WORLD TRADE  
ORGANIZATION  G/ADP/Q1/CAN/15 
G/SCM/Q1/CAN/15 
G/SG/Q1/CAN/1 
21 April 2008 
 (08-1835) 
Committee on Anti-Dumping Practices 
Committee on Subsidies and Countervailing Measures Committee on Safeguards Original:   English/ 
 French 
 
  
NOTIFICATION OF LAWS AND REGULATIONS UNDER  
ARTICLES 18.5, 32.6 AND 12.6 OF THE AGREEMENTS 
 
Replies to Questions Posed by CHINA
1  
Regarding the Notifications of CANADA2 
  
 The following communication, dated 14 April 2008,  is being circulated at the request of the 
Delegation of Canada.   
 
_______________ 
 
 
Question 1 
 
 Section 20 of Canada Special Import Measures Act (SIMA ), concerning the so-called 
"non-market economy " issue:   
 (1) The law defines that when domestic pri ces of the products under investigation are 
substantially determined by the government of prescribed country and there is sufficient reason 
to believe that they are not substantially the same as they would be if they were determined in a 
competitive market, the sector under investigation will be designated as a non-market oriented 
sector and surrogate country methodology could be used to calculate the normal value.  SIMA , 
however, does not clearly define the sector to be  considered, which, in practice, enables the 
investigating authority to go beyond the se ctor concerned, and unreasonably increase the 
burden of proof for respondents.   
 (2) SIMA  does not provide the criteria of "governme nt sufficiently determining the price", 
resulting in the unlimited discretion of the investigating authority.  In practice, the investigating 
authority only needs to find "influence" of gove rnment's policy on domestic price instead of 
"sufficiently determination" to determine whet her the sector is market-oriented or not.   
 
 Could Canada explain how to define a rel evant "sector" to be under investigation and 
how to define "government sufficiently determining the price"?  What are the criteria?    
Reply
 
 
 Under section 20 of Canada's anti-dumping legislation, the Special Import Measures 
Act (SIMA), the normal value of goods from a country prescribed under Section 20 (which includes 
                                                      
1 G/ADP/Q1/CAN/14 – G/SCM/Q1/CAN/14.   
2 G/ADP/N/1/CAN/4 – G/SCM/N/1CAN/4 and G/SG/N/1/CAN/3.   G/ADP/Q1/CAN/15 
G/SCM/Q1/CAN/15 G/SG/Q1/CAN/1 
Page 2 
  
  the People's Republic of China (PRC)) will be estab lished on the basis of prices or costs in the 
domestic market of the prescribed country unless th e investigating authority, the Canada Border 
Services Agency (CBSA), is of the opinion that dom estic prices are substantially determined by the 
government of that country and there is sufficient re ason to believe that they are not substantially the 
same as they would be if they were determined in a competitive market.     Canada notes that the term "sector" and phrase "government sufficiently determining the 
price" do not appear nor are defined in either th e Agreement on the Implementation of Article VI of 
GATT 1994 (the ADA) or SIMA.     Canada's investigating authority, the CBSA,  is responsible for forming an opinion as to 
whether the conditions described under section 20 of SI MA exist.  What is considered a "sector" and 
"prices are substantially determined by the go vernment" will inevitably require an in-depth 
examination and depend on the highly complex facts and circumstances of a particular case.   
  The CBSA has made public the policy regard ing the interpretation and application of 
section 20 of the SIMA and the related Special Import Measures Regulations  (SIM Regulations).  The 
document is entitled "Information on the Application of Section 20 of the Special Import Measures 
Act ("Non-market Economies").  A copy of the policy statement is attached.   
 
Question 2 
 
 SIMA  and Chapter II (subsidy margin) and chap ter III (initiation, investigation and 
determination of subsidy) of Special import Measures Regulations :   
 
(1) The provisions concerning the procedures of application and initiation are not strict, 
which lower the threshold of initiation of investigation.   
 
(2) The provisions concerning whether subsidy ex ists and what the amount and nature of it 
appears to be too simple, which requires less burde n of proof for the applicant and will easily 
lead to the initiation of investigations without sufficient evidence of subsidy, and does not meet 
the requirement of Article 11.2 of  ASCM .   
 
(3) The provisions of injury to domestic industr y caused by subsidy are too general, lacking 
objective criteria.  The determination of causal link between subsidy and injury also lacks objective criteria.   
 
 How could the Canadian investigating author ity fulfil the requirement of initiation of 
ASCM in practice?   
 
Reply
 
 
 The requirements set out in article 11.2 of the ASCM are implemented in Canadian legislation 
through the following provisions:    
- Section 2(1) of the Special Import Measure s Act – definition of  properly documented 
complaint;   
- Section 2(1) of the Special Import Measures Ac t – definition of the amount of subsidy;   
- Section 30.4 of the Special Import Measures Act – concerning the amount of subsidy;   
- Section 31(1) of the Special Import Measur es Act – initiation of investigation;   
- Sections 26 to 36 of the Special Import Measures Regulations – amount of subsidy;    G/ADP/Q1/CAN/15 
 G/SCM/Q1/CAN/15 
 G/SG/Q1/CAN/1 
 Page 3 
  
  - Section 37 of the Special Import Measures Regula tions – properly documented complaints;   
- Section 37.1(1), (2) and (3) of the Special Im port Measures Regulations – factors for injury, 
retardation or threat of injury.   
 
