International Trade Committee on Oct. 16th, 2018

[Bill Morneau, Liberal, Toronto Centre, ON]

Maybe I can step back and consider goals. Our goal, obviously, is to stabilize the market. We don't want to have a flood of steel from other countries coming in that's been diverted from the U.S. market and stealing the market from Canadian producers, so that is our goal.

In terms of considering how to move forward, I think the reason the early assessment was three categories is that in all likelihood—and I don't know the three categories you're talking about—they are probably the categories in which there was the most immediate and obvious diversion of steel from other countries coming into the country.

We had to do a broader analysis to look at all categories of steel to consider where we saw that potential harm or instability in the market could occur. All seven categories are not in exactly the same state in the current situation; some will have more or fewer issues. But in each case we saw that the threat to the market stability was significant enough that we felt we should put provisional safeguards in place.

The next step for us is to have the CITT review that to make sure we've come to the right conclusions. We didn't want to leave it and hope that nothing would happen. We'd rather take those provisional safeguards now and have a process from which downstream users can come to us if they have an issue. We think that keeps market stability, but it also helps the users, the manufacturers of steel, assure a supply at a reasonable price.

[Terry Sheehan]

I just want to thank you. I think the response to the tariffs has been quite quick.

Congratulations on the 2016, 2017 and 2018 budgets in modernizing a lot of our trade.

How did the safeguards and the system that are used further strengthen our response to unfair trade?

You touched on some of the other countries that might look at diverting their steel that was destined for the United States to other markets like Canada. Can you explain a few things to me? I was glad to hear that you're positive, and I'm positive that eventually the tariffs will be removed. Would we keep those safeguards in place in the future when the United States removes tariffs from Canada?

[Bill Morneau, Liberal, Toronto Centre, ON]

The best way to answer is that we're in a situation we don't want to be in, where we are putting tariffs on our major trading partner. We're doing it only because it has put in place what we see as unjust tariffs on us. That is our response, meaning obviously that again the first order of business needs to be to deal with that issue, the unjust utilization of section 232 on Canadian steel and aluminum, which is intended to be for security purposes.

The response to the tariffs and then the eventual response to safeguards and remission orders, all that activity is from that initial unjustified action. Clearly, our goal is to get rid of the tariffs and safeguards and get rid of any need for any of these remission orders or duties relief programs so we get back to an appropriately free market between Canada and the United States on what is a significant industry on both sides of the border.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Sheehan. Your time is up.

We're going to move over to the NDP now.

Ms. Ramsey, you have the floor.

[Tracey Ramsey, NDP, Essex, ON]

Thank you, Minister, for being here today. We're facing a critical issue, and there's a sense of urgency from people who are coming to sit at this table and speak to us.

You said in your statements that we're doing everything possible, but I have to be frank that we've heard quite the opposite from the witnesses at this committee. We've heard of the dire consequences of these tariffs and the government's failure to get that support directly to people on the ground. Businesses are talking about laying off people. We heard from a business this morning that has laid off 45 people. They have down weeks, which are weeks when people aren't even working in these places. They're all in a very precarious position where they're talking about losing their businesses to the U.S.—or globally at this point—and not being able to get them back. Things are quite serious.

They describe the programs as a failure; they say they're too slow. It's taking four to six months to get some type of response. When they get a response, the money isn't following the response. They're still waiting on the money even if they've received an okay.

There's too much red tape. We've heard from small businesses here at the committee that they don't have the resources to deal with this. BDC and EDC are there for large businesses, but they're not helping our SMEs at all.

There is no SME focus. Smaller companies aren't even applying because of the burdens. They've just simply given up.

During the summer, the NDP and some of my colleagues called for a national tariff task force, not in a partisan fashion, but to address the seriousness of what we're facing here because the program isn't working for so many, and we're losing jobs today.

You announced last week that a committee was being struck. Could you tell us what that committee is, who will be on it and the time frame it has to help people being impacted today?

[The Chair, Liberal, Mark Eyking]

Minister, if you need to get back to us on a question—

[Bill Morneau, Liberal, Toronto Centre, ON]

No, I would just like to clarify something that was asked.

We need to hear from businesses to understand how these programs are working for them and ensure that we're doing things in a way that is rapidly addressing the issues and concerns.

This is pretty unprecedented. We aren't in a situation where there's a playbook that shows the exact way to respond to this sort of activity. We certainly hope it goes away quickly.

I think though that it's always important to consider what we are doing so we can figure out how that is working and where we need to make tweaks.

It can't be four to six months of course because it hasn't been in place that long.

[Tracey Ramsey, NDP, Essex, ON]

Well, I'm happy to share the blues with you from the committee, but I really need an answer here so that people can understand how this process will work. This is a specific question about the announcement you made last week.

Can you speak specifically to the committee?

[Bill Morneau, Liberal, Toronto Centre, ON]

First of all, consider the objective of the committee. As I think you heard me say, we've had 135 requests for remission orders. Fifty have been approved. There will be some people who do not get approved because it doesn't look like they are in a situation where there's a current demand. Of course, that situation is quite dynamic because the market will change.

In setting up a committee, we will be able to look at the people who aren't approved. We don't have all the details about the committee for you as yet, because we're not at the stage where we've put that into place. We're moving quickly in order to deal with remission orders. I think it is actually going quite quickly. The money from the remission orders is immediate. So the money should be—

[Tracey Ramsey, NDP, Essex, ON]

We've heard otherwise here. We've heard that the money isn't flowing, and we've heard about timelines—

[Bill Morneau, Liberal, Toronto Centre, ON]

Well, we'd very much appreciate you telling us—

[Tracey Ramsey, NDP, Essex, ON]

Yes, I'm happy to share the blues from the committee with you on that testimony.

