The 20 July 2019 edition of the Canada Gazette Part I includes proposed Regulations Amending the Special Import Measures Regulations. The proposed amendments follow from recommendations of a working group comprising the Government of Canada and the Canadian steel industry and its workers aimed at “enhanc[ing] the effectiveness of the trade remedy system in protecting Canadian producers and workers against the impacts of unfairly traded imports, while maintaining a fair and balanced approach to trade remedies and respecting Canada’s legal and trade obligations”. The proposed amendments would grant the CBSA flexibility in calculating costs of production in anti-dumping investigations, specifically to: (i) address situations where inputs were acquired from associated parties at prices below cost or below a representative benchmark; and (ii) to provide further scope to address cost distortions created by a particular market situation.

Where inputs are supplied by an associated supplier (e.g. a subsidiary or affiliated company), the CBSA will be empowered to use, for the cost of production, 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.

In determining the costs of production where a “particular market situation” has been found, alternative options can be used by the CBSA 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.

The proposed amendments provide that where a particular market situation exists which does not permit a proper comparison of the sale of like goods with the sale of the goods to the importer in Canada, such that the acquisition cost of an input used in the production of the goods does not reasonably reflect the actual cost of that input, the cost of that input in the country of export shall be considered to be the first of the following amounts that reasonably reflect the actual cost of the input so as to permit a proper comparison of the sale of like goods with the sale of the goods to the importer in Canada:

(a) the price of the same or substantially the same inputs that are produced in the country of export and sold to the exporter or to other producers in the country of export;

(b) the price of the same or substantially the same inputs that are produced in the country of export and sold from the country of export to a third country;

(c) the price of the same or substantially the same inputs determined on the basis of the published prices of those inputs in the country of export;

(d) the price of the same or substantially the same inputs that are produced in a third country and sold to the exporter or to other producers in the country of export, adjusted to reflect the differences relating to price comparability between the third country and the country of export; or

(e) the price of the same or substantially the same inputs determined on the basis of the published prices of those inputs outside the country of export, adjusted to reflect the differences relating to price comparability with the country of export.

Interested persons may make representations concerning the proposed Regulations within 15 days after the date of their publication (20 July 2019).