CITT - 25 Years of Excellence

Canadian International Trade Tribunal
25 Years
of
Excellence

TABLE OF CONTENTS

 

Foreword – Chairperson’s Message

The Canadian International Trade Tribunal (CITT) has undergone many changes since it began operations in 1989; however, a theme in the Chair’s message for the CITT’s first full fiscal year of operations still rings true today: the CITT’s strength is its people.

In 1990, the Chair was confident that the CITT had built a foundation for “top-notch” work in the years ahead and hoped that the CITT would grow steadily in stakeholders’ trust. Today, as we look back over 25 years of operations, those early expectations have been met and for the same reason identified by my predecessor – the CITT’s strength is its people.

The CITT enjoys a global reputation for excellence and has earned the confidence of its stakeholders, including Canadian and international businesses, foreign governments and the Canadian public.

This paper celebrates what the CITT has achieved since 1989 and coincides with the end of an era: in November 2014, with the coming into force of Bill C-31, all staff of the CITT will be transferred to the Administrative Tribunals Support Service of Canada (ATSSC). The CITT will then comprise the chairperson and a maximum of six permanent members who will rely upon the ATSSC for funding and all services required to support their mandate. Even though the CITT will be very different in the future, I am confident that current and future chairpersons and members will ensure its continued success.

Stephen A. Leach
Chairperson
Ottawa, Ontario

INTRODUCTION

Canada is a trading nation, and international trade makes a significant contribution to Canada’s economic well-being. The CITT is the main quasi-judicial institution in Canada’s trade system and plays an important role in administering Canada’s national and international economic commitments.

The CITT is proudly celebrating its 25th anniversary this year. The CITT began operations on December 31, 1988, as the result of the merger of the Tariff Board, the Canadian Import Tribunal, and the Textile and Clothing Board. In 1994, the responsibilities of the Procurement Review Board were also transferred to the CITT.

Our mandates are diverse. The CITT supports the Government’s objective of a fair and secure Canadian marketplace by providing Canadian and international businesses with access to fair, transparent and timely resolution of trade remedy cases (both unfair trade cases, i.e. anti-dumping and countervailing cases, and safeguards), customs and excise tax appeals, safeguard complaints, and inquiries into federal procurement complaints. At the Government’s request, the CITT also provides advice in tariff, trade and general economic matters.

This paper commemorates the CITT’s 25 years of excellence and highlights our many accomplishments since 1989. The paper describes:

  • Who we are today: our mandates, our values, and our reputation
  • Where we came from: our predecessor organizations and our early years of operations
  • What we have achieved in our mandates: anti-dumping and countervailing cases, procurement reviews, appeals, safeguards, and references

WHO WE ARE

Overview

The CITT is an independent body that reports to Parliament through the Minister of Finance.

Our main governing legislation is the Canadian International Trade Act (CITT Act). Pursuant to section 17 of the CITT Act, the CITT is a court of record with the rights and privileges of a superior court in regard to such matters as the attendance of witnesses, the production of documents, and the enforcement of its orders.

Other legislation governing our work:

  • Special Import Measures Act (SIMA)
  • Special Import Measures Regulations (SIM Regulations)
  • Customs Act
  • Excise Tax Act
  • Canadian International Trade Tribunal Regulations (CITT Regulations)
  • Canadian International Trade Tribunal Procurement Inquiry Regulations (Procurement Regulations)
  • Canadian International Trade Tribunal Rules (CITT Rules)

APPENDIX II provides details on our governing legislation.

CITT Activities

Pursuant to section 16 of the CITT Act, the CITT has the authority to:

Anti-dumping/Countervailing Mandate

  • inquire into whether dumped or subsidized imports have caused, or are threatening to cause, injury to a domestic industry, or have caused material retardation of the establishment of a domestic industry

Procurement review mandate

  • inquire into complaints by potential suppliers concerning procurement by the federal government that is covered by the North American Free Trade Agreement (NAFTA), the Agreement on Internal Trade, the World Trade Organization (WTO) Agreement on Government Procurement, and any other applicable trade agreement

Appeals mandate

  • hear appeals of decisions of the Canada Border Services Agency (CBSA) made under the Customs Act and SIMA and of the Minister of National Revenue under the Excise Tax Act

Safeguard mandate

  • inquire into complaints by domestic producers or respond to references by the Government that increased imports are causing or are threatening to cause serious injury to domestic producers and, as directed, make recommendations to the Government on an appropriate remedy

Reference mandate

  • inquire into and provide advice on such economic, trade and tariff issues as are referred to the CITT by the Governor in Council or the Minister of Finance
  • investigate requests from domestic producers for tariff relief on imported textile inputs that they use in their production operations and make recommendations to the Minister of Finance on the requests

The CITT has a quasi-judicial role with regard to its anti-dumping and countervailing(AD/CV), procurement review, appeals and safeguard mandates. It has an advisory role with regard to the references mandate, including recommending appropriate remedies to Government in safeguard inquiries when so directed.

The work of the CITT has a distinctly international dimension. In particular, the CITT must have regard to aspects of the following international economic treaties and the related jurisprudence of WTO and NAFTA panels:

  • WTO General Agreement on Tariffs and Trade 1994
  • WTO Anti-dumping Agreement
  • WTO Agreement on Subsidies and Countervailing Measures
  • WTO Agreement on Safeguards
  • WTO Agreement on Government Procurement
  • WTO Protocol on the Accession of the People’s Republic of China
  • North American Free Trade Agreement
  • Canada-Chile Free Trade Agreement
  • Canada-Colombia Free Trade Agreement
  • Canada-Costa Rica Free Trade Agreement
  • Canada-European Free Trade Association Free Trade Agreement
  • Canada-Israel Free Trade Agreement
  • Canada-Jordan Free Trade Agreement
  • Canada-Panama Free Trade Agreement
  • Canada-Peru Free Trade Agreement
  • Agreement on Internal Trade
  • World Customs Organization Compendium of Classification Opinions to the Harmonized Commodity Description and Coding System

Excellence in Decision Making

The CITT has an excellent record of decision making.

Decisions of the CITT are ordinarily reviewable by the Federal Court of Appeal[1] or by binational panels for goods from NAFTA countries. Decisions of the CITT are also subject to review under the dispute settlement provisions of the international treaties listed above. Notably, CITT decisions are potentially reviewable by the WTO Dispute Settlement Body.

In its 25-year history, not a single CITT decision has been the subject of a dispute before a WTO panel.

Overall, for the most recent five-year period ending March 31, 2014, only 1.07 percent of decisions rendered by the CITT had been overturned by reviewing bodies, which is well below the CITT’s target of 2 percent. This included a recent run of nearly two years without a single decision being quashed or remanded.

Binational panels (as well as the Federal Court of Appeal) have been deferential to the CITT, recognizing the specialized expertise of its members and staff.[2]

Members and Staff

The CITT may have up to seven full-time members, including a chairperson and six members. The Government appoints full-time members for fixed terms of up to five years. On the expiration of a first term of office, full-time members may be re-appointed for one further term. A panel of three members decides most CITT cases, although a single member can decide some types of cases.

Members are currently supported by a permanent staff of approximately 70 public servants who provide specialized investigative and analytic services, legal services, communications and court registry services, and corporate services.[3]

Despite its central importance in Canada’s international trade system, the CITT is a “lean” organization: in 2013-2014, the CITT spent only $10.9 million.

Our Values

The CITT’s core values are integrity, excellence, respect and teamwork. These values are actively implemented in day-to-day operations and play a key role in the successful achievement of our mandate.

Investing in its people is also an important CITT value. Last year, the CITT launched a comprehensive development program to support the recruitment and training of investigators. Other noteworthy accomplishments were introducing an articling program in conjunction with Justice Canada’s Legal Excellence Program and a student internship program in cooperation with the University of Ottawa’s Faculty of Law.

Protection of Confidential Information

An important aspect of the CITT’s global reputation for excellence relates to its 25-year track record of successfully safeguarding commercially sensitive information.

The issues that the CITT must inquire into and adjudicate upon are economic in nature. To make well-informed decisions, especially in AD/CV cases, the CITT needs companies to provide it with their most sensitive commercial information, including financial results, pricing strategies and capital investment plans. To be willing to disclose this type of information, these parties need a guarantee that the information will not end up in the hands of their competitors.

Sections 45 to 49 of the CITT Act lay out the framework for the designation, protection and transmission of the confidential information by the CITT and provide severe penalties for those who disclose confidential information, up to a maximum fine of $1 million and potential prohibition from appearing before the CITT in any future proceedings.

The CITT has in place a comprehensive suite of policies, guidelines, training materials, and protocols to deal with confidential information. The official record of all CITT proceedings is segregated into two sections – public and protected. A key component of the CITT’s confidentiality regime is that only independent counsel who has filed declarations and confidentiality undertakings may have access to confidential information in the protected record.

Fairness and Transparency

As a quasi-judicial institution, the principles of natural justice are an integral part of the procedural and legal framework in which the CITT operates. Essentially this means that the CITT must operate in a fair and transparent manner.

  • In all its mandates, the CITT gives individuals and businesses opportunity to submit evidence, present their views and respond to other parties before it makes a final decision.
  • Section 35 of the CITT Act provides that hearings before the CITT “shall be conducted as informally and expeditiously as the circumstances and considerations of fairness permit.” When the CITT holds oral hearings, it normally conducts them in public. An oral hearing gives parties an opportunity to call witnesses and allows them to explain their point of view and present arguments. However, where appropriate, the CITT can decide on the basis of the written record alone.
  • The CITT members assigned to a case make their decision solely on the basis of the evidentiary record for that case.
  • The CITT provides well-documented written reasons for its decisions so that parties can understand why the case was decided in a particular manner.
  • The CITT strives to put as much information as possible directly on the public record. When this is not feasible because the information is confidential, the CITT ensures that the public record makes clear the general nature of the information.

A Modern Tribunal

The CITT has been a leader in the use of electronic tools to improve the efficiency of its operations and to lessen burdens for stakeholders. The CITT is paperless in respect of its case records, save for the original record.

1996    Launch of CITT’s first website

2000    Launch of ToolKit, a customized application that generates a fully searchable electronic record

2004    CITT hearing rooms outfitted to allow for live-time display of electronic records

2007    Stakeholders provided with the option of filing documents electronically via a secure customized channel

2010    Electronic distribution of case records to external counsel and parties

2011    All mandates and case types accommodated within the ToolKit application

2014    CITT introduces Excel-based questionnaires to ease the burden on respondents to questionnaires in AD/CV cases.

In July of this year, the CITT unveiled its renewed website. The goal was to facilitate navigation by streamlining the way the information is displayed and by regrouping on a single page all the content related to each mandate, including active and past cases, guidelines, glossaries, practice notices, forms, legislation and FAQs.

Outreach

Because of its global reputation for excellence, the CITT regularly hosts official delegations from around the world to share its expertise. In recent years, the CITT has hosted delegations from Chinese Taipei, Indonesia, Vietnam, the People’s Republic of China, the Republic of Korea, Peru and Colombia, among many others.

Likewise, CITT members and staff frequently give presentations at meetings of various international, legal, administrative and academic bodies, and participate in technical exchanges with counterparts in other countries. CITT staff also provides expert advice and support to federal government departments engaged in trade negotiations.

To promote discussion on issues of procedure, the CITT participates in the Bench and Bar Committee, which includes representatives from the Canadian Bar Association, counsel from the Department of Justice and members of the trade consulting community who appear regularly before the CITT.

The CITT has negotiated memoranda of understanding with Carleton University’s Norman Paterson School of International Affairs and the Australian Anti-Dumping Commission to support joint research initiatives and the exchange of best practices in the conduct of AD/CV inquiries.

Conclusion

The past year (2013-2014) was the CITT’s busiest year in over a decade and it issued more than 130 decisions and orders in its AD/CV, procurement review, and appeals mandates. Despite the heavy workload, the CITT continued its reputation for excellence, meeting all its statutory deadlines. At the same time, the CITT successfully completed the final steps in a three-year restructuring initiative that reduced the number of full-time employees by almost 30 percent and annual expenditures by nearly $2 million.

The hard work, professionalism and dedication of CITT members and staff remains as much our hallmark this year, our 25th anniversary, as it did in our first year.

WHERE WE CAME FROM

Background

Each of the three organizations that were initially merged to form the CITT – the Tariff Board, the Canadian Import Tribunal, and the Textile and Clothing Board – had mandates that were concerned with different aspects of international trade, particularly imports and their impact on domestic producers.

Tariff Board

The Tariff Board was the oldest of the three organizations, having been established by the Tariff Board Act in 1931. By 1988, the Tariff Board had three main functions. First, it heard appeals of Revenue Canada decisions on various customs and excise matters, including the determination of tariff classification and value for duty, and certain decisions related to SIMA, e.g. determinations of dumping. Second, the Tariff Board undertook economic inquiries into issues referred to it by either the Minister of Finance or the Governor in Council. The majority of these inquiries dealt with tariff matters. For example, in the 1976 Computers Reference (Number 150), the Tariff Board considered the costs and benefits of protective tariffs to encourage the growth of a computer manufacturing industry in Canada, advising the Government that no tariffs should be imposed on most products. Third, the Tariff Board undertook inquiries in relation to goods imported under the General Preferential Tariff (GPT) and the CARIBCAN tariff to determine if imports under these preferential tariff treatments were causing injury to domestic producers and to recommend whether the preferential tariff treatment should be withdrawn.[4]

The Tariff Board consisted of a chairperson and six members. Immediately before the merger, the Tariff Board was supported by a staff of 33 full-time equivalents (FTEs), divided into three branches: Research Branch (19), Appeals Branch (8), and Secretariat (6). Its budget was $2.74 million.[5]

The Canadian Import Tribunal

The Canadian Import Tribunal was established in 1984 with the enactment of SIMA. However, its predecessor, the Anti-dumping Tribunal, had been established in 1969. (See page 17 of this paper for information on the evolution of Canada’s AD/CV regime.) The Canadian Import Tribunal had two main functions. First, the Canadian Import Tribunal was the adjudicative body for trade remedies and inquired into whether dumped and subsidized imports were causing injury to Canadian producers. Second, at the request of the Governor in Council, the Canadian Import Tribunal undertook inquiries in relation to “the importation of goods . . . that may cause or threaten injury to the production of any goods in Canada . . . .”[6] The Canadian Import Tribunal’s role was advisory in these latter types of inquiries, which were the first step for the Government to impose import quotas. Together, the Canadian Import Tribunal and the Anti-dumping Tribunal conducted four safeguard inquiries on Canada’s footwear industries.[7]

Immediately before the merger, the Canadian Import Tribunal consisted of five members, including a chairperson, supported by a staff of 33 FTEs, roughly evenly divided between the Secretariat (17) and the Research Unit (16). The budget of the Canadian Import Tribunal was $2.47 million.[8]

The Textile and Clothing Board

The Textile and Clothing Board was established in 1970 by the Textile and Clothing Board Act as part of the implementation of the National Textile Policy, which was a Government initiative to respond to demands from domestic producers for protection from imports of textiles and apparel, particularly imports from “low-cost” countries. Unlike the other two organizations, the Textile and Clothing Board was purely an advisory body. The Textile and Clothing Board had the authority to conduct safeguard inquiries in response to complaints by textile and apparel producers (the only instance of direct access), at the request of the Minister of Regional Economic Expansion or on its own initiative. In its first five years of operation the Textile and Clothing Board conducted inquiries in relation to specific products, e.g. “Good Men’s and Boys’ Shirts”.[9] Then, in 1976, the Government directed the Textile and Clothing Board to undertake a broad inquiry into the domestic textile and apparel industries. On the basis of the resultant report, the Government implemented a series of restraints on imports of textiles and clothing, first global quotas and later bilateral arrangements with various countries.[10].Thereafter, the focus of the Textile and Clothing Board seems to have remained on broad inquiries.[11]

The Textile and Clothing Board had three members. In 1988-1989, its budget was $1.36 million; the number of staff at that time is not known.[12] However, the main estimates for 1983-1994 show authority for 17 FTEs.[13]

Given the overlapping functions of the three organizations, it is not surprising that there were discussions to amalgamate some or all of their functions well before 1988.

In fact, as early as 1979, a study of the Anti-dumping Tribunal prepared for the Law Reform Commission of Canada commented that the jurisdictions of the Anti-dumping Tribunal and the Tariff Board were “illogical in relation to each other, and overlap to some extent.”[14] Then, in 1982, a report by a House of Commons committee reviewing Canada’s import policy recommended that an in‑depth study be conducted of the relationships among the three organizations.[15] Two years later, the Institute for Research on Public Policy published a report on Canada’s trade policy regime. Among the many recommendations of the author, R.W. Hines, was the amalgamation of the Canadian Import Tribunal, the Tariff Board and the Textile and Clothing Board into a single agency. (Mr. Hines subsequently became one of the CITT’s first members.) In 1987, in another report published by the Institute for Research on Public Policy, the authors concluded that “[s]implification and rationalization of the import system would be further advanced by the amalgamation of the Tariff Board, [the] Canadian Import Tribunal and [the] Textiles and Clothing Board.”[16] They also noted that the Government was evidently in the process of planning the amalgamation, which had been under discussion for some time.[17]

The Early Years

In Budget 1988, the Government announced that legislation would be introduced to amalgamate the three existing import organizations – the Canadian Import Tribunal, the Tariff Board and the Textile and Clothing Board – into one new institution, the CITT.

On April 21, 1988, the Parliamentary Secretary to the Minister of Finance introduced Bill C-110, An Act to establish the Canadian International Trade Tribunal and to amend or repeal other Acts in consequence thereof, into the House of Commons for second reading. He stated that the Government’s objective in the merger was to modernize, rationalize and streamline domestic import institutions and to ensure that the Government got sound and consistent advice on trade-related matters.[18]

On September 13, 1988, Bill C-110 received Royal Assent.

The CITT began operations on December 30, 1988.

