Regulations Amending the Special Import Measures Regulations and the Canadian International Trade Tribunal Regulations: SOR/2022-160
Canada Gazette, Part II, Volume 156, Number 14
Registration
SOR/2022-160 June 24, 2022
SPECIAL IMPORT MEASURES ACT
CANADIAN INTERNATIONAL TRADE TRIBUNAL ACT
P.C. 2022-820 June 24, 2022
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, makes the annexed Regulations Amending the Special Import Measures Regulations and the Canadian International Trade Tribunal Regulations under
- (a) subsection 97(1)footnote a of the Special Import Measures Actfootnote b; and
- (b) paragraph 40(n)footnote c of the Canadian International Trade Tribunal Actfootnote d.
Regulations Amending the Special Import Measures Regulations and the Canadian International Trade Tribunal Regulations
Special Import Measures Act
Special Import Measures Regulations
1 (1) Subparagraph 37.1(1)(c)(ii) of the Special Import Measures Regulations footnote 1 is replaced by the following:
- (i.1) any actual or potential negative effects on employment levels or the terms and conditions of employment of the persons employed in the domestic industry, including their wages, hours worked, pension plans, benefits or worker training and safety,
- (ii) any actual or potential negative effects on cash flow, inventories, growth or the ability to raise capital,
(2) Paragraph 37.1(2)(g) of the Regulations is replaced by the following:
- (g) the actual and potential negative effects on existing development and production efforts, including effects on hiring and on efforts to produce a derivative or more advanced version of like goods;
2 (1) Paragraph 37.2(1)(h) of the Regulations is replaced by the following:
- (h) any changes in market conditions domestically or internationally, including changes in the supply of and demand for the goods, in sources of imports into Canada, in prices, in employment levels, in the terms or conditions of employment, in market share and in inventories;
(2) Paragraph 37.2(1)(j) of the Regulations is replaced by the following:
- (j) any other factor pertaining to the current or likely behaviour or state of a foreign government or of the domestic or international economy, market for goods or industry as a whole or in relation to workers or individual producers, exporters, brokers or traders.
(3) Paragraph 37.2(2)(e) of the Regulations is replaced by the following:
- (e) the likely impact of the dumped or subsidized goods on domestic industry if the order or finding is allowed to expire, having regard to all relevant economic factors and indices, including
- (i) any potential decline in output, sales, market share, profits, productivity, return on investments or utilization of production capacity,
- (ii) any potential negative effects on cash flow, inventories, growth or the ability to raise capital, and
- (iii) any potential negative effects on employment levels or the terms and conditions of employment of the persons employed in the domestic industry, including their wages, hours worked, pension plans, benefits or worker training and safety;
(4) Paragraph 37.2(2)(g) of the Regulations is replaced by the following:
- (g) the potential negative effects of the dumped or subsidized goods on existing development and production efforts, including effects on hiring and on efforts to produce a derivative or more advanced version of like goods;
(5) Paragraph 37.2(2)(k) of the Regulations is replaced by the following:
- (k) any other factor pertaining to the current or likely behaviour or state of the domestic or international economy, market for goods or industry as a whole or in relation to workers or individual producers, exporters, brokers or traders.
3 (1) The portion of section 57.16 of the Regulations before paragraph (a) is replaced by the following:
57.16 For the purpose of paragraph 71(c) of the Act, the following factors may be considered in determining whether the change in trade pattern is caused by the imposition of anti-dumping or countervailing duties:
(2) Section 57.16 of the Regulations is amended by striking out “and” at the end of paragraph (e) and by adding the following after that paragraph:
- (e.1) any economic or commercial factors that are unrelated to the imposition of anti-dumping or countervailing duties; and
Canadian International Trade Tribunal Act
Canadian International Trade Tribunal Regulations
4 Subsection 5(4) of the Canadian International Trade Tribunal Regulations footnote 2 is replaced by the following:
(4) The Tribunal shall evaluate, with respect to the factor mentioned in paragraph (1)(c), all relevant economic factors that have a bearing on domestic producers of like or directly competitive goods or on workers producing such goods, including the actual and potential changes in the level of production, employment, sales, market share, profits and losses, productivity, return on investments, utilization of production capacity, cash flow, inventories, the terms and conditions of employment, growth or ability to raise capital or investments.
