Evidentiary Problems with Threat of Injury Findings in Canadian Trade Remedy Cases

The recent proliferation of affirmative threat of injury findings by the Canadian International Trade Tribunal (CITT) indicates problems with the CITT’s approach to its threat of injury analyses. The CITT is arguably applying a lax evidentiary standard that does not meet the legal requirements prescribed by Canadian legislation and respective WTO agreements covering Canada’s obligations regarding trade remedy measures (Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 and Agreement on Subsidizing and Countervailing Measures, collectively “WTO Agreements”)...

The imposition of anti-dumping or countervailing duties based on a threat of injury is an exceptional remedy because it allows for punitive measures based on injury that has not occurred. However, the CITT’s recent practice has been to make affirmative threat of injury findings as the rule rather than the exception in cases where there is insufficient evidence of past injury. During the last five years, the CITT found that dumping or subsidizing was threatening to cause injury in close to 90 percent (all but one) of the cases where there was insufficient evidence of past injury. This represents a significant departure from the CITT’s practice in the preceding five year period when affirmative threat of injury findings were made in only 33 percent of the cases where there was insufficient evidence of past injury...

The legal standard prescribed by the WTO Agreements and the SIMA is that the threat of injury be: (i) material, (ii) clearly foreseen, and (iii) imminent. This requires, among other things, that a threat finding be based on positive evidence of a change in circumstances that is likely to lead to dumped/subsidized imports causing injury in the imminent future (generally within the next twelve to twenty-four months). The standard sets a relatively high threshold for the establishment of a threat of injury – near certainty of material injury to the domestic industry is required...

The trend of affirmative threat of injury findings by the CITT, when considered with the reasons for those findings, suggests that the CITT is not deciding threat of injury cases with “special care” or applying the legal standard prescribed by the WTO Agreements and the SIMA. That is not to say that the CITT is considering threat of injury less seriously than past injury; rather, it is arguable that the CITT has misinformed itself about the established evidentiary and legal requirements for a threat of injury finding. The CITT’s findings appear to be speculative, and are not based on positive evidence that a change in circumstances is likely to result in injury to Canadian producers that is material and caused by dumped or subsidized imports...

Other governments, international trade lawyers, and academics in the area are aware of the mounting evidentiary and resulting legal problems with the CITT’s approach to its threat of injury analyses. The CITT’s findings are vulnerable to challenge and being determined by the WTO Dispute Settlement Body to violate Canada’s international obligations.

This has been excerpted from 4 January 2016 article written by Jesse Goldman, Partner and Laura Murray, Associate of Bennett Jones LLP and is available in its entirety on the Bennett Jones website.