The CITT assumed all the inquiry and appeal functions of the three predecessor organizations. However, its safeguard mandate was expanded to provide direct access for domestic producers in all industries, not just those in the textile and apparel industries. Also, the CITT’s reference mandate was expanded to include any matter in relation to the economic, trade or commercial interests of Canada.

Initially, the CITT had six full-time members, including a chairman and vice-chairman. By the end of 1991, there was a second vice-chair and two additional members, for a total of nine members. (Appendix I lists all the members and senior staff of the CITT from the past 25 years.)

Members were supported by a staff of approximately 80 FTEs, divided into three branches. The largest branch was the Research Branch, with a staff of 38 FTEs. The Research Branch was responsible for the economic and financial analysis involved in CITT inquiries. The Secretariat, which was responsible for administration, public relations, and registrar functions, had a staff of 35. Unlike the three predecessor organizations, the CITT had a separate Legal Services Branch with seven FTES, including a General Counsel.

Like many new organizations, the CITT faced challenges merging the work cultures of predecessor organizations, absorbing new staff and consolidating operations in one location (the 18th to 20th floors of the Journal Tower South, 365 Laurier Ave. West, Ottawa). In response, from March to November 1990 the CITT conducted an intensive planning and management improvement project called “Vision and Values”. With input from CITT staff and members as well as from outside stakeholders (e.g. the trade bar), the CITT developed its first mission statement, values and internal work protocols.

On the other hand, the CITT began its operations with a wealth of experienced staff as two-thirds of employees came from the three predecessor organizations.

The “growing pains” of the CTTT were exacerbated by a very heavy workload. When SIMA was amended in 1984 to provide for five-year reviews, all measures in place were “grandfathered”, i.e. continued in force as if they had been made on the same day that the SIMA amendments were made. Accordingly, in 1989, there was a bulge of cases for which reviews needed to be initiated before November or else duties would automatically expire. In its first three months of operation, the CITT issued 19 notices of expiry, which eventually resulted in 13 expiry reviews as some cases were combined and others were allowed to expire because there were no requests to continue the duties.

Further, by the end of its first full fiscal year of operation (1989-1990), the CITT had completed a massive and controversial study of Canada’s textile tariff regime at the request of the Government (see page 53 of this paper).

In 1990, the CITT published a set of six pamphlets describing its mandates: “Introduction to the Canadian International Trade Tribunal”, “Appeals from Customs and Excise Decisions”, “Dumping and Subsidizing Injury Inquiries”, “Import Safeguard Complaints by Domestic Producers”, “Import Safeguard Complaints Concerning the General Preferential Tariff or CARIBCAN” and “General Inquiries into Economic, Trade and Tariff Matters”. It also began publishing a monthly newsletter, the Bulletin, to provide information on the status of cases.

The early annual reports of the CITT speak to the importance that organization placed on outreach, noting the many speaking engagements of staff and members at various conferences and meetings. As well, the annual reports document the many visits by foreign delegations, including, in 1989-1990 alone, the United States International Trade Commission, the Korean Trade Commission, the OECD and the GATT.

The CITT also began early the habit of consulting with stakeholders, holding its first consultative forum in February 1991 to get feedback on the procedures it had used to conduct a particular economic reference. The CITT also consulted widely in drafting its first CITT Rules, which came into force on August 14, 1991. Until then the CITT had been relying on the Canadian Import Tribunal Rules.

In the 1990s, CITT investigative staff routinely conducted research on economic and trade issues that was published in CITT annual reports. For example, the annual report for the CITT’s second full fiscal year of operations (1990-1991) devoted an entire chapter to a summary of a staff study on Canada’s use of the GATT Anti-dumping Code. This study was updated in the next two annual reports. In 1993-1994, the annual report summarized the results of four major staff papers: “The Canadian Tariff System”, “Canada’s Non-Tariff Trade Barriers”, “Anti-Dumping Measures and Imports” and “Import Regimes and Industry Performance: 1979-1992”.

The CITT continued to grow in the early years of its operation, peaking in size from 1991-1992 and 1994-1995 when there were 104 to 105 FTEs, including members, a permanent staff and temporary staff working on references.

New Mandates

The CITT was not a static organization and its mandates expanded in the years following 1989.

Procurement Review

The first significant change occurred in 1994 when the Procurement Review Board merged with the CITT. Chapter 5 of this paper provides more information on the CITT’s procurement review mandate.

Standing Textile Tariff Reference

On July 14, 1994, pursuant to section 19 of the CITT Act, the Minister of Finance directed the CITT to investigate requests from domestic producers for tariff relief on imported textile inputs used in their manufacturing operations. Chapter 8 of this paper provides more information on the standing textile tariff reference.

China-specific Safeguard

On September 30, 2002, Bill C-50 creating new Chinese safeguard inquiry provisions entered into force. Chapter 7 of this paper describes the CITT’s experience with this mandate.

Conclusion

The CITT is the result of successfully merging four organizations responsible for adjudicating, analyzing and advising on a wide range of issues in the realm of international trade. Although the CITT has evolved since its formation in 1989, our raison d’être has remained excellence in matters of international trade.

AD/CV

Overview

SIMA is the principal legislation in Canada that serves to protect domestic producers from injury due to unfair import competition. SIMA sets out Canada’s rights and obligations in respect of anti‑dumping and countervailing proceedings implemented pursuant to the WTO agreements, namely, GATT 1994, the Anti-dumping Agreement and the Agreement on Subsidies and Countervailing Measures.

Canada is one of a minority of countries that has a bifurcated AD/CV regime: the CBSA determines if goods are dumped and subsidized and the CITT determines if the dumping and/or subsidizing has caused injury or retardation or threatens to cause injury to a Canadian industry.

The CITT’s AD/CV decisions have significant impacts on the Canadian economy. As of December 31, 2013, there were 25 findings and orders[19] in force, affecting approximately $7.7 billion in shipments, $0.5 billion in investments, 22,000 direct jobs and $1.2 billion in imports.[20]

Excellence in AD/CV Decisions

The CITT’s AD/CV decisions are potentially reviewable by the Federal Court of Appeal and the Supreme Court, binational panels for cases involving the United States and Mexico and the WTO dispute settlement body.

The CITT has an excellent record of decision making in its AD/CV mandate. In fact, only 10 of the CITT’s AD/CV decisions[21] have been remanded by reviewing bodies over the past 25 years and, of these, the CITT has amended its decision in only four cases.[22] Five of the ten remanded decisions originated with binational panels, predominately in the early years of the CITT as counsel and parties may have been eager to take advantage of an alternative appeal route.

Evolution of the AD/CV Mandate

In 1904, Canada introduced what was the world’s first anti-dumping legislation.

Since then, Canada’s AD/CV system has evolved within the context of the international rules dealing with dumping and subsidizing.

Trade remedies have been part of international trade agreements since the 1947 GATT, of which Canada was a signatory. Article VI requires that contracting parties not impose anti-dumping or countervailing duties unless they determine the dumping or subsidizing is causing injury. At that time, Canada’s AD/CV legislation resided in various sections of the Custom Tariff and Customs Act and there was no test to determine if dumping was causing injury.

As part of the Kennedy Round (1964-1967), GATT members negotiated the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade (the Anti-Dumping Agreement) to establish common rules and procedures for the application of anti-dumping duties. Efforts to negotiate a similar agreement for countervailing duties were not successful.

Canada enacted the Anti-dumping Act in 1969, which created the Anti-dumping Tribunal as an independent body responsible for adjudicating matters of injury. This marked the beginning of Canada’s bifurcated AD/CV regime as the determination of dumping remained with the then Department of National Revenue for Customs and Excise.

Countervailing duty provisions were introduced in 1970, with revisions to the Customs Tariff, later to be embodied in the Countervailing Duty Regulations. The Anti-dumping Tribunal was given the authority to determine injury, but the Governor in Council retained the final decision on whether to impose countervailing duties.

Around the same time, Canada introduced the possibility of judicial review for some AD/CV decisions, including providing for injury determinations of the Anti-dumping Tribunal to be appealed to the then Federal Court of Canada’s Appeal Division (now the Federal Court of Appeal).

The conclusion of the Tokyo Round (1973-1979) resulted in a strengthened Anti-dumping Code and a parallel agreement on the application of countervailing duties, the Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade (the Subsidies Code).

Five years later, in 1984, Canada enacted SIMA to give effect to the revised Anti-dumping Code and the Subsidies Code. The Canadian Import Tribunal replaced the Anti-dumping Tribunal as Canada’s trade remedies adjudicative body. Other important changes in Canada’s AD/CV regime included a 120-day time limit for injury inquiries (previously it had been 90 days); automatic countervailing duties with a finding of injury; right of judicial review extended to injury decisions on subsidizing; automatic expiration of duties at the end of five years (“sunset clause”) unless there was a review and the Canadian Import Tribunal determined that the dumping and/or subsidizing and injury would continue; and a public interest provision whereby, in certain circumstances, the Canadian Import Tribunal could advise the Minister of Finance that imposition of duties would not be in the public interest.

When the CITT assumed the role of Canada’s trade remedies adjudicator in 1989 from the Canadian Import Tribunal, relatively little changed from a procedural point of view. Similarly, the implementation of NAFTA on January 1, 1994, had little impact on the day-to-day operation of the CITT’s AD/CV mandate, except that the option to request a binational panel review of CITT decisions was extended to Mexico.

The Uruguay Round culminated in the WTO agreement that subsumed the 1947 GATT and replaced the 1979 codes with more detailed agreements on dumping and subsidizing – the WTO Anti‑dumping Agreement and the WTO Agreement on Subsidies and Countervailing Measures. On January 1, 1995, amendments to SIMA and the SIM Regulations came into effect to reflect the language of the WTO agreements.

In terms of the CITT’s AD/CV mandate, the most significant amendments related to the definition of injury (injury or threat of injury vs. past, present and future injury), the prescription of factors for the CITT to consider in making its injury determinations and the delineation of requirements for cumulation. However, in practice, the CITT had already been applying many of the principles in the new WTO accords to its AD/CV work, e.g. cumulating the effects of dumped or subsidized imports from different countries and ensuring that the injurious effects of other factors were not ascribed to the dumping and subsidizing.

Finally, on April 1, 2000, significant amendments were made to SIMA that essentially established the CITT’s AD/CV mandate as it functions today, including preliminary injury inquiries for the CITT; shared responsibility with the CBSA for expiry reviews; self-initiation for public interest inquiries and factors for the CITT to consider when conducting public interest inquiries; and partial reviews of part of findings or orders, e.g. to grant a product exclusion.

AD/CV Cases

The CITT undertakes four main types of AD/CV cases:

Injury inquiries – Should duties be imposed to offset the injury from unfair imports?

Prior to initiation

  • Domestic producer submits a complaint to the CBSA.
  • The CBSA has 21 days to determine if the complaint is properly documented and another 30 days to decide to initiate an investigation.

Preliminary phase

  • The CBSA initiates an investigation to make a preliminary determination of dumping and/or subsidizing. Timeline: 90 days (135 days exceptionally). A positive decision means the CBSA begins to collect provisional duties.
  • The CITT initiates a preliminary injury inquiry to determine if the evidence discloses a reasonable indication that dumping and/or subsidizing have caused or are threatening to cause material injury to a domestic industry, or have caused material retardation of the establishment of a domestic industry. Timeline: 60 days + 15 days for reasons.

Note: The case ends with a negative finding by either the CBSA or the CITT.

Final phase

  • The CBSA initiates an investigation to make a final determination of dumping and/or subsidizing. Timeline: 90 days.
  • The CITT initiates a final injury inquiry to determine if the dumping and/or subsidizing have caused or are threatening to cause material injury to a domestic industry, or have caused material retardation of the establishment of a domestic industry. Timeline: 120 days + 15 days for reasons.

Note: Continuation of duties requires positive decisions by both the CBSA and the CITT.

The CITT has no control over the number of injury inquiries it hears in any given year because these cases only begin when a domestic producer submits a complaint to the CBSA.

It is also impossible to know when injury inquiries will be brought to our door. In fiscal year 2013‑2014, the CITT faced an exceptionally challenging workload: not only was the total number of AD/CV cases the highest in a decade, but many of these cases arrived together at the CITT in a period of less than six weeks.

Likewise, there is no way to anticipate the complexity of the injury inquiries that will come before the CITT. Each case is unique with different goods, producers (foreign and domestic), countries, and issues.

The CITT must complete its injury inquiries within the tight time limits set by SIMA. This means that the CITT can’t manage surges in workload by accumulating a backlog of AD/CV cases. Regardless of how many cases are before the CITT at one time, or how large or complex those cases may be, the CITT must decide all cases within the applicable statutory timelines.

Injury inquiries at the CITT are both investigative and adjudicative.

During the investigative phase of the final injury inquiry, lengthy questionnaires are sent to Canadian producers, as well as to importers and foreign producers, to collect information relevant to the case, including three full years of data on domestic and foreign production levels, the volume and value of imports, domestic sales and exports, and the financial results of Canadian producers. The CITT also sends questionnaires to purchasers to ask them to compare the imported goods with similar Canadian goods in terms of price, quality, methods of distribution, etc.

CITT staff uses the questionnaire responses to prepare a comprehensive investigation report on the state of the Canadian market. Such reports take six to seven weeks to prepare, can be more than 200 pages in length and summarize data gathered from dozens of Canadian producers and purchasers, as well as from importers and foreign producers.

Investigation reports are a critical component of AD/CV cases because they are the primary sources of evidence used by parties to argue their cases before the CITT and by members to make decisions. If you read a statement of reasons for a CITT AD/CV case, you will see many footnote references citing data from the investigation report.

During the adjudicative phase of a final injury inquiry, the CITT receives submissions and legal arguments, holds a public hearing and issues reasons explaining its decision.

The CITT has the authority[23] to grant exclusions from its injury decisions, but will only do so in exceptional circumstances, when it is presented with cogent case-specific evidence concerning the likely non-injurious effect of imports of particular products.

Public interest inquiries – Are there reasons to reduce or eliminate the duties?

Following the imposition of anti-dumping and/or countervailing duties, prices for imported goods generally rise and sometimes foreign producers choose to stop selling altogether into the Canadian market. As a result, consumers and downstream users may face higher prices and less choice of suppliers.

Accordingly, in certain circumstances, either in response to a request or on its own initiative, the CITT will undertake an inquiry to determine if the imposition of the antidumping and/or countervailing duties might not be in the “public interest”.

There are no statutory timelines for the CITT to complete a public interest inquiry,[24] but the CITT tries to follow the same schedule as for a final injury inquiry, i.e. 120 days. Also, the CITT generally follows the same procedures as in a final injury inquiry, including the preparation of an investigation report, receiving submissions and holding a public hearing.

Interim reviews – Has something changed?

The CITT may conduct an interim review at any time between making a finding or order and its expiry. The CITT may conduct an interim review on its own initiative or at the written request of the Minister of Finance, the CBSA, or any person or government. The CITT must be persuaded that an interim review is warranted before acting on a request.[25]

The CITT generally conducts interim reviews when there has been a significant change in circumstances, e.g. when there is no longer a domestic industry or when a particular product is no longer being produced by the domestic industry. In such circumstances, an interim review may result in the early rescission of a finding or order, in whole or in part.

Expiry reviews – Should duties continue for another five years?

If the CITT finds injury, threat of injury or retardation, anti-dumping or countervailing duties are imposed for an initial period of five years and can be renewed for additional five-year periods, if they are still necessary to offset injury caused by the dumping and/or subsidizing.

Expiry phase

  • Approximately 10 months prior to the expiry of the finding or order, the CITT seeks submissions on whether an expiry review is warranted. Timeline: approximately 50 days.

Note: If the CITT determines that an expiry review is not warranted, it issues a statement of reasons and duties will expire as scheduled on their five-year anniversary.[26]

Expiry review phase

  • The CITT initiates an expiry review that is jointly conducted with the CBSA.
  • First, the CBSA determines the likelihood of continued or resumed dumping and/or subsidizing. Timeline: 120 days.

Note: If the CBSA makes a negative determination, duties cease immediately.

  • Second, the CITT determines the likelihood of continued or resumed injury or retardation caused by the continuation or resumption of dumping and/or subsidizing. Timeline: usually 130 days + 15 days for reasons.

Note: If the CITT makes a negative determination, duties cease immediately.

For its part of the expiry review, the CITT generally follows the same procedures as in a final injury inquiry, including the preparation of an investigation report, receiving submissions, holding a public hearing and issuing reasons for its decision.

Improvements in Service Delivery

Throughout its 25 years, the CITT has continually evaluated its procedures for handling AD/CV cases to look for ways to improve the quality of evidence on the record, to lessen the burden on stakeholders and to increase transparency.

Questionnaires

Questionnaires have always been a central tool in the CITT’s AD/CV proceedings because they provide the information used to prepare the investigation report, which, as explained above, is the main piece of evidence in an injury inquiry as well as in other types of AD/CV cases. However, the kinds of questionnaires used by the CITT and the contents of those questionnaires have changed over time.

Initially, the CITT only issued questionnaires to domestic producers and to importers to collect essential information on the factors it required to make its AD/CV decisions, such as production, imports, sales, employment, financial results, etc.

In 1992, the CITT began to use questionnaires on market characteristics to obtain a better understanding of the behavioral characteristics of the players in the market. These questionnaires collect mostly qualitative information on issues such as whether and to what extent respondents perceive domestic and imported goods as substitutes; which factors are important to respondents in their purchasing decisions; which factors affect demand for the goods; and how respondents’ purchasing behaviour would change in response to changes in price. This information assists the CITT in deciding important legal framework issues, such as classes of goods and cumulation, as well as in deciding whether the dumping or subsidizing is causing injury.

On several occasions, the CITT has revised the content of its questionnaires to take account of new factors added in statutes or international agreements. For example, in 1996, the CITT began to issue questionnaires to foreign producers and exporters. The objective was to enhance the evidentiary record by collecting information to assist the CITT in analyzing factors related to the threat of injury or the likelihood of resumed or continued injury, e.g. the productive capacity of foreign producers.

