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International Trade - Special Import Measures Act (SIMA)
MORE CASES
Part 2
. Algoma Steel Inc. v. Canada (Attorney General)
In Algoma Steel Inc. v. Canada (Attorney General) (Fed CA, 2023) the Federal Court of Appeal considered the SIMS-concept of a 'particular market situation':[52] A PMS may be found to exist in respect of any goods of a particular exporter or of a particular country. As this Court noted in Canadian Hardwood, the SIMA and the SIMR do not provide a definition of what is a PMS (at para. 86). One must look to the SIMA Handbook, which provides a list of factors the President may consider to form the opinion that a PMS exists:. government regulations such as price floors, price ceilings, production quotas, import and export controls;
. taxation policies;
. government support programs (financial or otherwise);
. the presence and activities of state-owned or state-controlled enterprises in the domestic market as suppliers or purchasers of the like goods (also including other state-owned or state-controlled enterprises such as financial institutions);
. the acquisition of production inputs or processing services that do not reflect market-based costs because they are acquired from suppliers which are state-owned or state-controlled or that are affected by government influence or control;
. significant volatility in economic conditions in the home market of the exporter;
. evidence of distorted input costs;
. any other circumstances which may or may not be the result of government intervention, in which normal market conditions or patterns of supply and demand do not prevail. (SIMA Handbook, s. 5.2.2.9)
[53] As this Court noted in Canadian Hardwood, at paragraph 92, the determination of whether a PMS exists is highly contextual. It involves a process that is both technical and factually intensive, which falls within the CBSA’s expertise. . Algoma Steel Inc. v. Canada (Attorney General)
In Algoma Steel Inc. v. Canada (Attorney General) (Fed CA, 2023) the Federal Court of Appeal gives a procedural flavour for the specialized international trade law of the Special Import Measures Act (SIMA). I make no points of law here:[1] By notice of final determination issued on January 7, 2021, the President of the Canada Border Services Agency (CBSA) terminated the dumping investigation in respect of certain hot-rolled carbon steel heavy plate and high-strength low-alloy steel heavy plate (heavy plate) exported to Canada from Turkey by Ereğli Demir ve Çelik Fabrikalari T.A.Ş. (Erdemir). On January 22, 2021, the CBSA issued its statement of reasons for the final determination. Pursuant to paragraph 41(1)(a) of the Special Import Measures Act, R.S.C. 1985, c. S-15 (SIMA), the CBSA found that the margin of dumping for Erdemir was zero (HP 2020 IN).
[2] As part of its investigation, the CBSA found that a particular market situation (PMS) did not exist in Turkey’s heavy plate market such that the domestic sales did not permit a proper comparison with the sales to the importers in Canada (statement of reasons at para. 96).
[3] In this application for judicial review brought pursuant to section 96.1 of the SIMA, Algoma Steel Inc. (Algoma) challenges the CBSA’s conclusion on the absence of a PMS in Turkey. It also contends that the CBSA’s refusal to disclose certain worksheets relating to the calculation of preliminary dumping margins for Erdemir and to provide the final calculations by which it found that Erdemir had a dumping margin of zero amount to either a breach of procedural fairness or a failure to provide adequate and intelligible reasons.
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A. Decision under Review
[25] Strictly speaking, the decision under review is the final determination published by notice on January 7, 2021. However, for the reasons set out in Canadian Hardwood at paragraphs 58-62, the final determination must be read with the statement of reasons issued on January 22, 2021, and the confidential undated internal CBSA dumping memorandum from the Director General, Trade and Anti-dumping Programs Directorate to the Vice-President, Commercial and Trade Branch (dumping memorandum). The dumping memorandum, authored by the same person as the statement of reasons, contains the recommendations for the final determination.
