Presented by: Mr. Jesse I. Goldman Partner One First Canadian Place, 34 th Floor Toronto, Ontario, Canada Tel: Anti-Dumping 101: The Nuts and Bolts

Investigation of Dumping or Subsidization – the Procedure Normal Value and Export Price Countervailing Duty/Subsidies The Final Determination of Injury Application of Anti-Dumping or Countervailing Duties Liability for Anti-Dumping and Countervailing Duties 2 Overview of Canadian Anti-Dumping/Subsidization Law

What is Anti-Dumping/Subsidization? A remedy that protects Canadian producers from unfairly traded imports by imposing special duties at the time of importation Governing legislation The Special Import Measures Act (SIMA) and Special Import Measures Regulations (SIMR) govern the determination and application of anti-dumping and countervailing duties (AD/CVD) 3 Overview of Canadian Anti-Dumping/Subsidization Law

Administration of the AD/CVD Regime CBSA Initiates dumping/subsidizing investigations, Determines the existence of dumping or subsidizing, and Enforces the day-to-day operation of the AD/CVD The Canadian International Trade Tribunal Determines whether dumping or subsidizing has caused or threatens to cause material injury to the domestic industry, and Hears appeals arising from the CBSA's enforcement of the AD/CVD Regime 4 Overview of Canadian Anti-Dumping/Subsidization Law

Certain imported goods subject are subject to anti-dumping and countervailing duties (AD/CVD) because (1) The imported goods have been found to be dumped or subsidized; and (2a) The imported goods have been found to have caused injury or retardation to a Canadian domestic industry; or (2b) The imported goods threaten to cause injury by virtue of being dumped or subsidized 5 Introduction to Anti-Dumping and Countervailing Duties

Initiation of an investigation under the SIMA requires (1) dumping or subsidization of subject goods and; (2) injury or retardation to a domestic industry producing like goods 6 Investigation of Dumping or Subsidization – The Procedure

The President of the CBSA may initiate an investigation On his own initiative; or On the basis of a "properly documented" complaint by the domestic industry Requirements of Complaint: Standing The complaint needs the support of producers representing 50% of domestic production of like goods who have expressed an opinion for or against the complaint; and The producers supporting the complaint represent 25% or more of the total production of like goods The President has 21 days to determine whether a complaint is "properly documented" 7 Initiation of an Investigation

Notice of Initiation Once the President initiates the Investigation, he will notify the CITT, exporters, importers, the government of the country of export and the complainants and will publish the notice of initiation in the Canada Gazette. CITT Preliminary Inquiry When the CITT receives the notice of initiation, it initiates a preliminary inquiry into whether the complaint discloses evidence of a reasonable indication that the dumping or subsidizing of the goods has caused injury or retardation, or threatens to cause injury. The Preliminary Inquiry finding is due 60 days after initiation. A finding of no reasonable indication of injury terminates the investigation. 8 Investigation Procedure: Notice and Preliminary Inquiry

The CBSA conducts its investigation into whether the subject goods were dumping or subsidized from the date of initiation, at the same time that the CITT is conducting its Preliminary Inquiry Within 90 days of initiation, the President must issue a Preliminary Determination on dumping/subsidizing that may be extended up to 135 days 9 CBSA Dumping/Subsidizing Investigation

CBSA Questionnaires The CBSA issues detailed Requests for Information (RFIs) tailored to Exporter/Manufacturers of subject goods in the country of export, Importers of subject goods in Canada and, In subsidy investigations, the government in the country of export These RFIs elicit information to calculate margins of dumping (the amount by which normal values exceed export prices, if at all) and countervailable subsidies Emphasis on accounting concepts – cost accounting, tax and management accounting 10 CBSA Dumping/Subsidizing Investigation

Questionnaires (continued) Importer, Exporters and foreign governments have between 37 to 40 days to complete and file the RFIs with the CBSA in both confidential and non-confidential formats The CBSA may request further information in the form of supplemental RFIs Verification If the RFIs are properly and completely answered, CBSA officials will travel to the country of export and verify the responses to the RFIs from the source documents (books and records) used to complete the RFI Note that current CBSA practice is to conduct verification after the Preliminary Determination 11 CBSA Dumping/Subsidizing Investigation

Preliminary Determination Once verifications are completed, CBSA officials prepare a report and recommendations to their management respecting the establishment of normal values, export prices and the presence or absence of dumping or subsidizing On the basis of this report the President will issue the Preliminary Determination 12 CBSA Dumping/Subsidizing Investigation