The CITT has also frequently revised the “look and feel” of its questionnaires to try to make them easier and less burdensome for respondents to complete.

Most recently, in 2013-2014, the CITT piloted Excel-based questionnaires to assist stakeholders in providing information to the CITT. These questionnaires also helped reduce the time spent by staff on manual data entry and the number of revisions required to responses due to clerical errors.

Better Evidence, Sooner

When the CITT began operations in 1989, it largely adopted the procedures of the Canadian Import Tribunal in terms of handling AD/CV cases. However, over the next few years, AD/CV cases at the CITT became increasingly litigious, complex and costly. In particular, hearing time ballooned; as an example, in the early 1990s, three consecutive injury inquiries dealing with steel products each had 10-day hearings.[27]

Recognizing that the increased cost and complexity of inquiries could undermine access to justice for its stakeholders, both large and small, in 1994 the CITT established an internal committee to conduct a full review of the procedures for injury inquiries. In 1996, following nearly two years of review and extensive stakeholder consultation, the CITT implemented a number of significant changes to its procedures for AD/CV cases.

The focus of the changes was to ensure that more and better evidence was received earlier to give parties and the CITT more time to address issues. In particular, the CITT wanted to ensure that parties’ positions were fully documented prior to the hearing so that scarce and costly hearing time could be used to focus on the key issues in dispute in a more efficient, effective and fair way. Although the focus of the review was on injury inquiries, where applicable, the CITT carried the same procedures over to its other AD/CV cases.

The CITT still uses many of these procedures today:

  • Consult with parties and their counsel on questionnaire design to ensure that questionnaires are focused and relevant.
  • Issue questionnaires immediately after notification of the relevant CBSA determination (previously there was a delay of several days).
  • Parties and counsel submit their notices of appearance approximately two weeks after the case begins (previously notices were submitted at the same time as questionnaires returned).
  • Distribute the investigation report on approximately day 50 of the 120-day schedule (previously on day 65).
  • Domestic producers submit a reply brief (previously there was no such opportunity).
  • Establish hearing schedules in advance after consulting with parties and hold parties to their requested time allocations at hearings.

Requests for Information

As part of the 1996 procedural changes described above, the CITT tried to introduce a structured process for the exchange of information among parties to occur and be completed before the hearing; the submission of large volumes of new evidence at hearings had been one of the principal reasons behind the increasing length of hearings.

However, the process as initially designed did not work well, in part because it relied on the voluntary exchange of information among parties. The CITT continued to “fine-tune” the process over the next few years and by 1998 the request for information (RFI) process was well-established.

Following distribution of the investigation report, parties have an opportunity to file RFIs to other parties, who have an opportunity to object to providing the requested information. Ultimately it is the CITT that decides which RFIs should be answered and the CITT sometimes directs its own RFIs to parties. The objective of the RFI process is to enhance the evidentiary record, so parties that do not provide a cogent rationale for RFIs or seek information available elsewhere on the record are less likely to be successful.

Enhancing Transparency and Improving the Record

In 2014, the CITT initiated consultations with the trade bar on new procedures to enhance transparency and provide the CITT with a more complete record upon which to base its decisions.

First, there will be provision for three staff-led teleconferences during the conduct of AD/CV cases. Members would not participate in teleconferences but would make all decisions related to the teleconferences, including the need to hold them, the nature of the evidence expected from parties, and the length of proceedings. Transcripts of the teleconferences would be placed on the record. If there were unresolved issues arising from the teleconferences, members could adjudicate if necessary.

Teleconference No. 1 – Preliminary Injury Inquiry

The objective is to provide members with sufficient information to allow them to decide the issue of classes of goods during the preliminary injury inquiry. This will lessen costs for parties, questionnaire respondents, the CBSA and the CITT during the injury inquiry by eliminating the burden of multiple questionnaires when there is only a single class of goods. It will also provide greater transparency as the CITT will be able to explain its decision on classes of goods earlier in the statement of reasons for the preliminary injury inquiry.

Teleconference No. 2 – Questionnaire Design

A teleconference on questionnaire design will supplement the current paper-based consultation process. During the teleconference, parties will be able to respond to each other’s comments and CITT staff will be able to ask questions to clarify parties’ comments. Further, CITT staff will be able to clarify their understanding of trade levels, units of measure and other important industry parameters. The result will be better-designed questionnaires.

Teleconference No. 3 – Investigation Report

The objective is to provide parties with the opportunity to identify any errors or omissions in the investigation report so that they can be addressed early and not affect the conduct of the remainder of the case.

Second, any additional tables and data analyses prepared by the investigation staff between the issuance of the investigation report and the closing of the record at the end of the hearing will be put on the record as “investigation report supplements”.

Finally, members may invite CITT counsel to ask questions at hearings. Having CITT counsel ask questions in addition to the members would enhance the record as counsel could focus on the details of the evidence and members could focus on legal framework issues.

AD/CV Cases – A Statistical Snapshot

From January 1, 1989, to March 31, 2014, the CITT issued decisions in 418 AD/CV cases:[28]

  • 114 expiry reviews
  • 104 injury inquiries
  • 49 preliminary injury inquiries
  • 41 requests for interim reviews
  • 34 expiries
  • 28 advices to the Deputy Minister of National Revenue (Deputy Minister)
  • 25 interim reviews
  • 12 requests for public interest inquiries
  • 5 public interest inquiries
  • 4 requests on who is the importer
  • 1 reference from the Governor in Council regarding the public interest

Preliminary Injury Inquiries and Advices to the Deputy Minister

The CITT has rarely terminated proceedings at the preliminary phase of injury inquiries.

In fact, since 2000, the CITT has found no reasonable indication of injury only three times in 49 preliminary injury inquiries, with only one inquiry being terminated in its entirety. A second decision related to just a particular subset (“class”) of the goods involved and a third decision related to goods that were already covered by a finding in place.[29]

Only once has the CITT terminated a preliminary injury inquiry before rendering a decision and that was because the CBSA terminated its investigation due to insufficient evidence of dumping.[30]

Prior to 2000, if requested by the Deputy Minister or a party, the CITT could advise the Deputy Minister if the evidence before him disclosed a reasonable indication of injury; if the CITT advised in the negative, then the Deputy Minister would terminate the injury inquiry. The CITT provided advice to the Deputy Minister on 28 occasions and it found that the evidence disclosed a reasonable indication of injury in all but one of those cases.[31]

Injury Inquiries

Case Outcomes

The CITT has found injury or threat of injury in whole or in part in 74 of 104 injury inquiries[32] where it made a decision: 56 injury decisions and 18 threat of injury decisions.[33]

There have been three instances where the CITT did not issue a decision with regard to injury in an injury inquiry: in two cases, the CBSA accepted undertakings from exporters, which suspended the CITT’s proceedings,[34] and in the third case, the CBSA terminated its investigation at the final determination because it determined that the margin of dumping and amount of subsidy were insignificant.[35] The CITT has never made a finding of retardation.[36]

The CITT has been more likely to find threat of injury in recent years. In fact, 6 of the 18 threat decisions have occurred in just the last three years alone.

The CITT has considered requests for exclusions (product, producer, country, and seasonal)[37] in 63 of the 74 inquiries (85 percent) where it has found injury or threat of injury. The CITT has granted at least one exclusion in 27 of those inquiries.

Subject Countries

The United States and China have been the two most common subject countries in CITT injury inquiries, each representing approximately 13 percent of the total number of subject countries involved in CITT injury inquiries (37 and 36 instances, respectively).[38] Interestingly, the two countries are nearly mirror opposites of one another in terms of when they were involved in injury inquiries: the majority of cases involving the United States occurred in the first 10 years of the CITT’s existence, whereas China infrequently appeared in cases prior to 1999-2000.

Other countries in the top 10 subject countries are Chinese Taipei (17), Korea (15), Brazil (14), India (10), Germany and France (9 each), and the United Kingdom and Italy (8 each).

Cases Involving Subsidizing

Of the CITT’s 104 injury decisions, only 31 have involved both dumping and subsidizing, with 65 percent of those occurring in the years after 2002-2003. China has been the most frequent source of subsidized imports, appearing in 16 injury inquiries, all since 2005. India and Brazil have been a source of subsidized goods in seven and five injury inquiries, respectively.

Type of Product

Thirty-three of the one hundred and four injury inquiries decided by the CITT have dealt with steel products: seven for plate, six for various types of pipe, four for stainless steel bars, three each for hot‑rolled sheet, cold-rolled sheet, and various types of oil country tubular goods, two each for corrosion-resistant sheet reinforcing bar and wire, and one for hollow structural sections.

Consumer products were the subject of 29 injury inquiries. The range of products was diverse: footwear (six cases), refill paper (two cases), bicycles, consumables (beer, baby food, dry pasta, frozen pizza), household goods (appliances: refrigerators, clothes dryers, and dishwashers; thermoelectric containers; and venetian blinds), and several “one-off” products including toothpicks and granite memorials.

Agricultural goods and building materials each figured in 11 injury inquiries. Examples of the former are sour cherries, greenhouse peppers and two cases each for apples, grain corn, and garlic. Examples of the latter are unitized wall modules, pipe fittings, pipe insulation, and gypsum wallboard.

Capital goods have been among the products seen least frequently in injury inquiries, with only two cases in the CITT’s 25 years of operation: Polyphase Induction Motors (CIT-5-88) and Liquid Dielectric Transformers (NQ-2012-001).

Case Size

Seven of the ten injury inquiries with the largest market values have been steel cases. In fact, the injury inquiries that ranked first and second in terms of market value both dealt with hot-rolled steel sheet: NQ-2001-002, with a three-year average market value of $2.9 billion, and NQ-98-004, with a three-year average market value of $2.6 billion.

Aluminum Extrusions (NQ-2008-003) was a large injury inquiry both in terms of the number of participants and size of the record (100 questionnaire responses, 61 parties, 21 witnesses at the hearing, and an official record of 1,218 exhibits, totaling 25,332 pages), but also in terms of the value of the market: the three-year average market value was $1.1 billion, making it the seventh largest injury inquiry.

Only one injury inquiry dealing with consumer products figured in the top 10 largest injury inquiries in terms of market value, Women’s Footwear (NQ-89-003), with a three-year average market value of $0.9 billion.

Likewise, there was only one injury inquiry dealing with agricultural goods in the top 10, Grain Corn (NQ-2005-001), with a three-year average market value of $1.1 billion.

In terms of size, Fasteners (NQ-2004-005) is also worthy of mention because of the record number of product exclusions received – more than 20,000.

The smallest injury inquiry decided by the CITT was Toothpicks (NQ-91-005), with a three-year average market value of less than $600,000.

Public Interest Inquiries

The CITT has conducted only five public interest inquiries, having declined 12 requests[39] to conduct public interest inquiries. Of note, the United States has been one of the subject countries in all five public interest inquiries conducted by the CITT.

The CITT recommended the reductions in duties would be in the public interest in four of five public interest inquiries. The Government implemented the CITT’s recommendations for three of the four cases.[40]

In addition, pursuant to section 19 of the CITT Act, the Minister of Finance directed the CITT to conduct a preliminary examination to determine whether there had been a sufficient change in circumstances to warrant a new public interest inquiry for Grain Corn, and if so, to conduct such an inquiry. The CITT determined that changes in circumstances were not sufficient to warrant a second public interest inquiry.[41]

Interim Reviews

Prior to the amendments to SIMA in 2000, the CITT acted on requests for interim reviews by initiating expiry reviews of the entire finding or order. The CITT responded to 10 such requests by initiating seven expiry reviews (some reviews covered more than one request). All these expiry reviews resulted in the rescission of findings or orders.[42]

Between 2000 and now, the CITT has completed 25 interim reviews. The CITT granted the requested exclusion in nine interim reviews and declined to do so in seven others. The CITT rescinded the finding or order in eight interim reviews. There has only been one interim review where the CITT decided not to rescind a finding after conducting an interim review.

One interim review is currently in abeyance.

Expiries and Expiry Reviews

For the most part, once duties are in place, domestic producers want them to continue: in only 21 expiries did domestic producers not make submissions to request an expiry review. In 13 expiries, domestic producers requested an expiry review, but the CITT was not satisfied that an expiry review was warranted.

The CITT has decided to continue its findings or orders, in whole or in part, in 66 of 114 expiry reviews.

Since responsibility for expiry reviews was split between the CBSA and the CITT in 2000, there have been only three cases where the CBSA found no likelihood of continued or resumed dumping or subsidizing.[43]

Prior to 2000, the CITT also decided whether there was a likelihood of continued or resumed dumping or subsidizing. Although some early statements of reasons are vague, it is evident that the CITT found no likelihood of continued or resumed dumping or subsidizing in proportionately more cases than the CBSA. Since 2000, the CBSA has made “no likelihood” determinations in approximately 6 percent of expiry reviews. In comparison, the CITT made “no likelihood” determinations in at least 15 percent of the expiry reviews it decided.

The CITT has considered requests for exclusions in only 48 percent of expiry reviews where it has determined that the finding or order should be continued – a much lower percentage compared to the 85 percent of positive injury inquiries where it considered exclusion requests. The difference may reflect lower participation rates by importers and foreign producers in expiry reviews. However, it has granted at least one exclusion in 50 percent of expiry reviews where it considered exclusion requests.

Conclusion

In 25 years, the CITT has rendered decisions in over 400 AD/CV cases. Although certain products and certain countries have figured prominently, CITT decisions have provided a diverse range of domestic industries with protection from unfair imports.

PROCUREMENT

In 1994, the CITT was entrusted with a new mandate: the review of complaints from potential suppliers regarding the conduct of federal government procurements.

Government Procurement as a Topic in International Trade

One of the most important exceptions to the rules of international trade agreed to under the 1947 GATT concerned government procurement. Indeed, as a result of the perception on the part of government negotiators that any agreement on the subject was “virtually impossible”,[44] the final text of the 1947 GATT expressly excluded “laws, regulations or requirements governing the procurement by governmental agencies of products purchased for governmental purposes”[45] from its national treatment obligations.

By the 1970s, however, as the public sector expanded in many economies around the world and came to account for the largest proportion of national purchasing of goods and services in many countries, it became apparent, at least to a small number of industrialized nations including Canada, that further trade liberalization required tackling government procurement.[46] As a result, the Agreement on Government Procurement (the Government Procurement Code), the fruit of the Tokyo Round, was adopted as an agreement for optional accession under the umbrella of the GATT. It came into force in 1981.

Thus, the Government Procurement Code introduced for the first time the central principle of non‑discrimination whereby each signatory undertook to treat specified goods and suppliers of such goods of other signatories no less favourably than its own goods and suppliers in the context of purchasing by central government entities. The same premise would be at the heart of subsequent agreements on government procurement entered into by Canada, along with a relatively harmonized framework of specific rules aiming to ensure that procurements by the signatory governments are conducted in a way that is fair, transparent and promotes competition.

As Canada continued to pursue the opening of new markets, a rising number of its trade agreements have addressed government procurement. Canada notably became a party to NAFTA, the WTO Agreement on Government Procurement,[47] and the Agreement on Internal Trade[48] as well as a list of bilateral agreements concluded in more recent years.[49]

The quid pro quo, of course, was that many Canadian federal government procurements for goods and services exceeding a given monetary value became subject to the standards of these agreements. Furthermore, an integral feature of the negotiated set of rules was the requirement to establish and maintain an independent bid challenge body, where potential suppliers of a signatory could voice their complaints in connection with a procurement process subject to their disciplines.

Enforcement – The CITT’s Procurement Mandate

The CITT was first designated as Canada’s reviewing authority for challenges by potential suppliers in 1994, pursuant to the North American Free Trade Agreement Implementation Act.[50] Prior to the coming into force of NAFTA, potential suppliers of the federal government had access to the Procurement Review Board, established in implementing the 1988 Canada-United States Free Trade Agreement (CUSTA), Canada’s first trade agreement to require providing a forum to receive private complaints concerning any aspect of a covered procurement. NAFTA overhauled both CUSTA and the Procurement Review Board, which was absorbed by the CITT.

The class of government contracts subject to review by the CITT, and the number of potential suppliers with access to the CITT expanded rapidly with the subsequent coming into force of other trade agreements. With the entry into force of the CPAFTA, on April 1, 2013, the count of trade agreements under which the CITT has jurisdiction reached seven.

The CITT receives complaints from potential suppliers who believe that a procurement process by the federal government has not been conducted in accordance with the requirements of an applicable trade agreement.[51] As such, potential suppliers who believe that they have been unfairly treated during the solicitation or evaluation of bids, or in the awarding of contracts on a designated procurement, may lodge a formal complaint with the CITT, within 10 working days of the day on which the basis of the complaint became known or reasonably should have become known.

The CITT’s inquiries are conducted by a panel of one or three CITT members. Upon receipt of a complaint, the CITT determines, within five working days, whether to accept the complaint for inquiry. Complaints that satisfy the threshold technical requirements prescribed by the CITT Procurement Inquiry Regulations, such as the requirement for the complaint to be filed by a potential supplier of one of the parties to an applicable trade agreement[52] within the prescribed time limits and to concern an aspect of the procurement process for a designated contract, are accepted for inquiry if they disclose a reasonable indication that the procurement has not been conducted in accordance with the applicable trade agreements. The CITT’s inquiry on the merits proceeds on the basis of written submissions, except in rare cases where an issue cannot be determined on this basis, and follows a strict timeline that requires the CITT to issue its findings and recommendations within 90 days from the filing of the complaint (although the timeline can be extended to 135 days, or further expedited, in some circumstances).[53] Ultimately, the CITT determines whether the complaint is valid, and if so, recommends an appropriate remedy. It may also award costs.

The Impact of 25 Years of Operation

Since 1994, the CITT has received 1,333 procurement complaints. On average, the CITT receives 64 complaints per year. It received the most complaints in 2009-2010, 154 in total.[54] Since 2004-2005, the annual average value of procurements at issue before the CITT has been $1.1 billion, with the collective annual value exceeding $3 billion on occasion.

