Annual lists 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995

Government Response to the Report on the Special Import Measures Act

by the Sub-Committee on the Review of the Special Import Measures Act of the Standing Committee on Finance and the Sub-Committee on Trade Disputes of the Standing Committee on Foreign Affairs and International Trade

In conducting this review, the Sub-Committees heard witnesses and reviewed written briefs from business, academic and trade experts, the legal community, and government officials.

The Report of the Sub-Committees was tabled in the House of Commons on December 11, 1996. In accordance with Standing Order 109 of the House of Commons, the Sub-Committees requested that the Government provide a comprehensive response to the Report. In response to this request, the Government is pleased to submit the following comprehensive response to the House of Commons Report on the Special Import Measures Act.

Recommendation 1

The Sub-Committees recommend that the SIMA legislation and process be continued, subject to the modifications addressed in this report.

The Government supports this recommendation.

SIMA was brought into force in 1984 following a Parliamentary review of Canada's then anti-dumping and countervailing duty laws. Although there have been various changes to SIMA since the establishment of the Act in 1984, including those amendments required to implement Canada's rights and obligations under international trade agreements, the Report of the Sub-Committees represents the first comprehensive public review of SIMA.

After hearing from a broad range of witnesses from the business, legal and academic communities, the Sub-Committees concluded that: "...SIMA is working well and continues to be relevant to the competitive needs of the Canadian business community" (page 6). The Sub-Committees also noted that the proposals for changes to SIMA did not represent opposition to the law, but were rather an attempt to modify the balance struck between these various interests and improving the overall efficiency of the legislation.

The Government's response to the modifications addressed in the Sub-Committees' subsequent 15 recommendations are addressed below.

Recommendation 2

The Sub-Committees recommend that Revenue Canada take concrete measures to insure fair and equal access to the SIMA process by small and medium-sized Canadian producers.

The Government supports this recommendation.

Domestic producers must incur certain costs when proceeding with a complaint under SIMA. While information requirements under SIMA respond to Canada's obligations under the World Trade Organization, the Government recognizes that complying with these requirements may be quite burdensome, particularly for certain small and medium-sized producers seeking access to the system.

Given this, maintaining the accessibility of SIMA to small and medium-sized enterprises must be a continuing concern to the Government and, in this regard, Revenue Canada will continue to assist small and medium-sized Canadian producers with complaints during the pre-initiation phase of an investigation. Moreover, in response to concerns in this area, Revenue Canada is currently studying its practices and exploring options to further improve access to SIMA.

Recommendation 3

The Sub-Committees recommend that the CITT be given the responsibility for making the preliminary determination of injury.

The Government supports this recommendation.

Currently, Revenue Canada is responsible for evaluating whether a domestic industry's complaint of injurious dumping or subsidization is properly documented and for the decision of whether to initiate an investigation. Where an investigation is initiated, Revenue Canada makes the preliminary determination of both dumping/subsidization of goods and reasonable indication of resulting injury. However, in recognition of the fact that expertise in the evaluation of evidence of injury resides with the Canadian International Trade Tribunal (CITT), SIMA includes various provisions which allow Revenue Canada and other interested parties to seek the "advice" of the CITT on the issue of injury at the initiation and preliminary phases of an investigation. Revenue Canada is bound by the advice rendered by the CITT on the issue of injury. Upon receiving notice of a preliminary determination, the CITT assumes responsibility for the final injury inquiry while Revenue Canada is responsible for the final determination of dumping/subsidization.

The principal change recommended by the Sub-Committees is that, following a decision to initiate an investigation by Revenue Canada, the CITT would assume responsibility for the preliminary investigation of injury while Revenue Canada simultaneously conducted the preliminary investigation of dumping/subsidization. The CITT would make its preliminary injury determination within 60 days after initiation, (i.e., thirty days before the preliminary determination of dumping/subsidization is due from Revenue Canada). Revenue Canada would continue its preliminary investigation of dumping/subsidization only where the CITT made an affirmative preliminary determination of injury. Affirmative preliminary determinations by both Revenue Canada and the CITT would establish the basis for the application of provisional duties. The CITT would then proceed to its final injury inquiry while Revenue Canada would conduct its final antidumping/countervailing duty investigation.

