Standing Senate Committee on Foreign Affairs and International Trade
 

Proceedings of the Standing Senate Committee on 
Foreign Affairs and International Trade

Issue No. 46 - Evidence - Meeting of May 10, 2018


OTTAWA, Thursday, May 10, 2018

The Standing Senate Committee on Foreign Affairs and International Trade met this day at 10:32 a.m. to study the subject matter of those elements contained in Division 8 of Part 6 of Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures.

Senator A. Raynell Andreychuk (Chair) in the chair.

[English]

The Chair: Honourable senators, the Standing Senate Committee on Foreign Affairs and International Trade is meeting today to continue its examination of those elements contained in Division 8 of Part 6 of the subject matter of Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures introduced in the House of Commons on March 27, 2018.

Before I turn to our witnesses, I would ask the senators to introduce themselves.

[Translation]

Senator Saint-Germain: Raymonde Saint-Germain from Quebec.

[English]

Senator Cordy: Senator Jane Cordy, Nova Scotia.

Senator Bovey: Senator Bovey, from Manitoba.

[Translation]

Senator Dawson: Dennis Dawson from Quebec

Senator Massicotte: Paul Massicotte from Quebec.

[English]

Senator Ataullahjan: Salma Ataullahjan, from Ontario.

Senator Eaton: Nicole Eaton, from Ontario.

Senator Greene: Stephen Greene, from Nova Scotia.

Senator Ngo: Senator Ngo, from Ontario.

The Chair: I’m Raynell Andreychuk from Saskatchewan and chair of the committee.

Today, to continue with Bill C-74, we have, by video conference from Toronto, Mark Rowlinson, Assistant to the National Director, United Steelworkers; and Chris Roberts, Director, Social and Economic Policy, Canadian Labour Congress.

I’m going to thank both of our witnesses for appearing before us, and I am going to ask Mr. Rowlinson to commence with his opening statement.

Welcome to the committee. Mr. Rowlinson, the floor is yours.

Mark Rowlinson, Assistant to the National Director, United Steelworkers: Thank you very much, senator. As mentioned, I’m Mark Rowlinson, Assistant to the National Director of the United Steelworkers. In my position, I provide senior administrative and policy advice to the union’s elected leadership in Canada, and I have lead responsibilities in respect of issues relating to trade, law reform and industrial policy.

The United Steelworkers is an international union, with approximately 800,000 members across North America and about 220,000 members in Canada.

Our union has a particular interest in trade issues, because many of our key industries, such as steel, aluminum, manufacturing and commodities in particular are exceptionally trade-exposed.

The United Steelworkers recognizes the important role that trade plays in building a healthy and robust economy. We have insisted, however, that trade policy in Canada be developed in consultation with labour unions, workers, and other civil society groups. We insist that trade policy should respect international labour standards and that it serves the interests of Canadian producers, workers and communities.

To that end, we have consistently called on the Canadian government to modernize and strengthen our trade remedy regime and make it more accountable and transparent to Canadian workers and communities. For decades, trade remedy cases in Canada were almost exclusively the domain of private commercial interests and producers, but over the last number of years, our union has led the way in advocating changes to our trade remedy system.

In 2015, we played an active role in a public interest inquiry case involving dumped and subsidized rebar from China, Korea and Turkey. It was a case in which the Government of British Columbia and B.C. producers sought an exception to duties that had been imposed by the trade tribunal, a position ultimately rejected by the trade tribunal.

In 2016, in response to a government-initiated consultation process, we advocated for a number of changes to our trade remedy system, including most notably the right of unions to have notice of trade cases affecting our members, to the right of unions to have full standing in trade cases as well as to initiate trade cases.

Indeed, over the last year, our union has actively participated in a number of trade cases that directly affect our membership. Last fall, we participated in a case involving dumped and subsidized Korean steel pipe. In that case, the trade tribunal noted that our intervention in the proceeding illustrates the important and useful contribution unions can make to trade cases.

We are currently actively involved in a case that involves dumped Vietnamese copper pipe products and also actively involved in a case regarding the renewal of duties on Chinese hot-rolled steel plate. In each case, we are taking an active role to ensure that Canadian jobs are protected from the effects of unfair predatory trade practices.

Our union knows from experience that allowing dumped and subsidized products into Canada undercuts domestic selling prices and displaces domestic products, causing injury in terms of lost employment and wages. The injurious effects on employment and wages caused by this destructive behaviour extends far beyond the direct factory jobs and to the wider supply chains, local economies and communities.

