Baker McKenzie’s Canadian international trade and customs team is publishing a series of articles reviewing 2024 trade and customs compliance developments and looking ahead to 2025’s burgeoning issues. This article focuses on Canada’s trade remedies regime.

Before we dive into the trade remedies outlook, here is an overview of the current state of politics in Canada, which includes a discussion of the legislative powers that remain while Canadian Parliament is prorogued until March 24, 2025.

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2024 marked a year of enhanced enforcement and further protections for Canadian domestic industries as well a procedural changes for importers and exporters in respect of self-reporting anti-dumping duties and obtaining normal values. In the trade remedies space, the Canada Border Services Agency (CBSA) initiated 5 new investigations, 2 re-investigations, 9 expiry reviews, and multiple exporter-specific normal value reviews in respect of 9 measures in force. The CBSA also initiated their first-ever anti-circumvention investigation in respect of container chassis from China and acted on the 2024 federal budget’s promise of a new “Market Watch Unit”, whose monitoring was responsible for the CBSA initiating an anti-dumping investigation. The SIMA Handbook was updated, there were over 30 CBSA presidential decisions on subjectivity of goods and new steel monitoring measures entered into force.

In 2025, we expect the CBSA to continue to ramp up enforcement, especially through the CBSA’s new “Market Watch Unit” and for the Government of Canada to continue to implement protectionist measures to support Canadian industries. New products may be subject to Special Import Measures Act (SIMA) investigations as Canadian industries seek protection from alleged dumped imports and the risk of goods being diverted from other markets during tit-for-tat tariff wars initiated by the United States. In 2025, the CBSA will continue its new annual administrative review system, which will be used to update normal values as opposed to the CBSA’s traditional ad hoc process. 

Importers and exporters can prepare for trade remedies enforcement in 2025 as follows:

  • Stay on top of new self-initiated investigations by the CBSA’s Market Watch Unit and the factors considered by the Unit for self-initiation;
  • Watch for procedural developments in the CBSA’s new administrative review process;
  • Exporters should continue to report changes in domestic market conditions to avoid retroactive assessments; and  
  • Importers should carefully review calculations of SIMA duties on the CARM Client Portal to avoid over or underpayment of duties, risking re-determinations, interest and penalties. 

Market Watch Unit

In the 2024 federal budget, the Government of Canada proposed $10.5 million over three years for the CBSA to create a dedicated “Market Watch Unit” to “monitor and update” trade remedy measures annually. The aim of the Market Watch Unit is described by the Government to protect Canadian industry from unfair trade practices and to ensure greater transparency and market predictability. While the CBSA has not published a mandate for the Market Watch Unit or described its operational function, the Unit’s work is well underway.

The activities of the Unit to date are described in the CBSA’s Statement of Reasons for self-initiating a dumping investigation against one exporter in relation to imports of corrosion-resistant steel sheet originating in or exported from Turkey. The CBSA states that the self-initiation was due to the Unit starting to “monitor imports and trade practices in industries with existing trade remedy measures”. In this case, the CBSA identified information that suggested the exporter is dumping goods and causing injury to the Canadian domestic industry. The CBSA reviewed imports recorded in its FIRM and ACROSS databases and requested information from the CBSA’s Trade Compliance Division. This data illustrated an increasing share of imports for this particular exporter. The CBSA then calculated an estimated margin of dumping using customs values declared by the importer. Notably, the exporter targeted by this review was known to the CBSA, which had previously held that the exporter was not dumping in COR2.

In 2025, we expect further activity by the Market Watch Unit resulting in new self-initiated investigations by the CBSA. Exporters can expect that the Unit is monitoring Canadian imports on goods subject to AD/CVD measures and looking for patterns that may suggest dumping is occurring. 

Anti-circumvention proceedings

The CBSA launched its first anti-circumvention proceeding in relation to container chassis from China in November, 2024. The complainant alleges that goods assembled/completed in Vietnam are “like goods” that otherwise meet the product definition in the February 2022 CITT finding initiating measures against chassis from China.  Circumvention is generally defined under CBSA policy as circumstances “when trade and business practices are altered to specifically avoid the liability for SIMA duties”. In the CBSA’s reasons for initiating the investigation, it notes that there are changes in trading patterns; imports from China have decreased, while imports from Vietnam have increased. The CBSA also held there is a reasonable indication that chassis manufactured in Vietnam are produced using materials/components sourced from China, which represent a “major portion” of the total cost of production and that assembly in Vietnam is by means of “insignificant processes”. 

At the time of publication, the investigation remains in the fact-gathering stage. The record closes in March 2025 and will conclude in May 2025. Importers should be aware that they are at risk if there is a finding of circumvention because it could result in liability for SIMA duties retroactive to the date of initiation of the anti-corruption investigation. Participants in the Canadian trade remedies community are closely watching this case, as it will be precedent setting on how supply chain restructuring could constitute circumvention of the SIMA.

The Canadian domestic steel industry has raised concerns regarding the scope of the anti-circumvention provisions in the SIMA and its regulations. In particular, the established criteria are too narrow and discourages the domestic industry from seeking to initiate anti-circumvention proceedings. The domestic steel industry has asked the Government to amend the Special Import Measures Regulations (SIMR) to align with the U.S. anti-circumvention model. For example, to define “insignificant processes” in such a way to permit initiation of an anti-circumvention investigation when a foreign product undergoes only minor changes (up to 49% of the value-added) before being imported into Canada. We expect that there will be an increase in anti-circumvention initiations if the Government amends the SIMR in response to the domestic industry’s concerns.

