Finance Committee on June 12th, 2019

[Dean Allison, Conservative, Niagara West, ON]

Ms. Cobden.

[Catherine Cobden]

Yes, I would say that the trend has been downwards on all products, most products.

Dave, do you want to make a comment from your product category?

[David McHattie]

I won't make a comment from my product category necessarily, but just to give you an idea, for a benchmark hot rolled coil that is either in China or in the United States, those costs go up and down, and to give you an idea, they are lower today than they were. I look at about $750 U.S. for a short ton in the U.S., according to Steel Business Briefing, today or at the end of April. Last April, it was $967 a ton.

Unfortunately, that's the volatility that we see as result of global forces, and I don't think we should try to point fingers at the safeguard-caused volatility in Canada or the retaliation that was necessary from the 232-caused volatility or more volatility in Canada.

As a result of overcapacity, there's a lot of up and down and, if we had had more market forces and fewer distortions, I think we would see more stability overall.

[The Chair, Liberal, Wayne Easter]

Okay, thank you all.

We'll turn to Mr. Fonseca.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you, Mr. Chair.

What we've heard is that the 232s, these very unfair and unjust tariffs, brought some very dark and difficult days for many companies. The only silver lining I see in any of this is that it did bring labour, employers, stakeholders and government together. I could tell you that I sit on the international trade committee, and my experience down in Washington, along with MP Allison and the others, the Conservatives, NDP and Liberal members down there, was that we were a unified team, and that's what I'm finding here, what I'm hearing from all of you, and that's not always the case.

From these learnings in terms of this experience that we're still going through, what would you say are the big takeaways of what we should continue to do now that we can't take our eye off the ball? What do we need to do to continue to have this robust team and this approach to ensure that our American friends and others understand the importance of fair trade so that we don't see these unfair tariffs come back?

I'll open that up, and we can start with Mr. Neumann.

[Ken Neumann]

Other than the U.S. steel and some of those things, we got off to a rocky start. When it comes to maintaining the jobs and investment, I think that we go hand in hand with the employers to make sure we have a vibrant industry, and the fact is that communities basically depend on that.

This was a shock to all of us. As I said earlier, I'm more concerned about the bigger picture. I think the government needs to take a significant role, because dumping didn't just start last year. This is a problem that has been ongoing for some time, so we have to tighten the mechanisms to make sure we have the right folks and the right legislation to protect us at the border.

We've made some baby steps with regard to the last budget where they've given the unions access to have standing at hearings such as those held at CITT. I personally don't think that that's going far enough, because our colleagues in the U.S.... Our union is an international union, and we have filed 89 trade cases on a variety of products.

From the workers' perspective, if you look at the most recent hearings, like the one in 2015, the rebar case, we testified. The fact is that we can bring a lot to the table to give the workers' perspective, so that's our next thing. I think that we learned that workers should have a say, because it's their jobs as much as the employers' in those communities. We want them to be vibrant; we want them to expand. We've got some work to do, and I'm confident that we'll get there.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Catherine.

[Catherine Cobden]

I would just like to be reflective for a moment and say how important and impressive it was to have the Team Canada approach. I think what happened was that no matter what party and political stripe we were from, what community we were from, what side of the business ledger we were from, etc., we understood that the real challenge was outside of Canadian borders and that we needed to link arms, stand together and combat that challenge.

I think the most important message going forward, though, is that we're not done, and we've been mapping the overcapacity issues out pretty clearly today. They're still there, and they do continue to threaten us. We still need to link arms and do these additional things.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

One of the approaches we took when we went down stateside to Washington was to explain that this was actually helping China, which has increased its market share from section 232. Section 232 actually helped China increase its market share by 6.6%. They have been doing quite well with section 232. That was pretty impactful, but through stakeholders like yourselves we were able to get that type of information and deliver it to decision-makers down there.

Is that something you think we have to continue?

Maybe we haven't always been on top of things in terms of what we're doing at the border, as Mr. Neumann was saying. Is there something we could do immediately or in the mid-term that would also help to not only get the message across, but also stop any of these surges, so that we could be vigilant?

[Catherine Cobden]

I personally have already made this point, and I would like to double down on it in the sense that there's been a working group that's looking at strengthening our trade remedy system. It sounds “techie”, but it's really important. We must strengthen our borders and our mechanisms to combat the challenge we're facing in 2019 of a very different world.

