It has been just over one year since the first announcement of the steel and aluminum ad valorem tariffs imposed by the United States (US) on March 31, 2018.
Canada’s Steel Safeguards
While initially exempted, when Canada lost its exemption to the US’s steel and aluminum tariffs on May 31, 2018, the gloves were off.
Canada first imposed countermeasures only on the US. Those came in the form of a 25% surtax on certain steel products, 10% surtax on certain aluminum products and 10 % surtax on other affected products including but not limited to many types of food, herbicides, insecticides, kitchenware, home appliances, and stationary.
Next Canada challenged the US’s tariffs at the WTO Dispute Resolution Board, which several nations have now joined.
Finally, ostensibly fearing a diversion of steel imports to Canada, Canada has now begun its own steel safeguards inquiry and has added a 25% surtax on 7 types of steel goods coming from certain countries: 1) energy tubular, 2) heavy plate, 3) hot-rolled sheet, 4) pre-painted steel, 5) concrete rebar, 6) wire rod, 7) and stainless steel wire.
Canada’s Safeguards Are Now Overreaching…
While the countermeasures against the US appear to be tit-for-tat politics, there appears to be less wisdom in the implementation of the steel safeguards. Certain nations are exempt, however, some nations with which Canada has a free trade agreement are not. The Canadian government’s approach has made even less sense due to the non-exemption of specific goods within a class even if they are not manufactured in Canada.
There is a balance to be struck – at the very least goods that are NOT manufactured in Canada ought to be exempted from safeguards (i.e. surtaxes). Moreover, exemptions could be made for areas I which Canadian producers are unable to keep up with demand. However, it remains to be seen whether wisdom will prevail within the Canadian government as the CITT has provided for neither of these exemptions and has gone for an all-or-nothing approach.
There is a fine line between protecting one’s own industries and depriving the Canadian market of essential goods for which there is a demand. The Canadian government appears to have crossed that line with no regard to the needs of Canadian consumers and every bit of attention paid to Canada’s steel industry.
At the time this article is being written the safeguards inquiry’s public hearing are taking place, and we can expect the report to be published on April 3, 2019.
John Reiterowski
DS Lawyers Canada, LLP
Toronto
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