International Trade Committee on June 26th, 2018

[Bob Verwey]

I don't know your business as well as I know mine. All I know is that the reason I am in business is the during the recession in 1992 I bought a business for $3 and we grew our business to where it is today. We made it through 2008. That was a tough time but we made it through.

Again, I emphasize that the amount of money we put on the line, at my age, was ludicrous to do, but we did it again. If we have a big downturn, I'm in trouble. That's all there is to it. My house, my family, everything is on the line, so it creates an effect. Not only that, but I'm responsible for 220 lives. That's 220 families with children and parents. The decisions I make reflect them. I have to be responsible for those decisions, and you have to be responsible for your decisions, for me.

One thing for sure is that I believe Trump is a bear and we shouldn't be poking him too much. The bear will start roaring. When the bear roars, he roars. We know how he roars.

How you operate in your business.... I know in my case if we are not getting somewhere, sometimes we need to change the people at the table, but I don't know. All I'm doing is asking you to please step quietly. I have 220 people who rely on us to make the right decisions. I can't afford to lay them off. They bought houses and cars and boats and RVs, hopefully. They're relying on us, and we rely on you, so—

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We're going to move over to the Liberals. We have a guest at our table, Mr. Drouin from Glengarry—Prescott—Russell.

Who's on first for the Liberals?

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I'll go first, Mr. Chair.

I want to thank everyone for being here.

Mr. Neumann, I'd like to ask you a few questions. I do have an important facility, Ivaca Rolling Mills, in my riding, which has a lot of your members. Obviously this has been a great concern to them, and I've been working on this issue for the past six months with them since the threat came, since the report came out.

You've mentioned worker support. First, I'd like to understand your opinion. Ivaca Rolling Mills is an American company. What do you think about an American company posing a potential security threat to Americans? What do you think about that?

[Ken Neumann]

I think it's ridiculous. We've been on record for some time that that is the most ludicrous thing we have heard. Canada is not the threat. For decades that's been proven. Ivaca is an American company. In Canada there is no such thing as a Canadian steel industry. All the steel producers today are foreign-owned. We build relationships with them, with ArcelorMittal or whatever the case may be. Canada clearly is not the threat. That's been proven time and time again. On the section 232 investigations, a lot of the high-ranking U.S. officials, including Wilbur Ross, who was mentioned here a moment ago, basically said that Canada is not a threat.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

In your opening remarks you mentioned that tariffs must go toward where section 232 will hit them most. I'm wondering if you're working with your members and if your members are working with management of various steel facilities on how to identify that. I know some of them are pivoting to fulfill what is potentially a new market since June 1. How would you recommend the government analyze where section 232 will have the most impact when we know that some of the companies are pivoting to fulfill a new market?

[Ken Neumann]

First of all, our view is—and I think our membership are truly on the same page as we are, as, I'm sure, a lot of the employers are too—that the tariffs should have been imposed at midnight on the same day the U.S. imposed tariffs. There is no secret about that. We've always been very firm.

Our employers are working with our employees. They're very concerned at what's coming down the pike because this is kind of untested water. The fact is they are very much concerned, and, as I said, we have not seen the results recently of immediate impacts and whether there are going to be layoffs. Companies order their steel on a six-week cycle, so we could probably see relatively soon whether that is taking place, but, trust me, our membership and the companies are very much concerned about what is transpiring. They are very much concerned with what's happening south of the border.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

You mentioned worker support, but I didn't hear you go into some other details. I'd like to understand what type of worker support you'd like to see—

[Ken Neumann]

The federal government made the announcement. We also represent the softwood lumber industry and the workers across the country, so it's the same kind of devastation for a lot of these communities that have been affected. In many cases there have been loan guarantees to the employers. There may be some exemptions under employment insurance, such that they will make some modifications. There may be some retraining. There are a variety of those things to make sure that those workers will have an opportunity to sustain their families. It's about making some changes that are going to benefit them. Because of this unfair action by the government, we want to make sure that our communities and the employers in those areas are looked after, and if there is some way we can expand the domestic market, which there is always room to look at, that would be another area we would encourage the government to go toward.

Unfortunately, in Canada we still build bridges, which are infrastructure, and bridge steel comes from foreign countries. It has been a heartache for me for a long time that we sit by despite having the opportunity to use Canadian products, the steel produced here, to create the jobs that are needed in the communities. We have the ability to produce it, no different from anybody else in the world.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Neumann.

Mr. White, you mentioned that you're collaborating with some of your U.S. counterparts on the other side of the border. Have you gotten some feedback? Do you feel they are being heard down south by some of the decision-makers there?

