Thank you very much.
Thank you to the committee for the opportunity to appear today on this important study. It is much appreciated.
The Canadian Steel Producers Association is the national voice of Canada's $14 billion primary steel production industry. Canadian steel producers are integral to the automotive, energy, construction, and other demanding supply chains in Canada. In that context, we seek to work with governments and industry partners to advance public policies that enable a globally competitive business environment.
Before I directly address the committee's fundamental question with regard to industry priorities, I'd like to first provide a little context to the mutually beneficial nature of our NAFTA relationship in steel, focusing principally on the relationship between Canada and the U.S.
Canada and the U.S. enjoy a balanced and complementary trade relationship in steel founded on fair market principles. In 2016, over 10 million tonnes of steel with a market value of over $8.8 billion U.S., was traded between our two countries. Canada shipped $4.4 billion U.S. to the United States, and the U.S. shipped $4.45 billion U.S. to Canada.
Steel continues to be a major export commodity from the U.S. into Canada. In 2016, 50% of U.S. steel exports came here, accounting for about 30% of our domestic market. Additionally, Canadian steel producers buy significant raw materials from the United States. To be specific, $1.5 billion U.S. worth of iron ore, bituminous coal, steel scrap, zinc, and other metals were purchased by companies for processing last year. Beyond the value of those commodities, significant economic activity is generated through the mining, recovery, and transportation of those raw materials. Several of our producers maintain facilities and employment in multiple NAFTA jurisdictions, and the shared profitability of those facilities supports investment across the various companies.
Since NAFTA entered into force, steel trade in products between NAFTA countries has increased by 117.2%. The vast majority of North American steel exports are made within the region: 97% of Canadian steel exports are to the United States and Mexico, 90% of U.S. steel exports to Canada and Mexico, and 76% of Mexican steel exports are to Canada and the U.S.
Recognizing the strategic value of steel production to the NAFTA region, in 2003 the NAFTA governments created the North American steel trade committee, which coordinates government and industry actions on joint enforcement and continued growth and prosperity in steel in the region. This brings both government and industry representatives together from the three countries to discuss policy priorities and competitiveness.
As this committee recently heard as part of its study on the Canadian steel industry's ability to compete, growth and excess capacity from jurisdictions where state control and ownership are prevalent is both unsustainable and irresponsible. NAFTA governments and industries share a fundamental belief that urgent and substantive multilateral action is required to address causes and consequences of global overcapacity, and that is why we continue to support the efforts of NAFTA governments through the G20 OECD global forum on steel overcapacity, sharing an expectation that there will eventually be a permanent reduction in overcapacity.
In defending against unfairly traded imports for the time being, we share the challenges of our counterparts in the U.S. and Mexico. These detrimental impacts are artificially suppressing our prices and harming North American workers. We work co-operatively to ensure polices and actions in all three NAFTA countries are closely aligned, and that we are responsibly defending the regions from unfair trade.
We generally view NAFTA as having been a successful agreement, though after 23 years we believe it could be modernized. To that end, we would point to the strengthening of rules of origin, promotion of trade enforcement co-operation and coordination, establishment of enforceable currency disciplines in the conduct of state-owned enterprises, the elimination of burdensome customs procedures, and upgrades to border infrastructure.
In closing, I note that before a formal NAFTA renegotiation takes place, it is critical that Canada secure national consideration in the Department of Commerce's ongoing section 232 national security investigation on the imports of steel, its process on the construction of pipelines using domestic steel and iron, and its ongoing process with regard to the enforcement of current “buy American” policies.
In each instance, the government should continue to rigorously defend the interests of Canadian steel producers and steelworkers to ensure no adverse or unintended consequences occur as a result of direct action taken by the U.S.
Without positive outcomes on these—