Vol. 151, No. 23 — November 15, 2017
SOR/2017-230 November 2, 2017
EXPORT AND IMPORT PERMITS ACT
Order Amending the Import Control List
P.C. 2017-1333 November 2, 2017
Whereas, in the opinion of the Minister of Foreign Affairs, certain carbon and specialty steel products are traded in world markets in circumstances of surplus supply and depressed prices;
Whereas a significant proportion of world trade in those products is subject to control through the use of non-tariff measures;
Whereas the Governor in Council is satisfied that it is advisable to collect information with respect to the importation of those products;
And whereas those products were included on the Import Control List (see footnote a) by Order in Council P.C. 2014-1155 of October 30, 2014 (see footnote b), which came into force on October 31, 2014, and will be deemed by subsection 5.1(2) (see footnote c) of the Export and Import Permits Act (see footnote d) to be removed from that list on October 31, 2017;
Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, pursuant to subsection 5.1(1) (see footnote e) and section 6 (see footnote f) of the Export and Import Permits Act (see footnote g), makes the annexed Order Amending the Import Control List.
Order Amending the Import Control List
1 The Import Control List (see footnote 1) is amended by adding the following after item 74:
- 80 Carbon steel products including semi-finished products (ingots, blooms, billets, slabs and sheet bars), plate, sheet and strip, wire rods, wire and wire products, railway-type products, bars, structural shapes and units, pipes and tubes, but excluding the specialty steel products referred to in item 81.
- 81 Specialty steel products: stainless steel flat-rolled products (sheet, strip and plate), stainless steel bar, stainless steel pipe and tube, stainless steel wire and wire products, alloy tool steel, mold steel and high-speed steel.
Coming into Force
2 This Order comes into force on the day on which it is registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Steel is a $15.1 billion industry in Canada (sales), which employs 22 500 people (see footnote 2) with another 100 000 indirect jobs (see footnote 3) tied to the sector. It is integral to Canada’s automotive, energy, manufacturing and construction supply chains. Given that steel is traded in world markets in circumstances of overcapacity, widespread subsidization and a prevalence of dumping, (see footnote 4) a steel import monitoring program was implemented in 1986 to support early identification of issues of dumping on the Canadian market. The authority to monitor is granted through the Export and Import Permits Act (EIPA), by placing steel on the Import Control List (ICL). Carbon steel and speciality steel products were last included on the ICL in the Order Amending the Import Control List (P.C. 2014-1155). Under the terms of subsection 5.1(2) of the EIPA, carbon and specialty steel will be removed from the ICL automatically on the expiration of three years from its date of inclusion on the list, which for the current listing will be on October 31, 2017. Since market conditions have not changed and Canadian steel producers face significant market challenges, imports of carbon steel and speciality steel products should continue to be monitored by placing these products on the ICL by the Order Amending the Import Control List for another three-year period.
Import monitoring of steel products began on September 1, 1986, on the recommendation of the then Canadian Import Tribunal (CIT). The CIT conducted an inquiry into conditions in the steel trade and found that overcapacity, widespread subsidization and prevalence of dumping represented a threat of injury to the domestic industry. When steel produced in other markets where the cost of inputs to production (e.g. infrastructure, labour) is low and the producing companies are state-owned enterprises, enjoying significant financial supports, the products may be sold into markets like Canada’s at prices that are substantially below a reasonable cost of production. This is considered “dumping” and threatens the Canadian industry’s ability to sell their product at reasonable market prices. As a result, most steel commodities were added to the ICL, which lists goods over which Canada imposes import controls. The ICL is made under the EIPA. Since the adverse conditions identified by the CIT have persisted, the steel import monitoring program has been renewed repeatedly for two or three-year periods and was last renewed in October 2014. The Canadian International Trade Tribunal (successor to the CIT) frequently hears cases regarding anti-dumping charges and issues findings against various countries and products. This allows the Canada Border Services Agency (CBSA) to levy tariffs on the offending products. Not renewing the program by October 2017 would stop the flow of information to the Canadian steel industry and remove a valuable early-warning mechanism to detect dumping of products on the Canadian market. This early warning allows industry to request that CBSA institute an investigation leading potentially to the imposition of duties on the offending imports in order to level the playing field for Canadian producers.
The Canadian steel industry requires the most up-to-date information available on the nature, volume, price and origin of steel imports in order to provide early warning of potential dumping situations. Import data gathered under the authority of the EIPA and provided to the industry via weekly web publications is the timeliest source available in Canada on these elements. There are currently no alternative sources of equivalent steel import statistics. Similar information from Statistics Canada is published at least six weeks after the reference period.
Maintaining carbon and specialty steel on the ICL will provide the Canadian steel-producing industry with accurate and timely statistics on imports into Canada to facilitate early detection of the dumping of goods on the Canadian market, allowing early investigation by the CBSA and remedial action if required.