In addition to the next step that this legislation represents, that is a very important thing. That's not medium term. That's also now. I understand that it must feel like it just doesn't end—I know I feel that way—but it isn't going to end. We have to put these things in place and we have to keep going.

[David McHattie]

If I can jump on top of what Catherine is saying, over the last 10 years, we've been discussing the challenges and how exporters are willing to use whatever trick they can to gain more market in stable industrial markets like Canada. Canada's trade remedy system needs to continue to improve. We have very good, very knowledgeable government officials who understand this. The working group of the last 30 days has come up with some great recommendations and they're in the stakeholder engagement process. I've spoken to some stakeholders and they are very supportive of it.

If we go back 10 years, two different governments have agreed that this is a challenge. They hear it at the OECD. They hear it at all global forums and have committed to continue to make improvements, so that Canadian businesses can compete, invest, employ, strengthen and stabilize. This is an objective that is multi-party in commitment. A committee like this.... If we can obtain a multi-party commitment to continue on this progress, it is very helpful and sends a strong signal that Canada will continue to look at these things and will continue to make sure this a healthy place to invest.

[The Chair, Liberal, Wayne Easter]

Thank you.

Next is Mr. Dusseault.

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

Thank you, Mr. Chair.

My first question is for you, Mr. Neumann.

You made a proposal about union participation in the Canadian International Trade Tribunal. Can you give us more details on this proposal? You propose that the law formally recognize the role of unions with respect to the tribunal. You want them to participate in the hearings and be able to file complaints or cases with the tribunal. Can you give us an idea of what this might look like?

My second question is for anyone who can give us more information on the role of the Canada Border Services Agency at our borders, mainly in preventing and detecting dumping.

What do you think about the effectiveness of the agency's work in this regard? Does it have the necessary resources to do this work?

Mr. Neumann can answer first, and then we could hear from the others.

[Ken Neumann]

Thank you for the question. I alluded to it a bit. The fact is, we have lobbied quite extensively the government of the day to try to make some amendments so that we would have the same access as our union. As they know, we're an international union. We participate and work with the steel industry, the aluminum industry, the rubber tire industry, whichever. The fact is, we should have the right to file complaints.

In this last budget, the government came and gave us basically standing, and for that reason, Craig and many of our people were full participants. They had the right to bring evidence and to cross-examine. That's a step in the right direction, but I truly do not think it's going far enough. We truly have to have the ability to file trade dispute complaints on behalf of the communities and our members. That's something we're going to continue to strive towards, and hopefully the government can see fit....

I can also share this with you. I did some testimony here earlier in regard to the 2015 rebar case in British Columbia, where the B.C. government at the time was asking for exemption. I personally testified, along with some of our other people, because the argument there was that they couldn't supply the west coast because that had to do with the Site C dam. Basically the CITT ruled against them, and they also talked about the importance of the union members being part and parcel of that evidence. More recently, we've seen that the chair of the CITT talks about the importance of having workers. So, we're not going to give up on that. We're going to be very persistent.

The fact is, it's an industry that we care about. It's an industry that we want to make sure is going to be vibrant, because there's no successful economy around the world if you don't have an efficient steel industry. We want to become part of that and make sure that we don't lose that sight.

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

On the CBSA, anyone?

[Catherine Cobden]

I actually was giving a pause because I don't know, Dave, if you're still there, but Dave was the chairman of one of the working group subcommittees on CBSA, so he's very well versed.

Dave, did you want to come on?

[David McHattie]

Yes. Sure.

We had weekly meetings with CBSA officials and industry, and participation also from the union. We identified some areas of, I wouldn't call them deficiency, but areas where the system was maybe not as transparent and where there were tools that were available, used by other jurisdictions, that we weren't maybe using to the same extent. We understood why they weren't being used and what was needed. A series of recommendations has been made, and we're hopeful that they will be adopted, especially since they were done with the participation of the government officials who work in this every day.

If I go to what's black and white, the CBSA calculate these normal values and these margins of dumping. If they don't have the breadth of tools available to calculate those normal values when they have imperfect information, then those normal values won't be reflective of reality. These tools help get them the most information they can and the ability to calculate those normal values as well as possible.

I'd like to point out one particular area where the exporting community has a responsibility, when their cost and prices change in their home market, to notify the CBSA so that their normal values can be updated. Historically they've never done that, because they don't have an incentive to have the normal value increase. Then they would not be able to undercut the Canadian industry, even if they're under our funding. So, there has been no tool that the CBSA could use to go backwards in time for when those costs and prices changed and retroactively reassess them duties. That was one of the areas we identified. If we can implement this retroactivity, that will then incent the exporting community to notify the CBSA when their costs and prices change so their normal values will more accurately reflect the conditions.