 Because the definition of "properly documented  complaint" under subsection 2(1) of SIMA 
requires that the complaint state in reasonable detail the facts on which the allegation that dumping or subsidizing has caused injury or retardation or is  threatening to cause injury is based, it logically 
follows that the meaning that is to be ascribed  to these terms be determined by reference to 
subsections 37.1(1), (2) and (3) of the Regulations.   
  These provisions ensure that Canada's inv estigating authorities make determinations on 
initiation, subsidization and injury caused through th e effects of subsidies that are fully consistent 
with Canada's obligations under the ASCM.   
 
Question 3 
 
 Section 30.2 of Canadian International Trade Tribunal Act , concerning safeguard 
measures and preliminary measures agains t specific products from China:   
 
(1) The provision regarding the initiation of investigation is too general, which will result in 
a low threshold for initiation.    
(2) It lacks the procedural provisions on cons ultation, hearing and confidentiality, which 
provides the investigating authority with large discretion.    
(3) It authorizes the Cabinet, under the sugg estion of the Minister of Treasure, to take 
preliminary measures.  This provides the Cabinet large discretion.    
(4) It lacks the provisions concerning the obj ective factors to determine whether there is 
market disruption and trade diversion.    
 When will the law includes provisions on procedures on consultation, hearing, etc.?  
How to determine market disruption and trade diversion?   
 
Reply
 
  Regarding procedures on hearings and confidentiality, the  Canadian International Trade 
Tribunal Act and Canadian International Trade Tribunal Rules contain general provisions regarding 
the conduct of public hearings and the treatment of confidential information that apply to all 
proceedings before the Tribunal, including safeguard measures in respect of China.  Sections 43 to 49 
of the CITT Act and Rules 14 to 17 of the CITT Rules address all matters pertaining to the 
submission, treatment and distribution of confidentia l information.  Rule 25 of the CITT Rules allows 
the Tribunal to proceed by way of a hearing.  If required (this being partly dependent on whether a 
party requests an opportunity to be heard), the Tribunal may decide to hold an oral hearing.   
  Regarding consultations, the Government of Canada is able to meet the consultation 
obligations of the WTO Agreement without having pr ovisions in domestic legislation.  In fact, 
Canada has fulfilled this obligation in the past, e.g. consultations held  on 8 November 2005, under 
Article 16.1 of China's Protocol of Accession.   
 G/ADP/Q1/CAN/15 
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Page 4 
  
   Regarding objective factors to determine market  disruption and trade diversion, Sections 5.1 
and 5.2 of the Canadian International Trade  Tribunal Regulations set out such factors, which reflect 
the provisions of the Protocol of Accession of China to the WTO as well as the Working Party Report. 
 
Attached please find the Canadian Interna tional Trade Tribunal Guidelines on Safeguard 
Inquiries involving goods from China.   G/ADP/Q1/CAN/15 
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  INTERIM GUIDELINE 
SAFEGUARD INQUIRIES—IMPORTS FROM CHINA 
 
March 31, 2003 
 INTRODUCTION 
 
This guideline sets out the Tribunal's policies and procedures for safeguard inquiries with 
respect to increased imports from the Pe ople's Republic of China (China).  The Canadian 
International Trade Tribunal Act (CITT Act) was amended to provi de for such inquiries.  The 
amendments to the CITT Act came into effect on September 30, 2002, to implement the safeguard 
provisions of the Protocol on the Accession of the People's Republic of China to the World Trade 
Organization (Protocol), which came into effect on December 11, 2001.  These bilateral safeguard 
provisions will be available until December 11, 2013.   
 
The legislation provides for:   
• Market disruption inquiries 
• Market disruption extension inquiries 
• Trade diversion inquiries 
This guideline provides detailed information on the conduct of market disruption inquiries 
and trade diversion inquiries.  Mo re detailed information on market disruption extension inquiries will 
be issued in a future revised guideline.   
 
This guideline does not supplant the provisions of  the CITT Act or those of any other relevant 
acts, regulations or rules.  This guideline and other important documents, such as the Tribunal's 
Procedural Guidelines for the Designation and Use of Confidential Information in Canadian 
International Trade Tribunal Proceedings , are on the Tribunal's Web site (http://www.citt-tcce.gc.ca).  
This guideline is not a binding statement of how the Tribunal's discretion will be exercised in a 
particular situation.  Rather, it is  meant to provide assistance to inte rested parties when dealing with 
cases before the Tribunal by providing them with a brief description of the basic procedures that the 
Tribunal would ordinarily follow.  The Tribunal may vary these procedures if it considers it more appropriate in the circumstances of an individual case.    
Interested parties are invited to provide co mments on this interim guideline.  Any comments 
should be filed with the Secretary.    
SAFEGUARD
 MEASURES  ON IMPORTS  FROM  CHINA 
 