Adoption of the recommendation would, inter alia: i) eliminate the current institutional duplication of responsibilities between Revenue Canada and the CITT in respect of injury determinations; ii) allow Revenue Canada and the CITT to focus on their respective areas of expertise; iii) promote an earlier and more thorough examination of injury; iv) allow the CITT to settle basic investigatory framework issues, such as "like goods", "classes of goods" and "domestic industry", early in the investigation; v) allow for the repeal of cumbersome provisions where the CITT gives "advice" on injury to Revenue Canada during preliminary investigations; and vi) allow for streamlined procedures for certain horticultural products to ensure early implementation of provisional duties, (i.e., Revenue Canada's preliminary determination could be made sixty days from initiation of the investigation in the case of perishable horticultural goods to coincide with the CITT's preliminary determination of injury).

In re-defining the respective roles of Revenue Canada and the CITT in the SIMA process, the Government is mindful of the access concerns expressed by small and medium-sized Canadian producers. In this regard, the Government supports the Sub-Committees' view that Revenue Canada remain solely responsible for the acceptance of complaints and the decision to initiate an investigation. This "single gatekeeper" approach should minimize complainant costs and paper-burden at the pre-initiation stage of the SIMA process.

With regard to the post-initiation phase, the CITT would normally be expected to base its preliminary determination of injury on written submissions and without costly public hearings. While making the CITT responsible for the preliminary determination of injury would result in complainants having to deal with two administrative authorities early in the SIMA process, the Government agrees with the Sub-Committees' view that it would result in a more streamlined and efficient system. Parties would make all their injury submissions to the CITT and a more thorough examination of injury at the preliminary investigation stage should facilitate better-focused and shorter hearings during the final injury inquiry. Furthermore, while there will be no change to the actual standard for a preliminary determination of injury, which is done in accordance with WTO rules, these changes will allow the CITT and Revenue Canada to focus on their respective areas of expertise.

Recommendation 4

The Sub-Committees recommend that SIMA should be amended to provide counsel increased access to confidential information in anti-dumping/ countervailing duty investigations conducted by Revenue Canada.

The Government supports this recommendation.

SIMA and the Canadian International Trade Tribunal Act (CITT Act) respectively provide the Deputy Minister of National Revenue and the CITT with the discretion to grant counsel for a party restricted access to confidential information. However, while the CITT regularly affords counsel access to confidential information in SIMA injury inquiries, Revenue Canada's policy has been to provide counsel with access to confidential information only in those cases where the Deputy Minister is of the opinion that the non-confidential summary is inadequate to convey a reasonable understanding of the substance of the information.

In addition to providing greater consistency in the treatment of confidential information throughout the investigation process, adoption of this recommendation would introduce greater procedural fairness into the SIMA process and improve the overall quality and reliability of the evidence upon which SIMA determinations are based by affording parties an opportunity to make informed rebuttal submissions. The recommendation could be implemented by amending the Act to require disclosure of confidential information to counsel for a party (subject to appropriate conditions and protective undertakings).

The concern was expressed that more liberal access to confidential information might require the extension of current SIMA time-frames in order to accommodate the consideration by Revenue Canada of rebuttal submissions. However, the Government believes that it should be possible to deal with these submissions within existing time-frames.

Finally, the concern that parties might be less forthcoming with sensitive business information if such information was routinely accessible to counsel for their competitors, could be minimized by providing appropriate penalties for the unauthorised release of confidential information. In this regard, the Government agrees with the Sub-Committees' view that a liberalisation of SIMA's counsel disclosure policy would have to be accompanied by appropriate statutory penalties for the unauthorised release of confidential information by counsel.

