Order Amending the General Import Permit No. 80 — Carbon Steel: SOR/2024-214

Canada Gazette, Part II, Volume 158, Number 24

Registration
SOR/2024-214 November 1, 2024

EXPORT AND IMPORT PERMITS ACT

Order Amending the General Import Permit No. 80 — Carbon Steel

The Minister of Foreign Affairs makes the annexed Order Amending the General Import Permit No. 80 — Carbon Steel under subsections 8(1.1)footnote a and 10(1)footnote b of the Export and Import Permits Act footnote c.

Ottawa, November 1, 2024

Mélanie Joly
Minister of Foreign Affairs

Order Amending the General Import Permit No. 80 — Carbon Steel

Amendments

1 The General Import Permit No. 80 — Carbon Steel footnote 1 is amended by adding the following before section 1:

Interpretation

0.1 In this Permit, country of melt and pour means the country where the raw steel contained in a carbon steel product is first produced in a liquid state in a steel-making furnace and poured into its first solid state which can take the form of a semi-finished product that is a slab, billet or ingot or of a finished steel mill product.

2 Section 2 of the Permit is replaced by the following:

2 If any goods imported under the authority of this Permit are required to be accounted for under section 32 of the Customs Act, the resident of Canada must, at the time of accounting or interim accounting, whichever comes first, include the statement “GIP80” or “LGI80” in the prescribed form.

3 Section 3 of the Permit is amended by striking out “and” at the end of paragraph (b) and by replacing paragraph (c) with the following:

4 The Permit is amended by adding the following after section 3:

3.1 (1) Section 2 and paragraph 3(d) do not apply to a CSA importer in respect of goods released under paragraph 32(2)(b) of the Customs Act.

(2) In subsection (1), CSA importer has the same meaning as in section 2 of the Accounting for Imported Goods and Payment of Duties Regulations.

3.2 Paragraph 3(d) does not apply if

5 Section 4 of the Permit is amended by striking out “and” at the end of paragraph (i), by adding “and” at the end of paragraph (j) and by adding the following after paragraph (j):

Coming into Force

6 This Order comes into force on November 5, 2024, but if it is registered after that day, it comes into force on the day on which it is registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the orders.)

Issues

The collection and publication of country of melt and pour (COM) data is part of the Government of Canada’s ongoing commitment to increase transparency in the domestic supply chain for steel imports and to provide a more comprehensive picture of the origins of imported steel goods.

The Canada Border Services Agency (CBSA) has the authority to collect COM information but cannot compel importers to provide it. For Global Affairs Canada (GAC) to obtain COM information and monitor it, the terms and conditions of the General Import Permits (GIPs) No. 80 and No. 81 are amended to require importers to provide COM information at the time of importation to the CBSA.

Background

GAC administers the Steel Import Monitoring Program (Program) based on data provided by steel importers. Steel importers are required to cite the relevant GIP as part of their customs declaration to the CBSA. This information is transmitted by the CBSA to GAC and forms the basis for the steel import monitoring reports that are published on the departmental website and updated daily. The reports provide the government and industry with import data to monitor steel import trends.

Import monitoring of steel products began on September 1, 1986, when carbon steel products were added to the Import Control List (ICL) pursuant to subsection 5.1(1) of the Export and Import Permits Act (EIPA) for the purpose of collecting information concerning the importation of such goods. This provision enables the Governor in Council to add a certain type of steel or a certain product made of steel to the ICL where that steel or product is, in the opinion of the Minister of Foreign Affairs, being traded in circumstances of surplus supply and depressed prices and where a significant proportion of world trade in the aforesaid steel or steel products are subject to control through the use of non-tariff measures. Specialty steel products were added to the ICL in 1987. Importers of applicable steel goods were required to obtain a shipment-specific or individual permit to import their goods and the information was used by GAC to monitor imports.

In 2012, the Minister of Foreign Affairs issued the GIPs No. 80 (Carbon Steel) and No. 81 (Specialty Steel Products) for goods described in Items 80 and 81 of the ICL. With the issuance of these GIPs, importers are no longer required to obtain shipment-specific permits for the importation of steel goods and can now simply cite the applicable GIP on their customs declarations.

