February 21, 2019
Canada exempts Mexican steel tube and wire from steel surtax
Canada and Mexico signed a memorandum of understanding (MOU), on January 16, 2019, that ensures that provisional safeguards on steel product do not reduce imports originating in Mexico below their recent trend, with allowance for reasonable growth.
The Government of Canada put in force last October the imposition of provisional safeguards on steel products in seven product categories: heavy plate, concrete reinforcing bar (rebar), energy tubular products, hot-rolled sheets, pre-painted steel, stainless steel wire and wire rod. These measures came into force on October 25, 2018, in the form of tariff-rate quotas under which a 25% surtax is only applied to imports that exceed historical import volumes.
Energy tubular products and wire rod imports from Mexico accounted for a substantial share of total imports and were preliminarily subject to the surtax conditions.
The Canadian Government says it recognizes the NAFTA provisions that a global safeguard measure applied to a NAFTA partner should not have the effect of reducing imports below the recent trend of imports from that country, with allowance for reasonable growth. Following the imposition of provisional safeguards, the Government of Canada held consultations with the Government of Mexico with a view to ensuring that Canada's provisional safeguards are consistent with its rights and obligations under NAFTA and WTO rules with respect to the imposition of global safeguards.
On January 16, Canada and Mexico signed a MOU that provides, inter alia, for an exclusive 200-day surtax-free quota of 72 820 tonnes for energy tubular products and 16 776 tonnes for wire rod originating in Mexico. These quota amounts reflect the historical volume of energy tubular products and wire rod originating in Mexico plus an allowance for reasonable growth in light of import trends for each product.
Amending regulations published on February 16 remit the 25% surtax paid on imports of energy tubular products and wire rod originating in Mexico, and edicts the new conditions applicable to such imports.
The regulations also specify that Canadian steel products should not be subject to the surtax upon return to Canada.