Recommendation 5

The Sub-Committees recommend that appropriate changes be made to Canadian trade legislation to permit access by experts to confidential information in SIMA proceedings before the CITT.

The Government supports this recommendation.

Under subsection 45(3) of the Canadian International Trade Tribunal Act (CITT Act), the CITT may only grant disclosure of confidential information to "counsel" who, in turn, cannot disclose such information to any third party without consent. Given the complexity of anti-dumping and countervailing duty cases, counsel often wish to retain experts to give testimony before the CITT but, in order to gain access to confidential information on the record, such experts must designate themselves as "counsel" to satisfy the requirements of the Act. Common law provides that, other than in very exceptional circumstances, an individual acting as counsel in a proceeding may not appear as a witness in that same proceeding. Therefore, because of the operation of section 45(3) of the CITT Act and common law, parties have been dissuaded from seeking to have fully informed experts appear on their behalf in proceedings before the Tribunal.

Amending the CITT Act to provide the Tribunal with discretionary authority to allow protected disclosure to recognised experts working under the direction/control of counsel for a party or the CITT would: i) render proceedings more effective and procedurally fair by ensuring informed submissions; ii) represent a reasonable extension of the current statutory provisions respecting protected disclosure to counsel in view of the complex nature of these proceedings; and iii) allow the Competition Bureau's Director of Investigation and Research to more effectively fulfil the Director's role before the CITT.

In order to avoid a chilling effect on information-gathering in antidumping/countervailing duty inquiries, it would be necessary to attach appropriate conditions to disclosures of confidential information to experts backed by deterrent statutory penalties for breaches of non-disclosure undertakings. The CITT Act should also be amended to provide that confidential information disclosed to expert witnesses would be strictly for use in antidumping/countervailing duty proceedings and not be used in proceedings under any other statute, (e.g., the Competition Act).

Recommendation 6

The Sub-Committees recommend the inclusion in the SIMA Regulations the fact of dumping in third country markets as evidence of threat of future injury.

The Government supports this recommendation.

The Special Import Measures Regulations do not preclude the CITT from taking into account evidence of dumping in third country markets when assessing the threat of injury to a Canadian domestic industry from the dumping/subsidizing of goods into Canada. Indeed, the threat of injury factors enumerated in subsection 37.1(2) of the Special Import Measures Regulations expressly authorises the consideration of any factors that are relevant in the circumstances. However, implementation of the Sub-Committees' recommendation via the inclusion of "evidence of dumping in third country markets" as an explicit threat of injury factor in subsection 37.1(2) of the regulations, would provide greater transparency to threat of injury determinations.

Recommendation 7

The Sub-Committees recommend that Revenue Canada make allowance in regulations to accommodate representations from interested parties when undertakings are being considered.

The Government supports this recommendation subject to the preservation of existing statutory/regulatory time constraints for the acceptance of undertakings.

Undertakings are formal commitments made by exporters or foreign governments (in the case of subsidized goods) which eliminate the harm to Canadian producers caused by dumped or subsidized goods. They normally result in the suspension of the investigation process. As a precondition to acceptance, undertakings must cover all or substantially all the trade in the product under investigation and may only be accepted after the preliminary determination of dumping/subsidization is made.

Based on the fact that undertakings can result in the suspension of formal investigative proceedings and the fact that they may remain in place for five years, the Sub-Committees recognised that there should be an opportunity for all domestic parties to express their views before such agreements are finalised. Under current practice, Revenue Canada does not formally make public the fact undertakings are being considered and only the domestic complainant, importers and foreign interests may be aware. While this practice does not prevent other interested parties from making representations, the Sub-Committees were of the view that efforts should be made to more formally accommodate the submission of views by other domestic interests such as down-stream manufacturers and retailers/distributors. The government is of the view that such changes should be made. However, attention will have to be paid to the existing statutory/regulatory constraints for the acceptance of undertakings.

