Evidence of meeting #123 for International Trade in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was tariffs.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Terry Sheehan  Sault Ste. Marie, Lib.
Patrick Halley  Director General, International Trade Policy, Department of Finance

4 p.m.

Liberal

The Chair Liberal Mark Eyking

Good afternoon, everyone.

Welcome, Minister, and also your officials, to our committee.

We are a very active committee. Over the last couple of years, we've studied six different trade agreements. We've travelled around the world, but we've also travelled across the country and met with Canadians to talk to them about the importance of trade and how it affects their lives.

As you know, following up on the negotiations with United States and Mexico, our committee decided to study the impacts of the tariffs on Canadians and Canadian companies. I think your timing is very good in coming here today. We've had a good sense from our witnesses over the last two or three meetings on what's happening and the impacts they've had, the challenges, and what they're going through.

This is not your first committee, so welcome again, and you have the floor, sir.

4 p.m.

Toronto Centre Ontario

Liberal

Bill Morneau LiberalMinister of Finance

Thank you.

Good afternoon. I'd like to thank all of you for giving me the opportunity to be with you today and for the opportunity to speak about the impacts of tariffs on Canadian businesses, companies and workers across the country.

First, I want to thank the committee for taking the time to study this important file.

I'm pleased to participate in this discussion, as we assess the impact of the United States' tariffs on aluminum and steel products. It gives me the chance to keep you informed of further developments in the file.

I know that members of this committee take this issue seriously, as does the government. We appreciate the committee's efforts to listen to witnesses and receive submissions by Canadians impacted by U.S. tariffs on Canadian steel and aluminum.

As you know, for nearly three years, the government has been making investments to grow the economy, strengthen the middle class and obviously help people who want to do better in our country. Our efforts are working. We're starting to see significant results. Our economy is thriving.

As a result of the hard work of Canadians, over half a million full-time jobs have been created in the past three years, our unemployment rate is close to its lowest level in 40 years, wages haven't increased this quickly in almost a decade, and we have one of the best performing economies in the G7. By investing in people and communities, this government has restored the confidence of millions of Canadian families.

As you know, the government has reached a new United States-Mexico-Canada agreement. It took more than a year of tough negotiations to reach this agreement. We held out for a good deal, and we got a good deal. It's one that's good for Canada, good for Canadian businesses and, most importantly, good for Canadian families.

It will sustain more than $2 billion a day in cross-border trade, and provide tariff-free access for more than 70% of Canadian exports. It preserves our preferential access to the U.S. market. It keeps in place an important dispute resolution chapter that protects workers and companies against trade actions.

Our new trade agreement gives the business community the certainty and the confidence it needs to continue to invest in Canada. It can make those investment decisions knowing that this critically important trade relationship is safe and secure. This deal makes Canada the only country to have deals with all of its G7 partner countries.

We've created stability with our largest trading partner, and helped ensure that Canada's current pace of economic growth will be able to continue. The United States-Mexico-Canada agreement is good for Canadian workers, and we know if it's good for Canadian workers, it's good for the middle class.

Combined with the Canada-EU trade agreement and the comprehensive and progressive agreement for trans-Pacific partnership, it will provide even more opportunities for Canadians. Together, these three trade deals will give Canada access to over 1.3 billion customers around the world. As the agreements come into effect, the government will work with Canadian businesses, to ensure they have the right tools to invest, grow and create good, well-paying jobs.

We remain, however, committed to addressing outstanding trade issues, such as the unjustified tariffs imposed by the United States last June on Canada's steel and aluminum industry.

We responded to these tariffs by applying reciprocal countermeasures on products from the United States, for a total of $16.6 billion, dollar for dollar. These countermeasures will remain in place until the United States eliminates the tariffs on Canadian steel and aluminum products.

I'm optimistic that our ongoing discussions on that front will reach a positive outcome. In the meantime, we'll also follow the course that we set on June 29, when the government announced it would make available up to $2 billion to defend and protect the interests of Canadian workers and businesses in the steel, aluminum and manufacturing industries. This comprehensive set of measures included earmarking up to $1.7 billion to help businesses deal with financial and risk management in the face of these tariffs.

