RESTRICTED
WORLD TRADE G/ADP/Q1/CAN/2
G/SCM/Q1/CAN/2
ORGANIZATION 7March 1997
(97-0931)
Original: English Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
NOTIFICATION OFLAWS AND REGULATIONS UNDER
ARTICLES 18.5AND 32.6OFTHE AGREEMENTS
Replies ofCANADA1toquestions posed by
theUNITED STATES2andVENEZUELA3
Thefollowing communication, dated 4March 1997, hasbeenreceived from thePermanent
Mission ofCanada.
_______________
REPLIES TOQUESTIONS FROM THE UNITED STATES
1. Given thatArticle 2.4oftheADAgreement states thatthededuction shall befor"profits
accruing", doesCanada intend tobaseitsdetermination ofwhatprofit would bemade inthe
ordinary course oftrade ontheexperience andthefinancial records ofthespecific exporter
atissue?
Inaccordance withArticle 2.3oftheADAgreement, Article 25oftheSpecial Import Measures
Act(SIMA) onconstructed export prices applies where there isnoexport price ortheexport price
isunreliable byreason ofassociation orcompensatory arrangement.
Therefore, inorder toensure thattheamount forprofit reliably reflects theamount made in
theordinary course oftrade, Section 22oftheSpecial Import Measures Regulations (SIMRs) bases
theamount forprofit ontheamount thatgenerally results from salesoflikegoods, orgoods ofthe
same general category, orsalesofgoods thatareofthegroup orrange ofgoods thatisnextlargest
togoods ofthesame general category, inCanada, byvendors whoareatthesame orsubstantially
thesame trade levelastheimporter, tonon-associated purchasers.
2. Where istheADAgreement rationale foruseof7.4% astheamount for"profit accruing" on
anygiven constructed export price sale?
Thereference to7.4% hasbeendeleted intheSIMRs thatbecame effective on7May1996.
Paragraph 22(c) nowrefers totheamount ofprofit thatgenerally results fromsalesofgoods thatare
ofthegroup orrange ofgoods thatisthenextlargest tothesame general category ofgoods.
1G/ADP/N/1/CAN/2-G/SCM/N/1/CAN/2.
2G/ADP/W/73-G/SCM/W/82+G/ADP/W/73/Suppl.1-G/SCM/W/82/Suppl.1.
3G/ADP/W/151-G/SCM/W/158.G/ADP/Q1/CAN/2
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3. Article 2.2,footnote 2,oftheADAgreement states thatsalesinthehome market orthirdcountry
arenormally notsufficient iflessthan5%ofexport sales totheimporting Member. Neither
theSIMA northeSIMA Regulations contain this5%standard. What standard willCanada
apply indetermining whether thevolume ofsales inthehome market issufficient?
The5%standard infootnote 2is,ofcourse, intended asageneral guideline andnotaninflexible
standard andtheprovision clearly envisages thepossibility ofadifferent ratiowhere warranted.
Thedetermination bytheDeputy Minister ofNational Revenue ofwhether thereisasufficient
number of(home market) salesoflikegoods topermit afaircomparison ofnormal values andexport
prices willdepend upon thecircumstances ofeachcase.
Inmaking thisdetermination, theDeputy Minister willbeguided, interalia,byfootnote 2
toArticle 2.2oftheADAgreement. Inthisregard, Revenue Canada applies the5%standard inpractice
andwillonlydeviate therefrom where there isgood reason todoso,(e.g., where there aresufficient
saleseventhoughthe5%thresholdisnotsatisfied).Anydeviationsfromthethresholdwillbeexplained.
4. Isthereahierarchy among thethreealternative methods ofdetermining normal value outlined
inparagraph 16(1)(c) andsection 19ofSIMA?
Section 15ofSIMA setsoutthebasicrulesforthedetermination ofthenormal value ofgoods
inthecountry ofexport. Subsection 16(1) stipulates therules tobefollowed intheapplication of
section 15,intheevent thataparticular condition identified inthatsection cannot besatisfied. Inthis
regard, paragraph 16(1)(c) allows Revenue Canada investigators toconsider salesbyother vendors
inthecountry ofexport where there areinsufficient home market salesintheordinary course oftrade
bytheexporter.
Section 19ofSIMA, ontheother hand, expressly stipulates thatitonlyapplies where normal
value cannot bedetermined under section 15,(and, bynecessary implication, andwhere appropriate
under thecircumstances, subsection 16(1) ofSIMA).
Insuchcases, theDeputy Minister ofNational Revenue hastheoption, under section 19of
SIMA, tobasenormal value onthirdcountry salesorconstructed costs. Thisisentirely consistent
withArticle 2.2oftheADAgreement.
5. Intermediate Country Sales
What istheADAgreement rationale forbasing normal value andexport price inthecountry
oforigin because normal value ishigher inthecountry oforigin?
Incases involving goods thatarenotdirectly exported fromthecountry oforigin, Article 2.5
oftheADAgreement provides thatprices ofthegoods shallnormally becompared withthecomparable
prices inthecountry ofexport. Ourprimary method ofcalculating margins ofdumping inmultiple
country situations is,infact,based onacomparison ofexport prices withcomparable prices inthe
country ofexport.
Article 2.5,however, further provides that,where appropriate, thecomparison maybemade
withprices inthecountry oforigin. Anillustrative, (i.e.,non-exhaustive), listofexamples ofsituations
where thiswould beappropriate isprovided. Theselling priceinthecountry ofexport should behigher
thantheselling priceinthecountry oforigin given theadditional costs, (e.g., transportation), involved.