Potential suppliers have availed themselves of the recourse to the CITT on a broad range of issues. For instance, the CITT has dealt with claims that a contract has impermissibly been awarded on a “sole source” or limited tendering basis;[55] claims that the technical specifications were designed in a way that unfairly favours a specific supplier, for example, an incumbent or the provider of a specific brand-name product;[56] claims that the evaluation criteria have not been clearly set out in the solicitation documents, thus not allowing bidders to submit responsive bids;[57] claims that bids were not evaluated in accordance with the published requirements and evaluation criteria;[58] claims of bias or favouritism on the part of evaluators;[59] and claims that the procuring government entity has failed to explain to bidders why they were not successful, contrary to the specific transparency requirements of various trade agreements.[60] Responding government institutions have routinely defended their procedures on the merits, but also by challenging the CITT’s jurisdiction in respect to a particular procurement, for example, on the basis of one or the other of the several exceptions to the coverage of the trade agreements.

Perhaps surprisingly, the main beneficiaries of the CITT’s procurement mandate have been Canadian companies interested in supplying the federal government. Indeed, while the original impetus for the requirement of the trade agreements to establish independent review bodies may have been to ensure that foreign potential suppliers who believed that they have been treated unfairly have an avenue for redress, by and large, the most frequent users of the CITT’s procurement review process have been Canadian suppliers challenging the procedures of their own government.

Canadian suppliers have long been able to challenge government procurements before the Courts, essentially on the same issues that they can raise in CITT proceedings.[61] However, both the nature of the CITT’s administrative proceedings and a perhaps wider range of remedies have strategically differentiated it from the Courts, thereby making it an interesting alternative avenue of redress.

Most obviously, the speed and simplicity of the CITT’s proceedings are often an advantage, especially for small- and medium-sized businesses. The CITT’s tight timelines, where it takes only five days to decide to accept or reject a complaint and where the average inquiry is completed within 72 to 74 days,[62] guarantee the speedy resolution of disputes, in stark contrast with the lengthy procedures before the courts. Furthermore, the administrative setting offers the advantage of informality, and therefore of simplicity and affordability, which the CITT has strived to maximize over the years. As an example, the CITT has developed user-friendly forms and guidelines, which make the process easily accessible to unrepresented litigants. Furthermore, the CITT has reduced the paper burden on complainants by reducing the number of hard copies of the complaint to one and by accepting electronic filings. In addition, most CITT procurement inquiries are resolved on the basis of a relatively inexpensive written process; indeed, the CITT’s experience has shown that the overwhelming majority of procurement cases do not concern issues requiring an extensive gathering of testimonial evidence, but rather involve the objective review of the government’s procurement procedures from the point of view of fairness and transparency.

Another type of advantage that has led potential suppliers to opt for the CITT stems from the diverse range of remedies available through its process. The CITT Act empowers the CITT to recommend a remedy that it considers appropriate in the circumstances.[63] The CITT has exercised this discretion to devise remedies that are sensitive to the circumstances of the case and take into account a balance of interests, including, where appropriate, recommending the cancellation of the solicitation and existing contract award and re-tendering of a new solicitation compliant with the trade agreements. From the point of view of the aggrieved supplier, the perspective of ready access to such non‑monetary relief may be of particular interest, as such remedies are sometimes more valuable to a potential supplier than relief in the form of an award for damages typically granted by the courts.[64] In this regard, although the legislation enables the CITT to make recommendations only, the Federal Court of Appeal has held that non-compliance with the CITT’s recommendations should be an “awkward and unusual occurrence” and that, where a government institution decides not to implement a remedy, it must offer “cogent grounds” for this decision.[65]

If reception by the courts is any indicator of the CITT’s success in carrying out its procurement mandate, it is worth signaling that the Federal Court of Appeal, which reviews the CITT’s decisions in applications for judicial review, has recognized from the early days of the CITT’s procurement mandate its expertise in this field, adopting a deferent stance towards the CITT’s decisions. No procurement review decision of the CITT has been overturned in three years. In addition, not only has the Federal Court of Appeal adopted a deferent attitude on judicial review of the CITT’s final decisions, it has also been loath to involve itself into the CITT’s process at the interlocutory stage,[66] showing its willingness to preserve the integrity, coherence and efficiency of the administrative process established by Parliament.

The CITT has also shown that the work of a specialized procurement review body of its type can have systemic repercussions and instigate positive change in the government’s procurement practices. Needless to say, every particular complaint that is determined to be valid serves to expose deficiencies in the process; in turn, the CITT’s recommendations not only provide relief to the particular aggrieved bidder, but hopefully also instigate greater compliance with the trade agreements on the part of government entities desirous of increasing the efficiency of their procurement procedures. In this respect, the mere number of complaints processed by the CITT, when compared to the number of complaints processed under other mechanisms for review of government procurements under the trade agreements, supports the claim that a specialized review body allowing for relatively easy access for claims by private parties promotes enforcement and compliance with the trade agreements.[67]

An interesting early example of systemic change in government practices as a result of the work of an independent procurement review body comes from the jurisprudence of the CITT’s predecessor, the Procurement Review Board. Following the award of a contract on a sole-source basis because the procuring entity believed that only one supplier could comply with its requirement, a company filed a complaint with the Board arguing that it was not afforded a fair opportunity to bid on the solicitation. The Board recommended that the procuring entity review its procedures with respect to publishing notices of single-source procurements, so as to allow potential suppliers to test the rationale of the proposed limited tendering procedure.[68] Consequently, the practice of issuing Advance Contract Award Notices (ACANs) was instituted and ACANs are now routinely issued by federal government entities in situations where the procuring authority believes, but is not certain, that there is only one supplier for the requirement.

A more recent development that is bringing systemic change to government institutions’ procurement practices relates to increasing awareness among potential suppliers of the possibility of recourse to the CITT and of the strict timelines for filing a complaint. The reason for doing so is the unfamiliarity of potential suppliers with the intricacies of the procurement system in Canada, most particularly the need to exercise their rights under the trade agreements on a timely basis.

Successive years of statistics in the CITT’s annual reports indicate that each year a high number of procurement complaints were filed beyond the 10 day deadline, and therefore the CITT had no jurisdiction to examine the substance of the complaints. CITT Members also routinely observed that even complainants who filed on time appeared to have discovered their recourse to the CITT in a haphazard and almost accidental manner, and could have easily missed the filing deadline too.

In 2013, the Chairperson wanted to ascertain if missing the deadline for filing complaints was a systemic problem, and if so, how it was impacting the integrity of Canada’s procurement system. CITT staff began by undertaking a 5-year review of the federal department with the highest number of procurement processes each year and the highest number of complaints filed with respect to its procurement processes – the Department of Public Works and Government Services (PWGSC). The review covered the fiscal years from 2008-2009 to 2012-2013 and showed that almost 25 percent of complaints were filed outside of the 10-day time frame set out in the Canadian International Trade Tribunal Procurement Inquiry Regulations.

Pursuant to section 30.19 of the CITT Act, the Chairperson advised the Deputy Minister of PWGSC of a systemic concern with the number of complaints filed late resulting in the inability of the CITT to investigate the substance of the complaints against PWGSC procurement processes. PWGSC has taken some steps to increase awareness of the applicable time constraints, and the Chairperson and the Deputy Minister of PWGSC remain in a dialogue to examine other methods of addressing this concern.

On a case-by-case basis involving other Departments where this issue has also arisen in recent years, the CITT has had occasion to recommended similar improvements, and has seen encouraging steps taken to date.

Conclusion

Judging by the advantages that it offers to Canadian businesses and potential suppliers from Canada’s trading partners, the favourable treatment that it has enjoyed from the courts and the positive changes it has contributed to bring to the procurement practices of the federal government, at 25, the CITT represents an efficient model for procurement reviews under the framework of the trade agreements.

The CITT’s commitment to excellence in discharging its procurement mandate has been and remains constant. Apart from the foremost importance of high-quality decision making and legal reasoning, a key factor in this commitment has been the CITT’s attention to the practical needs of stakeholders in procurement-related disputes. Another factor – its recognition of the possibility for continual improvement, including through outreach to counterparts from other jurisdictions, with whom to discuss its own experience, and learn from that of others.

With the hope that the CITT’s efforts to increase awareness of that recourse in the community of bidders will be successful, it is arguable that the relevance of the CITT in the procurement context will only increase in the future.

APPEALS

Overview

One of the mandates the CITT acquired at its creation in 1989 was the appeals mandate in customs and excise matters.

The CITT hears appeals from decisions of the President of the CBSA under the Customs Act and SIMA. Appeals made under the Customs Act relate to the application of regular customs duties to imported goods, which turns on the questions of tariff classification, determination of their value and origin for customs purposes.

Appeals made under SIMA relate to the application of extraordinary customs duties – SIMA duties – to imported goods, which depends on the applicability to those goods of CITT findings or orders concerning injury or retardation caused by unfair trade (i.e. dumping and/or subsidizing) and the normal value, export price or amount of subsidy in relation to the imported goods.

The CITT also hears and decides appeals from decisions of the Minister of National Revenue made under the Excise Tax Act. These appeals relate to assessments or determinations of excise tax.

Historic Perspective

In acquiring the appeals mandate, the CITT inherited the role of one of Canada’s oldest administrative bodies – the Tariff Board – which dealt with appeals under one of Canada’s most enduring statutes – the Customs Act.[69] Arguably, the CITT thus also took over what was for a long time one of the most important administrative mandates.

Indeed, until the 1940s, customs and excise taxes represented the most important source of federal government revenue. At Confederation, customs and excise taxes accounted for about 80 percent of the revenues of the provinces that formed the Dominion.[70] The prevalence of this sort of government financing remained through the following decades, as a result of both economic policies that favoured protecting the domestic industry through high duties on imported goods, and the general political unpopularity of direct taxes on property or income.[71]

Canadian policy shifted as a consequence of the events of the first half of the 20th century. On the one hand, the war effort during both world wars justified the introduction of direct taxation, which although was first promoted as a temporary measure,[72] was there to stay and become the main source of federal government revenue. On the other, the Great Depression and the Second World War led to developments at the international level aimed at fostering trade cooperation and economic relations between nations, by reducing the protectionist tendencies generally prevalent until then.[73]

In this historical context, unsurprisingly, the central focus of the 1947 GATT was to garner commitments from signatory countries to limit the levels of customs tariffs and, ultimately, reduce them. This was largely achieved through successive rounds of GATT negotiations; the first seven GATT negotiating rounds (including the Tokyo Round, completed in 1979) having reduced the weighted average tariffs on industrial products to a level of about 6.3 percent.[74] The Uruguay Round resulted in cuts of 40 percent by developed countries in their tariffs on industrial products, bringing them down to an average of 3.8 percent.[75]

Continued Relevance of the Appeals Mandate

Over the past 25 years, almost 4,000 appeals have been filed with the CITT, which has issued approximately 1,900 decisions. In the early days of the CITT, the majority of appeals stemmed from the Excise Tax Act. In 1990, for example, 56 percent of appeals related to the Excise Tax Act. For many years now, the vast majority of appeals has related to the Customs Act instead. In 2008, for example, the Customs Act accounted for 93 percent of all appeals and the Excise Tax Act accounted for just 3 percent (only one Excise Tax Act appeal was filed that year).[76] Virtually all of the customs appeals have related to tariff classification, with the remaining few dealing with issues of rules of origin or value for duty.

The volume of new appeals was highest in the earlier years of the CITT. In 1994-1995, the CITT decided 188 appeals. The slowest years for appeals were 2007-2008 and 2008-2009 when 29 and 35 appeals were filed, respectively. Appeals have been resurgent in the last five years, however, having averaged 73 new appeals per year since 2009-2010. This small resurgence suggests that, despite the dramatic decline in tariff levels applied to imported goods since the implementation of CUSTA and subsequent trade deals since the late 1980s, duties remain an important issue for importers and a significant part of the work of the CITT.

Indeed, as long as different levels of duties continue to apply to different goods, the question of determining what kind of good a given article crossing the Canadian border is remains not just an issue of statistical interest, but also one of financial significance to businesses and individuals across the country. Further, determining what a good is can be an elusive question. The classification of goods is governed by the Customs Tariff Act, which itself adopts the Harmonized Commodity Description and Coding System (HS), administered by the World Customs Organization. The HS comprises about 5,000 commodity groups, each identified by a six-digit code and arranged in a logical structure. The HS system is supported by its own detailed rules of interpretation and is regularly updated with explanatory notes helping to achieve uniform classification throughout the some 200 countries and customs territories that use it as the basis for their import duties collection systems.[77] Navigating the HS and classifying a given product that is not expressly named in it can be a complex matter.

Over the years, the CITT has pronounced on the classification of hundreds of goods spanning the entire HS. These cases have important consequences to both importers (from transnational corporations, to SMEs, and individuals), as well as to consumers, and government regulators.[78]

Another difficult issue for importers that causes appeals to be filed with the CITT concerns estimating the value of a product for customs purposes. Since customs duties are determined as a percentage of the value of the imported goods, determining the duties payable first requires determining the value of the imported goods. The Customs Act contains the applicable valuation for duty rules, enacting Canada’s obligations under the GATT Valuation Code, and later, the WTO agreement on customs valuation.[79] The basic principle of the valuation rules is that the value for duty of imported goods is in most cases calculated on the basis of their actual transaction value. This is to ensure that commercial reality is reflected as simply as possible. Nevertheless, this area continues to raise questions of significant factual and legal complexity.

Indeed, in one case that came before the CITT, the question of the value for duty of a well-known children’s toy proved so elusive as to ultimately require a decision from the Supreme Court of Canada. Mattel (AP-95-126 and AP-95-255) concerned the duties of certain royalty payments, which depended specifically on whether such payments by the importer of the goods to a licensor were a “condition of sale” in the transaction for the purchase of the goods between the importer and the vendor (the latter being, incidentally, the parent company of the importer). Reversing a decision of the CBSA, the CITT found that the royalty payments were not a condition of the sale of the goods, as they did not present a “sufficient nexus” with the sale. The Federal Court of Appeal reversed the CITT’s decision in part, considering that a royalty payment will be a condition of sale of imported goods inter alia when there is control of some kind over the sale-of-goods transaction by the licensor. Ultimately, the Supreme Court of Canada held that royalties will be dutiable only when their payment amounts to a strict contractual obligation in the sale-of-goods transaction, applying traditional common law concepts. Interestingly, a commentator has recently observed that different countries around the world applying the same basic rule of valuation have arrived at different conclusions, some finding that royalties are only dutiable in the presence of a clear contractual commitment in the sale-of-goods transaction requiring their payment, while others accepted that even in the absence of a contract clause, royalties can enter in the value for duty of imported goods where the licensor exercises influence and control over the sale transaction as a result, for example, of cross-border ownership structures.[80]

The CITT continues to deal with novel and controversial valuation questions. Recently, the CITT’s decision in Jockey Canada Company (AP-2011-008) clarified the rules applicable in related-party importations where the transaction price is derived from a multi-national’s transfer pricing policy.[81] The decision has been described as a “landmark decision” by commentators.[82]

Determining the rate of duty applicable to imported goods also requires determining their origin. Most significantly, the question of origin is important due to an increasing number of preferential duty rates that may be applicable to goods of certain countries, resulting from the creation of free‑trade agreements, such as NAFTA. Furthermore, as such preferential agreements contain their own sets of rules of origin, the determination of origin and entitlement to a given tariff treatment quickly becomes complex.[83]

Lastly, the CITT plays an important role in safeguarding the procedural efficiency of the customs system. In particular, the CITT has in recent years provided an important avenue for redress in cases where customs decisions were reached in contravention of the procedural steps set out in the Customs Act and where a certain matter became entangled in the complex administrative structure of the Act.[84] In Grodan (AP-2011-031), the CITT expressly confirmed that it can determine questions of whether a decision from the President of the CBSA was validly made.[85] The Federal Court of Appeal has also suggested that, in carrying out its mandate in Customs Act appeals, the CITT can decide constitutional questions such as the admissibility of evidence obtained in breach of the Canadian Charter of Rights and Freedoms.[86]

Such CITT decisions have given effect to the intent and purpose of the Customs Act, which strikes a balance between the need for administrative flexibility in dealing with the flood of imported goods,[87] and the interests of importers in an efficient system and speedy resolution of customs questions.[88] The CITT places a high value on issuing its own decisions in a timely fashion and is committed to doing so within 120 days of the hearing date in an appeal. Currently, the CITT renders decisions on average within some 80 days of the hearing.

As its work on Customs Act appeals has remained active, the CITT has seen a dramatic decrease in the number of excise tax appeals filed yearly since its inception. Indeed, when the federal sales tax was replaced by the Goods and Services Tax on January 1, 1990, there were an important number of Excise Tax Act appeals awaiting determination by the Deputy Minister and decisions of the Deputy Minister waiting for appeal to the CITT. Accordingly, in the years following, the majority of appeals heard and decided by the CITT involved federal sales tax assessments and determinations. However, as soon as these cases made their way through the appeal process, the CITT’s appeals workload under the Excise Tax Act became limited to a handful of discrete issues, which explains why the number of cases under this act is now very low.[89]

Conversely, in recent years, there has been an increase in the number of SIMA appeals filed with the CITT. There were 18 SIMA appeals before the Tribunal in 2012-2013. Only five such appeals had been filed between 2003 and 2010 cumulatively. While the causes for this spike are uncertain, it may be due in part to particular SIMA findings and orders which, for one reason or another, have raised enforcement difficulties. For example, the CITT’s finding in Aluminum Extrusions (NQ-2008-003) has accounted for five SIMA enforcement appeals decisions from the CITT.

As a final historical footnote, in the early days, the CITT heard a few appeals arising from the implementing legislation for the first Softwood Lumber Agreement.[90] The CITT rendered five decisions between 1990 and 1996 concerning the assessment of export charges on softwood lumber products shipped to the United States.

