Ongoing safeguard measures are warranted on just two of the seven steel products that were subjected to emergency import restrictions by Finance Minister Bill Morneau in October, according to a much-anticipated report from the Canadian International Trade Tribunal (CITT) released Wednesday.
In what it called “one of the most complex inquiries” it has ever conducted, the quasi-judicial body held hearings over several weeks in January as to whether the provisional safeguards imposed on seven different steel products in October should be made final. The step would see the safeguards extended from a maximum of 200 days to up to three years.
A review of the evidence by the three judge panel concluded that only two products, steel plate and stainless steel wire, “are being imported in such increased quantities and under such conditions as to be a principal cause of a threat of serious injury to the domestic industry.”
However in the case of the remaining five products — concrete reinforcing bar, hot-rolled sheet, energy tubular products, pre-painted steel and wire rod — the Tribunal found there was either no significant increase in imports or that the increase detected had not caused injury.
“Our Government is carefully reviewing the CITT’s findings and recommendations before deciding on next steps and will respond in the coming weeks,” said Pierre Olivier Hebert, spokesperson for Finance Minister Bill Morneau. “We will continue to work with affected businesses and workers in the steel, aluminum and manufacturing industries, to ensure they have the support they need.
Morneau took the unprecedented step of imposing the provisional safeguards in October, arguing the immediate tariffs and quotas were necessary on all seven products in order to shield domestic producers from a flood of imports diverted into Canada as a result of U.S. tariffs on steel and aluminum. It was the first time the measures — considered emergency actions by the World Trade Organization — have ever been imposed in Canada ahead of a full, independent review of the evidence by the CITT.
The report is a recommendation, not a ruling and Finance Minister Bill Morneau is free to take a different course if he chooses. He is expected to make a decision by mid-May when the provisional measures are set to expire.
We are disappointed and concerned with the Tribunal’s recommendations
The results are a blow to the Canadian Steel Producers Association, which has been pushing for the measures since early last year.
“We are disappointed and concerned with the Tribunal’s recommendations. Since the temporary safeguards came into force, they have stabilized the Canadian steel market and limited the amount of steel that was being diverted to Canada,” Catherine Cobden, president of the association representing integrated steel producers ArcelorMittal Dofasco, Stelco and Algoma Steel. “Furthermore, the continued surge of low-priced imports and deteriorating market conditions that have persisted following the conclusion of the CITT’s hearing were not considered and further supports the imposition of final safeguard measures.”
If the Minister of Finance does not put in place final safeguard measures on all 7 products by May “the steel industry in Canada is threatened with a loss of jobs, significant community impacts, market share erosion, and growing investment uncertainty.”
However, the findings were welcomed by representatives of the construction industry and downstream manufacturers that rely on steel imports to make their products. They have warned that the safeguards could create a supply crisis, driving up the cost of steel and exacerbating shortages at a time when Canada’s retaliatory tariffs on the U.S. have already cut off supply from the U.S.
“The CITT analysis of the evidence calls into question the government’s analysis and the motivation that gave rise to these safeguards,” said Jesse Goldman partner in international trade and investment at Borden Ladner Gervais, representing he Canadian Coalition for Construction Steel.
The measures have also received pushback from both inside and outside the country – with several of Canada’s international trading partners, a number of provinces and private businesses warning they would threaten infrastructure projects and investments by creating shortages and raising the cost of steel.