Canada – MEASURES ON CERTAIN PRODUCTS OF CHINESE ORIGIN

Request for the Establishment of a Panel by china

The following communication, dated 12 May 2025, from the delegation of China to the Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.

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On 6 September 2024 the Government of the People's Republic of China ("China") requested consultations with the Government of Canada ("Canada") pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU") and Article XXIII of the General Agreement on Tariffs and Trade 1994 ("GATT 1994") with respect to customs duty measures relating to certain products of Chinese origin including, inter alia, electric vehicles ("EVs") and steel and aluminum products from China.[1] China supplemented its request for consultations pursuant to an Addendum communicated to Canada on 7 March 2025. The Addendum explicitly extended China's concerns to customs duty measures on other products and materials of Chinese origin including, inter alia, solar products, critical minerals, semiconductors, permanent magnets, and natural graphite.[2]

China held consultations with Canada on 7 April 2025. These consultations failed to resolve the dispute.

As a result, and in order to resolve the dispute, China respectfully requests, pursuant to Articles 4.7 and 6 of the DSU and Article XXIII:2 of the GATT 1994, that the Dispute Settlement Body ("DSB") establish a panel to examine this matter, with the standard terms of reference as set out in Article 7.1 of the DSU.

Measures at issue

Canada has initiated measures that are unified by a policy and intention "to protect Canadian workers and key economic sectors" against the importation from China of products that are or relate to "electric vehicles";[3] "electric vehicle supply chain";[4] "steel and aluminum supply chains";[5] "key economic sectors";[6] "critical industries";[7] and "critical manufacturing sectors".[8]

The measures at issue include, among others:

1_     Canada's imposition of a 100% surtax on Chinese-made EVs, carried out through various actions, announcements and instruments leading up to and culminating in:

(a)_     China Surtax Order (2024): SOR/2024-187;

(b)_     Customs Notice 24-32: China Surtax Order (2024) – Electric vehicles.

2_     Canada's imposition of a 25% surtax on steel and aluminum products imported from China, carried out through various actions, announcements and instruments leading up to and culminating in:

(a)_     China Surtax Order (2024) SOR/2024-187;

(b)_     Order Amending the China Surtax Order (2024): SOR/2024-202;

(c)_     Customs Notice 24-36: China Surtax Order (2024) – Steel and Aluminum.

3_     Canada's decision about the imposition of surtaxes and/or tariffs on certain solar products, critical minerals, semiconductors, permanent magnets and natural graphite imported from China, carried out through various actions, announcements and instruments leading up to and culminating in the official announcement by the Department of Finance Canada in Canada's 2024 Fall Economic Statement, at pp. 150-151.

4_     Any other measures attributable to Canada seeking to impose surtaxes and/or tariffs on products or materials that originate in China.

The measures at issue also include any amendments or extensions; related measures; replacement measures; renewal measures; and implementing measures of those listed above.

The measures at issue taken by Canada discriminate against the importation into Canada of China‑origin products and materials. Specifically, these measures are inconsistent with Canada's obligations to accord most-favoured nation treatment, and treatment no less favourable than that provided for in Canada's Schedule of Concessions and Commitments ("Schedule") annexed to the GATT 1994, to China with respect to the products and materials concerned, and exceed the duties for those products as provided for in that Schedule.

The instruments that enable and carry out the measures at issue include the legal and administrative enactments, decisions and actions, as identified above and in the Appendix.

Legal basis of the complaint

China considers that the measures at issue, together and individually, are inconsistent with Canada's obligations under the GATT 1994.

1_     The measures at issue are inconsistent with Article I:1 of the GATT 1994 because the measures fail to accord "immediately and unconditionally" to China-origin products an "advantage, favour, privilege or immunity" granted by Canada "[w]ith respect to customs duties and charges of any kind imposed on or in connection with" the importation of like products originating in the territories of other Members.

The surtaxes and tariffs fail to accord to China-origin products the most-favoured nation treatment to which they are entitled under Article I:1 of the GATT 1994. Whether officially announcing those surtaxes and tariffs with respect to the products and materials concerned or imposing them on importation, Canada discriminates against China-origin products by not according to them an advantage, favour, privilege or immunity granted by Canada to the importation of like products originating in the territories of other Members. The surtaxes and tariffs concerned, being ordinary customs duties for the purposes of Article I:1, apply only to, and are directed specifically at, China-origin products, to the exclusion of like products originating in the territories of other Members.

As well, the administrative arrangements associated with the surtaxes and tariffs are "methods of levying… duties and charges" and "rules and formalities" in connection with the importation of China-origin products that are different and additional to those that apply to like products originating in the territories of other Members, with the effect that those China-origin products are treated less favourably than like products originating in the territories of other Members, contrary to Article I:1 of the GATT 1994.

Accordingly, China submits that Canada's measures at issue, which discriminate against China‑origin products and materials by way of imposing surtaxes and tariffs; and by the methods by which those surtaxes and tariffs are levied; and by the rules and formalities applicable to those surtaxes and tariffs, are inconsistent with Article I:1 of the GATT 1994.

2_     The measures at issue are inconsistent with Article II:1(a) of the GATT 1994 to the extent that the measures fail to accord to the China-origin products and materials concerned "treatment no less favourable" than that provided for in Canada's Schedule annexed to the GATT 1994, and are inconsistent with the exemption of such goods from ordinary customs duties in excess of those set forth and provided in that Schedule under Article II:1(b) of the GATT 1994.

(a)_     With respect to EVs for which Canada has bound its ad valorem tariff rate and which are subject to the surtax, Canada's bound ad valorem tariff rates are lower than 100%. The surtax of 100% causes the ad valorem rate of duties imposed on China-origin EVs which are subject to the surtax to exceed the bound rate where applicable.

(b)_     With respect to steel products for which Canada has bound its ad valorem tariff rate and which are subject to the surtax, Canada's bound ad valorem tariff rates are lower than 25%. The surtax of 25% on those steel products causes the ad valorem rate of duties imposed on China-origin steel products subject to that surtax to exceed the bound rate where applicable.

(c)_     With respect to aluminum products for which Canada has bound its ad valorem tariff rate and which are subject to the surtax, Canada's bound ad valorem tariff rates are lower than 25%. The surtax of 25% causes the ad valorem rate of duties imposed on China-origin aluminum products subject to that surtax to exceed the bound rate where applicable.

(d)_     To the extent that Canada's officially announced surtaxes and/or tariffs with respect to other China-origin products including certain solar products, critical minerals, semiconductors, permanent magnets, and natural graphite exceed the ad valorem bound rates under Canada's Schedule, they constitute ordinary duties that are inconsistent with those set forth in that Schedule. Whether officially announcing those surtaxes and tariffs with respect to the products and materials concerned or imposing them on importation, Canada treats the commerce of China less favourably than that provided for by its Schedule.

Accordingly, China submits that Canada's measures at issue, announcing duties in the form of surtaxes with respect to the products and materials concerned and imposing them on importation, are inconsistent with Articles II:1(a) and (b) of the GATT 1994.

Request

The measures at issue appear to nullify or impair benefits accruing to China directly or indirectly under the GATT 1994.

China asks that this request be placed on the agenda for the meeting of the Dispute Settlement Body to be held on 23 May 2025.