Undertakings are commitments made by exporters, or the foreign government in subsidy cases, to adhere to certain conditions which serve to eliminate the harm to Canadian producers caused by dumping or subsidizing. Undertakings may result in a suspension of the investigation and thus may provide a more expeditious and less costly solution than proceeding with the completion of the investigation and a final Tribunal inquiry. Undertakings may only be accepted after a preliminary determination has been made by the President and generally remain in force for a five year period. No anti-dumping duties or countervailing duties are applicable while valid undertakings are in effect.

 

Undertakings are voluntary and the CBSA does not initiate proposals or solicit undertakings. However, the undertaking provisions of SIMA are explained in discussions with complainants and exporters early in the investigation. Upon request, in cases where undertakings offer a viable alternative, disclosure meetings are held subsequent to the preliminary determination for the purpose of assisting the exporter or foreign government in finalizing an undertaking proposal and facilitating an offer for an undertaking. In such cases, the Canadian producers who filed the complaint are consulted to obtain their views on possible undertakings and the price levels they feel are necessary to eliminate injury to production in Canada.

 

Undertaking proposals must be received by the CBSA as soon as possible after the preliminary determination to permit proper analysis and consultations with the complainants. The President may refuse to consider any undertaking submitted later than 60 days after the preliminary determination. Interested parties, including the Commissioner of Competition, will have nine days from the day the CBSA receives a proposal to provide comments on it.

 

During undertaking discussions, the investigation continues and all parties are expected to respond to any CBSA requests for information to establish normal values, export prices and the amounts of subsidy. As there is no guarantee that an undertaking will be accepted, the final investigation must proceed in order that the President is in a position to make a final decision in the investigation and specify the final margins of dumping or amounts of subsidy within 90 days of the preliminary determination as required by the Act. This time limit cannot be extended. In addition, the CBSA must collect adequate data to assess whether circumstances justify termination of the investigation rather than issuance of a final determination or acceptance of an undertaking.

 

Confidential information contained in undertakings will only be disclosed where counsel for a party to the undertaking proceedings signs a strict undertaking of confidentiality, and where disclosure is in accordance with the CBSA's policy on the disclosure of information. See Part 17 for more information.

 

(A) Types of undertakings

The definition of "undertaking" in SIMA provides for two possible types of undertakings in dumping investigations and several possible types in subsidy investigations:

 

• an undertaking by an exporter to increase the selling price of goods to importers in Canada by an amount sufficient to eliminate the injury to Canadian production;
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• an undertaking by an exporter to increase the selling price of goods to importers in Canada by an amount sufficient to eliminate the dumping;
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• an undertaking by an exporter to increase the selling price of goods to importers in Canada in order to offset the subsidy - it should be noted that prior to accepting such an undertaking from an exporter, the consent of the foreign government must be obtained;
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• an undertaking by a foreign government to take action to eliminate injury caused by a subsidy - the undertaking might:
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• eliminate the subsidy on the goods exported to Canada;
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• limit the amount of subsidy on the exported goods;
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• limit the quantity of the goods shipped to Canada that are subsidized; or
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• otherwise eliminate the injurious effects of the subsidizing on Canadian production.

 

(B) Requirements for acceptance of undertakings

The President may accept an undertaking only when the undertaking eliminates the margin of dumping or the amount of subsidy or, alternatively, removes the injury caused to Canadian industry. An undertaking which causes the price of goods sold to importers in Canada to increase by more than what is required to offset the estimated dumping or subsidizing cannot be accepted.

 

Undertakings must be made individually by exporters or governments and cannot be made by an association or a group of exporters acting in concert. While discussions with associations, agents, counsel, or affected importers may take place, the formal written offer of the undertaking must be made directly by individual exporters or governments and is accepted by the President only on that basis.

 

Undertakings are accepted only if they are given by exporters or governments of foreign countries representing all or substantially all of the trade in the product under investigation. The CBSA interprets this to mean that exporters or foreign governments offering undertakings should normally account for at least 85% of the volume of dumped or subsidized imports into Canada. However, representation of 85% of the volume of dumped or subsidized goods does not necessarily mean that the undertaking will be accepted. For example, if an exporter not included in the 85% has a potential to ship large quantities of dumped goods to Canada, the President may conclude that a sufficient percentage of the trade is not covered by the undertaking. Undertakings cannot be accepted and the investigation suspended for some exporters while the investigation continues for others.

 

The terms of the undertaking must be sufficiently precise and well defined to permit effective monitoring. There must also be an agreement by the exporter or the foreign government to provide evidence considered necessary by the CBSA to substantiate, on an ongoing basis, compliance with the undertaking.

 

The legislation stipulates that the President shall not accept an undertaking which is impracticable to administer. Factors which are considered in assessing the practicability of undertakings include:

 

• - the number of exporters or countries involved in the investigation;
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• - the complexity of the goods involved;
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• - the frequency of price changes for the goods; and
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• - the terms in the proposed undertaking.
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(C) Rejection of an undertaking proposal

Where a proposed undertaking is not acceptable, the exporter or foreign government is advised that the proposal has been considered but has not been accepted, together with reasons for not accepting the proposal. If the reason for rejection is the impracticability of administration, and should time permit further discussions, suggestions may be made regarding the means of overcoming this problem.