Insituations where thisisnotthecase, itwould beappropriate tocompare export prices withselling
prices inthecountry oforigin.G/ADP/Q1/CAN/2
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6. DutyAsACost
Subparagraphs 25(1)(c)(i) and25(1)(d)(v) oftheSIMA provide thatexport priceistobereduced
bytheamount ofallduties, including ADduties. However, these provisions aremodified somewhat
inthatsubsection 25(2) provides thatnosuchdeduction willbemade iftheDeputy Minister concludes
that,before suchdeduction ismade, export price isgreater thanorequal tonormal value. However,
subsection 60(2) ofSIMA provides that,notwithstanding subsection 25(2) ofSIMA, anyduties imposed
shall beincluded inthecosts, under certain circumstances, inre-determination proceedings.
HowwillCanada implement these seemingly contradictory provisions inamanner thatwill
notartificially increase dumping margins?
Therationale forsubsection 25(2) ofSIMA istoensure that,where anexporter increases the
export price ofgoods inorder toeliminate themargin ofdumping, anti-dumping duties assessed or
owing under theActarenotincluded inthecosts"backed-out" oftheresale price inCanada. Ifsuch
dumping duties were deducted, theresult would unduly penalize theimporter. Subsection 25(2) is,
therefore, intended toaddress theveryconcern raised intheUnited States 'question.
Itshould benoted thatparagraph 60(2)(a) onlybecomes applicable interms ofconsidering
thesaleprice ofthegoods bythefirstindependent purchaser inCanada oranysubsequent purchaser.
Therefore, itisnotthesalemade bytheimporter which isofconcern but,rather, itisthesalemade
bytheimporter 'sfirstarm's-length customer inCanada oranysubsequent salesmade further along
thedistribution chain.
Further, thisprovision isonlyapplicable inthecaseofre-determinations where theexport
price isdeemed asunreliable duetotheexistence ofacompensatory arrangement asconsidered by
subparagraph 25(1)(b)(ii) oftheActandissimply usedasanindicator astowhen anti-dumping duties
paidbytheimporter aretobetreated asa"cost" inthecalculation ofexport price under section 25.
Subsection 60(2) oftheActisonlyapplicable inthecaseofre-determinations where theexport
price isdeemed asunreliable duetotheexistence ofacompensatory arrangement within themeaning
ofsubparagraph 25(1)(b)(ii) oftheActandissimply usedasanindicator astowhen anti-dumping
duties paidbytheimporter aretobetreated asa"cost" inthecalculation ofexport price under
section 25.
7. Withrespect tosubsection 30.2(2) ofSIMA, isourunderstanding correct thatnormal value
willbedetermined bycomparing weighted average prices toprices ofindividual sales
transactions insituations ofsignificant price variations?
Wheretherearesignificantvariationsinthepricesofgoodsfromaparticularexporter:(i)among
purchasers; (ii)regions ofCanada; or(iii)timeperiods, suchasincases of"targeted dumping" ,
subsection 30.2(2) allows theDeputy Minister ofNational Revenue tobasethemargin ofdumping
onselected individual sales.
Pursuanttosubsection30.2(3),theexportpricesoftheseindividualsalesarecomparedtonormal
values based ontheweighted average oftheprices atwhich likegoods weresoldbytheexporter in
itshome market. TheUnited States 'interpretation ofthisprovision is,therefore, correct.G/ADP/Q1/CAN/2
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8. Re.section 12oftheSIMRs, whatistheADAgreement rationale forderiving thecalculation
ofdesign andengineering costs onnon-subject merchandise (thegeneral category ofgoods)
orcosts incurred byother producers orexporters?
When constructing normal values, theSIMRs require theDeputy Minister ofNational Revenue
toinclude, aspartofthe"cost ofproduction" calculation, those costs thataredirectly attributable to
thedesign andengineering ofthesubject goods.
Section 12oftheSIMRs expressly stipulates thatitsapplication islimited tothose situations
where thiscomponent ofproduction costscannot bedetermined onthebasisofcostsdirectly attributable
tothedesign/engineering ofthesubject goods.
While theADAgreement issilent onhowproduction costsaretobeconstructed when actual
amounts cannot bedetermined, section 12oftheSIMRs isentirely compatible withArticle 2.2.2 of
theADAgreement pertaining totheother components ofconstructed cost,which provides that,where
actual amounts pertaining toproduction andsalesintheordinary course oftradecannot bedetermined:
(i) actual amounts incurred bytheexporter orproducer inrespect oftheproduction and
saleofthesame general category ofproducts;
(ii) theweighted average ofamounts incurred byother exporters orproducers inrespect
oftheproduction andsaleoflikeproducts; or
(iii) anyother reasonable method;
maybeused.
9. HowwilltheCanadian authorities apply therequirements ofparagraph 13(a) oftheSIMA
Regulations, (i.e.,theconditions inparagraphs 15(a) to(e)oftheSIMA), insituations where
thecalculation ofprofit isbased onother thansales ofthesubject goods bytherespondent
exporter?
Wheretheamountforprofitisbeingdeterminedonthebasisofsalesbyotherthantherespondent
exporter, theDeputy Minister ofNational Revenue willutilize those saleswhich satisfy thegreatest
number ofconditions setoutinparagraphs 15(a) to(e)oftheAct. Some ofthese conditions, such
assubparagraph 15(a)(ii) pertaining totrade levelandparagraph 15(b) inrespect ofquantities, will
necessitate acomparison tothesalesmade toCanada bytheexporter forwhom theamount ofprofit
isbeing determined. Inorder toaffect aproper comparison, theprice ofthegoods willbeadjusted
inthemanner provided forinRegulations 3to10.
When theamount forprofit isdetermined onthebasis ofsalesbyother thantherespondent
exporter, suchinformation isusually available totheDeputy Minister provided thatthere areother
exporters orproducers whoaresubject totheinvestigation andwhohavesubmitted suchinformation
totheDeputy Minister aspartoftheirownsubmissions.
10. Howwillthesamerequirements, (regarding theconditions inparagraphs 15(a) to(e)ofSIMA),
beapplied forthepurposes ofcalculating SG&A?
