Large Diameter Line Pipe Anti-dumping Duty Remission Order: SOR/2019-261

Canada Gazette, Part II, Volume 153, Number 14

Registration

SOR/2019-261 June 25, 2019

CUSTOMS TARIFF

P.C. 2019-951 June 22, 2019

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 115 footnote a of the Customs Tariff  footnote b, makes the annexed Large Diameter Line Pipe Anti-dumping Duty Remission Order.

Large Diameter Line Pipe Anti-dumping Duty Remission Order

Interpretation

1 The following definitions apply in this Order.

Act means the Special Import Measures Act. (Loi)

large diameter line pipe means the subject goods as defined in paragraph 4 of the Statement of Reasons of the Canadian International Trade Tribunal issued on November 4, 2016 in Inquiry Number NQ-2016-001. (tubes de canalisation à gros diamètre)

Remissions

Anti-dumping duties

2 (1) Subject to subsection (2), remission is granted to a company set out in column 1 of the schedule of the amount of anti-dumping duties, set out in column 2, that are paid or payable under the Act, by or on behalf of the company, in respect of large diameter line pipe, if the importation was recorded under the transaction number set out in column 3.

Conditions

(2) Remission is granted on the following conditions:

Anti-dumping duties

3 (1) Subject to subsection (2), remission is granted to Trans Mountain Pipeline L.P. of the amount of anti-dumping duties that are paid or payable under the Act, by or on behalf of the company, in respect of large diameter line pipe, up to the amount of anti-dumping duties that are paid or payable under the Act in respect of the importation of 2,963,565 kg of large diameter line pipe.

Conditions

(2) Remission is granted on the following conditions:

Coming into Force

4 This Order comes into force on the day on which it is registered.

SCHEDULE

(Section 2)

Item

Column 1

Company

Column 2

Amount ($)

Column 3

Transaction Number (B3-3 Form)

1

Cantak Corporation

365,145.42

17848827194872

1,546,459.58

17848827614654

1,651,907.62

17848828821247

804,001.53

17848828869529

2

Sumitomo Canada Limited

2,210,632.37

13060803906758

3

Trans Mountain Pipeline L.P.

1,126,815.55

17848828521131

1,113,269.60

17848828590475

84,760.71

17848828821258

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issues

Anti-dumping duties on imports of large diameter line pipe from Japan have been in place since October 2016. Anti-dumping duties can be imposed under the provisions of the Special Import Measures Act (SIMA), in order to protect the Canadian industry from unfair trading practices. Subsequent to this, Cantak Corporation (Cantak), NOVA Gas Transmission Ltd. (NOVA), and Kinder Morgan Canada Inc. (now Trans Mountain Corporation [Trans Mountain]) imported large diameter line pipe from Japan and paid anti-dumping duties. These companies requested remission of the duties paid with respect to certain projects because, at the time, they were unable to source this product from domestic suppliers. To refund the amounts paid, a remission order is needed, as provided for under section 115 of the Customs Tariff.

Background

Anti-dumping duties address instances where unfair trade is injuring Canadian producers. Dumping occurs when a manufacturer exports a product to another country at a price either below the price charged in its home market or below its cost of production. Anti-dumping duties increase the prices of imported goods to a level that reflects non-dumped prices. In Canada, anti-dumping duties may be imposed pursuant to SIMA following investigations by the Canada Border Services Agency (CBSA) and the Canadian International Trade Tribunal (CITT), which are conducted in an independent, impartial and transparent manner. Duties imposed under SIMA are generally referred to as SIMA duties.

In February 2016, the sole domestic producer of large diameter line pipe, Evraz NA Canada (Evraz), filed a complaint with the CBSA alleging that large diameter line pipe from Japan is dumped and is causing injury to the Canadian industry. In September 2016, the CBSA found that large diameter line pipe from Japan was dumped and the amount by which it was dumped, also called the margin of dumping, ranged from 22.1 per cent to 95.0 per cent, depending on the exporter. In October 2016, the CITT found that these imports of large diameter line pipe from Japan caused injury to the Canadian domestic industry. After the CITT’s decision, the CBSA began assessing duties equal to the margin of dumping on all large diameter line pipe from Japan entering Canada. These duties are set to expire in October 2021.

The remission of duties is being provided to these companies for importations related to certain projects, to reflect that at the time these products were purchased, the only producer of large diameter line pipe in Canada, Evraz, was temporarily unable to supply the products that were needed. SIMA duties are intended to prevent injury to Canadian industry, but as Canadian industry was unable to supply these projects at that time, the remission of duties would not undermine the protection afforded by SIMA.

