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The federal government is amending some rules regarding trade remedies. What are the impacts for SMEs and associations in Canada?

13 July 2022 - Canada 3 min read

In an effort to make Canada’s trade remedies regime more accessible, the federal government has made amendments to the Special Import Measures Act (SIMA) and the Canadian International Trade Tribunal Act (CITT Act).

These changes are the result of public consultations undertaken by the Department of Finance Canada between August 6 and December 2, 2021. One of the purposes of these changes is to improve access to the trade remedies system for small and medium-sized businesses and labour organizations.

Following Royal Assent of Bill C-19, the legislative changes that came into force on June 23, 2022, target five specific areas.

1. Promoting the accessibility and participation of unionized workers in certain complaints 

The CITT Act has been amended to allow union associations to file comprehensive safeguard complaints and requests for extensions of safeguards. This type of remedy is specifically targeted at cases where certain goods are being imported into Canada in such increased quantities and under such conditions that their importation is causing or threatening serious injury to workers and jobs in Canada. Employee organizations will now be able to file complaints on behalf of domestic producers whether or not the complaint is directly supported by these producers.

This legislative addition will be interesting to follow in the coming years, as there is no requirement that domestic producers directly support the complaint. The criteria for openness, however, continues to apply. Under the legislation, the complaint must be brought by or on behalf of domestic producers of a “significant share” (generally 35% of Canadian production) of like or directly competitive goods produced in Canada, i.e., by a trade union group whose members are engaged in Canadian production of the like or directly competitive goods.

In practice, however, it may be difficult for a union to bring such actions without obtaining a minimum of support from the domestic producing companies, i.e., their employers, since such actions must be supported by sufficiently detailed evidence, particularly with respect to profits, sales, cash-flow, losses, market share and the level of productivity in the industry.  

2. Strengthen protection for domestic producers and workers in Canada

The criteria necessary to demonstrate injury are slightly relaxed and simplified, where the impact on “workers in the domestic industry” and on “jobs” in Canada which will now be considered in any assessment of “injury”. The Act adds two new interpretive provisions to guide the CITT in its injury assessment. The CITT will have to take into account the ” impacts “, as various as they may be, on workers and on jobs in Canada. This type of interpretive provision could increase the likelihood of success of complaints at the injury assessment stage, although situations where the CITT finds that there is no injury to domestic producers remain rare.

Finally, modifications are made with respect to the time limit for providing notice of complaints. In the case of dumping investigations, the governments of the exporting countries will now be notified of the filing of complaints in Canada seven days rather than twenty-one days in advance. In this way, Canada significantly reduces the ability of foreign exporters to move their products quickly into the Canadian market before an investigation is conducted, without being forced to pay anti-dumping duties if it is found that there has been massive importations. 

3. Broadening the criteria for circumvention investigations

In their complaints, Canadian domestic producers will no longer have to demonstrate that the imposition of anti-dumping or countervailing duties “is the principal cause” of the change in the pattern of trade, but only whether it “wascaused” or one of the possible causes. Complainants will now only have to provide “a reasonable indication that circumvention is occurring”. The law thus somewhat relaxes one of the key criteria for initiating anti-circumvention investigations, but it remains quite complex to demonstrate that the assembly or even slight modification of goods through minimal processes in a third country is likely to be caused by the imposition of anti-dumping or countervailing duties. No anti-circumvention investigations have been initiated in Canada to date, but this type of action may become more prominent in the coming years.

4. Expanding the test for interpreting mass imports

When the Tribunal conducts an inquiry at the provisional stage, it will be obliged to analyze potential massive importations. This new requirement is intended to require the Tribunal to systematically analyze cases of possible massive importations. Following the filing of a complaint, the Tribunal will now have to proceed with a systematic investigation of all the causes of injury listed in the Act, including those related to massive importations of foreign products. 

The legislation also changes the criteria for the imposition of retroactive duties in cases of massive imports, which will provide greater protection to domestic producers in the 90 days prior to the initiation of an investigation. 

5. Mandatory expiry reviews of orders

In the absence of an expiry review, an anti-dumping order is generally deemed to expire after 5 years from the date of the findings. During these years, a domestic industry may sometimes have undergone organizational, operational, or other changes that prevented it from requesting an extension of the order from the Tribunal in the prescribed time and form. Now, the Tribunal will automatically initiate the expiry review, without the domestic industry having to institute any proceedings, and may terminate a review if it finds that the domestic producers are unlikely to support the renewal of the order.

This type of measure not only institutionalizes expiry reviews, but also favours domestic producers that are small or do not have sufficient time or resources to mobilize before the Tribunal to raise their concerns. In addition, it may increase the likelihood that certain orders or findings made by the Tribunal will be extended by the Tribunal for a further five years.

Conclusion

In conclusion, it should be noted that the legislative changes do not apply to proceedings commenced before June 23, 2022.

It will be interesting to observe to what extent SMEs and union associations will be concerned by these changes, which are still quite limited and specific.

If you, your association or your company have any questions regarding trade remedies in Canada, do not hesitate to contact one of our legal advisors.   DS Avocats has an experienced team of lawyers with expertise in trade remedies and advocacy. We also provide comprehensive expertise in customs issues.

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