Recommendation 8

The Sub-Committees recommend that section 53(2) of SIMA be amended to allow the Deputy Minister of National Revenue to review and terminate undertakings before five years.

The Government supports this recommendation.

Under section 53 of SIMA, the Deputy Minister conducts a review of an undertaking. If, as a result of the review it is decided that there is no justification for its continuance, the Act does not allow for its immediate termination but, instead, provides that the undertaking remain in force for the remainder of its five-year term. The adoption of the Sub-Committees' recommendation would correct this legislative anomaly and make this provision consistent with other sections of the law, i.e.: that an undertaking be terminated when the conditions upon which it was based no longer exist.

Recommendation 9

The Sub-Committees recommend that SIMA be amended to make cumulation mandatory in the CITT's procedures for determining injury.

The Government supports this recommendation.

It is not unusual for a dumping or subsidy investigation to encompass a number of countries with significant variations among them in volumes exported and margins of dumping or amounts of subsidy determined. In this regard, one can envisage a situation where goods from two exporting countries are found to have caused material injury to the Canadian industry when the imports are considered en masse but where the injury caused by imports from each country, when considered individually, is not material. In such situations, the WTO Anti-Dumping and Subsidies Agreements allow for the cumulation of injurious effects subject to certain pre-conditions, i.e.: i) that the margin of dumping or amount of subsidy established in relation to imports from each country is not insignificant; ii) that the volume of imports from each country is not negligible; and iii) that an assessment of the cumulative effect would be appropriate taking into account conditions of competition.

Currently, SIMA provides the CITT with discretionary authority, in injury inquiries, to assess the cumulative injurious effects of goods from more than one country, subject to the pre-conditions for cumulation set out in the Anti-Dumping and Subsidies Agreements. The Government Agrees that the Sub-Committees' recommendation to make an explicit amendment to SIMA to this effect would provide greater transparency and predictability in the application of the law. This would also be consistent with the practices of our other trading partners, including the United States.

Recommendation 10

The Sub-Committees recommend no change from the prospective method of duty assessment.

The Government supports this recommendation.

There exists two primary methods of duty enforcement for anti-dumping and subsidy orders. Retrospective duty assessment systems, used by countries such as the United States, require importers to post securities when goods subject to an order are imported. Final duty liability is determined at some later date based on an administrative review of each specific importation. A prospective system establishes the duty liability prior to the specific goods being imported based on an analysis of the sale price of like goods in the country of export. For dumped goods, this can be achieved through the establishment of a base price or "normal value". Goods priced at or above their specific normal value do not incur a dumping duty. In subsidy cases, the duty liability is normally a specific per unit amount.

In their discussion on enforcement, the Sub-Committees compared the Canadian prospective system with the American retrospective system noting that:

• Both systems are generally comparable in terms of their effectiveness in eliminating injury due to dumping or subsidization. Where they differ is that the Canadian system is more transparent and predictable, and eliminates injury while at the same time ensuring that Canadian importers do not face unnecessary cost or impediments to the importation of goods at non-dumped prices. By contrast, the retrospective system creates uncertainty for importers as they will not know their ultimate duty liability on each shipment until months or even years after the date of importation [at p. 27].

The Sub-Committees went on to state that any change from the current prospective method of duty assessment would be unwise. In making this statement, the Sub-Committees noted that:

• Canada is more dependent on imports than is the United States, and it has need of a duty enforcement system that accomplishes the task of removing injurious dumped or subsidized imports with as little disruption to trade as possible [at p. 27].

The Government believes that the prospective duty assessment process used by Revenue Canada works well and will continue to represent a key element of the balance of various domestic interests found in SIMA. The Government also believes that the uncertainty associated with a retrospective duty assessment system would have economic effects resulting in costs to Canadian importers and consumers additional to those required to remove injury caused by dumped or subsidized goods.

