On February 15, 2023, section 17.1 of the Special Import Measures Regulations (the “SIMR”) was amended to add Russia and Belarus to the list of countries determined to have non-market economies.[1] The amendments are the result of recent determinations by American, European, and Canadian agencies that found significant government intervention and price distortions in the Russian and Belarusian economies. Previously, section 17.1 prescribed only China, Tajikistan, and Vietnam as non-market economies.
The distinguishing factor between a market economy and a non-market economy is whether prices in the exporting country do not substantially reflect prices of a competitive market. An exporting country’s government may substantially determine domestic prices through legislative and policy initiatives. In the case of non-market economies prescribed under section 17.1 of the SIMR, normal values are calculated pursuant to section 20 of the Special Import Measures Act, which provides for substitute pricing and costs information from a third country.
These amendments apply further pressure on Russia and Belarus, in addition to ongoing amendments to economic sanctions in relation to Russia and Belarus under the Special Economic Measures (Russia) Regulations and the Special Economic Measures (Belarus) Regulations.[2] Further details these economic sanctions may be reviewed here on the Baker McKenzie Sanctions & Export Controls Update. An unofficial copy of the legislative amendments to the SIMR that came into effect on February 15, 2023 is available here on the Canada Gazette website.[3]
[1] SOR/84-927.
[2] Special Economic Measures (Russia) Regulations, SOR/2014-58; Special Economic Measures (Belarus) Regulations, SOR/2020-214.
[3] Regulations Amending the Special Import Measures Regulations, SOR/2023-26.
