In-Transit Steel Goods Remission Order: SOR/2018-288
Canada Gazette, Part II, Volume 152, Number 26
SOR/2018-288 December 17, 2018
P.C. 2018-1610 December 14, 2018
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 115 footnote a of the Customs Tariff footnote b, makes the annexed In-Transit Steel Goods Remission Order.
In-Transit Steel Goods Remission Order
1 Subject to subsection (2), remission is granted of the surtax paid or payable under the Order Imposing a Surtax on the Importation of Certain Steel Goods footnote 1 in respect of goods that were in transit to Canada before October 25, 2018.
2 The remission is granted if
- (a) the good is imported into Canada on or after October 25, 2018; and
- (b) a claim for remission is made to the Minister of Public Safety and Emergency Preparedness within two years after the date of importation.
Coming into force
3 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.)
Since the Government announced the imposition of provisional safeguards, a number of concerns have been raised by steel importers and users regarding the application of provisional safeguards to goods that were in transit. Specifically, stakeholders have indicated that, given long transit times for shipments from offshore sources, the application of provisional safeguards on goods that started their journey to Canada prior to the imposition of safeguards on October 25 is unfair. Moreover, in-transit shipments have been subject to the surtax given higher-than-anticipated demand for steel import permits.
Global safeguards are trade measures that may be imposed pursuant to the World Trade Organization (WTO) Agreement on Safeguards to address situations where an increase in imports is causing, or threatening to cause, serious injury to domestic producers of like goods.
In Canada, global safeguard measures are imposed pursuant to the Customs Tariff by the Governor in Council, on the recommendation of the Minister of Finance, if there is evidence that an increase in imports has caused, or threatens to cause, serious injury to domestic producers. Provisional safeguards may be imposed for up to 200 days by the Governor in Council on the basis of a report from the Minister of Finance if, in addition to preliminary evidence of an increase of injurious imports, there are also critical circumstances where delay in imposing global safeguards would cause damage that is difficult to repair.
On October 11, 2018, the Government of Canada announced the imposition of provisional safeguards on steel products in seven product categories: heavy plate, concrete reinforcing bar (rebar), energy tubulars, hot-rolled sheet, pre-painted steel, stainless steel wire and wire rod. These measures came into force on October 25, 2018, in the form of tariff-rate quotas under which a 25% surtax is only applied to imports that exceed historical import volumes (see Order Imposing a Surtax on the Importation of Certain Steel Goods, SOR/2018-206).
On the same day, the Government requested that the Canadian International Trade Tribunal (CITT) inquire into whether longer-term final safeguards are warranted and, if so, to recommend appropriate remedies. The provisional safeguards are intended to stabilize the Canadian steel market from the effects of increased steel imports while the CITT conducts its inquiry. The CITT is scheduled to issue its report and any recommendations on April 3, 2019.
No exclusion for goods in transit was provided in the Order Imposing a Surtax on the Importation of Certain Steel Goods. At the time, the Government considered that the delay of 10 business days for the coming into force of that Order, combined with the ability for importers to obtain shipment-specific import permits to avoid a surtax, would mitigate the impact of provisional safeguards on goods that were in transit to Canada before the Order Imposing a Surtax on the Importation of Certain Steel Goods came into effect.
- Provide relief from provisional safeguards for subject steel imports that were in transit before October 25, 2018, in order to mitigate unintended impacts on steel importers and users.
- Preserve the effectiveness of Canada’s provisional safeguards in preventing excessive imports of subject steel products from causing, or threatening to cause, serious injury to domestic producers.
Pursuant to section 115 of the Customs Tariff, the In-Transit Steel Goods Remission Order (the Order) remits the 25% surtax paid or payable under the Order Imposing a Surtax on the Importation of Certain Steel Goods for goods that were in transit to Canada before October 25, 2018, and were imported into Canada on or after October 25, 2018.
In addition, the Order sets out the conditions for granting remission, including the condition that the requesting importer makes a claim to the Minister of Public Safety and Emergency Preparedness within two years after the date of importation.
