International Trade Committee on Nov. 1st, 2018

[Ben Whitney]

Well, somebody in the supply chain is overcharging. There's a tendency to go, “Okay, the tariff is in place, and I'm going to immediately charge 25% more, never mind that I stocked all this stuff before the tariffs. I'm going to charge for the tariff all the way along.” Then there's going to be a tail on the other end saying, “Well, hey, I paid the tariff on this stuff. I've got to get that money back.” This is after the tariffs are removed. It's unpleasant.

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

I'm going to share my time with Mr. Fonseca if that's all right, Mr. Chair.

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

Thank you.

My question is for Cedomatec. Justin, I think you brought up that you would welcome steel and aluminum from Asia. What would be the mix of your steel and aluminum coming from outside North America?

[Justin Juneau]

Depending on whether the steel meets our requirements, we can move up to maybe 70% coming from other countries such as Asian countries.

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

As you've heard, many companies are against this, and we've had a number of witnesses talk about how we should look at a 25% tariff on steel and aluminum coming from Asia and some of the countries that we feel are dumping.

This is open to the other witnesses. What would your thoughts be on that?

[The Chair, Liberal, Mark Eyking]

Hold it, now. The Liberals are having a tendency to get these loaded questions in at the end. I have to be fair here and not allow it.

So we're going to move back to the Conservatives.

Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Thank you all for being here, and I apologize that it's shortened down and that the format changed a little bit, but I'm glad we're getting a chance to ask questions.

I'm going to start off with Mailhot Industries. You talked about how you went through the process and had an exemption. You actually proved to the government there was a product that you could not get into Canada, that you could only get in the U.S.

When you got that exemption completed, and you did all the necessary documentation, does that product now go on a list so that anybody can get an exemption on access to that product in Canada?

[Stephen Vezina]

Yes. Actually, we didn't get a direct answer to our exemption request, but when the government put out the “Relief for Canadian Businesses from Countermeasures on Certain U.S. Imports” document around October 11, and we read the HS codes that covered the different products, we saw that our stuff was in there. That's how we found out. We knew there was something going on, that they were going to be exempting certain products. It was not done specifically for our company; it applied to any company in Canada that uses that type of tubular steel product.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Whitney, then, would have access to that steel at the same price as you, in theory? It would be tariff-relieved?

[Stephen Vezina]

Yes.

[Randy Hoback, Conservative, Prince Albert, SK]

We've had a lot of people come in front of this committee and say that there's the 232 issue, but then there's also the surtax issue. The surtax is doing as much damage as the 232 in a lot of cases. I'll use the witness from Cedomatec. I think that would be a good example. The 232 in your case probably doesn't matter, but it would for your Canadian sales, if you're paying the surtax on all the steel you're bringing in. Is that not fair to say?

[Justin Juneau]

Yes, you're right. It would affect our clients in Canada.

[Randy Hoback, Conservative, Prince Albert, SK]

You talked about taking steel in from Asia, for example, for certain components in your doors. Now, if you said, “You know what, I'm not going to bring steel in. I'm just going to build this component somewhere in Asia where I don't have that tariff.” In that case, could you ship those components in tariff-free?

[Justin Juneau]

As I mentioned earlier, response time is crucial in our industry. Just to ship in from Asia to Canada and get it quickly would cost a fortune. We cannot consider building our components outside of Canada.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay, I guess I'm looking at this and I'm questioning it. A lot of people were saying this was going to end quickly, but it didn't end with the free trade agreement being signed, and I think that surprised a lot of people in the business community. I think a lot of people are saying that after mid-terms it's going to be taken care of, but any prudent officer of a board would say we have to hope for the best but plan for the worst. You could be in this scenario again this time next year, so if you see this still being there on the horizon, what types of moves are you going to make with your organizations to make sure you stay competitive not only here in Canada but in the international market?

Mr. Stepien, maybe you're a good person to ask, and then I'll go to Mr. Hammersley, because you had actually experienced what these companies are facing out of Tennessee and out of Kentucky as to incentives to move down there.

I'll start off with you, Mr. Stepien.

[Gary Stepien]

In our case, our concern is our big customer, because they're facing pressure on the section 232 side as well as the surtax side.

[Randy Hoback, Conservative, Prince Albert, SK]

They're getting hit twice.

[Gary Stepien]

Right. I can't speak for them, but you can be sure that, with the amount of money they have invested, they're going to have to seriously think about what they want to do.

[Randy Hoback, Conservative, Prince Albert, SK]

It's either get hit twice in Canada or don't get hit at all and be in the U.S.

[Gary Stepien]

In our case, the remission has solved our problem, but the problem is that, when they ship into the States, some of the product that they make is being hit under the 232 duty. On the Canadian side of their business, they're impacted by foreign product that's not subject at all to any duties, so they're now the high-cost producer.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Hammersley, can you give us some insight on what these companies are facing as incentives to move to the U.S.?

[Robert Hammersley]

I'd like to comment on it by looking at the bigger picture. Let's remember that the issue is not just tariffs. It is the issue of other legislation, whether it be provincial or federal. It is the issue of competition to the U.S. It's illegal for companies or communities in my part of the country to incent companies to locate, by tax gifts and other such things; yet the State of Ohio does it regularly and the State of Michigan does it. It's a threat. I think the big picture is the way we need to look at this, and simplicity is probably the better way.

It's an interesting scenario to me to look to the imposition of tariffs and then look at creation of programs that take rebates and take hours of time to administer. It would be a heck of a lot easier on all concerned if we just simplified it and got back to the reality that, as far as trade between Canada and the U.S. goes, we aren't a security threat to each other. It was good the way it was, so let's just go back there.

[Randy Hoback, Conservative, Prince Albert, SK]

Yes, and I agree with you, but I think the reality is—

You have to be kidding me. What kind of watch do you have there?

[The Chair, Liberal, Mark Eyking]

I know, you're getting excited—

[Randy Hoback, Conservative, Prince Albert, SK]

It's not a Timex.