The anticipated steel safeguard action includes a significant risk of “provisional” safeguard duties. These duties can be imposed immediately upon initiation of a safeguard action, prior to the merits of the action being determined by the Canadian International Trade Tribunal (CITT). The duties can remain in place for 200 days.
What this means is that importers and users of imported steel products that might be included in a safeguard action need to contemplate such duties in the imminent future and cannot wait until the CITT issues its report (up to 270 days after initiation) and the Government considers and decides whether and how to follow the report’s recommendations (requiring additional time).
The provisional duties can take the form of ad valorem duties (e.g., an x% import duty) or a tariff-rate quota (TRQ) which allows a certain quantity of imports under the existing regular customs duty and applies a higher safeguard duty to imports above that quantity.
If a TRQ is used, the administration of the TRQ could affect whether current importers and users will be able to secure traditional supply volumes from import sources. The administration of the TRQ could also favour some importers and users over others. Options include a first-come-first-served rule whereby those importers who get their steel products into Canada before the in-quota amount fills will benefit from the lower duties.