If the Tribunal determines that increased impor ts of goods from China have caused, or are 
threatening to cause, market disruption to Canadi an producers of like goods, the Government may 
apply import measures to prevent or remedy the market  disruption.  If the Tribunal determines that an 
action under the Protocol, which has affected im ports into a World Trade Organization (WTO) 
country, has caused or is threatening to cause a si gnificant diversion of trade away from the country 
where the action was taken, the Government may a pply safeguard measures sufficient to prevent or 
remedy the trade diversion.  Under amendments to the Customs Tariff  and the Export and Import 
Permits Act , the Government may impose surtaxes, quotas or tariff rate quotas.   G/ADP/Q1/CAN/15 
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  MARKET
 DISRUPTION  INQUIRIES 
 
The purpose of a market disruption inquiry is to determine whether:   
 
• goods originating in China are being im ported 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 (like goods).  
Following receipt of a complaint from domestic producers, the Tribunal will decide normally 
within 21 days whether or not to accept the compla int and to commence an inquiry.  If it commences 
an inquiry, it must submit its report to the Govern ment and the Minister of Finance (the Minister) 
within 90 days.  The Government may direct th e Tribunal to report on other matters, including 
measures to prevent or remedy market disruption, during or after an inquiry.    
The Government may also direct the Tribunal to conduct a market disruption inquiry.  The 
Tribunal must submit its report no later than th e date established by Order in Council.   
 
Tribunal's Determination 
 
"Market disruption" means a rapid increase in th e importation of goods that are like the goods 
produced by a domestic industry, in absolute terms or relative to the production of like goods, so as to 
be a significant cause of material injury, or threat of material injury, to the domestic industry.   
 
"Significant cause" means an important cause th at need not be as important as, or more 
important than, any other cause of the material injury or threat.  
In making its determination, the Tribunal is to examine, among other factors:   
 
(a) the actual volume of the goods imported into Canada from China;   
(b) the effect of the imported goods on prices of like goods in Canada;  and 
(c) the impact of the imported goods on domest ic producers of like goods in Canada.   
Complaints by Domestic Producers 
 
One or more domestic producers may file a wr itten complaint with the Tribunal alleging that 
the goods are being imported from China in such increased quantities or under such conditions as to 
cause or threaten to cause market disruption.  The complaint may be filed by any person or 
association acting on behalf of the domestic producers.   
 
The complaint must:   
 
(a) provide, in detail, the facts and documen tary evidence supporting the allegations;   
(b) provide an estimate of the total percenta ge of Canadian production of the like goods 
produced by the domestic producers by whom or on whose behalf the complaint is 
filed and documentary evidence to substantiate this estimate;   
(c) be accompanied by any other information that may be required by the Canadian 
International Trade Tribunal Rules  (Rules);  and 
(d) make any other representations that the co mplainant deems relevant to the matter.    G/ADP/Q1/CAN/15 
 G/SCM/Q1/CAN/15 
 G/SG/Q1/CAN/1 
 Page 7 
  
  Full information on the filing of the complaint and required information can be found in the 
document entitled Safeguard Inquiry—Market Disruption—Imports from China—Guide for 
Complainant .  This document is available on the Tribunal' s Web site.  The complaint must be signed 
by the complainant and filed with the Secretary.   
 
The Tribunal will decide whether to commence an  inquiry on the basis of the information in 
the complaint as filed and information that the Tribunal may obtain from other sources, normally within 21 days of the date of filing.  If the comp laint does not contain all the required information, as 
set out in the Guide for Complainant, the Tribunal will consider that it is not a properly documented 
complaint and will close the file.    
Decision to Commence an Inquiry
 
 
If the complaint meets the requirements set out above, the Tribunal will commence an 
inquiry, if it is satisfied that:    
(a) the information provided by the complain ant and any other information examined by 
the Tribunal discloses a reasonable indication that the goods originating in China are being imported in such increased quantiti es or under such conditions as to cause or 
threaten to cause market disruption to domestic producers of like goods;   
(b) the complaint is made by or on behalf  of domestic producers that produce a major 
proportion of the domestic production of the like goods;  and 
(c) where the Tribunal completed or terminated  a market disruption inquiry on the same 
goods during the 12-month period preceding the date of receipt of the complaint, the 
circumstances are suffici ently different to warrant a new inquiry.   
 
Decision not to Commence an Inquiry
 
 
If, upon consideration of a properly documented complaint, the Tribunal decides not to 
commence an inquiry, it will:   
 
(a) notify the complainant and each other interest ed party in writing of its decision, of the 
reasons for its refusal to commence an inquiry and whether the reasons for its 
decision are based in whole or in part on information that was obtained from a source other than the complainant;  and 
(b) cause a notice of its decision to be published in the Canada Gazette .   
 
Conduct of an Inquiry 
 
Notice of Commencement of Market Disruption Inquiry
 
 
Where the Tribunal decides to commence an inquiry  into the complaint, it will immediately:   
 
(a) notify the complainant and each other interest ed party in writing of its decision, of the 
reasons for it and of the date on which any hearing in the inquiry shall commence;   
(b) cause a notice of its decision and the date  on which any hearing in the inquiry shall 
commence to be published in the Canada Gazette ;  and G/ADP/Q1/CAN/15 
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Page 8 
  
  (c) send to the Minister a copy of its d ecision, a copy of the complaint, and the 
information accompanying the complaint
1, and a copy of any other relevant 
information examined by the Tribunal in relation to the complaint.   
 
