New Twist on Law of Dumping of Goods from State-Influenced Economies

(Mondaq – Roy Millen and Michael Steinbach, Blake Cassels & Graydon LLP)

Producers and importers of Chinese and Vietnamese goods, and their competitors, take note: the analysis of whether the goods are being dumped in Canada may take on a whole new complexion following the decision of the Federal Court of Appeal in Tianjin Pipe (Group) Corporation v. TenarisAlgomaTubes Inc.

International and domestic law prohibits injury caused by the “dumping” of goods, which occurs when imported goods are sold at less than “normal” value. Under Canada's Special Import Measures Act (SIMA), the Canada Border Services Agency (CBSA) usually determines normal value by assessing the fair costs of production of the actual goods in question, with reference to other producers in the same country.

However, section 20 of the SIMA provides that where goods are imported directly from a prescribed country (currently only China and Vietnam), if in the CBSA's opinion the price of the goods is “substantially determined” by the government of that country, then normal value is determined by reference to goods produced in another country, other than Canada.

The significance of this section is apparent. Under the default regime, normal value may be quite low if the goods are produced in a country where macroeconomic conditions have a significant downward effect on the costs of production, such as inexpensive labour and limited government regulation. Under the alternative analysis prescribed by section 20 of the SIMA, the normal value of the goods may not reflect those macroeconomic conditions. Thus, Chinese and Vietnamese goods stand to lose significant price advantages if the CBSA is of the opinion that the price of the goods is “substantially determined” by the government. Read more here.