Dumping has been an ongoing practice in the international trade world for some time. Dumping is simply defined as the practice of a country or a company exporting a product to a foreign market at a price lower than the price charged for the product in its home market or below what would be considered a normal price. Sometimes exported goods are sent to other countries at lower prices than the cost of the raw materials that go into the manufacture of these goods. It is considered unfair trade but is not illegal under World Trade Organization (WTO) rules unless it can be proven to harm domestic producers.
Dumping has been an especially big issue for Canada as we import a considerable amount of goods relative to the size of our economy and are a country that imposes onerous environmental, labour, taxes and other red tape on our business community as compared to many other countries. Canadian businesses therefore have a higher cost of doing business than many of their foreign competitors, making them vulnerable to dumping.
In recent years, dumping has become a more serious issue for Canadian businesses – and especially Canadian manufacturing businesses. Countries such as China, Thailand, South Korea and other Asian countries have ramped up their production of goods such as steel, aluminum, other metal products, building materials, consumer goods and industrial machinery, among others. These countries look to export them at below-market prices to countries like Canada where domestic manufacturers can’t compete as they must conform to all the costly rules and regulations that the various Canadian governments impose.
In addition to not conforming to the many laws and regulations imposed on Canadian businesses, dumped products from other countries are also frequently inferior in quality. Canadian businesses using these products often assume the same quality standards honoured by Canadian manufacturers yet find the imported goods don’t measure up when used. As these products are often used in building construction, bridges and other infrastructure projects, the implications of using inferior quality materials can be very serious indeed.
Governments attempt to counter this unfair competition by imposing tariffs on imports and undertaking other measures to try to put Canadian businesses on a level playing field, but these efforts often fall short for a number of reasons. Federal and provincial Canadian governments often state their commitment to using goods manufactured in Canada for their various taxpayer-funded infrastructure projects yet very often don’t do so. For instance, the massive Kitimat B.C. LNG facility was built in its Stage One process with modules manufactured in China and shipped to Canada. Stage Two of this project, which has been named as a priority by the Carney government in its major projects inventory, will have its main modules made in South Korea.
This is taking place despite claims by the Carney government that they favour Canadian manufacturers wherever possible. The excuse for using foreign-produced goods by governments is often that there were no Canadian firms that bid on the project. Yet in discussions with Canadian manufacturers, it becomes clear that they were never asked to bid on the project, and that government bureaucrats chose foreign suppliers without even considering Canadian ones.
There are various Canadian government bodies tasked with determining whether dumping is going on and determining how to deal with it. One such entity is the Canadian International Trade Tribunal (CITT), which examines cases of alleged dumping and is responsible for imposing penalties if dumping has taken place. Unfortunately, these are highly legalistic and bureaucratic processes that cost businesses a lot of money to undertake. They also typically take a very long time to reach a decision, which means a business could literally go bankrupt because of unfair competition from dumping before the government processes are complete. As well, countries that dump goods into Canada also use whatever underhanded means they can to avoid the legal avenues. In one example, a Canadian business that appealed to the CITT regarding a dumping case from China found that the Chinese business subsequently routed its goods through Thailand, which required a completely new proceeding before the CITT as a different country was involved.
One of the members of my organization, the Coalition of Concerned Manufacturers and Businesses Canada (CCMBC), lost a very large contract in Ontario to a Chinese company that was clearly dumping its goods into Canada. What was interesting was that this Chinese company actually printed a logo on its products that was very similar to the Canadian company’s logo, attempting to pretend that it was the Canadian company that was supplying the goods. These foreign companies clearly know exactly what they are doing in unfairly competing with our domestic businesses and have no shame in being dishonest about what they are doing.
Political preferences also play a role. The current Canadian Liberal government has demonstrated on several occasions an affection for China, for some unfathomable reason, and have taken a tolerant view toward products dumped from China into Canada. China is one of the countries most likely to dump products unfairly into Canada, and it is a disgrace that the Liberal government does not crack down on this practice.
The bottom line on dumping is that Canadian governments could take a much harder line on this unfair behaviour that punishes Canadian businesses and has a negative impact on the Canadian economy and employment. Other governments, such as the U.S., do take dumping more seriously and impose more serious penalties. Canadian governments at both the provincial and federal level consciously choose not to crack down on dumping as severely as they should, seemingly for reasons connected to their relations with other governments (such as China) or their pure laziness in not wanting to make the effort to canvass the ability of Canadian companies to fulfill various procurement needs. Next time you hear any Canadian government claiming they are all in on “buy Canadian,” recognize that they are lying through their teeth. Canadian businesses have every right to feel betrayed by their governments that pretend to support them yet do anything but.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