The Tribunal's notice of commencement of inquiry  will include all the relevant information, 
including the name of the complainant, the description of the goods subject to th e inquiry, the date to 
file a written submission and the place and time fixed for the commencement of the hearing.  It will 
be placed on the Tribunal's Web site.   
 
The following table contains the schedule for a market disruption inquiry.   
 
Day Events in a Market Disruption Inquiry 
1 Commencement of Inquiry and Issuance of Tribunal Questionnaires 
10 Receipt of Notices of Participation, No tices of Representation and Declarations 
and Undertakings 
15 Replies to Questionnaires  
45 Distribution of Tribunal's Record (including the complaint) 
50 Opposing Submissions 
55 Response Submissions by those Supporting 
60 Commencement of Public Hearing (if required) 
90 Submission of Tribunal's Report to the Government and the Minister  
 
Tribunal Questionnaires and Pre-hearing Staff Report  
 
Tribunal staff will prepare a pre-hearing sta ff report, based primarily on replies to 
questionnaires.  The questionnaires will be issued to domestic producers and importers at the same 
time as the Tribunal issues its notice of commencem ent of inquiry.  The questionnaires will request 
information relating to the factors that the Tribunal must consider in the inquiry, for example, data on 
imports and import sales, domestic  production and sales, and other indicators of the domestic 
producers' performance.  Replies are to be provided within 15 days.   
Tribunal's Record
 
 
The Tribunal will distribute its administrative r ecord on day 45 of the inquiry.  The record 
includes the complaint, replies to the questionnaires, and the public and protected pre-hearing staff reports.  The record is distributed to counsel and parties.  Counsel filing notices of representation and 
declarations and undertakings receive both the pub lic and confidential information, while persons 
filing notices of participation have access only to the public version of those documents.  The relevant 
forms are available on the Tribunal's Web site.  Persons or governments no t participating in the 
Tribunal's inquiry may have access to the public reco rd of the inquiry by contacting the Secretary 
after the date of distribution.    
                                                     
 
1 The Tribunal will provide the Minister with  the public version of the complaint.    G/ADP/Q1/CAN/15 
 G/SCM/Q1/CAN/15 
 G/SG/Q1/CAN/1 
 Page 9 
  
  Submissions
 
 
The domestic producer's complaint is considered to be the initial submission in the inquiry in 
support of an allegation that increased imports from China are causing or threatening to cause market 
disruption.  Opposing parties may file their submissi ons on day 50 of the inquiry, or 5 days after the 
distribution of the Tribunal's record.  The Tribunal distributes these submissions to parties and counsel.  Parties supporting the complaint then have 5 days, or until day 55 of the inquiry, to file their 
submissions.  Absent exceptional circumstances, th e Tribunal will not accept any further submissions 
following these replies.   
 Public Hearing
 
 
If the Tribunal deems it appropriate, it will hol d a short public hearing.  The hearing will 
normally commence on day 60 of the inquiry.  To comple te the hearing in the short time available, the 
Tribunal may apply time allocations among the parties.  Any procedural matters will be dealt with in 
writing in advance of the hearing.    Tribunal's Report
 
 
The Tribunal will submit its report to the Govern ment, the Minister, the complainant and any 
other person who made representations during the in quiry.  The Tribunal's report will be posted on the 
Tribunal's Web site.  The Tribunal will publish a notice of the report in the Canada Gazette  and 
provide a copy of the notice to all interested parties.    MARKET
 DISRUPTION  EXTENSION  INQUIRIES 
 
No later than 165 days before the expiry of any safeguard measures imposed by the 
Government to remedy or prevent market disruption,  the Tribunal must issue a notice of expiry of the 
measures.  The Tribunal may conduct a market disruption extension inquiry following a request by a domestic producer to determine if the measures conti nue to be necessary to prevent or remedy market 
disruption.  The Tribunal must submit its report to  the Government and the Minister no later than 
45 days before the expiry of the measures.  The Government may direct the Tribunal to report on other matters during an inquiry, including measure s to prevent or remedy market disruption.   
 
TRADE
 DIVERSION  INQUIRIES 
 
The purpose of a trade diversion inquiry is to determine whether:   
 
• any action affecting imports of goods from China into the market of another WTO 
country causes or threatens to cause a signifi cant diversion of trade into the domestic 
market in Canada.   
 
Following receipt of a complaint from domestic producers, the Tribunal will decide normally 
within 21 days whether or not to accept the comp laint and commence an inquiry.  If it commences an 
inquiry, it must submit its report to the Government and the Minister within 70 days.  The Government may direct the Tribunal to report on other matters, including measures to prevent or 
remedy trade diversion, during or after an inquiry.   
 
The Government may also direct the Tribuna l to conduct a trade diversion inquiry.  The 
Tribunal must submit its report no later than th e date established by Order in Council.   G/ADP/Q1/CAN/15 
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  Tribunal's Determination 
 
"Action" means:   
 
• any trade-related action, including a provisional action, taken by:   
 
- China to prevent or remedy market di sruption in a WTO Member other than 
Canada, or 
- a WTO Member, other than Canada, to limit imports to prevent or remedy 
market disruption in that country caused or threatened by the importation of 
goods originating in China;  or 
 
• any combination of such actions.   
 