Given the potential negative aspects associated with the retrospective method of duty assessment, the Government of Canada will make efforts in the WTO and NAFTA to achieve improvements to the rules governing duty assessment and thereby reduce unnecessary impediments to Canadian exports.

With respect to the enforcement of SIMA orders, the Sub-Committees also suggested that the Minister of Finance give consideration to proposals made by Revenue Canada to enhance compliance.

Currently, in the enforcement of SIMA findings, Revenue Canada encourages importers to voluntarily self-assess SIMA duties at the same time that they account for other customs duties and taxes. However, Revenue Canada noted before the Sub-Committees that the current level of voluntary compliance respecting SIMA duties is low. According to Revenue Canada, much of this problem results from the fact that SIMA places the onus on Revenue Canada rather than the importer to identify importations subject to SIMA duties and to assess any SIMA duties payable. Some importers wait until a specific demand for SIMA duties is issued by Revenue Canada before they pay the appropriate amount of duties. Interest on the outstanding amount can only commence 30 days following such a demand for duties, a demand which may not be made for several months following the importation of the goods.

Two additional issues related to compliance raised by the Sub-Committees dealt with fraud and product alterations. While the Sub-Committees acknowledged that there is presently authority to address these issues, they nevertheless requested that the Minister of Finance take these matters under advisement to see whether future action is needed.

In response to the compliance issues raised by the Sub-Committees, the Government will review these matters with a view to achieving a greater level of self-assessment and compliance on the part of importers.

Recommendation 11

The Sub-Committees recommend that the Minister of Finance reform SIMA provisions for the conduct of interim and expiry reviews, in light of the comments made above (in the Sub-Committees' Report), and in this context, to bifurcate the administrative responsibilities for the conduct of such reviews.

The Government supports this recommendation.

SIMA, in accordance with the WTO Antidumping and Subsidies Agreements, provides that an antidumping/countervailing duty order is deemed to be rescinded at the expiration of five years after the order was made unless the CITT has initiated a review before that date and determines that the order should be continued. In this regard, the CITT may conduct two types of reviews of existing antidumping/countervailing duty orders under section 76 of SIMA. These are: interim reviews based on changed circumstances, which can occur at anytime while an order is in force; and expiry reviews, which normally occur upon request, just prior to the 5-year expiry date. However, SIMA does not explicitly distinguish between interim and expiry reviews. For greater clarity, the Government agrees with the Sub-Committees' proposal regarding the need for SIMA to expressly distinguish between interim and expiry reviews, consistent with WTO requirements.

Under subsection 76(3) of SIMA the CITT may only initiate a review if it is satisfied that a review is warranted. However, neither SIMA, the CITT Act nor the regulations or rules made pursuant thereto provide any guidance as to the grounds that can support the initiation of an interim or expiry review. The Government therefore supports the Sub-Committees' proposal regarding the need to provide legislative/regulatory guidance for the initiation of interim and expiry reviews and will consider amendments to the appropriate legal instrument to provide an illustrative list of grounds for the initiation of such reviews.

Similarly, neither SIMA, the CITT Act, nor the regulations/rules made pursuant thereto, offer any guidance as to the criteria to be considered by the CITT in determining whether or not to continue an order on interim or expiry review. In response to the Sub-Committees' proposal on this point, the Government supports amendments to the appropriate legal instrument to provide an illustrative list of criteria to be considered in determining whether or not to continue an antidumping/countervailing duty order on interim or expiry review.

Many of the requests for changed circumstance, (i.e., interim), reviews received by the CITT deal with a specific aspect or portion of an antidumping/countervailing duty order, (e.g., requests for the exclusion of certain goods from the scope of an order). However, because of the absence of explicit authority in SIMA allowing the CITT to limit the scope of an interim review to a specific aspect or portion of an order, it is compelled to examine the entire order to determine whether it should be continued with or without amendment for a further five-year period. In response to the Sub-Committees' observation on this point, the Government supports amendments to section 76 of SIMA to authorise the CITT to conduct reviews on a specific aspect of an antidumping/countervailing duty order.

