special import measures act
“ THE GOVERNMENT OF CANADA IS COMMITTED TO MAINTAINING AN EFFECTIVE TRADE REMEDY SYSTEM TO ENSURE THAT DOMESTIC PRODUCERS HAVE ACCESS TO THE APPROPRIATE TOOLS TO RESPOND TO UNFAIR TRADE.”
– PAUL DUCHESNE, FINANCE CANADA
Simply put, the term“ dumping” applies when a country of export sells goods into Canada at a lower price level than in their own market, or even at an unprofitable level.
“ A good example would be potatoes out of the U. S. In 1984, there was a finding regarding specific varieties of potatoes. Growers in certain U. S. states were able to export potatoes at a price that made B. C. growers non-competitive. What happens then is that the local potato producers can file a complaint with the CBSA.
There’ s a long complaint process involved, and if there is a finding of dumping, CBSA will impose an“ anti-dumping” duty on specific shipments of potatoes coming into B. C. in order to bring the price charged by the foreign producer up to a level comparable to the market rate for the domestic producer.
“ It’ s quite a program; it covers everything from potatoes to peppers from Holland, fasteners from China and sugar out of the EU,” said Bucholtz. The criteria can be extremely specific:“ In the case of fasteners, they have probably 100 different exclusions; a flange screw may be subject to dump duty, but a socket cap screw isn’ t.”
SIMA also covers cases of subsidizing that give an unfair advantage to foreign producers in the Canadian market.
“ 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,” said Duchesne.
Subsidizing might take many forms, such as government loans to small business, tax incentives or grants in the originating country.
One reason that a Canadian importer could be caught offguard by a requirement under SIMA is that“ the only time a dump duty would ever be applied is if a Canadian company brings forth an allegation,” said Bucholtz.
“ Trade remedy investigations are typically initiated following the submission of a properly documented complaint on behalf of a Canadian industry,” said Duchesne.“ Once a complaint is filed, the CBSA will evaluate the complaint. If the CBSA determines that an investigation should be initiated, questionnaires will be sent to exporters, importers and, in subsidy investigations, to the foreign government involved.” At this stage, the CITT also becomes involved.“ Following a decision to start an investigation, the CBSA will also send a copy of the complaint to the CITT. The CITT, independent from the CBSA, conducts an inquiry into the question of injury to the Canadian industry.”
If both the CBSA and the CITT find that an anti-dumping and / or countervailing duty is in order, it is imposed for an initial period of five years. At the end of that time, the case is reviewed, and the duty may be either extended or dropped.
The anti-dumping duties can vary considerably, even within the same product category. Bucholtz explains that when a category of goods is determined to be subject to duty, the Canadian government will contact the various manufacturers in the country of origin for further information to assist them in setting the rate.
“ Carbon steel fasteners coming in from China have a very high dump duty, as high as 170 per cent,” he said. However, for companies that are cooperative in providing Canadian authorities with information,“ the dump duty may be lowered, compared with companies that are not( cooperative).”
Dump duty may seem steep at first glance, but, as Bucholtz says, it’ s really just“ a cost of doing business.” Far more unfortunate would be to incur a penalty for ignoring the duty. The fee for a first infraction is $ 150, and rises to $ 450 for the third and each subsequent infraction, up to a maximum per infraction of $ 25,000. The fee applies per shipping transaction, which could be a 10-pound box, or a full container.
The fee schedule is covered under the CBSA’ s Administrative Monetary Penalty System( AMPS), and it is fairly complex.
“ Last time I looked, there were 152 different AMPS penalties, of which four were specific to SIMA,” said Bucholtz. A penalty may apply for failing to declare a duty-eligible item, or even for failing to produce documentation during an audit.
Of course, he added,“ There are appeals. The government will work with companies, depending on what they determine is the issue. Not knowing is not a defense, but they’ ll certainly work with you to mitigate the damage to your company.”
This may not apply in a situation like one Bucholtz recalls from some years ago, in which an importer claimed to be pricing goods at a level that was exempt from duty, while allegedly receiving rebates from the exporter to offset the price difference.
“ In a case like that, you’ re not going to get any breaks from anybody,” he said.
Since import-export regulations are a moving target, most importers rely on the expertise of a company like Bucholtz’ s to help them navigate the process.
“ Our company has 15 CBSA professional designates and 45 certified customs specialists( CCS), a designation provided by the Canadian Society of Customs Brokers( CSCB). We take a lot of pride in our expertise. Importers should be aware of everything they may run into – and part of that is having a good customs broker,” said Bucholtz.
Luckily for importers, information has never been easier to access.
“ CBSA has done a really good job of working with electronic messaging and they have wonderful websites. If worst comes to worst, you dial the 1-800 number,” he said.“ There’ s not really any excuse anymore for saying‘ Oops, I didn’ t know!’”
22 • SUPPLYCHAINCANADA. CA • SCMA