In making its determination, the Tribunal is to examine, among other factors:   
 
(a) the actual or imminent increase in Cana dian market share of goods originating in 
China;   
(b) the nature or extent of the action;   (c) the actual or imminent increase in the im portation of goods originating in China that 
is due to the action;   
(d) the conditions of supply and demand in the domestic market for the like goods;  and 
(e) the volume of goods originating in China th at are imported into Canada and into any 
WTO Member taking an action.   
 
Complaints by Domestic Producers 
 
One or more domestic producers may file a wr itten complaint with the Tribunal alleging that 
an "action" causes or threatens to cause a significan t diversion of trade into the domestic market in 
Canada.  The complaint may be filed by any person  or association acting on behalf of the domestic 
producers.   
The complaint must:   
 
(a) provide, in detail, the facts and documen tary evidence supporting the allegations;   
(b) provide an estimate of the total percenta ge of Canadian production of the like goods 
produced by the domestic producers by whom or on whose behalf the complaint is filed and documentary evidence to substantiate this estimate;   
(c) be accompanied by any other information that may be required by the Rules;  and 
(d) make any other representations that the co mplainant deems relevant to the matter.   
 
Full information on the filing of the complaint and required information can be found in the 
document entitled Safeguard Inquiry—Trade Diversion—Imports from China—Guide for 
Complainant .  This document is available on the Tribunal' s Web site.  The complaint must be signed 
by the complainant and filed with the Secretary.    
The Tribunal will decide whether to commence an  inquiry on the basis of the information in 
the complaint as filed and information that the Tribunal may obtain from other sources, normally within 21 days of the date of filing. If the comp laint does not contain all the required information, as 
set out in the Guide for Complainant, the Tribunal will consider that it is not a properly documented 
complaint and will close the file.    G/ADP/Q1/CAN/15 
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 G/SG/Q1/CAN/1 
 Page 11 
  
  Decision to Commence an Inquiry
 
 
If the complaint meets the requirements set out above, the Tribunal will commence an 
inquiry, if it is satisfied that:   
 
(a) the information provided by the complain ant and any other information examined by 
the Tribunal discloses a reasonable indication that an action causes or threatens to cause a significant diversion of trade into the domestic market in Canada;  and 
(b) the complaint is made by or on behalf  of domestic producers that produce a major 
proportion of the domestic production of the like goods.   
 
Decision not to Commence an Inquiry
 
 
If, upon consideration of a properly documented complaint, the Tribunal decides not to 
commence an inquiry into the complaint, it will:    
(a) notify the complainant and each other interest ed party in writing of its decision, of the 
reasons for its refusal to commence an inquiry and whether the reasons for its 
decision are based in whole or in part on information that was obtained from a source 
other than the complainant;  and 
(b) cause a notice of its decision to be published in the Canada Gazette . 
 
Conduct of an Inquiry 
 
Notice of Commencement of a Trade Diversion Inquiry
 
 
Where the Tribunal decides to commence an inquiry  into the complaint, it will immediately:   
 
(a) notify the complainant and each other interest ed party in writing of its decision, of the 
reasons for it and of the date on which any hearing in the inquiry shall commence;   
(b) cause a notice of its decision and the date  on which any hearing in the inquiry shall 
commence to be published in the Canada Gazette ;  and 
(c) send to the Minister a copy of its d ecision, a copy of the complaint, and the 
information accompanying the complaint2, and a copy of any other relevant 
information examined by the Tribunal in relation to the complaint.   
 
The Tribunal's notice of inquiry will include all the relevant information, including the name 
of the complainant, the description of the goods s ubject to the inquiry, the date to file a written 
submission and the place and time fixed for the commencement of the hearing.  It will be placed on the Tribunal's Web site.   
                                                     
 
2 The Tribunal will provide the Minister with  the public version of the complaint.   G/ADP/Q1/CAN/15 
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Page 12 
  
  The following table contains the schedul e for a trade diversion inquiry.   
 
Day Events in a Trade Diversion Inquiry 
1 Commencement of Inquiry and Issuance of Tribunal Questionnaires 
10 Receipt of Notices of Participation, Notices of Representation and Declarations 
and Undertakings 
10 Replies to Questionnaires  
25 Distribution of Tribunal's Record (including the complaint) 
30 Opposing Submissions 
35 Response Submissions by those Supporting 
40 Commencement of Public Hearing (if required) 
70 Submission of Tribunal's Report to the Government and the Minister  
 
Tribunal Questionnaires and Pre-hearing Staff Report  
 
Tribunal staff will prepare a pre-hearing sta ff report, based primarily on replies to 
questionnaires.  The questionnaires will be issued to domestic producers and importers at the same 
time as the Tribunal issues its notice of commencem ent of inquiry.  The questionnaires will request 
information relating to the factors that the Tribunal must consider in the inquiry and, in particular, 
data on imports from China and on supply and demand for the goods in Canada.  Replies are to be 
provided within 10 days.   
 
Tribunal's Record  
 
The Tribunal will distribute its administrative r ecord on day 25 of the inquiry.  The record 
includes the complaint, replies to the questionnaires, and the public and protected pre-hearing staff 
reports.  The record is distributed to counsel and parties.  Counsel filing notices of representation and 
declarations and undertakings receive both the pub lic and confidential information, while persons 
filing notices of participation have access only to the public version of those documents.  The relevant 
forms are available on the Tribunal's Web site.  Persons or governments no t participating in the 
Tribunal's inquiry may have access to the public reco rd of the inquiry by contacting the Secretary 
after the date of distribution.   
 
