Evidence of meeting #8 for International Trade in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was china.
A recording is available from Parliament.
Conservative
Jason Groleau Conservative Beauce, QC
For us Conservatives, agriculture is the top priority.
In their election platform, the Liberals proposed a new carbon border tariff.
What would be the impact of imposing this type of additional tax on Americans at this time?
Senior Director, Government and Industry Relations, Canola Council of Canada
Yes, border carbon adjustments have been discussed for a while. Obviously, the Europeans have decided to move forward in that space. Your colleagues over in the agriculture committee did a study on this as well.
We have concerns about how that could be implemented, particularly if it means an additional administrative burden on an already very burdened industry when it comes to administration and red tape. Anything that would be disproportionate in that area would be significant for us at a time when we need to be even more competitive than we have been historically as a result of the current geopolitical trading environment we find ourselves in.
Liberal
Liberal
Steeve Lavoie Liberal Beauport—Limoilou, QC
Thank you, Madam Chair.
Good afternoon, Mr. Kilby. Thank you for joining us.
My question is simple, but I would like you to provide a detailed answer.
What do you think of the government's decision to eliminate interprovincial barriers in order to promote trade?
Chief Executive Officer, Dajcor Aluminum Ltd., Canadian Aluminum Extruders Coalition
In our industry, I don't see any real competition or barriers between us as colleagues and competitors for aluminum extrusion. I was together with some colleagues yesterday at a smelter in Quebec. We're all the same. We're all buying our metal from them. This is the time of year when we set our contracts for next year. We have all come together in the past to get anti-dumping duties in place against China. We don't typically have any issues moving metal across provincial boundaries.
Liberal
Steeve Lavoie Liberal Beauport—Limoilou, QC
Thank you, Mr. Kilby.
Mr. Adams, I'll repeat a question that my colleagues are tired of hearing. However, I find it relevant in the current situation.
Some people may not know this, but I worked in the banking industry for 20 years. The companies that I worked with prioritized certainty. This is especially true for bankers who lend money. I then went on to head a chamber of commerce, where certainty was the only topic of conversation. However, the world has changed. We spoke to other stakeholders, who told us that they had never seen this type of situation in over 50 years. Certainty is still a priority, but we don't believe that it can make a comeback anytime soon. Yet our companies need to keep doing business and developing new markets.
While we continue to dream of a return to predictability, the government has already established the Canada Growth Fund and the Canada Infrastructure Bank. However, in your opinion, what choices should it make to help businesses continue to move forward despite this uncertainty?
Given that predictability won't come back tomorrow morning, but that we must keep moving forward, what advice and requests do you have for the government?
President, Global Automakers of Canada
The reality, as you say, is that everyone is looking for certainty regardless of business. What the government has been doing in terms of trying to provide support to businesses—whether ours or the canola sector—that are affected by the tariffs is important, but it's temporary relief. It's not certainty. I think getting to a review of the USMCA or CUSMA that re-establishes a rules-based environment for our trade with the United States is key given that, in the automotive sector, 85% of the product, regardless of manufacturer, goes into the U.S. market.
Getting the relationship sorted out with the United States on a tariff basis and a trade basis through the USMCA would be key.
Liberal
Steeve Lavoie Liberal Beauport—Limoilou, QC
Mr. Sherman, thank you for joining us.
I've spoken at length about our current exceptional circumstances. The United States and other countries, such as China, are imposing tariffs on our products. You're experiencing this first-hand, since China has imposed tariffs on Canadian canola. These days, we aren't just at the mercy of the United States. Other countries can slap tariffs on us at any time to disrupt a market and an industry.
You spoke a great deal about the United States and Mexico, but I would also like you to talk about the diversification of our export markets. For example, in the short or medium term, would it be possible to open up markets and increase our exports to Europe?
If so, does the supply chain allow for this? If not, what investments would be needed to make this happen?
Senior Director, Government and Industry Relations, Canola Council of Canada
The European Union is a long-standing trading partner of ours, a long-standing market, but it's not without challenges. In fact, 100% of what we export to the European Union is for biofuel, not for food consumption. There are significant challenges with that market, including their most recent vision for agriculture, which was announced back in February of this year and which talks about a new trade policy that they will be exploring around reciprocity and near clauses, which would further undermine the global trading system. When we look to Europe, we have to do so with eyes wide open. It is not an easy market to work in. We are comforted that they are making some progress on key policies that are important for us, including new genomic techniques, but Europe is not a panacea when it comes to diversification for the Canadian canola industry.
Liberal
Steeve Lavoie Liberal Beauport—Limoilou, QC
I'll give the rest of my time to my colleagues. Thank you.
Liberal
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot—Acton, QC
Mr. Kilby, I can remember my first term. Six years ago, of all the members here today, only the chair and I sat on the Standing Committee on International Trade. We were studying the Canada-United States-Mexico free trade agreement, or CUSMA, at the time. We thought that this agreement would be around for a long time. However, it will soon be up for review.