[John White]

Yes, I do feel they're being heard. The National Automobile Dealers Association is a very prominent organization. They've gone at this not only together, but also with the manufacturers, with the parts industry, and with other associations across the country. Of course, they're being careful in their approach. My understanding is that there are ongoing meetings. From our perspective, we are working to ensure that we are aligned in our strategy and in our position on this.

At the end of the day, yes, I do believe they're being heard.

[The Chair, Liberal, Mark Eyking]

Thank you.

Your time is up. We'll to move to the NDP.

Ms. Ramsey, you have the floor.

[Tracey Ramsey, NDP, Essex, ON]

Thank you so much, everyone, for being here today. You've brought us certainly a dire message.

As a 19-year auto worker from southwestern Ontario who was laid off during the 2008-09 period, I feel it very keenly. I think about all of the folks who are working across all of the sectors you represent and the real fear they feel about their jobs today and what we're facing. I think that worker income and support is critical, and at this point, no one knows what the government's plan is for workers.

Mr. Neumann, has the government reached out to you, and what conversations have there been about how to support workers who've been impacted over these last 20 days?

[Ken Neumann]

No, there's been no reach out to us. We've submitted letters to the Prime Minister, Minister Freeland, and I believe also Minister Morneau in regard to our concerns. First of all, there are numerous other elements in regard to the transshipment. In that same letter, we also addressed the fact that we're very much concerned about making sure that where people will be affected, they have those supports. We've not had any dialogue at this point.

[Tracey Ramsey, NDP, Essex, ON]

Well, that's shocking and I think deeply concerning, because it's been 20 days since these tariffs were implemented and we're five days away from the retaliatory ones coming into place. I can read back some of the things we heard today: “carmageddon” coming; “tsunami-like economic downturn”; 20,000 to 30,000 people losing their jobs. This is a very pivotal moment for the government to step up and stand behind working people, so I'm disturbed to hear that this conversation hasn't happened.

Another thing that I believe Canada has not moved quickly on is the prevention of dumping in transshipment. We did a study early on at the trade committee here on this issue. We put some recommendations forward to the government. The government came forward with some things that they would do, but we still haven't seen them implemented on the ground. We're deeply concerned about the impact that's being layered on top of all of these uncertain tariffs and everything else that's coming from the U.S.

To Mr. Donnelly and Mr. Volpe, what can Canada do immediately?

Mr. Volpe, you mentioned a couple of things potentially getting into domestic courts.

What can Canada do immediately to protect the industry?

[Sean Donnelly]

Thank you, Tracey, for your comments.

I can think immediately, as both Ken and I mentioned earlier, about safeguards. We have to protect Canada from diversion of offshore imports from everywhere else. We're an open market right now—open season—and it only takes a boat or two of steel from these other countries, unfairly dumped into Canada, to distort our markets. We're already seeing market distortions between Canada and the U.S. This will drive a further wedge and impugn us and hurt us even greater than right now.

[Flavio Volpe]

It's important to split domestic policy and foreign policy on this. I think the government is doing fine on foreign policy. We have to stop pretending that we're dealing with a rational counterparty. These people are caging children at the border, so discussions on auto tariffs are kind of weird.

From a domestic point of view, though, I think the government needs to plan for the fact that an irrational actor will likely move to impose these tariffs, and it should start to schedule how long it would take to have a successful fight, in either the U.S. district court or international trade court, and start to work backwards from what impact it will have on the industry. Certainly, from an operational point of view, you really have a very short period of time before everything grinds to a halt. Then you have to start picking your spots. The government needs to think about whether it will be in the business of supporting American companies that are making cars and parts and materials in Canada against an action by an American government. Those companies employ Canadians, tens of thousands of them.

It's a big mess that it would be best to avoid if we closed a NAFTA deal. I think foreign and domestic policy converge on “Can we get back to the NAFTA table?” Certainly on automotive, the Canadian industry, or at least the part that I represent, has expressed the view that there are acceptable terms on the table. Let's do what we can and get to it.

[Tracey Ramsey, NDP, Essex, ON]

You've both mentioned the cycle that it takes, that really we're in this bubble where no one has experience with what's coming towards us. What are you doing individually to prepare for this, and how can the government support you, both with respect to your businesses and the workers?

[The Chair, Liberal, Mark Eyking]

Short answers would be good.

[Flavio Volpe]

Let me say something really quickly.

The members I represent are commercial interests. Commercial interests that get hurt by improper use of statutory vehicles have access to a U.S. district court to go in and get an injunction. The government's pursuit of the same objectives at the WTO provides a really good cover for us.

