What is SIMA ?If you were listening to the news this May, you might have heard about an increase in duty on furniture from China and Vietnam. The announcement kicked off a storm of controversy and panic from retailers and purchasers concerned about rising costs. That additional duty was SIMA, and importers are often surprised to discover that it applies to an eclectic assortment of imported goods.
SIMA can make importing goods feel like navigating a minefield, but it’s actually there for the protection of Canadians and it doesn’t have to pose a barrier to importing. Keep reading to learn more about SIMA duties and find out how to avoid over-paying at the border!
What does SIMA mean?
SIMA is the Special Import Measures Act. It’s an act designed to protect Canadian producers from unfair competition from foreign sellers. SIMA imposes two types of penalties: anti-dumping and countervailing.
When foreign governments subsidize the production of goods in their own countries, it allows producers to sell their goods at cheaper prices and still make a profit. This could theoretically allow manufacturers receiving foreign government subsidies to price Canadian manufacturers out of the Canadian market. To prevent this, countervailing duty is levied on imported goods from countries where the manufacture of those goods is subsidized by the government.
Sometimes foreign manufacturers attempt to unload product by selling it overseas at prices below the fair market value. This is called “dumping,” and it’s another way that Canadian manufacturers could be priced out of their own market. To combat dumping, the CBSA levies anti-dumping duty when they believe that goods are being sold to an importer in Canada at a price below what those goods would be sold for in their country of origin.
SIMA is intended to level the playing field for Canadian manufacturers and protect the Canadian marketplace.
How is SIMA applied to goods?
Usually SIMA is applied to imported goods following a complaint from Canadian industry professionals. When a complaint is received, the Canadian International Trade Tribunal (CITT) investigates to find out if any injury is being caused to the Canadian industry. While the investigation is ongoing, provisional duties might be put in place on a temporary basis. Lowered prices, lost sales or decreased profits could all constitute proof of an injury to the industry.
Which goods are subject to SIMA duties?
SIMA applies to a wide variety of goods from specific countries. A full list is available on the SIMA Measures in Force website. SIMA is usually calculated as a percentage of the export price. A few examples include:
- Refined sugar made in the Denmark, Germany, Netherlands, the United Kingdom or the USA: 180% anti-dumping duty
- Stainless steel sinks made in China: 103.1% anti-dumping duty plus 264.94 Renminbi per sink countervailing duty
- Wheat gluten made in Lithuania: 26.2% anti-dumping duty
- Carbon steel screws made in China: 170% anti-dumping duty plus 1.25 Renminbi per kg countervailing duty
- Dry wheat pasta made in Turkey: 99.9% anti-dumping duty plus 0.09 Tk per kg countervailing duty.
How do I know if my goods are subject to SIMA?
Check the list! SIMA applies to a wide variety of goods and it is always a good idea to check whether there is SIMA on goods you are considering importing early in the import process. In particular, look out for SIMA on carbon steel pipe, concrete reinforcing bar, steel sheet and plate, and solar panels. If you aren’t sure whether your goods will attract SIMA, consult with your customs broker.
Are there any exceptions?
There are. For most categories of goods that attract SIMA, there are specific foreign manufacturers who are exempt. These are manufacturers who have agreed to comply with requirements from the CITT. For example, if you purchase refined sugar from the United States that is made by the Baldwin Richardson Foods Company or the Michigan Sugar Company, there is no anti-dumping duty.
So what actually happened with that furniture thing?
Last year, five Canadian furniture producers launched a formal complaint alleging that Chinese and Vietnamese manufacturers were dumping their products in Canada for less than they would sell for on the domestic market. The CITT launched an investigation and applied provisional SIMA duties of 295.5% on upholstered furniture from China and 101.5% from Vietnam. The Retail Council of Canada immediately objected, saying that Canadian manufacturers were being out-competed fair and square by more innovative and better priced product from overseas.
In September, the CITT and CBSA handed down their decision: they unanimously agreed that both dumping and subsidizing had occurred, and that significant injury was being done to Canadian producers. Permanent SIMA duties have been put in place: 188% anti-dumping duty on domestic seating made in China and 179.5% from Vietnam. Goods from both countries are also subject to countervailing duty. This nearly triples the cost of buying this kind of furniture from China and Vietnam. The measures are intended to incentivize retailers to purchase from Canadian manufacturers, and to put Canadians furniture makers on an even footing with manufacturers overseas. Retailers argue that the additional duties will result in costs passed on to consumers and will damage the furniture retail industry further as it recovers from the strain of COVID-19.
It’s worth noting that the goods affected by the SIMA ruling are a very specific subset: it applies to motion seating (seats that recline or swivel, etc.) upholstered in either leather or fabric, and stationary seating upholstered in leather. It does not apply to stationary seating upholstered only in fabric, office furniture, dining chairs, bar stools, outdoor seating or stacking chairs.
Is SIMA the worst thing ever?
It depends who you ask, but no, not really. SIMA gives Canadian producers a fair chance at competing with foreign manufacturers and encourages consumers to buy Canadian. It is, however, something you should be aware of if you are planning on importing goods into Canada. Before you purchase anything for import, you should consult the Measures in Force list online and read the definitions of goods very carefully. The categories of goods that are affected by SIMA are laid out very specifically. If you want to purchase SIMA-applicable goods, there may be manufacturers who are exempt from the additional duties who can help you.
If you have questions about SIMA or want more information, get in touch!
By Robin Smith, M.A., CCS
– Robin is a trade industry professional based in Victoria, BC.