Coming into Force
5 These Regulations come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
The Special Import Measures Regulations (SIMR) and the Canadian International Trade Tribunal Regulations (CITTR) do not specifically include terms and conditions of employment as factors to consider when assessing injury or threat of injury to the domestic industry in both anti-dumping/countervailing duty investigations and safeguard inquiries. This prevents the Canadian International Trade Tribunal (CITT) from fully accounting for the impacts of imports on workers.
In addition, the Special Import Measures Act (SIMA) allows the Canada Border Services Agency (CBSA) to undertake anti-circumvention investigations to determine whether circumvention of existing trade remedy duties is occurring and, if so, ensure the remedial effects of duties are not undermined. However, various Canadian stakeholders have raised concerns that the current requirement that SIMA duties must be the “principal cause” of the change in the trade patterns in order to find circumvention is too onerous.
Budget 2022 announced the Government’s intention to strengthen and improve access to Canada’s trade remedy system. These amendments are required for full implementation of the Budget commitment.
Background
Under Canada’s trade remedy system, anti-dumping and countervailing duties may be imposed on imports pursuant to SIMA, following investigations by the CBSA and the CITT, which are conducted in an independent, impartial, and transparent manner. The CBSA is responsible for the initiation of investigations, as well as determinations of dumping and subsidization, while the CITT is responsible for determinations of injury. Following positive determinations by both the CBSA and the CITT, the CITT will issue an order or finding, outlining the products and countries to which the anti-dumping and/or countervailing duties apply. Once a trade remedy measure is in place, the CBSA is responsible for enforcing the CITT’s order or finding, and ensuring that any anti-dumping and/or countervailing duties owing are paid. These duties offset the injurious effects of dumped or subsidized imports and help to ensure that Canadian producers are competing under fair trade conditions.
Under SIMA, the CBSA may also conduct anti-circumvention investigations to determine whether trade and business practices have been altered to specifically avoid the liability for SIMA duties under existing anti-dumping or countervailing measures. However, no anti-circumvention investigation has been initiated to date. Stakeholders have raised concerns that the existing requirement, that imposition of SIMA duties is the “principal cause” of the change in the trade pattern, is unnecessarily onerous.
Trade remedies also include safeguard measures, which aim to remedy the effects of a surge in imports of fairly traded goods that cause, or threaten to cause, serious injury to domestic industry producing like or directly competitive goods. The CITT is responsible for conducting safeguard inquiries pursuant to the Canadian International Trade Tribunal Act (CITT Act) and the CITTR, in an independent and transparent manner.
Trade unions have an important perspective to bring to anti-dumping and countervailing duty investigations, as well as in safeguard inquiries. However, the current Canadian practice does not fully account for impacts of imports on workers, as the factors to consider when assessing injury or threat of injury to the domestic industry do not include terms and conditions of employment.
In Budget 2021, the Government announced its intention to launch public consultations on measures to strengthen Canada’s trade remedy system and improve access for workers to ensure Canadian businesses can fully participate in the economic recovery and mitigate impacts of unfairly traded imports. These consultations were conducted in summer 2021 and included possible measures, including regulatory changes to improve the consideration of workers in trade remedy proceedings and clarify certain aspects of anti-circumvention investigations. Budget 2022 announced the Government’s intention to implement these measures.
Objective
The objective of the Regulations Amending the Special Import Measures Regulations and the Canadian International Trade Tribunal Regulations (the “Regulations”) is to implement the Budget 2022 announcement of the Government’s intention to strengthen Canada’s trade remedy system by better ensuring unfairly traded goods are subject to duties and by increasing the consideration of workers.
Description
The Regulations amend relevant sections of the SIMR and CITTR by including the impacts on terms and conditions of employment (e.g. hours worked, pension levels, training and safety) as factors for the CITT to consider when assessing injury or threat of injury to the domestic industry in both safeguard and anti-dumping and countervailing duty inquiries. In addition, the Regulations amend SIMR to ensure the CITT and CBSA consider impacts on terms and conditions of employment during expiry reviews.