Let's not be shy about the fact that—and I know the minister is currently saying it—these are illegal actions, an illegal use of section 232. We're looking forward to the government's supporting the independent businesses that show up in court. Whether that means being part of the action or not, taking a stand to say, “We're with you as part of a team Canada approach”, would be appreciated.

[The Chair, Liberal, Mark Eyking]

Thank you. That wraps up the time.

We're going to the member for Sault Ste. Marie.

Mr. Sheehan, welcome. You have the floor.

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

Thank you very much. It's an honour to be invited here to participate in this very special, important meeting today.

I'm from Sault Ste. Marie. We have two major steel players there, which many people are familiar with, Algoma Steel and Tenaris Algoma Tubes, which has operations in the Soo and Calgary.

We're in a unique situation with about 60% of the exports from Algoma Steel going to the United States. I want to thank people like Randy, Tracey, and some other folks. We travelled together down to Washington on two separate occasions to tell the story, which the media dubbed the “charm offensive”, over the last 10 months.

Algoma is a perfect example of the integration of NAFTA and how it works so well. Steel is made by steelworkers in the Soo, but it's made with coal from coal miners, as well as iron from iron miners, from four states. It's put into the transportation network. It travels across the bridge, comes through the ports. It's made into steel, and then it goes back into the supply chain into auto, into manufacturing, into defence.

One question I want to ask Ken and Sean is how these kinds of tariffs are going to negatively affect the United States and the workers there. In The Washington Post today they talk about the first layoffs in the United States related to steel tariffs. A nail company down in the States just lost 60 employees. They're set to close probably in a few months.

I would like to hear some comments on the negative effects these tariffs are going to have on the Americans.

[Sean Donnelly]

Thanks, Terry.

First of all, we don't support tariffs. We want these things eliminated outright on both sides. That said, they're in existence, so as we said earlier, we need to retaliate proportionately. Where steel can't be made in Canada, we need to inflict pain, unfortunately, on U.S. consumers of steel so they create the impetus in the States to reverse these decisions. Until you see that, they don't give a heck about us. They don't care about us. They don't care about our profitability.

I sit with CEOs of the U.S. steel mills at the American Iron and Steel Institute, and they're laughing. They're laughing. They're making all kinds of money. They don't care about Canada. They don't care about their steel shipments into Canada. Therefore, we need to inflict pain on U.S. steel consumers, unfortunately. That's where the pain has to be felt. The insurrection has to happen in the U.S., not in Canada.

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

Thank you.

Ken.

[Ken Neumann]

As I said earlier, for a lot of the companies that we deal with, there's no such thing as “Canadian”. They operate on both sides of the border, so there's no doubt there's going to be an effect.

If you look at the auto industry, there are some parts that may be made here. They don't have the facilities in the United States, so that's going to have an effect on the auto industry. If you look at the integration and the $1 billion in trade crossing the border every day, there's no doubt that the American workers are going to be affected.

I heard the comment earlier, “Don't poke the bear.” Well, I'll tell you that if you don't poke the bear, he's going to eat your lunch. That's exactly what's coming down the pike. The fact of the matter is that on the tariffs, you have to be tough on this. We're a sovereign nation. We're proud of the work that we do. We're proud of the employers we have. We're proud of the communities, be it the Soo—there's a long-standing history there. The fact is, don't punish your best neighbour. That's just not the situation. Come to the table with respect and dignity. That's how it works. We deal with a lot of the people at this table and around here. When it gets to collective bargaining, you don't become a bully. The fact is, this is about fairness and justice for the country. There's a long-standing history.

You're right. On both sides of the border, working people are going to get hurt, and in many cases the consumer is going to pay a much larger price.

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

We've been talking about what Wilbur Ross has said. He has said a lot of things that I disagree with. Canada has one of the strongest trade systems in place right now. We have well over 70 measures in place against steel dumping. In 2015, just a few months after we were elected, the steel industry, the unions, were in my office saying that there had been virtually no protection against dumped steel and that we needed changes. After a few months we put in place, in the first budget, measures that created a longer term in which these tariffs applied. We went and consulted and we heard. In 2016 we put in “particular market situation”, anti-circumventing, scope-ruling, and union participation. Then when the Prime Minister visited the Soo and many other places and talked with the United Steelworkers, the steel producer Algoma, the mayor, and all the stakeholders, he enacted more money for more guards with the CBSA and put in a lot more money and a whole bunch of other things.

My question is quite clear: without those in place, is there a steel and an aluminum industry under the current situation?