Possible Canadian Safeguard Action Against Steel Imports: Steel Importers, Distributors Consumers and End-Users Should Take Action

Source: Trade Law
Link: Possible Canadian Safeguard Action Against Steel Imports: Steel Importers, Distributors Consumers and End-Users Should Take Action

Canadian firms that import, distribute, or use steel and Canadian consumers who buy products that contain steel should pay close attention to the Government of Canada’s announcement that it is considering safeguard action, including the possibility of provisional safeguards, against imports of steel plate, concrete reinforcing bar, energy tubular products, hot-rolled sheet, pre-painted steel, stainless steel wire, and wire rod imported from all countries.  In most cases, if safeguard measures are adopted, duties or quotas or both would be assessed against these steel imports after a safeguard inquiry has been held.  But, in certain circumstances provisional safeguard measures could go into effect immediately while that inquiry is conducted.  Because the measures would restrict imports and increase costs, they would likely have a negative impact on importers, distributors, end-users and consumers.

On August 14, 2018, the Government of Canada announced public consultations to seek views on whether it should take safeguard action, including potential provisional safeguards, against imports of the seven steel products.  The Government is taking this action to address concerns that the recent 25% U.S. additional duties on steel products will divert foreign steel destined for the U.S. to Canada and that this could result in an increase in steel in the Canadian market that will injure Canada’s domestic producers.  Canada is seeking views on whether safeguard action is warranted and, if so, on the appropriate remedy.  A copy of the Invitation to Submit Views can be found at https://www.fin.gc.ca/n18/data/18-071_1-eng.asp.

Canada can take safeguard action to protect domestic producers.  Typically, if the Government believes that goods are being imported in increased quantities and under such conditions that they cause or threaten to cause serious injury to domestic producers the Canadian International Trade Tribunal will be directed to conduct a safeguard inquiry.  If the Tribunal finds that safeguards are warranted at the conclusion of that inquiry, it will make a recommendation on a remedy (i.e., duties, quotas or both) to the Minister of Finance who may then take action.  In these cases, safeguard measures would usually be imposed on all imports regardless of origin, but only after the inquiry has been conducted and all sides have been given an opportunity to present evidence and to make arguments.  In cases where the Minister of Finance determines that there is clear evidence that increased imports have caused serious injury, and that the injury would not be easy to repair, Government can immediately impose provisional duties on imports for up to 200 days while the CITT conducts its inquiry.

Regardless of the Government’s goal of protecting Canada’s steel producers, any safeguard measures assessed would likely increase the cost of the imported steel to Canadian importers and distributors, to Canadian manufacturers and other end-users who rely on steel and to consumers who buy the finished products.  The Government must recognize the negative impact of safeguards on Canadians and should take care to ensure:  (i) that any safeguard measures are limited so that they do not provide unnecessary protection to domestic producers because would impose unnecessary costs on the Canadian economy; and (ii) that it consider the protection given to domestic producers in light of the costs imposed on Canadian importers, distributors, end-users and consumers so that the result is a net benefit to Canada as a whole.  However, the Government cannot make these determinations without input and, for this reason, it is our view that the Invitation to Submit Views should be treated as a real opportunity to influence the Government’s decision on whether or not to impose safeguard measures and on the level of those measures.

The deadline for submitting views is August 29, 2018, which leaves little time to prepare and file a submission, so any firm that wants to participate should move as quickly as possible.  In addition, the Government has asked for “detailed information substantial any expected beneficial or adverse impacts” of a safeguard measure.  In our view, any party that makes submission should also present detailed information to substantiate their views on the questions of whether there has been an increase in imports since the U.S. imposed its 25% additional duty on steel, whether those imports have been sold at lower prices and whether this would have resulted in serious injury to Canadian steel producers.

Woods, LaFortune LLP is a boutique international trade and customs law firm with offices in Montreal and Ottawa.  We have extensive experience in safeguard inquiries and we regularly promote our clients’ interests with government officials.  We would be pleased to discuss this issue with you and to outline how we could work with you to prepare a submission to the Minister of Finance.