We have been pleased, therefore, that over the last couple of years the federal government has implemented a number of changes to the trade remedy system and the Canadian International Trade Tribunal.

First, in Budget 2017, the Canadian government announced a number of changes that have recently been implemented by regulatory amendments. First, the government allowed and made clear that unions have a full right to notice in trade cases, and it allowed for unions to participate in trade cases. Second, the government implemented regulations to expand the CBSA’s ability to investigate anti-circumvention by various producers. They also introduced regulations to implement the right to investigate particular market situations, and they allowed a new process involving scope rulings, which I can elaborate on if you wish.

Second, in Budget 2018, the federal government has also proposed changes to the Canadian International Trade Tribunal that are the specific subject of your committee hearing today. We support these measures that will allow greater flexibility and resources to the trade tribunal as it is increasingly the case that these cases need to be dealt with quickly.

Third, the government recently struck multi-stakeholder monitoring committees in steel and aluminum. Our union has been actively participating in both committees. The committees bring together senior federal government officials, industry representatives, unions and representatives of provincial governments to specifically look at the risks that are currently posed in steel and aluminum, the risks posed by increasing protectionism south of the border, and I’m happy to talk about that during the question and answer period.

Finally, the federal government has recently announced budgetary increases to the Canada Border Services Agency. That is the primary agency tasked with the responsibility of investigating foreign dumping and subsidized products into Canada. All of these changes are very welcome, and we wholeheartedly support them.

But there is still more to be done, in our submission. First, it is still the case that unions do not have the right to file trade cases ourselves, and we submit that this is an oversight. Unions have the right to file trade cases in the United States, in the European Union and in Australia. We submit that it is time for our laws to be changed to allow unions to file cases on behalf of Canadian workers here in Canada.

The second issue that is causing us great concern, and I alluded to this earlier, is that in light of increasing protectionism south of the border, we have great fears that there will be a massive surge of dumped products into the Canadian market, both dumped products that will seek a home in the Canadian market, and products that will seek then to be transshipped into the U.S. market as a way of evading the tariffs currently being implemented by the U.S. government.

Finally, we also submit that the current trade remedy process, while it has improved remarkably in the last few years, still has work to do in terms of transparency and greater public exposure.

As I noted at the outset, as a union we understand the value and importance of trade, but all trade is regulated trade. It is more important now than ever that countries which do not follow trade rules, and who engage in trade practices that can literally eviscerate certain Canadian industries, must be held accountable. They must be forced to follow the rules. Unless Canadian workers are protected from bad actors on the global trade scene, they will increasingly lose faith in our global trade regime. A robust, effective and inclusive trade remedy process is an essential part of a good trading system.

Thanks very much. I look forward to your questions.

Chris Roberts, Director, Social and Economic Policy, Canadian Labour Congress: Thank you, chair and committee members, for the opportunity to appear before you today.

I am here on behalf of the Canadian Labour Congress, Canada’s largest labour central. The CLC is the voice on national and international issues for 3 million working people in Canada, and it brings together 55 national and international unions, 12 provincial and territorial federations of labour, and over 100 district labour councils from coast to coast.

In 2015, the Canadian Labour Congress participated in the public interest inquiry initiated by the Canadian International Trade Tribunal, referenced by Mr. Rowlinson a moment ago, as permitted under the Special Import Measures Act. This inquiry flowed from a 2014 complaint initiated by Canadian concrete reinforcing bar — rebar — producers against illegally dumped and subsidized rebar from China, South Korea and Turkey.

After an investigation, the Canada Border Services Agency found in December 2014 that rebar imported from these countries had been illegally dumped and that Chinese rebar had been illegally subsidized.

Following a lengthy hearing, the Canadian International Trade Tribunal issued a decision in January 2015, finding that these dumped and subsidized rebar imports did have the potential to cause injury to the domestic industry. Accordingly, the tribunal imposed duties on the rebar imports in question.

In these hearings, the Independent Contractors and Businesses Association of British Columbia, supported by the Government of British Columbia, sought a regional exclusion from the imposition of duties on rebar imported into the province of British Columbia.

The tribunal ultimately rejected this request for a regional exemption for the province of B.C. In February 2015, the ICBA and the Government of B.C. requested a public interest inquiry permitted under the statute. That inquiry commenced in April 2015.