On August 26, 2019, following the Joint Statement by Canada and the United States on Section 232 Duties on Steel and Aluminum (Joint Statement), and consultations with the steel industries, workers, and other stakeholders from various sectors on ways to improve Canada’s trade remedy and import monitoring regimes, the Government of Canada enhanced Canada’s steel import monitoring capabilities by adding a reporting and record-keeping requirement to the steel GIPs No. 80 and No. 81. This requirement enabled officials at GAC, at their discretion, to ask importers to submit detailed documentation on their imports of steel, to help identify any possible discrepancies in import data and determine the source of inconsistencies in a targeted manner.

Under subsection 5.1(2) of the EIPA, steel goods that were included on the ICL pursuant to subsection 5.1(1) are deemed to be removed from the ICL after three years. Steel goods therefore need to be re-added to the ICL every three years. On November 2, 2020, to continue to implement the steel-related commitment agreed to in the Joint Statement, carbon and specialty steel products were re-added to the ICL pursuant to paragraph 5(1)(e) of the EIPA, which allows the Governor in Council to include goods on the ICL “to implement an intergovernmental arrangement or commitment.” This enabled the indefinite continuation of the Program. In addition, in the Joint Statement, Canada and the United States had agreed that in monitoring for import surges, either country may treat products made with steel that is melted and poured in North America separately from products that are not. The United States began collecting COM information for steel imports on October 13, 2020, and began publishing monthly high-level aggregate COM data on January 19, 2021.

The Government of Canada held public consultations from May 12 to June 26, 2022, on the potential collection and publication of COM information for steel imports. The results indicated majority support for the collection and publication of COM information. Further details are provided in the “Consultation” section.

Following the public consultations, GAC and the CBSA worked together to determine the approach and associated technical details to collect COM information. Consideration was given to using the CBSA Assessment and Revenue Management (CARM) system. However, due to the ongoing and lengthy implementation of the CARM system, the CBSA proposed an alternative option. In January 2024, the CBSA confirmed that it has the authority to implement the collection of COM information for steel imports subject to the Steel Import Monitoring Program and that it could add a field in the Single Window Integrated Import Declaration (SW IID) to collect COM, similar to providing country of origin. The SW IID was the quickest and most efficient means to collect COM information and met the caveat that stakeholders had provided during the public consultations, which was that COM information be collected with minimal administrative and cost burden to importers. As a result, as of February 21, 2024, importers using the SW IID have the option to provide COM information for their steel imports. This is the first phase of the implementation. The second phase is to require steel importers to provide COM information to the CBSA as a term and condition of use of the GIPs No. 80 and No. 81 through regulatory changes.

Objective

The amendments improve steel supply chain transparency by requiring Canadian steel importers to provide information on COM for imported steel, which will improve the data quality of the Steel Import Monitoring Program.

Description

The amendments change various provisions of the General Import Permit No. 80 — Carbon Steel and the General Import Permit No. 81 — Specialty Steel Products to require importers to provide COM information to the CBSA at the time of importation as terms and conditions of using the GIPs.

Regulatory development

Consultation

The Government of Canada held public consultations via a questionnaire on the Consulting with Canadians and GAC websites on the potential collection and publication of COM information for steel imports from May 12 to June 26, 2022. The consultation provided an opportunity for all Canadians and steel industry stakeholders to provide their views regarding the potential introduction of a mechanism to collect and publish COM data.

Input was received from companies, trade unions, industry associations, provincial governments, members of Parliament and international trade partners. The results indicated that industry stakeholders supported the collection of COM information as it would enhance Canada’s steel import monitoring regime by improving transparency on the origins of steel imports.

Most respondents supported the publication of COM information on the GAC steel import monitoring website. Importantly, a majority caveated their support by noting that the collection method must not increase the administrative nor cost burden for importers and that in the publication of COM information, business proprietary and commercially sensitive information must be protected. Most respondents indicated their preference for collecting COM information through CBSA customs declarations, as this approach allows COM information to be collected at the same time as the importation of the goods and thus minimizes the administrative burden for importers. The importance of a transition period to adjust internal processes was also noted by respondents.

