Time to safeguard jobs and investment in Canada's steel sector

  • National Newswatch

Many Canadians may conclude that all will be well in the Canadian steel sector if the United States would simply exempt Canada from its punitive tariffs on steel.Not so.  Thousands of skilled middle-class jobs and more than a billion dollars in investment will remain in jeopardy.  For a start, we don't know when or how the US will eliminate the tariffs on Canada.  But it goes deeper than the Canada-US trade relationship.Bluntly, the Canadian steel sector is now dangerously exposed to an unsettled global trade environment.  American tariffs on other countries from China to the European Union are causing a massive disruption in the global flow of steel products. With the largest and most lucrative import market in the world heavily restricted, millions of tons of steel traditionally imported into the US are being diverted into other markets, including Canada.  This comes at a time of significant global overcapacity of steel.  Indeed, the OECD estimates that this overcapacity is approximately 36 times higher than Canada's total production.The steel industry has had a long, proud history as a cornerstone of the Canadian economy and it continues to be an economic engine across the country, supporting 123,000 high skill, high-wage jobs directly and indirectly in communities from Hamilton to Sault Ste Marie and from Edmonton to Regina to Contrecoeur.The sector is now a $15 billion high-tech industry that provides high quality and competitive products for the automotive industry, other advanced manufacturers, infrastructure and the energy sector.  It is a forward-looking industry that is innovative and green and striving to excel.The Canadian government rightfully acknowledged the challenges faced by domestic steel companies when it imposed temporary safeguards on seven steel products in October of last year. The temporary safeguards are designed to help protect both Canadian jobs and investment by stabilizing imports of foreign steel products at historical levels.  These safeguards are largely working.However, they expire on May 13 and steel producers are now calling on the Minister of Finance to stand up for Canadian workers by imposing final safeguard measures on all seven steel products. It is vital that such safeguards be put in place for 3 years to ensure the long-term viability and growth of the Canadian steel industry.Safeguards are an elegant trade measure—they are designed to stabilize the domestic market and prevent a flood of imports of foreign steel while at the same time allowing imports at historical levels without penalty. In other words, they are a legal trade remedy, compliant with WTO rules, that protect the Canadian steel industry while ensuring the domestic market is supplied.The safeguard measures would also serve as proof that Canada will not allow itself to be used as a back door for imports into the American market. The US Administration is worried that countries could try to re-route steel through Canada.  The safeguard measures would show one of the measures that Canada is firmly committed to preventing this from happening.  And that would help Canada's case in fighting for an exemption from American steel tariffs.Canada is not alone in adopting the safeguard approach. Other countries are in the process of implementing this trade measure as well.  In January, the European Union brought in safeguards to protect its steel industry. We are confident that the federal government will also agree that extraordinary times require extraordinary measures such as safeguards. That is the smart way to safeguard quality jobs and investment in the steel sector for the benefit of the broader Canadian economy.'Catherine Cobden is president of the Canadian Steel Producers Association