Morneau continues trade action on 2 foreign steel products, drops it for 5 others

Only two kinds of foreign steel imports, heavy plate and stainless steel wire, will continue to face trade remedies to protect Canada's steel industry, Finance Minister Bill Morneau announced Friday.

Hisdecision onfinal safeguards followsthe advice of the Canadian International Trade Tribunal, which earlier this month found no justification to continue a surtax on five other products that have also been subject to a provisional 25 per cent surtax since last October.

That provisional surtax on concrete reinforcing bar, energy tubular products,hot-rolled sheet,pre-painted steeland wire rod ends on Sunday. The surtax wastriggered only when import volumes exceeded historical averages.

Friday's release from the Finance Department did not specify what form the final safeguard action against these two products would take. Morneau's office said that would be announced "in the coming days."

Canada's steel mills and the United Steelworkers union had asked the minister to overrule the tribunal and impose final safeguards on all seven products.

In a release late Friday, the president of the Canadian Steel Producers Association said she was disappointed.

"Steel producing nations around the world are implementing these trade measures and Canada's failure to do so means we are more dangerously trade exposed than ever before," said Catherine Cobden, warningthat not having safeguards in place could "lead to the loss of thousands of jobs, put $1.1 billion in planned investments at risk, and see the erosion of our competitiveness."

But if Morneauactedagainst the recommendations of his ownquasi-judicialtribunal, it would have beendifficult for Canada to say it respects evidence-based decision-making and international trade rules.

Prime Minister Justin Trudeau has metwith several steel executives in recent months.

Several of his senior ministers, including Morneau and Foreign Affairs Minister Chrystia Freeland, whose name was also on this announcement, have repeatedly turned up at Canadian steel mills for meetings and photo opportunities, as the government wrestled with how to respond to the 25 per cent steel and 10 per cent aluminum tariffs imposedon Canadian exports by the Trump administration last summer for "national security" reasons.

Friday's release said the Trudeaugovernment is startingan "intensive, 30-day consultation with industry and workers, in order to determine what further protections are required."

More protectioncoming

A working group is being formed to "ensure that the views of workers and industry continue to be heard and are acted upon without delay," therelease said.

It also promises "within the next few weeks" to "take every legal action at its disposal to protect Canadian jobs," including:

• Reviewing potential dumping cases to see if higherduties are warranted to ensure Canadian products are not disadvantaged.
• Strengthening data collectiontotrack the quantity, type and origin of imports and better respond to any surges, transshipments (steel that originates in one country but is shipped from another to dodge duties or tariffs) or othersudden changes in trading patterns.
• More flexibility for the Canada Border Services Agency to address price and cost distortions in foreign markets when determining ifdumping has occurred.
• More guidance for the CBSA to determine when trade remedy cases should be self-initiated over unfair prices or subsidies.
• More consultation on the rationale for the remission (refunding) ofsurtaxes on U.S. imports, to encouragethe use of Canadian-made steel.
• More support for domestic producers fromInnovation, Science and Economic Development Canada and its agencies.

The federal government has already put in placea $2-billion assistance package for Canada's steel sector. According to publicly announced funding decisions, muchremains unspent.An additional $100 million of support forsmall- and medium-sized producers and manufacturers was announced earlier this year.

The emergency safeguards process Morneau has just been through imposing preliminary surtaxes for 200 days, followed by the tribunal investigation of their merits, leading to Friday's final decision on longer-term measures complied with Canada's obligations under the World Trade Organization.

Failing to respect the tribunal's findings could have triggered retaliation or challenges from other steel exporters.

These emergency safeguardsdid not apply to imports from the United States, which have facedseparate retaliatory tariffs since the Americans slapped an extra levy on Canadian steel and aluminum exports last July.

Some other countries with whom Canada has trade agreements, as well as a list of developing countries, also were not included.

The safeguards were alsoseparate fromother anti-dumping and countervailing duties Canada already has in place forspecific steel products from countries like China and Vietnam.

U.S tariffs persist

Ever since the U.S. imposedits"national security" tariffs last year, the Canadian steel industry has warned aboutcheap foreign steel being diverted north, disrupting Canada's domestic market.

But the tribunal did not consistently find evidence of surges for all seven products it investigated, and even when there was a noticeable increase in imports, it did not always find those imports to be a threat to the stability of the domestic market.

Canada's safeguards ensureda 25 per cent tariff wall shielded producers in bothCanada andthe U.S. from foreign competition.

Once in place, it becamemore difficult for the Americans to accuseCanada of acting asa back doorthrough which cheap steel could sneak into the U.S.and harder for Americans to argue they needed theirprotective tariff on Canadian products.

Nevertheless, the U.S. did not respond by lifting its steel and aluminum tariffs on Canada.

Meanwhile, the surtaxes risked serious damage to Canadian construction firms, pipeline companies and other downstream manufacturers that needed affordable steel.

Some reported supply shortagesand other disruptions to their businesses that risked potentially more jobs than could be protected at steel mills.

Officials, including Canada's ambassador in Washington David MacNaughtonjust this week, have saidCanada will notratify the renegotiated North American trade agreement while the U.S. tariffs remain in place.