Submissions  
 
The domestic producer's complaint is considered to be the initial submission in the inquiry in 
support of an allegation that an action into th e market of another WTO country is causing or 
threatening to cause trade diversion.  Opposing par ties may file their submissions on day 30 of the 
inquiry, or 5 days after the distribution of the Tribunal's record.  The Tribunal distributes these submissions to parties and counsel.  Parties supportin g the complaint then have 5 days, or until day 35 
of the inquiry, to file their submissions.  Absen t exceptional circumstances, the Tribunal will not 
accept any further submissions following these replies.   
 
Public Hearing
 
 
If the Tribunal deems it appropriate, it will hol d a short public hearing.  The hearing will 
normally commence on day 40 of the inquiry.  To comple te the hearing in the short time available, the 
Tribunal may apply time allocations among the parties.  Any procedural matters will be dealt with in 
writing in advance of the hearing.    G/ADP/Q1/CAN/15 
 G/SCM/Q1/CAN/15 
 G/SG/Q1/CAN/1 
 Page 13 
  
  Tribunal's Report
 
 
The Tribunal will submit its report to the Govern ment, the Minister, the complainant and any 
other persons who made representations during the inquiry.  The Tribunal's report will be posted on 
the Tribunal's Web site.  The Tribunal w ill publish a notice of the report in the Canada Gazette  and 
provide a copy of the notice to all interested parties.    
CONTACTING THE TRIBUNAL 
 
 Please address all inquiries to:    
The Secretary Canadian International Trade Tribunal 
333 Laurier Avenue West 
15th Floor Ottawa, Ontario K1A 0G7 
 Telephone: (613) 993-3595 
Fax:  (613) 990-2439 
E-mail:  secretary@citt-tcce.gc.ca 
Web site: http://www.citt-tcce.gc.ca 
   G/ADP/Q1/CAN/15 
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Page 14 
  
  Information on the Application of Section 20 of the Special  
Import Measures Act  ("Non-market Economies") 
 
August 2007  
 
This document is also available in French. / 
Ce document est également disponible en français. 
 
INTRODUCTION  
 
This brochure summarizes the Canada Border Se rvices Agency's (CBSA) policy regarding the 
interpretation and application of section 20 of the Special Import Measures Act  (SIMA) and the 
related Special Import Measures Regulations  (SIM Regulations).   
 
The current policy regarding section 20 of SIMA came into effect in 2003.  The policy 
recognizes the substantial progress that many countri es that formerly had non-market economies have 
made towards market liberalization.   
 
The provisions of section 20 of SIMA and the related SIM Regulations can be found at 
Appendix I.   
 
Section 20 of SIMA only applies to anti-dumpi ng investigations.  It has no bearing on the 
conduct of a countervailing duty investigation.   
 
PURPOSE OF SECTION 20 
 
Generally, in an anti-dumping investigation, the margin of dumping of the goods under 
investigation is determined by reference to norma l values that are based on the selling price of like 
goods in the country of export or on the basis of the full costs of the goods exported to Canada.  
However, section 20 of SIMA requires that the de termination of dumping in respect of the sector 
within the country under investigation that has certain "non-market" characteristics be determined 
using special rules.  This most typically involv es the determination of normal values using prices and 
costs of like goods in a third country (i.e. a "surrogate" country).   
 
CONDITIONS FOR THE USE OF SECTION 20 
 
The normal value of imported goods will be determined pursuant to section 20 of SIMA 
where the goods sold to an importer in Canada and shipped directly to Canada from a country where, 
in the opinion of the President of the CBSA:   
 
• The government of that country has a monopoly or  substantial monopoly of its export trade; 
and  
• Domestic prices are substantially determined by the government of that country and there is 
sufficient reason to believe that they are not s ubstantially the same as they would be if they 
were determined in a competitive market.   
 
Both of these conditions must exist in the sect or under investigation before the provisions of 
section 20 are applied in the determination of normal values.   
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  However, in respect of prescribed countries,  only the second condition is applicable.  The 
People's Republic of China and the Socialist Repub lic of Vietnam are the only countries that have 
been prescribed for purposes of this provisi on (see SIM Regulations 17.1 and 17.2).   
 
The provisions of section 20 are applied on a sectoral basis rather than on the country as a 
whole.  The sector to be reviewed will normally  only include the industry producing and exporting the 
goods under investigation.   
 
The fact that the President has found that the conditions of section 20 exist in a particular 
sector in a country will normally not have any re levance on a similar determination being made in 
respect of another sector that is under investigation in that same country.   
 
It is important to note that SIMA contains  no provisions for making an overall, blanket 
designation that a country or a sector within a country is either "market" or "non-market" in its 
economic organization.  Section 20 is applicable in any anti-dumping investigation involving any 
country where the conditions set forth in section 20 exist.   
 