Evolution in the Approach to Appeals

One of the enduring characteristics of customs and excise tax appeals is ease of access. When the Law Reform Commission studied the Tariff Board’s approach to appeals in 1981, it commended its simple, straightforward and informal procedure.[91] The CITT has continued this legacy. An appellant files a notice of appeal, typically by way of letter. The CITT acknowledges the appeal and sets out the deadline for the appellant to submit a brief. Upon receipt of the appellant’s brief, the respondent has 60 days to file a reply brief. These briefs, in contrast to written submissions in trade remedies inquiries notably, are typically concise and unburdened by witness statements. Also, there is only one round of submissions per party, with normally no opportunity for the appellant to file an answer to the respondent’s brief before the hearing. The hearing itself is quite informal. Appellants routinely represent themselves or are often represented at hearings by customs consultants rather than lawyers. Witnesses are heard from, and from time to time the CITT accepts hearsay evidence. After hearing from the witnesses, the parties present oral argument. Hearings rarely last more than a day, and often just an hour or two. It is not at all uncommon for an appeal to be resolved without a hearing, either by way of the written submissions in cases where the key facts are not in dispute, or through a settlement. To encourage settlements, the CITT has a long established practice of consenting to parties’ requests to hold appeals in abeyance while they explore a mutually acceptable resolution together. Where the CITT is called upon to decide the matter, it typically renders a decision within 80 days of the hearing. Thus, appellate recourse to the CITT is far more cost-effective and expeditious than recourse to other courts of appeal.

Where the CITT has progressed since the Tariff Board days is in the expertise of support staff. At the time of the study of the Law Reform Commission, Tariff Board members were working on appeals without the assistance of in-house legal counsel.[92] Indeed, shortly before their dissolution, neither the Tariff Board nor the Canadian Import Tribunal nor the Textile and Clothing Board had a legal department of note. The establishment of a legal department was one of the first and most important innovations upon their merger. Today the Legal Services Branch provides support for the CITT members on the full range of CITT mandates.

Conclusion

It is very difficult, if not impossible, to quantify the impact of CITT appeals decisions on the Canadian economy because a given appeal may typically apply to only an advance ruling or to an initial transaction or set of transactions. As a result the affected volumes and values on years of importations that will or will not occur into the future, because the CITT has pronounced on a given matter, cannot be accounted for, other than in a purely speculative manner. CITT decisions will either cause an importer to abandon a planned importation of a good or lead it to start or resume or increase an inflow of importations. In addition, a decision with respect to one product may have a ripple effect in the way in which the CBSA treats other products that are never the subject of an appeal. What is certain is that, considering that Canada imports over $475 billion worth of merchandise annually[1], the CITT’s customs decisions have profound, and long lasting economic effects, and invariably become important considerations for various business and consumer decisions even though they may only appear, on their face, to concern but a small fraction of those imports.

SAFEGUARDS

Overview

As opposed to inquiries under the AD/CV mandate, safeguards inquiries involve imports of fairly traded goods. The CITT responds both to safeguard complaints from domestic producers and safeguard references from the Government. When specifically directed by the Government, the CITT also makes recommendations on appropriate remedies.

Evolution of the Safeguard Mandate

The rationale underlying safeguards is that they provide temporary relief to industries to allow them time to adjust to the unforeseen consequences of trade liberalization. Article XIX of the 1947 GATT, sometimes referred to as the “escape clause”, allows members to take measures against imports if they caused or threatened to cause “serious injury” to domestic producers.

Article XIX had a political objective. While many countries favoured or were expected to be able to adapt to trade liberalization, Article XIX was there to allow for relief from unforeseen surges in imports that could not have been anticipated at the time of negotiations. It helped secure political acceptance of trade liberalizations.

Relatively few countries made extensive use of safeguards under Article XIX, resorting instead to “grey area” controls, such as voluntary bilateral export restraints. Safeguards were one of the most challenging issues faced by GATT members and successive negotiation rounds failed to bring any greater discipline to the area. It was not until the completion of the Uruguay Round that a safeguard agreement was signed. The WTO Agreement on Safeguards clarified the conditions under which safeguards could be applied; defined “serious injury” and “threat of serious injury”; set strict limits on the duration of measures; and required mid-term reviews.

As noted in Chapter 3 of this paper, previous to the creation of the CITT, responsibility for Canada’s safeguard regime had been split among the three predecessor organizations: the Textile and Clothing Board for inquiries on the textile and apparel industries, the Canadian Import Tribunal for inquiries on other industries, and the Tariff Board for inquiries related to the GPT and the CARIBCAN tariff. The CITT assumed all these safeguard mandates in 1989 as well as the expanded mandate of direct access for domestic producers in industries other than the textile and apparel industries.

When Canada implemented the WTO Agreement on Safeguards, effective January 1, 1995, the CITT Act and the CITT Regulations were amended to reflect the new disciplines for global safeguards.

As noted in Chapter 3, in 2002 the CITT assumed responsibility for the conduct of safeguard inquiries in respect of imports from China. In accordance with Article 16.9 of the WTO Protocol on the Accession of the People’s Republic of China, these provisions ceased to have effect on December 12, 2013, the 12th anniversary of China’s WTO accession.

Finally, as Canada has concluded free-trade agreements with other countries, the CITT has been given the authority to conduct bilateral safeguard inquiries specific to imports from the United States, Mexico, Israel, Chile, Colombia, Costa Rica, Panama, Iceland, Norway, Switzerland, Liechtenstein, Peru and Jordan. The CITT has never conducted a safeguard inquiry under any of these provisions, some of which are no longer operational as they were in effect only during the transition period of the free-trade agreement.

Safeguard Activities at the CITT

The CITT has conducted few safeguard inquiries during its 25 years of operation.

GPT and CARIBCAN Safeguards

The CITT conducted only two safeguards and five reviews of existing GPT withdrawals, all before the end of 1991-1992. The CITT recommended that the GPT not be withdrawn in the two safeguards. For three of the five reviews, the CITT recommended extension of the GPT withdrawal whereas it recommended termination of the GPT withdrawal in the other two reviews.

Boneless Beef Safeguard

In early 1993, Canadian cattle producers became concerned about an increase in imports of boneless beef into Canada from Australia and New Zealand following negotiation of voluntary restraint agreements between those countries and the United States, which came into effect on January 1, 1993.[93] As a result, on April 16, 1993, pursuant to section 20 of the CITT Act, the Governor in Council directed the CITT to conduct an inquiry into imports of boneless beef from all countries, excluding the United States. The CITT was directed to determine if imports were causing or threatening to cause “serious injury”, and, if so, to advise on appropriate remedies. The CITT was given just six weeks to complete the inquiry.

Given the short time period, the CITT conducted the inquiry in a highly expedited manner: in weeks one and two, the CITT notified interested parties and sent questionnaires to over 60 industry participants; in week three, parties exchanged submissions and a staff investigation report was distributed; in week four, a four-day public hearing was held with over 39 witnesses; and in weeks five and six, the members reviewed the evidence and made their decision.

On May 28, 1993, the CITT reported[94] that there was a threat of serious injury and recommended that a tariff rate quota be established for three years beginning on May 1, 1993, and ending on December 31, 1995, with a surtax of 25 percent for imports in excess of quota.[95]

Steel Safeguard

The next safeguard inquiry conducted by the CITT was as different from the Boneless Beef Safeguard as an inquiry could possibly be; in fact, the 2002 Steel Safeguard remains one of the largest and most complex inquiries of any type ever conducted by the CITT.

The background for this safeguard inquiry was a safeguard inquiry in the United States. In December 2001, the United States International Trade Commission had recommended imposing quotas on a wide range of steel products. Even though Canada was excluded from the U.S. measures, Canadian steel producers were concerned that massive volumes of steel would be diverted to Canada from third countries. They lobbied the Government to take action.

The U.S. measures became effective on March 20, 2002, and the next day, on March 21, 2002, pursuant to section 20 of the CITT Act, the Governor in Council directed the CITT to inquire into and report on the importation of nine steel products. The CITT was directed to determine if the steel products were being imported “in such increased quantities since the beginning of 1996, and under such conditions, as to be a principal cause of serious injury or threat thereof . . . .”[96] As well, the CITT was directed to recommend appropriate remedies to address the injury or threat of injury over a three-year period. The CITT was to make its injury determinations by July 4, 2002, and report to the Governor in Council by August 19, 2002.

The CITT undertook an extensive program of research with staff eventually compiling the responses to 215 domestic producers’, importers’ and exporters’ questionnaires into 20 investigation reports, a general report and two additional reports for each of the nine products. Later, after the CITT made its injury determinations, staff prepared a final set of reports dealing with remedy considerations for the products in question.

The CITT held two separate hearings; a 15-day hearing on injury in June and a three-day hearing on remedy in July. At the latter hearing, the CITT invited the Commissioner of Competition to provide views on what would be appropriate remedies, with particular emphasis on the effects of any remedy on competition in the steel industry and the effects on users of steel goods.

In total, an unprecedented volume of documents, over 80,000 pages, was filed by the parties during the inquiry.

The CITT determined that increased imports had not caused and did not threaten to cause serious injury for four of the nine products.[97]

For the five remaining products, the CITT determined that imports from the United States accounted for a substantial portion of total imports, whereas imports from Canada’s other free-trade partners did not. Further, it determined that imports from the United States were contributing importantly to the serious injury for four of these five products. Accordingly, the CITT recommend tariff rate quotas for these latter products (discrete plate; cold-rolled sheet and coil; angles, shapes and bars; and standard pipe), with differing in-quota volumes and surtaxes on over-quota volumes. For the fifth product (concrete reinforcing bars), the CITT recommend a simple surtax.[98]

Bicycles and Frames Safeguard

The 2005 Bicycles Safeguard was the only direct-access global safeguard inquiry ever completed by the CITT.

The impetus for the inquiry may have arisen when the CBSA changed how it administered anti‑dumping duties on imports of bicycles and frames from China. In 2004, the domestic industry had benefitted from anti-dumping duties against imports of various products from China and Chinese Taipei for 12 years.[99] In March 2004, the CBSA initiated a reinvestigation to update the normal values and export prices for bicycles and frames. In the past, the CBSA had treated China has a non‑market economy and established normal values for Chinese exporters on the basis of costs or prices of bicycles sold in a third-country market economy. In September 2004, the CBSA concluded that there was no evidence to demonstrate that the government substantially controlled the pricing of the bicycles and bicycle frames. As a result, it is likely that Chinese exporters were able to sell into Canada at lower prices without being subject to anti-dumping duties.

On February 10, 2005, the CITT gave notice that it was commencing, pursuant to subsection 26(1) of the CITT Act, a global safeguard inquiry into the importation into Canada, from all sources, of bicycles and finished painted bicycle frames, assembled or unassembled, having received a properly documented complaint from two domestic producers. Because of the way in which domestic producers had worded their first complaint, they subsequently submitted a second complaint dealing specifically with frames and, on March 24, 2005, the CITT decided to proceed with a single safeguard inquiry combining the two complaints.

On May 10, 2005, the Government directed the CITT to determine whether an affirmative injury determination would remain the same if goods imported from Canada’s free-trade partners were excluded and to recommend the most appropriate remedy to address any injury.

In establishing the schedule for the safeguard inquiry, the CITT decided to issue its determination and remedy recommendations within 180 days, even though the CITT Act permitted an extension of up to 90 days.

Although this safeguard inquiry was smaller in scope than the Steel Safeguard, it was nonetheless a substantial undertaking: CITT staff compiled 229 questionnaire responses; 50 parties participated; and there was a nine-day public hearing with 42 witnesses.

On September 1, 2005, the CITT determined that increased imports of bicycles were a principal cause of serious injury to domestic producers of bicycles. The CITT determined that the quantity of bicycles imported from each of Canada’s free-trade partners did not account for a substantial share of total imports and that its finding would not change with the exclusion of imports from these countries.

As a remedy, the CITT recommended surtaxes at declining levels over three years, excluding imports from Canada’s free-trade partners and certain developing countries.[100]

Barbeques From China

The CITT conducted only one inquiry under the provisions for China-specific safeguards, the 2005 Barbeques Safeguard.

This safeguard inquiry got underway in the aftermath of a failed AD/CV case. In April 2004, the CBSA initiated a preliminary determination investigation into imports of barbeques from China. At the same time, the CITT initiated a preliminary injury investigation (PI-2004-001). The CITT and the CBSA both made positive preliminary determinations, and, accordingly, the CBSA commenced its final determination investigation and the CITT commenced its final injury inquiry (NQ-2004-004). However, on November 10, 2004, the CBSA, in a rare decision, terminated the investigation at the final determination because the margins of dumping and the amount of subsidy were insignificant. As a consequence, the CITT terminated its injury inquiry.

On July 11, 2005, the CITT commenced a safeguard inquiry into imports of barbeques from China having received a properly documented complaint from a domestic producer. The next month the Governor in Council directed the CITT to recommend the most appropriate remedy to address any injury.

The CITT faced the challenge of having to complete the inquiry and make its determination within 90 days as set out in the CITT Act. The CITT decided to deal with the issue of remedy in the same time frame.

To meet the short time frame, the CITT streamlined procedures wherever practical. For example, rather than issue market characteristic questionnaires to purchasers, the CITT placed on the record the investigation report from the recent injury inquiry, NQ-2004-004, which contained the necessary information from purchasers of barbeques. Further, since the hearing only allowed time for a three‑day hearing, members questioned witnesses first and then counsel had the opportunity to cross‑examine witnesses and make argument. Also in recognition of the tight time frame and number of counsel, prior to the commencement of the hearing, the CITT provided time allocations to counsel for examination and argument.

The test in the China-specific safeguard inquiry was whether imports of Chinese goods were causing or threatening to cause “market disruption” to domestic producers. In turn, market disruption meant that Chinese goods were being imported in such quantities or under such circumstances that they were a significant cause of material injury to domestic producers of similar goods. Canadian law defined a “significant cause” as an important cause that did not have to be as important or more important than any other causes of injury. The CITT interpreted this to mean that there could be several important causes of injury present in the market simultaneously as long as imports from China were one of those important causes.

On October 11, 2005, the CITT determined that imports of barbeques had caused market disruption. It acknowledged that there may have been other important causes for the injury suffered by Canadian barbeque producers’ problems, but that didn’t alter its finding that imports of Chinese barbeques were a significant cause of that injury.

As a remedy, the CITT recommended a surtax of a fixed amount for three years.[101]

Other Safeguard Activities

On August 24, 1992, the CITT determined that the information before it did not disclose a reasonable indications that wide flange shapes were being imported into Canada in such increased quantities and under such conditions as to cause serious injury to the domestic producer.

On December 29, 2005, following a complaint by the Ontario Flue-Cured Tobacco Growers Marketing Board (the Board), the CITT initiated a global safeguard inquiry into imports of flue‑cured tobacco. However, on February 14, 2006, the Board notified the CITT that its members no longer wished to participate in the inquiry and would not submit evidence to support their complaint, and the CITT terminated its inquiry.

In March 2006, the CITT found that a complaint in respect of furniture from China was not properly documented and therefore declined to commence an inquiry.

In October 2006, the CITT dismissed a request by the Unite Here labour union to commence a safeguard inquiry in respect of textile and apparel goods from China, finding that the union did not have standing to make such a request.

Conclusion

Although the CITT has conducted relatively few safeguard inquiries, those it has conducted have generally been memorable – either because of their speed, their size or their uniqueness.

ECONOMIC REFERENCES

Overview

When the Government presented the CITT Act to Parliament in 1988, it characterized the CITT as an organization with a standing economic inquiry capability. The CITT can provide advice on any matter relating to economic, trade or commercial policy. As a totally independent body, the CITT can give the Government impartial advice on controversial and politically sensitive matters, taking full account of all the interests at stake.

The CITT’s inquiry process is a key component in the CITT’s capacity to give the Government sound and impartial advice. The process is totally transparent. The CITT’s report explaining the CITT’s advice or recommendations is made public.

The other key components in the CITT’s capacity to provide sound advice are the expertise of its members and staff and its investigatory powers. The CITT investigation ensures that all the relevant facts and views are put before the parties. Staff provides an analysis of the issues, including options for dealing with them. The CITT obtains outside expertise where it is required. Parties are invited to make substantive submissions addressing the matters from the perspective of their particular interests; their submissions and other evidence are tested during the inquiry.

The CITT Act contains broad provisions under which the Government may direct the CITT to inquire into economic, trade or tariff matters: section 18 provides for references from the Governor in Council for inquiries in relation to the “economic, trade or commercial interests of Canada” and section 19 provides for references from the Minister of Finance for inquiries into “tariff-related matters”.

During the past 25 years, the CITT has conducted a total of 10 economic references[102] at the request of the Government.

Section 18 References

The CITT has conducted four references pursuant to section 18 of the CITT Act

The Horticultural Study: GC-90-001

This was the CITT’s first reference pursuant to section 18 of the CITT Act. In June 1990, the CITT was directed to assess the competitiveness of Canada’s fresh and processed fruit and vegetable industry and report to the Governor in Council in 18 months.

The CITT held five sets of hearings: (i) a methodological seminar on the proposed research program with government officials and agricultural consultants; (ii) a preliminary hearing in Ottawa to ask parties for their advice on interpreting the terms of reference; (iii) five weeks of hearings in six cities across Canada; (iv) a two-week hearing in Ottawa at which staff and the consultants presented their research; and (v) a final two-day hearing in Ottawa at which parties commented on the report summarizing staff research and members posed questions to parties.

CITT staff and consultants produced a vast amount of research during the inquiry, including detailed profiles of the fresh production of 17 vegetables and nine fruits and the processing industry, summaries of government support programs and policies, and a comparative overview of pesticides in Canada and the United States.

The CITT’s final report identified several areas where government policy affected the competitiveness of the horticultural industry with particular reference to disadvantages Canadian producers faced with respect to pesticides.

Import Quotas: GC-91-001

By the 1990s, the Government had implemented supply management regimes for many agricultural products. Protection of the Canadian market from import competition was critical to the operation of these regimes. At that time there were 18 agricultural or food products on the Import Control List (ICL),[103] 10 of which had quotas established to allow limited volumes of imports.

