Steel yourself, Canada: Tariff deal falls short of 'a full lift'

"Don't bask in the glory of this one," United Steelworkers president Leo Gerard told CBC's The House podcast last week, casting a skepticaleye on theagreement to end steel and aluminum tariffs.

The deal points to where the Trump administration's protectionism may beheaded next and it'snot really a return toa North Americanfree trade zone forsteel and aluminum products.

That didn't stop Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freelandfrom touring Canada, striking celebratoryposes with thegratefulhard-hats-and-overallscrowdlast week. Trudeau talked to aluminum workers in Sept-Iles, Que. and steelworkers in Sault Ste. Marie, Ont. Freelandmetsteelworkers in Regina before heading to meet more aluminum workers in Jonquiere, Que.

Their message at every stop: we had your backs. Patience and firm persistence paid off. Sault Ste. Marie MP Terry Sheenaneven introduced Trudeau as their "man of steel."

"Canada is able to make sure that we're taking care of our people," the prime ministersaid, sporting anAlgomaSteel jacket. But, he acknowledged,there's still morework to do.

If everyone at those events was being completely honest, they'dadmitthings aren'treturningto how they used to be. Workers must steelthemselves for this: the U.S.hasn't abandonedprotectionism. Rather, itadjusted it whenit becamepolitically expedient to do so.

The White Houseneededallies in its escalating trade fight with China. This tariffdeal clearedthe way for a much-needed trade win on therelatively simpler North American front.

But a "full lift" of the tariffs didn't really come without concessions, despite what Trudeau suggested May 17.

"There wasn't a way to this without some sort of concession to the United States," said former U.S. diplomat Sarah Goldfederasthe deal was announced. "This is a necessary evil."

Here are a few still-unanswered questions about where things stand now:

What's a 'meaningful surge'?

The agreement is what trade watchers call a "snap back" deal. Yes, the tariffs were removed. But the U.S. reservedthe right to slap them back on specifically, "in the event that imports of aluminum or steel products surge meaningfully beyond historic volumes of trade over a period of time."

Freelandhas beenasked to define a"surge"and couldn't. There's a conversation still underway with the U.S. to flesh out how this language should be interpreted.

Canada's hope was that this part of the agreement would never be used.

Catherine Cobden of the Canadian Steel Producers Association told CBC News this week she doesn't have a clear definitionfor "surge" either, but she's hoping for a wayto engage with the Americans and nail it down.

Otherwise, what's to stop the Americans from torquingany increase in Canadian importsintoa industry-threatening "surge"?What time periods would be compared? How would these volumes be calculated?

Sometimes, data can be manipulated to show whatever you want the numbers to show. And if tariffs are re-applied, Canada could no longerretaliate with tariffs on politically sensitive commodities like orange juice or bourbon.

Are there really no quotas?

Both the Mexicans and the Canadians said they wouldn't settle for a deal that fixed quotas on their exports. But, as Carleton University's Meredith Lilly observed on Power & Politics last week, "there's language in the agreement that suggests perhaps we have quota by another name."

The agreement lays out how the U.S. "may"requestconsultations before imposing duties at the same rate as the previous tariffs, "with consideration of market share." In other words, Americans don't want Canada's market share to grow.

Is this aquota in disguise?

The U.S.Mexico agreement is less subtle, saying that in assessing whether there has been a surge, Washington will consider that the U.S. may require "225,000 tonnesof billet from Mexico" and new investment in Mexico may require "200,000 tonnes of cold-rolled steel." Those are negotiated quotas, hiding in plain sight.

What kind of Canadian steel is still a target?

The new (but undefinedofficials are working on it, Freeland'sspokespersonsays) monitoring regime for Canadian and Mexican imports "may treat products made with steel that is melted and poured in North Americaseparately from products that are not."

Freeland's office emphasizes that the wording here is"may," not "will."

Only a handful of facilities in Hamilton and Sault Ste. Marie, Ont., make steel from iron ore in integratedmills. Most ofCanada's producers are smaller facilities forelectric-arc steelmaking, often from scrap.

Where does that scrap come from? Even if it's not from offshore industry representatives say that'srarely profitable can they prove the integrity of theirsupply chains?

If they lack the right paperwork, Canadiansteel productscould be stalled, or even rejected, at the U.S. border, aseagle eyes track any traces of Chinesesteel.It creates uncertainty for exporters a classic non-tariff barrier to trade.

"There's a presumption that [Americans]would use any opportunity to restrict market access," trade consultant Dan Ciuriak said. "Is this something we extracted from them at great pain, that they would claw back at the slightest excuse?"

Are more safeguards coming?

The United Steelworkers union, and Cobden'sCSPA, still wantCanada to put up more tariff barriers to protect its market. Spokespeople like Gerard warnabout "countries that cheat because they want dollars"; because the world still makes more steel than it needs, they fear foreign steel displaced from the U.S. could somehow flood into Canada.

But Canada's safeguard process has already run its legal course. The Canadian International Trade Tribunal concludedsurtaxes wereonly justified on two offshore productsheavy plate and stainless steel wireforthe next three years.

There's adifference between unfairly dumped steel whichCanada investigates regularly, implementingdozens of different duties and fairly priced foreign steel, which meets legitimate needs that domestic producers cannot or will not serve.Manufacturers and construction companies that import steel were relieved when the government followed the tribunal's adviceand the provisional surtaxes imposed on five other steel products ended last month.

A working group has untilearly June to considerother ways of supporting Canada'sindustry.

Will this help the new NAFTApass?

After saying initially that the end of the tariffs meant things were "full steam ahead" for ratifying the revised North American trade agreement, Freeland and Trudeau were using more cautious language last week.

Freelandwould make no predictions about ratification timing duringa CBC Radio interview Tuesday. Trudeau has talked about ratifying in co-ordination with Washington.

Democrats in the U.S. Congress have suggested several parts of the deal mustchange before they'dproceed witha vote, including strengtheningintellectual property provisions for biologic drugs, a move that could increase pharmaceutical costs.

Vice-President Mike Pence is scheduled to visit Ottawa next Thursday to promote ratification of the revised NAFTA deal. The Trudeau government may longto conclude this saga as well.

But it's risky to draft and passan implementation bill to change Canadian laws based on an agreement that's still fluidin Washington. What if they made Canadian drugs more expensive than they actually needed to be to get a deal?How would that play in an election campaign?

No mention of NAFTA legislationappeared on the House of Commons notice paper in time for a billto be introduced on Monday, when the House returns for what is scheduled to be its final two- to four-week stretch before the summer.

Trudeau thanks steel workers

5 years ago

Duration 1:17

Prime Minister Justin Trudeau thanks Algoma steel workers and the people of Sault Ste. Marie for standing strong during the period of American tariffs on Canadian steel.