Information in the RFI responses may be treated as confidential. This is often the first question a respondent has when it receives the CBSA RFI. Where information is provided on a confidential basis, a non-confidential, edited version to the RFI must be submitted to the CBSA for public distribution SIMA contains elaborate rules surrounding selective public disclosure and every party has the right to examine and be provided with copies of documents filed with the CBSA unless the documents are designated confidential 13 Confidential Information

From the Preliminary Determination (if dumping or subsidizing is found) the President has 90 days (exceptionally extended to 135 days) to make the Final Determination of Dumping Between the Preliminary and Final Determinations, the CBSA will continue their investigation by requesting further information, refining their calculations and consider factual and legal arguments raised by counsel CBSA may, in certain circumstances, accept and verify late RFI responses from exporters or importers who were not able, or simply failed to respond in a timely fashion 14 Investigation: From Preliminary to Final Determination

In the Final Determination the President must reach a conclusion on the margins of dumping and margin of subsidy of the subject goods The President must also conclude that the margins of dumping and subsidy are not negligible and specify the goods to which the determination applies The Final Determination is conclusive and may only be challenged on judicial review to the Federal Court of Appeal, or in the case of goods from a NAFTA Party, a panel constituted under the NAFTA 15 Investigation: Final Determination

Provisional Duties are applied to subject goods released on or after the date of the Preliminary Determination An importer may post security in an amount not greater than the estimated margins of dumping or subsidy in lieu of Provisional Duties Provisional duties continue until either the Final Determination terminates the Investigation or the CITT makes a finding of no injury or retardation. In these cases, the CBSA refunds the provisional duties If the investigation results in the imposition of AD/CVD, Provisional Duties may be fully or partially refunded following a reinvestigation commenced by the CBSA after the CITT issues its finding 16 Provisional Duty

Where the CITT finds there was a massive importation of subject goods 90 days prior to the Preliminary Determination, the CBSA must retroactively levy AD/CVD duties on goods imported during this period A massive importation is one which is extraordinary in volume, whether as a one-time importation or as a series of importations which in the aggregate, are massive AD/CVD are applied retroactively where the importer was, or should have been aware that the massive dumping/subsidization was or would have been injurious and where it is considered necessary to prevent recurrence of injury 17 Massive Importation

To determine whether dumping exits, the President of the CBSA must determine the Normal Value (NV) and Export Price (EP) of the goods which are exported to Canada. Goods are dumped when their NV is greater than their EP, and the difference between the two is the margin of dumping (MoD) For example, if NV = 100 and EP =90, there is dumping and the MoD is 10. The MoD expressed as a % of NV is 10%, and expressed as a % of the EP is 11.1% 18 Margin of Dumping, Normal Value and Export Price

The NV of exported goods is determined based on an orderly application of one of the following methodologies: (1) The domestic selling price of like goods; (2)The selling price of like goods to importers in third countries; (3) The cost of the exported goods plus a mark-up; (4) Section 20 NVs; or (5) a ministerial specification Each Exporter who cooperates with the Investigation and who provides a complete, verifiable response to the RFI will be assigned its own NVs. Different exporters therefore have different NVs The NV is determined on an ex-factory basis 19 Normal Value

The EP, determined on an ex-factory basis, is (1) the lesser of the exporter's sale price for the goods, as adjusted; and (2) the importer's purchase price for the goods, as adjusted Deductions to the EP The costs, charges and expenses incurred in preparing the goods for shipment to Canada that are additional to those generally incurred on sales of like goods for domestic consumption Any federal or provincial duty or tax imposed on the goods which is paid by the export; and All other costs, charges and expenses resulting from the shipment of the goods from the place of direct shipment to Canada 20 Export Price

EP based on Resale Price Method If there is no EP (consignment sales) or the President is of the opinion that the EP is unreliable (due to a compensatory arrangement or because the exporter and importer are associated) the President calculates the EP based on the price at which the imported goods were resold to an unrelated purchase in Canada The President deducts from the Importer's resale price the costs incurred on or after the importation of the goods, an amount for profit reflecting the profit that would be made in the sale of goods by the importer in the ordinary course of trade; and All costs from the point of direct shipment to Canada 21 Alternative EP

Where the President forms the opinion that there is not sufficient information furnished to calculate either NV or EP under the applicable methodologies, the NV or EP is established arbitrarily by Ministerial Specification Other Adjustments Credit Sales (NV and EP) Compensatory Arrangements (EP) Currency Conversion (NV and EP) Trade level adjustments (NV) 22 Ministerial Specification and other Adjustments

