Thank you, Mr. Chairman.
It is an honour for the members of the tribunal here today to appear before the committee. We will do our best to answer your questions. Mr. John Greig and I are here today with Mr. Reagan Walker, our Legal Department Director, and Ms. Hélène Nadeau, the tribunal's secretary.
You invited us to appear before the committee to explain the Canadian International Trade Tribunal's role in determining whether dumped or subsidized imports, in the context of dumping or countervail cases, or increase imports, in the context of safeguard cases, are causing or threatening to cause injury to the domestic industry. You asked for a summary of our recent caseload and the findings made in our inquiries.
We have filed with the committee our annual report for 2005-2006. The report presents a summary of our work during the last fiscal year. It also provides an overview of our mandate. I will be pleased to answer questions you might have on this report.
I will however give you a quick overview of our mandate in the area of dumping and subsidizing injury inquiries and safeguard inquiries as you have requested. As the chairman said, we have also filed with the committee guidelines that we will follow during this appearance, as there are some areas that we cannot discuss.
As you know, the Tribunal is a quasi-judicial institution that operates at arm's length from the government. The Tribunal publishes all of its decisions and recommendations supported by reasons. It does not comment on its decisions nor does it discuss the deliberative process underlying the decision-making process. We can provide information concerning our mandate and administration.
With this in mind, let me briefly explain the tribunal's mandate in the area of dumping, subsidizing and safeguard inquiries. The Tribunal's injury findings with respect to dumping or subsidizing are made in accordance with the provisions of the Special Import Measures Act and Special Import Measures Regulations. These largely implement the requirements of the WTO Antidumping Agreement and the Agreement on Subsidies and Countervailing Measures. The Special Import Measures Regulations, in accordance with the WTO agreements, prescribe the factors that the tribunal must consider when it is conducting an injury inquiry.
A dumping and subsidizing complaint is first filed with the Canada Border Services Agency and the tribunal begins its injury inquiry when the CBSA issues a preliminary determination of dumping of subsidizing. We have provided you with a diagram explaining the inquiry process.
When conducting an inquiry, the Tribunal follows a very rigorous process. The Tribunal ensures that potential participants that could be affected by a finding are properly notified. In addition, the Tribunal requests information and data from interested parties, receives representations and hold public hearings. Tribunal staff obtain information through questionnaires sent to manufacturers, importers, and purchasers of the subject goods. This information forms the basis of a staff report, which sets out the information in the context of the factors to be examined by the Tribunal in arriving at his findings. This report becomes part of the case record and is mandate available to the parties.
The legislation requires that the Tribunal's determination of injury be based on positive evidence and involve an objective examination of the volume of the imports, the effect on domestic prices, and the consequent impact on the state of domestic producers. The agreements specify that a causal relationship between the imports and the injury or retardation must be demonstrated and that any injury resulting from factors unrelated to dumping or subsidizing be set aside.
At the public hearing, the domestic industry must provide evidence that the dumping or subsidizing of goods has caused injury or retardation or is threatening to cause injury. Importers or exporters, and users challenge the domestic industry's case. After cross-examination, each side has an opportunity to respond to the other's case and to summarize its own. The Tribunal issues its findings within 120 days from the date of the preliminary determination. A positive finding of injury or retardation or of threat of injury is the legal authority for the CBSA to impose antidumping or countervailing duties immediately and for a five-year period.
I would now like to turn to the global safeguard inquiries.
There's a fundamental difference between safeguard measures and anti-dumping or accountability measures. Safeguard measures provide a remedy to rapid increases in imports that cause injury to domestic producers. The measures help injured domestic producers adjust to increased import competition.
In comparison, anti-dumping and countervailing duties provide a remedy to imports found to be underpriced that cause injury to domestic producers. The measures are designed to eliminate the advantages conferred by this underpricing.
I will first address global safeguards, and then we can turn to the China safeguards.
A global safeguard inquiry can be initiated either by the government or directly through a complaint by domestic producers. The purpose of the safeguard inquiry is to determine whether goods are being imported in such increased quantities and under such conditions as to cause serious injury or threat of serious injury to Canadian producers of like or directly competitive products.
In making its determination, the tribunal is to examine, among other factors, the actual volume of the goods imported into Canada from all countries, the effect of the imported goods on prices of like goods in Canada, and the impact of the imported goods on domestic production of like goods in Canada.
The inquiry process followed is very similar to a dumping or subsidy inquiry. Data is collected, a staff report is prepared, parties file their submissions, and a public hearing is held. The tribunal reports to the government and to the Minister of Finance when it completes a safeguard inquiry.
If the tribunal finds serious injury or threat thereof, it can recommend a safeguard measure only if it has been ordered to do so on referral by the Governor in Council. Without such an order, the tribunal has no statutory authority to address the remedy issue. The decision on whether to implement the tribunal's remedy recommendations rests entirely with the Governor in Council.
Moving to the China safeguard inquiries, the CITT act was amended in 2002 to implement the safeguard provisions of the protocol of accession of China to the World Trade Organization. China agreed to allow WTO members, during a 12-year period, to take bilateral safeguard actions against its imports if they were found to be causing market disruption or trade diversion. These bilateral safeguard provisions expire on December 11, 2013.
The most obvious difference from global safeguard inquiries is that the goods concerned come from just one source, namely China. Another key difference is that the causation and the injury thresholds are lower than in a global safeguard and consist of a significant cause of material injury versus a principal cause of serious injury.
As in global safeguards, the tribunal may commence a market disruption inquiry or trade diversion inquiry following a request by the government or a complaint by domestic producers. Following receipt of a complaint from domestic producers, the tribunal decides whether or not to accept the complaint and to commence an inquiry.
The purpose of a market disruption inquiry is to determine if goods originating in China are being imported into Canada in such increased quantities or under such conditions as to cause or threaten to cause market disruption to domestic producers of like or directly competitive goods.
In making its determination, the tribunal is to examine, among other factors, the actual volume of goods imported into Canada from China, the effect of those imported goods on prices of like goods in Canada, and the impact of the imported goods on domestic production of like goods in Canada. Once again, the tribunal reports to the government and to the Minister of Finance. It can only recommend a safeguard measure following a finding of market disruption, or threat thereof, if it has been ordered to do so by referral by the Governor in Council.
The purpose of trade diversion inquiries is to determine whether any action affecting imports of goods from China into the market of another WTO-member country causes or threatens to cause a significant diversion of trade into the Canadian domestic market. I won't go into detail on that aspect, since there has been no such complaint so far before us. The tribunal is, again, required to make its report to the government and to the Minister of Finance.
Mr. Chairman, that's my opening statement, and I will be pleased to answer the committee's questions.