On 14 August 2018, the Canadian Department of Finance launched a public consultation on a possible global safeguard action on imports of certain steel products. The comment period ended 29 August 2018. The Department is now reviewing the comments and will decide whether and how to initiate an action.
If the Canadian International Trade Tribunal initiates a safeguard inquiry, steel users, importers and exporters will have only 15 days to file notices of participation and representation. Replies to Tribunal questionnaires will likely be due 30 days after initiation. If your company could be adversely affected by future safeguard duties, it is essential to immediately begin planning your participation so that your company’s interests can be taken into consideration in the inquiry.
If your company is a Canadian user of steel products, an importer of steel products into Canada, or a foreign exporter of steel products to Canada, you need to consider the following:
Scope of Safeguard Inquiry
The consultation notice of August 14th indicated that imports of the following steel products would be considered in a safeguard inquiry:
- Steel plate: e.g., for construction and manufacturing heavy machinery and vehicles;
- Concrete reinforcing bar (“rebar”): e.g., for strengthening and preventing concrete from cracking;
- Energy tubular products: e.g., for oil and gas exploration, extraction and transmission;
- Hot-rolled sheet: e.g., for construction and manufacturing motor vehicles, agricultural support products, and welded pipe and tube products;
- Pre-painted steel: e.g., for construction, industrial packaging, and manufacturing appliances;
- Stainless steel wire: e.g., for manufacturing pins, nails, springs, filters and conveyor belts; and
- Wire rod: e.g., for manufacturing wires, springs, wire mesh, fasteners and nails, automotive and industrial components.
If your company uses or deals in steel products that could be covered by these categories, you need to consider participation in the safeguard inquiry.
Class of Goods
The Tribunal will determine the classes (i.e., categories) of goods that it will investigate in the inquiry. Your company’s case could be stronger if your steel products are in a specific, discrete category rather than a general category. The classes of goods may track the categories identified above, but they could also be more general or more specific. Are your company’s steel products a sub-set of one of the categories identified above?
If your company’s steel products serve a market segment that is not fully served by the Canadian domestic steel producers, there might be a basis to request an exclusion for your products from the scope of future safeguard measures. In the 2002 steel safeguard inquiry, a large proportion of product exclusion requests were granted. Since that time, the procedural requirements and evidentiary thresholds for product exclusions have become more demanding. Provided that these requirements and thresholds are met, a product exclusion might be worthwhile pursuing.
Although global safeguards will generally apply to subject steel products regardless of their country of origin, imports from certain countries that have free trade agreements with Canada could be treated differently and might be excluded from future safeguard measures. Such countries include the United States, Mexico, Korea, Chile, Israel, Columbia, Panama and Peru.
If your foreign steel products are supplied from a country that has a free trade agreement with Canada, this possibility must be considered.
Strength of the Canadian Domestic Industry’s Safeguard Case?
The safeguard inquiry will examine whether the targeted imported steel products are being imported in such increased quantities and under such conditions that they are a cause of serious injury, or threat thereof, to domestic producers of like products or directly competitive goods. The Tribunal will conduct this inquiry separately for each class of goods. Detailed legal requirements apply to all elements of the inquiry. The strength of the domestic industry’s case will have to be assessed on the basis of each product class once the product classes are announced and the data are available.