Provisional duties under SIMA: what they are and how they apply

Provisional duties are a temporary trade measure that may apply while a Special Import Measures Act (SIMA) investigation is ongoing.

As a Canadian importer, this means your duty exposure can begin before the CBSA and CITT reach their final decisions. If your goods are covered by an active investigation, you may need to pay provisional duties or post security at the time of accounting.

In this article, we explain what provisional duties are, how they are calculated and collected, and when they can apply retroactively.

What are provisional duties?

Provisional duties are temporary duties that may apply to goods subject to an active dumping or subsidizing investigation under SIMA.

Anti-dumping duties may apply when goods are exported to Canada at prices below their normal value, and countervailing duties may apply when goods benefit from foreign government subsidies.

Who is responsible for SIMA investigations?

In a SIMA investigation, the Canada Border Services Agency (CBSA) examines whether goods are being dumped or subsidized, while the Canadian International Trade Tribunal (CITT) determines whether those imports have caused injury to Canadian producers.

If the CBSA issues a positive preliminary determination, you may have to pay provisional duties or post security for goods of the same description released during the provisional period.

"Goods of the same description" refers to goods that fall within the product definition set out in the investigation, not just goods sharing the same tariff classification (HS code).

If the CITT finds injury, the finding becomes a "measure in force," and anti-dumping or countervailing duties continue to apply to imports of subject goods from the named country. These findings usually remain in force for five years, unless they are reviewed, changed, or allowed to expire.

The provisional period begins when the CBSA makes its preliminary determination. It usually ends when the investigation is terminated or when the CITT issues its final injury finding.

Because the CITT must issue its finding within 120 days, provisional duties usually last no more than about four months.

How provisional duties are calculated and collected

Provisional duties are based on the CBSA’s preliminary estimate of the margin of dumping and/or amount of subsidy. The final assessment may be higher or lower, depending on the final normal values, export prices, and amounts of subsidy determined later.

For dumped goods, the margin of dumping is generally the amount by which the normal value exceeds the export price. For subsidized goods, the provisional duty is based on the estimated amount of subsidy.

However, if the CBSA estimates that the margin of dumping or the amount of subsidy is insignificant, provisional duties may not apply to those goods or to those exporters.

A margin of dumping is generally insignificant if it is less than 2% of the export price, and a subsidy amount is generally insignificant if it is less than 1% of the export price.

At the time of accounting, you must either pay the provisional duties or post security, usually in the form of a surety bond. Provisional duties are accounted for through the Commercial Accounting Declaration (CAD) in CARM, and financial security for SIMA provisional duties is posted through CARM as well.

When provisional duties can apply retroactively

SIMA allows retroactive anti-dumping and/or countervailing duties if the CITT finds that there were massive importations of dumped or subsidized goods over a relatively short period before the preliminary determination, and that those importations are likely to seriously undermine the remedial effect of the duties.

When the CITT makes such a finding, you may become liable for anti-dumping and/or countervailing duties on subject goods released before the preliminary determination.

This retroactive period generally runs from the day the investigation was initiated to the day of the preliminary determination. If the preliminary phase lasts longer than 90 days, the retroactive period is limited to the 90 days before the initial determination.

For subsidized goods, retroactive countervailing duties apply only when a prohibited subsidy is involved.

How we can help

At Cole International, we offer trade consulting and customs brokerage services to help Canadian importers navigate active SIMA investigations and assess their duty exposure.

Reach out to one of our trade professionals to discuss how provisional duties may affect your duty liability and compliance.