International Trade Committee on Nov. 3rd, 2016

[Michèle Govier]

Okay.

[The Vice-Chair, Conservative, Randy Hoback]

You still have 30 seconds, Mr. Duvall.

[Tracey Ramsey, NDP, Essex, ON]

Because other countries have really stepped up their provisions, and we haven't, we've become this target for dumping.

What measures are we putting in place to ensure that we can bring ourselves in line? Is there legislation being proposed to do that so that we don't become this side area to dump while other countries enjoy more protection than we do against it?

[Michèle Govier]

We've already taken two measures in the previous budget. The government reaffirmed its commitment to having a strong and effective trade remedy system. In the budget implementation act, there were two measures that were put in place. Following the consultations that were held this summer, we're actively looking at implementing further ones in the coming months.

[The Vice-Chair, Conservative, Randy Hoback]

I'm going to have to stop you right there, and move on to our next round of questions. We are going to go to Mr. Peterson. You've got five minutes.

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

Thank you all for being here with us this morning.

I want to ask some questions about the investigation process at the outset. I've spoken to some steel industry stakeholders, as I'm sure most of my colleagues, if not all, probably have in their role as a member of Parliament. We do have some good producers here in Canada. The same theme I'm hearing is that Canadian steel is very competitive. The one issue they have is the dumping by the Chinese. That's the consensus in the industry.

It seems to me that the problem is real. I'm wondering how the investigation process works, and if we're keeping up with methods and technologies that Chinese and other producers are using to circumvent the trade investigation process and make it look like they're not dumping, which may be affecting local pricing on the techniques.

I understand there's software out there now that they can use to make it look like there's no dumping going on. Are we staying ahead of the game in an investigative unit? Are there more tools that could be used? How can we get to where we need to be?

[Michèle Govier]

I can walk through a bit about the investigation process.

Essentially, there are two agencies responsible for conducting trade remedy investigations.

Canada Border Services Agency is responsible for initiating a case at the beginning and then looking into whether dumping and subsidizing is taking place, and in what amounts.

The Canadian International Trade Tribunal is responsible for looking at whether that dumping and subsidization is causing injury to the domestic industry.

They have separate functions, and the investigations move in parallel.

Once a complaint has been received by the industry, the CBSA has a certain period of time to determine whether it's properly documented and then, on that basis, whether they want to initiate an investigation.

Once that's initiated, this parallel process goes on where the trade tribunal, first, makes a decision as to whether there's an initial indication that there's injury; then the CBSA makes its decision as to whether there's an initial indication of dumping or subsidizing. Based on those findings, provisional duties can be put in place. Then that moves on to the final stage, where they're doing additional verifications. The CITT holds public hearings and they're just gathering the information to make the final finding. The CBSA will then issue its decision as to what the levels of dumping are. Then the CITT, as a final step, confirms, or not, whether that dumping is causing injury. From that point, final anti-dumping duties or countervailing duties, depending on the issue, would be put in place.

Once measures are in place, they're in place for a five-year period, and that's the time at which, when duties are being collected, some of these issues that you're talking about might be taking place, potentially, where companies might be trying to get around the duties by misrepresenting the nature of what the product is, or where it's coming from. Basically, they will look at what the duties apply to and see if there's a way that they can get out of it. That does happen, from time to time. We don't have a lot of evidence as to the extent to which that's happening in the Canadian market, but there is some anecdotal evidence.

That's one of the areas that we looked at in the consultations as to what tools we might need to have to address that.

We already have, actually, quite good tools within the Special Import Measures Act, within the Customs Act, to deal with fraud and evasion, where there's really just wrong information, incorrect information, being put on entries.

For things where it's more about using loopholes, making small modifications to goods, we're looking to see whether that's an extensive problem that merits having a separate process to be able to address that, as well.

I think your other question was on this software. This is something that's only come to our attention recently. It's the way that dumping margins are calculated. You're basically comparing the prices that they're being sold at in Canada by this exporter with the prices that they're being sold at in their domestic market. If they can play with the prices in the domestic market, it can affect the levels of dumping duties that can be applied.

The CBSA has quite a lot of tools at their disposal to determine whether the pricing in the other market is actually reliable. On that particular case, I don't have an answer as to whether they could address that. We haven't been able to raise that with them yet. But it's been brought to our attention and we're having a look at whether anything additional is needed in that respect.

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

Thank you.

I know there have been some changes to some legislation because of budget 2016.

Is there anything else that, legislatively, you think might give you a better...?

[Michèle Govier]

Well, this is what I was talking about. The things that we were consulting on would all be legislative changes.

We consulted on eight different proposals. Three of them were related to enforcement-type issues. There were another three that were related to how the margin of dumping is calculated, and some technicalities around that. There were a couple of others that related to the evidentiary standards.

Those consultations concluded on June 29 of this year, and we're actively looking at what additional legislative changes we'll be wanting to make.

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

Thank you very much.

[The Vice-Chair, Conservative, Randy Hoback]

You were right on five minutes. Thank you very much.

Mr. Kerry Diotte, welcome to the committee. You come from a steel-producing area yourself.

[Kerry Diotte, Conservative, Edmonton Griesbach, AB]

I do, yes. It's all very interesting to me. I grew up in Sault Ste. Marie, and I'm sure you all know the history of that—

[The Vice-Chair, Conservative, Randy Hoback]

Pardon me. Sorry. We have to go to Madame Lapointe first, and then I'll come to you.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chair.

Good morning, and welcome to the witnesses.

With steel, we have extraction, then primary and secondary processing. You said that 60% of our processing is imported and we export 50% thereafter. Where is the biggest problem? Is it at the extraction stage, the primary processing or when it is put on the market?

[Michèle Govier]

So you are asking whether the dumping—

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

At what point would that become a factor? Would it be more in terms of extraction?

[Michèle Govier]

The primary steel producers will be most affected. A number of measures are in place in terms of primary products, but, more and more, dumping is beginning to affect products at secondary processing. People are telling us that it is becoming a problem at that level too.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Okay.

What are our main uses after primary processing? Clearly, we have the automotive sector, steel construction, and tools. What are our strengths in Canada?

[Michèle Govier]

Are you asking where it is used?

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Yes.

[Michèle Govier]

It is used in construction, in the automotive industry.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

In steel structures.

[Michèle Govier]

Yes.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

In which area are we the best? Is it in the automotive industry or in structural steel?

[Patrick Hum]

The Canadian steel market comprises three sectors: manufacturing, energy and infrastructure, or construction.