On August 14, 2018, the Government published an invitation to submit views on potential safeguard action, including the possibility of provisional safeguards. These consultations ended August 29, 2018. Over 140 submissions were received from a variety of stakeholders, including steel producers, industry associations, manufacturers and other downstream users, as well as provincial governments and individuals. The provisional safeguards announced by the Government on October 11, 2018, took into consideration the views heard during consultations.
Since October 11, 2018, the Government has heard concerns from importers, downstream users and industry associations regarding the impact that provisional safeguard measures are having on the Canadian market. In particular, concerns were raised regarding the impact of provisional safeguards on goods that were in transit before October 25, 2018.
Broader consultations were not undertaken, as the remission of surtaxes for goods that were in transit does not fundamentally change the nature or effectiveness of the provisional safeguards imposed by the Government.
Modern treaty obligations and Indigenous engagement and consultations
The Order does not impact Indigenous peoples rights and interests.
Section 115 of the Customs Tariff provides the authority for the Governor in Council to remit surtaxes on the recommendation of the Minister of Finance.
Benefits and costs
Provisional safeguards were imposed on imports of certain steel goods in response to evidence of an increase in imports, which has caused or is threatening to cause serious injury to domestic producers. The intent of the provisional safeguards is to stabilize the Canadian steel market and provide interim relief to domestic steel producers while the CITT conducts an independent, arm’s length inquiry to determine whether longer-term final safeguards are warranted.
In response to concerns raised by stakeholders affected by the provisional safeguards, the remission of surtaxes on goods that were in transit before October 25, 2018, would provide relief to importers from the costs related to the unanticipated rate of quota utilization in the first 50-day period of provisional safeguards. Remission of surtaxes for goods that were in transit before October 25, 2018, is consistent with the Government’s approach to imposing surtaxes in other circumstances [e.g. the United States Surtax Order (Steel and Aluminum) and the United States Surtax Order (Other Goods)].
The Order only applies to a specific set of goods (i.e. steel goods subject to provisional safeguards that were in transit) and does not change the overall quota volumes established in the Order Imposing a Surtax on the Importation of Certain Steel Goods. This Order does not change the Government’s approach to provisional safeguards. The Government will continue to carefully monitor the impact of provisional safeguards on the Canadian market while the CITT conducts its inquiry into whether final safeguards are warranted.
Small business lens
There are no significant costs imposed on small businesses resulting from this Order. Small businesses claiming remission on a prospective basis (i.e. waiving of surtaxes for imports after the date of entry into force of the Order) would make a claim for each applicable importation as part of the process of completing existing customs documentation requirements. As well, small businesses claiming a refund of surtaxes paid (i.e. for imports on which the surtax has already been paid) would request refunds for the surtax paid on importations, accompanied by supporting documentation establishing that the imported goods qualify for remission.
The “One-for-One” Rule applies to this Order, as there is an administrative burden associated with applying for remission of surtaxes that have been paid. However, the Order is exempted from the “One-for-One” Rule, as it is related to tax and tax administration.
The administrative costs for Canadian businesses to claim remission of the surtaxes are expected to be limited. In regard to waiving surtaxes on a prospective basis (i.e. for imports after the date of entry into force of the Order), remission claims would be made for each applicable importation as part of the process of completing existing customs documentation requirements.
In regard to requesting a refund (i.e. for imports on which the surtax has already been paid), importers would submit forms requesting refunds for the surtax paid on importations, accompanied by supporting documentation establishing that the imported goods qualify for remission.
Regulatory cooperation and alignment
The Order is not related to a work plan or commitment under a formal regulatory cooperation forum.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that the Order would not have positive or negative effects on the environment; therefore, a strategic environmental assessment is not required.
Gender-based analysis plus (GBA+)
No GBA+ impacts have been identified for this Order.
Implementation, compliance and enforcement, and service standards
The Canada Border Services Agency (CBSA) will assess any requests for remission made pursuant to the Order and will ensure compliance with its terms and conditions in the normal course of its administration of customs and tariff-related legislation and regulations. In doing so, the existing administrative framework will be leveraged to ensure that costs can be managed within existing resources. Any refunds issued pursuant to the Order will be administered by the CBSA. Depending on the volume and complexity of refund submissions, the CBSA strives to achieve a 90-day processing standard.
International Trade Policy Division
Department of Finance Canada