Finance Committee on June 11th, 2019

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

I want to come back to the tribunal, to which you gave the mandate to inquire. It turned out that two steel products out of seven had to be subject to safeguards. Were you expecting the tribunal to decide that it would be seven products out of seven?

We feel that the problem is that we are getting involved a bit late and have to backtrack to adjust. We did not anticipate this situation.

Did you expect the tribunal to request safeguards for only two of the seven products?

[Patrick Halley]

Provisional safeguards can be implemented under critical circumstances. We then have 200 days to try to stabilize the market and, parallel to that, an independent inquiry takes place.

So there were not really any other specific expectations. Safeguards can even be viewed separately—in other words, an attempt is made to stabilize the market for 200 days, while an in-depth inquiry is conducted on those imports.

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

My question was more about whether it was expected that this situation could occur one day. Perhaps it should have been considered previously that the tribunal could possibly make that kind of a decision at some point. This decision led to a lack of safeguards for certain products now that the provisional safeguards have expired. So Canada is leaving itself open when it comes to those products.

[Patrick Halley]

The bill is trying to give the government flexibility to take the necessary measures if the circumstances change. As Ms. Govier said, during the process, we relied on the data for a certain period of time. The global steel market, for example, is especially subject to significant distortions. Market conditions can change fairly quickly. Should that happen, the government would have the flexibility it needs to implement other safeguards, if necessary.

[The Chair, Liberal, Wayne Easter]

We'll have to come back to you, Pierre.

Ms. Rudd.

[Kim Rudd, Liberal, Northumberland—Peterborough South, ON]

Thank you.

Thank you for coming on what I know is short notice.

I have just a couple of things. The unpredictability and fluidity of the global markets relating particularly to steel, but certainly to other products as well, have put Canada and other countries in a place where we have to be nimble. I think that is exactly what this bill does: It allows us to address those special circumstances that come up unexpectedly.

There are a couple of things in this process. There has certainly been a huge amount of consultation with the steel sector to get us to this place. There have been a number of mayors of communities like Sault Ste. Marie and a number of CEOs of steel companies who have come and said they want this flexibility. They want us, as a government, to be able to respond, and I think we all agree that we are in a very different world, if you will, in this particular space from where we were even a few years ago.

I have a couple of questions specifically on that. You mentioned that everything else stays the same. Are there exemptions still allowed within this process? One of my small or medium-sized enterprises, which Mr. Allison asked about, was able to obtain an exemption in the last round of temporary measures that were put on, and that made a big difference to their business, because the product they need is not manufactured in Canada. There is no other supplier.

We are very aware that circumstances like that will come up, and they do affect the SMEs especially.

Can you just respond as to whether or not they are still in there?

[Michèle Govier]

There are two ways, I guess, we can address those issues. There may be a product that falls under one of the broad product categories that we would be looking at, but perhaps there's a particular item in there that's not produced by a Canadian producer. For some of the products where perhaps trade remedies have already been in place, we were already aware, through previous processes, of some of these products, and they could be removed from the scope out front. That sounds like the situation you may have been describing. There could be others that we're not aware of up front. However, what we're doing in the current process, with the current safeguards that have been applied, is that after the government decided to apply the final safeguards on the two products, a reference was sent to the trade tribunal to hear people basically asking for these types of exclusions, to make the case...if they're not available in Canada. Then all parties who have an interest in it could provide their views. The CITT will make recommendations to the government on those exclusions.

To the extent possible, then, it's trying to minimize the impacts of that.

[Kim Rudd, Liberal, Northumberland—Peterborough South, ON]

A proactive approach, I guess, is what it sounds like. That's good to know, certainly.

My colleague asked about the CITT process, and you walked through that. What is a typical time frame this would occur in? Or is there a typical time frame?

[Michèle Govier]

Canada doesn't have a lot of experience with safeguards, so I don't know if we can say what's typical. I would say that certainly if we are in a situation with provisional safeguards, we would largely be driven by that 200-day time frame during which those occur. I think we would certainly want that process wrapped up before the expiry of that 200-day period.

