Thank you very much.
Good morning to the honourable members of the committee, and thank you, as always, for the opportunity to present today on behalf of the Canadian Steel Producers Association, as this committee undertakes its important task of studying the implications of a potential Canada-Mercosur free trade agreement.
CSPA is the voice of Canada's $14-billion primary steel production industry. Our producers are integral to automotive, energy, construction, and other vital industrial supply chains in Canada, producing roughly 13 million tonnes of primary steel and an additional one million tonnes of steel pipe and tube on an annual basis. This activity employs directly 22,000 Canadians, while supporting an additional 100,000 jobs indirectly.
As an organization the CSPA supports open and fair trade. We appreciate the value of a diversified trade portfolio and understand the importance of free trade agreements to Canada's economic future.
With that in mind, we also believe that the growth of and investment in advanced manufacturing in Canada should be a key consideration in the negotiation and ratification of any free trade agreement. Successful agreements should enhance employment opportunities while ensuring Canadian enterprises retain the ability to compete fairly in domestic markets; promote fair, open, and mutually beneficial trade; facilitate the global export of high-quality Canadian products; and promote Canadian socio-economic values, including strong environmental and health and safety standards.
To ensure that a given agreement has the best chance to benefit Canadians, we believe that any negotiation in which Canada is engaged should be informed by open consultation with affected industries and rooted in the following principles: the preservation of reciprocal, market-based trade with strong provisions to mitigate unfairly traded imports; the encouragement of foreign direct investment in Canada; the enhancement of domestic supply chain relationships; the promotion of the overall economic interests of Canadian manufacturers; and effective and enforceable controls for state-owned enterprises and/or currency manipulation.
Specific to Mercosur, the CSPA would like to highlight considerations for Canada's steel industry, which we think the Government of Canada should be mindful of during this negotiation. First, there is virtually no primary steel and very few steel-containing goods currently exported from Canada to Mercosur countries. This is unlikely to change in the context of a free trade agreement. We don't expect any noticeable increase and would in fact note that there are presently Canadian International Trade Tribunal anti-dumping remedies in place on certain Mercosur countries relating to imports on hot rolled carbon steel, alloy steel sheet, steel strips, and steel plate.
We would also note that there exists real potential for market share erosion within the steel-using community in Canada, particularly as it relates to those involved with automotive manufacturing and the makers of energy, pipe, and tubular goods, as the result of an agreement with Mercosur.
To mitigate these exposures the CSPA would propose a parallel domestic policy implementation process to blunt potential impacts of a Canada-Mercosur agreement on our sector. These would include the continued improvement of Canada's trade remedy system, and increased enhanced resources for investigation and enforcement at the CBSA to properly ensure that Canadian companies and workers are protected from harms associated with dumped and subsidized goods.
The fundamental principle of two-way gains from free trade agreements is founded on market-based trade, and the contravention of WTO rules through product dumping and subsidization undermines those goals. This behaviour distorts markets, displaces domestic production, and undermines Canadian supply chain opportunities.
An effective trade remedy system needs to detect unfair trade activity and engage, as appropriate, the required tools to enforce measures already in place, accurately guide those investigations, and discourage circumvention. There should be no free ride for dumped products through free trade agreements, and no trade agreement should ever include measures that would weaken the trade remedy system in Canada.
I would also note the importance of the development of government procurement guidelines that account for greenhouse gas emissions, the state of sustainable development principles, and overall respect for the environment. Greater use of Canadian steel in government procurement programs significantly reduces the carbon footprint associated with those projects. The steel in Canada is by far the cleanest steel for use in the country in terms of a full life-cycle GHG analysis.
As such, domestic preferences for Canadian steel products would reduce global GHG emissions while increasing demand for our domestic steel products and offsetting potentially increased competition from Mercosur producers.
Finally, we would also suggest the inclusion in the final agreement of a broad, enforceable discipline or a series of disciplines on state-owned enterprises, which would discourage government ownership of entities that operate in a commercial context, require a state-owned enterprise to operate according to commercial considerations, prohibit those enterprises from discrimination against foreign suppliers, restrict the ability of SOEs to give or receive subsidies, and recognize that any subsidies that may be provided to SOEs are actionable and subject to countervailing measures.
Finally, I would also note from a Canadian steel perspective, the overarching importance of the preservation and modernization of the North American Free Trade Agreement. That agreement and the ongoing negotiations as relates to the future of that agreement are of overwhelming importance to our industry and certainly more impactful to the Canadian economy than a potential Mercosur agreement. In engaging in any additional international negotiations at this time, the Government of Canada should be especially mindful of the consequences in the NAFTA context and should avoid any discussions or activities that would potentially undermine or negatively affect in any way those vital negotiations.
In closing, thank you again to the committee for the opportunity this morning. I would be happy, of course, to answer any questions you may have.