Good morning. Thank you to the honourable members for the opportunity to present today on behalf of the Canadian Steel Producers Association.
We represent Canada's $14 billion primary steel production industry. Our producers are integral to the automotive, energy, construction, and other vital industrial supply chains in Canada.
I would like to start my remarks today by providing some context in regard to the currently balanced and mutually beneficial nature of the Canada–U.S. relationship in steel. Canada and the U.S. enjoy a complementary trade relationship founded on the fair market principles embraced in both jurisdictions.
In 2016 more than 10 million tonnes of steel was traded between our two nations, with a market value of over $8.8 billion. These are U. S. dollars, by the way. Canada shipped $4.4 billion worth to the U.S and the U.S. producers shipped $4.45 billion worth to Canada. So it's extraordinarily balanced.
Steel continues to be a major export commodity from the United States into Canada, and supports significant economic activity and employment in America's steel sector. Last year 50% of U.S. steel exports came to Canada, which accounted for approximately 30% of Canada's domestic market. Additionally, significant volumes of raw inputs for Canadian steel production are sourced from U.S. suppliers. Approximately $1.5 billion of iron ore, metallurgical coal, scrap steel, zinc, and other metals were purchased by Canadian companies for processing into steel in 2016. Beyond the value of the commodities themselves—and I know that later today you will be hearing from the port authorities, who can speak to this as well—the economic activity and transportation associated with those raw materials contribute significantly to the economies of both countries.
Without question, American employment and industry are supported by the ability to access fairly traded Canadian-made steel, and any disruption to our well-established, heavily integrated, and mutually beneficial supply chains will create unintended economic consequences on both sides of the border.
Several steel producers maintain facilities and employment in both Canada and the United States, with their shared supporting additional investment and expansion. Integration also facilitates timely delivery of products, which meets complex customer requirements, allows for specialization in market segments, maintains appropriate economies of scale and, importantly, supports a common competitive defence against dumped and subsidized imports.
Mutually assisted defence against unfairly traded steel is critical in the Canada–U.S. context. As we have known for some time, dumped and subsidized steel—primarily from China—is justifiably the United States' top international trade irritant.
Global excess production in steel has now risen to nearly 700 million tonnes annually. The People's Republic of China, through a variety of state supports, by itself now maintains more than 425 million metric tonnes of the global surplus—that is almost 30 times the size of the entire Canadian steel market—despite declining demand in China. Simply put, that steel has to go somewhere.
The price deterioration and market instability associated with that illegal trade has contributed significantly to our industry's challenges. This is hurting North American families, and capacity utilization and employment are under threat throughout North America.
To that end, since 2003, NAFTA governments and the NAFTA steel industry have worked through the North American Steel Trade Committee to demonstrate our shared commitment to combatting market distortions in the steel sector, to further collaborating between our steel industries, and to preserving our fair and balanced trading relationship.
We have worked together within the NASTC to develop strong and coordinated positions on issues in multilateral settings of importance to steel, including the OECD steel committee and WTO rules negotiations. Moreover, we have used the NASTC to track developments in certain steel-producing countries for the purposes of identifying and addressing distortions in the global steel market. This is including the submission of joint comments on China's proposed changes to its steel industrial policies.
I mentioned the OECD steel committee. We're also active partners with the United States there and, through that forum, have supported the establishment of the G20 Global Forum on Steel Excess Capacity, from which we share an expectation that an eventual permanent reduction of excess capacity and government interference in the sector will follow in the near term.
However, until that time comes, we fully support appropriate domestic and multilateral action to address unfair trade. I would highlight, in that context, the recent establishment of a trilateral customs steel enforcement dialogue among Canada, the United States, and Mexico to facilitate coordinated compliance efforts and information sharing regarding the enforcement of anti-dumping and countervailing measures on steel products.
Despite all of our best efforts and collaboration, continual vigilance is required to make sure that Canada's steel industry is not negatively affected by sweeping U.S. action to defend the interests of its domestic producers. To that end, I would specifically note that it is essential that Canada secure national consideration in the Department of Commerce's ongoing section 232 national security investigation on imports of steel; in the department's process on the construction of pipelines using domestic steel and iron; and as regards the department's ongoing processes on the enforcement of current Buy American policies. In each instance, the Government of Canada should continue to rigorously defend the interests of Canadian steel producers and steelworkers to ensure that no adverse consequences result from direct action taken by the United States, and to make sure that our market is not unduly exposed to the diversion of foreign product that would result from U.S. action. Without positive outcomes on these three consequential investigations, the health of the Canadian steel industry is at risk and any potential benefits to industry that would result from a NAFTA modernization would be effectively neutralized.
In closing, I would again note that the Canada–U.S. relationship in steel is defined by mutual benefit and fairness. The United States, I would note, has not filed a trade complaint against Canada on its steel products since 2002. Preserving that relationship while collectively addressing damaging, unfair global trade in steel should be our shared focus.
Thank you very much for your time. I'm happy to take your questions.