When SG&A isbeing determined pursuant toRegulation 11(c)(i) based onthedomestic sales
oflikegoods made bytheexporter, suchsalesarethose which satisfy thegreatest number ofconditions
setoutinparagraphs 15(a) to(e)oftheAct. Insuchcases, theDeputy Minister ofNational RevenueG/ADP/Q1/CAN/2
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willexamine domestic sales andwillselect those sales thatsatisfy suchconditions withparticular
emphasis onselecting saleswhich aremade inthesame quantities asthose soldtotheimporter and
which aremade tothesame orsubstantially thesame trade levelastheimporter.
When GS&A isbeing determined pursuant toRegulation 11(c)(ii), these conditions arenot
applicable since theamount isbeing determined onthebasis oftheactual export GS&A incurred by
theexporter onthesale.
11. How doesCanada plantoimplement paragraph 13(c) oftheRegulations? Willrespondents
berequired toprovide alltransactions andtransaction-specific adjustments forthegeneral
category ofsales orforsales ofthenextlargest group orrange ofgoods when profit cannot
becalculated onsales ofthesubject merchandise? What information willberequired from
other exporters orproducers iftheirprofit istobeusedinthecalculation ofconstructed value
forarespondent company?
Paragraph 13(c) isusedinconjunction withRegulation 11(b) oftheSIMRs indetermining
anamount forprofit based onthepriceofgoods ofthesame general category orofgoods ofthegroup
orrange ofgoods thatisthenextlargest. Theselection ofthese saleswillbemade bytheDeputy
Minister ofNational Revenue based onthecriteria setforthinparagraph 13(a) oftheSIMRs andthe
saleprices willbesubject toadjustment toensure aproper comparison.
Generally, respondents willnotberequested toprovide domestic salesinformation concerning
salesofgoods ofthesamegeneral category orofthenextlargest group orrange unless/until theDeputy
Minister hasdetermined thatnormal values willhavetobedetermined pursuant toparagraph 19(b)
oftheAct. However, ifsuchinformation isrequested, therespondent exporters willbeexpected to
provide adequate information bywhich toapply theprovisions ofparagraphs 11(b) and13(c) ofthe
SIMRs.
Likewise, other exporters orproducers willnormally onlyberequired toprovide information
regarding theirdomestic salesofgoods ofthesame general category orofthenextlargest group or
range when theDeputy Minister hasdetermined thatsuchinformation isnecessary. Ifsuchinformation
isbeing requested solely todetermine anamount forprofit forother thanthegoods which theyexport
toCanada, thenthesubmission ofsuchinformation willberequested ona"courtesy basis" totheextent
thatfailure toprovide suchinformation willnotaffect theoutcome oftheinvestigation asfarasthe
determination ofdumping forthese exporters orproducers isconcerned.
12. HowwillCanada restrict theapplication ofsubparagraphs 11(b)(v) and(vi)oftheRegulations
toensure thattheprofit calculation doesnotexceed theprofit normally realized byother
exporters andproducers forthesame general category ofproducts?
Because paragraph 11(b) oftheSIMRs ishierarchical innature, subparagraphs 11(b)(v) and
(vi)cannot beapplied ifthere aredomestic salesoflikegoods orgoods ofthesame general category
thatcanbeusedtodetermine anamount forprofit. However, where suchsalesdonotexistorwhere
suchsalesdonotproduce aprofit, thensubparagraphs 11(b)(v) and(vi)permit theuseofdomestic
sales ofgoods ofthenext largest group orrange ofgoods. While theconstruction of
Regulations 11(b)(v) and(vi)doesnotlogically permit acomparison totheprofit earned ongoods
ofthesame general category, since subparagraphs (v)and(vi)arestillmaking reference toarange
ofproducts thatwould include likegoods andgoods ofthesamegeneral category, thismethod ofprofit
determination isa"reasonable method" within themeaning ofArticle 2.2.2(iii) oftheADAgreement.G/ADP/Q1/CAN/2
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13. Arethere anycircumstances inwhich thecalculation ofSG&A expenses under
subparagraph 11(c)(ii) oftheRegulations would yieldadifferent result forSG&A expenses
thansubparagraph 11(c)(i)?
There will becircumstances inwhich thecalculation ofSG&A expenses under
subparagraph 11(c)(ii) oftheRegulations would yieldadifferent result forSG&A thanhadtheybeen
determined pursuant tosubparagraph 11(c)(i).
Under subparagraph 11(c)(ii) theamount forSG&A isbased ontheactual amounts attributable
tothesaleofthegoods exported toCanada while SG&A under subparagraph 11(b)(i) isbased onthe
domestic salesoflikegoods. Inthisregard, there could becases, forexample, where theexporter
undertakes selling functions inthedomestic market thatarenotincurred inrespect ofthesalestoCanada,
orundertakes additional activities, eventhough thedomestic andexport salesmaybeatthesametrade
level. Under subparagraph 11(b)(i), SG&A would include anamount related totheseparticular selling
functions butsuchamounts would notbeapplicable inrespect ofthesalestoCanada and,therefore,
would notbeincluded intheSG&A calculated under subparagraph 11(b)(ii).
14. Ifarespondent isunable toprovide appropriate SG&A information forsubject merchandise,
willCanada consider using anyalternative SG&A information (such asisprovided forin
Articles 2.2.2(i) to(iii)oftheADAgreement) prior torelying onfactsavailable?
Paragraph 11(c) oftheSIMRs provides twomethods fordetermining areasonable amount for
administrative, selling andallother costs. Inmostcases, themethods provided forinparagraph 11(c)
should besufficient toestablish anappropriate amount forSG&A.
