Scrap steel safeguards, say Alberta and B.C.

Provinces warn extra trade restrictions threaten to create shortages, hike costs

TORONTO Alberta and British Columbia want the federal government to scrap safeguards on a range of imported steel products, arguing they are undermining crucial infrastructure projects and eroding the competitiveness of local firms.

The Canadian International Trade Tribunal (CITT) began hearings this week into whether provisional safeguards — imposed in October on imports of seven different steel products — should be made “final,” a step that would see them extended from a maximum of 200 days to up to three years.

Finance Minister Bill Morneau has said the combination of levies and quotas are needed to prevent a damaging surge of imports from being diverted into Canadian markets as a result of U.S. tariffs.

But in separate filings submitted to the CITT, Alberta and B.C. say available pricing and import data across affected products suggest any hikes in imports are due to other factors, including rising demand and historical economic trends, not the diversion of steel from the U.S.

The extra trade restrictions from the safeguards threaten to create shortages and boost the cost of steel needed for infrastructure and other projects, the provinces say.

The safeguards, which place a prohibitive tariff on imports of each product above a certain amount, are “detrimental to the British Columbia economy and for British Columbians generally without appearing to afford significant benefit to domestic producers,” the B.C. government says in its submission.

Restrictions on imports of concrete reinforcing bar and pre-painted steel for instance, could hike the costs of new homes needed to address B.C’S housing crisis, the submission states. The B.C. government has pledged $7 billion for the construction of affordable homes amid soaring rents and prices in Vancouver and other urban areas.

“This price increase will increase the cost of all new housing construction and ultimately the cost of housing for consumers. Even worse, however, is the very real prospect that this increase in the price of rebar and associated restriction in supply will result in developers discounting or delaying construction.”

B.C. says imported steel is vital to its economy because the cost of shipping by sea is often cheaper than moving goods from east to west. Some steel items may not be made domestically or in sufficient amounts to fulfil domestic needs.

Due to these factors, heavy plate for use in bridge construction is typically sourced from the U.S. or from overseas, the province says. Restriction on those trade flows could have serious consequences both for local fabricators who supply the construction industry but for the projects themselves, the province says. For example, safeguards on heavy plate combined with the retaliatory tariffs on U.S. steel imports imposed last year, “will significantly increase” the construction costs associated with replacing the Patullo Bridge, part of a major transportation corridor in the Greater Vancouver Area, B.C.’S filing states. A shortage of the material could see the project delayed, it adds.

B.C.’S submission asks the CITT to terminate the safeguards on some products and grant the province “regional exemptions” on others.

For its part, Alberta points to safeguards on heavy plate and tubular goods — essential to the province’s oil and gas sector — as significant concerns for its economy. It wants those measures shelved.

The province has plans for 160 infrastructure projects — worth about $460 million — for which steel has yet to be purchased. The cost of those projects, already estimated to have risen by $86 million due to “escalating steel actions” — including tit-for-tat tariffs exchanged by Canada and the U.S. — is expected to rise further if “more aggressive safeguard measures” are imposed.

Investment decisions in the province’s struggling energy sector could also be affected by rising costs due to safeguards intended to offset an import surge for which there “is questionable evidence,” it says.

The feds announced plans Thursday to invest $90 million into Algoma Steel in a bid to fortify the steelmaker against U.S. tariffs as it emerges from three years of bankruptcy protection. The Ontario government will loan an additional $60 million to the company.