Canada is a trading nation. Our nation’s economic prosperity, and that of Canadian producers, depends on secure access to export markets and a reliable stream of competitively priced imports from markets around the world. That is why Canada has been a long-standing proponent of international trade rules that level the global playing field and ensure that Canadian producers can trade on terms that are not only free but also fair.
Trade terms that are free promote healthy global competition. Trade terms that are fair seek to ensure that unfair trading practices do not harm Canadian producers by undermining their access to global markets or threatening their survival at home.
The Canadian International Trade Tribunal (the Tribunal) is at the forefront of Canada’s efforts to balance free and fair trade. The Tribunal is jointly responsible for administering Canada’s domestic law governing unfair trading practices—the Special Import Measures Act (SIMA)—with an administrative arm of government, the Canada Border Services Agency (CBSA). SIMA reflects international trade rules set out by the World Trade Organization and international trade agreements to which Canada has agreed, including the Canada-United States-Mexico Agreement.
Unfair trading practices—Dumping and subsidizing
SIMA is concerned with two unfair trading practices—dumping and subsidizing.
Dumping refers to the trading practice by which foreign manufacturers sell their products in Canada for less than the price at which they sell the same products at home. In some cases, one could argue that dumping is simply an attempt to gain a competitive edge in a foreign market. However, dumping is far more than that, as it can be used as a predatory trading practice in which foreign manufacturers produce more than required for their home markets and sell a substantial portion of those surplus goods in Canada at unfairly low prices.
Governments, including the Canadian government, offer subsidies to producers for many reasons. This is known as subsidizing. In some cases, subsidies are legitimately fair and within international trade rules. In other cases, subsidies can unfairly distort trade, for example, when subsidies artificially reduce costs for foreign manufacturers so that they can flood Canada with goods at unfairly low prices.
When forced to compete with unfairly low prices, Canadian producers of the same goods either lose sales to dumped and/or subsidized goods or must lower their prices to preserve sales. Either way, dumping and subsidizing can harm Canadian producers by putting them (and the Canadians they employ) at significant financial risk.
Assessing the harm of unfair trading practices
As noted, the Tribunal and the CBSA share administration of SIMA. Their processes are independent, and decisions are based on different, yet complementary, factors as set out by law.
The CBSA determines if goods are dumped or subsidized, while the Tribunal determines if the dumping or subsidizing has harmed (injured) Canadian producers or threatens to harm (or threatens to injure) them in the future. When the Tribunal finds that Canadian producers have been harmed or are threatened with harm, the CBSA levies duties (known as anti-dumping or countervailing duties) on foreign imports to raise unfairly low prices back to fair levels so that Canadians can continue to compete.
Unfair trade cases do not begin at the Tribunal. An unfair trade case generally begins when Canadian producers file a complaint with the CBSA alleging that unfair dumping and/or subsidizing has occurred. It is only after the CBSA decides to initiate a case that the Tribunal gets involved.
The CBSA and Tribunal divide their work in unfair trade cases into two phases: preliminary investigations and final investigations. These investigations take place alongside each other over a seven-month period under strict legislated time frames. If the CBSA or Tribunal reaches a “negative” determination at any point along the way, the case is terminated. For information on the detailed steps in the process, see the Preliminary and Final Injury Inquiry Guidelines.
Three Tribunal members (the decision-makers) are assigned to adjudicate each unfair trade case.
Tribunal’s preliminary injury inquiry
The Tribunal’s preliminary injury inquiry lasts 60 days. Given the short time frame, the Tribunal relies largely on information provided to it by the CBSA and written submissions from parties.
Based on the information that it receives, the Tribunal must decide whether the evidence discloses a reasonable indication that Canadian producers have been harmed or are threatened with harm from dumped or subsidized goods. While SIMA does not define “reasonable indication”, the Tribunal considers whether the information before it is relevant, accurate and adequate.
Tribunal’s final injury inquiry
The Tribunal’s final injury inquiry lasts 120 days and has two phases: the investigation phase in which information is collected and the adjudication phase in which the information is evaluated, and decisions are made.
During the investigation phase, staff of the Canadian International Trade Tribunal Secretariat designs questionnaires to collect information from all the relevant market players: foreign and domestic producers, importers, distributors, retailers as well as any known trade unions that represent workers employed in the domestic industry. Questionnaires are designed to gauge the size of the overall market, and the market share, sales volume and pricing of each player. The data gathered by the questionnaires are compiled in a report known as the Investigation Report that is distributed to all parties in the case.
