Taylor Schappert, Peter Glossop, Riyaz Dattu
May 18, 2017
Our last international trade brief dealt with SCOTUS rejecting an expropriation claim and the alternate process of seeking compensation using bilateral investment treaties to avoid sovereign immunity defences, dispute settlement and key improvements in the CFTA government procurement rules, and a Trade Case Alert discussing Boeing launching a trade remedies petition against Bombardier. In this brief, in several articles, we discuss Robert Lighthizer’s confirmation as U.S. Trade Representative, Chinese semiconductors potentially becoming the target of a U.S. national security probe, and our Trade Case Alert involving a Canadian anti-dumping and countervailing investigation for silicon metal.
On February 20, 2017, the Canada Border Services Agency (CBSA) initiated anti-dumping and countervailing investigations, pursuant to the Special Import Measures Act (SIMA), related to allegations of dumping of silicon metal originating in or exported from Brazil, Kazakhstan, Lao People’s Democratic Republic, Malaysia, Norway and Thailand. The investigation follows a complaint from Québec Silicon Limited Partnership and its affiliate QSIP Canada ULC, the sole Canadian producers of silicon metal.
Silicon metals are used as an input for the chemical and aluminium industries. The chemical industry uses the metals to produce a family of chemicals known as silicon. The predominant users of silicon metals in Canada are the primary and secondary aluminium industries.
The Canadian investigation is proceeding in parallel with a similar investigation launched in the United States regarding silicon metal from Australia, Brazil, Kazakhstan and Norway.
In its Statement of Reasons [PDF] issued on March 7, 2017, in the Canadian proceedings, the CBSA estimated that silicon metal was being dumped into the Canadian market in 2016 at margins of between 7.9 – 17.5%, and that exports from Brazil, Kazakhstan, Malaysia, Norway and Thailand had been subsidized.
On May 15, 2017, the CBSA announced that it was extending its preliminary investigation due to the complexity and novelty of the issues, and its preliminary determination would be released by July 5, 2017. The next day the CBSA announced that it was also initiating an inquiry regarding the role of the Government of Kazakhstan in the silicon metal sector as it appears that all known silicon metal producers in Kazakhstan are state-owned enterprises. As part of this inquiry, the CBSA will seek information from the Government of Kazakhstan, and all known silicon metal producers in Kazakhstan, regarding the nature and extent of government involvement in exports and in determining pricing.
If the CBSA makes a preliminary determination, it will immediately impose provisional duties on all silicon metal imported from the subject countries. Within 90 days of its preliminary determination, the CBSA will issue a final determination, which may include duties that are higher or lower than the provisional amount.
If the CBSA’s preliminary determination concludes that the domestic injury has been or will be injured in the future, the Canadian International Trade Tribunal (CITT) will thereafter conduct its final injury inquiry. Should the CITT find that the importation of the subject goods has injured in the past or threatens to injure the domestic production of like goods, it will make a finding of injury.
A final finding of injury by the CITT will mean that the duties imposed by the CBSA in its final determination will apply for five years, subject to reinvestigation by the CBSA (generally annually) to ensure the percentage of duties payable continues to be appropriate. Before the end of the five-year period, the CITT will undertake a “sunset review” of its previous injury finding to determine if it should be extended for another five-year period.
The consequence of anti-dumping and countervailing duties to Canadian businesses that use silicon metal can be expected to be potentially significant and long-lasting, and those companies affected should be alert to this ongoing Canadian trade remedies case.