If you were listening to the news this May, you might have heard about an increase in duty on furniture from China and Vietnam. The announcement kicked off a storm of controversy and panic from retailers and purchasers concerned about rising costs. That additional duty was SIMA, and importers are often surprised to discover that it applies to an eclectic assortment of imported goods.
SIMA can make importing goods feel like navigating a minefield, but it’s actually there for the protection of Canadians and it doesn’t have to pose a barrier to importing. Keep reading to learn more about SIMA duties and find out how to avoid over-paying at the border!
What does SIMA mean?
SIMA is the Special Import Measures Act. It’s an act designed to protect Canadian producers from unfair competition from foreign sellers. SIMA imposes two types of penalties: anti-dumping and countervailing.
When foreign governments subsidize the production of goods in their own countries, it allows producers to sell their goods at cheaper prices and still make a profit. This could theoretically allow manufacturers receiving foreign government subsidies to price Canadian manufacturers out of the Canadian market. To prevent this, countervailing duty is levied on imported goods from countries where the manufacture of those goods is subsidized by the government.
Sometimes foreign manufacturers attempt to unload product by selling it overseas at prices below the fair market value. This is called “dumping,” and it’s another way that Canadian manufacturers could be priced out of their own market. To combat dumping, the CBSA levies anti-dumping duty when they believe that goods are being sold to an importer in Canada at a price below what those goods would be sold for in their country of origin.
SIMA is intended to level the playing field for Canadian manufacturers and protect the Canadian marketplace.
How is SIMA applied to goods?
Usually SIMA is applied to imported goods following a complaint from Canadian industry professionals. When a complaint is received, the Canadian International Trade Tribunal (CITT) investigates to find out if any injury is being caused to the Canadian industry. While the investigation is ongoing, provisional duties might be put in place on a temporary basis. Lowered prices, lost sales or decreased profits could all constitute proof of an injury to the industry.
Which goods are subject to SIMA duties?
SIMA applies to a wide variety of goods from specific countries. A full list is available on the SIMA Measures in Force website. SIMA is usually calculated as a percentage of the export price. A few examples include:
- Refined sugar made in the Denmark, Germany, Netherlands, the United Kingdom or the USA: 180% anti-dumping duty
- Stainless steel sinks made in China: 103.1% anti-dumping duty plus 264.94 Renminbi per sink countervailing duty
- Wheat gluten made in Lithuania: 26.2% anti-dumping duty
- Carbon steel screws made in China: 170% anti-dumping duty plus 1.25 Renminbi per kg countervailing duty
- Dry wheat pasta made in Turkey: 99.9% anti-dumping duty plus 0.09 Tk per kg countervailing duty.
How do I know if my goods are subject to SIMA?
Check the list! SIMA applies to a wide variety of goods and it is always a good idea to check whether there is SIMA on goods you are considering importing early in the import process. In particular, look out for SIMA on carbon steel pipe, concrete reinforcing bar, steel sheet and plate, and solar panels. If you aren’t sure whether your goods will attract SIMA, consult with your customs broker.
Are there any exceptions?
There are. For most categories of goods that attract SIMA, there are specific foreign manufacturers who are exempt. These are manufacturers who have agreed to comply with requirements from the CITT. For example, if you purchase refined sugar from the United States that is made by the Baldwin Richardson Foods Company or the Michigan Sugar Company, there is no anti-dumping duty.
So what actually happened with that furniture thing?
Last year, five Canadian furniture producers launched a formal complaint alleging that Chinese and Vietnamese manufacturers were dumping their products in Canada for less than they would sell for on the domestic market. The CITT launched an investigation and applied provisional SIMA duties of 295.5% on upholstered furniture from China and 101.5% from Vietnam. The Retail Council of Canada immediately objected, saying that Canadian manufacturers were being out-competed fair and square by more innovative and better priced product from overseas.
In September, the CITT and CBSA handed down their decision: they unanimously agreed that both dumping and subsidizing had occurred, and that significant injury was being done to Canadian producers. Permanent SIMA duties have been put in place: 188% anti-dumping duty on domestic seating made in China and 179.5% from Vietnam. Goods from both countries are also subject to countervailing duty. This nearly triples the cost of buying this kind of furniture from China and Vietnam. The measures are intended to incentivize retailers to purchase from Canadian manufacturers, and to put Canadians furniture makers on an even footing with manufacturers overseas. Retailers argue that the additional duties will result in costs passed on to consumers and will damage the furniture retail industry further as it recovers from the strain of COVID-19.
It’s worth noting that the goods affected by the SIMA ruling are a very specific subset: it applies to motion seating (seats that recline or swivel, etc.) upholstered in either leather or fabric, and stationary seating upholstered in leather. It does not apply to stationary seating upholstered only in fabric, office furniture, dining chairs, bar stools, outdoor seating or stacking chairs.
Is SIMA the worst thing ever?
It depends who you ask, but no, not really. SIMA gives Canadian producers a fair chance at competing with foreign manufacturers and encourages consumers to buy Canadian. It is, however, something you should be aware of if you are planning on importing goods into Canada. Before you purchase anything for import, you should consult the Measures in Force list online and read the definitions of goods very carefully. The categories of goods that are affected by SIMA are laid out very specifically. If you want to purchase SIMA-applicable goods, there may be manufacturers who are exempt from the additional duties who can help you.
If you have questions about SIMA or want more information, get in touch!
By Robin Smith, M.A., CCS
– Robin is a trade industry professional based in Victoria, BC.