Intheunlikely scenario thatneither ofthese methods canbeused, normal values could not
bedetermined pursuant toparagraph 19(b) oftheAct,(i.e., using the"cost plus" method), without
recourse tothe"facts available" methodology. However, itispossible thatnormal values could be
established using a"cost plus" methodology under Ministerial specification pursuant tosection 29of
theAct,withanamount forSG&A established using another reasonable method consistent with
Article 2.2.2(iii) oftheADAgreement.
15. Does section 31.1(4) oftheSIMA mean thattheDeputy Minister willnotinitiate onanon-
notified subsidy which theDeputy Minister isoftheopinion isanon-actionable subsidy or
doesitsimply mean thattheissue ofthesubsidy 'snon-actionability mustberesolved during
theinvestigation?
Paragraph 31.1(4)(a), inconjunction withsubsection 30.4(3) ofSIMA, implements Canada 's
obligations under footnote 35oftheSCM Agreement withrespect toanysubsidy which, although not
notified inaccordance withArticle 8.3oftheSCM Agreement, isdetermined bytheDeputy Minister
ofNational Revenue, during aninvestigation, tofullyconform totheconditions fornon-actionability.
Inthese situations, notification oftheDeputy Minister ofFinance effectively terminates allfurther
action bytheDeputy Minister ofNational Revenue withrespect tothatsubsidy.
16. What isthereason forinclusion oftheword "directly" insection 25.3(e)(iii) oftheSIMA
Regulations?
Theword "directly" wasincluded forgreater clarity andinrecognition ofthefactthatall
fundamental orbasic research isindirectly linked toindustrial orcommercial objectives totheextent
towhich theresults canultimately becommercialized.G/ADP/Q1/CAN/2
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17. Please explain howinvestigations willbecompleted within the365daysallowed byArticles 5.10
oftheADAgreement and11.11 oftheSCM Agreement.
Inmost cases, investigations willbecompeted in210days, based ona90preliminary
determination (PD)anda120-day Canadian International Trade Tribunal (CITT) finaldetermination
(FD) period .
Inaworst casescenario, (excluding judicial reviews), themaximum would be315days, which
iswellwithin themaximum 18-month timeframes setoutinArticles 5.10and11.11 oftheADand
SCM Agreements, respectively, i.e.:
PD 90days(SIMA/38(1))
PD(Extension) 45days(SIMA/39(1))
35(2)(b) referral 30days(SIMA/35(2)(b))
CITT advice 30days(SIMA/37(b)(iii))
*(FD 90days) (SIMA/41(1))
CITT Order 120days(SIMA/43(1))
TOTAL 315DAYS (or10.5months)
(* TheCITT proceedings andtheDeputy Minister ofNational Revenue 'sfinaldetermination (FD)
arerunning concurrently sotheFDisnotincluded.)
(Itshould alsobenoted thattheCITT time-frame could beadayortwolonger than120days
since theCITT proceedings commence onthedatewhen theyreceive notice ofthePDasper
subsection 42(1) ofSIMA).
Thereferences intheUSquestion totheadditional time-limits insection 29oftheCITT Act
areincorrect asthese pertain tosafeguard inquiries under section 26ofthatAct.
18. Whyisthere noprovision inClause 6(a)(i)(A) ofSIMA fortheimports tobeoverarelatively
shortperiod oftime,aswellasmassive, asapre-requisite toafinding ofcritical circumstances
asrequired byArticles 10.6oftheADAgreement and20.6oftheSCMAgreement? Does the
language, "amassive importation" ofClause 6(a)(i)(A) envision asingle importation andhence
dispense withthe"relatively short period oftime" language?
Thereason whythereference inclauses 6(a)(i)(A) ofSIMA to"amassive importation" does
notcontain the"relatively short period oftime" language oftheWTO Agreements isthat
Clause6(a)(i)(A)oftheSIMAisinrespectofasinglemassiveimportation.Asinglemassiveimportation
will,byitsverynature, occur within ashort period oftime(i.e., onaspecific day). Itistherefore
unnecessary toaddtheconstraint "within arelatively short period oftime". Where SIMA speaks to
multiple importations constituting amassive importation, (e.g., Clause 6(a)(i)(B)), the"relatively short
period oftime" requirement isincluded.
19. Subsection 49(3) oftheSIMA permits theparties torequest thattheunderlying investigation
becompletedwhenanundertakingisaccepted,butdoesnotexplicitlyrequiretheDeputyMinister
todoso.Articles 8.4oftheADAgreement and18.4oftheSCM Agreement require the
administering authority tocomplete theinvestigation ifcompletion isrequested. Under SIMA,
istheDeputy Minister required tocomplete theinvestigation?
Subparagraph 50(a)(iii) andparagraph 50(b) oftheSIMA provide that,upon acceptance of
anundertaking, theDeputy Minister andtheCanadian International Trade Tribunal mustsuspend theirG/ADP/Q1/CAN/2
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respective dumping/subsidy investigation andinjury inquiry unless therequest, referred toin
subsection 49(3) oftheActtocomplete theinquiry, hasbeenmade.
20. What standards areapplied ingranting anddeciding theresults ofreviews under section 76
oftheSIMA?
There aretwotypes ofrequests forreviews under section 76ofSIMA, i.e.:
(i) arequest forreview filedinresponse totheTribunal 'snotice thatanorder isabout
toexpire; and
(ii) arequest forreview atanytimeafteranorder ismade/continued, based onchanged
circumstances.
Inbothcases, theTribunal mustbesatisfied thatareview iswarranted based ontheinformation
contained intherequest andanyother representation received from other parties either for/against
thereview.
Withrespect toexpiry reviews, theTribunal willconsider information insubmissions received
relating tosuchaspects asthelikelihood ofaresumption ofdumping/subsidizing, likely import volumes,
domestic industry performance since theorder, andanyother relevant factors, (e.g., changes inthe
supply/demand forthesubject goods, changes inthelevel/sources ofimports intoCanada, etc.).
