Canada-U.S. Blog Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

Canada Imposes Definitive Safeguard Duties on Heavy Plate and Stainless Steel Wire

Posted in Canada's Federal Government, Canada's Steel Safeguard, Countermeasures, Customs Law, Imports Restrictions, Legal Developments, origin, Steel, tariff classification, tariffs, Trade Remedies, valuation

On May 10, 2019, the Canada Border Services Agency (“CBSA”) posted Customs Notice 19-08 “Final Safeguard Measures on the Importation of Certain Steel Goods”.  Effective May 13, 2019, Canada will impose definitive safeguard duties on Heavy Plate and Stainless Steel Wire for a period of 3 years. Canada is imposing tariff rate quotas with declining tariff rate and increasing quotas over a three year period. The TRQs are not prohibitively restrictive and allow a reasonable volume of imports of heavy plate and stainless steel wire in order to meet Canadian supply deficiencies.

The Governor-in Counsel (the Trudeau Government) has amended the original order imposing the provisional safeguards, the Order Imposing a Surtax on the Importation of Certain Steel Goods, SOR/2018/206, which came into force October 25, 2018. The amending order, the Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods (Final Safeguards), SOR/2019-127, will impose final safeguard measures and effectively ends provisional safeguards on hot-rolled sheet, rebar, pre-painted steel, wire rod and energy tubular products.

The Final Steel Safeguards Order applies to Heavy Plate and Stainless Steel Wire (goods) imported from all countries except for:

a) goods originating in Canada;

b) goods originating in Chile, Columbia, Mexico, Panama, Peru, the Republic of Korea, the United States or Israel or another CIFTA beneficiary; and

c) goods originating in a World Trade Organization (WTO) Member country that is a beneficiary of the General Preferential Tariff (GPT), as long as the share of imports from such a country does not exceed 3% of total imports of each good, provided that imports from countries accounting for less than 3% of import share do not collectively account for more than 9% of total imports of each good.

Excluded GPT beneficiary countries that qualify for the exception in (c) include Moldova, Pakistan, the Philippines, Vietnam, and Ukraine.  These countries have exported steel products to Canada.  The complete list is in the Customs Notice.

The burden of proof that goods originate in an excluded country or meet an exceptions set out in the Final Steel Safeguard Order will lies with the importer.  Proof of origin may be in the form of a commercial invoice, a Canada Customs Invoice, a Form A – Certificate of Origin, an Exporter’s Statement of Origin, a Certificate of Origin pursuant to a Free Trade Agreement, or any other acceptable documentation that clearly indicates the country of origin of the goods. Exporters may be asked to provide mill test certificates and/or other documentation to establish origin and/or specifications for the steel.

The origin of the goods is determined in accordance with the rules of origin set out in the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations or the Determination of Country of Origin for the Purpose of Marking Goods (Non-NAFTA Countries) Regulations, as the case may be.

It is important that countermeasures are applied under a separate countermeasures order against steel from the United States.  When the United States lifts its national security measures against steel from Canada, the Canadian countermeasures against steel from the United States will likely be lifted also.

The Final Steel Safeguards TRQs and tariff rates for heavy plate and stainless steel wire are consistent with the Canadian International Trade Tribunal’s recommendations made on April 3, 2019.

The TRQ and tariff rates for heavy plate is:

Period Duration Surtax Rate TRQ (Tonnes)
1 May 13, 2019 to May 12, 2020 20% 100,000
2 May 13, 2020 to May 12, 2021 15% 110,000
3 May 13, 2021 to October 24, 2021 10% 54,699

The TRQ and tariff rates for stainless steel wire is:

Period Duration Surtax Rate TRQ (Tonnes)
1 May 13, 2019 to May 12, 2020 25% 2,800
2 May 13, 2020 to May 12, 2021 15% 3,080
3 May 13, 2021 to October 24, 2021 5% 1,532

The historical volumes of imports of stainless steel wire into Canada is low.

The amount of surtax payable will be applied on the value for duty of goods determined in accordance with sections 47 to 55 of the Customs Act.

The TRQ will be monitored by Global Affairs Canada through the use of transaction-specific individual import permits.  Canadian resident companies must apply for import permits on a shipment by shipment basis.  Non-resident importers are not entitled to receive import permits under the Export and Import Permits Act.  The Minister is granted authority to issue import permits under Section 8 of the Export and Import Permits Act and that authority is limited to “any resident of Canada”.

Global Affairs will require importers apply for import allocation.  On May 10, 2019, Global Affairs Canada posted Notice to Importers No. 945 “Steel Goods (Item 82 on the Import Control List)” detailing the import allocation process.There will be three periods:

  • May 13 and June 2, 2019
  • June 3, 2019 to January 31, 2020
  • February 1, 2020 to October 24, 2021

Between May 13 and June 2, 2019, shipment-specific import permits will be issued on a first-come, first-served basis. During the period between May 13 and June 2, 2019, the quantity of steel goods that may be imported under each TRQ is as follows:

  • for stainless steel wire, 161,000 kg;
  • for heavy plate, 5,738,000 kg.

This quantity is equal to the prorated TRQ for the first period as set out in the Schedule to the Surtax Order.

Between June 3, 2019 to January 31, 2020, the TRQ will be administered on an allocated basis.  During the period June 3, 2019 to January 31, 2020, TRQ volumes  will be divided into two pools: an allocation pool, available for eligible applicants based on their import history during the reference period, and a residual pool, available on a first-come, first served basis to those who do not hold allocations. Applications for a quota allocation will be accepted by Global Affairs Canada between May 10 and May 24, 2019. Said quota allocation, if granted, may be used between June 3, 2019 and January 31, 2020. Applications must be submitted by May 24, 2019. Applications Form 3145 must be submitted by e-mail to steel-acier@international.gc.ca.

A consultation process will be undertaken in the summer of 2019 to determine the approach to be used for February 2020 to October 2021.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at Cyndee @lexsage.com.  For more information about Canada’s customs and trade remedies laws, please go to the LexSage website where we have posted many useful articles.