International Trade Committee on Oct. 23rd, 2018

[Gian Paolo Vescio]

Obviously, as I stated, for bigger companies the ability to wait for the drawbacks is a little bit easier. The issue is that for a lot of the smaller parts companies that we represent, they might not have the finances to wait. They would preach speed, essentially.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Have you suggested how we could have managed that differently? We heard from other SMEs as well, and they said the same thing you're telling me. Have you provided your input on how government could have done things differently so that those small businesses, and particularly your members, could have taken advantage of the situation?

[The Chair, Liberal, Mark Eyking]

Make it a quick answer, please.

[Gian Paolo Vescio]

I believe there are so many things the government can do. Allowing business to be able to react more quickly in terms of the administrative process is probably where we could start.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Dhaliwal.

We'll go to the NDP now.

Ms. Ramsey, you have the floor.

[Tracey Ramsey, NDP, Essex, ON]

I'm actually going to pick up on my colleague's thread, because I think this is an area where we should be able to help what's happening on the ground. The amount of money that's flowing into the country and being collected right now is not reaching the ground. I think that's clear. We've heard that repeatedly at this committee. Out of 74 companies that have applied, only 36 have been successful in the duty drawback and duty relief.

Part of it is that there just aren't enough people on the ground. CBSA has hired 10 people, as we heard last week, since the launch of these tariffs. That prevents them from getting to your places in a timely manner to determine whether or not you're a successful applicant. In the meantime, to Mr. VanderVeen's point, you're bleeding that money. You're losing during that whole period of time.

The point you made about BDC and EDC, about getting a loan, is something we heard repeatedly here. It's not that people can't have access to that money; it's just that if your business is diminishing and you're losing, losing, losing, and then you have a loan on top of it, how does that benefit or help your company in any way?

In Windsor on July 18, we had 300 people come down to a meeting that was planned within, I think, a day and a half. I was there. The automotive parts manufacturers were there. Flavio Volpe was there. It was packed. The title was “Planning for the Impact of Tariffs on Manufacturers”. A lot of the things we've been sitting here discussing at this committee over this last little while are the exact same things we heard on July 18. The program hasn't improved in a way that's helping businesses on the ground.

I really want to dig at that a little further, because I think my colleague was asking you some questions, and I want to know if you have applied for the duty drawback and duty relief or exemptions at all. Obviously, you're representing an umbrella. I'm wondering if you have any data on how many of your members have applied for the duty drawback or duty relief and whether they've applied for exemptions because they need U.S. steel, basically.

[Gian Paolo Vescio]

I don't have access right this moment but I could possibly see if I can acquire that and provide it.

[Tracey Ramsey, NDP, Essex, ON]

Okay.

[Mark VanderVeen]

In Vineland, as I've used the example, we're a very lean organization. The administration to fill out the paperwork and go through the process is taxing, and we have one person who can do that, along with their other duties, of course.

In addition to that work, we also needed to post a $300,000 bond just to cover for our exports. Again, each time we talk about this—

[Tracey Ramsey, NDP, Essex, ON]

Wow.

[Mark VanderVeen]

—ekes away at the working capital we would like to reinvest in the business, but we can't do so now.

What we have done is hired a company to help us with the administration of that. As I mentioned, they are taking 5% off the top. Each time you eke away at and nibble away, it becomes very taxing on the business to be able to come forward with a solid bottom line.

Yes, we are applying on a monthly basis to get back our clawbacks. We have three months in arrears, and we expect our first cheque at the beginning of November.

[Tracey Ramsey, NDP, Essex, ON]

Okay.

[Mark VanderVeen]

Again, to put it bluntly, my money is sitting in the coffers of the government, not in my bank.

[Tracey Ramsey, NDP, Essex, ON]

I know. That's exactly right.

In the middle of the summer, the NDP called for a tariff task force. We think you should all be in a room trying to find a solution and a way forward much in the way we saw in the USMCA negotiations. I don't understand why that process isn't being replicated, because I think the answers lie within all of your companies, with all of the job creators you have. We're hearing consistently the same type of theme. To think there is now some subsection of consultants who are popping up charging you fees, trying to take advantage of you in this really difficult time....

The government should be helping you with this. What you're paying 5% for, you should not be paying. This should be done by Finance. They should be assisting your company because you're already in very difficult times.

I want to go back to another theme that we hear. It's about what we can be doing domestically. What do your companies now need domestically to strengthen themselves and to find some types of opportunities here in this tariff war we're in? It's very unclear at this point in time how long this will go on. For long-term planning to be in this, what do you see as the domestic policy?

[The Chair, Liberal, Mark Eyking]

I'm sorry, but there's not going to be time. Your five minutes are up, and I don't think they are going to be able to answer that question.

[Tracey Ramsey, NDP, Essex, ON]

If you could submit your response to the committee after, I would appreciate it.

[The Chair, Liberal, Mark Eyking]

Yes. They are welcome to do that if they can. Submissions are good.

We have time for one more MP.

Mr. Peterson, you have the floor.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

Thank you, everyone, for being here with us today. It's obviously a very important issue.

We hear clearly that USMCA is a good deal, but perhaps in the auto world it's a bit tempered by these continuing steel and aluminum tariffs. I think the auto industry and the steel and aluminum industries rely on each other to be healthy, vibrant, free market industries. Hopefully, we can get back there as soon as possible. I think we also all agree that the section 232 tariffs were unwarranted and put on by the President and his executive order based on a commerce report. It obviously had nothing to do with Congress or anybody else. We're trying to deal with the situation the best we can, but we appreciate your input in trying to guide us in that initiative.

I want to talk about the impact on auto. I'm from the riding of Newmarket—Aurora. My neighbour Ms. Alleslev and I both have a lot of auto parts manufacturers that have strong footprints in our ridings and thousands of jobs.

The consensus seems to be on auto that this is good. There's significant room for growth. I think my friend Mr. Carrie quoted Mr. Volpe. He came out, too, saying this is important. There is, I think, up to a 20% increase in local content rules that will be helpful in those things.

Mr. Vescio, I know you agree with Mr. Volpe.

Mr. VanderVeen, do you see the same sort of growth opportunity that Mr. Volpe sees?

[Mark VanderVeen]

In our automotive business, we manufacture brake caliper pistons. We have a very dominant position within the automotive market in North America.

We are happy with the increased content rules coming on board. We were very engaged with the APMA and provided input into the negotiating team. We believe it will provide us with the ability to continue to grow our business based upon the fact that it will put up barriers from offshore components coming up. It's not to say we're in a position where we're concerned with that, because we believe we're extremely competitive in a world market, but it certainly does help.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

I think I see the concept in the case that it sort of puts a fence around the offshore market.

Ideally, what should the steel and aluminum industry look like? Should it be a Canadian industry? Should it be a Canada-U.S. industry? Should it be a North American industry? How do we deal with the external threats that have nothing to do with these tariffs, but you look at dumping and things like that? What should the industry be structured like to be as successful as possible?

I have 20 seconds left I think.

[Gian Paolo Vescio]

I would say, on behalf of our members, it should be an industry that allows us to be able to make car parts and cars in the best way we can and the most cost-effectively—if I could put it as quickly as I could.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

That's good.

[Mark VanderVeen]

Steel companies are international businesses, and there are very few stand-alone Canadian steel companies remaining. Putting up barriers within companies to stop the natural flow of product is something that needs to stop. Let the businesses operate in a free enterprise market and things will settle out for sure.

[Gian Paolo Vescio]

It's important to note that 70% of what we make comes from the U.S., so it's important that the North American steel market remain strong for our members to prosper and grow.