CIIT Committee Report

SUPPLEMENTARY OPINION BY THE OFFICIAL OPPOSITION
CONSERVATIVE PARTY OF CANADA
THE CANADIAN STEEL INDUSTRY’S ABILITY TO COMPETE INTERNATIONALLY

Introduction

The Conservative Party of Canada (CPC) greatly appreciates the contribution of all witnesses who took the time to share their perspective and expertise in the committee’s study of the Canadian steel industry’s ability to compete internationally. Many of the witnesses have made clear that there are significant opportunities for Canada’s steel industry to successfully compete in the global marketplace; however factors must first be addressed to ensure a level playing field.

Environment

The Committee heard from witnesses that emphasized Canadian steel as the cleanest steel for Canada[1]. Canadian steel manufacturers currently utilize numerous techniques to ensure the utmost environmentally friendly production and constantly innovate ways to reduce the carbon footprint throughout the production process. As described, “Measures that place Canadian producers at a disadvantage at home against heavier polluters are not good for middle-class jobs or the environment”[2].

The Canadian steel industry strives to continue to produce a greener product; however additional taxation within Canadian boarders, such as a carbon tax, only hinders their ability to compete. “We want to provide the green steel that goes into construction products, automobiles, and the other infrastructure projects that everybody wants, in order to provide a greener footprint for Canadian manufacturing, but we need some help to equalize those costs at the back end.”[3]

As such, the CPC recommends that the Government of Canada completes an economic impact analysis of the effects of the Government’s federal carbon pricing plan on the competitiveness of Canada’s steel industry.

Market Economy Status

A continuous caution that the committee heard from the balance of witnesses was the warning against granting China market economy status. To do so would be disastrous for the Canadian steel industry[4].

As described by Dr. Ian Lee,

“[China is] subsidizing in multiple ways. They're giving extended loans, loans that wouldn't qualify because the company's bankrupt in the first place. They're giving them very artificially low interest rate loans. They're giving them preferential treatment inside, because they're owned by the Government of China. They're getting a whole series of preferences and preferential treatment”[5].

In 2002, the Liberal government of the day passed legislation in recognition of China’s membership to the WTO which included product-specific safeguards which expired on December 11, 2013 and the use of an alternate methodology for antidumping cases which would have expired on December 11, 2016. In April 2013, through an Order in Council, the previous Conservative Government repealed the mechanism which would have automatically granted China market economy status. This signaled that Canada did not believe China had met their obligations under their Accession Protocol and the CPC believes this still to be the case.

Likewise, there is a significant need for Canada to demonstrate unanimity with the United States and the European Union against the recent WTO proceedings China has initiated, to which Canada has registered itself as a participant to the process, regarding special calculation methodologies used by the US and EU in anti-dumping proceedings[6].

As such, the CPC recommends that the Government of Canada completes an impact assessment on changes to the calculation methodologies of dumping if the People’s Republic of China and other non-market economies are granted Market Economy Status. In addition, the CPC also recommends not granting Market Economy Status to the People’s Republic of China as a precondition for Canada to enter free trade talks.

Conclusion

Inclusively, the CPC agrees with the overall analysis of the committee’s report. Drawn from the study and witness testimony, the Canadian steel industry is capable of successfully competing in the global market place provided that competition is on a level playing field. Factors that currently need to be assessed and addressed include the imbalance of Canadian taxation against Canadian steel manufacturers through measures such as the carbon tax, as well as international disparity of steel dumping.

Given that maintaining access to the US market should be Canada’s number one international trade priority, the Government must oppose any unilateral action by the United States to restrict steel imports from Canada.

We must continue to work collaboratively with our North American partners on coordination in trade remedy enforcement and addressing global access capacity as laid out in the 2016 North American Leaders’ Summit declaration.