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Explainer: U.S. export duty petitions affecting Canada

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MONTREAL — The U.S. Department of Commerce is adding nearly 80 per cent in preliminary anti-dumping duties on exports of Bombardier’s CSeries commercial jet. The Montreal-based aircraft manufacturer’s (TSX:BBD.B) 100- to 150-seat plane faces a total tariff of almost 300 per cent when combined with last week’s almost 220 per cent countervailing duties.

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Here’s what you need to know about U.S. export duties:

Q: What is the difference between countervailing and anti-dumping duties?

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A: Countervailing duties are applied when the Department of Commerce determines that foreign governments unfairly subsidized the named producers and exporters. Anti-dumping duties are added if the department subsequently determines that the exported product is being sold in the United States at a price that is below that producer’s sales price in its home market or at a price that is lower than the cost of production.

Q: When are duties paid?

A: Duties are paid when the product is exported into the United States. For Bombardier CSeries aircraft, that would only come when the first deliveries to Delta Air Lines are made next year. Canadian softwood lumber producers have paid hundreds of millions of dollars in export deposits related to preliminary duty orders.

Q: What is the process to have duties applied?

A: The U.S. International Trade Commission responds to a petition by making a preliminary decision that there is a reasonable indication that the American industry is materially injured by the imported products. Following investigations, the Department of Commerce announces preliminary countervailing and anti-dumping duties. Several months later they make final determinations about the duties. The USITC then decides if the industry was harmed. If so, the Secretary of Commerce issues duty orders which are enforced by the U.S. Customs Service.

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Q: Can the decisions be appealed?

A: U.S. International Trade Commission decisions can be appealed to the U.S. Court of International Trade in New York City. In cases involving Canada and/or Mexico, the appeal can be made to a binational panel under the North American Free Trade Agreement. The case can also be taken to the World Trade Organization.

Q: Where do cases against Canada stand?

Bombardier CSeries: The Department of Commerce on Friday announced preliminary anti-dumping duties, following the imposition of nearly 220 per cent preliminary countervailing duties. Final determination on both are expected Dec. 18. The final USITC determination is scheduled for Feb. 1, with an order being issued Feb. 8.

Softwood Lumber: Canadian softwood lumber producers were assessed 6.87 per cent in preliminary anti-dumping tariffs and a 19.88 rate for preliminary countervailing duties, which ended in early September. Five producers were singled out for their own duties. The Department of Commerce is slated to announce final duty determinations on Nov. 14. The USITC is scheduled to release its final determination on Dec. 21.

Uncoated groundwood paper: A Washington State paper company launched a petition in August against uncoated groundwood paper from Canada. The USITC issued its decision Sept. 22 that there was a reasonable indication of material injury from the imported products. A preliminary CVD decision is expected around Nov. 2, followed by a preliminary anti-dumping decision around Jan. 16.

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