Since that support was made available, dozens of Canadian companies have made use of the financial support provided by the Business Development Bank of Canada and Export Development Canada, in the amount of $131 million and $44 million respectively to date.

We're doing everything possible to stand up for Canadian workers and protect the competitiveness of the affected businesses. That's why, just last Thursday, we also announced new steps to provide targeted relief from surtaxes collected on certain products imported from the United States, and why we announced additional measures to prevent import surges from injuring our domestic industry.

I'd like to provide the committee with some details on these new measures.

As the government works toward the complete repeal of the U.S. tariffs, we recognize that these tariffs and our own countermeasures may be having an impact on Canadian businesses and on workers.

Last week, we made two important announcements. First, we announced targeted relief from surtaxes collected on steel, aluminum and certain other products imported from the U.S. since July 1, 2018. Companies that have applied for and have been granted relief can now import these goods without paying surtaxes.

Second, the government will also create a committee in which relevant stakeholders can bring forward issues around domestic supply challenges that are triggered by counter-tariffs. Last week, the government also announced provisional safeguard measures on seven steel products. These safeguards respond to a surge in imports of foreign steel that are causing or threatening harm to Canadian steel producers and workers. The safeguards are consistent with Canada's international trade obligations, and they respond to comments heard during recent consultations.

We've found that, as a result of the unfair tariffs imposed by the United States earlier this year, many countries are looking for markets to sell their steel products. One of those markets is Canada, and our imports of steel products from these countries have recently reached an unusually high level.

In response to this phenomenon, imports of steel products that exceed the historical average will be subject to a 25% surtax as of October 25.

These provisional safeguards will give Canadian steel producers and workers relief from the harm caused by excessive imports of foreign steel products.

As part of this action, the government has asked the Canadian International Trade Tribunal, CITT, to conduct an inquiry into whether final safeguards are warranted. We continue working with stakeholders to monitor steel imports and supply conditions in Canada. We stand ready to take further action to protect our producers and manufacturers and to stabilize the market.

In closing, the government has created stability with our largest trading partners by reaching an agreement with the United States and Mexico. The result will be more stability and a greater level of confidence for the business community to make investments in Canada, as well as in the other North American countries. We're equally committed to diversifying our trade beyond North America and around the world.

We'll pursue this agenda by continuing to address the remaining trade issues, including the elimination of the unjustified tariffs on Canadian steel and aluminum.

Once again, I want to thank the committee members for their important work. I'm grateful for the opportunity to provide this update on our latest trade actions and on the United States-Mexico-Canada Agreement concluded recently.

I would now be pleased to answer your questions.

Thank you.

4:10 p.m.

Liberal

The Chair Liberal Mark Eyking

Thank you for keeping it brief. It gives us more time to have dialogue with the MPs.

I welcome the MP from Milton. Ms. Raitt, it's good to see you here. You can never have enough Cape Bretoners in the room.

4:10 p.m.

Conservative

Lisa Raitt Conservative Milton, ON

Thank you. I agree.

4:10 p.m.

Liberal

The Chair Liberal Mark Eyking

Folks, we're just going to go right down the list and we'll run the clock as far as we can until five o'clock. We're going to start off with the Conservatives. Mr. Allison, you have the floor.

4:10 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

It goes to five o'clock? I thought it was until 4:15 p.m.

4:10 p.m.

Liberal

The Chair Liberal Mark Eyking

No, it goes to six o'clock, sir.

4:10 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

Minister, how much money has been collected in surtaxes to date?

4:10 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

I'm not sure of the exact amount. It's coming in on a day-to-day basis. Each day there's more money coming in from the surtaxes.

4:10 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

I know it was reported to be almost $300 million after two months. Would it make sense that we're probably close to half a billion, or three-quarters of a billion at this point in time?

4:10 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

I don't have the exact number for you, but I think it's fair to say that these surtaxes are generating significant revenues. Yes.

4:10 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

Where are those revenues going? Are they going to general funds?

4:10 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

We've made a commitment to use the revenues that come in to support the industry. That is what we are working towards doing. Obviously there are various ways that we're trying to do that. I'd be happy to elaborate on those ways if you would like.