The Regulations also amend SIMR to remove references to “principal cause” in order to provide additional discretion for the CBSA to find circumvention in cases where a change in the trade pattern is caused by the imposition of trade remedy duties, even if it is not the principal cause. The amendments also clarify that, in anti-circumvention investigations, the CBSA can consider other factors that could have led to a change in trade patterns that are unrelated to the imposition of trade remedy duties (i.e. economic or commercial factors unrelated to the imposition of anti-dumping or countervailing duties).
Regulatory development
Consultation
The Regulations are exempted from prepublication, since public consultations have already been conducted in 2021 and the regulations are not expected to result in any new compliance or administrative costs. As a result, prepublication would not have resulted in any further modifications. In addition, SIMA and the CITT Act do not require prepublication of regulations.
In summer 2021, the Department of Finance conducted public consultations on various measures to strengthen and improve access to Canada’s trade remedy system, including the proposed amendments to increase the consideration of workers in injury analyses and to modify anti-circumvention rules. The Department received 38 submissions, which reflect a variety of perspectives (i.e. Canadian steel producers, importers, workers, other Canadian manufacturers, industry associations, provinces, and other interested persons).
The majority of submissions were supportive of the proposed measures. However, a limited number of stakeholders representing importer interests opposed certain elements of the proposed measures. More specifically, these stakeholders argued that workers’ interests are already sufficiently taken into account in trade remedy proceedings. Despite importers’ assertion that workers’ interests are already sufficiently taken into account, the current regulatory framework does not explicitly prescribe the CITT to take into consideration the impact of imports on terms and conditions of employment such as hours worked, pension levels, training and safety during injury inquiries. Workers, like producers, are impacted by unfair trade practices and as such, these amendments will afford the opportunity to have these elements considered during a CITT injury inquiry.
Importers also expressed that it was unclear whether there was any problem that needed to be addressed with respect to anti-circumvention, since there have been no anti-circumvention investigations to date in Canada. However, the majority of stakeholders who provided views during the consultation process expressed concerns that the applicable standards with respect to circumvention are too onerous, which create barriers to proceeding with anti-circumvention investigations. The amendments are intended to reduce barriers to initiate and make findings of circumvention.
Modern treaty obligations and Indigenous engagement and consultation
No impacts have been identified in respect of the Government’s obligations in relation to Indigenous rights protected by section 35 of the Constitution Act, 1982, modern treaties and international human rights obligations.
Instrument choice
The Regulations will amend SIMR and the CITTR. This can only be accomplished through regulations and as such, no other instruments were considered.
Regulatory analysis
Benefits and costs
The Regulations are expected to benefit workers as they will increase the consideration of workers’ interests in trade remedy proceedings by ensuring impacts on terms and conditions of employment are taken into account by Canada’s investigating authorities. These amendments are not expected to create any significant costs for Canadians, as the addition of new injury and threat of injury factors is not expected to significantly affect the frequency of injury or threat of injury findings.
The amendments related to anti-circumvention investigations are consequential to legislative amendments to SIMA through Budget Implementation Act, 2022, No. 1. Therefore, any costs and benefits associated with these amendments are attributable to the amendments to SIMA and not to these Regulations.
Small business lens
The Regulations do not involve any costs for small businesses, as the addition of new injury and threat of injury factors would not significantly increase the frequency of injury or threat of injury findings and would not require any additional information from small businesses in CITT inquiries. With respect to anti-circumvention, any costs on small businesses would be attributable to the parallel legislative amendments and not these Regulations.
One-for-one rule
The Regulations would not result in an increase or decrease of administrative burden for the purpose of the one-for-one rule. While the amendments to injury and threat of injury factors will provide trade unions with an opportunity to provide additional information in the context of injury and safeguard inquiries, providing this information to the CITT would not constitute administrative burden under the one-for-one rule.
With respect to anti-circumvention, any additional administrative costs for the CBSA are addressed separately, as they are associated with the related legislative amendments and not the Regulations.
Regulatory cooperation and alignment
There are no regulatory cooperation or alignment components associated with the proposal. In accordance with World Trade Organization (WTO) rules, the WTO will be notified when the Regulations are made.
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 Regulations 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 proposal.
Implementation, compliance and enforcement, and service standards
Implementation
The Regulations would come into force on the day on which they are registered.
Contact
Marie-Hélène Cantin
International Trade Policy Division
Department of Finance Canada
Ottawa, Ontario
K1A 0G5
Telephone: 343‑550‑6119