The draft orders amending the General Import Permit No. 80 — Carbon Steel and the General Import Permit No. 81 — Specialty Steel Products (GIPs No. 80 and No. 81) were published in the Canada Gazette, Part I, from August 24 to September 23, 2024. The proposed amendments included a requirement for importers of monitored steel goods to provide COM information when submitting their customs declarations to the CBSA in the form and manner determined by the CBSA as a term and condition of using the GIPs. The amendments also provided exemptions for low value shipments; certain finished and semi-finished steel products; and low-risk importers who are participants of the CBSA Customs Self-Assessment (CSA) program.

GAC received input from importers, individuals, and an industry association. Stakeholder feedback on the draft regulatory changes included comments on documentation requirements; the increased administrative burden in the context of potential supply chain disruptions caused by the launch of the CARM system on October 21, 2024; the verification and publication of COM information; and the scope and nature of exemptions to the COM requirements. In response to feedback received, minor amendments to the draft regulations were made to specify that importers must retain documents containing COM information and provide them to GAC upon request.

Modern treaty obligations and Indigenous engagement and consultation

As required by the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, an assessment of modern treaty implications was conducted on the proposal. The assessment did not identify any modern treaty implications or obligations.

Instrument choice

Subsection 8(1.1) of the EIPA provides that the Minister of Foreign Affairs can, by Ministerial Order, issue generally to all residents of Canada a GIP to import any goods specified in the permit, subject to such terms and conditions as are described in the GIP. Further, subsection 10(1) of the EIPA provides the Minister of Foreign Affairs with the authority to amend, by Ministerial Order, any GIP issued under the EIPA, including the GIPs No. 80 and No. 81.

As noted above, in 2012, the Minister issued the GIPs No. 80 and No. 81 pursuant to subsection 8(1.1). These two GIPs form the basis of Canada’s Steel Importing Monitoring Program. The purpose of the present orders is to enhance Canada’s Steel Importing Monitoring Program by requiring importers to provide COM information for imported steel products. Accordingly, an Order amending the existing GIPs No. 80 and No. 81 is the most appropriate instrument to achieve the Government’s objective of enhancing Canada’s Steel Import Monitoring Program and improving supply chain transparency for steel products. No other instruments were considered.

Regulatory analysis

Benefits and costs

The amendments implement the outcomes of public consultations with Canadians and steel importers and industry stakeholders and enhance Canada’s steel import monitoring capabilities without hindering the importation process. Importers continue to cite the applicable GIP on their import declarations and the GIPs continue to be automatically processed. At this time, COM collection can only be done via the SW IID and most steel importers (approximately 93%) already use the SW IID to clear their imported goods. In addition, information related to COM is identified on mill test reports or in supporting import documentation that importers could obtain through the course of regular business or upon request.

The CBSA has absorbed the minimal cost of the technical changes required for the collection of COM information and a COM field has been added to the SW IID. The CBSA has also assumed minor costs related to implementation, communication and outreach activities needed because of the amendments (e.g. updating departmental memoranda and work instruments and updating web content on the CBSA web page). The regulations will not result in increased compliance, enforcement and verification costs to CBSA, as there is no change required due to the amendments. The CBSA will continue to send import information for steel goods, including COM information, to GAC.

For GAC, incremental resource requirements related to the amendments to the steel GIPs and adding the verification of COM information to the existing verification process are estimated to be minimal and to be absorbed within the existing reference levels of the International Trade Branch. GAC publishes steel import monitoring reports and the publication of COM information will be added.

The collection of COM information provides the government and industry with increased information on steel imports and support efforts to demonstrate Canada’s commitment to protect the North American market from unfairly traded steel.

Overall, the amendments are expected to have a net benefit for Canada’s steel import monitoring capabilities while minimizing the cost and administrative burden for steel importers.

Small business lens

Analysis under the small business lens concluded that the regulations impact Canadian small businesses, but it is expected to be minimal and low cost.

Importers are already required to complete customs declarations forms and the requirement is to complete an additional field of data and provide COM information for applicable imported steel products. This is considered an administrative activity under the definition in the Policy on Limiting Regulatory Burden on Business, but bears minimal administrative burden. There may also be a minor initial cost associated with the time required to find the COM information. However, the completion of the COM field should be a simple process as the importer continues to input the country into the field, just as they are already required to do for the Country of Origin field.

