International Trade Committee on Nov. 3rd, 2016

[Scott Duvall, NDP, Hamilton Mountain, ON]

Thank you.

One of the concerns that I see happening is.... Most of the countries have now reacted to this dumped steel coming in, putting in high tariffs. Canada is still lagging behind, but now the Chinese are using us as a back door and dumping the steel.

If that dumped steel gets into the United States through our borders, are there any concerns that we could be held accountable for any damages?

[Michèle Govier]

No.

To answer that question, if it's flowing through Canada and Canadian companies are not doing anything that is aimed at either circumventing or evading duties that are going to the United States, then no. It may be that they're trying to use back channel ways, but whoever is filling in the import documentation would be the one who would be held accountable for that.

I'd also like to address your opening point in terms of other countries putting measures on steel while we're not, because we do have quite a lot of measures already on steel products, with quite robust margins of dumping found, so that offers a very good level of protection. If you look at some of the key products, you see that on steel plate, concrete reinforcing bar, and a lot of tubular products that are used in pipelines and whatnot, we have quite a number of findings in place that are offering good protection in our Canadian market against dumped and subsidized products.

There is a perception, perhaps, that we don't have any of these measures in place or that we're lagging behind in that sense, but I want to make sure it's clear that our industry is very active in bringing complaints forward and very successful in terms of getting measures in place.

[Scott Duvall, NDP, Hamilton Mountain, ON]

I have one other quick question. When it comes to our ports, is there any fraud happening, such as changing of paperwork or tags, or things we should be concerned about, and who is policing that?

[Michèle Govier]

The Canada Border Services Agency is responsible for the enforcement of trade remedies measures, so once things come in, if they're subject to anti-dumping and countervailing duties, they are the ones assessing the duties on that. They're determining whether the products meet the definition that's in the finding to ensure the duties need to be applied, and they're the ones examining whether there's false information, perhaps on the entries and whatnot.

As I said, my understanding, and you may want to discuss this further with the steel industry as well, is that we've heard anecdotal evidence that things are happening or at least that there are parties in Asian countries that might want to facilitate the import of products without paying duties. In terms of having found a very prevalent issue coming into the Canadian market, I don't think we have evidence of that.

That said, we understand that it's a concern of the industry and enforcement is very important. That's one of the reasons why we're looking at it. We looked at that in our consultations to help improve the mechanisms we have to deal with it.

[Scott Duvall, NDP, Hamilton Mountain, ON]

Tracey.

[Tracey Ramsey, NDP, Essex, ON]

Has the CBSA found any of these cases? Do they exist?

[Michèle Govier]

You'd have to talk to them.

[Tracey Ramsey, NDP, Essex, ON]

Okay.

[Michèle Govier]

Unfortunately, I don't have that information with me.

[Tracey Ramsey, NDP, Essex, ON]

I have another question. I understand that we're doing this to the best of our ability without further legislation, but we are not in line with some of our largest competitors, such as Australia, the EU, and the U.S. Even the Canadian Chamber of Commerce, through the Hamilton Chamber of Commerce, the Windsor-Essex Chamber of Commerce, and the Sault Ste. Marie Chamber of Commerce, has put forward recommendations to bring us in line with them so we can actually ensure that we have a strong steel sector.

One of the complaints that comes from a facility in my riding—Atlas Tube, with Barry Zekelman—is that by the time they bring the case forward and start the process, the damage has been done. That's the issue. What could we possibly do to address things in a more timely way so that we don't continue to bleed out that damage while we're waiting for some type of ruling?

[Michèle Govier]

There are limits to what we can do in terms of going retroactive or whatnot. That's really governed by the rules that are set out in the WTO. These are measures that can result in very high levels of duties, and there are appropriate rules around that to make sure there's good evidence, that they're merited and warranted.

I'll mention again that our system is among the most responsive in the world in terms of getting duties in place quickly. We only have one opportunity to potentially extend an investigation, but otherwise it's set out in the legislation that you're going to have provisional duties if it applies within 90 days, and then final duties at the end of I think 210 days after the initiation. It's not immediate, but it is certainly very quick, and quicker than virtually all other jurisdictions.

