Trade Policy Statement

15.0 Trade Remedy Measures

The use of countervail, antidumping and safeguard measures is a double-edged sword; necessary at times to protect the legitimate interests of Canadian producers, but also at times unfairly damaging to Canadian export interests.  In a less-than-perfect trade environment, Canada needs to:

• Ensure we maintain and improve trade remedy legislation that permits farmers to effectively counteract unfairly damaging trade practices, but
• Give priority to achieving trade agreement provisions which would significantly restrain the ability of other countries to take trade remedy action against Canadian exports.

CFA believes the best long-term resolution of problems with countervail action lies in improvement of the domestic support provisions of the WTO Agreement on Agriculture; improvements which will place stronger and equitable limits on domestic support spending and provide better definition of countervail free green programs. (See Domestic Support)
 
Despite the damage to Canadian agricultural export interests caused by the use of anti-dumping action within NAFTA, the elimination of anti-dump within NAFTA, while desirable, is not a realistic option.  Therefore, Canada should endeavor to find means to minimize the use of anti-dumping action within NAFTA and/or establish effective and meaningful alternative dispute resolution mechanisms.
 
Many anti-dumping and countervail actions do not lead to final imposition of a duty.  However, even if an action is not successful, the imposition of initial duties and/or the cost of defending an exporter’s interests in the proceedings can be very disruptive and damaging to the interest of the exporting parties.  In order to reduce the frequency of these unsuccessful, but harmful, actions Canada should:

• Seek revisions to WTO rules which strengthen the requirements for initiating a trade remedy  action and, in effect, eliminate the initiation of actions which had little likelihood of success, and
• Seek revisions which establish more stringent requirements for the initial determinations and, in effect eliminate actions which lack sufficient evidence to justify proceeding to the final determinations.

Beyond strengthening the initiation standards, CFA believes that there is a need for revisions of WTO rules which will help restrain the use of countervail and anti-dumping actions, and improve the fairness and consistency of the proceedings and results.  Our specific recommendations follow.

15.1 Anti-dumping

We believe the following provisions would improve anti-dumping rules:

a. In the case of trade within economically integrated commodity markets, such as the North American red meat markets, dumping should be based on whether export prices are less than those prevailing at the same time in the home market, not cost of production.  Within other sectors, such as horticulture, costs of production should still be used as another method to calculate dumping margins.

b. The time period used for compensation between export and home market prices should be calculated using methodology acceptable under the WTO that reflects a true market to market comparison.

c. If a cost of production calculation is made, the length of period, for the determination of whether there is recovery of cost of production, should be long enough to include the high as well as the low of a price cycle.  Periods when returns are adversely affected by extraordinary events such as disease or drought should be excluded from cost of production calculations

d. It should be clearly required that any individual sample, that has a “0” or de minimis level of subsidy or dumping, is included in the averaging to determine the level of subsidy or dumping.

e. When individual determinations of countervail or dumping rates are made, there should be a limit on the cost of establishing an individual rate for a firm not included in the initial sampling.

f. Producers of primary product should have “standing” (i.e. be considered part of the domestic industry) in cases where imports of processed product cause or may cause injury to producers of primary product.

15.2 Countervail

Recommendations d., e. and f. above, also apply to countervailing duty actions.  In addition we believe that:
It should be provided that the level of countervailing duty, which may be imposed, shall not exceed the net difference between the level of subsidy provided for the product in the exporting and the level of subsidy in the importing country.