The proposed Order Amending the Import Control List includes carbon and speciality steel products on the Import Control List for a further three years beginning on October 31, 2017.
The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business. By 2012, then Department of Foreign Affairs, Trade and Development, Finance Canada and the CBSA had worked together to virtually eliminate any financial or administrative burden at the border. In November 2010, all steel import permit fees were eliminated as a cost-saving measure for steel importers. In April 2012, the requirement for importers to apply for import-specific permits was eliminated. Currently, importers must cite “General Import Permit No. 80 — Carbon Steel” and “General Import Permit No. 81 — Specialty Steel Products” on their CBSA import documentation, but do not need to apply for individual permits or pay any fees.
Small business lens
The small business lens does not apply to this proposal, as there are no costs to small businesses.
There is strong support for the renewal of this initiative from the primary stakeholders, Canadian steel producers. Canadian steel producers are consulted on the program within the context of the North American Steel Trade Committee which meets twice a year and is chaired by Finance Canada. Global Affairs Canada (GAC) representatives also meet two or three times a year with the Trade Committee of the Canadian Steel Producers Association (CSPA). A one-day workshop was also held in May 2017 with the industry and other government departments (CBSA, Statistics Canada and Finance Canada) to review the current state of the industry and their data requirements. The online statistical reports are added to and amended in response to their requirements. The industry has been actively querying Global Affairs Canada to ascertain the status of the renewal of the program as well as requesting that the Department increase the granularity of the reporting. In addition, all CSPA Committee members, which include the full Canadian steel producing industry, have been invited to submit their views, in writing, with respect to the prospective renewal of the steel import monitoring program. The Committee provided a consolidated response on behalf of the Canadian steel producing industry which included extensive arguments (with supporting documentation from the Organisation for Economic Co-operation and Development [OECD]) supporting the continued adverse global market conditions and proof that industry stakeholders value this program and support its renewal for another three years. In addition, one company, Tenaris, provided additional comments.
Under the terms of subsection 5.1(2) of the EIPA, any type of steel or any product that has been included on the ICL by order under subsection 5.1(1) shall be removed from the ICL on the expiration of the period of three years from the day on which it was included on that ICL or on such day prior to the expiration of that period, as specified in the Order. As a result, the Order Amending the Import Control List (P.C. 2014-1155) is only in effect until October 30, 2017. Therefore, action is needed to continue the regulatory authority for the monitoring program. Not doing so would remove an important source of information that is used extensively by steel producers to track prices, volumes, and origin of steel imports and to flag potential dumping on the Canadian market in order to request a CBSA investigation.
The program significantly benefits the industry by providing information on steel imports on a timely basis with limited costs. Only a fraction of a single full-time employee time is dedicated to produce reports, post information online, answer industry questions and submit the annual report to Parliament. The cost of this full-time equivalent is estimated at $50,000 annually.
Implementation, enforcement and service standards
Importers of carbon and specialty steel must cite the appropriate General Import Permit (“General Import Permit No. 80 — Carbon Steel” or “General Import Permit No. 81 — Specialty Steel Products”) on their customs documentation. Global Affairs Canada provides information and guidance to industry on the process with instructions and contact information posted on the website and help desk staff available to answer questions. The information is also sent to all clients of the Trade and Export Controls Bureau when the regulation is renewed. Failure to cite the required import permit may lead to the levying of penalties by CBSA under the Administrative Monetary Penalty System which authorizes CBSA to assess monetary penalties for non-compliance with customs legislative, regulatory and program requirements. Importers may also face prosecution under the EIPA for contravening a provision of the Act (section 19). Compliance is monitored by CBSA.
Ms. Sheila M. Barth
Administration and Technology Services
Trade and Export Controls Bureau
Global Affairs Canada
125 Sussex Drive
- Footnote a
C.R.C., c. 604; SOR/89-251, s. 1
- Footnote b
- Footnote c
R.S., c. 13 (3rd Supp.), s. 1
- Footnote d
R.S., c. E-19
- Footnote e
R.S., c. 13 (3rd Supp.), s. 1
- Footnote f
S.C. 1991, c. 28, s. 3
- Footnote g
R.S., c. E-19
- Footnote 1
C.R.C., c. 604; SOR/89-251, s. 1
- Footnote 2
Statistics Canada data on 2016 sales and employment for iron and steel mills and ferro-alloy manufacturing (NAICS 3311) and Steel product manufacturing from purchased steel (NAICS 3312).
- Footnote 3
Canadian Steel Producers Association website.
- Footnote 4
Dumping refers to the situation where products may be sold into markets like Canada’s at prices that are substantially below a reasonable cost of production due to low cost of inputs and state subsidies.