In the course of the CLC’s participation in the inquiry, the opaque and inaccessible aspects of the trade remedy regime for unions became apparent. Under Canada’s trade remedy rules, as you have just heard, trade unions have historically been prevented from filing anti-dumping, countervailing duty or safeguard complaints. Unions had no ability to participate procedurally in any of the subsequent hearings or administrative actions. In fact, unless invited by an interested party, defined under the CITT rules, to act as supporting witnesses, unions played no formal role in the trade remedy regime.

In June 2016, the CLC made a submission to the Department of Finance’s consultation on measures to strengthen Canada’s trade remedy system. Along with the United Steelworkers, the CLC’s submission specifically called for changes to allow trade unions to fully participate in the trade remedy process. The CLC was therefore pleased to see that regulations amending the Special Import Measures Regulations and the CITT Regulations, gazetted on March 31, 2018, provide unions with an explicit right to participate in trade remedy investigations.

In our opinion, these changes begin to bring Canada closer into line with the current trade remedy laws of Canada’s major trade partners, including the United States, the EU and Australia, all of which permit trade unions to file trade remedy complaints and fully participate in procedures before their domestic trade oversight regime.

In our opinion, the Government of Canada’s steps will improve the transparency and inclusiveness of our trade remedy system and the CITT in particular. The cost and complexity of the current trade remedy process make participating in the system prohibitive for many small producers and stakeholders. Interested parties must be prepared and have the ability to spend significant amounts of money on legal and economic consulting fees, and spend days and weeks preparing documents and testimony. Within the means of large firms, this requirement can effectively exclude many small producers and stakeholders unless they are part of a coalition of interests.

In our view, the CITT should not be administered like a private tribunal designed exclusively to hear commercial disputes. As a key part of Canada’s trade remedy system, the CITT attracts an important public policy interest.

Among other functions, the duties of the CITT, set out in the Canadian International Trade Tribunal Act, include conducting inquiries and reporting on matters referred to the tribunal for inquiry by the Government of Canada. The CITT is also tasked with inquiring into and reporting to the Governor-in-Council on any matter in relation to the economic and trade interests of Canada with respect to any goods or services, or any class thereof, that the Governor-in-Council refers to the tribunal for inquiry.

Most importantly, dumped and subsidized imports in the Canadian market have deleterious impacts, not only on domestic producers, but also on their employees, the families and communities whose livelihoods depend on jobs and incomes provided by the domestic industry. We therefore welcome the step to explicitly permit unions to participate in trade remedy proceedings. We hope this will bring wider attention and scrutiny to Canada’s trade remedy system and its ability to promote high levels of domestic investment, employment and economic development within a fair trade regime.

Honourable senators, thank you for your attention. I would be pleased to answer any questions you might have.

Senator Eaton: The trade tribunal is always short one or two members, apparently. Does this affect things like softwood lumber, a difficulty we have had in this country forever? Or when President Trump gives us an exemption over steel but says we can’t dump steel, we can’t accept dumped steel and pass it through? Or the fact in NAFTA now, I think the big thing is auto salaries. Isn’t it trying to bring the Mexican workers’ salaries up to Canadian and American levels? Would a stronger tribunal help you in this, or does a tribunal have nothing to do with any of these negotiations?

The Chair: You’re addressing your question to which witness?

Senator Eaton: Whomever wants to answer.

Mr. Roberts: I would say that the problems you alluded to are far more deeply rooted in our international trade orientation and regime — the trade agreements themselves, the instruments that permit or that prevent against social dumping on the basis of low wages and labour rights violations. The sources of those problems extend far beyond the administration of the CITT.

I think with respect to the changes that are contemplated in Bill C-74 regarding the administration of the CITT, those changes are fairly anodyne and basic. Insofar as they improve the effective and efficient administration of the tribunal, we would support them and certainly not object. But the problems that you address in your comments extend far beyond this particular tribunal and aspect of our trade system.

The Chair: Do you have anything to add, Mr. Rowlinson?

Mr. Rowlinson: I would agree with Chris, but I would add the following.

The softwood lumber dispute — we have a number of members in the forestry sector — is really a dispute whose origins are in the United States, seeking to oppose duties, of course, on Canadian softwood lumber imported into the U.S. So the Canadian trade tribunal has no real direct impact on that. Similarly, it has no real direct impact or even direct connection to the current NAFTA negotiations around auto rules of origin and wage rates.

