International Trade Committee on Nov. 3rd, 2016

[Michèle Govier]

If we're amending things in such a way that anti-dumping margins are higher, and the duty rates are higher, to the extent that the auto companies were already using Canadian steel, that should not have any impact on them because those won't be facing duties. They'll be able to continue those supply relationships. If they were importing steel from countries that are a target of those measures, then their costs could go up if they're not able to find other sources for that steel. I'm not totally sure which measures might affect steel that's used in automotive applications. We have no steel measures against the United States, for example, so a lot of our production chains are really integrated chains with the United States. Those would not be affected unless we're starting to take additional measures against them. There are potential impacts to the extent that they're importing from countries against which we would have measures. We have not heard from the auto sector that they would be concerned with those types of changes.

[Tracey Ramsey, NDP, Essex, ON]

You mentioned, Ms. Govier, the eight different proposals. I'm wondering if you could share those with us here at the trade committee, because we won't be revisiting steel for a bit. You've been before the finance committee, and some of those things will cross over.

The other question that I want to ask you is around these modifications that could take place and the actual investigative process. Can you tell us how our investigative process compares with the other systems that are in place? Do you see opportunities to model on the other systems that exist?

[The Vice-Chair, Conservative, Randy Hoback]

You have 10 seconds.

[Michèle Govier]

I'll say that because certain things are spelled out in the WTO rules, certain features are common across systems. Our system is not that different in terms of process to the United States. We do things more quickly. We get measures in place more quickly, which I think is a positive thing, but I would have to get into a lot of detail to be able to answer that for you.

[The Vice-Chair, Conservative, Randy Hoback]

That's okay. We are out of time. We're about 15, 20 seconds over now, so we're going to move on.

Peter, you have the floor for five minutes.

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

Thank you, Mr. Halucha, for your presentation, and your entire team for coming and giving us this deep insight into steel.

It was mentioned earlier, when Mr. Dhaliwal was asking some questions, that 60% of our steel is exported. Is that correct?

[Michèle Govier]

I think it was 50%.

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

Of that, 84% goes to the United States. Does it go direct, as raw steel, or is it going through products? Is it going through cars, etc.? How would you break that percentage up? Of that 84% that's going into the U.S., is it going as a made product or is it going as raw steel?

[Patrick Hum]

If it's part of an automotive component, for instance, that would not be included in the statistics. One of the difficulties that we always have with regards to—

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

I'm sorry to interrupt, but you're saying that the raw steel would be that 84% of the 50% export going to the U.S., and then there would be other components going into the U.S.? Because 90% of our cars are exported, and the majority are going into the U.S., is that also steel going into the U.S.?

[Patrick Hum]

No.

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

Why?

[Patrick Hum]

As I was mentioning, steel products are quite diverse. We have raw slabs of steel, and we have various forms of coils, hot rolled, cold rolled, and pipes and tubes. Those would be the products that are primarily within the steel export numbers. There are certainly a couple of others, but anything that was transformed into an auto part, machinery, and equipment is separate from that.

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

You're not considering all of the steel that's being used to manufacture our cars that are then going into the U.S. as part of that 50% export number?

[Patrick Hum]

Absolutely not, no.

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

In terms of the steel that crosses the border, how much of our steel do you feel is going into the U.S., then? If you took into account all the cars and everything else that we put steel into, and then that crosses that border, it would be 80% of our steel?

[Paul Halucha]

I think the steel industry association, who I'm sure will be appearing before you, will be able to give you some numbers, because they've done indirect numbers. I think their estimate, for example, of the annual is roughly about $18 billion to $19 billion a year when they consider indirect.

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

What I'm trying to get to with the number is how much we really keep here, domestically—not export through planes, trains, rails, coils, etc. How much is actually used here, domestically? Then, going back to the billions of dollars that we are going to be investing in infrastructure at the federal level, the provincial level, and throughout the municipalities, would that not be able to absorb all the rest of that steel, and how much is that? What percentage of Canadian steel would be there, and how much is actually from imports that are coming in?

I was talking to a company the other day. They are not in steel; they are in the construction industry. They make big sewer pipes, massive pipes the size of this room, and they have a world-class facility here in the greater Toronto area. They said that once Buy America came in.... They used to make up 20% of their sales. It's virtually zero today. Do we have, or should we have, a Buy Canada type of initiative? I don't even understand how with Buy America they get around the WTO challenges that we should be putting on them.

[Paul Halucha]

I'll let Trade deal with this one in more detail. I've asked the same question, because it does seem, on the face of it, that it would be quite attractive as a policy measure to think about doing something like Buy America, particularly given the fact that during the recession period when the Buy American policy was really ramped up in the United States, there certainly were a lot of stories and anecdotes that we saw or heard about Canadian steel being displaced by American steel that would qualify for federal and state-level subsidies.

The challenge is that the United States, through various trade agreements, has effectively gotten an exemption going quite significantly back into the past, so they've preserved that policy space for themselves. In Canada, we don't have that same ability under the trade agreement obligations that we face. I've said it kind of simply, and I'll let my colleague here—

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

We've never posed a WTO challenge to any of this, because they are exempt. Is that what you're saying?

[Paul Halucha]

They effectively have a safe harbour provision within the international trade law.

[John Layton, Executive Director, Trade Remedies and North America Trade Division, Department of Foreign Affairs, Trade and Development]

I would just add that, as Paul said, they have an exemption that allows them to have Buy American policies, but the Canadian representatives in Washington and our counsel are quite active in advocating for exemptions for Canada or certainly trying to stop the U.S. from expanding Buy America, because there is always political pressure to expand it. We are quite aware of that threat.

The other thing is that, from a Canadian perspective, we'll look at any proposals that might come up from a trade policy—

[The Vice-Chair, Conservative, Randy Hoback]

I'm sorry, you are well over your time.

Maybe Ms. Lapointe will give you some time in the next round.

We're moving into the next round, and we are going to start with Mr. Van Kesteren, for five minutes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Mr. Chair.

Before going into my time, can I ask the chair a question?

[The Vice-Chair, Conservative, Randy Hoback]

You can ask me a question.