Withrespect tochanged circumstances reviews, theTribunal mustbesatisfied thatinformation
insupport oftherequest discloses thatconditions relating directly tooneoftheessential elements of
theoriginal finding, (e.g., definition oftheproduct, injury, causality, etc.), hadchanged tosuchan
extent astorender theoriginal order nolonger valid.
Indetermining whether anorder/finding should becontinued, theTribunal must, inaccordance
withArticle 11.3oftheADAgreement and21.3oftheSCM Agreement, besatisfied:
(i) thatthere isalikelihood ofacontinuation/recurrence ofdumping and/or subsidizing
from thesubject countries iftheorder/finding isrescinded; and
(ii) thecontinuation/recurrence ofdumping and/or subsidizing islikely tocause injury
tothedomestic industry.
With respect totheissue ofthelikelihood ofacontinuation/recurrence ofdumping and/or
subsidizing, theTribunal would consider suchfactors as,demonstrated propensity todump, product
pricing trends relative toother relevant economic indicators, andrelevant datafrom theDepartment
ofNational Revenue including theresults ofthemostrecent administrative review. Inexamining the
issueofinjury, theTribunal would consider thevolume, price effect, andindustry impact factors set
outintheADandSCM Agreements.
With respect tochanged circumstance reviews, theTribunal considers whether some keyfact
orcircumstance thatunderpinned anessential element ofthefinding under review haschanged so
fundamentally astomake thefinding nolonger valid.
21. TheCITT Annual Report refers toreviews pursuant to76oftheSIMA under theheading
"Reviews ofFindings ofMaterial Injury". Does theCITT alsoconduct reviews directed solely
orprimarilytowardchangedcircumstanceswhichresultinanabsenceofdumpingorsubsidizingG/ADP/Q1/CAN/2
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alone? Ifnot,howaresuchreviews, foreseen byArticles 11.2oftheADAgreement and21.2
oftheSCM Agreement, provided forunder Canadian law?
Changed circumstances reviews, including reviews based onchanges indicating thatthere is
nolongeralikelihoodofacontinuation/recurrenceofdumpingand/orsubsidizing,areconductedpursuant
tosubsection 76(2) oftheSIMA bytheCanadian International Trade Tribunal.
22. Itisnotclear howreview isobtained ifaparty toanundertaking wishes tomake ashowing,
prior toasunset review, thattheconditions which ledtotheundertaking nolonger existwere
theundertaking tobeterminated. Articles 11.5oftheADAgreement and21.5oftheSCM
Agreement callfortheprovisions ofArticles 11and21oftheADandSCM Agreements
respectively, (including thechanged circumstances provision), toapply, mutatis mutandis, to
undertakings. Hasthisprovision beenimplemented intoCanadian laworisthetreatment
accorded undertakings distinct fromthetreatment accorded definitive measures?
Therequirements ofArticles 11.5oftheADAgreement and21.5oftheSCM Agreement have
beenimplemented intoCanadian law. SIMA requires thatundertakings bereviewed atleastevery
fiveyears butthereisnothing intheActprecluding theDeputy Minister, uponarequest ofaninterested
person, toconduct anearlier review todetermine whether theundertaking continues toserve itspurpose
andshould, therefore, becontinued. Inthisregard, subsection 52(1.2) requires theDeputy Minister
toterminate anundertaking atanytimeafteraccepting theundertaking iftheDeputy Minister issatisfied
thatthedumping/subsidizing orresulting injury, uponwhich theundertaking wasbased, willnotrecur.
23. (a) Indetermining theallothers rate,Article 9.4oftheADAgreement requires authorities
todisregardmarginsestablishedonthebasisof"factsavailable".Paragraph25.2(1)(a)
oftheRegulations requires theexclusion ofmargins established asaresult of
paragraph 25(1)(e) ofSIMA. Isparagraph 25(1)(e) ofSIMA anexport price facts
available provision?
Yes,paragraph25(1)(e)ofSIMAuses"factsavailable"methodologiesandis,therefore,
expressly excluded inparagraph 25.2(1)(a) oftheRegulations inaccordance withArticle 9.4
oftheADAgreement.
(b) Ifso,theRegulations donotsimilarly exclude normal values established onthebasis
offactsavailable. Willthisbeadded totheRegulations?
Regulation 25.2(1)(a) refers tomargins ofdumping which havebeenestablished as
aresult oftheapplication ofsections 15to28and30oftheAct. Since section 29oftheAct
usesthe"facts available" methodology, ithasbeenexcluded from Regulation 25.2(1) in
accordance withArticle 9.4oftheADAgreement. Therefore, under Regulation 25.2(1), only
normal values established pursuant tosections 15to23.1andsection 30would beincluded
inestablishing theweighted average ofthemargins ofdumping.
(c) Whyissection 29oftheSIMA, thefacts available provision, notreferred toin
section 25.2(1)(a) oftheRegulations?
Because section 29oftheSIMA uses"facts available" methodologies, ittooisexcluded
from paragraph 25.2(1)(a) oftheRegulations, inaccordance withArticle 9.4oftheAD
Agreement, (i.e., itisexcluded byomission inthatparagraph 25.2(1)(a) oftheRegulations
requires theapplication ofsections 15to28andsection 30,excluding paragraph 25(1)(e) of
theAct).G/ADP/Q1/CAN/2
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24. Whatisthereasonforincludingsection25.2(1)(b)oftheRegulations,calculationmethodology?
Asindicated inparagraph 25.2(1)(b) oftheRegulations, thisprovision isintended forsituations
where amargin ofdumping cannot bedetermined under paragraph (a). Thissituation could arise
when themargins ofdumping foralloftheexporters included inthesample orpercentage inagiven
country weredetermined using factsavailable (i.e.section 29oftheAct). Where thisoccurs, there
would benomargins ofdumping thatcould beutilized forpurposes ofparagraph 25.2(1)(a). Insuch
cases, therefore, paragraph 25.2(1)(b) permits theweighted average margin ofdumping tobedetermined
using goods fromallother countries whose goods areunder investigation. TheADAgreement does
notprohibit suchanapproach norissuchanapproach contrary totheAgreement.
