Services Agency (CBSA) and the Canadian International Trade Tribunal (CITT).
On May 17, 2018, in order to address concerns raised by Canadian producers, SIMA was amended in order to add three new investigative and administrative tools to the CBSA’s mandate:
These proceedings are specific to cases in which anti-dumping or countervailing duties have been imposed and a foreign producer attempts to circumvent duties by making slight modifications to, or changing the pattern of production of, exported goods such that the good no longer falls with the scope of goods to which duties apply.
The amendments are found in sections 71 to 76 of SIMA and allow that CBSA to investigate allegations that anti-dumping and countervailing duties are being circumvented and, where warranted, to extend the scope of the duties to cover importations of goods that are circumventing duties.
The CBSA has published a flow chart outlining this new procedure.
Previously, importers and exporters were able to request that the CBSA provide informal advice as to whether a particular shipment would likely be subject to duties upon importation. However, these determinations were not public and other interested parties could not challenge them or express their views on them. Moreover, these decisions were not binding, and the CBSA was free to make a different determination upon importation.
The changes made can be found in section 63 to 70 of SIMA and include a new formal proceeding that allows interested parties to request a ruling from the CBSA as to whether a particular product is subject to anti-dumping and countervailing duties (i.e. whether it is within the scope of those duties). Moreover, the decisions made will allow for interested parties to provide their views. Furthermore, be both public and binding on the CBSA.
Finally, interested parties will have the right to appeal re-determinations, made at the second level of review, by the CBSA on whether a product that has already been imported is or is not within the scope of the duties.
In anti-dumping investigations, dumping margins are normally calculated by comparing the prices of the goods when sold in the domestic market of the exporting country. Previously, there was no flexibility in SIMA for the CBSA to disregard prices in the domestic market of the exporting country because of price distortions in that market.
The SIMA amendments now give the CBSA the ability to use alternative methodologies when calculating margins of dumping in situations where price distortions in the country of export render those prices unreliable. Therefore, instead of using the selling prices of the goods in the domestic market of the exporting country, the CBSA may determine prices charged in the exporting market by calculating the cost to produce the good, and adding reasonable amounts for selling, general and administration costs and profit.
As of the writing of this blog, these new anti-circumvention and scope proceedings and methods of addressing price distortion have yet to be used in any published decisions.
However, they provide some interesting possibilities for the CBSA’s enforcement. There are some pros and cons to each one. While the anti-circumvention proceeding and price distortion calculation will undoubtedly become formidable tools for the CBSA and domestic (Canadian) industries, the scope proceedings may yet serve importers as both a sword and a shield.
Those importing into Canada may do well to review their practices to ensure they comply with these new SIMA provisions.
John Reiterowski, DS Lawyers Canada, LLP
DS Customs & Trade team located in Paris, Brussels, Montreal, Toronto, Lima, Singapore, Vietnam, Beijing, Guangzhou, Dakar and Cotonou is at your disposal to provide you with additional information.