KEY PRINCIPLE OF THE SECTION 20 POLICY 
 
The key principle of the section 20 policy can be stated as follows:   
 
• Regardless of the country, sector or product un der investigation, anti-dumping investigations 
and re-investigations (administrative reviews) are to be initiated on the presumption that 
section 20 of the Act is not applicable to the sector under investigation unless there is 
evidence that suggests otherwise.    
 
Whether or not there is information that suggests that the conditions described in section 20 exist in 
the sector is dependent on the particular case.   
 
INITIATION OF NEW INVESTIGATIONS 
 
If a complainant alleges that goods are exporte d to Canada from a country in which the 
conditions described under section 20 apply, the compla inant must provide information to support the 
allegation.   
 
The President will not initiate a section 20 inquiry if there is insufficient evidence that the 
conditions of section 20 may exist in the sector under investigation.   
 
If the complainant cannot provide sufficient ev idence regarding the conditions of section 20, 
the evidence of dumping provided in the written comp laint must be based on prices or costs of the 
goods in the country of export rather than prices and costs in a third country.   
 
INITIATIONS OF RE-INVESTIGATIONS (ADMINISTRATIVE REVIEWS) 
 
Re-investigations are also initiated under the presumption that section 20 is not applicable to 
the sector under investigation. Interested parti es should provide facts and supporting information to 
the CBSA if they believe that the conditions of sec tion 20 exist in the sector under investigation.   G/ADP/Q1/CAN/15 
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  SUFFICIENCY OF EVIDENCE FOR PURPOSES OF INITIATING A SECTION 20 
INQUIRY 
 
The CBSA will initiate a section 20 inquiry if it has sufficient evidence indicating that the 
conditions of section 20 may exist in the sector under investigation.  A section 20 inquiry will usually 
be conducted in parallel with an i nvestigation or a re-investigation.  A "section 20 inquiry" is not a 
term found in SIMA but is simply used here to re fer to a process whereby information is collected 
from various sources in order to decide whether section 20 applies in a particular case.   
 
When evaluating information which suggests that section 20 conditions may exist in a 
particular sector in new investigations and in re-investigations, the CBSA will rely on a two-part 
threshold test to determine whether to proceed with a section 20 inquiry.   
 
The first part of the test requires that the evidence presented in support of an allegation be 
relevant and reasonably reliable.  The second part ask s whether this evidence, if later found to be 
accurate, would be capable of r easonably supporting a positive determin ation as to the applicability of 
section 20.   
 
It should be noted that a section 20 inquiry may be undertaken in the later stages of an 
investigation or re-investigation should rele vant information become available.   
 
FORMING THE OPINION UNDER SECTION 20 
 
Once a section 20 inquiry is undertaken, the President may, having regard to the information 
collected, form an opinion that the conditions d escribed under section 20 exist in the sector under 
investigation.  The President may form this opinion based on information obtained from the 
government of the country of export, foreign prod ucers and exporters, Canadian producers, and any 
other source of relevant information.  
 
In forming this opinion, the President will cons ider whether the conditions of section 20 exist 
in the sector under investigation because of direct or  indirect actions on the part of government and 
whether these actions result from the application of laws or practice.   
 
PROCEDURES IF SECTION 20 CONDITIONS ARE FOUND 
 
If the President forms the opinion that the c onditions of section 20 exist in the sector under 
investigation, the normal value of the goods under investigation normally will be determined in 
accordance with one of the methods provided for in  section 20 of the Act.  These methods include:   
 
• the price of like goods sold by producers in any country designated for that purpose by the 
President, adjusted for price comparability;   
• the full cost of producing and selling like goods plus a reasonable amount for profit as 
determined in a designated country;   
• the selling price in Canada of like goods impor ted from a designated country, adjusted for 
price comparability.   
 
An opinion that the conditions of section 20 exist in the sector under investigation may be reviewed at 
any time. Such a review would normally take place in the context of a re-investigation (administrative 
review).    G/ADP/Q1/CAN/15 
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  FURTHER INFORMATION  
 
Further information concerning section 20 of SIMA can be obtained from the Director, 
Operational Policy Division, at the address below:   
 
Canada Border Services Agency 
Anti-dumping and Countervailing Directorate 
11th Floor 
100 Metcalfe Street 
Ottawa, Ontario. 
K1A 0L8 
Telecopier:  (613) 954-2510 
 
Anti-dumping and Countervailing Directorate Website:  
http://www.cbsa-asfc.gc.ca/sima-lmsi/  
 
June 2004 
 
 
 
APPENDIX I  
Legislative References  
 
Section 20 - Special Import Measures Act  
 
20. (1) Where goods sold to an importer in Canada are shipped directly to Canada 
 
(a) from a prescribed country where, in the opinion of the Commissioner, domestic prices are 
substantially determined by the gove rnment of that country and there is sufficient reason to believe 
that they are not substantially the same as they wo uld be if they were determined in a competitive 
market, or 
 
(b) from any other country where, in the opinion of the Commissioner, 
 
(i) the government of that country has a monopoly or  substantial monopoly of its export trade, and 
 
(ii) domestic prices are substantially determined by the government of that country and there is 
sufficient reason to believe that they are not subs tantially the same as they would be if they were 
determined in a competitive market, 
 
the normal value of the goods is 
 
(c) where like goods are sold by producers in any country other than Canada designated by the 
Commissioner for use in that country, 
 