The procedures for deciding which importers would receive a share of the quota were highly contentious and various initiatives by the government to reach a consensus among industry participants had failed.[104]

In August 1991, the Government directed the CITT to recommend the “optimum method” of quota allocation for all “agricultural products currently subject to import controls”, i.e. cheese, ice cream, yoghurt, buttermilk, evaporated/condensed milk, broiler hatching eggs, chicks, chicken, turkey, shell eggs and egg products, taking into account the factors of “equity, predictability, economic efficiency, transparency, entry to the industry, market responsiveness and competitiveness”. The CITT was given 14 months to complete the inquiry.

CITT staff compiled responses to nearly 230 questionnaires covering the majority of quota holders for most key products. CITT staff and members also visited more than 20 poultry and dairy facilities to understand better how the controlled products were manufactured and used in further processing operations. Consultants were hired to assess the strengths and weaknesses of various allocation methods and to develop an economic model to measure the impact of different allocation methods.

At a 12-day hearing in January-February 1992, parties had an opportunity to make submissions on the research that had been developed by staff and the consultants. Next, staff prepared a report using a grid approach to rate different proposed allocation methods against the seven assessment factors. This report and further consultant reports were circulated to parties prior to a second 10‑day hearing in June 1992.

In its final report (October 1992), the CITT decided to approach the task of recommending allocation methods in what it termed a “qualitative” manner, discarding the grid approach proposed by staff and the consultants’ economic methods.

The CITT recommended that auctions be used to allocate quotas for cheese, ice cream, yoghurt, buttermilk, evaporated/condensed milk and shell eggs. The auctions would be structured to allow some continuity in the marketplace, while allowing existing holders and new entrants a chance to compete on equal footing for import quotas. For chicken and turkey, the CITT recommended that quotas be allocated first to processors of products not on the ICL (e.g. frozen chicken dinners). This sector must not only compete with U.S. products made with lower-cost poultry inputs, but also its tariff protection is declining under CUSTA. Any remaining quota should be allocated to other poultry processing operations. The CITT recommended no change for broiler hatching eggs and chicks or egg products.

The Cattle and Beef Study: GC-92-001

In November 1992, the CITT was given a second reference on industry competitiveness, this time in relation to the cattle and beef industries. The time frame for the CITT to conduct the inquiry was 12 months.

The CITT began the inquiry with a preliminary one-day hearing in Ottawa to obtain feedback from industry experts and departmental officials on the proposed research plan. Next the CITT held two‑day public hearings in both Calgary and Ottawa to provide parties with an opportunity to present facts and arguments relevant to the inquiry. A final one-day hearing was held in Ottawa to give parties an opportunity to comment on reports prepared by CITT staff and consultants and to offer final evidence and advice. An additional important source of information in this inquiry was members’ numerous visits within Canada, the United States and Mexico to observe various products and production processes.

The CITT’s final report concluded that, for the most part, the future of the Canadian cattle and beef industries was “bright”. However, the CITT identified five broad challenges to the competitiveness of the cattle and beef industries. The CITT emphasised that an open border between Canada and the United States and a fair trading regime was vital to the industries. In this regard, the report noted that the recent imposition of a tariff rate quota on imports from boneless beef[105] from countries other than the United States had removed an irritant to Canada-U.S. relations. The CITT also expressed the hope that meat import laws in Canada could be made more equivalent to those in the United States.

Dairy Product Blends (GC-97-001)

As part of the WTO Agreement on Agriculture, on January 1, 1995, Canada converted its import quotas for dairy products to tariff-rate quotas (TRQs), i.e. tariffs that were associated with different levels of market access, thereby making it possible to protect specific markets. Also, products on the ICL were now listed by tariff item rather than simply by name as they had been previously.

Dairy blends are blends of butter oil and sugar, blends of butter oil and glucose and blends of butter oil and processing solids. Dairy blends were classified by Revenue Canada as falling under tariff item number 2106.90.95, which was not on the ICL. Accordingly, dairy blends could be imported without restriction.

In the face of significant increases in imports of dairy blends following the introduction of the TRQs, representatives of the dairy industry put pressure on the Government to address the issue. Accordingly, in December 1997, the CITT was directed to inquire into the matter of the importation of “dairy product blends” outside the coverage of Canada’s tariff-rate quotas by examining the “factors influencing the domestic market” and by identifying “options for addressing any problems raised by this issue” in a manner that would be consistent with Canada’s domestic and international rights and obligations. The CITT was given six months to complete the inquiry.

Despite the relatively short time period for the inquiry, the CITT conducted an extensive program of research. More than 90 questionnaires were received from dairy industry associations, dairy processors, importers and foreign governments. CITT staff prepared an industry profile and reports on import regimes, possible producer reactions to imports of dairy product blends, and the international and domestic legal framework. Staff at Agriculture Canada and consultants prepared additional reports. There was a seven-day hearing in April 1998 at which parties had an opportunity to test the evidence on the record, to present witnesses and to submit their final arguments.

The CITT identified the cost saving compared to domestic butterfat as the single most important factor influencing the demand for imported butter oil blends. Closely linked to the issue of the cost of domestic butterfat was the issue of the short supply of domestic butterfat for ice cream processors.

In defining options for the Government to consider, the CITT first observed that “there is no option available that comes without a cost to one or more of the stakeholders.”

The CITT rejected six options because they were either inconsistent with Canada’s domestic or international rights and obligations, or were otherwise not viable options: reclassification of dairy blends by the government; imposition of an excise tax; bilateral negotiations with New Zealand (the largest source of butter oil blends); removal of anti-dumping and countervailing duties on refined sugar; increase in milk prices; and change in labelling requirements.

The CITT identified seven options for the government to consider:[106] the status quo; a classification appeal to the CITT by the dairy farmers;·a safeguard inquiry pursuant to a complaint by the dairy farmers; a special class price[107] for butterfat for ice cream and processed cheese; a special class price for butterfat for domestic butter oil blends; compensation for the dairy farmers for their income losses; and a new tariff item for butter oil blends with a different tariff treatment negotiated under Article XXVIII of the GATT.

Section 19 References

The CITT has conducted six references pursuant to section 19 of the CITT Act, all but one in relation to tariffs on textile inputs.

An Inquiry Into Textile Tariffs (MN-89-001)

In the years leading up to the first textile reference, Canada’s textile and apparel industries had faced increasing pressure from imports.[108] With the signing of CUSTA in January 1988,[109] both the textile and apparel industries were concerned about what the agreement would mean for them in the future.

In March 1988, the Government introduced various measures to support the industries, including six duty remission programs and tariff reductions on 13 specialty fabrics not made in Canada.[110] Also, the Government committed to progressively reduce textile tariffs down to the levels of other industrialized countries over a 10-year period, commencing in 1990. The Government indicated that it would seek the advice of the soon-to-be-operational CITT on how to proceed with this plan.

In February 1989, the Government directed the CITT to assess the economic impact of reducing Canada’s textile tariffs to levels comparable to those of its major trading partners and to recommend the level and pace of tariff reduction that would maximize the economic gains to Canada without causing undue hardship to domestic suppliers of textile products. The CITT was directed to report by December 31, 1989.

This first reference on textile tariffs turned out to be one of the largest endeavours ever undertaken by the CITT; an especially difficult task for an organization that was less than one year old. The CITT undertook a massive program of research: members and CITT staff visited over 40 firms; almost 500 companies filled out questionnaires; and CITT staff and consultants generated hundreds of pages of research.

Three public hearings were held during the course of the inquiry, lasting more than six weeks in total.

Every aspect of the inquiry was controversial and strongly contested by one or the other of the two industries, or both. Even the analytic framework to compare Canada’s average tariff rates to those of other countries was a source of significant disagreement: Which countries? Which products to include? Should future reductions under CUSTA be factored in? What about the impact of non-tariff barriers, such as voluntary export restraint agreements? After carefully examining all the relevant factors, the CITT concluded that average most-favored-nation rates in Canada were indeed much higher and more complicated than those in the United States, the EEC and Japan.

As part of the research for the inquiry, the CITT engaged consultants to estimate the economic effects of tariff reduction on the Canadian economy: both an econometric model and a cost-benefit analysis indicated that the economic impact of tariff reductions would be positive. Not surprisingly, the textile industry was extremely critical of the models. In its final report, the CITT defended the models as providing reasonable estimates of the impact of tariff reduction.

The CITT recommended that textile tariffs be reduced by an average of 26 percent through moving to a simpler structure with maximum rates of 5 percent for fibres, 10 percent for yarns and 16 percent for fabrics.[111]

Standing Textile Tariff Reference

During the course of the 1990 reference, users of textile inputs, predominately apparel manufacturers, submitted about 400 requests for tariff elimination on imported textile inputs that they claimed were not available in Canada. The textiles industry opposed most of the requests. The CITT made no recommendations on these individual requests in its final report.

Over the next several years, efforts by the Government to resolve differences between the two industries and act on the individual requests were generally unsuccessful.

Eventually the Government turned to the CITT to break the logjam and, in 1994, it gave the CITT a standing reference to deal with requests from domestic producers for tariff relief on textile inputs. The goal was to provide domestic producers with a relatively quick and inexpensive process by which to have their requests for tariff relief assessed (inquiries were to be completed in 120 days) and to provide the Government with an independent, objective rationale for deciding whether to act on such requests (recommendations were to maximize net economic gains for Canada).

As part of its conduct of each investigation, the CITT sent questionnaires to domestic producers and users of the textile inputs in question, staff prepared an investigation report, and parties made submissions. The CITT generally did not hold public hearings in cases filed under the standing textile tariff reference; rather, written exchanges of submission typically sufficed.

The CITT assessed the benefits of tariff relief as the duty savings to domestic users of the textile input and the costs as the lost sales revenues or lost margin to domestic producers of substitutable inputs. Given this framework, it is not surprising that the issue of “substitutability” was at the core of most tariff relief requests. If the CITT found that there were no domestically produced substitutes, it usually also found that there were few, if any, costs of granting tariff relief, and concluded that the net economic benefits would be positive.

Perhaps also not surprising, the textile and apparel industries tended to view the issue of substitutability very differently. The textile industry tended to consider fabrics as substitutable if they could be used to make the same end products. The apparel industry, on the other hand, looked at the market acceptance of the fabrics. From their perspective, fabrics were not substitutable, even if they had similar technical descriptions, when consumers perceived them or the end products in which they were used to be different.

In total, the CITT received 187 requests under the standing textile tariff reference, with two-thirds of the requests occurring in the first four years of the reference. In fact, the CITT has received no requests under this reference since 2007-2008.

The CITT recommended tariff relief in 70 percent of the requests where it made a recommendation (i.e. requests that were not withdrawn or terminated).[112] The Government has implemented virtually all the CITT’s recommendations for tariff relief.

Three Textile Tariff References in the 2000s

The textile and apparel industries continued to be an important focus of government policy initiatives throughout the 1990s and beyond. There were many changes in both the domestic and international landscape that affected these industries.[113]

In February 2004, the Government announced that it planned to eliminate tariffs on imports of certain textile inputs used by the apparel industry, providing savings of up to $26.7 million per year. The Government announced that it would direct the CITT to consult with the textile industry to identify textile inputs currently being produced in Canada to ensure that duties would not be eliminated on those goods.[114]

Accordingly, on May 19, 2004, the CITT received reference MN-2004-001. The Minister of Finance directed the CITT to inquire into the extent to which yarns and fabrics classified under 151 10-digit statistical codes of the Customs Tariff were domestically produced and sold to Canadian apparel manufacturers. The CITT was directed to complete its report by October 31, 2004.

The CITT began conducting the reference as it normally would by issuing questionnaires to industry participants best placed to provide it with the necessary information, in this case domestic textile producers. However, the CITT received only two complete responses and two partial responses to 81 questionnaires. Many textile producers wrote to the CITT indicating that, while they manufactured some of the subject inputs, they were opposed to the inquiry and would not respond to the questionnaire.

The CITT considered compelling textile producers to attend a hearing to produce information, by using its subpoena powers. However, as the CITT explained in its eventual report to the Minister of Finance, while the CITT had used these powers on occasion in the past, it had generally done so only as a last recourse and to compel individual companies to provide testimony. In this case, the CITT would have had to subpoena a whole industry. The CITT was concerned that if there should be non‑compliance, it would need to undertake court proceedings to enforce the subpoenas. Accordingly, the CITT rejected this option.

Eventually, on October 28, 2004, the CITT issued an interim report concluding that textile inputs classified under 127 of the 151 statistical codes were not produced in Canada. The CITT requested that the Minister extend the reference to January 31, 2005, to give it time to prepare a final report.

While agreeing to give the CITT more time to complete its final report in this reference, on December 14, 2004, the Government announced its intention to implement additional tariff relief measures to the benefit of both industries and to give the CITT a second reference to identify the range of textile inputs manufactured in Canada.

On December 23, 2004, the CITT issued its final report in MN-2004-001, which modified slightly the results of its interim report, i.e. the CITT concluded that 114 textile inputs were not made in Canada.

On January 10, 2005, the CITT received reference MN-2004-002. The Minister of Finance directed the CITT to inquire into the domestic availability of fibres, yarns and apparel fabrics classified under 591 tariff items found in 12 chapters of the Customs Tariff and to propose a tariff structure that would distinguish these textile inputs from those not produced in Canada. The CITT was directed to complete its report by June 30, 2005.

This time the textile industry chose to co-operate and the CITT received questionnaire responses from 48 firms, which were compiled into an investigation report circulated to parties. The staff investigation report proposed a tariff structure based strictly on evidence of production or imminent production of textile inputs. The CITT received 60 submissions in response to the issuance of the staff report, including submissions from the two principal industry associations, the Canadian Textile Institute and the Canadian Apparel Federation. The CITT did not hold a public hearing because it considered that there was sufficient information on the record to enable it to fulfil its mandate.

For each of the 591 tariff items, the CITT recommended continued tariff protection when there was production or imminent production, regardless of the value of that production. To confirm that there was production of a textile input, the CITT relied on sample invoices submitted by textile producers. The CITT defined imminent production as a situation where a manufacturer had made a substantial commitment to start production in the near future. The CITT looked for evidence, such as concrete plans to convert production capacity; marketing plans; orders on hand; an agreement to purchase or lease manufacturing equipment; and the hiring of personnel.

The CITT recommended that duties be eliminated on 341 of 591 tariff items because there was no evidence of current or imminent domestic production. It estimated that the value of the textile inputs imported under these 341 tariff items was $690 million over the 2003-2004 period.[115]

Many of the tariff items reviewed by the CITT in the second reference had been “basket” tariff items under which a wide variety of products were classified. Where there was domestic production reported under a basket tariff item, the CITT had recommended that duties be retained on all the products covered by the tariff item. The CITT had followed this approach because it did not receive sufficiently detailed information to enable it to distinguish products made in Canada from those not made in Canada.

Accordingly, the Government gave the CITT a third reference, MN-2005-001, directing it to break out apparel fabrics produced in Canada from those not produced in Canada for 12 basket tariff items where the CITT had recommended the retention of duties in MN-2004-002. The CITT was given six months to complete the reference.

The CITT issued questionnaires to 31 textile producers and received 21 responses. In the questionnaire, textile manufacturers were asked to provide detailed information on the characteristics of domestically available fabrics, e.g. weight, types and percentages of fibres, weave, yarn thickness, range of apparel end uses. Using this information, CITT staff proposed tariff structures to distinguish domestically available apparel fabrics from apparel fabrics not produced in Canada, and from fabrics produced for non-apparel end uses. Parties had an opportunity to make submissions on the proposed tariff structures. The CITT did not hold a public hearing.

After carefully considering the evidence, the CITT concluded that it could not recommend new eight‑digit dutiable tariff items to encompass Canadian apparel fabric production without there being a negative impact on that production. The CITT was of the view that putting a dutiable tariff “box” around domestic production and giving duty-free status to the remaining fabrics under a basked tariff item would create a powerful incentive for importers to source imported fabrics with only minor differences in composition from domestic fabrics with the express purpose of avoiding duties.

Based on its analysis of the evidence, the CITT recommended that duties be eliminated for 4 of the 12 tariff items. It estimated that between January 1, 2003, and September 30, 2005, apparel producers had paid approximately $5 million in duties on imports of fabrics under these four tariff items.[116]

Tariff Anomalies

In early 1989, the Canadian and U.S. governments invited interested parties to submit requests for the acceleration of CUSTA tariff reductions on specific products. Negotiations resulted in agreement on 400 items that became subject to earlier tariff reduction than that originally provided in CUSTA.

During the course of this exercise, some Canadian firms indicated that the rates of duty on their products were being phased out faster than the tariffs on certain input parts and materials that they import from the United States. These differences were described as tariff phase-out anomalies. Firms asked that these anomalies be removed. However, in some cases, bilateral agreement could not be reached on proceeding with these accelerations because the requisite “broad industry support” was lacking.

Accordingly, in October 1990, the CITT was directed to examine tariff anomalies in five industries: air cleaners; disposable diapers; detergents and household cleaners; pressure vessels; and furniture. More specifically, the terms of reference were for the CITT to determine if the tariff anomalies were causing or would cause economic difficulties for the Canadian producers of the finished goods and, if so, to assess the economic benefits and costs (to Canadian producers of both the finished products and the associated parts and materials) of possible remedial measures, including bilateral acceleration of CUSTA tariff reductions or unilateral reductions in the rates of duty.

The letter of reference directed the CITT to complete its inquiry in approximately six months so that its recommendations can be incorporated into the next round of negotiations with the United States on the acceleration of tariff reductions under CUSTA.

In establishing the analytic framework for the reference, the CITT first decided that it would assess “economic difficulty” to Canadian producers of finished products in terms of the effects of the anomaly on their net income, sales revenues, investment and employment.

The CITT measured the benefits of removing the anomaly to finished product producers as the direct duty savings on inputs sourced in the United States. The CITT also looked at additional benefits that might accrue to finished producer producers from domestic input producers lowering their prices to match lower import prices. The CITT measured the cost of removing the anomaly as the revenue lost by domestic input producing firms. These revenue losses related to price reductions, which were made to meet lower import prices, or to lost sales, if the price reductions could not be afforded.

