COMMUNICATION FROM CANADA IN RESPONSE TO THE UNITED KINGDOM'S NOTIFICATION PROPOSING TO SUSPEND CONCESSIONS UNDER

Canada

The following communication, dated and received on 24 October 2025, is being circulated at the request of the delegation of Canada.

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Canada has received the United Kingdom's notification^* under Article 12.5 of the Agreement on Safeguards regarding its proposed suspension of concessions or other obligations under Article 8.2, with respect to Canada's steel tariff rate quotas (TRQs) measures expanded to free trade agreement (FTA) partners on 1 August 2025.

Canada notes that the premise of the United Kingdom's proposed suspension of concessions or other obligations under Article 8.2 is that Canada's steel TRQs are safeguard measures for purposes of that Agreement. These TRQs are not safeguard measures. Canada's steel TRQs were implemented under the Order Imposing a Surtax on the Importation of Certain Steel Goods[1] and the Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods[2] pursuant to section 53 of Canada's Customs Tariff. This provision authorizes imposition of surtaxes and import controls in response to acts, policies or practices of the government of a country that adversely affect, or lead directly or indirectly to adverse effects on, trade in goods or services of Canada.

As one of the countries most affected by the fundamental restructuring of the global steel industry, Canada implemented its steel measures in direct response to trade diversion caused by U.S. steel tariffs and distortive non-market policies and practices of certain countries, which have resulted in significant overcapacity in the global steel and aluminum sectors. This overcapacity undermines Canada's interests and values, including its economic security. Accordingly, these actions were not taken in response to a sudden, unforeseen surge of imports of fairly traded goods. These actions are, therefore, not safeguard measures, and there is no basis for the United Kingdom's proposal to suspend concessions or other obligations under Article 8.2 of the Agreement on Safeguards with respect to these measures.

Article 8.2 of the Agreement on Safeguards states, in relevant part, that an exporting Member shall be free to suspend, upon the expiration of 30 days from the day on which written notice of suspension of concessions is received by the Council for Trade in Goods, "the application of substantially equivalent concessions or other obligations under GATT 1994, to the trade of the Member applying the safeguard measure." However, Canada is not "applying [a] safeguard measure." Thus, by its terms, Article 8.2 cannot accommodate the United Kingdom's proposal. Moreover, Article 8.2 prefaces an exporting Member's ability to suspend such concessions upon holding consultations under Article 12.3 with the Member applying the safeguard measure. The position of Canada is that there is no basis under Article 12.3 to hold such consultations because there is no safeguard measure at issue.

In addition, we note that Canada has not been a significant destination for the United Kingdom's steel exports, accounting for two per cent of the United Kingdom's exports of steel mill products on average between 2022 and 2024. Furthermore, the scope of the measure excludes 79% of United Kingdom's steel mill exports to Canada from 2022 to 2024. Imports from the United Kingdom account for only 0.2% of subject imports captured by Canada's TRQs, with the United Kingdom ranking as the 37^th source of Canadian imports for the subject goods (excluding the US and Mexico). As such, even if Canada's TRQs were safeguards, which they are not, the United Kingdom would not have a 'substantial interest' as an exporter of the products concerned.

Nonetheless, we remain open to discuss this or any other issue with the United Kingdom, as it relates to steel. However, any discussions regarding the TRQs would not be under the Agreement on Safeguards and would be without prejudice to our view that the TRQs are not safeguard measures.

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