International Trade Committee on Nov. 3rd, 2016

[Michèle Govier]

We're supplying 40% of the domestic market, so—

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

Sixty per cent is exported.

[Michèle Govier]

Sixty per cent is supplied by imports, but then we are also exporting 50% of Canadian production to other markets.

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

What are the opportunities if we ratify the TPP? Do you think Canadian producers will benefit, or would it affect them negatively?

[Michèle Govier]

As they mentioned, 84% of our exports already go to the U.S. The U.S. is already a very open market with respect to steel trade, so I would say that with regard to the TPP, we already have very good access through NAFTA to our key markets. It does open up, potentially, markets in Asia, but as I think Mr. Hum had indicated, the transport costs for going overseas with steel are quite high. Those Asian markets are also supplied by very competitive producers within that region. In that sense there is a potential, certainly, but I'm not sure how much of that will be realized, given the realities that are being faced.

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

When it comes to dumping, that is a key concern. Can you explain this to me? We have legislation here, and we have anti-dumping regulations in Canada. When we compare those with those in the U.S. or Australia, where do we fall?

[Michèle Govier]

I think our anti-dumping system is a very effective system for the steel industry. It's very hard to compare different systems on a blanket basis. There are WTO rules that govern what's permitted in that space, and they're very detailed but allow a lot of flexibility as well, so people might choose to implement things a bit differently in each country.

That being said, if you look at some of the measures put in place in the U.S. on products we've put measures in place on, they're quite comparable in terms of level of protection. I don't have as much information about the Australian system, but I think we're on very good ground in terms of the effectiveness of our system and the ability to get measures in place that do their job in addressing dumping and subsidization.

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

The Canadian Steel Producers Association claims it is the other way. They are saying we are far behind when it comes to comparing those remedies with those of the U.S. and Australia.

[Michèle Govier]

There are some features of the U.S. system that are different from ours, to be sure. I think they are interested in seeing some changes to our system, which we're looking at to see whether they can be integrated into the Canadian context as well. Some of those features that are in the U.S. system haven't necessarily been used yet by the United States, so I would say that, in terms of the effectiveness, we aren't in a situation where we're falling behind in a practical sense. Certainly they've introduced things on the enforcement side, once measures are in place, that we're looking into to see whether there are benefits that can be brought to our system by focusing more in that area. While I would still argue that I think we have a very good and effective system, we're certainly looking at different options for whether there are areas for improvement.

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

Do you think dumping will be better or worse if we ratify the TPP?

[Michèle Govier]

Do you mean whether we would be able to address dumping more or less?

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

That's right.

[Michèle Govier]

The TPP itself won't affect our ability to address dumping. We don't change our trade remedy system as a result of the TPP. It continues to apply to the TPP countries should they be found to be dumping or subsidizing.

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

Okay.

Thank you.

[The Vice-Chair, Conservative, Randy Hoback]

Ms. Ramsey.

[Tracey Ramsey, NDP, Essex, ON]

Thanks so much for your presentation here this morning. This is an issue of serious concern for the NDP, and certainly, a lot of the ridings that we represent have some fantastic Canadian steel producers and workers.

The question I have for you is about China seeking the status of a market economy with the WTO. Currently they're non-market and that impacts the way that we're able to proceed with our countervailing and anti-dumping measures.

What is the Government of Canada's position on the Chinese claim that it should be granted market economy status after December 11 of this year?

[Michèle Govier]

We definitely recognize the importance of this issue for the steel sector. We've heard the concerns of Canadian producers about government interventions and the Chinese economy, and the implications this has in terms of their steel production.

Absent a regulatory change, non-market economy treatment for China would continue past December. I'll also point out that Canada's trade remedy system doesn't provide for a standing non-market economy designation. Rather, investigations are initiated on the assumption that market economy conditions prevail, unless there is evidence that's provided by the Canadian industry otherwise. That's more—

[Tracey Ramsey, NDP, Essex, ON]

That's is pretty clear in China. They don't have that, so it would impact the pricing, which then could negatively impact the industry even further. Coming up on this date, then, do we have a position on whether that claim should be granted?

[Michèle Govier]

We do not have a position to say yes or no. We're definitely very taken with this issue. We're following it closely internationally, because other countries, a number of WTO members, are also grappling with this question, examining how clear the wording is in the exception protocol of China and the WTO. China takes a very black-and-white approach to this issue, but it's actually quite complex.

[Tracey Ramsey, NDP, Essex, ON]

I'm going to share my time with my colleague.

[Scott Duvall, NDP, Hamilton Mountain, ON]

Thank you. Thanks for coming today.

In Hamilton and Sudbury, our steel companies are having a problem with the dumping of steel. On the remedy formula that we have in Canada, unions in Canada are prevented from initiating or participating in anti-dumping and countervailing duty or safeguard complaints.

Many of our trading partners, such as U.S., Australia, and the EU all permit unions to file their remedy complaints and permit unions to participate fully in their domestic trade.

Why is it that Canada's unions are not? The steelworkers presented a written submission to the Department of Finance back in mid-August. I'm just wondering if there was any follow-up on that for this to happen.

[Michèle Govier]

We are looking at that. This was an issue that was raised by a couple of unions in the context of consultations that we held recently on our trade remedy system. We've had a follow-up meeting with the unions to discuss it further, to better understand what their interests are, and what they would like to see. We're currently examining what our law allows for, because some of the language is not precise as to participation or not, to see whether we would want to look at doing that.

I understand the interest that unions have and the value that they bring to those kinds of investigations. I would just note, too, that the approaches that have been taken in different countries with respect to union participation are a little bit different. We're examining those different approaches and examining the proposal by the steelworkers to look at what we can do in that area.

[Scott Duvall, NDP, Hamilton Mountain, ON]

When do we feel the committee will have those answers? What's the time frame?

[Michèle Govier]

Because there's a potential legislative change required to get that through, there would have to be a policy decision. Then a legislative change would likely be needed in order to bring that into effect.

Budget 2017 might be a vehicle for that, but it is something we're still thinking through.

[Scott Duvall, NDP, Hamilton Mountain, ON]

This is just a comment, but it's hurting our steel industry. Something drastic has to be done because our jobs are being lost. The ripple effect that the steel industry produces hurts everybody. It has to stop. We have to get up to speed as the other countries have. Thank you very much.