special import measures act
“ THE GOVERNMENT OF CANADA IS COMMITTED TO MAINTAINING AN EFFECTIVE TRADE REMEDY SYSTEM TO ENSURE THAT DOMESTIC PRODUCERS HAVE ACCESS TO THE APPROPRIATE TOOLS TO RESPOND TO UNFAIR TRADE .”
– PAUL DUCHESNE , FINANCE CANADA
Simply put , the term “ dumping ” applies when a country of export sells goods into Canada at a lower price level than in their own market , or even at an unprofitable level .
“ A good example would be potatoes out of the U . S . In 1984 , there was a finding regarding specific varieties of potatoes . Growers in certain U . S . states were able to export potatoes at a price that made B . C . growers non-competitive . What happens then is that the local potato producers can file a complaint with the CBSA .
There ’ s a long complaint process involved , and if there is a finding of dumping , CBSA will impose an “ anti-dumping ” duty on specific shipments of potatoes coming into B . C . in order to bring the price charged by the foreign producer up to a level comparable to the market rate for the domestic producer .
“ It ’ s quite a program ; it covers everything from potatoes to peppers from Holland , fasteners from China and sugar out of the EU ,” said Bucholtz . The criteria can be extremely specific : “ In the case of fasteners , they have probably 100 different exclusions ; a flange screw may be subject to dump duty , but a socket cap screw isn ’ t .”
SIMA also covers cases of subsidizing that give an unfair advantage to foreign producers in the Canadian market .
“ Subsidizing occurs when goods imported into Canada benefit from foreign government financial assistance . The amount of subsidizing on imported goods may be offset by the application of ‘ countervailing ’ duty ,” said Duchesne .
Subsidizing might take many forms , such as government loans to small business , tax incentives or grants in the originating country .
One reason that a Canadian importer could be caught offguard by a requirement under SIMA is that “ the only time a dump duty would ever be applied is if a Canadian company brings forth an allegation ,” said Bucholtz .
“ Trade remedy investigations are typically initiated following the submission of a properly documented complaint on behalf of a Canadian industry ,” said Duchesne . “ Once a complaint is filed , the CBSA will evaluate the complaint . If the CBSA determines that an investigation should be initiated , questionnaires will be sent to exporters , importers and , in subsidy investigations , to the foreign government involved .” At this stage , the CITT also becomes involved . “ Following a decision to start an investigation , the CBSA will also send a copy of the complaint to the CITT . The CITT , independent from the CBSA , conducts an inquiry into the question of injury to the Canadian industry .”
If both the CBSA and the CITT find that an anti-dumping and / or countervailing duty is in order , it is imposed for an initial period of five years . At the end of that time , the case is reviewed , and the duty may be either extended or dropped .
The anti-dumping duties can vary considerably , even within the same product category . Bucholtz explains that when a category of goods is determined to be subject to duty , the Canadian government will contact the various manufacturers in the country of origin for further information to assist them in setting the rate .
“ Carbon steel fasteners coming in from China have a very high dump duty , as high as 170 per cent ,” he said . However , for companies that are cooperative in providing Canadian authorities with information , “ the dump duty may be lowered , compared with companies that are not ( cooperative ).”
Dump duty may seem steep at first glance , but , as Bucholtz says , it ’ s really just “ a cost of doing business .” Far more unfortunate would be to incur a penalty for ignoring the duty . The fee for a first infraction is $ 150 , and rises to $ 450 for the third and each subsequent infraction , up to a maximum per infraction of $ 25,000 . The fee applies per shipping transaction , which could be a 10-pound box , or a full container .
The fee schedule is covered under the CBSA ’ s Administrative Monetary Penalty System ( AMPS ), and it is fairly complex .
“ Last time I looked , there were 152 different AMPS penalties , of which four were specific to SIMA ,” said Bucholtz . A penalty may apply for failing to declare a duty-eligible item , or even for failing to produce documentation during an audit .
Of course , he added , “ There are appeals . The government will work with companies , depending on what they determine is the issue . Not knowing is not a defense , but they ’ ll certainly work with you to mitigate the damage to your company .”
This may not apply in a situation like one Bucholtz recalls from some years ago , in which an importer claimed to be pricing goods at a level that was exempt from duty , while allegedly receiving rebates from the exporter to offset the price difference .
“ In a case like that , you ’ re not going to get any breaks from anybody ,” he said .
Since import-export regulations are a moving target , most importers rely on the expertise of a company like Bucholtz ’ s to help them navigate the process .
“ Our company has 15 CBSA professional designates and 45 certified customs specialists ( CCS ), a designation provided by the Canadian Society of Customs Brokers ( CSCB ). We take a lot of pride in our expertise . Importers should be aware of everything they may run into – and part of that is having a good customs broker ,” said Bucholtz .
Luckily for importers , information has never been easier to access .
“ CBSA has done a really good job of working with electronic messaging and they have wonderful websites . If worst comes to worst , you dial the 1-800 number ,” he said . “ There ’ s not really any excuse anymore for saying ‘ Oops , I didn ’ t know !’”
22 • SUPPLYCHAINCANADA . CA • SCMA