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Finance Canada’s “Short Consultation” on Steel Imports

Posted August 16, 2018

Reacting to fears* that Canada may be at risk of a “surge” of steel imports from other countries that could seriously disrupt the domestic steel industry in the reverberating wake of the Trump administration’s punitive steel and aluminum tariffs, Ottawa says it intends to step up the government’s crackdown on the diversion of “unfairly priced” foreign steel products.

According to a statement released this week, the Department of Finance is proposing to lessen the “harm that diversion into Canada may cause to Canadian steel producers and workers” by taking various “safeguard actions” in regards to several different types of steel products, that could include quotas, surtaxes, or a combination of both.

International trade rules enable countries to introduce safeguards to protect its domestic market when it finds itself in an unusual situation, Finance Minister Bill Morneau told steel producers in Hamilton the other day, arguing that the expected fallout from the U.S. tariffs qualifies as an “exceptional circumstance.” The proposed safeguard actions, reportedly to be taken under Section 55 of the Customs Tariff Act (“Surtax under certain conditions”), would be in addition to the range of other countermeasures that have already been implemented by the Trudeau government to restrict the dumping and transshipment of the subject goods from China.

During a “short consultation” taking place over the next two weeks, the federal government will be seeking input in an “expeditious manner” from producers, users and the public as it looks to identify areas at risk of causing potential harm to domestic industry with respect to imports of the following steel products: steel plate; concrete reinforcing bar; energy tubular products; hot-rolled sheet; pre-painted steel; stainless steel wire; and wire rod. Comments in this regard may be submitted via e-mail to the Department of Finance Canada until August 29, 2018.

Joe Galimberti, the president of the Canadian Steel Producers Association, welcomed the proposed safeguard action noting that industry has been seeing increased import activity from offshore sources. “This is a serious, serious challenge for the industry and a flood would truly be devastating to a lot of our producers,” he said.

Not everyone is in agreement with the government’s proposed approach, however. A new group formed to oppose the imposition of more tariffs, the Canadian Coalition for Construction Steel, claims to represent the interests of Canadian importers, manufacturers, and a wide range of downstream users, including labour unions and other groups from the construction industry.

The group is urging the government “to be really cautious about this,” at it warns that “any measures the government takes to protect the country’s steel producers must be carefully designed to ensure they avoid putting more than 60,000 Canadian construction jobs at risk and causing harm to the national economy.”

The retaliatory steel tariffs introduced by Canada against the U.S. in response to the American levies are already providing a lot of protection for the steel industry, the group claims, while asserting – somewhat unconvincingly given the market’s current overcapacity – that imposing safeguards on the rest of the world would likely cause a supply shortage of steel in Canada.

It’s Never Too Late

Highlighting the importance of acting quickly during the initial comment period prior to regulations being finalized, a recent story by CBC News noted that with respect to those companies who didn’t manage to successfully argue their way out of being hit by Ottawa’s wide-ranging list of retaliatory tariffs levied against U.S. imports at the start of July, the federal government has yet to make public of any instances of duty remissions being granted.

Not that this should deter companies from taking advantage of the remission process in any way, of course. As a reminder to companies that may have previously considered the idea of seeking relief, but have refrained from actually doing so for whatever reason, in order to be eligible you must meet one or more of the following criteria:

  • Your domestic market supply is short, either nationally or regionally.
  • Your company has contracts dated before May 31 that demand the use U.S. steel or aluminum (such as the strict “Buy American” origin requirements called for by some defense contractors and government-sponsored infrastructure projects).
  • Your company faces other exceptional circumstances that risk “severe adverse impacts” on Canada’s economy.

While the undertaking has been described as a “heavy lift” and acknowledging there is no firm guarantee that a petition for relief will succeed, or indeed, that a request for exemption won’t run into an invidious block of some kind, as the Great One is famously purported to have said, “You miss 100% of the shots you don’t take.”

If you have questions about the consultation process, require assistance establishing the eligibility criteria for remission or could benefit from help preparing a duty relief submission for consideration by the federal government, GHY International’s consulting professionals are always ready to support your endeavors with expert advice and a full range of services to match your needs.

*The move is also seen as the federal government extending an “olive branch of sorts” to the Trump administration.