Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods (Exclusions): SOR/2019-313
Canada Gazette, Part II, Volume 153, Number 18
SOR/2019-313 August 23, 2019
P.C. 2019-1265 August 21, 2019
Whereas on July 15, 2019, the Canadian International Trade Tribunal submitted a report to the Governor in Council on its first inquiry pursuant to the Order Referring to the Canadian International Trade Tribunal, for Inquiry into and Reporting on, the Matter of the Exclusion of Certain Steel Goods from the Order Imposing a Surtax on the Importation of Certain Steel Goods footnote a;
And whereas the Governor in Council is satisfied, on the basis of the inquiry made by the Canadian International Trade Tribunal, that certain goods described in the schedule to the Order Imposing a Surtax on the Importation of Certain Steel Goods footnote b should be excluded from the application of that Order;
Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 55(1) and paragraph 56(1)(b) of the Customs Tariff footnote c, makes the annexed Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods (Exclusions).
Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods (Exclusions)
1 The portion of items 1 and 2 of the schedule to the Order Imposing a Surtax on the Importation of Certain Steel Goods footnote 1 in column 2 is replaced by the following:
Hot-rolled carbon steel plate and high-strength low-alloy steel plate not further manufactured than hot-rolled, heat-treated or not, in widths from 80 inches (± 2,030 mm) to 152 inches (± 3,860 mm), and thicknesses from 0.375 inches (± 9.525 mm) to 4.0 inches (101.6 mm), with all dimensions being plus or minus allowable tolerances contained in the applicable standards. For greater certainty, these dimensional restrictions apply to steel plate, that contains alloys greater than required by recognized industry standards provided that the steel does not meet recognized industry standards for an alloy-specification steel plate.
The following goods are excluded:
Cold drawn and cold drawn and annealed, stainless steel round wire, up to 0.256 inches (6.50 mm) in maximum solid cross-sectional dimension; and cold drawn, and cold drawn and annealed, stainless steel cold-rolled profile wire, up to 0.031 square inches (0.787 mm2) in maximum solid cross-sectional area.
439 copper-coated TiCu stainless steel wire in diameters of 0.030 inch to 0.187 inch is excluded.
Coming into Force
2 This Order comes into force on the day on which it is registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the orders.)
On May 9, 2019, the Government directed the Canadian International Trade Tribunal (CITT) to inquire into whether certain products should be excluded from steel safeguards on imports of heavy plate and stainless steel wire, if they are not available in Canada. On July 15, 2019, the CITT issued its findings and recommended that certain specific dimensions and grades of heavy plate and stainless steel wire products be excluded from safeguard measures. Amendments to the Order Imposing a Surtax on the Importation of Certain Steel Goods (the Surtax Order) are needed to exclude certain products that are not available in Canada from the application of safeguard measures, and an additional Order is needed to refund safeguard surtaxes paid on importations of those products since October 2018.
In October 2018, the Government imposed provisional safeguard measures on seven classes of steel goods, and directed the CITT to undertake a safeguards inquiry, to determine whether longer-term safeguards were warranted. In April 2019, the CITT determined that final safeguard measures were warranted on imports of two classes of steel goods, heavy plate and stainless steel wire (except those originating in certain countries identified by the CITT, in line with Canada’s free-trade agreements). Following the CITT’s safeguard inquiry, the Government made the Surtax Order to impose final safeguards on these two classes of steel goods.
Safeguard measures aim to remedy the effects of a surge in imports that cause, or threaten to cause, serious injury to domestic industry producing like or directly competitive goods. In its initial safeguard inquiry, the CITT was directed to conduct its inquiry and make recommendations with respect to classes of goods as a whole, and as a result, the CITT recommended that final safeguards be imposed on heavy plate and stainless steel wire. However, within those two classes of goods, there are specific products for which there are no sources of supply in Canada and for which no domestic producer has firm and commercially viable plans to produce in the near future. As such, for those specific products, excluding imports of these products from foreign sources from the final safeguards would not injure or threaten to injure Canadian steel producers.
In this context, on May 9, 2019, the Governor in Council directed the CITT to inquire into whether certain products covered by final safeguards on heavy plate and stainless steel wire should be excluded from the Surtax Order, if they are not available in Canada. The CITT initiated its exclusion inquiry on May 16, 2019. On July 15, 2019, the CITT concluded its inquiry and submitted its report to the Governor in Council. The CITT recommended the exclusion of certain specific products, based on dimensions or other technical specifications. In total, the CITT recommended seven exclusions for heavy plate (some including multiple grades or dimensions) and one for stainless steel wire. Additional details on the exclusions recommended may be found in the CITT report, GC-2018-001-E1.
- Exclude products that are not available in Canada from safeguard measures imposed on heavy plate and stainless steel wire;
- Remit safeguard surtaxes paid on the products that are excluded from safeguard measures.
The Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods (Exclusions) [the Order Amending the Surtax Order] excludes certain products, as recommended by the CITT as a result of its exclusion inquiry, from the application of safeguard measures, considering that they are not available in Canada. Product exclusions refer to certain dimensions, grades, technical specifications or end uses for heavy plate and stainless steel wire. The affected products will no longer be subject to the safeguard measures in force on imports of heavy plate and stainless steel wire.