[26] The final determination must also be read in light of the record and of the particular context of the decision under review (Vavilov at paras. 91-98). As in Canadian Hardwood, the record in this case also contains a confidential undated CBSA memorandum prepared by a Senior Program Officer and approved by a Manager of the Anti-dumping and Countervailing Investigations Division, Trade and Anti-dumping Programs Directorate (PMS memorandum). It outlines the positions of the interested parties and explains why the CBSA did not form the opinion that a PMS existed in Turkey with respect to its heavy plate industry. The conclusions in the statement of reasons are consistent with the analysis set out in the PMS memorandum.
[27] Moreover, the SIMA provides for an explicit delegation of power pursuant to subsection 2(9): “[a]ny power, duty or function of the President under this Act may be exercised or performed by any person authorized by the President to do so and, if so exercised or performed, is deemed to have been exercised or performed by the President.” The Vice-President, Commercial and Trade Branch and the Manager of the Anti-dumping and Countervailing Investigations Division, Trade and Anti-dumping Programs Directorate, both enjoy delegated authority (AGC’s Confidential Record, Vol. I at 266, AGC’s Public Record, Vol. I at 11).
[28] For these reasons, the final determination shall be read with the statement of reasons, the confidential dumping memorandum and the confidential PMS memorandum. At paras 29-45, the court considers (and finds) the non-disclosure (to the Canadian applicant) of foreign importer records as being unnecessary - an unusual step in terms of conventional administrative law.
. Canadian Hardwood Plywood and Veneer Association v. Canada (Attorney General)
In Canadian Hardwood Plywood and Veneer Association v. Canada (Attorney General) (Fed CA, 2023) the Federal Court of Appeal considered a statutory federal judicial review under s.96.1 of the Special Import Measures Act (SIMA). In these quotes the court canvasses some of the SIMA regime, particularly relating to the 'dumping' of goods on the market:II. The SIMA and the SIMA Handbook
[12] Before turning to the Final Determination and the Statement of Reasons, it is helpful to review certain provisions of the SIMA, policies and procedures set out in the SIMA Handbook, as well as certain industry practices relevant to the issues raised in this judicial review. While some of these provisions are not at issue here, they are important to underscore in order to appreciate the complexity encountered by the President of the CBSA when faced with determining the normal value of goods and determining whether a PMS exists.
[13] The relevant provisions of the SIMA and of the Special Import Measures Regulations, S.O.R./84-927 (SIMR) are reproduced as Annexes A and B to these reasons.
[14] The President of the CBSA, on his own initiative or upon receipt of a complaint, must initiate an investigation into whether certain goods are being dumped or subsidized into Canada if he is of the opinion that there is evidence that the goods have been dumped or subsidized and that there is a reasonable indication that the dumping or subsidizing has caused injury or retardation or is threatening to cause injury (SIMA, s. 31(1)). In this judicial review, the CBSA’s investigation was initiated following a complaint filed by the applicants.
[15] The terms "“dumped”", "“insignificant”" and "“margin of dumping”" are all defined in subsection 2(1) of the SIMA as follows:"“Dumped”" means that the normal value of the goods exceeds the export price of the goods.
"“Insignificant”", in relation to a margin of dumping, means a margin of dumping that is less than two per cent (2%) of the export price of the goods.
"“Margin of dumping”" means, subject to sections 30.2 and 30.3 of the SIMA, the amount by which the normal value of the goods exceeds the export price of the goods. [16] Therefore, dumping occurs when the normal value of goods is greater than the export price of the goods. The margin of dumping represents the amount by which the normal value exceeds the export price. It is either zero or the amount determined by subtracting the weighted average export price of the goods from the weighted average normal value of the goods, whichever is greater (SIMA, s. 30.2(1)). To determine if the dumping is insignificant, the CBSA converts the margin of dumping into a percentage of the export price. Dumping becomes significant when the margin of dumping is 2% or more of the export price of the goods.
[17] Determining the normal value of goods is critical because the normal value is the benchmark against which the price of the exported goods is compared to determine if the exported goods are being dumped.
[18] To obtain the information required to establish the normal value of goods during an investigation, the CBSA issues RFIs to the entity in the foreign country that is producing and/or exporting the goods to Canada. The CBSA can also issue RFIs to the country of export and to importers.
