The European Union has said that should President Trump impose steel tariffs, the EU will expedite a steel safeguard case. While Canada may be excluded from the U.S. Section 232 tariffs, Canadian steel companies would be caught by the European Union safeguard case. There is no provision in the Canada-European Union Comprehensive Economic and Trade Agreement (the “Canada-EU CETA”) to exclude Canada for EU safeguard actions.
Chapter 3 of the Canada-EU CETA covers the agreement relating to trade remedies. Global safeguard actions are a form of trade remedy. Pursuant to Article 3.1 of the Canada-EU CETA, the Parties reaffirm their rights and obligations under Article VI of GATT 1994 (which includes the prohibition against discrimination). In Article 3.4 of the Canada-EU CETA, the parties address global safeguards as follows:
- The Parties reaffirm their rights and obligations concerning global safeguard measures under Article XIX of GATT 1994 and the Safeguards Agreement.
- The Protocol on rules of origin and origin procedures shall not apply to global safeguard measures.
Article 3.5 of the Canada-EU CETA addresses issues of transparency in global safeguard proceedings:
- At the request of the exporting Party, the Party initiating a safeguard investigation or intending to adopt provisional or definitive global safeguard measures shall immediately provide:
(a)the information referred to in Article 12.2 of the Safeguards Agreement, in the format prescribed by the WTO Committee on Safeguards;
(b) the public version of the complaint filed by the domestic industry, where relevant; and
(c) a public report setting forth the findings and reasoned conclusions on all pertinent issues of fact and law considered in the safeguard investigation. The public report shall include an analysis that attributes injury to the factors causing it and set out the method used in defining the global safeguard measures.
2. When information is provided under this Article, the importing Party shall offer to hold consultations with the exporting Party in order to review the information provided.
Article 3.6 of the Canada-EU CETA addresses the imposition of definitive safeguard measures:
- A Party adopting global safeguard measures shall endeavour to impose them in a way that least affects bilateral trade.
- The importing Party shall offer to hold consultations with the exporting Party in order to review the matter referred to in paragraph 1. The importing Party shall not adopt measures until 30 days have elapsed since the date the offer to hold consultations was made.
None of the provisions say that the EU must exclude Canada from definitive measures. This means that Canada may be caught up in any EU safeguard action taken in retaliation to the U.S. steel tariffs. Canadian companies will have to participate. However, since global safeguards look at imports from all countries combined and not at imports from specific countries, there will be no preferential treatment even if Canadian steel imports into the EU did not cause serious injury to EU steel producers.
If you have any questions, please do not hesitate to contact Cyndee Todgham Cherniak at 416-307-4168 or a firstname.lastname@example.org. More information about trade remedies and the Canada-EU CETA are contained on the LexSage website.