International Trade Committee on Sept. 18th, 2024

[Jean Simard]

That's an interesting question. You know, Canada is a land of resources and an exporter. It isn't a market per se, because we don't have the population density, the critical mass. As such, the issue for an industry like the aluminum industry is that our metal goes to foreign markets. About 95% of what we produce in Canada is shipped to the United States. The American market could very well disappear if processors in the United States replace Canadian metal with Chinese products, because that processor might end up saying that it needs less of our metal or doesn't need it at all.

I said earlier that aluminum is like water: It follows the path of least resistance to get the best price. That's exactly what we're talking about here. The danger is that once the Americans close the door, Mexico will follow suit. The danger is that Canada will become the gap through which Chinese products enter to take our place in the American market. If that happens, we'll be at odds with our American partners because we would become the conduit for transshipment to the United States. That's the issue, the gradual erosion of jobs and investment and so on.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Have you already started to see that happening in recent years? What's the current impact of aluminum dumping—and I could ask the same question about steel—on the Canadian economy? I'm talking about Chinese aluminum, obviously.

[Jean Simard]

In our case, we're seeing an increase in certain products from China, such as aluminum sheet or thick plate, which is arriving at a discount to penetrate the market. By selling at a lower price, metal gets moved.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

I would like to be a little clearer. Earlier, you talked about 40 plants that have closed. How many jobs does that represent in the Canadian economy? How many jobs are at risk if nothing is done?

[Jean Simard]

It's 40 plants that have closed around the world. None have closed in Canada.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

You're telling me that there haven't been any in Canada.

[Jean Simard]

That's right.

With its energy contracts, Canada has a resilience that allows it to withstand and go through downward cycles like that. The closures occurred in the United States and Europe.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Perfect.

Mr. Desmarais, do you have a comment on the impact of Chinese steel dumping on the Canadian economy?

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

There are two parts to the answer to your question. The first is that steel producers in Canada are at risk of losing a lot of market share. As we speak, only 35% of the steel used in Canada is produced in Canada. We risk seeing these market shares decline further if we leave the door open to Chinese steel.

The other important aspect to consider is access to the American market. The Americans are very concerned about Chinese producers and exporters circumventing their tariff measures. They paid a lot of attention to steel that came from China via Mexico. The question is also for Canada. It's critical for us to maintain this access to the U.S. market since 50% of our production goes to the U.S.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Desmarais.

We'll move on to Mr. Sheehan for six minutes, please.

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

Thank you very much for everyone's presentations on this really important subject matter, not just for Sault Ste. Marie but for the rest of Canada.

My first question, Chair, is for Catherine.

At the last meeting, I said it was very reminiscent of when I was first elected. When I was first elected, Tenaris's AlgomaTubes had a handful of people working there just to keep the lights on. Algoma Steel was in bankruptcy protection. Many other steel companies were up against the ropes, almost down and out. In 2016, with our first budget, we started implementing changes to our trade regime, because they squarely blamed Chinese dumped steel for why we almost didn't have a steel industry.

We talked about increasing the length of time—which we did—that these remedies would be in place when they were found to be bad actors. We also said we'd consult. After we consulted with your group, Catherine, the steel producers, and the unions, we came up with four things in the next budget, in 2017: particular market situations, anti-circumvention, scoping rules and union participation.

Then, in the next year's budget, we put more money and more resources into the CBSA for forensic auditors. I'm not going to talk about all of them, but I'll fast-forward to 2024. Each and every year, we strengthen our trade regime, and in 2024 it was with our market watch, with $10 million to support those folks who are doing the hard work to support Canadian workers and jobs.

Now, before I get to the 25% tariff on China right now, I want you to take a moment and think about what the steel industry would look like without all of those measures that we had in place. You talked about the surge recently, and I get that, but what would the steel industry look like without what we have done over the last nine years?

[Catherine Cobden]

The trade remedy regime needs to keep pace. The facts are that we've had to make changes year over year, really, because global trade practices have evolved, if you will. Those have been very necessary and very welcomed changes to the trade remedy system. We have more to do. Certainly, the tariffs aren't the only answer.

What we know, though, in this moment in time, is that the trade remedy system is overwhelmed despite all those changes, so we need to have this extra layer of protection that was announced by the government on section 53. We need it.

That doesn't say we don't have an additional.... We must continue to ensure those trade remedy systems remain in place. It's our first line of defence. It's our regular line of defence. The cheaters cheat, and their practices of cheating evolve. It's a never-ending need to continually modernize and upgrade to the current practice.

