On November 21, 2024, the Canada Border Services Agency made a significant ruling in its second expiry review of anti-dumping and countervailing duties on certain silicon metals originating from China. The review was prompted by the expiration of previous AD and CVD measures that had been in place to protect Canada’s domestic industry from unfair trade practices. The CBSA concluded that if these duties were removed, there would likely be a continuation or resumption of dumping and subsidizing of silicon metals from China. This finding suggests that without the duties, Chinese producers might once again flood the Canadian market with silicon metals at unfairly low prices, harming local businesses.
Silicon metal is a key component in industries such as electronics, solar energy, and automotive manufacturing, where it is used to create alloys and semiconductors. Given its importance in a wide range of high-tech and industrial applications, any disruption in the supply chain could have significant economic repercussions. The issue of dumping, where goods are sold at artificially low prices, has been a longstanding concern for many countries, and Canada is no exception. Silicon metal from China has historically been sold at prices below the cost of production, a practice that threatens the viability of local manufacturers who cannot compete with such pricing.
Following the CBSA’s determination, the Canadian International Trade Tribunal will now conduct its own inquiry to assess the potential harm that could be caused by the expiry of the AD and CVD orders. The CITT’s investigation will focus on whether the removal of the duties would lead to injury for the Canadian industry, particularly in terms of lost market share, reduced profits, or the closure of businesses that rely on the protection these duties provide. The CITT is scheduled to issue its final decision no later than April 30, 2025, which will be crucial in determining the future of the AD and CVD measures.
The silicon metals under investigation are classified under the Harmonized System (HS) code 2804.69.00.00, and the review covers a variety of products within this category. The CBSA’s decision is based on a comprehensive analysis of trade patterns and pricing practices, including input from industry stakeholders and an evaluation of current market conditions. The investigation also took into account the fact that China is one of the largest producers and exporters of silicon metal globally, and its ability to sell at low prices could undermine the competitiveness of domestic manufacturers in Canada.
The AD and CVD duties were originally imposed on Chinese silicon metals after investigations showed that China was using government subsidies and other unfair trade practices to support its silicon metal industry. These measures aimed to level the playing field for Canadian manufacturers and prevent the market from being flooded with cheap imports that could drive down prices and harm local production. The duties have been reviewed several times since their imposition, and the current expiry review is part of an ongoing process to assess whether they should continue or be removed.
In addition to the potential harm caused by dumping, the countervailing duties are designed to counteract the effects of subsidies provided by the Chinese government to its silicon metal producers. These subsidies can create an unfair advantage for Chinese manufacturers, allowing them to sell their products at artificially low prices. The countervailing duties are intended to offset this advantage and protect Canadian producers from unfair competition. If the duties are allowed to expire, Canadian companies may find it more difficult to compete, particularly in a global market where prices are increasingly influenced by government-supported trade practices.