25. (a) Article 9.5oftheADAgreement states thatnoduties willbelevied onimports from
theexporter orproducer while theexpedited review isbeing carried out.Section 56
oftheRegulations setsforthprocedures forposting security intheformofcashora
certified cheque, andprocedures forposting security, "inanyother form". Willnew
shippers begiven theoption ofposting security intheformofcash, orcertified cheque
orinsome other form?
Section13.2(4)ofSIMAandsection56oftheRegulationsareconsistentwithArticle9.5
oftheADAgreement which, while prohibiting thelevying ofduties onimports from an
exporter/producerwhileanexpeditedreviewisbeingcarriedout,allowstheauthoritiestorequest
aguarantee toensure that,should thereview result inadetermination ofdumping, anti-dumping
duties canbelevied retroactively tothedateofinitiation oftheexpedited review.
Newshippers willbegiven theoption ofposting security intheformofcash, certified
cheque orabond. Administrative procedures willrequire thatthebond beguaranteed bya
financial institution acceptable totheGovernment ofCanada.
(b) Willadefinition ofsecurity "inanyother form" beadded tosection 56ofthe
Regulations?
There isnointention todefine, byregulation, themeaning ofsecurity "inanyother
form" .
26. Hasanyprovision beenmade inCanadian lawfortheimplementation ofWTO panel reports?
New section 76.1 oftheSIMA provides fortheimplementation ofWTO panel reports.
Specifically, section 76.1authorizes theMinister ofFinance torequest theDeputy Minister ofNational
Revenue and/or theTribunal toreview alloranyportion ofadecision, determination, order orfinding,
asthecasemaybe,based onaWTO/DSB panel recommendation orruling.
SUPPLEMENTARY QUESTIONS
1. Section 42(3) oftheSIMA states thattheCITT "may make anassessment ofthecumulative
effect ofthedumping orsubsidizing ofgoods ...". Does thispermit, authorize ormandate
thepractice of"cross-cumulation" ofdumped imports withsubsidized imports?
TheSIMA neither precludes normandates thecross-cumulation oftheinjurious effects of
dumping andsubsidizing ofsubject goods.G/ADP/Q1/CAN/2
G/SCM/Q1/CAN/2
Page11
2. HowdoesCanada implement therequirement ofArticle 3.4oftheADAgreement thatthemargin
ofdumping beexamined inascertaining theimpact ofdumped imports onthedomestic industry?
Themagnitude ofthemargin ofdumping isnotamong the"impact" factors listed in
paragraph 37.1(1)(c) oftheRegulations.
Inaccordance withthenon-exhaustive nature ofthelistoffactors inArticle 3.4oftheAD
Agreement, paragraph (d)ofsubsection 37.1(1), which allows fortheconsideration ofanyotherfactors
thatarerelevant inthecircumstances, would capture "magnitude ofthemargin ofdumping" where
relevant. However, forgreater certainty, subparagraph 37.1(1)(c)(ii.1) oftheSIMRs hasbeenadded
which identifies thefollowing factor: "themagnitude ofthemargin ofdumping oramount ofsubsidy
inrespect ofthedumped orsubsidized goods".
3. (a) SIMA subparagraph 35(1)(a)(iii) states thatinvestigations shall beterminated when
theDMdetermines that"theactual orpotential volume ofdumped orsubsidized goods
isnegligible". Butthedefinition of"negligible" import volumes insection 2(1)ofthe
SIMA pertains solely todumping investigations. HowdoesCanada define negligibility
incountervailing dutyinvestigations?
Subsection2(1)oftheSIMA,whichdefines"negligible" importvolumesonlyinrespect
ofdumped imports, isconsistent withthefactthat,whereas Article 5.8oftheADAgreement
provides specific negligibility thresholds, Article 11.9oftheSCM Agreement doesnot.As
aresult, thenegligibility ofsubsidized import volumes willdepend upon thecircumstances
ofeachcase, having regard tosuchfactors asthetotalvolume ofimports fromallcountries.
3. (b) Isthisdefinition consistent withArticle 27.9oftheSCM Agreement?
Article 27.9oftheSCM pertains toaction under Article 7andnottoPartV
oftheAgreement onCountervailing Measures. Ontheissueofspecial treatment for
developing countries incountervail investigations, newsection 41.2ofSIMA expressly
implements thedeminimis andnegligibility thresholds inArticles 27.10 and27.11
oftheSCM Agreement.
4. Sections 33-35 oftheSIMA provide circumstances under which theDeputy Minister "may"
referaninvestigation totheCITT todetermine whether there isareasonable indication that
thedumping orsubsidizing hascaused oristhreatening tocause injury. Does thismean that
thedetermination whether torefertheinjury enquiry totheCITT isamatter ofdiscretion for
theDeputy Minister?
Under theCanadian bifurcated system, theDeputy Minister ofNational Revenue isresponsible
fordeciding whether toinitiate aninvestigation andwhether tomake apreliminary determination of
dumping/subsidizing andreasonable indication ofinjury, retardation orthreat ofinjury caused bysuch
dumping/subsidizing (SIMA/subsection 38(1)).
Where theDeputy Minister makes apreliminary determination, theDeputy Minister must,
among otherthings, fileawritten notice withtheSecretary oftheCanadian International Trade Tribunal
(SIMA/subsection 38(3)). Upon receipt ofsuchnotice, theTribunal mustcommence theformal injury
inquiry (SIMA subsection 42(1)) while theDeputy Minister conducts thefinaldumping/subsidizing
investigation (SIMA/subsection 41(1)).
