On August 9, 2019, Canada’s Department of Finance announced that “Canada Welcomes Anticipated Construction of One of the World’s Cleanest LNG Facilities” and hidden in the announcement is an unusual exception to the Canadian International Trade Tribunal’s (“CITT”) antidumping order on Fabricated Industrial Steel Components (“FISC”).  On May 25, 2017, the CITT issued an antidumping order on FISC exported from or originating in China.  On June 9, 2017, the CITT issued its reasons for finding threat of future injury and for denying exclusion requests, including a request filed by LNG Canada.

The announcement states:

“In keeping with previous public statements that trade barriers would not be permitted to stand in the way of these historic private sector investments, the Government is providing relief from duties on fabricated steel contained in modules for the Woodfibre LNG project as well as the previously announced LNG Canada project, which is the single largest private sector investment in Canadian history. These modules are key components used in the construction of LNG facilities, and relief is being provided because modules of the size and complexity required for these projects are not available in Canada.”

Did the Department of Finance just call the CITT’s antidumping order a “trade barrier” on FISC from China?  Are all antidumping orders trade barriers or just the FISC order?

The Department of Finance appears to be issuing a remission order or an order in council for past imports by LNG Canada and future imports relating to the Woodfibre project.  The remission order/order in council does not yet appear to have been published in the Canada Gazette.

What this means is that even though the CITT did not grant the exclusion requested by LNG Canada, the Department of Finance is granting the exclusion.  While LNG Canada filed a judicial review with the Federal Court of Canada (A-195-17) with respect to the CITT’s decision to not grant an exclusion for large complex modules and the hearing was held in April 2018, no decision has been issued yet.  This means that the Department of Finance has resolved the issue without waiting for the Federal Court of Appeal decision.

Even though there was no public interest inquiry filed with the CITT under section 45 of the Special Import Measures Act, the Department of Finance will be publishing a remission order for any antidumping duties on FISC imported for use in the Woodfibre LNG project.

Even though the Canada Border Services Agency (“CBSA”) conducted the first scope proceeding, which was filed by LNG Woodfibre and issued a decision on November 28, 2018 that the heavy complex components in the LNG Woodfibre project were within the scope of the Tribunal’s Order in the FISC case, the Department of Finance is granting the exception.

There exception is not authorized in the Special Import Measures Act.  However, it is authorized in the Financial Administration Act as the Department of Finance has the authority to issue remissions orders.

This is a first and sets a precedent. The Department of Finance has acknowledged that “modules of the size and complexity required for these projects are not available in Canada”.  This statement effectively says that the CITT’s test for granting an exclusion is satisfied for the LNG Woodfibre complex modules.  The Department of Finance has essentially overridden a decision of the CITT.  Further, other importers of complex modules may use this precedent to seek an exclusion by way of an interim review proceeding or during the expiry review proceeding.  Importers may also go straight to the Department of Finance to get the exclusion if they feel that the CITT may not grant the exclusion.  This is truly an unusual situation.

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