Finance Committee on June 11th, 2019

[The Chair, Liberal, Wayne Easter]

Okay.

Mr. Allison.

[Dean Allison, Conservative, Niagara West, ON]

Thank you very much, Mr. Easter.

I didn't know if you guys were coming today and thinking that we were going to ask about what's been collected and stuff. I know that you've been before our trade committee a few times—some of you have, anyway. Do you have any indication of how much money has been collected in tariffs, duties and from all of this stuff on steel to date? That's the first question.

Second, how much has actually been paid out to small and medium-sized enterprises? Do we have those numbers at all, or ballpark numbers? I know that you were before our committee back in the fall, and I know that that number has grown, so I'm just curious.

[Patrick Halley]

If I understand you, this is not with respect to the surtaxes that were imposed during the provisional period for safeguards. It's surtaxes in the context of the countermeasures against the United States.

[Dean Allison, Conservative, Niagara West, ON]

Yes, just in general, what we've collected exactly.

[Patrick Halley]

Okay. I think the last number we have is to the end of April, and it was $1.3 billion.

[Dean Allison, Conservative, Niagara West, ON]

Do we have any indication at all of what actually has gone back out to businesses?

[Patrick Halley]

There's a long list here. There have been remissions. There have been three orders, and that's $395 million. There was a duties relief program from the CBSA that I think is about $30 million. It's $31 million or $32 million.

Then there were the programs that were announced. There was a $100-million program announced in March for small and medium-sized enterprises. There was strategic innovation funding, from June 29, of $250 million, and there was another $250 million that was topped up—

[Dean Allison, Conservative, Niagara West, ON]

I'm aware of the programs that were announced. My question is related to how many dollars have actually gone out. I know that they've announced that most of the money was going to go out. Do you have any idea of what actually has gone out the door?

[Patrick Halley]

No. We can get back to you. We can come back to the committee with the exact number.

[Dean Allison, Conservative, Niagara West, ON]

It would be great if we could get that at some point, just to get a balance and a number.

I have a bunch of questions, but I'm running short on time here.

I read the report, but could you explain this to people? The CITT makes a ruling and says, “These are the only two areas of steel we want to cover, and on the other four, we didn't see any kind of injury.” Explain to me how that happens if they say that's not the case, but the government thinks differently. That's part of the reason why we're here with this legislation: because they don't agree with the announcement.

Talk to me about the CITT's ruling versus where the government wants to go on this particular issue.

[Michèle Govier]

I don't think we should assume that we think there's anything wrong with the CITT report or any of the findings it came up with. It was looking at a particular period of investigation, a particular moment in time, and did its analysis based on that.

I think the intent here is to be prepared for changing circumstances. We're in a very volatile time in the steel industry, as I think people are aware. The idea here is just to give the flexibility to be able to respond should the conditions present themselves and should action need to be taken. If the government did move forward with imposing provisional measures and referring the measures to the CITT, they would be looking at an updated dataset, if you will, that reflects more recent information, and so could potentially lead to a different result.

[Dean Allison, Conservative, Niagara West, ON]

Okay, and with the flexibility, of course, it's not to have to wait the 200 days, or whatever the case may be, to reapply them.

[Michèle Govier]

Yes.

[The Chair, Liberal, Wayne Easter]

You can take more time, if you want, Dean. Go ahead. We're pretty flexible around here.

[Dean Allison, Conservative, Niagara West, ON]

All right.

I guess the other question is with regard to the issue with safeguards. We get that fact. We're trying to actually figure out ways to keep cheaper steel from being taken through here. I guess the question is, how do you guys manage what is actually going on in terms of products?

I ask because one of the concerns we hear from small and medium-sized enterprises is that sometimes the reality on the ground with what's coming in, and the quota, or whatever the case may be, don't always reflect the timeliness of when these products are available and the safeguards. There is product that's available at a lower tariff rate, and then, all of a sudden, because all of that quota has been taken up, safeguards get stamped on.

What measurements are in place to help manage that? I find that the safeguards aren't the issue as much as the management or the execution of the day-to-day stuff is, depending on whether you're in western Canada or eastern Ontario, whatever the case may be, which present different challenges.

Do you have any thoughts on that? I know it's a broad question, and it's more around the operation of how that happens.

[Michèle Govier]

Yes, there were certainly some issues that came up during the provisional safeguards with ensuring that there was still a situation that was relatively predictable and workable for people who do still need to import steel. Provisional safeguards previously were imposed as tariff rate quotas, so a certain amount could come in without any surtax. After that, there would be 25% on it.

At the time, we did not have legal authority to allocate that quota and to tell importers, for example, that “you get this share of the quota” and “you get this share of the quota”. Since that time, an amendment was made to the Export and Import Permits Act, which does allows for allocation. I think that if safeguards were to be reapplied, if they were to take the form of a tariff rate quota, there would be a more predictable situation that we could put in place for importers to minimize some of those impacts.

The other thing that came up and that I think led to a bit of uncertainty was that goods were in transit when the safeguards were applied. We did retroactively deal with that issue, given the concerns that were raised, but it’s certainly something that we could consider doing up front to manage some of those issues when there’s uncertainty as to when it’s going to come into force to just allow people to plan accordingly.

[The Chair, Liberal, Wayne Easter]

Thank you. We can come back to you again, Dean.

Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

I thank the witnesses for coming to explain Bill C-101 to us.

First, we are talking about provisional safeguards, but are permanent safeguards planned? Is that a possibility the government is considering?

[Patrick Halley]

As we said, the process in terms of the provisional safeguards started in October. After its inquiry, the Canadian International Trade Tribunal concluded that, for two types of products—heavy plate and stainless steel wire—the safeguards established, although not permanent, had a maximum length of three years, under our WTO obligations. So there are already longer safeguards for those products than the temporary 200-day safeguards.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

A decision from the tribunal was necessary to be able to establish that.

[Patrick Halley]

That's right.

As we mentioned earlier, nothing changes in the legislation in terms of the process, the standards that must be met or the solutions that can be implemented. The only change proposed in the bill is the obtaining of a two-year moratorium in terms of the period during which a new safeguard measure cannot be imposed for a product that had already been subject to a safeguard.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

There must be a reason the legislator decided on this procedure. Today, we are being asked to change a rule that was established in the legislation several years ago by members who came before us. There is surely a reason that, once a safeguard expires, two years must go by before a new one can be imposed.

Can you tell me what the reasoning behind that change is? Why should we change it today?

[Patrick Halley]

It should be understood that safeguards apply to fairly traded goods. We are not talking about imports that are subject to dumping or subsidizing, which go through the normal trade remedy system. So the safeguards apply to imports that are not subject to market distortions such as dumping or subsidizing. It's just that, when products are imported in excessive quantities, a temporary measure must be applied to enable domestic producers to adapt to the change.

Under the circumstances, we are not talking about measures against unfair or inequitable trade. Measures have been implemented to prevent the situation from persisting. Trade partners who have obtained concessions from Canada during various negotiation cycles at the WTO, for example, could see their benefits reduced because of this. That is the context involved.

Like we said in the beginning, those kinds of measures apply only during somewhat more difficult periods in terms of trade, when the environment is a bit less predictable. That provides the necessary flexibility to apply those safeguards in a less staggered manner.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Is that because it could not be proved that dumping was used in the steel and aluminum industry?

[Patrick Halley]

Currently, for steel products, there are 77 anti-dumping and countervailing measures against 25 countries. There are still a number of measures in place and trade remedies to counter dumping and subsidizing.

In this case, safeguards are in response to the import increase, which is higher than expected and difficult to manage. It is a global phenomenon.