I remember that the aluminum issue was the focus of a major debate when we arrived in the House of Commons. When I say “we”, I'm referring to my colleagues in the Bloc Québécois. We had 22 more members than in the previous Parliament. We made this issue a key battle because we noticed that steel and aluminum had different statuses in CUSMA.
In the case of steel, I believe that a minimum of 70% was required for automotive parts. We talked about steel as a material, the metal itself. In the case of aluminum, we talked about aluminum parts of North American origin, not cast and molten aluminum. We figured that China would simply continue to use Mexico as a dumping ground. We thought that China would send its aluminum to Mexico, that the parts would be assembled in Mexico and that the product would then be marketed as a North American part, when in fact it was of Chinese origin and, in some cases, of Indian origin.
Do you believe that aluminum should have been given the same status as steel, and that this would have helped your industry?
Chief Executive Officer, Dajcor Aluminum Ltd., Canadian Aluminum Extruders Coalition
At the conclusion of CUSMA, we did raise this concern regarding Rio Tinto and the extrusion industry, which I represented myself. We came forward with this exact concern, that Chinese aluminum would enter the U.S. and Canadian market through Mexico. Both Canada and the United States have anti-dumping duties in place for extrusions with China. Canada went first in 2009. It's been upheld for 15 years, and, recently, a couple of months ago, it's been upheld again for another five years.
The U.S. went second in 2011. I entered this market in 2010. I can tell you first-hand that metal was coming through the United States and into Canada at that time, when the anti-dumping duties were in place in Canada but not the United States.
We already saw what happens when you don't have a good policy in place to prevent some of that. The exclusion of the 70% content at the conclusion of CUSMA was a concern. It did, in fact, result in metal coming in from China into Mexico, which found its way into Canada and the United States on vehicles. That's something we would like mitigate in the future.
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot—Acton, QC
Obviously, there will be all sorts of negotiations and debates on rules of origin, for example.
As part of this review, would you ask that aluminum be given the same status as steel right now?
Chief Executive Officer, Dajcor Aluminum Ltd., Canadian Aluminum Extruders Coalition
Yes, that would be a great outcome.
Recently, Canada put a 25% tariff on raw aluminum coming from China. That has some effect in helping our market because those parts that use China-sourced raw aluminum that enter the North American market come at a premium because of that 25% duty. However, many do not.
The arbitrage, the price change for the difference between Canada and Europe and other low-cost countries, has gotten significant enough that we become an attractive market again. All these things are always moving, especially when there's been a disruption like we've had with the tariffs where things are being repriced and cost bases are changing. We're seeing the negative impacts of that.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot—Acton, QC
I think that you made it clear that the dumping had continued and that this marked a missed opportunity five years ago. That's quite clear to you.
I don't think that you even need to explain the benefits of promoting local production for taxpayers, for jobs and for the spinoffs. There isn't any debate here.
Tell me about the environmental aspect. I know a bit about aluminum smelters in Quebec. They're very eco-friendly. We aren't yet carbon neutral, but some people are talking about it more and more. We're starting to talk about technology that would help produce carbon‑neutral aluminum. Even though we aren't there yet, it means that we're still ahead of the game.
Is there any real added value in aluminum from China, for example, which is often produced using coal?
You might say that the question holds the answer, but I welcome your comments.
Chief Executive Officer, Dajcor Aluminum Ltd., Canadian Aluminum Extruders Coalition
Yes, it is true that, if you look at Quebec's smelted aluminum, it's around four tonnes of carbon per tonne of aluminum produced versus what you would find in China, which is around 17 tonnes per tonne. There's no accounting for that difference in the regulations and things that we do here in Canada, including paying carbon tax, which, thankfully, for the moment has been suspended, so we can muddle through here during all this turmoil.
Yes, that disparity is a cost factor in our industry, and it creates an unfair disadvantage for North American suppliers of aluminum extrusions.
Liberal
Conservative
David McKenzie Conservative Calgary Signal Hill, AB
Thank you, Madam Chair.
Mr. Adams, first of all, I have a question for you, if I may, sir.
The Liberal government has been—I might describe it as—warming our relationship with China. I wonder if you could comment on what you might see as an outcome if protective tariffs on Chinese EVs coming into Canada are lowered.
President, Global Automakers of Canada
What I would say is that, if you look at what's happened in other jurisdictions, if tariffs are lowered, the Chinese enter into the marketplace aggressively and take over a large chunk of that marketplace. The penetration in Europe right now, with Chinese automakers, is around 15% after being in that market for, I believe, two or three years.
I think the prospect for Canada, when we're trying to grow our own EV ecosystem here, is daunting. It would also undermine our manufacturing base in Canada.
Conservative
David McKenzie Conservative Calgary Signal Hill, AB
It seems to me as well that our government has provided supports to industry to grow our capacity for domestic EV production. I presume that would be put in peril.