[19] The current practice is for RFI responses to be filed electronically with key sales and costing data set out in Microsoft Excel spreadsheets. As part of the RFI, the exporter is required to complete several key appendices, which include: (1) detailed information on every sale of the goods under investigation that were exported to Canada during a specified period (the period of investigation); (2) details on every sale of the goods under investigation in the exporter’s home market during the period of investigation; and (3) details on the production and selling costs of the goods reported in the first two appendices (Applicants’ Public Record, Vol. 2, Tab F, p. 204 at paras. 47−48).
[20] The information obtained from the RFIs is shared with the applicants.
[21] The CBSA can also choose to attend at the offices of the entity in the foreign country that is producing and/or exporting the goods to Canada (SIMA Handbook, s. 4.5.6). As the dumping investigation at issue in this proceeding was conducted during the COVID-19 pandemic, no such attendance occurred. The CBSA relies on the information obtained from responses to the RFIs and the site visits to calculate the margin of dumping (SIMA Handbook, s. 4.4.5.3). The methodology for calculating dumping margins is encompassed within the SIMA and the SIMR.
A. The calculation of normal values
(1) Section 15 and subsection 16(1) of the SIMA
[22] The SIMA sets out different methodologies to calculate normal values. The starting point is the methodology for calculating normal values outlined at section 15 of the SIMA, which requires examining the price at which the goods are sold in the country of export. The determination of the normal value of goods under section 15 is subject to the rules set out in section 16 of the SIMA.
[23] In the review before us, the President of the CBSA found that he could not determine the normal values in accordance with section 15 as there were an insufficient number of sales of like goods that complied with all the terms and conditions referred to in section 15 and subsection 16(1) so as to permit a proper comparison with the sales of the goods to the importer in Canada.
(2) Paragraph 16(2)(c) of the SIMA
[24] When, in the opinion of the President, a PMS exists in respect of any goods of a particular exporter or of a particular country "“which does not permit a proper comparison with the sale of the goods to the importer in Canada”", paragraph 16(2)(c) of the SIMA prohibits the CBSA from using domestic sales as the basis for normal values. Depending on the circumstances at play, the CBSA will refer to sections 19 or 29 of the SIMA to calculate normal values: (SIMA, ss. 16(2)(c), 16(2.1); SIMR, ss. 11.2(2)).
[25] The SIMA Handbook explains that the President of the CBSA may form an opinion that a PMS exists if one or more of the following factors have had a significant impact on the domestic sale of like goods in the country of export:Ÿ Government regulations such as price floors, price ceilings, production quotas, import and export controls;
Ÿ Taxation policies;
Ÿ Government support programs (financial or otherwise);
Ÿ The presence and activities of state-owned or state-controlled enterprises in the domestic market as suppliers or purchasers of the like goods (also including other state-owned or state-controlled enterprises such as financial institutions);
Ÿ The acquisition of production inputs or processing services that do not reflect market-based costs because they are acquired from suppliers which are state-owned or state-controlled or are affected by government influence or control;
Ÿ Significant volatility in economic conditions in the home market of the exporter;
Ÿ Evidence of distorted input costs; and
Ÿ Any other circumstances which may or may not be the result of government intervention, in which normal market conditions or patterns of supply and demand do not prevail.
(SIMA Handbook, s. 5.2.2.9) (3) Section 19 of the SIMA
[26] Section 19 offers the President of the CBSA the option of two methodologies, which can be used when the CBSA cannot calculate the margin of dumping for an exporter pursuant to section 15 of the SIMA. Under paragraph 19(a), the price at which the exporter sold like goods to customers in a country other than Canada is used to calculate the normal value. Under paragraph 19(b), the normal value is constructed by aggregating the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits. Further details for calculating these amounts are set out in sections 11, 11.2, 12, 13 and 13.1 of the SIMR.
[27] The CBSA calculates the margin of dumping on the basis of the information it receives from the exporters through the RFIs, from the applicants and, if it deems necessary, from its own investigation.
