Alberta, B.C. say steel safeguards are undermining infrastructure projects
|National Post 11 Jan 2019 at 04:23|
Alberta and British Columbia want Ottawa to scrap safeguards on a range of imported steel products, arguing they are undermining crucial infrastructure projects and eroding the competitiveness of local firms.
The Canadian International Trade Tribunal (CITT) began hearings this week into whether provisional safeguards — imposed in October on imports of seven different steel products — should be made “final,” a step that would see them extended from a maximum of 200 days to up to three years.
Finance Minister Bill Morneau has said the combination of levies and quotas are needed to prevent a damaging surge of imports from being diverted into Canadian markets as a result of U.S. tariffs.
But in separate filings submitted to the CITT, Alberta and B.C. say available pricing and import data across a number of affected products suggest any increases in imports are due to other factors, including rising demand and historical economic trends, not the diversion of steel from the U.S.
Meantime, the additional trade restrictions presented by the safeguards threaten to create shortages and boost the cost of steel needed for planned infrastructure and other projects, the provinces say.
The safeguards, which place a prohibitive tariff on imports of each product above a certain amount, are “detrimental to the British Columbia economy and for British Columbians generally without appearing to afford significant benefit to domestic producers,” the B.C. government says in its submission.
Restrictions on imports of concrete reinforcing bar and pre-painted steel for instance, could hike the costs of new homes needed to address B.C’s housing crisis, the submission states. The B.C. government has pledged $7 billion for the construction of affordable homes amid soaring rents and prices in Vancouver and other urban areas.
“This price increase will increase the cost of all new housing construction and ultimately the cost of housing for consumers. Even worse, however, is the very real prospect that this increase in the price of rebar and associated restriction in supply will result in developers discounting or delaying construction.”
B.C. argues that imported steel is particularly important to its economy, because the cost of shipping by sea is often cheaper than moving goods from east to west. Some steel products may also not produced domestically or in sufficient quantities to supply the needs of the domestic market.
Due to these factors, heavy plate for use in bridge construction is typically sourced from the U.S. or from overseas, the province says. Restrictions on those trade flows could have serious consequences both for local fabricators who supply the construction industry and for the projects themselves, the province says. For example, safeguards on heavy plate combined with the retaliatory tariffs on U.S. steel imports imposed last year, “will significantly increase” the construction costs associated with replacing the Patullo Bridge, part of a major transportation corridor in the Greater Vancouver Area, B.C.’s filing states. A shortage of the material could see the project delayed, it adds.
B.C.’s submission asks the CITT to terminate the safeguards on some products and grant the province “regional exemptions” on others.
For its part, Alberta points to safeguards on heavy plate and tubular goods — essential to the province’s oil and gas sector — as significant concerns for its economy. It wants those measures shelved.
The province currently has plans for 160 infrastructure projects — worth about $460 million — for which steel has yet to be purchased. The cost of those projects, already estimated to have risen by $86 million due to “escalating steel actions” — including tit-for-tat tariffs exchanged by Canada and the U.S. — is expected to rise further if “more aggressive safeguard measures” are imposed.
Investment decisions in the province’s struggling energy sector could also be affected by rising costs due to safeguards intended to offset an import surge for which there “is questionable evidence,” it says.
This price increase will increase the cost of all new housing construction and ultimately the cost of housing
B.C. government submission to CITT
Ottawa announced plans Thursday to invest $90 million into Algoma Steel, in an attempt to fortify the steelmaker against U.S. tariffs as it emerges from three years of bankruptcy protection. The Ontario government will loan an additional $60 million to the company.
The new federal government committed nearly $2 billion in assistance for domestic steelmakers last summer after U.S. President Donald Trump slapped tariffs of 25 per cent tariffs on Canadian steel. That move prompted Canada to impose retaliatory tariffs on U.S. steel and a range of other goods.
The steel safeguards, announced in October, have also faced resistance from Canada’s international trading partners, who say Ottawa has not provided the crucial data to prove a damaging surge in imports has occurred — a concern shared by Alberta and B.C.
For instance, in the case of heavy plate, import volumes have been consistent with those spanning the last three to five years, the Alberta government says, while data on energy tubular goods show increases in line with growth dating back to December 2016.