The CITT received over 180 submissions and responses to short-form questionnaires in the course of the inquiry. The CITT did not hold public hearings.

The CITT recommended that the Government accelerate the tariff elimination for 43 parts and materials, affecting approximately $153 million of trans-border trade and $93 million of domestic trade. The CITT estimated that eliminating the tariff anomalies would save manufacturers of finished goods $10.3 million in 1993, of which $6.4 million were direct duty savings.

Conclusion

The CITT’s reference mandate has provided some of its most challenging and ground-breaking work.

Even though the CITT’s many renewal initiatives of the past three years were primarily focused on its AD/CV, procurement review and appeals mandates, they also supported the renewal of the specialized knowledge required to respond to references.

IN CLOSING

Beginning in 1989, the CITT has earned a global reputation for excellence. In doing so the CITT’s fundamental priorities have remained unchanged:

  • Process cases within legislated and internal deadlines and maintain high-quality standards
  • Invest in our people
  • Foster sound management practices
  • Improve service delivery

The CITT’s reputation of excellence depends largely on the dedication and professionalism of our highly specialized staff and members working together to deliver on our mandates. In fact, there are a handful of CITT employees who have been with the CITT for all of its 25 years; surely a powerful testament to the unique working environment that the CITT has offered.

This year marks not only the CITT’s 25th anniversary, but also the end of the CITT as it currently exists.

In November 2014, with the coming into force of Bill C-31, all staff of the CITT will be transferred to the ATSSC. The ATSSC will provide funding and services required to support 11 administrative tribunals, including the CITT, by providing corporate services, registry services, library services and all case-specific services, including legal, research, investigation, analysis, drafting, editing, and translation.

APPENDIX I – Members and Senior Staff

Chairpersons
John C. Coleman, 1989-1993
Anthony T. Eyton, 1993-1997
Pierre Gosselin, 1997-2007
André F. Scott, 2008-2010
Stephen A. Leach, 2011-
 

Vice-Chairpersons and Members
Robert J. Bertrand, Q.C., 1989-1991
Arthur B. Trudeau, 1989-1998, 1999-2000
Sidney A. Fraleigh, 1989-1995
W. Roy Hines, 1989-1995
Kathleen MacMillan, 1989-1994
Michèle Blouin, 1990-1995
Charles A. Gracey, 1990-1995, 1997-1998
Hon. Robert C. Coates, 1991-1998
Desmond Halissey, 1992-1996
Lise Bergeron, 1992-1995
Raynauld Guay, 1994-2000
Lyle M. Russell, 1994-1997
Anita Szlazak, 1995-1999
Dr. Patricia M. Close, 1997-2005
Peter F. Thalheimer, 1997-2002
Richard Lafontaine, 1998-2006
Zdenek Kvarda, 1999-2007
Dr. James A. Ogilvy, 1999-2008
Ellen Fry, 2001-2010
Meriel V.M. Bradford, 2002-2007
Elaine Feldman, 2005-2007
Serge Fréchette, 2006-2014
Diane Vincent, 2007-2012
Pasquale Michaele Saroli, 2008-
Stephen A. Leach, 2009-2011
Jason W. Downey, 2009-
Daniel Petit, 2012-
Ann Penner, 2013-
Jean Bédard, 2014-

Secretaries/Executive Directors
Robert J. Martin, 1989-1992
Michel P. Granger, 1992-2004
Hélène Nadeau, 2004-2009
Dominique Laporte, 2009-2014

Executive Directors/Directors-General, Research
Ronald W. Erdmann, 1989-2004
John A. Greig, 2004-2011
Rose Ritcey, 2011-2013

General Counsel
Louise Sabourin-Hébert, 1989-1990
Debra P. Steger, 1991-1994
Gerry Stobo, 1995-2001
Reagan Walker, 2001-2013

APPENDIX II – Governing Legislation of the CITT

Section

Authority

CITT Act

18

Inquiries on economic, trade or commercial interests of Canada by reference from the Governor in Council

19

Inquiries into tariff-related matters by reference from the Minister of Finance

19.01

Safeguard inquiries concerning goods imported from the United States or Mexico by reference from the Governor in Council

19.011

Safeguard inquiries concerning goods imported from Israel by reference from the Governor in Council

19.012

Safeguard inquiries concerning goods imported from Chile by reference from the Governor in Council

19.0121

Safeguard inquiries concerning goods imported from Colombia by reference from the Governor in Council

19.013

Safeguard inquiries concerning goods imported from Costa Rica by reference from the Governor in Council

19.014

Safeguard inquiries concerning goods imported from Iceland by reference from the Governor in Council

19.015

Safeguard inquiries concerning goods imported from Norway by reference from the Governor in Council

19.016

Safeguard inquiries concerning goods imported from Switzerland or Liechtenstein by reference from the Governor in Council

19.017

Safeguard inquiries concerning goods imported from Peru by reference from the Governor in Council

19.02

Mid-term reviews with regard to global safeguard and anti-surge measures

20

Global safeguard inquiries by reference from the Governor in Council

23(1)

Global safeguard complaints by domestic producers

23(1.01) and (1.03)

Safeguard complaints by domestic producers concerning goods imported from the United States

23(1.02) and (1.03)

Safeguard complaints by domestic producers concerning goods imported from Mexico

23(1.04)

Safeguard complaints by domestic producers concerning goods imported from Israel

23(1.05) and (1.06)

Safeguard complaints by domestic producers concerning goods imported from Chile

23(1.061)

Safeguard complaints by domestic producers concerning goods imported from Colombia

23(1.07) and (1.08)

Safeguard complaints by domestic producers concerning goods imported from Costa Rica

23(1.09)

Safeguard complaints by domestic producers concerning goods imported from Iceland

23(1.091)

Safeguard complaints by domestic producers concerning goods imported from Norway

23(1.092)

Safeguard complaints by domestic producers concerning goods imported from Switzerland or Liechtenstein

23(1.093)

Safeguard complaints by domestic producers concerning goods imported from Peru

30

Further safeguard inquiries by reference from the Governor in Council

30.01

Surge complaints regarding goods from NAFTA countries

30.011

Surge complaints regarding goods from Israel

30.012

Surge complaints regarding goods from Chile

30.08 and 30.09

Extension inquiries with regard to global safeguard and anti-surge measures

30.14

Complaints by potential suppliers in respect of government procurement for designated contracts

30.21

Inquiries into market disruption and trade diversion in respect of goods originating in China by reference from the Governor in Council

30.22

Complaints of market disruption in respect of goods originating in China

30.23

Complaints of trade diversion in respect of goods originating in China

30.24

Further inquiries into market disruption or trade diversion by reference from the Governor in Council

30.25

Expiry reviews of measures relating to market disruption or trade diversion in respect of goods originating in China

SIMA

33 and 37

Advisory opinions on injury by reference from the CBSA or further to requests by affected parties

34(2)

Preliminary injury inquiries

37.1

Preliminary determinations of injury

42

Inquiries with respect to injury caused by the dumping and subsidizing of goods

43

Findings of the Tribunal concerning injury

44

Recommencement of inquiries (on remand from the Federal Court of Appeal or a binational panel)

45

Public interest inquiries

46

Advice to the CBSA regarding evidence of injurious dumping or subsidizing of like goods

61

Appeals of re-determinations of the CBSA concerning normal values, export prices or amounts of subsidies or whether imported goods are goods of the same description as goods to which a Tribunal finding applies

76.01

Interim reviews of Tribunal orders and findings

76.02

Reviews resulting from the CBSA’s reconsideration of final determinations of dumping or subsidizing

76.03

Expiry reviews

76.1

Reviews at the request of the Minister of Finance as a result of rulings of the WTO Dispute Settlement Body

89

Rulings on who is the importer for purposes of payment of anti-dumping or countervailing duties by request of the CBSA

91

Reconsideration of rulings on who is the importer

Customs Act

60.2

Applications for extensions of time to request a re-determination or a further re-determination

67

Appeals of decisions of the CBSA concerning value for duty, origin and tariff classification of imported goods

67.1

Applications for orders extending the time to file notices of appeal under section 67

70

References from the CBSA for advisory opinions relating to the origin, tariff classification or value for duty of goods

Excise Tax Act

81.19, 81.21, 81.22, 81.23, 81.27 and 81.33

Appeals of assessments and determinations of excise tax (on automobiles, air conditioners designed for use in automobiles, gasoline, aviation gasoline, diesel fuel and aviation fuel) made by the Canada Revenue Agency (CRA)

81.32

Applications for extensions of time for internal CRA objection procedure or for appeal to Tribunal

Energy Administration Act

13

Declarations concerning liability for and the amount of any oil export charge that is payable where oil is transported by pipeline or other means to a point of delivery outside Canada

 

Endnotes

 

[1]     Where the CITT decides on an appeal under the Excise Tax Act and a party appeals the CITT’s decision, the matter is heard by the Federal Court in a hearing de novo.

[2]     See, for example, National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 SCR 1324; Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government Services), 2001 FCA 241, [2002] 1 FC 292; Canada (Minister of National Revenue) v. Schrader Automotive Inc., 1999 CanLII 7719 (FCA).

[3]     The staff of the CITT will be transferred to the ATSSC with the coming into force of Bill C-31.

[4]     Robert K. Paterson, Canadian Regulation of International Trade and Investment (Toronto: Carswell, 1986) at 67-75.

[5]     Report by Michel Granger, former Secretary of the CITT.

[6]     SIMA pre-1988 section 48 and Anti-dumping Act section 16.1.

[7]     Paterson, Canadian Regulation of International Trade and Investment at 90, 113-19, 125-26; G. E. Salembier, The Canadian Import File: Trade, Protection and Adjustment (Montréal: Institute for Research on Public Policy, 1987) at 124-27.

[8]     Report by Michel Granger, former Secretary of the CITT.

[9]     Paterson, Canadian Regulation of International Trade and Investment at 86-90.

[10]   Salembier, The Canadian Import File at 121-24.

[11]   Paterson, Canadian Regulation of International Trade and Investment at 87; W.R. Hines, Trade Policy Making in Canada: Are We Doing It Right? (Montréal: Institute for Research on Public Policy, 1985) at 94-95.

[12]   Hines, Trade Policy Making in Canada at 95.

[13]   Report by Michel Granger, former Secretary of the CITT.

[14]   Philip Slayton, The Anti-dumping Tribunal: A Study of Administrative Procedure in the Anti-dumping Tribunal (Ottawa: Law Reform Commission of Canada, 1979) at 63.

[15]   Sub-committee on Import Policy, Report on the Special Import Measures Act (Ottawa: The Sub-committee, 1982) at 31-33.

[16]   Salembier, The Canadian Import File at 135.

[17]   Ibid.

[18]   House of Commons Debates, April 21, 1988, at 14679.

[19]   When the CITT makes a decision in an injury inquiry, it is a finding. When the CITT makes a decision in an expiry review, an interim review, or an expiry, it is an order.

[20]   Each year, the CITT publishes a paper on its website that updates the effects of its decisions on the Canadian economy. The latest version of the paper is attached in Appendix II.

[21]   The 10 remanded CITT decisions are Fabric-Covered, Padded, Wooden Clothes Hangers (CIT-4-88), Beer (NQ-91-002) (2 October 1991) Binational Panel, Certain Beer Originating in or Exported from the United States of America by or on Behalf of G. Heileman Brewing Company Inc. and Pabst Brewing Company and The Stroh Brewery Company, Their Successors and Assigns, for Use or Consumption in the Province of British Columbia (Injury) (26 August 1992), CDA‑91‑1904‑02; Machine Tufted Carpets (NQ-91-006) (21 April 1992), (NQ-91-006R) (25 May 1993) Binational Panel, Certain Machine Tufted Carpeting Originating In or Exported from the United States of America (Injury) (7 April 1993), (21 January 1994), CDA‑92‑1904‑02; Baler Twine (NQ-93-003) (22 April 1994) Binational Panel, Synthetic Baler Twine With a Knot Strength of 200 lbs or Less, Originating in or Exported from the United States of America (10 April 1995), CDA-94-1904-02; Dry Pasta (NQ-95-003) (13 May 1996); Hot-Rolled Carbon Steel Plate (NQ-97-001) Binational Panel, Certain Hot-rolled Carbon Steel Plate Originating in or Exported from Mexico, the People’s Republic of China, the Republic of South Africa and the Russian Federation (27 October 1997), CDA‑97‑1904‑02; Certain Fasteners (NQ-2004-005); Aluminum Extrusions (NQ-2008-003) (17 March 2009); and Refined Sugar (RR-2009-001) (6 January 2010).

[22]   In the second remand on Machine Tufted Carpets (NQ-91-002-2R), the CITT rescinded its previous findings of past and present injury, but upheld its finding of future injury. In the remand on Hot-Rolled Carbon Steel Plate (NQ-97-001R), the CITT issued a separate finding for Mexico. In the remand on Aluminium Extrusions (NQ-2008-003R), the CITT granted product exclusions that it had originally denied. In the remand on Refined Sugar (RR-2009-003R), the CITT reinstated its order against the dumping of refined sugar from Denmark, the Federal Republic of Germany, the Netherlands and the United Kingdom, and the subsidizing of refined sugar from the European Union.

[23]   While SIMA does not expressly authorize the CITT to grant exclusions from its injury decisions, it has been recognized by the Federal Court of Appeal and binational panels that this authority is implicit. Hetex Garn A.G. v. The Anti-dumping Tribunal, [1978] 2 FC 507 (FCA); Sacilor Aciéries v. The Anti-dumping Tribunal (1985) 9 CER 210 (CA); Binational Panel, Induction Motors Originating In or Exported From the United States of America (Injury) (11 September 1991), CDA-90-1904-01; Binational Panel, Certain Cold-Rolled Steel Sheet Originating In or Exported From the United States of America (Injury) (13 July 1994), CDA-93-1904-09.

[24]   Pursuant to subsection 40.1(1) of the SIM Regulations, requests to conduct a public interest review must be submitted within 45 days of the CITT’s finding in an injury inquiry.

[25]   If the CITT does not proceed with an interim review, it will generally issue an order with reasons. However, if the request is not timely or is not properly documented, the CITT will only communicate with the requester.

[26]   The CITT only issues a decision for an expiry when it determines that an expiry review is not warranted, either because there were no requests for an expiry or because it was not persuaded by the submissions to conduct an expiry review. Otherwise, it issues a notice of commencement of an expiry review.

[27]   Hot-Rolled Carbon Steel Plate and High-Strength Low-Alloy Plate, Heat-Treated or not, NQ-92-007; Flat Hot-Rolled Carbon Steel Sheet Products, NQ-92-008; Cold-Rolled Steel Sheet, NQ-92-009.

[28]   The number of decisions by case type equals the number of decisions by CITT case descriptors: PIs for preliminary injury inquiries, NQs (and CITs) for injury inquiries, RDs for interim review requests and interim reviews, PBs for public interest requests and public interest inquiries, LEs for expiries, RRs (and Rs) for expiry reviews, REs for advices to the Deputy Minister, and MPs (and IRs) for determinations of who is an importer. One pre-2000 public interest decision was labeled a PI, Beer (PI-91-001). The reference is Grain Corn, MN-89-002. The case counts do not include the 10 remand decisions referred to earlier in the chapter.

[29]   In Grain Corn (PI-2005-001), the CITT determined that the evidence did not disclose a reasonable indication of injury for processed grain corn. In Steel Piling Pipe (PI-2012-002), the CITT terminated proceedings for those goods that were already subject to a finding. The CITT found no reasonable indication of injury in Unitized Wall Modules (PI-2012-004).

[30]   Pulp-dewatering Screw Presses (PI-2000-004).

[31]   The one instance where the CITT found that the evidence did not disclose a reasonable indication of injury, Wooden Clothespins, RE-90-001; concurred with the decision the Deputy Minister had previously taken not to initiate an investigation. In one case, Synthetic Baler Twine, RE-93-002, the CITT found that evidence disclosed a reasonable indication of injury when the Deputy Minister had not. The CITT received a 29th request to seek advice from the Deputy Minister, RE-2000-001, but it’s mandate to do so had expired with the coming into force of the 2000 amendments to SIMA.

[32]   This comprises “mixed” decisions where the CITT found injury or threat of injury for at least one subject country or at least one class of goods.

[33]   The “injury” decisions include decisions prior to 1995 where the CITT found that dumping or subsidizing had caused, was causing and was likely to cause injury (past, present and future injury) and decisions since then where it has found injury. The “threat of injury” decisions include decisions prior to 1995 where the CITT found that the dumping or subsidizing was likely to cause injury (future injury) and decisions since then where it has found threat of injury. The first case where the CITT determined whether there was injury or threat of injury as compared to past, present and future injury was Caps, Lids and Jars (NQ-95-001).

[34]   Cigarette Tubes (NQ-98-002) and Bingo Paper (NQ-2000-003).

[35]   Outdoor Barbeques (NQ-2004-004).

[36]   There has only been one finding of material retardation in Canada: Bicycle Tires and Tubes (15 August 1972), ADT-4-72.

[37]   Some early statements of reasons are not clear on whether an exclusion was being requested, and if so, what type of exclusion was being requested, so these data reflect some “judgement calls”.

[38]   The total count of countries named in injury inquiries initiated by the CITT is 276. Dumping and subsidizing is counted only once per country. Multiple classes of goods are also counted only once per country.

[39]   In Carpets (NQ-91-006), the CITT dismissed public interest representations that had been made during the course of the inquiry.

[40]   In Refined Sugar (PB-95-002), the CITT did not recommend a reduction of duties. In Beer (PI-91-001), the CITT was of the opinion that duties in the full amount should not be imposed, but there was no change in duty rates. In Baby Food (PB‑98-001), Contrast Media (PB-2000-001), and Stainless Steel Wire (PB-2004-02), duties were amended.

[41]   Grain Corn (MN-89-002).