During the adjudication phase, parties submit evidence in support of their positions. Their evidence is often supported by legal arguments and testimony of witnesses. This evidence is presented during an oral hearing and tested as parties and Tribunal members question witnesses.
Based on the evidence received and testimony heard, the Tribunal decides if the dumped or subsidized goods have caused harm or are threatening to cause harm to the domestic industry. SIMA does not define how much harm the dumped or subsidized goods must cause, but the Tribunal looks for harm that is more than just minimal. The Tribunal reaches this decision by assessing the degree to which the dumped or subsidized goods have affected, or could affect, the performance of Canadian producers in terms of their levels of production, sales, market share, profit, employment, etc. This assessment takes into account any impacts on workers employed in the domestic industry.
The Tribunal may also consider whether to exclude certain products from its decision if and when it is convinced that those imports will not harm the domestic industry. For more information on product exclusions, see the Guideline to Making Requests for Product Exclusions.
According to SIMA, the Tribunal must issue its decision by day 120 of the final injury inquiry and reasons explaining its decision within another 15 days.
If the Tribunal finds that the domestic industry has indeed been harmed or is threatened with harm, the CBSA will impose anti-dumping and/or countervailing duties on the foreign goods. A review of these duties will be initiated no later than five years after they are imposed, at which point they will be rescinded, unless the CBSA and the Tribunal conclude that the expiry of the duties would lead to continued or resumed dumping and/or subsidizing and injury to the domestic industry.
What else can happen?
The Tribunal handles other types of cases as part of its unfair trade mandate.
Public interest inquiries
Once anti-dumping or countervailing duties are in place, the Tribunal may decide to investigate whether they are in the broader public interest if they appear to negatively impact users of the goods and/or consumers. Public interest inquiries can be initiated by the Tribunal itself or upon request from an interested party.
Public interest inquiries do not happen often; the Tribunal will not initiate a public interest inquiry if the only argument from an interested party is that the dumped or subsidized goods cost more than before. In fact, the Tribunal expects that the imposition of anti-dumping or countervailing duties will restore the prices of unfairly traded goods to fair levels. For more information, see the Public Interest Inquiry Guidelines.
At the conclusion of a public interest inquiry, the Tribunal may recommend to the Minister of Finance that the duties should be reduced in part or in full to balance competing interests between domestic producers and the users and/or consumers of the foreign goods.
The Tribunal may also review the need for duties at any time while they remain in effect (i.e. before the five-year expiry review). This type of inquiry is known as an interim review.
The Tribunal can initiate an interim review on its own or at the request of an interested party. Parties might request an interim review to exclude particular goods that they want to import because they are not available in Canada or if they believe that duties are no longer needed because Canadian producers have gone out of business.
In interim reviews, the key question before the Tribunal is whether an amendment to the range of goods covered by anti-dumping or countervailing duties would harm Canadian producers. If the answer to that question is yes, the Tribunal will make no changes to its injury decision and duties will remain in place for the remainder of the five years. For more information, see the Guidelines on Interim Reviews.
Anti-dumping and/or countervailing duties expire after five years unless continued by the Tribunal following the conduct of an expiry review to determine whether the duties are still needed to protect Canadian producers from harm. An expiry review must be initiated no later than five years after the Tribunal’s decision in the final injury inquiry or after the Tribunal’s decision in a previous expiry review. For more information, see the Expiry Review Guidelines.
Once an expiry review is initiated, the CBSA has 150 days to determine whether the expiry of the duties is likely to result in the continuation or resumption of dumping or subsidizing. If the CBSA determines that such likelihood exists, the Tribunal then has 160 days to conduct its inquiry to determine whether the expiry of the duties is likely harm the domestic industry.
SIMA guides the Tribunal in its decision about whether duties should remain in place. First, the Tribunal looks at what has changed in the international and domestic markets over the past five years, as well as the recent performance of the domestic industry. Then, the Tribunal analyzes what would happen if the duties were not in place, in particular, how dumped or subsidized imports would affect the performance of Canadian producers in the future. This assessment takes into account any impacts on workers employed in the domestic industry.
If the Tribunal decides that removing the duties is likely to harm the domestic industry, the duties will be extended until they are again reviewed in no more than five-years’ time.
If you have questions about the Tribunal, questions about specific cases, or would like information on how to file cases, please contact the Registrar:
Secretariat to the Canadian International Trade Tribunal
333 Laurier Avenue West
Ottawa, Ontario K1A 0G7