Introduction of annual administrative reviews

The CBSA issued its new administrative review policy on January 13, 2025, outlining how these new annual reviews of SIMA measures will continue to unfold. Changes to volumes of imports, changes affecting ministerial specifications and/or changes to market conditions or the provision of subsidies may trigger an administrative review. If triggered, a Notice of Initiation will be posted on the CBSA’s website alongside a proposed schedule, similar to the notifications that exist for re-investigations and normal value reviews. There are currently three ongoing administrative reviews.  

Administrative reviews will follow a “tiered review process”, with tier 1 outlining procedures for less complex reviews and tier 3 outlining procedures for more complex reviews. Similar to other trade remedy proceedings, interested parties may make representations throughout an administrative review. While administrative reviews may provide more predictability to market participants and create further alignment with the U.S. trade remedies regime, the CBSA still retains large discretion in conducting and determining the procedures that apply to a review and interpreting the data supplied by exporters seeking normal values. Exporters and importers may find themselves subject to annual reviews requiring extensive RFI responses in tight timelines, while remaining exposed to the possibility of retroactive assessments of SIMA duties. 

Retroactive assessments

In 2024, the CBSA continued to issue retroactive assessments to importers. These assessments are typically caused by an exporter’s failure to alert the CBSA to changes in costs, domestic sales, market conditions and terms of sale in their export market, which may require an exporter to adjust its export prices to avoid dumping. Historically, the CBSA’s enforcement branch considers participating parties’ arguments for or against the issuance of a retroactive assessment, and the delta between a normal value issued during the review/re-investigation and the export price during the period of review/re-investigation. Retroactive assessments have largely been unpredictable due to their discretionary nature and have been issued months after the conclusion of a review/re-investigation by the CBSA’s enforcement branch.

While the newly issued Administrative Review Policy (D14-1-8) discussed above replaces and significantly amends the previous “Re-investigation and normal value review policy”, exporters remain obliged to adjust selling prices to Canadian importers in response to changes in market conditions, prices, costs and terms of sale that could impact normal values. Under the Administrative Review Policy, the CBSA will continue to administer retroactive assessments when exporters fail to adjust selling prices. However, it remains to be seen how frequently retroactive assessments will be issued given the CBSA’s new self-appointed responsibility to annually review SIMA measures to determine if updates to normal values are required. Given that the threat of retroactive assessments continues to loom large and create risk for importers, exporters should remain vigilant in reporting changing markets conditions to the CBSA. 

CARM procedures for importers and exporters & the SIMA

The official launch of the CBSA’s new import portal, CARM, introduced new procedural and administrative responsibilities for both exporters and importers in relation to goods subject to SIMA duties. In particular, exporters are required to register for an import/export “RM” account with the Canada Revenue Agency in order to register on the CARM Client Portal, where normal values, export price deductions, margins of dumping and/or amounts of subsidiary will be issued going forward.

CARM will automatically calculate the amount of SIMA duties payable based on the information input into the relevant Commercial Accounting Document (CAD) fields by an importer. However, importers must be vigilant and verify that the assessed SIMA duties are correct. If the amounts are not correct, importers must self-declare the correct SIMA duties owing. The SIMA-specific fields on a CAD are listed here. Note that the “Self-Declare SIMA” checkbox must be selected by importers when self-declaring SIMA duties when the SIMA duties owing are higher than those calculated by CARM. Errors in SIMA duty payment can be corrected by submitting a SIMA re-determination through the CARM Client Portal.

Steel import monitoring

On November 5, 2024, new country of melt & pour (COM) requirements under Canada’s Steel Import Monitoring Program came into force. The amendments to General Import No. 80 and the amendments to General Import Permit No. 81 are now in force. Although the Import Control List defines “carbon steel products” and “speciality steel products” broadly, there are certain steel imports that are excluded from the COM requirements. For example, COM does not need to be reported if the value for duty of the imported non-exempt steel goods does not exceed CAD 5,000. There are also a number of HS Codes that are exempt. See section 4.4 of Global Affairs Canada’s Notice to Importers on the exemptions related to COM requirements. 

The risk of diversion and safeguard inquiries

As a tariff war brews, the threat of widespread tariffs on imports into the U.S. creates the risk of Canada (and other nations) initiating safeguard inquiries to guard against the possibility that goods destined for the U.S. are diverted to other markets. For example, in 2018, Canada implemented a 25% provisional safeguard surtax against certain steel products being imported into Canada from all countries, subject to limited exceptions. The Government instructed the Canadian International Trade Tribunal to conduct an inquiry into whether a final safeguard was warranted based on the risk of a diversion of steel products due to U.S. tariffs. While a final safeguard was not implemented in respect of many of the steel products, a safeguard was implemented against some steel products.

Canadian importers should consider that U.S. tariffs will likely have knock-on effects that indirectly impact other sectors of the Canadian economy. Depending on the tariffs imposed by the U.S., there might be a risk that goods will be diverted from the U.S. market to Canada, causing the Government of Canada to take action to protect domestic industries.   

Author

Toronto

Author

Toronto

Author

Toronto