International Trade Committee on May 30th, 2024

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

I think that is important. It was developed and we looked at it. The market watch unit is to be reviewed annually. It's systematic. It's proactive. It's not reactive and waiting, per se.

I can't remember what meeting it was, but we had the CBSA. I think this is a tip of the hat to the steel producers and the unions. The steel industry has had, probably, some of the most success in launching and winning cases in dollars and sheer volume. I think the market watch unit, being proactive, as well, will help resource a collaborative effort. I was pleased to hear that.

Tony talked about some tariffs. In steel town, our backs all go up with tariffs, because we know what the intention is. They're to hurt workers. They're to hurt the industry. Both presidential candidates are talking about tariffs. One thing that happened in the last round, I think, was section 232 tariffs driving industry, unions, communities, the country and everyone together in this team Canada approach.

Please explain this for the committee and the witnesses. It's important to get on record that, when America puts a tariff on Canadian steel.... You talked, Catherine, about the integration of our market and 50% of that steel going into the manufacturing or auto sector of the United States, vis-à-vis.... It's a tax on Americans. That 25% is.... They're basically taxing Americans, whether it's aluminum or steel.

Would you not agree with that? That was just one part of the issue with tariffs when the Americans launched them.

[Catherine Cobden]

It was a devastating situation for the industry. It's one of the reasons for the CUSMA review and also the broader trade relationship between Canada and the U.S. We think it's timely and very important to take a very close look at what the big signals are that we can send to the current and future U.S. government, whatever form it might take. We're very serious about trade. We never want to find ourselves in that situation again.

What we want to do is make sure we are matching and keeping pace in our trade remedy system and beyond, to ensure we can look the U.S. in the eye and say, “We are real partners with you” and doing all those things together to protect Canada-U.S. trade flows, which, as you put it, are so highly integrated. That's the rationale now that the U.S. has come out with so strongly on the section 301 tariffs and across the supply chain. We obviously aren't here to talk about the other aspects of that. From the steel perspective, we think that's very important for Canada to look at.

There are threats on our industry all the time. We learned some pretty hard lessons in that period. We have to prevent them from ever happening again.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Yes, I don't want to see that movie again.

[The Vice-Chair, Conservative, Kyle Seeback]

That's your time, Mr. Sheehan.

Mr. Savard‑Tremblay, you have the floor for six minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

My first question is for Ms. Cobden and Mr. Desmarais.

It goes without saying that, in the context of a study on a revision of the CUSMA, we need to talk about the trade relationship with the Americans. I've heard that this issue has been very much on the table. We know they're wary of steel imports that might come through Canada.

Until now, what we've heard, especially from President Biden, has been about Mexican steel. There's an admitted distrust in the official American discourse. However, we also know that there is dumping here. You'll correct me if I'm wrong in a short while, but that's what some pretty important indicators are telling us.

For his part, candidate Donald Trump is already pledging to impose a 10% tariff on Canadian steel if elected. This is coming from Donald Trump, but that doesn't mean that President Biden, if re-elected, wouldn't do the same thing, if indeed there's a transpartisan consensus on this kind of practice.

Currently, 22% of steel imported into the United States comes from Canada. First, are producers here concerned about a possible loss of access to the U.S. market?

[François Desmarais, Director, Trade and Industry Affairs, Canadian Steel Producers Association]

Thank you for your question.

The U.S. market remains absolutely essential to our producers here at home. Over 50% of our production is sold in the United States. An average of $8 billion U.S. in trade goes to the U.S. every year, not counting all the U.S. steel that comes into the country. It's just as important for them. When you say that Canadian steel represents 22% of the market, it's important to specify that it's 22% of the steel imported into the United States. Canadian producers account for 6% of the total U.S. steel market.

You're also absolutely right when you mention the recent American focus on Mexican practices. Again, to quote Ms. Cobden, our trade remedy system is essential to the discussion, because what the Americans were criticizing the Mexicans for was precisely the absence of a modern control system at their border to prevent the dumping of steel from Mexico into the U.S.

We therefore recommend the same thing to the Canadian government, i.e., to keep the country's trade remedy system up to date to prevent dumping. Indeed, dumping does occur in Canada. It's estimated that 60% of tariffs and countervailing duties today target steel products entering the country. That may give you an idea.

We have to face up to this situation and continually improve our system to prevent dumping.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

We also know that Canada passed anti-circumvention legislation in 2018 or 2019. To my knowledge—you can tell me if I'm wrong—no cases have been identified in Canada.

[François Desmarais]

That's right.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

In the United States, on the other hand, there were some forty over the same period.

First of all, how can such a discrepancy be explained?

[François Desmarais]

As far as I know, the Canadian law was modernized in 2018 or 2019, while the Americans modernize their anti-circumvention law on a regular basis. Last time I checked, I believe the U.S. had 37 steel-related anti-circumvention cases in particular.

