RESTRICTED
WORLD TRADE G/SG/W/28
27September 1995
ORGANIZATION(95-2820)
Original: English Committee onSafeguards
REPLIES FROM CANADA CONCERNING QUESTIONS
POSED BYAUSTRALIA1CONCERNING THE NOTIFICATION
OFCANADIAN LAWS AND REGULATIONS2
Thefollowing communication, received on15September 1995, hasbeen received from the
Permanent Mission ofCanada.
_______________
Q: Under section 26oftheCITT Act(page 8)andRegulation 4(2) (page 257), itappears that
theCITT canexclude portions ofthedomestic industry from consideration, inparticular of
injury.
How isthisjustified under theSafeguards Agreement?
A:
• Regulation 4(2)permits theexclusion from consideration ofdomestic producers whoarerelated
toimporters orexporters inorder toensure thatthedetermination ofwhether thecomplaint
issupported byamajor proportion ofdomestic producers isnotaffected byparties thathave
adirect interest incontinuation oftheimportation onexisting terms, ofthegoods inquestion.
While such exclusion isnotprovided forspecifically intheSafeguards Agreement, itiscommon
practice under Canadian trade remedy law. Such exclusions areprovided forspecifically in
theAgreement onSubsidies andCountervailing Measures (Article 16)andtheAgreement on
Implementation ofArticle VIoftheGeneral Agreement onTariffs andTrade 1994 (Article 16).
Moreover, astheSafeguards Agreement provides noguidance onthispoint, weconsider the
regulation tobeconsistent with theAgreement.
Asfortheinjury determination, although Canadian legislation does notspecifically address
thisissue, Canada would bebound bytheWTO obligations.
Q. Paragraph 60(1) oftheCustoms tariff Act(page 113) seems toallow notonly variable duties
butalso different rates ofduty, depending onthedestination inCanada.
How isthisjustified under theSafeguards Agreement?
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A:
• Section 60oftheCustoms Tariff hasbeen suspended (seesubsection 59.1(18) oftheAct).
However, thesame language canbefound inthecurrent provision (subsection 59.1(1)(d)),
which isapplicable tosafeguard actions.
Ontheissue ofvariable duties, theSafeguards Agreement does notprevent amember party
from applying atariff ratequota onimports thathave been found tocause orthreaten serious
injury. Indeed, theAgreement does notprovide guidance withrespect tothenature ofsafeguard
measures, other than with respect toquantitative measures.
With regard toduties depending onthedestination inCanada, such aprovision hasbeen a
long-standing feature ofthedomestic safeguards regime buthasrarely been used. However,
theapplication ofanymeasure would only bemade possible after adetermination thatatleast
amajor proportion oftheentire domestic industry issuffering orlikely tosuffer serious injury
from increased imports. Such determination would bemade infullcompliance with theinjury
requirements found intheAgreement onSafeguards. Furthermore, theapplication ofaregional
measure intheCanadian context would beincompliance withArticle 5oftheAgreement which
states that"aMember shall apply safeguard measures only totheextent necessary toprevent
orremedy serious injury".
Q. Incircumstances where oneorboth NAFTA partners areexcluded from thescope ofthe
safeguard measures, how willCanada meet itsobligations under SGArticle 2oninjury
determination, given thedifferent levels ofinjury determination forNAFTA andother countries?
Will theCITT doaseparate injury determination after exclusion ofNAFTA countries?
A:
• Thequestion appears toconfuse theobligation respecting theapplication ofameasure with
theobligations relating toserious injury determinations. Article 2oftheAgreement on
Safeguards does notimpose anobligation thataninjury determination bebased onimports
from allsources. Asforthecompliance oftheNAFTA exclusion with Article 2,please refer
totheanswer tothelastquestion.
Q. Does thelegislation permit different levels ofduty forNAFTA countries? Ifso,howcanthat
bejustified, especially given thehigher standard ofinjury determination?
A:
• According tosubsection 59.1(12) oftheCustoms Tariff, therateofduty applicable toNAFTA
goods does nothave tobethesame asthatapplied togoods originating from other countries.
This isconsistent with theAgreement which does notaddress therelationship between Article
XIX andArticle XXIV:8. (See footnote 1totheAgreement.)