The Surtax on the Importation of Certain Steel Goods Remission Order (the Surtax Remission Order) remits safeguard surtaxes already paid on imports of the goods excluded under the Order Amending the Surtax Order, covering the period between when safeguard measures were initially imposed (October 2018) and the day on which these orders come into force. Remission is provided in recognition that, in line with the CITT’s findings in its exclusion inquiry, these products are not produced in Canada and, as such, were not injurious to Canadian producers during this time period.
The Order Amending the Surtax Order implements the recommendations made by the CITT following an independent and transparent inquiry conducted between May 16 and July 15, 2019. As part of its inquiry, the CITT invited interested parties to submit product exclusion requests. The CITT then invited domestic producers to submit their views on the exclusion requests, along with any additional evidence related to their production capabilities.
As part of its exclusion inquiry, the CITT received 23 exclusion requests (17 for heavy plate and 6 for stainless steel wire, with some requests made by different parties for identical products). A total of 12 companies (including foreign producers, importers, distributors and end users) submitted requests, along with supplementary evidence.
Representatives of domestic producers who supported the imposition of safeguards on the categories of goods in question provided responses to exclusion requests, along with evidence to demonstrate their capacity to produce such goods, where applicable. Union representatives also submitted views in support of domestic producers’ submissions.
The purpose of referring the matter of exclusions to the CITT for inquiry was to allow the CITT to render its impartial advice, following a transparent inquiry, in which it could receive requests and collect evidence (including confidential proprietary information) from all interested parties, such as domestic producers, importers, and downstream industries. In light of the scope of the CITT inquiry process, further consultations were not warranted and these orders were not prepublished.
Modern treaty obligations and Indigenous engagement and consultation
Constitutional and modern treaty implications were considered and none have been identified.
Paragraph 56(1)(b) of the Customs Tariff provides the authority for the Governor in Council, on the recommendation of the Minister of Finance, to amend an order imposing a surtax made under section 55 (such as the Surtax Order). Section 115 provides the Governor in Council with the authority, on the recommendation of the Minister of Finance, to remit duties. In cases where duties have already been paid, subsection 115(3) provides that remission shall be made by granting a refund of the duties to be remitted.
Costs and benefits
The costs for the Government associated with these orders are expected to be minimal and will be managed within existing resources. The Canada Border Services Agency (CBSA) will continue to enforce the Surtax Order, as amended, and will process requests for remission of safeguard surtaxes under the Surtax Remission Order.
The Order Amending the Surtax Order will benefit Canadian businesses (including small businesses) that import the products concerned, by ensuring access to surtax-free sources of supply for those products not available in Canada.
The Surtax Remission Order provides remissions for safeguard surtaxes paid since October 2018, on goods that are excluded from the Surtax Order. It provides relief to importers who have paid the surtax on such goods that are not available in Canada. The amount to be remitted will depend on the amount of safeguard surtaxes collected on the products covered and on the requests received. It is estimated that the amount to be remitted should not exceed $2.5 million.
Minor administrative costs to businesses are anticipated, as businesses who have imported the subject products will need to submit a claim to the CBSA in order to receive a remission. However, the expected benefits from remissions for those businesses are expected to significantly outweigh the administrative costs associated with submitting the documentation required for the request.
Small business lens
To the extent that small businesses in Canada may be importing the products covered by these orders, they will benefit from the product exclusions provided in the Order Amending the Surtax Order, as they will now be able to import such products surtax-free. Small businesses who have already paid the surtax on imports of such products may incur a minor amount of administrative burden associated with submitting a request to the CBSA, but they would also benefit from the surtaxes remissions. The costs for each business involved are expected to be limited; importers would only make a limited number of requests covering past transactions, and the evidence to be provided to demonstrate eligibility for remission would be based on existing documentation.
The “One-for-One” Rule does not apply to the Order Amending the Surtax Order.
The Surtax Remission Order provides relief from the surtaxes, but it is expected to increase administrative burden on businesses insofar as businesses seeking a remission will need to submit a request for the refund of surtaxes already paid. Nevertheless, the costs on Canadian businesses are expected to be limited as the evidence that would need to be provided to demonstrate eligibility for remission would, in most cases, be based on existing documentation (e.g. invoices, purchase orders, Canada customs invoice, bill of lading). The Surtax Remission Order is related to tax and tax administration and is exempted from the requirement to offset administrative burden under the “One-for-One” Rule.
Regulatory cooperation and alignment
These orders do not have a regulatory cooperation component.
Strategic environmental assessment
In accordance with The Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that these orders would not have a positive or negative environmental impact; therefore, a strategic environmental assessment is not required.
Gender-based analysis plus
No gender-based analysis plus (GBA+) impacts have been identified for these orders.
Implementation, compliance and enforcement, and service standards
The CBSA is responsible for administering the Customs Tariff and its regulations, including the safeguard measures imposed by the Surtax Order, as amended. The CBSA will also assess and process requests for remissions received pursuant to the Surtax Remission Order. In doing so, its existing administrative framework will be leveraged to ensure that costs are managed within existing resources. Depending on the volume and complexity of transactions for which requests for remissions are received, the CBSA strives to achieve a 90-day processing standard.
International Trade Policy Division
Department of Finance Canada
90 Elgin Street