What You Should Know About Dumping and Subsidy Investigations

Updated - May 2006

Foreword

This is an overview of Canada's anti-dumping and countervailing law as contained in the Special Import Measures Act (SIMA).

SIMA helps to protect Canadian industry from injury caused by the dumping and subsidizing of imported goods.

The Canada Border Services Agency (CBSA) and the Canadian International Trade Tribunal (Tribunal) are jointly responsible for administering SIMA.

What is dumping?

Dumping occurs when goods are sold to importers in Canada at prices that are lower than the selling price of comparable goods in the country of export or when goods are sold to Canada at unprofitable prices. The amount of dumping on imported goods may be offset by the application of "anti-dumping" duty.

What is subsidizing?

Subsidizing occurs when goods imported into Canada benefit from foreign government financial assistance. The amount of subsidizing on imported goods may be offset by the application of "countervailing" duty.

Examples of subsidies:

• loans at preferential rates;
• grants;
• tax incentives.

What is injury?

A critical factor is whether the dumped or subsidized imports are causing injury or threatening injury to the Canadian industry. Injury may be shown by:

• reduced prices;
• lost sales;
• lost market share;
• decreased profits; and
• other such difficulties.

When are anti-dumping or countervailing duty applied on imported goods?

The Canadian International Trade Tribunal is responsible for establishing if the dumping or subsidizing of imported goods is causing injury to Canadian industry. The injury must be significant and a positive injury decision by the Tribunal provides the authority for the CBSA to impose anti-dumping or countervailing duty on dumped or subsidized imports.

These duties offset the price advantage caused by dumping or subsidizing and give Canadian industry an opportunity to compete fairly with the imported goods.

How does the process work?

A Canadian producer of goods that are identical or similar to the competing imports can file a written complaint with the CBSA if it suspects that the imported goods are being dumped or subsidized and are causing injury to Canadian industry. An association of producers may also file a complaint on behalf of its members.

What type of information is provided in a complaint?

A written complaint must include information on the Canadian produced goods, the competing imports, the domestic industry and conditions in the Canadian market. Also, it must provide evidence relating to the dumping or subsidizing of the imported goods and the resulting injury to Canadian industry.

What happens after a complaint is filed?

The CBSA will evaluate the complaint and may start a formal investigation to determine whether the goods imported into Canada are dumped or subsidized.

To ensure there is sufficient support by the Canadian industry for an investigation, producers representing at least 25 per cent of Canadian production must support the complaint. As well, there must be more support than opposition to the complaint within the Canadian industry.

If the CBSA determines that an investigation should be started, questionnaires will be sent to exporters, importers, and, in subsidy investigations, to the foreign government involved. The questionnaires are intended to collect detailed information on the alleged dumping or subsidizing of the imported goods and the CBSA will, as needed, meet directly with these parties to examine the information provided.

What is the role of the Canadian International Trade Tribunal (Tribunal)?

Following our decision to start an investigation, we send a copy of the complaint to the Tribunal. The Tribunal, independent from the CBSA, assumes the responsibility for the question of injury to the Canadian industry and conducts an inquiry into this question. The Tribunal holds public hearings where interested parties are allowed to present their arguments and question witnesses. Interested parties generally include Canadian producers and importers, as well as foreign exporters.

How long does the process take?

(refer to the chart on the last page of this document)

The process takes about seven months from when the CBSA starts an investigation until the Tribunal makes a final decision on the injury matter. Our investigation and the Tribunal's inquiry are conducted separately but both are carried out during the same time period.

Our investigation process includes both a preliminary and final decision on the dumping or subsidizing of the imported goods. The Tribunal's inquiry also includes a preliminary and a final decision. The Tribunal holds public hearings at the final stage of the investigation followed by its finding on the question of injury.

In order for an investigation to continue, the Tribunal must make a preliminary decision of injury and we must make a preliminary decision of dumping or subsidizing. Otherwise, all investigation proceedings will be terminated.

When are duties applied?

We can impose temporary duty on imports of dumped or subsidized goods following a preliminary decision of injury by the Tribunal and our preliminary decision of dumping or subsidizing; which is normally made within three months of the start of the investigation. This temporary duty is intended to protect Canadian producers until the Tribunal makes its final injury decision.

If the Tribunal issues a final injury decision in favor of the Canadian industry, we impose anti-dumping or countervailing duty on all imports that are dumped or subsidized. Detailed information on how to properly declare and pay duties imposed under SIMA is provided in the SIMA Self-Assessment Guide available on our web site at: www.cbsa-asfc.gc.ca/sima-lmsi/. This duty is generally imposed for a period of at least five years.

What are undertakings?

An undertaking is a potential alternative to a full investigation and Tribunal inquiry. It involves a commitment by exporters or foreign governments to change their pricing or subsidizing practices to eliminate the harm to Canadian industry.

Generally, these agreements with the CBSA result in a suspension of our investigation and the Tribunal's inquiry. They provide a faster and less costly solution than the normal process. We do not collect temporary duties when an undertaking is in effect.

Who do I contact for more information?

Contact us at the:

Trade Programs Directorate
(Anti-dumping and Countervailing Program)
Canada Border Services Agency
100 Metcalfe Street
11^th Floor
Ottawa ON
K1A 0L8

Telephone: (613) 954-7172
Fax: (613) 948-4844
E-Mail: simaregistry-depotlmsi@cbsa-asfc.gc.ca
Web site: www.cbsa-asfc.gc.ca/sima-lmsi/