[28] Where a PMS is found to exist, such that the acquisition cost of a particular input does not reasonably reflect the actual cost of that input, subsection 11.2(2) of the SIMR sets out alternative benchmarks for the calculation of cost inputs to be used in the cost production. Under subsection 11.2(2), the acquisition cost of the input used in the production of goods shall be considered to be one of five possible amounts that reasonably reflects the actual cost of the input so as to permit a proper comparison.
[29] A finding that a PMS exists has broad implications on the dumping investigation. Such a finding may change the methodology with which the cost inputs of the goods are determined, which in turn impacts the calculation of the normal value of the goods, which then impacts the calculation of the margin of dumping. Since a margin of dumping of 2% or more of the export cost is considered not to be insignificant, small changes to the cost inputs can easily increase the margin of dumping above this threshold.
[30] In the review before us, the President of the CBSA found that a PMS did not exist, and determined the normal values of the goods for the Zero-Rated respondents who provided satisfactory data about the costs of production pursuant to paragraph 19(b) of the SIMA.
(4) Section 20 of the SIMA
[31] The third methodology used to calculate normal values is set out at section 20 of the SIMA and is specific to non-market economies. It is not relevant in this proceeding.
(5) Subsection 29(1) of the SIMA
[32] The final methodology used to calculate normal values is applicable where, in the opinion of the President of the CBSA, the information is unavailable or insufficient to allow for a determination under one of the other methodologies. Normal values are then determined by ministerial specification, pursuant to subsection 29(1) of the SIMA. This methodology aims to limit the advantage an exporter can get by not cooperating with the investigation. It is punitive in nature.
[33] In the review before us, the President of the CBSA determined the normal values of goods pursuant to subsection 29(1) of the SIMA with respect to all goods exported where no information was supplied in respect of the cost of production.
B. Final determination under section 41 of the SIMA
[34] Within 90 days of making a preliminary determination on the dumping investigation, the President of the CBSA must make a final determination pursuant to section 41 of the SIMA. In particular, the President of the CBSA must either:i. Terminate its dumping investigation against any exporter that is not dumping or whose margin of dumping is "“insignificant”" (SIMA, s. 41(1)(a)); or
ii. Make a final determination of dumping against all other exporters and specify the margin of dumping (SIMA, s. 41(1)(b)). [35] In the present case, the President of the CBSA terminated the dumping investigation with respect to the Zero-Rated respondents pursuant to paragraph 41(1)(a) of the SIMA.
[36] As is evident from this brief review of the statutory framework and policies, the determination of the normal values used to calculate the margin of dumping in order to arrive at a decision under section 41 of the SIMA is not an easy task. It obliges the CBSA to sift through voluminous information and undertake a complex selection and adjustment of information to use as cost inputs in order to complete the required mathematical exercise. All of this must be accomplished within a short timeframe. This determination is sensitive to the inputs; the export price being merely 2% lower than the normal value would constitute dumping.
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(5) Determination
[133] In sum, this Court has described the nature of dumping and subsidy investigations as a process that is "“complex and technical and requires specialized analysis and calculations of commercial data”" and is "“essentially a fact-finding economic mission in an international trade context”" (Uniboard at para. 28). Similarly, as is evident from the passages cited at paragraphs 90 and 91 above from WTO-Australia, the consideration of a potential PMS is a highly contextual assessment. This factually intensive assessment is conducted under a complex technical framework and under strict statutory timelines.
