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As a result of a recent decision, importers and exporters of goods to Canada that are subject to an existing anti-dumping finding may now be able to obtain an exclusion from the finding (and thereby stop paying anti-dumping duties) if the importer or exporter can establish that the particular goods are not in fact made by Canadian producers.

On January 31, 2003, the Canadian International Trade Tribunal delivered its Statement of Reasons in an interim review (the "Review Decision") of the material injury finding issued in July 1999 with respect to certain hot rolled steel sheet products originating in or exported from France, Romania, the Russian Federation and the Slovak Republic (the "Finding"). Pursuant to the Finding, anti dumping duties have been levied on such imports of hot rolled steel since July 1999. In its Review Decision, the Tribunal agreed with the French exporter, Sollac Méditerranée S.A. ("Sollac Med"), and the Canadian importer, Usinor Canada Inc. (now Arcelor International Canada Inc.) ("Usinor"), and decided to exclude from the Finding certain specialized products, called the "Solbor Products", which were found not to be available from the domestic industry.¹

INTERIM REVIEWS

This is an important decision for Canadian importers since, by rendering this decision, the Tribunal has for the first time recognized that interim reviews can be used to modify an existing anti dumping measure in order to obtain the exclusion of new products that are not produced by Canadian manufacturers.

Under Canadian law and in accordance with the Tribunal's practice, interim reviews of existing anti dumping findings have been exceptional and have very rarely been granted by the Tribunal. The burden of convincing the Tribunal to commence an interim review and to modify an existing anti dumping order lies with the importers and exporters making the request. The Tribunal ultimately has discretion as to whether to conduct a review.

Interim reviews are subject to a two step procedure before the Tribunal. The first step consists in determining whether or not an interim review is warranted. Section 76.01 of the Special Import Measures Act ("SIMA") provides that the Tribunal may conduct an interim review of a whole finding or any aspect of it if it is satisfied that the review is warranted. The Canadian International Trade Tribunal Rules and the Tribunal's Guideline on Interim Reviews further provide that the party requesting such an interim review must establish either that changed circumstances or new facts have arisen since the making of the initial finding or that there are facts that were not put in evidence during the original proceedings and that were not discoverable by the exercise of reasonable diligence at that time. These facts must be "sufficient" to justify a review and must provide a reasonable indication that, if known, they would have led to a different or modified finding. If the Tribunal concludes that a review is warranted, it proceeds to the second step, which is to determine if the finding should be rescinded or continued, with or without amendment.

THE SOLBOR CASE

In this case, Usinor and Sollac Med did not claim that there were facts that were not put in evidence or that were not discoverable in the original proceedings. Rather, they claimed that the facts underlying their request and justifying the exclusion of the Solbor Products were new and simply did not exist in July 1999. More specifically, Usinor and Sollac Med submitted that a specific and limited interim review of the Finding was warranted because the Solbor Products imported from France for a single Canadian end user (North American Tillage Tools Company ("NATT")) were not marketed in Canada in 1999 and had only been developed after the Finding. They further submitted that the products were not produced by and were not readily available from any of the Canadian producers and that no domestic products were substitutable for the Solbor Products, given their very specific technical and chemical characteristics.

The domestic producers were strongly opposed to the initiation of an interim review to consider such a product exclusion, as, so they argued, holding such a review would create a precedent that would perpetually jeopardize the protection that the domestic industry is afforded by anti dumping findings. However, the Tribunal disagreed and instead found that the Solbor Products were new products for which there was no market in Canada prior to 2000. It concluded that these facts were new and represented such a significant change from the situation that had given rise to the Tribunal's Finding that the continued validity of the Finding in respect of the Solbor Products was called into question. The Tribunal specifically recognized that the existence of new products, for which there was no market in Canada at the time of the initial Finding, can constitute a "change in circumstances" that warrants an interim review.

The fact that the Tribunal's Guideline on Interim Reviews refers to only a few examples of new facts or changed circumstances that are sufficient to warrant an interim review (such as the cessation of production or the termination of subsidies) does not mean that the cases where reviews are warranted are strictly limited to these examples. The Tribunal's Review Decision confirms that the Tribunal's discretion to initiate an interim review is not constrained.