A subsidy may be "countervailable" when there is a financial contribution by a country other than Canada that confers a benefit to persons engaged in production, manufacture, growth, processing, purchase, distribution, transportation, sale export or import of goods provided that benefit is specific to a business, industry or region, but does not not include any duty or internal tax imposed by the country. Where a subsidy is prohibited, a CVD equal to the amount of the subsidy is applied to the imported goods, but only to the extent of the portion of the subsidy that is an export subsidy The margin of subsidy is established on a per-unit basis by distributing the value of the subsidy over subsidized goods based on the application of general accepted accounting principles 23 Subsidy

The role of the CITT is to conduct an inquiry to determine whether the dumping or subsidizing of goods Has caused or is likely to cause injury to the domestic industry in Canada of like goods?; or Would have caused injury or retardation except for the imposition AD/CVD? Key Issues in the CITT Inquiry What are like goods? What is the domestic industry? Is there a causal link between dumping or subsidization, as the case may be, and injury or retardation? Ruling on exclusion requests from the effects of an injury finding 24 The Final Injury Determination

If the CITT issues a finding of injury or retardation, AD/CVD will be applied to the subject goods for five years unless the finding is set aside. Review of Finding As with the Final Determination by the President, the CITT's finding is subject to judicial review by the Federal Court of Appeal, or in the case of goods exported from a NAFTA Party, a panel constituted under the NAFTA Public Interest Inquiry Persons whose interests may be adversely affected by a finding of injury by the CITT may ask the CITT to conduct a public interest inquiry. The CITT determines whether the full level of AD/CVD is necessary for the protection of the Canadian producers, and if not, will recommend a reduction in the amount of AD/CVD to the Minister of Finance 25 After the Final Injury Determination

After the CITT issues its injury/retardation finding, the matter reverts to the CBSA for enforcement No injury finding – refund of provisional AD/CVD paid prior to the finding No past injury finding, future injury finding – refund of provisional AD/CVD paid prior to the finding, but AD/CVD payable on subject goods released from customs on or after the date of the finding Past Injury – AD/CVD payable from the date of the Preliminary Determination forward 26 Application of AD/CVD

Post-Importation Reinvestigation Within 6 months of the CITT's finding, the CBSA must conduct a further investigation of dumping or subsidization in relation to the goods imported after the Preliminary Determination subject to Provisional Duties 27 Application of AD/CVD

After the initial reinvestigation, the CBSA conducts periodic administrative reviews to determine if the AD/CVD continue to be accurate There is no set schedule for reinvestigations, the CBSA initiates at its discretion Reinvestigation triggers include significant changes to the following: Prices of subject goods Market circumstances The exporters cost structure 28 Application of AD/CVD

Under the SIMA, the importer in Canada is liable for AD/CVD "importer" is defined as the person who "in reality is the importer of the goods"; there is no further definition The President, on his own initiative may, or if requested by an interested party shall, refer the question of which of two or more persons is the importer of the goods into Canada Only a few cases have been decided and these contain little guidance 29 Liability for AD/CVD

Importer's who are assessed AD/CVD by the CBSA can challenge the assessment based on Whether the imported goods are included in the CITT's definition of the goods subject to AD/CVD Whether the CBSA incorrectly determined the NV, EP or Subsidy 30 Liability for AD/CVD

Appeal Process is time sensitive An importer has 90 days to request a "re-determination" of the initial assessment by the CBSA and must "pay to play" by paying the AD/CVD assessed The next step is an appeal to the President within 90 days of the re- determination Within 90 days of the President's re-determination of the re-determination, the importer can appeal to the CITT On appeal, the CITT can determine if any AD/CVD is payable and if so, in what amount The importer may appeal the CITT's decision to the Federal Court of Appeal on questions of law only. 31 Liability for AD/CVD

China NME Status post December 11, 2016 a key issue 2016 – Consultations on potential SIMA amendments Almost entirely derived from CSPA pre-2016 Budget Submissions 3 key areas? 32 What’s Next?

“Particular market situation” - code for China, post December 11, 2016 How to address uncompetitive market conditions of section 20 NME provisions struck by WTO 33 Change some aspects of Normal Value calculation

“Anti-circumvention” Seeking ability to expand the scope of a finding without a new inquiry Not clear that circumvention is a significant problem Scope proceedings: Formalize it as a procedure, rather than leaving it to s. 55 – 61 of SIMA. Would give Canadian industry ability to participate Will drive up cost 34 Enforcement

Preliminary injury Expire reviews 35 Evidentiary Issues

Jesse I. Goldman Partner One First Canadian Place, 34 th Floor Toronto, Ontario, Canada Tel: George W.H. Reid Associate One First Canadian Place, 34 th Floor Toronto, Ontario, Canada Tel: THANK YOU