(i) the price of the like goods at the time of the sale  of the goods to the importer in Canada, adjusted in 
the prescribed manner and circumstances to reflect th e differences in terms and conditions of sale, in 
taxation and other differences relating to price co mparability between the goods sold to the importer 
in Canada and the like goods sold by producers in the country other than Canada designated by the 
Commissioner for use in that country, or G/ADP/Q1/CAN/15 
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  (ii) the aggregate of 
 
(A) the cost of production of the like goods, 
 
(B) a reasonable amount for administrati ve, selling and all other costs, and 
 
(C) a reasonable amount for profits, 
 
whichever of the price or aggregate the Commissi oner designates for any case or class of cases;  or 
 
(d) where, in the opinion of the Commissioner, suffici ent information has not been furnished or is not 
available to enable the normal value of the goods  to be determined as provided in paragraph ( c), the 
price of like goods 
 
(i) produced in any country designated by the Comm issioner, other than Canada or the country from 
which the goods were shipped directly to Canada, and 
(ii) imported into Canada and sold by the importe r thereof in the condition in which they were 
imported to a person with whom, at the time of  the sale, the importer was not associated, 
 
such price to be adjusted in the prescribed manner and circumstances to reflect the differences in 
terms and conditions of sale, in taxation and other differences relating to price comparability between 
the goods sold to the importer and the imported like goods in relation to their sale by the importer 
thereof.   
 
(2) The Commissioner may not designate a country under paragraph (1)( d) if 
 
(a) the like goods of that country are also the subject of investigation under this Act, unless the 
Commissioner is of the opinion that those goods are not dumped goods;  or 
 
(b) in the opinion of the Commissioner, the price of  the like goods imported into Canada has been 
significantly influenced by a country described in paragraphs (1)( a) and ( b).   
 
R.S., 1985, c. S-15, s. 20; 1994, c. 47, s. 156; 1999, c. 12, s. 7, c. 17, ss. 183, 184; 2002, c. 19, 
s. 16. 
 
Special Import Measures Regulations 
 
State Trading Countries 
 
14. For the purpose of determining the normal va lue of any goods pursuant to paragraph 20(1)( c) of 
the Act, sections 4 to 6, 9 and 11 shall be read with the substitution of 
 
a. the expression "country of production" for the expression "country of export", wherever that 
expression occurs therein; and  
b. the word "producer" for the word "exporter", wherever that word occurs therein.   
 
SOR/2000-138, s. 3.   
 
15. For the purpose of determining the normal va lue of any goods pursuant to paragraph 20(1)( d) of 
the Act, sections 4 to 6 shall be read with the substitution of 
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  a. the expression "vendor in Canada of the im ported like goods" for the word "exporter", 
wherever that word occurs therein; and  
b. the word "Canada" for the expression "the country of export", wherever that expression 
occurs therein.   
 
SOR/2000-138, s. 12. 
 
16. For the purpose of determining the normal va lue of any goods pursuant to paragraph 20(1)( d) of 
the Act, the price of like goods sold in Canada sh all be adjusted by deducting therefrom an amount 
equal to the sum of  
 
a. all costs, including any duties and taxes, that result from the importation of the like goods or 
their sale by the importer to the purchaser in Canada;   
b. the amount of profit, determined in accordance with section 17, made by the importer of the 
like goods on their sale;   
c. all costs, charges and expenses incurred by the importer or exporter of the like goods, or any 
other person, in preparing the like goods for sh ipment to Canada that are additional to the 
costs, charges and expenses generally incu rred on sales of the like goods for domestic 
consumption in the country of export;  and  
d. all other costs, charges and expenses incurred by the exporter or importer of the like goods, or 
any other person, that result from the exportation of the like goods or arise from their 
shipment to Canada.   
 
SOR/2000-138, s. 12. 
 
17. For the purposes of paragraph 16( b), the amount of profit made by an importer on the sale of like 
goods in Canada is  
 
a. the amount of profit that generally results from sales of like goods by vendors in Canada who 
are at the same or substantially the same tr ade level as the importer of the like goods to 
purchasers in Canada who are not associated with those vendors;   
b. if the amount described in paragraph ( a) cannot be determined, the amount of profit that 
generally results from sales of goods of the same general category as the like goods by 
vendors in Canada, who are at the same or subs tantially the same trade level as the importer 
of the like goods to purchasers in Canada who are not associated with those vendors;  or  
c. where the amounts described in paragraphs ( a) and ( b) cannot be determined, the amount of 
profit that generally results from sales of goods th at are of the group or range of goods that is 
next largest to the category referred to in paragraph ( b), by vendors in Canada who are at the 
same or substantially the same trade level as the importer, to purchasers in Canada who are 
not associated with those vendors.   
 
SOR/96-255, ss. 6, 25. 
 
17.1 (1) For the purposes of subsection 20(1) of th e Act, the customs territory of the People's 
Republic of China is a prescribed country.  
 
(2) This section ceases to have effect on December 11, 2016. 
 
SOR/2002-349, s. 1. G/ADP/Q1/CAN/15 
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  17.2 (1) For the purposes of subsection 20(1) of the Act, the customs territory of the Socialist 
Republic of Vietnam is a prescribed country. 
 
(2) This section ceases to have effect on December 31, 2018. 
   
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