Canada has added a new “Scope Ruling” process to Canada’s antidumping/countervailing duty regime in Bill C-44 “An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures” (also known as “Budget Implementation Act, 2017, No. 1”). Bill C-44 received Royal Assent on June 22, 2017. The “other measures” include amendments to the Special Import Measures Act (Canada’s trade remedies law). The “other measures” include the establishment of a Scope Ruling process, which takes place after the Canada Border Services Agency (“CBSA”) has made a dumping and/or subsidy final determination and the Canadian International Trade Tribunal (“CITT”) has issued a material injury determination. In other words, when final antidumping and/or countervailing duties are being collected, the basket of goods covered by a CITT Order may be changed by the CBSA by making a Scope Ruling.
What is a Scope Ruling?
A Scope Ruling is a ruling by the CBSA under subsection 66 of the Special Import Measures Act (“SIMA”) concerning whether certain goods are subject to an order by Canada’s CITT (or Governor in Council that certain goods are subject to a countervailing duty Order) or an undertaking. In other words, a Scope Ruling is a decision by the CBSA as to whether goods are subject goods or should be considered to be subject goods.
Any interested person (including domestic producers, importers, exporters, consumers, associations, etc.) may submit an application for a Scope Ruling pursuant to new section 62 of SIMA. The application must be filed with the President of the CBSA. The President of the CBSA is also able to commence a Scope Ruling review on his/her own initiative (e.g., the CBSA wants to expand a CITT Order to cover additional goods).
A scope ruling may be requested by domestic producers or the CBSA to expand a CITT Order to goods that are similar to goods described in the Subject Goods definition in an existing Order. It can be expected that domestic producers will file Scope Ruling applications when they wish to prevent importers from importing goods from Subject countries. For example, if a domestic producer cannot sell to a customer because that customer buys goods from an importer, the domestic producer may file a Scope Ruling application against the importer and ask the CBSA to initiate a review as to whether the imports are within the scope of an Order.
A scope ruling may also be filed by exporters, foreign producers and importers as a protective measure when they believe goods are not subject to a CITT Order (and want to know what the CBSA thinks instead of being surprised by a large detailed adjustment statement). Since domestic producers are notified of new Scope Ruling applications, exporters, foreign producers and importers will have to consider whether they want domestic producers to know about their plans. The domestic producers can make it more difficult for plans to move forward by taking the position that the goods are within the scope of a CITT Order. It used to be that importers could ask the CBSA whether certain goods are subject to a CITT Order and the CBSA would not seek input from domestic producers before issuing an advance ruling. This new Scope Ruling review process will replace the confidential advance ruling process.
Scope Ruling Process
The process starts with an application for a Scope Ruling being made pursuant to new section 62 of the SIMA. As stated above, any interested person may file an application for a Scope Ruling. The President of the CBSA must decide within 30 days (can be extended to 45 days by the President of the CBSA) whether the application for a Scope Ruling should be accepted or rejected. If the application for a Scope Ruling is rejected, the President of the CBSA must provide written reasons for the rejection. If the application for a Scope Ruling is accepted, the President will initiate a Scope Ruling review. Criteria for the acceptance or rejection of an application for a Scope Ruling will be promulgated by way of a regulation (has not been published yet).
If the President commences a Scope Ruling review, upon an application by an interested person or on his/her own initiative, the President must provide written notice to the applicant, any foreign government of the country of export of goods that are covered by the Scope Ruling review, the exporter, the importer and the domestic producers. Interested parties who may be affected by the CBSA decision are not required to be notified of the initiation.
The Scope Ruling Review decision must be made by the President of the CBSA within 120 days (can be extended to 210 days by the President of the CBSA). The President may terminate the Scope Ruling review after initiation. The CBSA must notify the foreign government of the export country of the decision or termination. There does not appear to be a requirement to publish all Scope Rulings or make them publicly available.
Regulations will be published (yet to occur) concerning the factors the President of the CBSA must consider when making a Scope Ruling.
Effect of Scope Ruling
A CBSA Scope Ruling decision would apply to determinations or re-determinations made under sections 55, 56, 57 and paragraphs 59(1)(a) and (e) of SIMA. A Scope Ruling will be binding with respect to any decision or determination or re-determination of the CBSA or President of the CBSA. In other words, if the Scope Ruling covers new goods, the CBSA must impose antidumping and/or countervailing duties on the goods and issue an assessment against the importer or record.
A Scope Ruling decision may also apply to an undertaking (which are not common in the Canadian trade remedies process).
The effect of a Scope Ruling may be retroactive going back two years – yes, on previously accounted goods going back 2 years. For this reason, importers need to be very concerned and will have to factor this risk when pricing goods. If the volume of imports were significant and the anti-dumping duties/countervailing duties rates are high, the re-determinations after a Scope Ruling could bankrupt an importer.
Any interested person will be entitled to appeal a scope ruling made under section 66 of the SIMA. A written appeal must be filed with the CITT (with a copy to the President of the CBSA) within 90 days after the Scope Ruling decision is made by the CBSA. The CITT will have to publish rules for the conduct of Scope Ruling proceedings. The CITT is granted the authority to make an order or finding as to the nature of the matter may require and declare what duty is payable or that no duty is payable on the goods that are the subject of the appeal.
The appeal decision of the CITT will be final and conclusive subject to a further appeal to the Federal Court under section 62 of SIMA.
The President of the CBSA may, pursuant to new section 67 of the SIMA, review a Scope Ruling after it is issued. Regulations will be published (yet to occur) concerning the factors the President of the CBSA must consider when reviewing a Scope Ruling.
For more information about Canada’s antidumping and countervailing duty laws, please contact Cyndee Todgham Cherniak at 416-307-4168 or at firstname.lastname@example.org. More information has been posted on the LexSage website.