After concluding that an interim review was warranted, the Tribunal continued with the second step of its inquiry, that is, it sought to determine whether, on the merits, the Finding should be amended to exclude the Solbor Products.

PRODUCT EXCLUSIONS

The Tribunal confirmed that, whether in injury inquiries, expiry reviews or interim reviews, product exclusions from anti dumping findings were only granted in exceptional circumstances. The Tribunal further confirmed that the main criteria it relies on in determining whether to exclude a particular product remained (1) whether the domestic industry produces the product, (2) whether there is any domestic production of substitutable or competing products, and (3) whether the domestic industry is an "active supplier" of the product. In short, where the domestic industry produces or is about to produce goods that are considered to be the same as or in direct competition with the goods for which an exclusion is requested, the request for exclusion is typically denied.

In this case, however, both Usinor and NATT submitted ample evidence that the Solbor Products were not, and were not about to be, available from domestic producers and that there were no acceptable substitutes available from domestic mills despite years of discussions between NATT and the Canadian producers. The evidence showed that the domestic producers had never been able to manufacture a substitutable product that had the technical and chemical characteristics of the Solbor Products and that could have been used by NATT. Except for some general and unsubstantiated statements made early in the proceedings, the Canadian producers did not file any well documented evidence contradicting NATT's detailed statements and showing that they were able to produce an acceptable substitute for the Solbor Products. Instead, the domestic producers ultimately decided to consent to or not to oppose the request, but only at the second step of the interim review proceedings.

Since the domestic producers either consented to or did not oppose the exclusion and thereby directly or indirectly acknowledged that they were not able to manufacture the Solbor Products, the Tribunal concluded that the amendment of the Finding was appropriate.

The Tribunal was, however, concerned about making the definition of the excluded products as generic as possible and criticized the domestic producers' attempt at narrowing the scope of the proposed product exclusion by restricting it to certain end uses, to a specific supplier and to a specific Canadian end user. The Tribunal noted that Sollac Med and Usinor had initially proposed a definition that included a trade marked product but was otherwise free of restrictions and that the proposed definition was amended solely to secure the domestic producers' consent or non opposition. The Tribunal agreed with Sollac Med and Usinor that references to specific end users or end uses in the description of the product exclusion were unnecessary and unwarranted, as no Canadian producer was able to make the Solbor Products.

The Tribunal restated that an exclusion should be defined as generically as possible to avoid potential trade distortions and unfair competitive advantages and therefore avoided references to specific producers or end users in its decision. The Tribunal agreed to leave the "Solbor" trade mark in the definition but added more specific references to the chemical composition of the product and extended the exclusion to products with "equivalent" specifications.

CONCLUSION

The Canadian anti dumping regime does not protect Canadian producers with respect to products that are not made in Canada, as there is no domestic industry to protect in such circumstances and there cannot be any injury to the domestic industry for a product it does not and cannot manufacture. This was true at the time of an initial inquiry and this Review Decision confirms that it continues to be true during the life of an anti dumping finding. If by innovation and technical development importers can develop products which are not made in Canada but which fall within the scope of an existing anti dumping finding, they can resort to interim reviews in order to avoid being subject to unjustified anti dumping measures and to the high administrative costs of the normal value regime. This can be done fairly rapidly, as demonstrated by the fact that slightly more than three months elapsed between the filing of the request by Sollac Med and Usinor and the Tribunal's decision on the merits.

This case is an important precedent for Canadian importers and has already given rise to another request for interim review in the context of an anti dumping finding, filed in December 2002 by the Corus Group with respect to a unique stainless steel specialty product that, Corus said, is not produced in Canada and was not marketed at the time of the initial 1998 finding. In that case, the domestic producers did not oppose the request, even at the first step in the proceedings.

1. Ogilvy Renault acted as counsel to Sollac Méditerranée and Usinor Canada in the CITT proceedings.

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