Clearly, there are global trends to divert steel inventories in order to avoid tariffs and countervailing duties. This tells us that Canada should perhaps modernize its system, as well as its anti-circumvention legislation, to bring it into line with that of the Americans. I believe your colleague has asked for suggestions to this effect. We'd be happy to pass on our suggestions, which are quite technical after all, to the committee.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Could you send them to the committee in writing?

[François Desmarais]

Yes, absolutely. I could also briefly mention three.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

It depends on how much time I have left.

[The Vice-Chair, Conservative, Kyle Seeback]

You have a minute and a half.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

All right; we're listening.

[François Desmarais]

First of all, one of the big differences between Canada's system and that of the United States is that, over there, the Commerce Department can take care of identifying cases of circumvention itself, whereas here, the Canadian government expects the industry to do so. Yet, if the government were to take care of certain cases, it would allow more to be spotted.

Also, certain definitions in the law—which, as I said, are very technical—would need to be changed. For example, the Canadian law is too restrictive as to what constitutes a change in equipment that has an impact on tariff evasion. So we could change that definition too.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

All right. So we can see that Canada is quite far behind in this regard and that there would be some updating to do.

I think I have very little time left, so here's my last question.

I imagine this CUSMA review is going to provide us with some good opportunities to move this issue forward, isn't it?

[François Desmarais]

Yes. We firmly believe that, if we align our trade remedy system with that of the Americans, we will send a strong signal to Washington showing that we understand the new challenges we face in international trade, that we share the same fears, that we are on the same wavelength and that we want to collaborate and have a beneficial partnership for all.

[The Vice-Chair, Conservative, Kyle Seeback]

That's the time.

We'll go to Mr. Cannings for six minutes.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you all for being here today.

I'm going to start with Unifor. Ms. Payne, you talked about how the original NAFTA was disappointing for workers, if I can put it that way. You said it basically drove a lot of Canadian jobs out of the country and into the southern states and Mexico, but the new CUSMA helped reverse that with its labour chapter.

You obviously have some concerns about what's happening now and how those parts of CUSMA are being used. Could you elaborate on that?

You mentioned a union vote at Mercedes and some things going on in Mexico. Could you elaborate on that situation, what's happening in that space and what we need to be looking forward to in a new CUSMA in a couple of years?

[Lana Payne]

Absolutely.

First of all, I would say, the labour chapter is very important and must be something that we protect. Within that, in terms of what has been happening in Mexico, this mechanism that was set up has been really important. It has in some ways emboldened democratic free trade unions in Mexico. We've had a relationship with some of those unions with respect to making sure they get good collective agreements with, for example, General Motors in Mexico, so that wages and living standards for Mexican workers can be increased. This labour chapter has been very important to how that can evolve.

With the case of what's just happened recently in the United States, we had a situation where the UAW, which is a sister union to us in the U.S., had been organizing at two Mercedes plants. There were very what I would call “anti-union” tactics, intimidation tactics, used by the employer, threatening employees in this case, not unlike what we would have historically seen and still do see in some cases in Mexico. This is not something we should be tolerating.

We should find ways to use and avail of this labour chapter to ensure that this is not happening in the United States or in Canada and that workers are free to be able to join trade unions and to bargain for collective agreements that can lift their living standards.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

One event that I don't think CUSMA perhaps really foresaw fully and that is definitely happening now is the increase in electric vehicle manufacturing. Canada has invested very strongly in some parts of that.

I'm wondering if you could comment on how that might change our negotiations in a new CUSMA. What does EV manufacturing mean in the future for workers?

[Lana Payne]

Yes, absolutely. Obviously, we've seen somewhere in the range of $50 billion in investments in the auto industry and in the supply base around that in the last three years in Canada. It's been quite significant.

We will start seeing a change in manufacturing as a result of that. You heard from my fellow panellists about how we've had a decline in manufacturing jobs in Canada for quite a period. Now we've seen these massive investments, and you'll see growth in the manufacturing sector as a result of that. That's really important in this picture.

I would also say that it's critical that we continue on that path of trying to invest in and build up the manufacturing sector in Canada. That includes the supply base as well.

I'll turn it over to my colleague Angelo right now. He'll add to this piece for you.

[Angelo DiCaro, Director, Research Department, Unifor]

Thanks very much, Lana.

On the specific points on the CUSMA, we've seen over the last three years as the EV space has developed that we have a better handle on some of the most critical component parts that will go into EVs—parts like electric motors and electric drive units—which become a very obvious and natural transitioning technology to existing powertrain facilities. We're seeing this happen at our St. Catharines powertrain plant.

These will be critical components to retain jobs in this space. These are not contemplated currently in the CUSMA as “core parts” of a vehicle. We join with others in looking at this section of the agreement and trying to modernize it in those ways to protect workers.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

In my last 50 seconds, Mr. DiCaro, I'll stay with you and perhaps bring in the concept of China. China has been leading the world in all sorts of EV manufacturing, with batteries, etc., and is now producing vast quantities of inexpensive EV vehicles.

I'm wondering what concerns you have there and what we have to look out for when we're trying to renegotiate CUSMA to make sure that North America as a whole can withstand that competition.