25 July 2019
Canada Proposes to Strengthen Trade Remedy Regime
The Canadian government is seeking input from interested parties by 5 August on a proposal to provide additional tools to the Canada Border Services Agency to address price distortions more effectively when calculating dumping margins in AD duty proceedings. Specifically, the proposed amendments would provide the CBSA with flexibility in calculating the costs of production when inputs are supplied by an associated supplier (e.g., a subsidiary or affiliated company). They would specify that the CBSA may use for this cost the highest of the transfer price between parties, the actual costs to the supplier, or a reasonable benchmark determined in the country of export if such information is available.
The CBSA already has the ability to disregard sales in the domestic market of the exporting country if they are affected by a particular market situation. In those cases, the agency may use alternative methodologies such as constructed costs when calculating dumping margins. The proposed amendments would further specify that in determining the costs of production where a particular market situation has been found, alternative options can be used to determine the cost of inputs if they do not allow for a proper comparison between the sale of goods in the country of export and the sale of goods exported to Canada.
The amendments would provide a hierarchy of alternatives to be used to determine the costs of inputs, depending on the information available and whether the alternative would allow for such a proper comparison. For instance, if such information is available the CBSA could use the price of a similar input produced in the country of export and sold to the exporter or other producers in the country. Other alternatives include referring to published prices in trade publications, with price adjustments to be made as necessary to reflect the actual cost of the input in the country of export.
According to Canadian authorities, the proposed amendments follow recommendations made to the minister of finance by a joint working group between federal government officials and the Canadian steel industry and workers’ representatives on actions that could be taken if there is a desire to strengthen Canada’s trade remedy regime. The Canadian steel industry and workers have indicated strong support for these amendments, as they will increase the effectiveness of Canada’s trade remedy system and offer additional protection against unfairly traded imports.