4:10 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

What about duty relief? You did talk about some big numbers. How much actual duty relief has been paid out so far? Not with loans from EDC and BDC, which are not bad things, but they are not relevant to the actual relief that companies have to pay at this point in time.

4:10 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

We have made significant progress. We've been seeking people to come forward with remission requests. In that case, they find themselves in the situation where they go through a process. Many of those companies have been reviewed and processed. There are significant activities going on as we speak. Of course it takes some time to go through the process. We expect more companies will come forward.

4:10 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

We don't know how much duty relief has actually been paid out at this point in time?

4:10 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

Every day we have a new amount that's going through, of course. I think the best way to explain it, though, is to talk about the process it's going through. We've had 135 companies that have applied for a remission order. Of those, 50 have been approved and that relief can go back right through to July 1. It's retroactive. There are another 135 and 50 have been approved, which means there are others in the process of being approved. There will be more that will come forward.

The timing of the surtaxes and the timing of the money going back will, by definition, be on a different track, but our goal is to ensure that we use the money received to support the industry.

4:10 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

Great.

Would it be possible for the department to let the committee know what they have up to date? The last number we saw in the newspaper was around $11,000. Now I don't believe everything I read in the paper, but obviously $11,000 is not hundreds of millions of dollars at this point in time. Is it possible to get an update at some point through the department?

4:10 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

There certainly will be opportunities for us to update this committee, as we have more information.

I think there will be always a challenge in the different categories of things we're doing. Some will be direct duty relief. Some will be in the category of providing financing for companies. There will also, almost by definition, if you think about this process.... Obviously we're optimistic that we will work the United States to get out of this situation. When the hopeful conclusion of this tariff regime happens there will still be the opportunity for firms to apply for remission order, which means there will still be firms doing that, going back to July. The process will take some time, but we're going to try to make sure that you have the information that you require.

4:15 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

How long is this process supposed to take?

4:15 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

Just to be clear, we have to do the work once the remission request comes in. Some requests will require some research and will take longer than others.

Currently, 50 have been approved, and 166 product categories have been approved from that 50, which means that some companies that are using that product category will be able to apply right now for a waiver and won't have to go through the process. So some things will be quite fast, but some things will take longer if there are new categories. I think that's the way to think about it. It can be almost immediate for some companies, if they're in those categories, but for some it might take a little longer.

4:15 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

I'll leave with a thought. This is certainly the first time in the history of free trade deals where there are actually more tariffs in place after a deal is finished than before the negotiations started. We have talked to a number of companies and they are greatly concerned. I've talked to over 150 stakeholders on the ground, and I can assure you that money can't get out the door soon enough in order to keep these companies viable over the long term.

4:15 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

I agree with you.

I've had the opportunity to be out talking to Canadian businesses before we came to the USMCA. While there is some relief that we've reached a new agreement with the United States and Mexico, there is still legitimate concern around these tariffs. That's why as a first order of business we're working towards the elimination of what we see as unjust tariffs. In the interim, we absolutely agree that we need to move forward as rapidly as we can to make sure we find ways to properly deal with not only the market stabilization, but also the real issues that are presented to some businesses that are users of steel.

4:15 p.m.

Liberal

The Chair Liberal Mark Eyking

Thank you, Minister.

We're going to the Liberals now. Mr. Sheehan, you have the floor.

4:15 p.m.

Terry Sheehan Sault Ste. Marie, Lib.

Thank you very much, Minister. I truly appreciate your work on this file.

As you know, Algoma steel in Sault Ste. Marie alone accounts for 40% of our GDP locally, so it's critical. Then you throw Tenaris in there as well, and the SMEs that are working in the steel industry, and it's of absolute critical importance.

I was in Hamilton when they announced the $16.6 billion in retaliatory measures, as well as the $2 billion in aid for the steel workers and steel industry. At that time they were looking at safeguarding three product lines. Last week you announced seven, and I was pleased, because Algoma steel produces the heavy steel plate, but they also produce the rolled steel.

How did you come up with those seven? What process was involved?