The Canadian pasta industry is facing unrestricted competition this summer from dumped and subsidized Italian pasta and an industry spokesperson says imports likely will climb.
In early June, the Canadian International Trade Tribunal reaffirmed an earlier ruling that record-high imports from Italy do not hurt domestic manufacturers.
The effect of the decision was to end, effective June 2, an anti-dumping duty which averaged 20 percent.
“Without that tariff, you have to assume that imports will not be discouraged but will be encouraged and will increase,” said Don Jarvis, of the Canadian Pasta Manufacturers’ Association. “The segment of the Canadian market taken by subsidized, dumped Italian product will increase.”
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Italian pasta, which receives European Union export subsidies and which even the CITT has agreed is sold into Canada at dumped prices, already takes 15 percent of the Canadian market.
The portion has increased sharply in the past five years. Italy has replaced the United States as the largest source of imported pasta.
Last year, imports from Italy increased 20 percent to 21.3 million kilograms.
Jarvis said the imports from Europe displace domestic production which would consume 35,000 tonnes of prairie-produced durum wheat.
But the CITT ruled that this inflow has “not caused material injury to the domestic industry and (is) not threatening to cause material injury to the domestic industry.”
The Canadian Wheat Board supported the pasta manufacturers in their bid to win protection from the dumped competition.
The ruling applies to product imported into Canada before May 1996.
Jarvis said the domestic pasta companies will study the ruling, once written reasons are issued and then decide whether to appeal.
He said a new application for protection also is possible, based on evidence of injury during the past year.
In that time, imports from Italy have increased, the United States has applied an anti-dumping duty on Italian pasta, sending more of it to Canadian markets, and the European Union has started to subsidize exports again.
“We continue to believe we have a good case,” said the executive director of the pasta manufacturers association.
Last year, after the first ruling from the CITT that pasta is being dumped but does not take enough of the domestic market to be damaging, the pasta industry appealed the ruling to court. They argued it was illogical to find dumping, which by definition is unfair competition, but then to decide it had no impact on the competition.
In the winter, a judge agreed and took the unprecedented step of overturning a trade tribunal decision and ordering a new hearing.
Then, when the CITT decided the same three members would re-hear the case, the pasta manufacturers went back to court to try to win an order that the CITT should appoint a new panel.
They argued that using the same panel members to hear the same evidence would present an image of the panel being biased against the applicants, since its earlier ruling was being challenged.
The courts refused to order a different panel membership, the case was heard by the three-man panel in early May and on June 2, the panel members reaffirmed their earlier judgment.
