Canada's AD Policy Change Seen as Shift From Prospective System; CBSA Disagrees
A recent Canada Border Service Agency policy update on how it administers antidumping normal value reviews seems to mark a notable shift away from a prospective system of trade remedies, lawyers at Borden Ladner said in a recent blog post. The new policy, which was announced (see 1907190017) in a July 19 memo, reduces predictability about whether a sales price "will be sufficient to avoid duty liability when goods are imported into the Canadian market," the firm said. CBSA disagreed with the characterization and said the policies "were informed by consultation with industry, workers, and other stakeholders."
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Historically, CBSA has established definitive normal values for goods to be exported to Canada on a prospective basis, allowing the exporter to eliminate the importer's liability for antidumping duties at the time of importation of the goods by making sure its actual price is higher than the established normal value, the firm said. Unlike the AD duty regime in the U.S., for example, "exporters with normal values have long understood that their Canadian importer customers could face potential retroactive anti-dumping duty assessments" only if the various requirements weren't met, the firm said.
An unofficial change seemed to start about a year ago, with the CBSA issuing retroactive duty assessments and setting more onerous notification requirements, the lawyers said. The change seems to be driven by Canadian steel producers, whose "advocacy the Government has been unwilling to resist, even where the changes sought may breach Canada's WTO obligation," it said. The July memo seems to formalize the practice, but the requirements remain vague, the firm said.
The CBSA took issue with how Borden Ladner framed the issue. "The CBSA’s legal authority to assess anti-dumping duties retroactively is not new," a CBSA spokesperson said in an email when asked about the blog post. "Rather, the policy update announced by the CBSA merely establishes a formalized framework that gives clarity and predictability to industry as to the conditions under which retroactive assessments can be made. In doing so, the Government of Canada is improving responsiveness to Canadian interests while supporting transparency and an open and fair international market."
Canada uses normal values to "represent the price at which goods can be fairly sold to the Canadian market," the spokesperson said. "Anti-dumping duties are only payable where goods are imported at a price that is below the normal value. In this regard, if normal values are not up to date, duties may not be sufficient to restore fair competition and could result in injury to the Canadian market. As such, retroactive assessments may be applied in limited circumstances where exporters have failed to adjust export prices to reflect significant changes in their own domestic market."
More clarity is needed from the CBSA, the firm said in the blog post. "These statements leave considerable latitude for capricious and arbitrary enforcement," it said. "It is unclear, for example, how significant changes must be to require reporting, when reporting will be considered sufficiently prompt, on what basis normal values will be considered 'significantly outdated', or how quickly export prices must be increased for those increases to be 'timely'. In other words, what is missing from the policy is guidance that would allow exporters and importers to specifically understand and plan for these additional obligations and to comply with them."