Finance Committee on June 11th, 2019

[The Chair, Liberal, Wayne Easter]

We shall call the meeting to order. Pursuant to the order of reference of Monday, June 10, we are considering Bill C-101, an act to amend the customs tariff and the Canadian International Trade Tribunal Act.

We have a number of officials on this issue. From the finance department we have Mr. Halley, director general, international trade policy division, and Ms. Govier, senior director, trade rules. From the foreign affairs department, we have Mr. Layton, executive director, trade remedies and North American trade division.

I'm not sure if you have an opening statement, Mr. Halley. We'll start with you and then go to a series of questions. Welcome.

[Patrick Halley, Director General, International Trade Policy Division, International Trade and Finance, Department of Finance]

Thank you, Mr. Chair.

My name is Patrick Halley, and I am the director general of the International Trade Policy Division at the Department of Finance. I am joined by Michèle Govier, senior director within my division, as well as John Layton, executive director of the Trade Remedies and North America Trade Division at Global Affairs Canada.

It is a pleasure to be here with you to discuss Bill C-101—

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Chair, I'm having trouble hearing this.

[The Chair, Liberal, Wayne Easter]

Yes. I was having a hard job hearing as well.

You'd better start over, Mr. Halley. Speak directly into the mike, if you could.

[Patrick Halley]

Okay.

It is a pleasure to be here today to discuss Bill C-101, An Act to Amend the Customs Tariff and the Canadian International Trade Tribunal Act.

Before I provide a description of the amendments proposed in the bill, it is relevant to remind you of the current context that has led to the bill.

Global safeguards are trade measures that may be imposed under World Trade Organization rules and Canadian law where there is evidence that an increase in fairly traded imports has caused, or is threatening to cause, serious injury to domestic producers. In October 2018 the government imposed provisional safeguards for a period of 200 days on imports of seven steel product categories: heavy plate, concrete reinforcing bar, energy tubular products, hot-rolled sheet, pre-painted steel, stainless steel wire, and wire rod.

In accordance with Canadian law, the government also asked the Canadian International Trade Tribunal, the CITT, to inquire into whether final safeguards that could last up to three years on these products were warranted. At the beginning of April, the CITT shared its findings that final safeguards were warranted on imports of heavy plate and stainless steel wire. As a result, the provisional safeguards on the remaining five product categories were terminated on April 29.

The customs tariff currently prevents the reimposition of safeguard measures on products that were subject to previous safeguards for a period of two years following their last imposition. As such, for the five products for which provisional safeguards expired on April 29, safeguards may not be imposed on them until April 2021. The amendments being proposed in Bill C-101 would temporarily remove the two-year moratorium on the imposition of safeguards for products that were recently subject to such measures.

As well, consequential amendments are being proposed to the Canadian International Trade Tribunal Act. These amendments are intended to be temporary. That's why they've been structured as follows.

First, the provisions setting out the prohibition on further safeguards in the customs tariff would be repealed upon royal assent. That's in subclause 1(1) of the bill. A consequential amendment is also made to the CITT Act to remove those references to these provisions during the period of time during which they are repealed. That's in subclause 2(1) of the bill.

Second, the same provisions that are being repealed would be reinserted two years after royal assent on both the customs tariff and in the CITT Act. These are in subclauses 1(2) and 2(2). The coming-into-force clause, which respected the two-year period after which it would be reinserted, is in the coming-into-force provision of the bill.

The amendments would give the government the flexibility, should the need arise during the two-year period, to respond quickly and appropriately by imposing safeguards where a substantiated surge of fairly traded imports harms, or could harm, Canadian producers and workers. The conditions for the application of safeguards, as provided for under Canadian law, remain unchanged, and would still need to be met in order for any further safeguards to be put in place.

That concludes our presentation. We'd be happy to take any questions you might have.

[The Chair, Liberal, Wayne Easter]

Okay.

We'll go to five-minute rounds. We can go a number of rounds for sure, if we have to.

Ms. Bendayan.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you, Mr. Chair.

Mr. Halley, thank you very much for joining us today and for your testimony.