 

(D) Acceptance of undertakings

An undertaking proposal which satisfies all of the requirements of the legislation may be formally accepted by the President. Written notice of this decision is sent to all parties involved in the investigation. Except for the situation described below, acceptance of an undertaking causes an investigation to be suspended in respect of all exporters, regardless of whether they are covered by an undertaking. In situations where the investigation was suspended due to the acceptance of undertakings, additional undertakings may be accepted after the suspension of the investigation from exporters or foreign governments who had not previously provided any.

 

(E) Completion of investigation following acceptance of an undertaking

An exporter or the foreign government may, at the same time as it submits the undertaking proposal, request that the President complete the investigation and the Tribunal complete its inquiry. In these circumstances, and following the acceptance of the undertaking and the resulting suspension of collection of provisional duties, the President continues the investigation to a final decision while the undertaking remains in place. If the President subsequently terminates the investigation with respect to the goods of an exporter or if the Tribunal concludes that there is no injury caused by the dumping or subsidizing, the President terminates the undertaking(s), as appropriate. Should an injury finding result, the undertakings that were not terminated by the President continue in effect. However, under these circumstances, no additional undertakings can be accepted after the investigation is concluded.

 

(F) Termination of an undertaking

SIMA requires that the President terminate an undertaking upon receipt of a request to do so by a directly concerned person within 30 days of the date of acceptance of the undertaking and prior to the Tribunal's finding. Such persons include the exporter, importer and complainant, and the foreign government in a subsidy case.

 

SIMA also provides that at any time after an undertaking is accepted, the President may terminate the undertaking for the following reasons:

 

• - new or additional information becomes available which indicates that the undertaking should not be continued. For example, it may be determined that it is not possible to effectively monitor the undertaking to ensure its terms are being respected;
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• - a change of circumstances from those prevailing at the time the undertaking was accepted. For example, the investigation is still suspended and a new exporter commences selling significant quantities of dumped goods to Canada who is not willing to provide an undertaking agreement that will eliminate the margin of dumping or the injury;
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• - there is a violation of the terms of the undertaking, whether intentional or not. Minor non-compliance with the terms by one exporter with a small volume of sales which do not affect the undertakings provided by other exporters does not usually result in a termination of the undertakings. However, where there is a serious violation which has a significant impact on the viability of the undertaking, the President terminates the undertaking.
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The termination of any undertaking necessitates the termination of all undertakings which may have been accepted with respect to that investigation. Where an undertaking is terminated, all involved parties are informed in writing and the CBSA's investigation and the Tribunal inquiry are resumed, if they have not already been completed as a result of a request described in section (E) above.

 

(G) Enforcement of undertakings

After the acceptance of an undertaking, the CBSA, as part of its ongoing enforcement activities and administration of undertakings, conducts periodic re-investigations to verify compliance with the terms of the undertaking.

 

In this respect, exporters may be requested to provide information on domestic and export sales to Canada, including production and pricing data. Importers may also be requested to provide information similar to that requested during the original investigation. As a result of these periodic re-investigations, price levels with respect to sales to Canada are adjusted according to the terms of the undertaking to reflect changes in market conditions, if any. It would be during this phase of the case that undertakings could be accepted from exporters who had not previously provided them if the investigation is still in suspension and the conditions for acceptance of undertakings exist.

 

(H) Reviews of undertakings

Where a Tribunal decision of injury has been issued following the acceptance of an undertaking, the undertaking stays in place until the Tribunal decision is rescinded or is allowed to expire. Where no Tribunal decision has been made following the acceptance of the undertaking, that is, where the investigation was suspended, SIMA requires that undertakings be reviewed at least every five years in order to determine whether they continue to serve the purpose for which they were intended and should therefore be continued. Before the expiration of the initial five year period, the CBSA initiates a review for the purpose of obtaining information to determine if the undertaking is to be renewed. All parties involved in the original investigation are notified in writing of the review.

 

The complainant is requested to provide information similar to that required in support of the injury allegations in the original complaint. Exporters and importers are requested to provide information and documents necessary to determine whether the undertaking should be continued. Details on market shares, trends in the Canadian market and developments in production or product design, where applicable, are included in these requests. In addition, each of these parties, and the government of the country concerned in subsidy cases, has the opportunity to provide any other information or representations they deem appropriate to the question of whether the undertaking should be continued. Following analysis of all information available, the President decides whether to continue the undertaking. Written notice of this decision is sent to all parties involved in the investigation and notice is published in the Canada Gazette.

 

If a decision is made by the CBSA that the undertaking will not be renewed, it expires immediately and all action under SIMA ceases. An undertaking may also be allowed to lapse before the expiry of the five year period if the President or the Tribunal, as appropriate, considers that anti-dumping or countervailing measures are no longer required.

 

On the other hand, the undertaking may be renewed for a further period of not more than five years. The renewal may be for a period of less than five years if the circumstances of the case warrant it. At the end of this period, a new review would be conducted.

 

Source: Canada Border Services Agency