Giventhemannerinwhichoursystemisbifurcated,andinrecognitionoftheTribunal'sexpertise
ininjury matters, theso-called sections 33,34and35"advice" provisions wereincluded intheAct
asfurther safeguards oninjury issues during thepreliminary phase oftheinvestigation. Inthisregard:G/ADP/Q1/CAN/2
G/SCM/Q1/CAN/2
Page12
(i) Where theDeputy Minister decides nottoinitiate aninvestigation because heisof
theopinion thattheevidence does notdisclose areasonable indication thatthe
dumping/subsidizing ofgoods hascaused injury, retardation orathreat ofinjury, either
theDeputy Minister orthecomplainant canrefer theinjury issue totheTribunal.
(SIMA/subsection 33(2));
(ii) Where theDeputy Minister decides toinitiate aninvestigation, theDeputy Minister
orother interested party referred toinparagraph 34(1)(a) oftheAct(e.g., anexporter,
importer, orgovernment ofanexporting country), mayrefer theissue ofwhether
theevidence discloses areasonable indication thatthedumping/subsidizing ofgoods
hascaused injury, retardation orathreat ofinjury, totheTribunal.
(SIMA/paragraph 34(1)(b)); and
(iii) Where, atanytimebefore making apreliminary determination, theDeputy Minister
decides toterminate theinvestigation because hehasconcluded thattheevidence does
notdisclose areasonable indication thatthedumping/subsidizing ofgoods hascaused
injury, retardation orathreat ofinjury, theDeputy Minister orother interested person
referred toinparagraph 34(1)(a) may refer theinjury issue totheTribunal.
(SIMA/paragraph 35(2)(b)).
However, onceaninvestigation hasbeeninitiated andapreliminary determination made by
theDeputy Minister inaccordance withsubsection 38(1) oftheAct,theissues ofinjury andcausality
must bereferred totheTribunal forfinaldisposition.
5. Ifreference totheCITT isdiscretionary, arethere anyregulations orguidelines indicating
howtheDeputy Minister mayexercise hisdiscretion?
AsexplainedinourresponsetoquestionNo.4,duringthepreliminaryphaseoftheinvestigation,
theDeputyMinisterisresponsiblefordeterminingwhethertheevidencedisclosesareasonableindication
thatthedumping/subsidizing hascaused injury, retardation oristhreatening tocause injury. Therefore,
references totheTribunal, bytheDeputy Minister under thesections 33,34and35"advice" provisions
arediscretionary andwilldepend uponthecircumstances ofeachcase. Where, however, theDeputy
Minister doesnotseektheTribunal 'sadvice under sections 33,34or35,aninterested person may
doso.
6. Isitpossible fortheDMtomake anaffirmative determination pursuant tosubsection 38(1)
oftheSIMA thatthere isareasonable indication thatdumping orsubsidizing hascaused, or
isthreatening tocause injury without making areference totheCITTpursuant tosections 33-35?
Ifsowhatprocedures areapplicable?
Yes,theDeputyMinistercanmakeapreliminarydeterminationundersubsection38(1)ofSIMA
thatthereisareasonableindicationthatthedumping/subsidizingofgoodshascausedinjuryorretardation
oristhreatening tocause injury, without making areference totheCITT under sections 33-35. In
suchacase, however, suchpersons asareprovided forintheAct,including theexporter, canrefer
thepreliminary determination ofinjury, retardation orthreat ofinjury totheCITT.
7. Itdoesnotappear thatanything intheSIMA expressly provides exporters orforeign producers
theright tosubmit evidence totheDeputy Minister ortheCITT before thepreliminary
determination required bysection 38ofSIMA. HowdoesCanada implement therequirement
ofArticle 7.1(i) oftheADAgreement andArticle 17.1(a) oftheSCM Agreement requiring
thatinterested parties begiven adequate opportunity tosubmit information andmakecomments
before provisional duties areimposed?G/ADP/Q1/CAN/2
G/SCM/Q1/CAN/2
Page13
Various administrative policies, procedures andpractices areinplace toensure conformity
withtheprocedural fairness, (i.e.,dueprocess), requirements, oftheADandSCM Agreements. These
areoutlined inRevenue Canada 's"Statement ofAdministrative Practices fortheSIMA".
Regarding implementation ofArticle 7.1(i) oftheADAgreement and17.1(a) oftheSCM
Agreement, atthetimeofinitiation, theStatement ofReasons ,which isprovided toallknown interested
parties, andtheofficial Canada Gazette notice, invite interested parties tofilewritten submissions,
byaspecified date, presenting facts, arguments andevidence which theyconsider toberelevant to
theinvestigation ofthealleged dumping, subsidizing, injury and/or causality.
Inaddition, detailed requests forinformation aresentouttoexporters andimporters and,in
thecaseofasubsidyinvestigation,tothegovernment(s)concerned,whichsolicitthedetailedinformation
required todetermine specific margins ofdumping and/or amounts ofsubsidy.
8. Aretheprocedures ofCITT Rule25applicable inproceedings referred totheCITT pursuant
tosections 33to35ofSIMA?
No.Theprocedures relevant totherendering ofadvice bytheTribunal under sections 33
to35ofSIMA aresetoutinsection 37ofSIMA andPartIIIoftheCanadian International Trade
Tribunal Rules.
9. Isthere anyrequirement thatthefinding thattheCITT mustmake pursuant tosection 43of
theSIMA address relevant arguments orclaims made byexporters orimporters ascontemplated
byArticle 12.2.2 oftheADAgreement andArticle 22.5 oftheSCM Agreement? This
requirement isnotaddressed bysection 43oftheSIMA orPartIVoftheCITT Rules.
