Annual report March 31, 2017 - Chapter VI

The Government of Canada may refer economic or tariff matters to the Tribunal for inquiry and request that it recommendations in a public report. The Tribunal’s transparent inquiry process and expertise in trade and economics positions it well to provide sound and impartial advice and to take into account all the interests at stake. The specifics of how the Tribunal conducts such an inquiry depend on the nature of the issues and the scope and/or time frame of the Government’s request.

Economic and Tariff Inquiries Completed in the Fiscal Year

The Tribunal completed one economic and tariff inquiry in the fiscal year—the first in several years. There were no inquiries in progress at the end of the fiscal year.

GC-2016-001—Gypsum Board

This inquiry was referred to the Tribunal on October 13, 2016, by His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 18 of the CITT Act. The purpose of the inquiry was to determine whether the imposition of provisional duties or duties applicable to gypsum board imported from the United States for markets in Manitoba, British Columbia, Saskatchewan, Alberta, Yukon and the Northwest Territories was contrary to Canada’s economic, trade or commercial interests, and specifically whether such an imposition had or would have had the effect of substantially reducing competition in those markets or causing significant harm to consumers of those goods or to businesses who use them. As such, the Tribunal’s inquiry centred on activity relating to this specific market.

Information was sought via questionnaires, requests for information and a public hearing in conjunction with Inquiry No. NQ-2016-002. The Tribunal sent specific requests for information to multiple parties ranging from purchasers to local governments. These requests for information were tailored to obtain a more direct view of the market than would be typically seen in a final injury inquiry or an expiry review.

The Tribunal’s hearing was held in Edmonton, Alberta, from November 28 to December 8, 2016, where participants testified to the injury to the domestic gypsum board industry and to other matters relevant to Inquiry No. NQ-2016-002 and to Reference No. GC-2016-001. Thirty-seven witnesses appeared before the Tribunal. There were 26 participants to the case. Parties who were participants in Inquiry No. NQ-2016-002 were automatically considered to be parties to Reference No. GC-2016-001. Twenty-five parties were participants to both inquiries. One hundred and eight other parties filed notices of participation with the Tribunal in Reference No. GC-2016-001. The official record of this matter was combined with that of Inquiry No. NQ-2016-002.

After reviewing the documentary and oral evidence presented to the Tribunal, it came to the conclusion that the imposition of provisional duties or duties applicable to gypsum board imported from the United States for markets in Manitoba, British Columbia, Saskatchewan, Alberta, Yukon and the Northwest Territories, in its full amount, was contrary to Canada’s economic, trade or commercial interests, and specifically that such an imposition had or would substantially reduce competition in those markets, or cause significant harm to consumers of those goods or to businesses that use them.

The Tribunal made the following recommendations:

1. That provisional duties collected be retained by the federal government and used to refund, either wholly or in part, the higher costs for imported and domestically produced gypsum board purchased since the imposition of the provisional duties on September 6, 2016, up to but not including January 4, 2017;
2. That all of the final duties imposed on cooperating exporters be remitted to them through a simplified process until the earlier of a) six months, from the date of this report, i.e. from January 4, 2017, up to and including July 4, 2017, or b) the date the subject imports reach a maximum volume of 229 million square feet, allocated on the basis of historical export shares; this temporary elimination of the duties would give time for the downstream market participants (especially drywall installers) to perform existing fixed-price contracts and, going forward, to give them an opportunity to reflect the duties in new contracts;
3. That final duties for any cooperating exporters on any export transaction involving subject gypsum board to Canada should not exceed 43 percent of the export price at any time on and after the earlier of July 5, 2017, or the date the subject imports reach a maximum volume of 229 million square feet, a reduced rate which should allow either U.S. exports or domestic shipments from Eastern Canada to continue to supply the Western Canadian market;
4. That, considering the limited amount of data available to the Tribunal at the time of the inquiry in GC—2016-001, the reduced final duty be reviewed at the appropriate time; and
5. That, if the Government considers the measures mentioned above as insufficiently alleviating the hardship suffered by certain residents of the Regional Municipality of Wood Buffalo (the Fort McMurray region) as a result of the May 2016 wildfires, and considering the consent by the domestic industry to a special remission in connection with the Fort McMurray region, the Government grant a special remission in an amount equivalent to the dumping duties collected on gypsum board specifically used for the rebuilding of the Fort McMurray region, on terms and conditions that ensure that the end users or consumers benefiting from the measure do not pay more than the amount that they would have paid for that gypsum board in the absence of duties. This special remission should cover subject imported gypsum board which is specifically linked to the reconstruction effort, and is purchased and installed between September 6, 2016, and December 31, 2019.

The Minister of Finance responded to these recommendations in February 2017.