There are rules that say if after initiation there is a situation of massive importation—if you see that there's a real surge after a case has been initiated—there is the potential to apply duties going back to that date of initiation. It's very rarely used amongst different countries because it's a fairly high standard. Other than that, it's really that 90-day period when the provisional duties begin to apply—

[Tracey Ramsey, NDP, Essex, ON]

Is there any way to decrease that? Is that one of the recommendations you have? Is decreasing this part of the trade remedy that is being sought?

[Michèle Govier]

No, and that's one of the elements that's clearly set out in the WTO agreement as to what the conditions are for applying it.

[Tracey Ramsey, NDP, Essex, ON]

I want to go back to the non-market economy status that China has and this date of December 11 that is looming. I'm wondering what the impact of granting them market economy status would be on our investigative process here.

[Michèle Govier]

Essentially, in terms of non-market economy status, when you find that non-market economy conditions exist, it means that instead of comparing the prices of the exports into Canada with those in China, you're using third-country information or some kind of surrogate information—because the thought is that the prices within China are not reliable—so that you're able to get credible and good margins of dumping on those investigations. Not having the ability to do that and being forced to rely on the prices within China, where there are serious concerns that there are a lot of distortions, would reduce the levels of the anti-dumping duties.

I've seen different estimates as to what those might be, including in the range of about 30 percentage points, so where we might have had duties of 50%, they would be going down to 20%. Those are estimates. It really depends on a case-by-case basis as to what the situation is on the ground. Yes, we're very mindful that the impacts of this could be significant.

[Tracey Ramsey, NDP, Essex, ON]

Yes, because—

[The Acting Chair, Liberal, Kyle Peterson]

Thank you. That's your time. I'm sorry, Ms. Ramsey, but I appreciate the line of questioning.

We're going to move back to Madam Ludwig now for six minutes.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

How often do you meet with your global partners around the issue of trade and what are they telling you about their situation with their domestic markets?

[John Layton]

We meet frequently with our North American partners in Mexico and the United States, with government officials and with their industries as well. Twice a year, we have the North American steel trade committee that meets to discuss issues of common interest. Usually, those involve issues about overcapacities and concerns with unfairly priced imports from other countries.

We also co-operate with our NAFTA partners in the OECD steel committee, which meets twice a year as well to discuss issues of interest to the global community. It's a unique forum to discuss steel issues in a multilateral context. As I mentioned before, we also have a G20 forum on steel overcapacity.

There's also co-operation on the trade remedies front, in trade remedies and enforcement. Maybe Michèle could talk to that.

[Michèle Govier]

In terms of the Department of Finance, there are WTO committees held twice a year pertaining to anti-dumping and subsidies issues. We participate in those and have a lot of interactions with other international players and like-minded and not-so-like-minded countries to discuss some of these issues.

I'll mention as well that, on the enforcement side, CBSA has quite a lot of interaction with its NAFTA partners as well. Very recently, in the North American leaders' summit, there was an announcement that there would be further co-operation efforts on the enforcement of steel anti-dumping measures in particular. The first meeting pursuant to that occurred in October. They report out to that North American steel trade committee.

In that sense, there's quite a lot of co-operation, formal and informal, with other countries, because there are shared challenges on a lot of these issues, and getting a better understanding of how other countries are dealing with them, as well as best practices and whatnot, is a very useful exercise.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you. There are quite a few meetings.

[Patrick Hum]

I should point out that at the last high-level meeting of the Global Forum on excess steel capacity, which was held in April, the associate deputy minister for Innovation, Science and Economic Development, Kelly Gillis, represented Canada. That's where they had deputy ministers and ministers from various countries talking about the global excess steel capacity issue.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you.

I have one last question and then I'll be splitting my time.

Ms. Govier, you mentioned that the Canadian system is the “most responsive” for setting out duties. How likely is it that the other countries you're having conversations with may take similar actions in dealing with the challenges?

[Michèle Govier]

In terms of the responsiveness, I was speaking specifically about the timelines. In terms of getting measures in place, I'm not aware that other countries are looking to expedite their processes. I know that Australia recently already did that as an exercise, but I think their time frames extend out a bit further than ours in many cases.

There are other measures being taken by different countries to respond to the challenges. I don't know if you're interested in mainly trade remedy types of changes or if it was a broader question.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

I may have to get back to you because I'm splitting my time. Thank you.

Peter.