There were nine to 11 different areas where we saw improvements, but I'm highlighting that one. Catherine used the word “techie” earlier, so I don't want to go through all the different tools, but we're available to come back and meet with anyone individually and share the value of them. It was serious work done by both governments and industry. We believe that they can all be implemented between now—some are immediate—and the end of the summer, and that will make a difference.

[The Chair, Liberal, Wayne Easter]

Catherine.

[Catherine Cobden]

Mr. Chair, if I may jump in, I'll just point out that there was an allocation of new resources in the last budget. That was certainly a step in the right direction but—as Dave is alluding to—there are other things that can be done that industry and government agree should be done.

Therefore, we'll remain vigilant on those recommendations. We'll be sure to communicate with folks, once these things are considered by the government, to ensure they are delivered.

[The Chair, Liberal, Wayne Easter]

Thank you. That's good information.

Mr. May has the last series of questions.

[Bryan May, Liberal, Cambridge, ON]

Thank you, Mr. Chair.

I was very pleased to be asked to join this committee. I am not a usual member of this committee, but I jumped at the opportunity.

As the member of Parliament for Cambridge, I'm very proud of the work that's done at Gerdau and the many different steel and manufacturing businesses in my community that have had a real struggle over the last 11 months or so in dealing with the uncertainty.

Through you, Mr. Chair, I want to thank all of the companies affected by this for their patience and for standing with us. I talked to many different folks in the industry who felt it was their patriotic duty to stand with us and be vigilant, because it became not about steel and aluminum but really about sovereignty and allowing Canada to make the decisions for itself on how we govern our own industries.

One of the problems with going last is that a lot of the questions have already been asked. Pierre, I thought I had a good one, and you just stole it from me.

I will ask a technical question, however. It's just my ignorance in the process. I guess I was surprised, Mr. Neumann, when you were talking about how it requires the industry to file a complaint in order to get these things moving. I would like to hope that we can get to a point—as Ms. Cobden mentioned—of modernizing the process so that these things can be caught prior to requiring industry or unions to be making these complaints moving forward.

When that happens, how quickly does the process work? Is it a fairly large range, or is it fairly quick in terms of how these things get done if there's an obvious case or a spike in dumping? How quickly can we respond to these things, prior to, of course, the legislation and tool we're going to have—hopefully—in front of us soon?

[Ken Neumann]

First of all, we don't have the right to actually file. We just now have the right to have standing. Therefore, once the employer decides to file a complaint, we then get notification in regard to what the product...and all this other stuff. We really don't participate from the beginning. However, once the complaint is filed, we then have standing and we work no differently from how we did in these last seven products. That's the issue.

I think the best person to answer the question of the timing on it is Catherine.

I think once they find that they've been injured and there's some damage coming, they go ahead and file the complaint and go through a process.

[Catherine Cobden]

Right. From the CITT's perspective, it's talking about the decision-making process to go from provisionals to final, which I don't think this legislation changes. This legislation really just removes the barrier to revisiting safeguards so that you no longer have to wait two years.

I don't know, but I am expecting the process part will be similar. It's about 175 days of CITT deliberations, but that's with provisionals in place. It's designed this way. You can put them in place, and then the CITT calls the witnesses, gets the data, gets the information and then deliberates internally on that information and comes up with its independent ruling. It's 175 days, even though the provisionals are in place for 200 days, because then of course the minister needs to have his or her period of time to deliberate on the recommendations that come forward.

[Bryan May, Liberal, Cambridge, ON]

Ms. Cobden, you've talked a lot about the modernization of the process. Is there an opportunity, or would you have any recommendations with regard to maybe modernizing or strengthening the relationship we have with our friends to the south in terms of working together, so that we're not necessarily doubling up on efforts to try to combat this issue?

[Catherine Cobden]

Yes, thank you very much for that comment. I had that thought earlier, to talk about the sense and the understanding with the U.S. that gives us the certainty that they see the world the same way we do; that there's overcapacity. These risks are significant, and we all need to act. We can all do that in our domestic context, but there's also the opportunity to work with our NAFTA partners collectively to look at things we can do to strengthen our NAFTA zone going forward.