U.S.A.

North America Free Trade Agreement countries flag patch on white background.

On June 29, 2016, Prime Minister Justin Trudeau, U.S. President Obama and Mexican President Enrique Peña Nieto issued a Statement entitled “Economic Prosperity – Trade and Competitiveness.”

Hidden at the end of the Statement is the following announcement on trade remedy enforcement:

Coordination in Trade Remedy Enforcement / Addressing Global Excess Capacity

Canada, the United States and Mexico agree on the need for governments of all major steel-producing countries to make strong and immediate commitments to address the problem of global excess steelmaking capacity. This includes curtailing government subsidies and other supports that artificially maintain or increase steelmaking capacity, enhancing transparency and information sharing about capacity and production developments, and seeking robust policy commitments to address excess capacity and encourage adjustment.

The three countries further recognize the critical need for customs agencies to work together to ensure robust trade enforcement, including increased information sharing on high-risk shipments and on broader trends concerning potential circumvention and evasion. For this purpose, Canada, the United States and Mexico will establish a trilateral Customs Steel Enforcement Dialogue, designed to facilitate coordinated compliance efforts and information sharing regarding the enforcement of anti-dumping and countervailing measures on steel products.

This trilateral dialogue builds upon existing bilateral initiatives between Canada and the United States and will take place in conjunction with meetings of the North American Steel Trade Committee. It will be an important step towards ensuring that importers of potentially dumped and subsidized steel are compliant with all regulatory requirements and pay all duties owing, thereby protecting the North American steel industry from the injury caused by the dumping and subsidizing of imported goods into the North American marketplace.

What is significant in this Statement includes:

  • Canada, the United States and Mexico are agreeing to curtail government subsidies and other supports that artificially maintain or increase steelmaking capacity.  This would mean both (1) curtailing subsidies at home at the federal, provincial and municipal levels and (2) pursuing countervailing duty cases against counties who continue to subsidize steel manufacturing;
  • Canada, the United States and Mexico are agreeing to enhancing transparency and information sharing about capacity and production developments. This would mean more domestic information gathering and publication of capacity and production;
  • Canada, the United States and Mexico are agreeing to seek robust policy commitments to address excess capacity and encourage adjustment.  This means that North America may seek reductions in steel production at home as well as abroad.  This could be viewed as interference with free market principles; and
  • Canada, the United States, and Mexico will establish a trilateral Customs Steel Enforcement Dialogue.

What is likely is more trade remedies cases and more enforcement actions.  But, that is what is expected.  What could be new is that Canada and the United States will have to lead by example.  Changes will be required in North America and this might cause more harm to North American steel manufacturers than the alleged dumping, foreign subsidization and circumvention.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com. Alternatively, visit www.lexsage.com