Law Times

April 1, 2019

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LAW TIMES 4 COVERING ONTARIO'S LEGAL SCENE | APRIL 1, 2019 BY MEAGAN GILLMORE For Law Times THE future of Canadian safe- guards on steel products should become clearer in the next few weeks. The Canadian International Trade Tribunal's report about whether the federal government should impose final safeguards on steel is due to the government on April 3, the tribunal's website says. The government will then decide to accept or reject the tri- bunal's recommendations. "Anyone in the steel industry is waiting with bated breath for [the] April 3 report and to see what the government could do with it by mid-May," says Jona- than O'Hara, co-chairperson of the international trade group at McMillan LLP in Ottawa. Provisional steel safeguards came into effect on Oct. 25, 2018 and last for 200 days, a federal department of finance press re- lease from October says. They apply to imports of heavy plate, concrete reinforcing bar (rebar), energy tubular products, hot- rolled steel, pre-painted steel, stainless steel wire and wire rod. The safeguards were a re- sponse to tariffs the United States imposed on steel prod- ucts, including steel from Can- ada, last year. These prompted the Canadian government to impose surtaxes on a variety of products from the United States, including steel. The safeguards "offer a bal- anced response that will support Canadian producers and manu- facturers, while the Govern- ment continues to work toward the complete repeal of all U.S. tariffs of Canadian steel and aluminum," the government's October press release says. The safeguards limit how much of the steel products can come into Canada. An increase of steel products from other countries coming into Canada could harm steel workers and producers, the government's release says. The safeguard measures are supposed to "protect Canadian producers and protect the Cana- dian market from being affected or injured by this overf low of ex- cess capacity kicking around the world that had been generated by the closure of the U.S. mar- ket," says O'Hara. "The imports of steel prod- ucts into Canada play a vital role in our economy. It's a natural part of trade for Canada," says Daniel Hohnstein, a partner at Tereposky & DeRose LLP in Ot- tawa. "Canada's got a lot of man- ufacturers and construction and infrastructure companies that rely on imported steel products. "Imports are a good thing and safeguards, like the mea- sures that Canada initiated in October, are intended to be ap- plied when there's too much of a good thing coming into Can- ada," he says. Steel producers allege that in- creased steel coming into Cana- da was costing jobs, O'Hara says. "The safeguard measures gave the domestic producers some breathing room and al- lowed them to compete on a level playing field, that's what the domestic producers say," O'Hara says. The tribunal could recom- mend the government impose final safegaurds. These could be in place for three years, says Riyaz Dattu, a partner in inter- national trade and investment law at Osler LLP in Toronto. But the final decision still rests with the government, and the govern- ment has never imposed final safeguard measures, he says. "This is an extraordinary remedy with very high thresh- olds under the World Trade Organization rules for impos- ing safeguards. They are, in fact, emergency measures," says Dattu. Safeguard measures are unique because they are applied to imports that are fairly traded. "There's no allegation that products are unfairly traded," says Dattu. "Industry is simply asking for protection against fairly traded imports, and that's why the threshold is high." The World Trade Organiza- tion says safeguards can only be imposed if it can be proven that the sharp increase in a product's availability have resulted in seri- ous injury to domestic produc- ers. The tribunal will have to look at each of the products provisional safegaurds apply to, and then determine if final safeguards are necessary, says Hohnstein. Introducing safeguards would impact the entire Cana- dian economy, not just steel pro- ducers, he says. "Imposing them will cause significant collateral damage across Canada's economy in or- der to offer protection to what is a narrow group of steel produc- ers. In addition, it will also entail political costs, both here at home in Canada and also internation- ally. This is not a decision that can be taken lightly and it's very much a political decision," he says. The government's decision needs to come before the provi- sional safeguards expire. If the government chooses to impose safeguards, Dattu says, they could be challenged at the World Trade Organization and could damage Canada's inter- national reputation. They could "taint our reputation as a coun- try that relies on the application of trade rules on a fair basis," he says. It's unlikely, then, that the governent will choose that op- tion, says Dattu. The government could decide to impose tariff rate quotas, says Hohnstein. This means a certain amount of of a product could come into Canada with little or no tariffs. The government may allow businesses to apply for exemptions, says Hohnstein, which means some businesses will only see increased admin- istrative costs. But the threat of increased costs can be enough to disrupt some supply chains, he says. "No matter what, the TRQs are going to be disruptive for Canadian businesses" if they're implemented, says Hohnstein. Businesses need to tell the government how safeguards will impact them, he says. "There needs to be a full- court press addressing how [businesses] will be affected by definitive safeguard measures," he says. It's difficult to develop busi- ness plans right now because of the uncertainty, he says. "Everyone's in a holding pat- tern right now to see what the tribunal recommends and keep- ing in mind the government of Canada is not compelled to do what the tribunal recommends," says Hohnstein. The U.S. tariffs on Canadian steel products still remain, and no one's sure how long they will last. Removing them won't cre- ate stability in the global steel market, says O'Hara. "That will still not deal with the issue of the United States having tariff barriers up against everyone else, even if Canada gets an exemption," he says. "Be- cause the United States having the tariffs barriers up against ev- eryone else is what is causing the global over-capacity, and coun- tries like Turkey or Korea would then turn to Canada to sell their excess capacity. Canada is still going to need some protection in place to deal with divergent steel from Korea or from Turkey, even if Canada and the United States sort out their bi-lateral re- lationship." LT Jonathan O'Hara says steel producers allege that increased steel coming into Canada from other countries was costing jobs for Canadian workers. Report from trade tribunal to debut in early April Lawyers expect recommendations about steel safeguards NEWS Celebrating Change Agents in Law BRONZE SPONSOR MEDIA PARTNER THE E B O L G AND MAIL The 2019 Lexpert Zenith Awards celebrate change agents in the legal profession. You can support these achievements while networking with winners and leading membersof the legal profession at an elegant Cocktail Reception and Gala Dinner in Toronto. Date: June 18, 2019 5:30 p.m. Cocktail Reception 7:00 p.m. Gala Dinner and Awards Presentation Location: Arcadian Court, Toronto For sponsorship opportunites, contact us at 416-649-8841 or Keynote Speaker Orlando Da Silva, LSM Senior Crown Counsel and Serious Fraud Office at Ministry of the Attorney General Mental Health Advocate Untitled-2 1 2019-03-27 10:41 AM

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