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Ottawa, March 22, 2002
2002-025

Canada Calls for Investigation on Steel Imports

Related documents: 

• Backgrounder.
• Products Subject to Safeguard Inquiry.

The Government of Canada is launching a safeguard investigation into imports of steel products from all countries, Secretary of State (International Financial Institutions) John McCallum and International Trade Minister Pierre Pettigrew announced today.

The Government has directed the Canadian International Trade Tribunal (CITT) to investigate whether increased imports of certain steel products are causing – or threatening to cause – injury to Canadian steel producers.

"Canada has one of the most open steel markets in the world and this government will not stand idly by and let our market be flooded with diverted steel," said Mr. McCallum. "That is why we have instructed the CITT to determine whether foreign steel imports are injuring Canadian producers."

The Government is concerned about the possible diversion of foreign steel into the Canadian market following the March 5 decision by the United States to impose tariffs of up to 30 per cent on a number of steel products. These tariffs will restrict access for steel imports to the U.S. market and increase the risk that large quantities of offshore steel could be diverted to Canada.

"There is already too much steel being produced around the world. This, combined with recent U.S. actions, will force many exporters to seek new markets for their product," said Minister Pettigrew.

"If the CITT determines that foreign steel imports are injuring our producers, this government is prepared to take the action necessary to remedy the situation, as permitted under World Trade Organization rules," he added.

Secretary of State McCallum said the safeguard investigation is a necessary first step to determine what further action is warranted.

The CITT will issue its findings on the injury question in 105 days. If it finds injury, it will have another 45 days to recommend appropriate remedies.

During the CITT investigation, the Government will continue to closely monitor imports and is prepared to impose provisional measures if it finds significant diversion.

The steel products affected by the CITT investigation are found in the attached backgrounder.

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Backgrounder

What Is a Safeguard?

• A safeguard is an emergency measure, permitted by the World Trade Organization (WTO), that is aimed at protecting a domestic industry from serious injury or threat of serious injury caused by increased imports from all sources. The WTO Agreement on Safeguards sets out the rules on applying safeguard measures, which may be applied only after an investigation by the competent authorities of a WTO member country.

• A safeguard measure can apply for up to four years although it may be extended, upon review, for a further four years. A safeguard measure may be applied only to the extent necessary to remedy the injury and may take the form of a quota or surtax, including a tariff rate quota (i.e. a tariff applied to imports above a specified level).

• Compensation must be paid to exporting countries if the measure is in place for more than three years or, failing agreement on appropriate compensation, countries have a right of retaliation.

• Under WTO rules, developing countries that account for less than 3 per cent of the total volume of steel coming into Canada are protected from measures as long as these countries collectively represent less than 9 per cent of the total volume of steel imports.

• If, collectively, these countries account for more than 9 per cent of the total volume of steel coming into Canada, they can be subject to measures, even if individually they account for less than 3 per cent of the total volume of steel.

North American Free Trade Agreement/Other Free Trade Agreement Provisions

• Under the North American Free Trade Agreement, if Canada takes a WTO global safeguard action, it is required to exclude imports from the U.S. and Mexico unless such imports from each account for a substantial share of total imports and contribute importantly to the serious injury caused by imports.

• If goods from the U.S. and Mexico are excluded from a safeguard action, they may be subsequently included in the action if there is a surge in imports that undermines the effectiveness of the action.

• If Canada finds that the U.S. or Mexico accounts for a significant share of total imports and contributes importantly to the serious injury, Canada may impose import restrictions on the U.S. or Mexico. However, such restrictions cannot reduce the level of imports from the U.S. or Mexico below the trend of imports over a recent representative base period. Also, any import restrictions must allow for reasonable growth in import levels during the period the restrictions are in place.

• If Canada imposes import restrictions against U.S. or Mexican imports, these countries have a right to compensation or, failing agreement on compensation, a right of retaliation.

• Similar provisions also apply to Chile and Israel under Canada’s free trade agreements with these countries.

Canada’s Safeguard Regime

• Canada’s international rights and obligations regarding safeguards are implemented under the Canadian International Trade Tribunal Act , the Customs Tariff and the Export and Import Permits Act.

• The Canadian International Trade Tribunal is the competent authority that conducts safeguard inquiries, either at the request of domestic producers or by way of a referral from the Government. It reports its findings to the Government, which has discretion on whether to impose a safeguard measure and, if so, what form it should take.

Products Subject to Safeguard Inquiry

1. Flat rolled carbon and alloy steel comprising discrete plate; hot rolled sheet and coil; cold rolled sheet and coil; and corrosion-resistant sheet and coil.

For greater certainty, the foregoing includes floor-patterned plate, prepainted steel and corrosion-resistant steel coated with zinc or zinc in combination with aluminum.

It excludes clad plate; PVQ plate over 3.125″ thick; other plate over 5″ thick; cold rolled sheet that is not annealed (commercially known as "full hard" cold rolled sheet) for metallic coating; grain-oriented electric steel sheet; certain proprietary grades of corrosion-resistant steel known as "Tribrite" "Trichrome" and "Triclear"; aluminized steel sheet; aluminum clad sheet; and stainless grades of flat rolled steel products.

2. Carbon and alloy "long" steel products comprising hot rolled bars; shapes; light and intermediate structurals; bars and rods that have been cold drawn and finished; and concrete reinforcing bars.

For greater certainty, the foregoing includes alloy tool and mold steel bars, both hot and cold-finished. It excludes heavy structural steel products (such as beams), that is, with over 6″ thickness in leg or web; "leaded" grades of hot rolled bars; and stainless grades of long steel products.

3. Welded and seamless carbon and alloy tubular steel products comprising standard pipe to 16″ O.D. (outside diameter).

For greater certainty, the foregoing includes waterwell casing, sprinkler pipe and piling pipe.