Canada Set to Impose Final Safeguards on Steel Plate, Stainless Rod; Refund Safeguards on Other Steel Products

Canada appears set to impose a three-year safeguard duty on imports of heavy steel plate and stainless steel wire from most countries, but could soon refund safeguard duties collected on five other types of steel, after the Canadian International Trade Tribunal issued a mixed decision April 3 on whether to finalize provisional safeguard duties in place since October.

The CITT found stainless steel wire and heavy plate are being imported in increased quantities and injuring Canadian producers, recommending a final “definitive” safeguard duty on those products. It also found steel concrete reinforcing bar, energy tubular products, hot-rolled sheet, pre-painted steel and wire rod were not imported in increased quantities or did not cause or threaten injury to Canadian industry.

The recommendations do not apply to products from the U.S., Israel, Chile and Mexico, which were not part of the investigation, nor to products from South Korea, Panama, Peru, Colombia and Honduras, which were under investigation but not recommended by CITT for additional duties.

The CITT recommended a tariff-rate quota on heavy plate from subject countries, starting in the first year at a limit of 100,000 metric tons with an out-of-quota rate of 20 percent, rising to 110,000 metric tons in year two with an above-quota rate of 15 percent, and again increasing to 121,000 metric tons in the third year with an out-of-quota rate of 10 percent.

For stainless steel wire, the CITT recommended an initial in-quota volume of 2,800 metric tons, above which the out-of-quota tariff rate would be 25 percent. That would rise to 3,080 metric tons with an above-quota rate of 15 percent in year two, and 3,388 metric tons with an above-quota rate of 5 percent in year three.

The CITT’s recommendations will now be considered by the Canadian Minister of Finance and Cabinet for a final decision on whether to impose a definitive safeguard, Canadian law firm Tereposky & DeRose said in a client alert. “For the five product categories for which the Tribunal found that safeguard measures at not warranted, it is reasonable to expect that (i) the provisional safeguard measures will be discontinued, and (ii) a process will be established for the prompt refund of import surtaxes that have been paid by importers during the provisional period,” the law firm said.

The provisional measures expire May 12, and “the question on many Canadian trade lawyers’ minds is whether the Minister of Finance will continue to impose provisional steel safeguard duties” until that date despite the CITT’s negative recommendation, said Cyndee Cherniak of LexSage on twitter.

“Finance could and should immediately terminate the provisional safeguard duties as the factual basis for the provisional duties has been found not to exist,” said Greg Tereposky of Tereposky & DeRose in an email. WTO rules require provisional duties be “promptly refunded” in the event of a negative recommendation, he said.

But there’s some question as to exactly how the process will play out. “Given this is the first time provisional safeguard duties have been imposed, there is no guidance as to the timing of this and how it will be implemented including whether and how much interest will be paid on the duties that were collected and refunded,” Tereposky said.