CITT recommends safeguard duties on two out of seven steel products

The Canadian International Trade Tribunal (CITT) has recommended reducing steel safeguard duties previously instituted in response to Section 232 measures implemented by the United States, it said on Wednesday April 3.

The CITT has recommended tariff rate quotas (TRQs) for only two steel products – heavy plate and stainless steel wire – out of seven that have been subject to 25% temporary safeguard duties since October.

Canada initiated the duties after US President Donald Trump issued Section 232 orders against imports. These steel safeguards are in the midst of a 200-day effective period that will expire in May.

For the remaining five steel products – concrete reinforcing bar, energy tubular products, hot-rolled sheet, pre-painted sheet and wire rod – the tribunal found no serious injury to the domestic industry, even when flows of certain of these products increased significantly.

“We are disappointed and concerned with the Tribunal’s recommendations,” Canadian Steel Producers Association (CSPA) president Catherine Cobden said in a statement on April 3.

The recommendations are a significant departure from the conclusions reached by the Minister of Finance to establish the provisional measures and the overwhelming evidence put forward to the CITT that justified the imposition of final safeguard measures, Cobden added.

The Finance Department said at the time that such measures were appropriate under international law, given “exceptional circumstances.” The safeguards were intended to protect Canadian steelmakers and workers from “harm caused [by] excessive imports” and steel that has been diverted from other countries to the Canadian market.

It excluded imports from the US, Chile, Mexico, Israel and other Canada-Israel Free Trade Agreement beneficiary countries. Therefore, the CITT’s recommended remedies do not apply to imports from these countries.

The CITT recommended an above-quota surtax of 20% on heavy plate imports during the first year of implementation, and lower surtaxes of 15% and 10% in the second and third years respectively.

For stainless steel wire, it recommended an above-quota surtax of 25% in the first year, 15% in the second year and 5% in the third year.

Prior to the recommendations, the CITT held a series of hearings on whether to extend the steel safeguards. Steel market participants in Canada held mixed views on whether the duties were needed to counter the incentive to divert US-bound foreign steel into Canada.

CITT recommendation not binding
As in the US, trade cases are arbitrated along two tracks in Canada. The CITT, like the US International Trade Commission, decides whether the domestic industry has been injured. And like the US Commerce Department, the Canada Border Services Agency (CBSA) decides on margins.

The CITT’s recommendation is not binding on the Minister of Finance, the CSPA said.

The trade group, therefore, is “urging the minister to exercise his statutory authority and impose final safeguard measures on all seven steel products as recommended by the industry in order to protect thousands of middle-class jobs and more than $1.1 billion in planned investments,” Cobden said.

Without these safeguards, the Canadian steel industry is threatened with job losses, significant community impacts, market share erosion and growing investment uncertainty, Cobden added.

Fastmarkets AMM’s daily Midwest HRC index was calculated at $34.44 per hundredweight ($688.80 per short ton) on April 3, down by 0.2% from $34.50 per cwt the previous day and off by 0.6% from $34.65 per cwt a week earlier.

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