[Bill Morneau, Liberal, Toronto Centre, ON]

That's important for us to get, because we'd like to respond to it.

[Tracey Ramsey, NDP, Essex, ON]

Regarding this committee, this is an emergency situation. I am from southwestern Ontario. My riding is Essex. Windsor-Essex is the backbone of our manufacturing sector and we're already losing jobs. In respect of this committee, you don't have any timeline on when it will be struck, and from what I hear you saying to me, the people who have applied are people who are likely to be on that committee.

I'll leave it there and hopefully we can get some more information from the department on the specifics of that committee and the timeline around it.

The other thing that I want to ask you about is this: We've heard dire warnings that the need for relief will only increase the longer that these tariffs exist and that the support package will not sustain businesses. It's a band-aid solution that will hopefully help them in the interim, although we've heard otherwise here.

Not everything has been safeguarded. I can tell you that Atlas Tube from my riding has asked for a hollow structural steel—

[The Chair, Liberal, Mark Eyking]

Ms. Ramsey, your time is up.

[Tracey Ramsey, NDP, Essex, ON]

Okay, thank you.

[The Chair, Liberal, Mark Eyking]

We're going to have to move on to the Liberals. Karen Ludwig, you have the floor.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you, and thank you, Minister, for joining us today. I'm pleased to put my question forward and share with you what I've heard from some of the businesses in my riding of New Brunswick Southwest.

Over the course of the summer, I had the opportunity to speak with a number of Atlantic Canadian fabricators and hear some of the impacts of the tariffs that they discussed with me. These include the limited supply in Canada for certain shapes of steel, the longer time frame for sourcing alternate supplies, the profitability of currently quoted work and work in progress, as well as the need for relief on the cost impacts of imported U.S. steel destined back to the U.S. once it has been fabricated.

I'm going to start, Minister, with two questions. The first is, would you please explain how remission orders will relieve certain market participants from the pressure they are currently experiencing? My second question is, how has the government been consulting with small and medium-sized businesses to explain the tariffs and connect them with the necessary supports?

[Bill Morneau, Liberal, Toronto Centre, ON]

There were two questions. First of all, how do remission orders work to relieve people from a situation where they're finding that their supply is not there?

It's a straightforward process, in the sense that they put an application in to explain the category of product for which they don't have an adequate source, or to explain that the source has been priced out of reasonableness from their perspective. In these cases, we'll be taking a look at whether a remission order in that situation would be appropriate. That's what would happen for those companies. Assuming they get the remission order, they will be relieved of the tariffs, if the steel is from the U.S. That should help them. Of course, there are 166 product categories that have already been approved, and they won't need to go through that process. They can just claim with CBSA to say that's a product category that they're part of, and they'll be removed from those tariffs.

In terms of the consultation process, maybe I'll let Patrick speak to that for us.

[Patrick Halley, Director General, International Trade Policy, Department of Finance]

With respect to the consultation on remission, when we get the request, we have a consultation mechanism where we go back to some of the producers to assess, for example, the supply situation to make sure that our assessment takes that into consideration.

With respect to that process, it's already well in train, as the minister mentioned. There will be a committee established to formalize this consultation mechanism on a go-forward basis, but so far it has worked relatively well. Of the 50 requests that were part of last week's announcement, three-quarters were actually from SMEs.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

A second part to that question then is this. From my years from teaching international trade, one of the common denominators I found with small businesses is they're busy making payroll, and it's very hard to find out what they don't know. Is the government working with the regional development corporations, the Canadian manufacturers and exporters, and other organizations like that? We have EDC and BDC, really the ground level for really small businesses. Is the government also working with those organizations to connect directly with businesses to let them know how to access the resources?

[Bill Morneau, Liberal, Toronto Centre, ON]

I'm happy to take that. There has been extensive outreach done by BDC and EDC. With the numbers so far, BDC has had authorized loans totalling $131 million for 189 clients. You can do the math to see that those are generally small loans. EDC tends to be slightly larger, but they're still not large organizations in the sense that their support is so far $44 million for 24 clients.

We had, obviously, consultation on remission orders and safeguards on websites of the companies, again, as Patrick mentioned, that have so far been granted remission orders. Thirty-five of them are small businesses.

I think that to the extent this committee hears from small businesses, from anyone who's experiencing challenges in getting this information, we're quite anxious to hear that information because we want to facilitate that. Tracey Ramsey was mentioning the same issue. We would be really happy to hear specific examples because we want to iteratively improve this process. Of course, we hope it's not going to go on for very long, but we want to improve it so that we get people into the process as quickly as possible.

[The Chair, Liberal, Mark Eyking]

Thank you.

That wraps up our first round. We should be able to get through part of our second round here. We're going to start off the round with the Liberals.

Mr. Fonseca, you have the floor.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you, Minister.

Minister, one thing that we've heard loud and clear, and this is for all parliamentarians and all Canadians, is that what unites us is that we see section 232 as unfair and unjust. We speak as one voice when we talk about that.

We heard today from Boart Longyear, a company from my area, Mississauga. They make equipment for the mining industry. They've put in for their remittances, and they have said that they have 94% on the remittance that they have put forward, and they will be getting back. There was 6% that they're still out and it may not fall into one of those steel product categories. Will you be looking still at the categories and expanding that list? Is that something that you continue to do?

[Bill Morneau, Liberal, Toronto Centre, ON]

Yes. This is a dynamic issue. The longer these tariffs stay on, the more the potential for change is. One of the reasons that we're talking about this at this committee is to make sure that we are looking at that on a dynamic basis. Of course, also it can be retroactive back to July 1.

To the extent we find harm, to the extent we find places where the market isn't stable, we can still react and deal with that in the future. We are committing to do so to the extent that the proof is there that people have been harmed.