If an inquiry is based on an industry complaint—not one that the government has started, but one where an industry itself has come forward and asked the CITT to please look into it—those time frames are longer. I think part of the benefit and interest in having the government move forward is to do so on a faster time frame.

[Kim Rudd, Liberal, Northumberland—Peterborough South, ON]

Probably my last question will be around the surge of imports. That is the trigger that may come from industry or from government, or possibly other sources. We did hear that the surges are examined to determine whether or not they indeed are a surge that would warrant the process going through, or whether there's some particular unique situation that's causing it for another reason. I don't really understand what those reasons might be—i.e., yes, there's a surge, but there's a good reason for it, and here's what it is. I wonder whether you are aware of a particular infrastructure bill, maybe, that is causing a certain specific type of steel that needs to come into Canada.

[Michèle Govier]

With the surge analysis, that is a little more straightforward. It is looking a little bit more quantitatively at what imports look like and whether they've increased in absolute terms, as well as relatively, compared with what the market is or what Canadian producers have been selling.

Where you can look into these other issues, it's more on the injury side. You're trying to determine whether the surge has caused injury or could cause injury. There could be other factors in the market that are harming Canadian producers for different reasons, or having an impact on producers. For example, on the energy side, perhaps a downturn in the energy sector is having impacts, and there's less of a market in Canada, which is causing difficulty. The CITT in its analysis will look at some of these other factors. Parties can bring them forward for them to examine. They will look at that as part of their analysis on whether it's the surge that's causing, or threatening to cause, the injury.

[Kim Rudd, Liberal, Northumberland—Peterborough South, ON]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

We'll turn to Mr. Poilievre and then to Mr. Fragiskatos.

[Pierre Poilievre, Conservative, Carleton, ON]

I want to be clear with regard to Mr. Allison's questions. What is the total amount the Government of Canada has collected in countermeasures against the United States for its steel and aluminum tariffs, plus the total amount that was collected through the Canadian safeguard tariffs or other actions the government has imposed?

[Patrick Halley]

As I said, with respect to the countermeasures, the number we were provided with up to April 30 was $1.3 billion.

[Pierre Poilievre, Conservative, Carleton, ON]

Those are from the countermeasures against the United States?

[Patrick Halley]

Against the United States, from when were imposed on July 1. These numbers can change because of CBSA accounting and the fact that companies can modify that, but that is the number we have right now.

With respect to the safeguards, as Michèle mentioned, the form of the safeguard was a tariff rate quota where a quantity was coming in surtax-free, and only the products that were above the quantity were hit with a surtax. We can get you the exact number, but I think the surtax that was collected was about $10 million or $12 million.

[Pierre Poilievre, Conservative, Carleton, ON]

It was $10 million or $12 million.

[Patrick Halley]

That's right. But we'll get back to the committee with the precise figure.

[Pierre Poilievre, Conservative, Carleton, ON]

Again, the question we were asking earlier for you to get back to us on was how much of that money was given back to the businesses that suffered as a result of the trade conflict in the first place. We're not looking for a list of announcements. We're looking for dollars transacted.

For my next question, I just want to make sure I understand the full scope of this legislation. Clause 1 repeals sections that require a 180-day delay between the removal of safeguards and their reimposition. Is that an accurate summary of what clause 1 does?

[Michèle Govier]

It's a two-year delay.

[Patrick Halley]

Clause 1 removes the prohibition against further orders where there's a two-year period.

[Pierre Poilievre, Conservative, Carleton, ON]

A two-year period; so it removes the two-year delay.

[Patrick Halley]

That's right.

[Michèle Govier]

Yes. There are actually two clauses that talk about delay. The prohibition against further orders that you see in the first paragraph of clause 1 is the two-year period. It's saying that if you've imposed safeguards, you have to wait two years until you impose them again. Under that, there's an exception that says that if you've had your safeguard in place for fewer than than 180 days, you have to wait only one year.