Paragraph 43(2)(b) oftheSIMA requires theSecretary toprovide interested parties withacopy
ofthereasons upon which aTribunal order/finding isbased. These detailed Statements ofReasons
satisfy therequirements ofArticles 12.2.2 and22.5oftheADandSCM Agreements respectively.
10. WhatstandarddoestheCITTusetodetermineunderSIMAsubsection76(4.1)whethertoconfirm
anorder/finding inareview proceeding? Isthisthestandard thatisestablished byArticles 11.2
and11.3oftheADAgreement and21.2and21.3oftheSCM Agreement?
Articles 11.2and11.3oftheADAgreement and21.2and21.3oftheSCM Agreement address
"changed circumstances" and"sunset" reviews. These provisions areimplemented byvirtue of
subsections 76(2) and(5)oftheSIMA.
Subsection 76(4.1) ofSIMA, ontheother hand, pertains toreviews pursuant to
subsections 76(2.1) or(2.2). These subsections dealwith reviews necessitated byjudicial or
NAFTA/FTA panel remands. Theapplicable standard forsuchreviews isreconsideration ofthe
order/finding inlightof,andforaction notinconsistent with, thedecision ofthecourt/panel.
11. Section 59oftheCITT rules contains mechanisms toprovide interested parties withall
information thathasbeenprovided totheCITTinitsinquiry. Istheresomeprovision providing
interested parties theopportunity tocomment onallinformation?
Upon filing a"Notice ofAppearance" inaninjury inquiry under section 42orareview under
section 76ofSIMA, aninterested "party" ,asdefined insection 2oftheCanadian International Trade
Tribunal Rules, isentitled tomake submissions, including submissions based oninformation made
available under section 59oftheRules.G/ADP/Q1/CAN/2
G/SCM/Q1/CAN/2
Page14
Pursuant totheprovisions governing confidential information (sections 43-49 ofCanadian
International Trade Tribunal Act)onlyqualified counsel mayhaveaccess toit.
12. (a) Under Canadian jurisprudence, donon-statutory provisions suchastheCITT rules
andtheSIMA Regulations enjoy theforce oflaw?
Regulations,whicharemadeundertheauthorityofanenablingstatute,(e.g.,theSIMA),
enjoy theforce oflawbyvirtue ofsubsection 2(1)oftheStatutory Instruments Act.
TheCanadian International Trade Tribunal Rules aremade pursuant tosection 39of
theCanadian International Trade Tribunal Act.Afailure toapply established rules could,
except where permitted byRule6,belegally challenged.
(b) Intheevent thataprovision inthese regulatory schemes conflicts withaprovision in
theCanadian statute, (i.e., theSIMA), which provision controls?
Intheevent ofaconflict between thestatute andtheregulations/rules made pursuant
thereto, thestatute willprevail.
(c) Intheevent thataprovision intheseregulatory schemes conflicts withtheADorSCM
Agreement, which controls?
International agreements, suchastheWTO Agreement, donotenjoy direct effect under
Canadian law. Assuch, regulations, which aremade pursuant toastatute, would prevail in
theevent ofaconflict withtheADorSCM Agreement.
Thatbeing said,international agreements suchastheWTO ADandSCM Agreements
canbeusedasguides tointerpretation where anambiguity, either latent orpatent, exists within
thedomestic implementing legislation.
REPLIES TOQUESTIONS FROM VENEZUELA
1. Notification ofthetextofthelegislation
When notifying thetextsofitslawsandregulations totheCommittee, theGovernment ofCanada
stated thatthe"integrated text"oftheSpecial Import Measures Acthasnotbeensanctioned bythe
Canadian Department ofJustice andistherefore unofficial. Could theGovernment indicate when it
willnotify theofficial textoftheActtotheCommittee? What consequences doestheunofficial status
oftheActhavewithrespect toitshaving effects?
Reply
Amendments totheSpecial Import Measures Act(SIMA) toimplement Canada ’santi-dumping
andcountervailing dutyrights/obligations, entered intoeffect on1January 1995, inaccordance with
thedetermination oftheMarrakesh Ministerial Conference.
ForMembers ’convenience andeaseofreference, Canada notified an“integrated ”version
oftheSIMA which consolidates alltheseparate amendments made totheActovertheyears since it
firstentered intoforce in1984. Thereference to“unofficial ”refers onlytothefactthatitisa
consolidation anddoesnotrefertothestatus ofthelawitself.G/ADP/Q1/CAN/2
G/SCM/Q1/CAN/2
Page15
2. Amount ofduties
InSection 4,subsections 3(a)and(b)oftheSpecial Import Measures Actstatethattheamount
ofanti-dumping orcountervailing duties applicable should beequal tothemargin ofdumping orthe
amount ofsubsidy, respectively, asthecasemaybe.
Cantheamount oftheanti-dumping orcountervailing duty, asthecasemaybe,belessthan
themargin ofdumping established, ifsuchlesser amount issufficient toeliminate theinjury tothe
domestic industry?
HowcanthisprovisionbeconsistentwiththecontentsofArticles9.1and9.2oftheAnti-Dumping
Code and19.2oftheSubsidies Code, under which theamount oftheduties imposed maybeequal
toorlessthantheamount thanthemargin ofdumping orofsubsidy, asthecasemaybe?
Reply
Consistent withthepermissive nature ofthelesser dutyprovisions inArticle 9.1oftheAD
Agreement and19.2oftheSCM Agreement, Canada hasnotadopted alesser dutyrule. Thatbeing
said,where theCanadian International Trade Tribunal isoftheopinion thattheimposition ofanti-
dumping orcountervailing duties, infullorinpart,might notbeinthepublic interest, section 45of
theSIMA, allows theTribunal tosoadvise theMinister ofFinance withfacts/reasons insupport.
Inthisregard, interested persons canmake representations withrespect topublic interest. There is
statutory authority allowing theMinister ofFinance toreduce duties.