There is currently no specific provision in SIMA authorising the CITT to make a review determination retroactive when rescinding an antidumping/countervailing duty order. This can result, for example, in the collection of antidumping duties even when there is no domestic production of the goods in question. In response to the Sub-Committees' proposal, the Government will review section 76 of SIMA to consider whether it is appropriate to allow review determinations to be applied retroactively when rescinding an antidumping/countervailing duty order.

Responsibility under SIMA for the conduct of antidumping/countervailing duty investigations is divided between Revenue Canada and the CITT based on their respective areas of expertise, i.e., Revenue Canada is responsible for the final determination of dumping/subsidization while the CITT is responsible for the final determination of injury. On the other hand, interim and expiry reviews of existing antidumping/countervailing duty orders under section 76 of the Act are conducted exclusively by the CITT. In this regard, the Government supports the Sub-Committees' view that administrative responsibilities for the conduct of interim and expiry reviews be divided between Revenue Canada and the CITT in a similar manner, (i.e. Revenue Canada would focus on all matters related to dumping and subsidization, as required, including the existence and possible resumption of any dumping or subsidization, and the CITT would focus on injury or the possible resumption of injury in the absence of a specific finding). [This would also be consistent with the reasoning underlying the Sub-Committees' recommendation no.3].

Recommendation 12

The Sub-Committees recommend that section 76 of SIMA be amended to require the CITT to assess the cumulative injurious effects of dumping/subsidizing in conducting interim and expiry reviews.

The Government supports this recommendation.

This recommendation is linked to recommendation 9. For consistency, the Sub-Committees are requesting that the CITT cumulate injurious effects both in the original injury inquiry (recommendation 9) and also in the review of the injury finding.

The Government agrees that if cumulation is made mandatory in the injury inquiry, it should also be mandatory upon review, subject of course, to the preconditions for cumulation set out in the WTO Anti-dumping and Subsidies Agreements.

Recommendation 13

The Sub-Committees recommend that a non-exclusive list of factors be included in section 45 of SIMA that would guide the CITT respecting whether and how to conduct a public interest inquiry.

The Government supports this recommendation.

The current public interest provisions of SIMA were established based on the 1982 Report on the Special Import Measures Act by the Sub-Committee on Import Policy (the Mackasey Report). These provisions included in section 45 of the Act provide that, in the event of a finding of injury, "persons interested" may make representations to the CITT on the question of whether the imposition of duties is in the public interest. If the CITT is of the opinion that there may be a public interest concern it will undertake an inquiry which could result in a recommendation to the Minister of Finance that the duties be reduced or eliminated. The Minister of Finance may, on the basis of such a report, recommend to the Governor-in-Council that duties be reduced or eliminated.

Section 45 of SIMA, in its current form, is very general and does not define the term "public interest". It also provides no guidance as to how the CITT should interpret what the public interest is. This situation has led to difficulties in the application of this provision and is arguably the reason why this provision has been seldom used. The incorporation of a illustrative list of factors as recommended by the Sub-Committees would provide greater clarity to the CITT as to the meaning of public interest.

The Sub-Committees suggest factors that might form a test for public interest could include:

• significant damage to downstream users;
• problem of access to inputs due to imposition of the full duty;
• restriction of competition in domestic market;
• significant impact on choice or availability of products to consumers; and
• elimination of competition in the marketplace.

The Government agrees that these are relevant factors to be considered in the context of developing a non-inclusive list of factors.

Recommendation 14

14. The Sub-Committees recommend that the CITT's decision, that an anti-dumping or countervailing duty might not be in the public interest, should be a formal decision reviewable by a Federal Court. The level of any duty reduction should continue as at present in section 45 of SIMA to be a report to the Minister of Finance.