However, you also mentioned a third issue, which is the potential imposition by the United States of tariffs or quotas on Canadian steel and aluminum. There, the tribunal could have a very important role to play in this sense. The U.S. administration has already announced tariffs against steel imported into the United States from a wide range of countries — China, India, and they have agreed on quotas from Korea and so on. The risk is that all of the dumped and subsidized steel or aluminum that would have originally been intended for the U.S. market will seek to find a different shore on which to land, and that will be Canada. In other words, a lot of that previously dumped product will end up in Canada. That’s why it’s either as a way of flooding our market or, as I mentioned, as a way of potentially circumventing the U.S. tariffs and finding a way into the U.S. market.

So, yes, we welcome these changes to the trade tribunal, but it will be essential over the coming months and perhaps years, depending on how long these tariff measures remain in place, that Canada has as robust a trade remedy system as possible to protect our market from this dumping diversion and potential transshipment into the U.S. market.

Senator Cordy: Thank you very much to both of you. I think you both said that the changes that have been made to the Canadian International Trade Tribunal will allow for greater flexibility and will allow decisions to be made more quickly and more efficiently, so I’m not going to talk about the changes that have been made.

One of you spoke about unions not being able to file trade cases on behalf of trade workers. One said you cannot file on anti-dumping violations, so I wonder why that is not in the bill, if you could expand on that a little bit.

You’ve said that in the EU and Australia — and you named other countries, but I didn’t jot them down — unions are able to file these cases. I wonder if you could expand on how that would be most helpful to trade from Canada and why it would be helpful to the tribunal and for Canadians.

Mr. Rowlinson: In addition to the EU and Australia, it’s also particularly the case in the United States that unions — including our union as a union with members in the United States — are allowed to file trade cases. In the United States, indeed, our union does file trade remedy cases, so we have firsthand experience of the kinds of benefits that such cases afford to our members.

Let me give you an illustration. In Canada, for example, in the steel industry, we no longer have any steel producer that is majority owned by Canadians. All of them are multinationals. The same is true, in large measure, with respect to the aluminum sector. So it’s not always going to be the case that the interests of Canadian workers are directly represented by the producers. At the moment, under the statute, only Canadian-based producers can file complaints. It is not the case that workers or their organizations can file complaints.

In our view, it ought to be the case that trade unions, as a representative of Canadian workers, ought to be able to file complaints directly when there may be circumstances where the Canadian industry has, let’s say, somewhat conflicted interests because they also, of course, produce steel or aluminum in the United States or in the European Union or even in the country that is alleged to be engaging in predatory trade practices.

Mr. Roberts: I would only add that Canadian unions do currently file complaints under international trade agreements, bilateral agreements between Canada and its partners. The CLC participated in a complaint under the Canada-Colombia Free Trade Agreement several years ago that is proceeding.

I would agree with Mr. Rowlinson that unions can play an important trade-related but public advocacy role in bringing to light violations and policy decisions that influence economic and trade relations impacting Canadian workers and communities.

Senator Cordy: You both talked about protectionism in the United States, the U.S. first and the effect that will have on Canadian businesses. We know that right now steel and aluminum are exempted. That could change any morning with a new tweet.

If we see that all of the steel producers in Canada are international, does that make a difference if we’re looking at policies that the U.S. will have in terms of protectionism, or is it because it’s based in Canada and the ownership is not relevant?

Mr. Rowlinson: The short answer is any imposition by the United States of tariffs or quotas on Canadian steel — as you know, the current exemption is only scheduled to apply until June 1, and the U.S. administration has made it clear that it will not be extended beyond June 1.

Let’s take Algoma Steel, a Canadian producer, as an example. Algoma Steel is majority owned by an Indian corporation and is a sort of multinational. Algoma Steel in Sault Ste. Marie produces plate steel, the majority of which is exported to the United States, so that facility would be directly affected by duties or quotas imposed by the United States on Canadian products.

Now, the truth is that the North American steel industry is more or less an integrated industry. That is to say, there is steel going back and forth across the Canada-U.S. border on an almost daily basis. It has been our position on both sides of the border — and it certainly is the Canadian government’s position — that it makes absolutely no sense, of course, and would be counterproductive to the industry on both sides of the border for the U.S. administration to impose any tariffs or quotas on Canadian steel and vice versa. But if they were to be imposed, it could have significant effects on the Canadian industry.

Mr. Roberts: Just to buttress what was said in response to your question, although foreign ownership of the domestic industry can aggravate the interests of producers and the interests of workers and unions in that particular industry, it’s also the case that Canadian-owned firms — for instance, in manufacturing — are also effectively global. So one can’t assume that the interests of workers and unions in high levels of employment and domestic investment are also the priorities of the Canadian-owned domestic firm involved.