[134] The President of the CBSA assessed each factor, considered all of the available evidence and explained why he did not form an opinion that a PMS existed in China. His conclusion was the result of a highly discretionary and fact-based assessment that falls within his expertise. In conducting a reasonableness review, I am cognizant that this Court must be attentive to the application by the President of his specialized knowledge and expertise (Vavilov at para. 93). . Angang Steel Company Limited v. Canada (Border Services Agency)
In Angang Steel Company Limited v. Canada (Border Services Agency) (Fed CA, 2020) the Federal Court of Appeal considered a statutory judicial review directly to itself under s.96.1 of the Special Import Measures Act. The court summarized the role of this statute as follows:[4] SIMA is the statute that provides for the imposition of anti-dumping and countervailing duties when goods are dumped into Canada. Goods imported into Canada are "“dumped”" (as defined in subsection 2(1) of SIMA) when the normal value of the goods exceeds the export price of such goods. The margin of dumping is defined in subsection 2(1) of SIMA as the difference between these two amounts. The normal value is determined in accordance with the provisions of sections 15 to 23.1 and 30 of SIMA and the export price is determined in accordance with the provisions of sections 24 to 28 and 30 of SIMA. If the normal value or export price cannot be determined in accordance with these provisions, then such amount is determined in the manner specified by the Minister of Public Safety and Emergency Preparedness (Minister) (section 29 of SIMA).
[5] An investigation with respect to the possible dumping of goods is initiated under subsection 31(1) of SIMA by the President, either on the President’s own initiative or following a complaint that satisfies the requirements of subsection 31(2) of SIMA. In general, there are two stages of a dumping investigation – preliminary and final – with a separation of responsibilities at each stage. If an investigation has not been terminated under section 35 of SIMA, the President is responsible for the preliminary determination of the estimated margin of dumping for each exporter and the goods to which these apply (section 38 of SIMA). Within 90 days following the preliminary determination of dumping, the President must either:(a) terminate the investigation if the President is satisfied that there is no dumping or the margin of dumping is insignificant (paragraph 41(1)(a) of SIMA); or
(b) if the investigation is not terminated, make a final determination that goods have been dumped and specify for each exporter the margin of dumping and the goods to which the determination applies (paragraph 41(1)(b) of SIMA).
[6] "“Insignificant”" is defined in subsection 2(1) of SIMA. This definition, in relation to a margin of dumping, reads:"insignificant means, "
"minimale S’entend : "
"(a) in relation to a margin of dumping, a margin of dumping that is less than two per cent of the export price of the goods,… "
"a) dans le cas de la marge de dumping, d’une marge inférieure à deux pour cent du prix à l’exportation des marchandises; " [7] The Canadian International Trade Tribunal (CITT) is responsible for making an inquiry and a preliminary determination of whether the dumping has caused injury or is threatening to cause injury (sections 37.1 and 42 of SIMA). The CITT is also tasked with making any applicable order or finding as provided in section 43 of SIMA following a final determination made by the President. Anti-dumping duties are imposed under sections 3 to 5 of SIMA as a result of an order or finding made by the CITT. The final determination made by the President, in and of itself, does not result in the imposition of anti-dumping duties.
[8] Section 30.2 of SIMA provides that the margin of dumping in relation to any goods of a particular exporter is the amount determined by subtracting the weighted average export price of the goods from the weighted average normal value of the goods. If this result is a negative number, the margin of dumping is zero. If it is impractical to determine the margin of dumping for all goods under consideration, the margin may be determined based on a sample as provided in section 30.3 of SIMA.
[9] SIMA sets out strict time limits within which the amounts must be determined by the President. Under subsection 38(1) of SIMA, the President must make a preliminary determination of dumping between the sixtieth and the ninetieth day after the initiation of an investigation under section 31 of SIMA (unless the President extends the time by 45 days as provided in subsection 39(1) of SIMA for the reasons as set out in that subsection). Within 90 days of making the preliminary determination of dumping under subsection 38(1) of SIMA, the President must make the final determination of dumping under section 41 of SIMA.
[10] The normal value of goods is to be determined based on the price of like goods that are sold to the persons and in the circumstances as set out in section 15 of SIMA. If there are insufficient qualifying sales of like goods, the normal value, subject to section 20 of SIMA, is determined either by using the price at which like goods are sold to other countries or by using the cost of production and adding a reasonable amount for administrative, selling and all other costs and a reasonable amount for profits (section 19 of SIMA).
[11] If the President is of the opinion that insufficient information has been provided to allow the determination of the normal value or the export price, the amount to be used for such normal value or export price is the amount to be determined in the manner specified by the Minister. ...
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