The Government does not support the Sub-Committees' recommendation that CITT public interest decisions should be reviewable by the Federal Court of Canada but supports that part of the recommendation that calls for the level of any duty reduction to continue, as at present in section 45 of SIMA, to be a report to the Minister of Finance.

Under SIMA, CITT orders that are final in nature are subject to judicial review in the Federal Court of Appeal or to NAFTA Chapter 19 binational panel review in lieu thereof. A public interest determination, however, does not currently take the form of a final order. Rather, the CITT makes a report of its "opinion", and the facts upon which the opinion is based, to the Minister of Finance who has discretion to act upon the Report by making a recommendation to the Governor in Council. This structure: i) reflects the fact that SIMA's public interest mechanism departs from the basic purpose of SIMA, (i.e., to apply duties equivalent to margins of dumping and amounts of subsidization where injury has been caused to a domestic industry); and ii) is consistent with the Governor in Council's general responsibility in respect of the broader public interest.

The Sub-Committees recommend that "public interest" receive a clear operational definition in law and that factors be prescribed that might form a test for public interest. CITT public interest determinations would become final in nature and subject to Federal Court review to determine whether they were properly made, having regard to relevant factors. In this regard, if the Federal Court quashed the CITT's determination, the Minister of Finance would be precluded from acting upon it. Where, on the other hand, the Court upheld a public interest determination, the Minister of Finance would be required to act upon it, although the level of duty reduction would continue to be the responsibility of the Minister of Finance.

Adoption of the Sub-Committees' recommendation would represent a major change in the policy underlying section 45 of SIMA in that it would severely limit the Minister of Finance's discretion to act in the broader public interest. In addition, it is questionable whether CITT public interest determinations are appropriately the subject of judicial review given the broad economic nature of the factual issues involved.

Recommendation 15

The Sub-Committees recommend that the lesser duty concept as provided in Article 9.1. of the WTO Anti-dumping Agreement be incorporated in section 45 of SIMA provisions for public interest.

The Government supports this recommendation.

The lesser-duty concept allows authorities to impose a duty at a level which is lower than the actual margin of dumping or subsidization, but sufficient to alleviate the injury to domestic producers. In other words, the lesser duty approach ensures that domestic producers are provided with necessary protection while minimizing the costs of increased duties on imports to downstream manufacturers and consumers.

Certain WTO Agreements contain a reference to the lesser duty concept. The WTO Anti-dumping Agreement (Article 9.1) states that "it is desirable that the imposition of the duty be less than the margin, if such lesser duty would be adequate to remove injury to the domestic industry." While this WTO provision is not mandatory, a number of countries have incorporated lesser-duty options into their trade remedy legislation.

Amending section 45 of SIMA, as recommended by the Sub-committees, would allow the CITT to employ a lesser-duty methodology in the context of a finding of public interest. Therefore, once the CITT is of the opinion that there is a public interest concern, it could then use the lesser-duty approach to recommend a level of duty that would remove injury while minimizing the impact on other sectors of the economy. In this regard, a lesser duty calculation would not be a requirement but rather an alternative methodology for the calculation of the duty margin where issues of public interest are addressed.

Recommendation 16

The Sub-Committees recommend that the Minister of Finance consider amending SIMA to allow for the temporary exemption of goods from anti-dumping/ countervailing duty orders under conditions of domestic short supply.

The Government agrees to consider this issue as recommended.

The Government acknowledges the concerns of the Sub-Committees and witnesses that appeared before them regarding the possibility that action taken under SIMA may, under certain conditions, lead to shortages in the supply of products in the Canadian market. The Government will be monitoring the situation over the coming months and, as requested by the Sub-Committees, the Minister of Finance will consider whether existing statutory authority is adequate to address this situation or whether legislative amendments are required. In the meantime, existing duty remission and other statutory authority may be used, as appropriate, to provide relief on a case-by-case basis in domestic short supply situations.