Explainer: Canada's SIMA import duties for anti-dumping and countervailing

What is the Special Import Measures Act (SIMA)?

SIMA is a Canadian trade legislation that outlines rules to determine import duties for the purposes of anti-dumping and countervailing. These regulations are enforced to protect Canadian industries and businesses against economic damage caused by some types of foreign imports.

Anti-dumping and countervailing tariffs help to prevent a flood of artificially inexpensive goods that can disrupt domestic markets and producers. Applying duties on imports help to prevent unfair import pricing from negatively impacting Canadian businesses and markets.

What are SIMA anti-dumping and countervailing duties?

Anti-dumping and countervailing duties are the primary means that SIMA leverages to prevent unfair foreign imports from impacting domestic Canadian markets. These duties can even the playing field by equalizing the cost of imported and domestic goods. Governments also have the choice to invest the collected tariffs into domestic industries.

Anti-dumping duties

Anti-dumping duties help to deter imports to Canada that are priced lower than their normal value in the country of origin. Dumping artificially inexpensive goods onto the Canadian market can harm producers and importers by undercutting prices to erode the market share of domestic businesses. To prevent this unfair tactic, anti-dumping duties are imposed to even the competitive landscape. The duties are designed to raise the price up to fair market value, protecting Canadian businesses from anti-competitive import pricing.

Countervailing duties

Countervailing duties help to deter imports to Canada that have been subsidized by foreign governments. Exporters that receive tax incentives or direct financial assistance from their government can have an unfair advantage over Canadian competitors. Countervailing duties are intended to eliminate the advantage that a subsidized import would have over Canadian producers.

How does Canada’s SIMA process work?

Typically, from start to finish, the SIMA investigation process is supposed to finish within 210 days. This includes SIMA expiry reviews that determine whether anti-dumping and countervailing duties will continue to be applied. In some scenarios, parties can request an expedited expiry review to greatly reduce the amount of time it takes to investigate and apply a ruling.

The length of time it takes to get a ruling can change, but the SIMA investigation process usually involves the following steps:

1. Filing a complaint

The process usually starts when a Canadian producer files a complaint against unfairly traded imports that involve dumping or subsidizing goods. The complaint must include evidence of dumping or subsidization and the resulting damage to industry. This evidence can include sales information, financial statements, market analyses, and other details that must be submitted to the CBSA.

2. Initial investigation by the CBSA

The CBSA reviews the complaint to determine if sufficient evidence exists to begin an investigation. If the evidence meets their minimum threshold, the CBSA will perform an in-depth investigation and notify all groups involved.

3. Preliminary phase

A premilitary phase focuses on gathering as much relevant data as possible. The CBSA can collect information from Canadian importers, foreign producers, exporters, and other groups. This data is analyzed by the CBSA to determine if there’s preliminary evidence injury to the Canadian industry due to dumping or subsidization.

4. Provisional duties

When the CBSA publishes their preliminary determination, they can decide to start imposing duties on the goods under investigation. These provisional duties continue during the investigation to ensure that Canadian industries stay protected during the process.

5. Tribunal and final determination

After the CBSA provides their preliminary determination, the CITT conducts a parallel investigation alongside the CBSA. This entails a more detailed and thorough investigation, ranging from on-site visits to foreign companies to hearings conducted for domestic industries to present evidence.

The CITT is responsible for the final determination of anti-dumping and countervailing duties. If the Tribunal confirms that the domestic industry has experienced injury, the duties will continue to be applied. If the Tribunal finds that injury hasn’t occurred to the industry, the provisional duties will be refunded and the tariffs won’t be enforced.

6. Imposing measures in force

When both the CBSA and the CITT confirm that dumping or subsidization is causing injury, provisional duties will be replaced with definitive anti-dumping or countervailing duties. The CBSA announces these duties as a measure in force. A list of goods currently under a measure in force is available to browse on the CBSA website.

Keeping track of the latest regulatory and industry trends is a crucial part of maintaining a competitive edge. Significant changes to import duties, such as those imposed by SIMA, can signal a trade opportunity or reveal increased risk when trading certain types of goods from specific markets.

Connect with us to get the latest insights into SIMA and important developments that can impact your imports.

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