Special Import Measures Act

AuthorMohan Prabhu
A | Introduction
Chapter 3
Special Import Measures Act1
The primary purpose of the Special Import Measures Act (SIMA) is to pro-
tect Canadian manufacturers and producers by levelling the playing f‌ield
between exporting countries with which Canada has trade relations and
Canadian manufacturers and producers of goods and merchandise, by
counteracting unfair and aggressive competition that materially injures or
threatens to cause material injury resulting in disruption of Canadian mar-
kets, through the special measures provided by the Act. Unfair competition
is caused not only by below-normal pricing but also by the consequence
of various forms of government subsidy that enable foreign manufacturers,
producers, and exporters to reduce their production costs and sell at lower
prices in domestic as well as foreign markets. An analysis of facts in various
investigations conducted by the Canadian Border Services Agency (CBSA)
and the Tribunal reveals that f‌inancial subsidies granted to manufacturers,
producers, and exporters take various forms, both f‌inancial and non-f‌inan-
cial, including tax preferences; write-of‌f of research and development costs
against income; cheap leases of government lands that enable extraction of
timber, minerals, oil, and gas; and state trading, especially in grains.
The process begins with a preliminary investigation into dumping or
subsidizing, or both, by the CBSA on the basis of valid complaints from the
Canadian industry or producers, followed simultaneously by an inquiry by
the Tribunal. If the CBSA’s investigation f‌inds that the complaints are valid,
1 RSC 1985, c S-15 [SIMA].
A | Introduction
it is authorized to impose provisional duties on all imports from the export-
ers concerned as of the date the investigation commenced. The provisional
duties, as the term implies, are only temporary, though payable immediately,
and must be conf‌irmed by the Tribunal through a f‌inding of injury. When
that f‌inding is made, and it has become f‌inal, the SIMA dumping or counter-
vailing duties, or both, are payable by the importer of the goods as from
the date of the f‌inding. If the Tribunal does not f‌ind injury, the provisional
duties have to be refunded. The obligation to pay the duties is imposed on
the importers who will, if they can, pass them on to Canadian manufactur-
ers and producers, who will ultimately raise the prices of their products. If
the imported goods continue to be cheaper than similar goods produced in
Canada, the ultimate losers are Canadians, hurting both the consumer and
the economy. To mitigate the ef‌fects of the levy, however, the Tribunal may
conduct a public interest investigation and, at the conclusion of its inquiry,
may, and usually does, invite Canadian manufacturers who were dependant
on the imports, and public interest groups, to make submissions, following
which the Tribunal may make a recommendation to the Minister of Finance
to reduce or eliminate the levies.
The SIMA applies to goods imported from any country. Specif‌ic Parts of
the Act apply to goods imported from the United States (Part II) and from the
NAFTA countries (Part I.1), but the operation of Part II (goods imported from
the United States) is suspended while Part I.1 (goods imported from a NAFTA
country) is in operation.2 The Governor in Council, on the recommendation
of the Minister of Finance, may by regulations prescribed under section 14,
exempt any goods or class of goods imported from any country from the ap-
plication of the SIMA, and, specif‌ically, goods imported from Chile, the latter
during a period and subject to conditions specif‌ied in the regulations.
Canadian exporters are not immune from similar protective measures
taken by other countries, including free trade partners, if they too engage in
unfair competition or receive f‌inancial or non-f‌inancial subsidies from vari-
ous levels of the Canadian government. A few of the signif‌icant measures
imposed on Canadian exporters, especially on softwood lumber exports, are
referred to in this chapter.
Safeguard measures taken under the Customs Tarif‌f that result in the im-
position of surtaxes and tarif‌f rate quotas have a similar purpose. They have
been discussed in Chapter 2. Unlike those measures, the SIMA anti-dumping
and countervailing duties are applied when there is evidence that the dump-
2 Ibid, s 77.1(2).
Chapter 3: Special Import Measures Act
B | Meaning and Occurrence of Dumping and Subsidizing
ing or subsidizing by exporters has caused, or is likely to cause, injury to, or
retardation of, production in Canada of like goods. Unlike the Customs Tar-
if‌f safeguard measures, there is no limitation on the amount of anti-dump-
ing and countervailing duties so long as they do not exceed the margins of
dumping or subsidy, and those margins or volumes of export to Canada are
not insignif‌icant or negligible.
Anti-dumping and countervailing duties are authorized by Article VI of
the General Agreement on Tarif‌fs and Trade (GATT) as a quid pro quo to global-
ization of trade advocated by the World Trade Organization (WTO), of which
Canada and over 150 other countries are members. The SIMA inquiries and
investigations must be consistent with the GATT Article VI procedures; if
they are not adhered to and the facts are disputed, the aggrieved country can
appeal to the appeals body of the WTO, whose decisions are binding.
In this chapter, except in respect of the Dispute Settlement provisions
of Parts I.1 and II, the word “Minister” is def‌ined by the Act to mean the Min-
ister of Public Safety and Emergency Preparedness, who acts through the
CBSA. In some provisions of the Act, another Minister is named, who may
be the Minister of Finance or the Minister of International Trade. The latter
is specif‌ically named in a few provisions of Part I.1. If the word “Minister” is
used alone in the Act, other than in Parts I.1 and II, it stands for the Minister
of Public Safety and Emergency Preparedness.
Section 98 of the Act expressly authorizes the Governor in Council, by
order, to modify or suspend the application, with respect to any country, of
any provision of the SIMA, in whole or in part, for the purpose of ensuring
that the SIMA procedures comply with the GATT Subsidies Agreement.
1) Dumping
Dumping and subsidizing are two concepts that are central to the SIMA.
Dumping is counteracted by levying an anti-dumping duty to of‌fset its ef-
fects, subsidizing by levying a countervailing duty to of‌fset the amount of
subsidy granted to exporters by their governments.
a) Meaning of Dumping and Margin of Dumping
According to section 2(1), dumping occurs when an exporter sells goods
to an importer in Canada at prices that are lower than those the exporter

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