Since you made your presentation in English, I will also put my questions to you in English.

You mentioned in your opening remarks that the conditions for imposition of safeguards measures have not changed. I'm wondering if you could similarly confirm that the manner in which CITT conducts its inquiries has not changed either, and will not change, should this legislation pass.

[Michèle Govier, Senior Director, Trade Rules, International Trade and Finance Branch, Department of Finance]

Yes. Nothing is being changed from what's laid out in the CITT Act or the customs tariff with respect to the conduct of the CITT's inquiries. What happens in such cases is that a reference is made to the CITT requesting that they undertake the inquiry. The terms of it are set out there. All of the standards they have to follow are set out in the law. None of that is changing.

[Rachel Bendayan, Liberal, Outremont, QC]

Okay.

Perhaps just for Canadians watching and for everybody's benefit, even in this committee, you could take us through the steps, if you will, of what would happen should the legislation pass and the government determine, based on changing market circumstances, that safeguards should be put in place. Could you just take us through what the process would look like?

[Michèle Govier]

I can just walk through what was done previously, since we expect that it would follow a similar process.

In October provisional safeguards were imposed. Provisional safeguards can be imposed under the law where the Minister of Finance makes a report to the Governor in Council and there's a decision to impose provisional safeguards. There's a requirement at the same time, if you are imposing provisional safeguards, to immediately refer that to the tribunal for inquiry. The tribunal then undertakes its process. It would notify potential interested parties and solicit information. They do their own internal analysis. They hold hearings. They hear arguments from parties, both for and against the imposition of safeguards. They would then issue a report to the government recommending whether or not safeguards are merited on the products in question.

In doing their analysis, the key factors they would be looking at are whether there's a surge in imports—a meaningful increase in imports in the period in which they're looking—and whether that increase in imports has caused, or could cause, injury to the domestic producers of the steel products. They would be conducting that analysis.

[Rachel Bendayan, Liberal, Outremont, QC]

I'm sorry to interrupt, but when you say “they”, you mean—

[Michèle Govier]

This is the tribunal process.

[Rachel Bendayan, Liberal, Outremont, QC]

The independent tribunal.

[Michèle Govier]

Yes, that's right. They would be conducting that.

Yes, I think it's important to indicate that it's an arm's-length tribunal that reports to the government, but the government does not have a direct role in that process. Once the recommendation comes to the government, there is then another decision point as to whether or not the tribunal's recommendations would be followed. If they recommend four safeguards, the government still has the choice of whether to impose them or not, following their recommendations. If the recommendation is not to impose safeguards, then there is not the discretion to do so under the law.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Go ahead. We've got lots of time.

[Rachel Bendayan, Liberal, Outremont, QC]

I'm wondering if you could confirm this. While the CITT is analyzing the safeguards and conducting its examination, pending the result of its final decision, the provisional safeguards are in place, are they not?

[Michèle Govier]

That is the case, as happened last fall when provisional safeguards were undertaken. They were in place for the entire time that inquiry was taking place. Provisional safeguards, as Patrick noted, went until the end of April. The CITT issued its report early in April. So that would still be the case.

That said, it is optional to impose provisional safeguards. There is another route the government could potentially take, which is simply to refer the matter to the CITT for their inquiry and not impose provisional safeguards, but as I said, last fall the decision was to impose provisional safeguards and do the inquiry concurrently.

[Rachel Bendayan, Liberal, Outremont, QC]

That was instead of waiting an indeterminate amount of time for the tribunal to make its decision.

[Michèle Govier]

That's correct.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Before I turn to Dean, could you give us the time frames for that as well?

[Michèle Govier]

Provisional safeguards can be imposed for a maximum of 200 days. That's because of—

[The Chair, Liberal, Wayne Easter]

No. The Minister of Finance and cabinet refer it to the tribunal for inquiry. What are the time frames following that?

[Michèle Govier]

When it's referred to the tribunal, the time frames are actually built into that reference. We can make them as long or as short as possible, because the provisional safeguards were in place for a maximum of 200 days, and 175 days was given to the tribunal to report back in order that the government would have its report before the provisional safeguards expired.