Care to share that? Ottawa cuts steel deal with Mexico - but doesn't tell trade tribunal

The Department of Finance didn't inform the Canadian International Trade Tribunal investigating the merits of its emergency safeguards on foreign steel when it quietly signed an agreement to allow more Mexican steel to enter Canada without paying the surtax.

A memorandum of understanding (MOU)signed on Jan. 16setnew quotas for energy tubular products (such as those used to build pipelines) and wire rod imports from Mexico only.

Up to the new limitswhich were set based on how much has been shipped to Canada historically,plus some negotiated room forgrowth these two products will no longer face the 25 per cent surtaximposed lastOct. 25 on seven categories of foreign steel products. Surtaxes paid before Feb. 2, when the change took effect, will be refunded.

Between Jan. 7 and 24, the trade tribunal was holdinghearings to gather evidence for an eventual recommendation to the minister on whether to continue withemergency safeguards on steel, which otherwise expire after 200 days. The tribunal's inquiry isbased on the language of the federal cabinet's order in council that imposedthe safeguards last fall language that included a provisional surtaxonthese two categories of Mexican steel.

Legal counsel and other parties participating in the hearings including domesticsteelmakers, importers of foreign steel (including Canadian manufacturers) and representatives of foreign embassies could have been interested to learn that these Mexican importsno longerface the extra cost. It's the sort ofchange that mayhave impacted what waspresented to the tribunal.

The days when witnesses appeared to discuss wire rod and energy tubular productswere after the MOU was signed on Jan. 16.

In a letter circulated by theregistrarto "counsel and parties of record" on Feb. 22, the tribunal states that it was not notified of the MOU of Jan. 16.

"To be clear, the tribunal had no knowledge of any aspect of the MOU prior to, during or immediately following the hearing in this inquiry," it said. "The tribunal learned of the MOU when the information was released publicly by a media outlet in February 2019."

CBC News first reported the CanadaMexico agreement on Feb. 14.

In a statement to CBC on Friday, FinanceMinister BillMorneau's office said that the tribunal's inquiry is "conducted in an arm's length, open and transparent manner for all participants to the inquiry" and pointed out that the government is not a participant.

Morneau's office saidthat any final safeguards imposed after the tribunal makes its recommendations would not necessarily mirror the provisional safeguards put in place for the first 200 days.

"It is important to note that, when requesting this inquiry, the government also requested that any final decision takes into account Canada's existing commercial agreements," spokesperson Pierre-Olivier Herbert wrote.

Mexico strongly objected to surtax

Last fall, emergency safeguards were imposed on seven specific kinds of foreign steel usingan emergency tool the finance minister had never deployed before.

Canada already haddozens of trade remedies (like anti-dumping duties)in place to protect its domestic steelmakers against shipments from countries like China, which hasbeen caught selling steel at unfairly low prices.

Morneau justified the additional surtax aspart of apushto curb global overproduction and preventcheap steel from sneakinginto North American supply chains.

Once the U.S. imposed its 25 per cent "national security" steel tariffs earlier last year, there was a risk that at least some foreign steel originally destined for the American market could be dumped into Canada instead.

The Mexicans strongly objectedto two of their major steel exports being included in Canada's emergency safeguard measures.

When contacted by CBC News earlier this month, Morneau'soffice saidthe MOUwas"in recognition of Canada and Mexico's mutual rights and obligations underNAFTA."

A revised North Americantrade agreement was signed by both countries on Nov. 30, after several tense months of negotiations. It is not yet ratified.

Finance did not issuea press release, nor did it holda public event, to reveal that steelnegotiations with the Mexicans had concluded with this signed MOU.

The Mexican embassy in Ottawa confirmed to CBC News that an agreement was reached and shared a copy of the MOU.

CBC News reached out to the tribunal Friday for additional information about the letter it circulated.

"The tribunal does not comment on its inquiries and the public record speaks for itself," replied Haley Raynor, its deputy registrar.

The tribunal is expected to report no later than April 3.