That’s why we need separate rights and standing, and the ability of unions to bring complaints and the interests of affected communities directly into the trade remedy process.

Senator Cordy: That’s a really good point. Thank you.

Senator Massicotte: Thank you both for being here this morning.

Here is what I’m hearing from your comments. The first thing is that the proposed amendments have to be acceptable to both of you; there is no issue there. But you are raising issues that are more complex relative to more significant amendments to the existing act. The way I’m hearing it, it is for us to consider doing a separate study to modernize the act to make sure it represents best governance standards of today. That’s what I’m hearing from both of you. Is that a fair interpretation of what you are saying?

Mr. Roberts: We would certainly welcome such a study initiated by the committee. I think it would be reflective of an evolution in the governance of trade policy in Canada that Mr. Rowlinson reflected on in his opening comments. We are seeing greater participation of labour groups in the deliberations around the negotiation and renegotiation of trade agreements. We’re seeing greater disclosure and transparency from the government with respect to these trade talks. The labour movement has all sorts of interests in reforming and modernizing the Investment Canada Act and the regime that oversees and ensures the benefit of foreign direct investment in Canada with respect to jobs and economic opportunities.

So I think what is happening with the international trade tribunal is part of a larger process of change and evolution that I think the committee would be well positioned to explore.

Mr. Rowlinson: I would agree with everything Mr. Roberts just said, and I would also share his view that we would welcome such a study.

As I mentioned at the outset, issues of fair trade, ensuring that we have the ability to enforce trade laws in this country, are only going to become more important to our industry as we see more trade agreements being negotiated. We are now, of course, renegotiating NAFTA. As we see a more protectionist impulse coming to the fore south of the border, I think our members know it is going to be essential that we have open, transparent and inclusive processes by which we can ensure that trade laws are enforced in this country.

The Chair: I see no other questioners. I would like to thank Mr. Rowlinson and Mr. Roberts for coming forward.

I have one comment to follow up on the question Senator Massicotte asked. We’re in a difficult situation in that there are trade negotiations going on. We have not completed CETA. It seems the CPTPP is on the forefront, but we’re not sure when it’s coming forward; and, of course, we have NAFTA. For such a study, as you said, on the tribunals, do we need to wait to see the direction that these trade negotiations are going to be able to tailor the appropriate mechanism for tribunals or a study that would be looking at options — and that’s more of an academic review of what is going on and where we might go — as opposed to drilling down on an appropriate tribunal for each agreement?

Mr. Roberts: I think the point was made very effectively by my colleague that trade policy is simply being overtaken by events amongst our major trade partners and elsewhere in the world with significant indirect impacts on Canada in the form of trade diversion, transshipments and the like.

I would argue that we simply don’t have the luxury of waiting for the next wave of trade agreements to be concluded and resolved before addressing many of these questions. The issues are too important and too urgent to put off. Frankly, I think the agreements you just referenced that Canada is embarking on will themselves involve all sorts of ramifications for Canadian workers and communities. The sooner we have a full, inclusive and open discussion about our trade system extending beyond just the trade remedy system the better, in our opinion.

The Chair: Thank you.

Mr. Rowlinson, do you have anything to add?

Mr. Rowlinson: I would agree with Mr. Roberts’ comments.

I would say, in terms of all of the trade agreements you mentioned, the corollary to a free-trade regime — whether with the European Union, Pacific nations or even the United States — has to be that for those nations that don’t follow the rules, they need to be held to account.

So I would suggest there is no reason to necessarily wait for the conclusion of all of those negotiations in order to take a close look at Canada’s trade remedy regime to ensure it is up to the task of protecting Canadian businesses and workers from some countries that simply don’t follow the rules.

I want to thank the committee very much for having these hearings and for taking the time to listen to me today. Thank you very much.

The Chair: Mr. Roberts and Mr. Rowlinson, thank you for coming. Your task was rather quickly dispatched on Bill C-74, but the broader issues you brought to the table are timely, and we thank you for them.

Senators, this is the conclusion of the witnesses that wanted to come forward. So with your leave, the researchers will be preparing a report, which we would deal with the week we come back. I’m anticipating that it won’t be a long report.

Senator Massicotte: Fewer than 25 pages.

The Chair: No, I’m saying there is a week for it to be prepared. I’m hoping that you will receive it and there will be more time to deal with it. But thank you very much for that.

(The committee adjourned.)