[42]   Brass Coated Carbon Steel Wire, RR-89-002; Alloy Tool Steel Bars, Plates and Forgings, RR-89-005; Nickel and Nickel Alloy Seamless Tubing, RR-90-001; Stainless Steel Pipe, RR-90-002; Vehicle Washing, Drying, Waxing, Polishing or Cleaning Equipment, RR-90-004; Brass Replacement Key Blanks, RR-91-005 and Chemically Presensitized Aluminum Offset Printing Plates, RR-91-006. In the case of RR-89-005, the CITT issued a Notice of Expiry (LE-89-007) before proceeding with the expiry review.

[43]   Polyiso Insulation (RR-2001-002), Carpets (RR-2001-003) and Appliances (RR-20004-005).

[44]   Early drafts for the Havana Charter and the 1947 GATT would have prohibited violations of national treatment in government purchasing. See Jeffrey S. Thomas and Michael A. Meyer, The New Rules of Global Trade: A Guide to the World Trade Organization (Toronto: Carswell, 1997) at 300, and John H. Jackson, The World Trading System: Law and Policy of International Economic Relations, 2nd ed. (Cambridge: MIT Press, 1997) at 225.

[45]   Article III(8) of the 1947 GATT. See also Jackson, The World Trading System at 224-25.

[46]   Thomas and Meyer, The New Rules of Global Trade at 225, and Jackson, The World Trading System at 225. See also World Trade Organization, “General Overview of WTO Work on Government Procurement”, http://www.wto.org/ english/tratop_e/gproc_e/overview_e.htm, consulted on July 3, 2014.

[47]   This is the multilateral WTO agreement that replaced the Government Procurement Code in 1996, and has itself recently been superseded by the revised Agreement on Government Procurement, entered into force for Canada on April 6, 2014.

[48]   The Agreement on Internal Trade (AIT) is a trade agreement signed by the executives of Canadian federal, provincial and territorial governments seeking to reduce barriers to trade within Canada that came into force in 1995.

[49]   These include the Free Trade Agreement between the Government of Canada and the Government of the Republic of Chile, 1997 Can. T.S. No. 50 (entered into force 5 July 1997). Chapter Kbis, entitled “Government Procurement”, came into effect on September 5, 2008; Free Trade Agreement between Canada and the Republic of Peru, online: Department of Foreign Affairs and International Trade, http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-... (entered into force 1 August 2009); Free Trade Agreement between Canada and the Republic of Colombia, online: Department of Foreign Affairs and International Trade, http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-... (entered into force 15 August 2011); Free Trade Agreement between Canada and the Republic of Panama, online: Department of Foreign Affairs and International Trade, http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-... panama-toc-panama-tdm.aspx (entered into force 1 April 2013).

[50]   S.C. 1993, c. 44.

[51]   The Canadian International Trade Tribunal Act, R.S.C., 1985, c. 47 (4th Supp.) and the Canadian International Trade Tribunal Procurement Inquiry Regulations, SOR/93-602.

[52]   Northrop Grumman Overseas Services Corp. v. Canada (Attorney General), 2009 SCC 50, [2009] 3 SCR 309.

[53]   Canadian International Trade Tribunal Procurement Inquiry Regulations, section 12.

[54]   Sixty-nine of these related to a single standing offer.

[55]   Cognos Inc. (29 November 2002), PR-2002-017; FreeBalance Inc. (24 January 2012), PR-2011-041.

[56]   Alcohol Countermeasure Systems Corp. (24 April 2014), PR-2013-041; Halkin Tool Ltd. (3 May 2010), PR-2009-066; Laerdal Medical Canada Ltd. (17 May 2004), PR-2003-078.

[57]   Brookfield LePage Johnson Controls Facility Management Services (6 September 2000), PR-2000-008 and PR‑2000‑021; Siemens Westinghouse Inc. (19 March 2001), PR-2000-039, upheld in Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government Services), 2001 FCA 241, [2002] 1 FC 292.

[58]   Samson & Associates (19 October 2012), PR-2012-012; The Access Information Agency (16 March 2007), PR-2006-031.

[59]   Cougar Aviation Ltd. v. Canada (Minister of Public Works and Government Services), [2000] FCJ No. 1946; Bureau d’études stratégiques et techniques en économique (5 September 2007), PR-2007-010 and PR-2007-012.

[60]   Ecosfera (11 July 2007), PR-2007-004.

[61]   The Supreme Court of Canada, starting with its decision in Ron Engineering v. Ontario, [1981] 1 SCR 111, which introduced the foundational paradigm in the Canadian common law of procurement constituted around a “Contract A” and a “Contract B”, recognized that a “Contract A” is formed when a potential supplier submits a bid in response to the solicitation documents (the offer), thus giving rise to binding obligations for both parties. Through the years, the courts have also come to recognize a number of implied duties proper to “Contract A”, such as that bids must be evaluated fairly (Martel Building Ltd. v. Canada, [2000] 2 SCR 860). Many of the requirements under “Contract A” have an equivalent in the rules established by the trade agreements.

[62]   This average is for inquiries conducted on a 90-day schedule. The average for inquiries conducted on a 135-day schedule is 126 days. The average time to conduct inquiries on both schedules has decreased in recent years.

[63]   See section 30.15 of the CITT Act.

[64]   At common law, the chance of non-monetary relief is limited, as specific performance claims are normally only granted where a unique interest is proven that could not be compensated through an award for damages. See Anne C. McNeely, Canadian Law of Competitive Bidding and Procurement (Aurora: Canada Law Book, 2010) at 407.

[65]   Canada (Attorney General) v. Northrop Grumman Overseas Services Corporation, 2007 FCA 336; Canada (Attorney General) v. Symtron Systems Inc., [1999] 2 FC 514.

[66]   Mil Systems v. Canada (Minister of Public Works), 2000 CanLII 14860 (FCA); Telus Integrated Communications v. Canada (Attorney General), 2000 CanLII 16221 (FC).

[67]   A comparison of the differing processes for challenging procurements conducted by federal and provincial level governments under the AIT offers a good illustration. While the federal government has designated the CITT as the independent review body that entertains private complaints brought directly by the aggrieved suppliers, the provincial governments have opted for a solution that largely favours government-to-government dispute resolution. It is instructive to note that, as of May 2014, the latter system appears to have processed only five procurement-related challenges since 1995. While there may be other reasons for this situation, part of the explanation likely lies in the fact that the CITT represents a more effective model for enforcing the AIT. Indeed, in discussing the expected coming into force of the Comprehensive Economic and Trade Agreement in the near future, which would impose important new obligations in relation to government procurement at the provincial level, commentators have recently suggested that establishing a review body similar to the CITT for procurements conducted in other jurisdictions would be a good way to ensure that potential non‑compliance issues are reviewed quickly and efficiently, and to allow for a development of a body of jurisprudence pertaining to procurement rules under the relevant trade agreements similar to that which has emerged from the CITT. See Denis Lemieux and Pierre Giroux, “L’intérêt du droit des marchés publics européen pour l’évolution du régime québécois des contrats publics”, http://blogueexpertise.com/2014/01/27/linteret-du-droit-des-marches-publ... du-regime-quebecois-des-contrats-publics/, consulted on July 8, 2014. The authors envisage a similar role, notably, for the Tribunal administratif du Québec.

[68]   LANsPLUS INC. (18 January 1990), D89PRF6608-021-0006.

[69]   The Customs Act is as old as Confederation. J.-G. Castel, A.L.C. de Mestral and W.C. Graham, The Canadian Law and Practice of International Trade With Particular Emphasis on Export and Import of Goods and Services (Toronto: Emond Montgomery Publications, 1991) at 312-13.

[70]   Peter W. Hogg, Constitutional Law of Canada, 5th ed. (Toronto: Carswell, 2007), Vol. 1 at 6-1.

[71]   Ibid. at 6-2 – 6-4; Castel et al., The Canadian Law and Practice of International Trade at 312-13.

[72] Hogg, Constitutional Law of Canada, Vol. 1 at 6-3.

[73]   John H. Jackson, The World Trading System: Law and Policy of International Economic Relations, 2nd ed. (Cambridge: MIT Press, 1997) at 13.

[74]   Ibid. at 141.

[75]   WTO, “Tariffs: more bindings and closer to zero”, http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm2_e.htm, consulted on July 11, 2014.

[76]   In 2010, none of the CITT’s appeals decisions related to the Excise Tax Act. The reason for the decline in Excise Tax Act appeals is discussed later in this chapter.

[77]   World Customs Organization, “What is the Harmonized System (HS)?”, http://www.wcoomd.org/en/topics/nomenclature/ overview/what-is-the-harmonized-system.aspx.

[78]   The goods under consideration are wide-ranging and often follow technological developments. For example, in Oceaneering, AP-2012-017, the question was whether a remotely operated underwater vehicle used to carry out work on sub-sea structures is a vessel or a machine with individual functions. In Wolseley, AP-2012-066, the CITT had to determine whether a sink was entitled to duty-free treatment on account of being specifically designed to assist persons with disabilities.

[79]   Officially called the WTO Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994.

[80]   See Dan Cannistra and Miguel A. Rodriguez Cuadros, “The Dutiability of Royalty Payments: The Impact of the World Customs Organization’s Advisory Opinion 4.15”, Global Trade and Customs Journal, Vol. 9, Issue 2 at 61.

[81]   Jockey Canada Company, AP-2011-008.

[82]   Darrel Pearson and Laura Murray, “The Landmark Decision in Jockey Canada Company v. President of Canada Border Services Agency: Lessons for Compliance with Canadian Customs Valuation Requirements”, Global Trade and Customs Journal, Vol. 8, Issue 7-8.

[83]   See, for example, the CITT’s decisions in Provincial WallCoverings Limited, AP-93-150; MRP Retail Inc., AP-2006-005; Duhamel & Dewar Inc., AP-2005-046; Jan K. Overweel Limited, AP-2011-075.

[84]   See, for example, Canada (Border Services Agency) v. C.B. Powell Limited, 2010 FCA 61 (CanLII); Frito-Lay Canada, Inc., AP-2010-002.

[85]   Grodan, AP-2011-031.

[86]   Fritz Marketing Inc. v. Canada, 2009 FCA 62, [2009] 4 FCR 314 at paras. 36-39; Fritz Marketing Inc., AP-2006-023.

[87]   C.B. Powell Limited v. Canada (Border Services Agency), 2011 FCA 137 (CanLII) at para. 29.

[88]   The Supreme Court of Canada has commented Parliament’s intention in setting up the hierarchy of the customs review and appeals process: “Parliament’s intention seems clearly to be to hurry the process along . . . .” See Little Sisters Book and Art Emporium v. Canada (Minister of Justice), 2000 SCC 69, [2000] 2 SCR 1120 at paras. 91-94 (discussing a former version of the Customs Act).

[89]   CITT’s Annual Report for the fiscal year ending March 31, 1996, at 25, http://publications.gc.ca/collections/collection_ 2012/tcce-citt/F40-1996-eng.pdf.

[90]   Softwood Lumber Products Export Charge Act, 2006 (S.C. 2006, c. 13).

[91]   The Tariff Board: A Study Prepared for the Law Reform Commission of Canada (Ottawa: Law Reform Commission of Canada, 1981) at 52.

[92]Ibid. at 63.

[93]   An Inquiry into the Importation of Boneless Beef, Originating in Countries Other than the United States, GC-93-001 at 5.

[94]   Two of the parties to the inquiry applied to the Federal Court of Appeal for an order quashing the report and prohibiting the CITT from conducting any further safeguard inquiries into the importation of boneless beef that excluded an assessment of imports from the United States. In dismissing the application, the Federal Court of Appeal found that the CITT did not err in excluding U.S. imports being under a mandatory duty to conduct its inquiry in accordance with the terms of reference established by the Governor in Council.

[95]   See the Surtax on Boneless Beef, PC 1993-2184, C Gaz 1993.II. 4396.

[96]   Order in Council P.C. 2002-448, March 21, 2002.

[97]   Even before the CITT had issued its final determination in July 2002, proceedings had begun to challenge the U.S. safeguard measures at the WTO. In July 2003 the WTO Panel concluded that U.S. measures had been inconsistent with various WTO requirements (Panel Report, United States – Definitive Safeguard Measures on Imports of Certain Steel Products, DS248 at 249, 251, 252, 253, 254, 258, 259 (2 May 2003)) The United States appealed the decision and on November 10, 2003, the Appellate Body generally upheld the Panel’s decision. (Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Certain Steel Products, DS248 at 249, 251, 252, 253, 254, 258, 259 (10 December 2003)).

[98]   On October 6, 2003, the Government announced that it had “decided against implementing surtaxes on imports of certain steel products…”. At the same time it announced the formation of a North American Steel Trade Committee that would “bring together officials of the three North American Free Trade Agreement governments and representatives of North American steel manufacturers, [would] address critical trade issues such as subsidies and other distortions in global steel markets. Press release, Department of Finance, October 6, 2003, “Canada Joins North American Steel Trade Committee”.

[99]   Bicycles and Frames, NQ-92-002; reviewed and continued with amendments in RR-97-003 and RR-2002-001. Previously, duties had been in place from 1977 to 1984 (ADT-11-77, Review No. ADT-11B-77).

[100]  On May 29, 2006, the Government announced that it would not “impose special trade restrictions” Press release, Department of Finance, May 29, 2006. “Government of Canada Reject Trade Restrictions on Bicycles and Barbeques).

[101]  Ibid.

[102]  There was a fifth reference pursuant to section 19, MN-89-002, Grain Corn Public Interest. This reference is discussed in Chapter 4 of this report in the section dealing with public interest inquiries.

[103]  The Import Control List is the list of goods established under the Export and Import Permits Act (EIPA) which cannot be imported into Canada except under the authority of, and in accordance with, an import permit issued under the EIPA.

[104]  In 1989, the Government had established 11 task forces composed of farmers, processors, suppliers, consumers and Government to consult and develop policy options. By 1991, the task forces had presented their reports to federal and provincial ministers. Agriculture: The Policy Agenda, prepared by Sonya Dakers, Frédéric Forge, Science and Technology Division, Revised 14 September 2000. In March 1991, the National Poultry Task Force released a report entitled “Towards the Development of a Second Generation of Poultry Supply Management Systems”. The report concluded that “the import quota system is not sensitive to the needs of the market” and recommended that a comprehensive and thorough review of the current import quota system be undertaken by a commission of inquiry or the CITT.

[105]  See endnote 95.

[106]  The CITT rejected six options because they were either inconsistent with Canada’s domestic or international rights and obligations or were otherwise not viable options: reclassification of dairy blends by the government; imposition of an excise tax; bilateral negotiations with New Zealand (the largest source of butter oil blends); removal of anti-dumping and countervailing duties on refined sugar; increase in milk prices; and change in labelling requirements.

[107]  A special class pricing program excised in Canada for dairy ingredients. Milk used for different purposes was included in different classes, which were priced differently. Final report, Dairy Blends, at 12, 67.

[108]  The Government had tried to control the volume of imports through the negotiation of voluntary export restraints; in 1986 there were agreements in place with 25 countries. The Multi-fibre Arrangement governed the world trade in textiles and garments from 1974 through 2004. Textile and clothing quotas were negotiated bilaterally.

[109]  CUSTA came into force on January 1, 1989.

[110]  The new duty remission programs were introduced for denim fabrics imported by both textile and clothing manufacturers; certain greige fabrics, for finishing and use in clothing; outerwear imported by clothing manufacturers; outerwear fabrics imported by textile manufacturers; and girls’ and ladies’ blouses and shirts imported by clothing manufacturers.

[111]  See Bill C-122, An Act to Amend the Customs Tariff (Textile Tariff Reduction), Royal Assent June 23, 1993.

[112]  The majority of requests for which the CITT did not recommend tariff relief relate to a single 1996 case dealing with 28 requests for tariff relief on circular knit fabrics. Requests No. TR-95-015 to TR-95-032, TR-95-038 to TR-95-042, TR‑95-046, TR-95-048 to TR-95-050 and TR-95-055, BC Garment Factory Ltd. and Global Garment Factory.

[113]  (1) On January 1, 1994, NAFTA came into effect, with new rules of origin for textiles and apparel. Tariffs between Canada and the United States had already been reduced by 60 percent according to the CUSTA schedule, with other tariffs among the NAFTA partners scheduled to be eliminated by January 1, 2003. (2) Beginning on January 1, 1995, as part of the conclusion of the Uruguay Round, tariffs were scheduled to be reduced significantly in annual increments over a 10‑year period The net impact was to reduce tariffs on fabrics from a maximum of 20 percent to a maximum of 14 percent and tariffs on apparel from 25 percent to 18 percent. Also, on January 1, 1995, the Multi-fibre Agreement was replaced by the WTO Agreement on Textiles and Clothing, which set out a transitional process for the removal of quotas. Quotas were to be eliminated in three stages over a 10-year period. (3) In 1997, the Government extended the six duty remission programs until the end of 2004. (4) In 2001, China joined the WTO and acquired the same rights as all the other WTO members, including the benefits of quota elimination. (5) On January 1, 2003, the Government removed all tariffs and quotas on textiles and apparel imports from 48 least-developed countries.

[114]  At the same time, the government announced that it had set aside an exactly equal amount of funds ($26.7 million) for a new support program targeted at the textile industry.

[115]  On October 28, 2005, the Government announced the “elimination of import tariffs on a number of fibres, yarns and apparel fabrics not produced domestically [reflecting] the recommendations made in a Canadian International Trade Tribunal (CITT) report issued on June 30, 2005”. Press Release, Department of Finance, October 28, 2005, “Government of Canada Continues to Improve the Competitiveness of the Textile and Apparel Industries”.

[116]  On December 8, 2006, the Government announced that it was “eeliminating the tariffs on a variety of apparel fabrics of particular interest to Canadian apparel producers where it has been determined these fabrics are not available from Canadian production”. Press Release, Department of Finance, December 8, 2006, “Canada's New Government Provides Savings Of Up To $4.5 Million In Tariffs To Canadian Apparel Manufacturers”.