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

We can just suppose, then, that without all those other measures, it would be a lot worse right now.

[Catherine Cobden]

We have the vast majority of trade remedy cases in the steel industry. We absolutely rely upon it, and every year we need changes to be continuing so that it evolves in order to protect the industry. Without it, the industry would not be protected. We'd be fully exposed.

However, I do want to make the point that trade remedy cases cost a lot and are very slow, and that's the benefit of the 53 tariff. At this moment in time, with these terrible circumstances we're facing, we need something faster and more nimble, which is what section 53 gives us.

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

That's great to get on record. I think it's really, really critical that we do the 25%. That is just taking it a little bit further, not just for steel but for aluminum, for 100% on the EV. It's critical and then, you know, we haven't talked about 2018 when Trump imposed the 232 tariff on us.

How important is it to be aligned with our American partners going forward, since our steel industry is so integrated? Algoma Steel ships 50% of its steel to the United States, so that's absolutely critical. Would you agree with that?

[Catherine Cobden]

Yes. As I alluded to in my remarks, we're highly integrated, and steel moves back and forth across the border many times, so there is no question that, if we are at a moment in time when we need to pick where we align, we align with the United States. That will be the steel industry's view each and every time.

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

Some people called our anti-tariffs dumb. They weren't. We won, and on that, at the same time, we also invested in aluminum and steel through the SIF initiative to decarbonize in particular the economy, such as with $420 million for Algoma Steel. Why has the steel industry chosen by itself to decarbonize?

[Catherine Cobden]

Well, the market is going that way, and while we're already producing some of the lowest-carbon steel in the world, it's very important for the steel industry to continue to reduce our carbon footprint. As you know, especially in your riding, there's a very significant project going on for the decarbonization. The decarbonization cannot be done by the industry on its own; it requires partnership with governments.

In these cases, then, the federal and provincial governments have stood in to support the industry's transition. These are very significant investments that cannot be made by the industry on its own.

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

Thank you.

[The Chair, Liberal, Judy Sgro]

Go ahead, Monsieur Savard-Tremblay. I let Mr. Berthold go over, but we'll catch him the next time.

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

Thank you, Madam Chair.

I'd like to thank all the witnesses for their presentations.

Mr. Simard, we are, of course, aware of the importance of aluminum in Quebec. In 2020, hearings were held here on the Canada-United States-Mexico Agreement, or CUSMA. You will no doubt recall that the Bloc Québécois tried very hard to get an agreement from the government. At the end of the day, should Chinese aluminum be dumped through Mexico, the government committed to returning to the negotiating table to try to get aluminum to a status similar to that of steel. You yourself said at the time that it was unfortunate, and probably harmful, that aluminum did not have the same status as steel in CUSMA, not only in terms of parts, but also in terms of melted and cast materials.

There will be a review of CUSMA shortly. Do you think it could be a good advantage to put that in the works?

[Jean Simard]

Harmonization of border control measures is certainly in the interest of the CUSMA trade space. I would say that Canada, together with the United States, has put a lot of pressure on Mexico in this regard. Our own industry has done that with Mexico, with our American colleagues. I think all of that has contributed to Mexico recently following the lead of the United States in putting tariffs in place. In addition, Canada is consulting on a statement identifying the cast country for the aluminum sector, similar to what we are currently studying for the steel sector.

It's interesting. Furthermore, it's much more complex than it seems, because Mexico, which is sovereign and autonomous, only has to say no, in the end. If I put myself on their side of the border, Mexico's problem is that they don't produce metal. So they take what comes in from all over the world, and they probably want to preserve that capacity.

To come back to your question, I would say yes, it would be very wise to reintroduce that requirement.

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

Thank you.

Mr. Kingston, from the Canadian Vehicle Manufacturers' Association, I'll turn to you.

At the last meeting two days ago, representatives from Electric Mobility Canada called for the introduction of green tendering for public contracts. We're all familiar with the problems caused by American protectionist legislation. We know that when it comes to international trade law and free trade agreements, it's very complicated to say that Canada is simply exempt. It's even extremely complicated to have a North American exemption because the Canada-United States-Mexico Agreement, CUSMA, does not contain a chapter on government procurement, whereas the North American Free Trade Agreement, NAFTA, did.

According to a study by the Université de Sherbrooke, calls for tenders based on environmental criteria would pass the legal test with respect to free trade rules. Is that a path you support?

[Brian Kingston]

I'm sorry. The translation stopped there.

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

Is there anything in particular you would like me to repeat?