Trade Protectionism in Canada: Tools Used by Government

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Trade Protectionism in Canada: Tools Used by Government

Canada’s Special Import Measures Act (SIMA) could affect your plans to import a new product to Canada. Verifying if the product you want to bring isn’t affected could help you avoid duties which would otherwise have a significant impact on your bottom line.

The Act is designed to provide protection to Canadian producers who are being harmed or injured by the dumping or subsidizing of goods imported into Canada. Since its enactment, SIMA has been amended to bring it into conformity with Canada’s obligations under the Canada-United States Free Trade Agreement (FTA), the North American Free Trade Agreement (NAFTA) and, more recently, the World Trade Organization (WTO) agreements relating to anti-dumping and subsidies.

What is anti-dumping duty?

Such a duty is assessed when it is found that a product is being sold to Canadians at a price that is lower than comparable ones already available in the exporting country. When the goods are being sold in Canada at an unprofitable rate, an anti-dumping duty would also be applied.

What is countervailing duty?

A countervailing duty is applied when it is determined that a producer or exporter is being financially backed by their home country to sell their product at a cost lower than Canadian market value.

When and why?

The Canada Border Service Agency, in conjuncture with the Canadian International Trade Tribunal administer anti-dumping and countervailing duties. These duties are applied as a proactive step once a complaint is received in relation to a product found to be sold at costs lower than the market value, which in results harm Canadian industry.

In order for both these duties to be applied, an investigation needs to occur, via the Canadian International Trade Tribunal, which needs to determine that there is a significant dent in the Canadian industry.

The Tribunal also has the power to apply a provisional duty which is intended to protect Canadian industry and producers while the Tribunal makes its final decision.

It’s only once the Tribunal has confirmed the basis of dumping or countervailing, that the CBSA can impose anti-dumping or countervailing duty. Thanks to these duties, the playing field is leveled between importers and local producers. These duties are usually imposed for a period of five years after which there is a new reassessment.

Who’s complaining?

Canadian producers that suspect that competing goods are being brought into the country are dumped or subsidized can complain to the CBSA. Producers’ associations can also file a complaint on behalf of its members.

When deposing a complaint, it must contain information on the Canadian good affected, the competing good as well as a portrait of the conditions in the Canadian market and the domestic industry. Proof must show that the dumping or subsidizing of the goods are causing harm to the Canadian industry.

To avoid coughing up money, importers should have a look at the Measures in Force listing on the CBSA website: http://www.cbsa-asfc.gc.ca/sima-lmsi/mif-mev-eng.html in order to discover the current list of the duties.

In order to find out more about SIMA Program, consulting the CBSA’s website on the matter is the best first step: http://www.cbsa-asfc.gc.ca/sima-lmsi/contact-eng.html

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