International Trade Committee on June 26th, 2018

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

So you'd be tariffed again? Is it a double whammy?

[Robert Dimitrieff]

It depends on the product, but many of them are.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

So it's a double tariff for you.

[Robert Dimitrieff]

Yes. In the context of power generation, with gas or steam turbine and generator components, three major OEMs in the world make those things. For strategic decisions I fly to Japan or Germany to get the orders, but I ship my product to Georgia or to North Carolina. I'll be paying tariffs on that product when it ships. I'm selling to the world, but I ship to the United States and I'm getting tariffed on it. That is what's happening.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Can I ask Jerry a question?

[The Chair, Liberal, Mark Eyking]

Your time is up and we have to move on. We have time for only one slot, and the Conservatives have it.

I'll go right to Mr. Carrie, because he was almost finished but had a question.

Go ahead, sir. You have the floor. You were going to split the time with Mr. Hoback.

[Colin Carrie, Conservative, Oshawa, ON]

Yes. I'll try to be really quick.

I'm really listening to Mr. Dimitrieff, and we've listened to other witnesses today about these tariffs. Counter-tariffs will be very harmful for some people. I understand the importance of retaliation, but I want to bring up the point that maybe there's another thing we should be looking at.

If we get into the Americans' viewpoint, which I'm trying to understand, their issue seems to be the dumping of Chinese steel long term. We found out last week, when Minister Freeland was here, that they knew about this tariff action last year. They had a meeting at the highest levels in Italy with the Prime Minister and Mr. Trump. So they were aware of it. There was nothing in the budget. There didn't seem to be a plan. I was kind of criticized because I was asking the minister about what the plan was for auto; we can't just sit on our butts here, we have to get moving.

Mr. Dimitrieff, with Mr. Ross saying that if they took this action sooner it would have prevented the crisis, do you maybe think there's another thing we should be doing right now? Should we maybe be looking at, with the Americans...? Apparently, they're looking for global partners to make this tariff action work. Should we open up that page again and say, “Look, maybe if we work with you on this action in the big picture, all these issues we're dealing with right now will go away, or it will help us move closer to a NAFTA solution”?

You seem to be in the gravest situation of any of the witnesses we've had here.

[Robert Dimitrieff]

I don't want to pretend I know everything about the larger context of what's going on, but certainly it would seem to me that if Canada and the United States had close, if not mirroring, regulations on how things coming into North America would be tariffed or impacted, it should be easy to get some agreement to have a shared market internally.

I don't know to what degree that is a simple thing to do, or to what degree it is a complicated thing to do. I won't try to pretend that I have any insight into that. But it seems—

[Colin Carrie, Conservative, Oshawa, ON]

It seems that what they wanted was a stamp with country of origin, to make sure that it was Canadian steel and aluminum, and we are doing that, but as I said, it took a year.

[Robert Dimitrieff]

I don't know. I'm not aware of those details.

[Colin Carrie, Conservative, Oshawa, ON]

All right.

Go ahead, Randy.

[Randy Hoback, Conservative, Prince Albert, SK]

I think I'm going to go to you, Mr. Wilson.

We've talked lots about competitiveness in the past. We have a 25% tariff on steel and 10% on aluminum.

Can we make up some of this 25% by being more competitive? Can we in government do things to actually make you more competitive? Just look at it and say, “Okay, let's not put the tariff on; let's just become more competitive and absorb it somehow on the margins or through our ability to produce something cheaper and better.” Is that an option? Is that something we should also look at?

[Mathew Wilson]

Yes. I think it is critical that we look at that.

The problem that we're in right now is the short-term nature of the actions. Between now and Monday, I don't think there's enough time for the government to act to make us more competitive. This is not a new issue, though. This is something going back to the last government. We spent a lot of time talking about this. This goes back, five, six, or seven years that we've talked about these issues. Frankly, we're just not as competitive as we need to be in Canada from an investment-attraction perspective, and that impacts long-term competitive of companies. It's not a short-term issue. It's all long term. It's tax rates, investment support, and a wide range of things. Again, those are mid- to long-term issues, not issues for Monday.

[Randy Hoback, Conservative, Prince Albert, SK]

I get only five minutes, unfortunately.

[The Chair, Liberal, Mark Eyking]

It's more like two minutes now.

[Randy Hoback, Conservative, Prince Albert, SK]

You came back to NAFTA and the importance of getting this done.

I think everybody we've heard from today, whether they are for the tariffs or not for the tariffs, wants to get this done.

Would you agree that we need to simplify our process, actually look at NAFTA, go back to the basics, and do a basic trade deal?

[Mathew Wilson]

I would say that our number one recommendation to the government on the tariff retaliation was to focus on NAFTA. That to us is the number one priority. With applying tariffs, we understand the need to retaliate, but we need to fix the base problem, which is NAFTA in the first place. We think it should include things like working co-operatively with the U.S. and Mexico on dumping of products into the North American market. We think that's part of the package, which we recommended a year ago. I don't know how much discussion there was taking place but we think there's a path forward on NAFTA; that should be priority number one. Yes, we need to retaliate because of short-term priorities, but there are ways to get around some of the short-term pain, and we believe in that as well. We need to try to hammer out a NAFTA deal in the very short term. Hopefully, it won't be October or November, as was suggested earlier, but maybe something as soon as September.

[Randy Hoback, Conservative, Prince Albert, SK]

Yes, and we have to throw in Mexican elections.

Have you considered the risks involved with those, in this whole negotiation of NAFTA, with those happening on July 1, and what the outcome could look like? That's a risk we haven't even looked at.

[Mathew Wilson]

We've certainly looked at it. What we've been told is that the new government is ready to negotiate, whoever that new government is. Negotiations will resume shortly after July 1 because of their willingness. Maybe the negotiations won't be as hostile as we originally thought they might be, which is positive.

[Randy Hoback, Conservative, Prince Albert, SK]

One thing I think this committee has done very well is to educate members of the House, the Senate, and governors. What we sensed when we were down there the last time was that they don't have the ability to take that education or that knowledge and convince the President, the White House, what should be done.

Do you have any advice on how to do that? That is up to the PMO and the Prime Minister. What would you advise the PMO and the Prime Minister right now as far as his relationship with Trump goes?

[The Chair, Liberal, Mark Eyking]

A short answer would be good.

[Randy Hoback, Conservative, Prince Albert, SK]

Keep in mind that a year ago he hated the leader from North Korea, and two weeks ago he was hugging him.

[The Chair, Liberal, Mark Eyking]

A quick answer would be good.

[Mathew Wilson]

I don't know if there is a quick answer to that.

I'd say just don't forget that they are our number one customer and they're our number one client. We need to work with the U.S. regardless of the political realities of any situation.