Additional flexibility is being provided to importers, especially small businesses, as the requirement to provide COM information does not apply to imports of applicable steel goods that do not exceed $5,000.

One-for-one rule

The one-for-one rule applies since there is an incremental increase in administrative burden on business. The proposal is considered burden “in” under the rule, and no regulatory titles are repealed or introduced.

As per the Red Tape Reduction Regulations, the assessment of administrative impacts was conducted for a period of 10 years commencing from registration. All values listed in this section are presented in 2012 dollars, discounted to 2012 at a rate of 7%. The total annualized cost of the incremental administrative burden is estimated to be approximately $6,619.

The amendments related to the completion of an additional field for COM in SWI IID represent a total annualized cost of $3,456. Up to 290 businesses are estimated to spend 5 minutes to complete the task 579 times per year. The average wage (including overhead) of the responsible individual is estimated to be $32.26.

The amendments related to finding COM information represent a total annualized cost of $3,163. Up to 4,700 businesses are estimated to spend 20 minutes to complete the task once per year. The average wage (including overhead) of the responsible individual is estimated to be $32.26.

The orders amend an existing regulation, which imposes limited administrative and financial burden to steel importers. Steel importers continue to cite the relevant GIP on the CBSA customs declarations and, if applicable, complete an additional field for COM information, which is similar to that of the Country of Origin field. For record keeping, there is no additional administrative burden, as importers are already required to maintain importation records for a period of up to six years after the year of importation. This requirement aligns with the requirements of existing customs law for documents related to the imports.

The goal of the amendments is not to restrict steel imports, but to enhance the steel import monitoring capabilities of GAC and the industry while improving the steel import data that is made available to the public.

Regulatory cooperation and alignment

The amendments are not related to a work plan or commitment under a formal regulatory cooperation forum.

Effects on the environment

In accordance with the Cabinet Directive on Strategic Environmental and Economic Assessment, a preliminary review concluded that the amendments do not result in positive or negative effects on the environment; therefore, a strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified for the amendments.

Implementation, compliance and enforcement, and service standards

In line with the input received from the public consultations, there is a transition period for importers to adjust and adapt their systems to the requirement to provide COM information. The regulatory changes are implemented in phases. The first phase commenced in February 2024 with the optional provision of COM, and the SW IID was updated to include a field for importers to provide COM information on a voluntary basis. The second phase follows regulatory changes and requires the provision of COM information. For the majority of steel importers, the mandatory provision of COM information is a minimal burden as they are familiar with the SW IID and are benefitting from a transition period. Further, importers continue to maintain existing exemptions from the terms and conditions of the GIPs, such as for participants of the CBSA’s Customs Self-Assessment program, and have additional flexibility for certain steel products, and for imports that do not exceed $5,000 in value.

GAC is engaged with stakeholders and responding to inquiries on the provision of COM and continue to do so through broadcast messages and website updates. To further help with compliance with the new COM reporting requirements under the GIPs No. 80 and No. 81, GAC provides administrative guidance to importers by amending the Notice to Importers No. 1032, which can be found on the departmental website.

Under the EIPA, GAC is responsible for administering the import permits regime, including the issuance of import permits. Importers of carbon and specialty steel must cite the appropriate General Import Permit No. 80 — Carbon Steel or General Import Permit No. 81 — Specialty Steel Products on their customs documentation. The CBSA is responsible for the collection of customs data, including COM information, and transmits steel import data to GAC. GAC provides information and guidance to steel importers on use of the GIPs through the Steel Import Monitoring Program website and can also be directly contacted via email.

Failure to cite the required import permit may lead to the levying of penalties by the CBSA under the Administrative Monetary Penalty System, which authorizes the CBSA to assess monetary penalties for non-compliance with legislative, regulatory and program requirements related to customs. Importers may also face prosecution under the EIPA for contravening a provision of the Act or its regulations (section 19). Compliance is monitored by the CBSA and GAC.

Contact

Anh Nguyen
Deputy Director
Steel and Aluminum Import Monitoring
North American Trade Policy and Negotiations Bureau
Global Affairs Canada
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Email: anh.nguyen@international.gc.ca