While the remission authority under section 115 of the Customs Tariff is broad, it is not used to override the legislated intent of SIMA, which is to remedy the injury caused by dumped goods to domestic producers of competing goods. Remission of SIMA duties is typically only used in extraordinary circumstances, such as pursuant to a public interest inquiry by the CITT (where it has been determined that application of the duties in their full amount would not be in the public interest) or if there was short supply domestically at the time of importation.

Given the circumstances surrounding the requests for remission of duties made by Cantak, NOVA, and Trans Mountain, remitting the anti-dumping duties would not undermine their protective effect.

Objective

The Large Diameter Line Pipe Anti-dumping Duty Remission Order (the Order) provides a remedy in response to the short supply of large diameter line pipe in the Canadian market for certain specific projects.

Granting remission on these requests would be consistent with Department of Finance policy that situations of domestic short supply constitute appropriate grounds for remission of SIMA duties.

Description

This Order would remit SIMA duties paid with respect to imports of large diameter line pipe from Japan. These duties would be remitted to the party who is the importer of record, which may be different than the requesting party. Specifically, the amounts of SIMA duties to be remitted to each company are as follows:

Company

Amount to remit

Cantak

$ 4,367,514.15

Sumitomo Canada Limited

$ 2,210,632.37

Trans Mountain

$ 2,324,845.86

Total

$ 8,902,992.38

Trans Mountain is expected to make one more importation for its project that this remission covers, which would result in an additional payment of approximately $1 million in anti-dumping duties.

Finance Canada officials have reviewed the import documentation provided by the requestors and are satisfied that the transactions are linked to a situation of short supply. Remission would be granted on the condition that the importer provides the CBSA with documentation that demonstrates that the importer is entitled to such a remission under the Order.

Regulatory development

Consultation

Evraz, the sole domestic producer of large diameter line pipe in Canada, has been consulted and supports the remission of the anti-dumping duties covered by the Order. As all companies impacted by this remission order have been consulted directly, it was not prepublished.

Modern treaty obligations and Indigenous engagement and consultation

The Order does not impact Indigenous peoples rights and interests.

Instrument choice

Section 115 of the Customs Tariff provides the authority for the Governor in Council to remit the anti-dumping duties on the recommendation of the Minister of Finance.

Regulatory analysis

Costs and benefits

As this Order concerns specific projects for specific companies, it would result in $8.9 million in refunds (for anti-dumping duties that have already been paid) and the remittance (or non-collection) of an additional $1 million, for a total of $9.9 million.

The CBSA will administer and enforce the Order. In doing so, the existing administrative framework will be leveraged to ensure that costs can be managed within existing resources. Refund requests will be processed by the CBSA’s Trade and Anti-Dumping Programs Directorate.

Small business lens

The small business lens does not apply to this Order, as there are no costs being imposed on small business.

“One-for-One” Rule

The “One-for-One” Rule applies to this Order as it would result in incremental administrative burden for businesses in having to apply for remission of anti-dumping duties. However, the Order is exempt from the “One-for-One” Rule as it relates to tax and tax administration.

The administrative costs for Canadian businesses to claim remission of the anti-dumping duties are expected to be limited. In regard to waiving anti-dumping duties on a prospective basis (i.e. for imports after the date of entry into force of the Order), remission claims would be made for each applicable importation as part of the process of completing existing customs documentation requirements.

In regard to requesting a refund (i.e. for imports on which the anti-dumping duties have already been paid), importers would submit forms requesting refunds for the anti-dumping duties paid on importations, accompanied by supporting documentation establishing that the imported goods qualify for remission.

Regulatory cooperation and alignment

The Order is not related to a work plan or commitment under a formal regulatory cooperation forum.

Strategic environmental assessment

In accordance with The Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that the Order would not have positive or negative effects on the environment; therefore, a strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified for this Order.

Implementation, compliance and enforcement, and service standards

The CBSA will assess any requests for remission made under the Order and will ensure compliance with its terms and conditions in the normal course of its administration of customs and tariff-related legislation and regulations. Any refunds issued under the Order will be administered by the CBSA. Depending on the volume and complexity of refund submissions, the CBSA strives to achieve a 90-day processing standard.

Contact

Ted Chester
International Trade Policy Division
Department of Finance Canada
Ottawa, Ontario
K1A 0G5