Steeling for a fight over dumping
Trudeau faces pressure for Buy Canadian
Ott awa is coming under increasing pressure to introduce a Buy Canadian program to accompany its multibillion- dollar infrastructure plan that its proponents claim would maximize jobs and growth by freezing out foreign producers.
Justin Trudeau was in Sault Ste. Marie, Ont., Friday, where the issue is of particu- lar concern since the city’s largest employer, Essar Steel Algoma Inc., is under creditor protection and trawling for new owners.
Trudeau was asked if the planned infrastructure blitz offered the 115-year-old Algoma plant the opportunity to win business without being undercut by cheap foreign steel.
“We are concerned with the practice of dumping into the Canadian market and are working with different levels of government,” he said. “Building new infrastructure requires new steel. There is a strong future for the steel industry in Canada.”
The two areas where the feds could improve the prospects of a happy ending in Sault Ste. Marie are procurement and the trade remedy process.
On procurement, the Canadian Manufacturers and Exporters trade association has been vocal in calling for Buy Canadian provisions to be introduced to ensure companies l i ke Algoma maximize the work from projects like the Champlain Bridge in Montreal. The Algoma plant has won contracts for steel bridge plate on the bridge across the St. Lawrence that account for about 20 per cent of the total steel requirement. But critics point out much of the other work is going to foreign suppliers.
A Buy Canadian policy would be controversial politically, particularly since the Canadian government has long railed against Buy American provisions south of the border that block Canadian suppliers from bidding on sub-national procurement work.
Canada would likely be in breach of trade agreements like NAFTA if federally fund- ed projects were ring-fenced. It would also upset the Chinese, with whom the Liberals are keen to foster tighter trade ties, if Asian steel is frozen out.
The other area in which steel producers would like to see action from the federal government is in the trade remedy process.
Prospective buyers are likely to be concerned by the existing system where the Canadian International Trade Tribunal adjudicates on whether steel from China and other parts of Asia is dumped on the Canadian market at prices lower than the cost of production.
But the CME and others have long complained that CITT lacks resources to investigate and enforce in a timely fashion.
Bill Morneau, the finance minister, met with Algoma earlier this year and the recent budget said the government will introduce legislative amendments to limit dumped and subsidized imports. “We are launching consultations on reviewing Canada’s t r ade r emedy system shortly,” said Dan Lauzon, Morneau’s communications director.
Algoma is currently appealing a January decision by CITT on steel plate imports from India and Russia that were deemed not to be sufficiently injurious to the domestic steel industry to justify the imposition of stiff dumping duties.
Jayson Myers, CME’s president, said there is a lot of work being done on trade remedy modernization. “But I don’t think you can say yet that we have a robust or effective process for ensuring effective compliance,” he said.
On procurement, he said his conversations with government do not indicate there is an appetite for a reciprocal procurement policy to match Buy American.
But Trudeau’s comments suggested serious thought is being given to more protectionist measures. One Liberal MP, Ahmed Hussen, has already introduced a private members’ bill that would require the government to consider the benefits for communities from procurement contracts. The Ontario provincial government has in place a “local knowledge” provision that gives domestic bidders an advantage.
The concern in Sault Ste. Marie is less about broad trade policy and more about the future of the 2,700 jobs linked to the Algoma plant. There are said to be five or six financial bidders, some of whom are keen to combine the company with U. S. Steel Canada’s operations in Hamilton, Ont.
They have been attracted by a relatively low-cost operation and a rising steel price. But they will want some assurances from government that it will not allow the market to be buried under an avalanche of dumped foreign steel. “The answer will determine whether Canada continues to have a steel industry,” said one industry insider.