CIIT Committee Report

NDP SUPPLEMENTARY OPINION

The New Democratic Party (NDP) welcomes the Committee’s study on the Canadian steel industry’s ability to compete. The study comes at a critical time for the sector, which is under attack by unfair international trade practices like dumping. With the United States contemplating swift and potentially sweeping actions against such practices, Canada must prioritize strengthening our trade remedy rules.

While the NDP supports the report’s conclusion and recommendations, we believe the report should have gone further in emphasizing the need to work in close partnership with the United States and the need for urgent action by the government to defend and grow Canada’s steel industry.

Canada’s steel industry provides over 22,000 good middle-class jobs. For every one direct job, steel creates as many as seven spin-off jobs. While these jobs have declined over the past few decades, there remains strong growth potential – as outlined by a range of witnesses who testified before the Committee. This growth can only be realized if the federal government takes urgent action to curb steel dumping and maximize the sector’s many competitive advantages.

Witnesses emphasized that retaliatory action against ‘Buy American’ policies would not be helpful. However, Canada can simultaneously support our steel sector and address unfairly dumped steel by implementing measures that will encourage the use of domestic steel in federally funded infrastructure projects or other government procurement contracts. This can be done by fairly evaluating steel for the level of GHG emissions generated during production and transportation, and for the presence of health, labour and safety standards during production and manufacturing.

It is also important to note two significant developments that occurred after the Committee heard from the majority of witnesses.

First, on March 22, 2017 the government proposed reforms to Canada’s trade remedy system in Budget 2017, some of which were later reflected in Bill C-44, the Budget Implementation Act. The NDP welcomes actions to strengthen trade remedy rules as we believe both legislative and regulatory changes are urgently needed. But while C-44 is a good start, it does not contain all necessary changes.

For example, C-44 does not address the Budget’s commitment to “provide unions with the ability to participate in trade remedy proceedings.” The United Steelworkers specifically recommended that unions be allowed to file anti-dumping and countervailing duty complaints under section 31 of the Special Import Measures Act, file safeguard complaints under section 23 of the Canadian International Trade Tribunal Act, and participate fully in the process leading to the imposition of anti-dumping duties and countervailing duties.

Unions and industry have an established history of working in close partnership to advance their shared interests. In other jurisdictions where unions are able to file complaints, they often do so in collaboration with producers, as unions can be in a unique position where they are not beholden to external stakeholders. Therefore, the government’s promise to expand union participation in trade remedy proceedings should address all three of the United Steelworkers’ recommendations.

The NDP will continue to work with all stakeholders, including labour, producers and industry groups, to ensure Canada’s trade remedy system is effectively strengthened to respond to the sector’s needs.

Second, on April 20, 2017 U.S. President Donald Trump issued a Presidential Memorandum ordering a U.S. Department of Commerce investigation under Section 232 of the Trade Expansion Act of 1962 into the impact of steel imports on U.S. national security. The NDP is deeply concerned by the potential outcomes of this investigation for Canada’s steel industry, including that the U.S. may apply tariffs on steel imports from Canada and that Canada may increasingly be used as a dumping ground for cheap foreign-produced steel.

There is significant risk to Canada’s steel sector if our two countries’ trade remedy systems diverge. If the U.S. government, through ‘Buy American’ policies or otherwise, imposes restrictions on steel imports or applies tariffs to Canadian steel as a result of the Section 232 investigation, the federal government should urgently seek an exemption from these restrictions or tariffs for Canadian steel. Furthermore, the government must actively work in close partnership with the U.S. to address global steel dumping, and it must demonstrate to the U.S. the importance of working together—not against one another—on this critical issue.

Looking ahead, Canada must consider the potential implications of a free trade agreement with China for our steel sector. The Liberal government has expressed its clear preference to negotiate a free trade agreement with the People’s Republic of China, which is the largest source of unfairly dumped steel. Witnesses consistently told our Committee that Canada’s steel sector would have no problem competing on a level playing field, but it is impossible to compete with countries such as China that subsidize their producers and drive down global steel prices. The NDP urges the government to consider the testimony received by the Committee, and to remember that fair trade starts with following the rules and raising standards for working people.

In conclusion, the NDP presents the following recommendations which we would have liked to see included in the Committee’s main report. We would also like to thank the witnesses who provided evidence to the Committee, including detailed proposals for strengthening Canada’s trade remedy rules so that our steel sector can compete fairly and provide good quality jobs for present and future generations.

RECOMMENDATIONS

1. That the Government of Canada take immediate action to address issues where calculation of dumping margins do not accurately reflect the amount of dumping in the Canadian market, the need for enhanced and transparent processes available to the government in instances of circumvention, and clarification as regards the type and amount of evidence required to initiate trade cases.
2. That the Government of Canada consider prioritizing the allocation of carbon pricing revenue to help incentivize energy-intensive industries like steel to further develop low-carbon processes, technology and innovation, and other capital investments.
3. That the Government of Canada implement measures that will encourage the use of domestic steel in federally funded infrastructure projects or other government procurement contracts by taking into account the level of GHG emissions generated during production and transportation, and the presence of health, labour and safety standards during production and manufacturing.
4. That the Government of Canada negotiate trade agreements in such a way that defends our ability to promote the use of domestic steel in federally funded infrastructure projects or other government procurement contracts.
5. That the Government of Canada grant labour unions an expanded role in Canada’s trade remedy system, including rights to file and participate in trade remedy complaints.
6. If the U.S. government, through ‘Buy American’ policies or otherwise, imposes restrictions on steel imports or applies tariffs to Canadian steel as a result of the Section 232 investigation, the federal government should urgently seek an exemption from these restrictions or tariffs for Canadian steel.