“Canada will closely collaborate with the EU, which also filed a WTO challenge today on opposing these tariffs.” – Freeland
The Canadian Government is filing litigation in response to the Trump Administration’s announcement that Canada’s exemption from the 10 per cent aluminium tariff is lifted as of June 1 and the tariff is now permanent, according to a government press release posted Saturday. The litigation will be filed with the World Trade Organization and under the North American Free Trade Agreement.
“Canada will always defend Canadian workers and Canadian interests against protectionist actions that undermine the integrity of the global trading system. On May 31, 2018, the United States (U.S.) announced the imposition of tariffs on imports of certain steel and aluminum products from Canada (at the rates of 25% and 10%, respectively),” said Chrystia Freeland, minister of foreign affairs.
In response to these measures, Canada intends to impose surtaxes or similar trade-restrictive countermeasures against up to C$16.6 billion in imports of steel, aluminum, and other products from the U.S., representing the value of 2017 Canadian exports affected by the U.S. measures. The Government is also considering whether additional measures may be required.”
“This decision by the U.S. administration will have negative impacts on the North American integrated aluminium value chain. The overall price of aluminium will increase, affecting small and medium size businesses both in Canada and the U.S.,” said Jean Simard, CEO of the Aluminium Association of Canada (AAC).
The consumers and companies that supply these consumers will suffer when prices go up as a result of these tariffs, ultimately undermining the competitiveness of the entire North American aluminum industry.
“Instead, the U.S. should focus on the real issue at hand, mainly China’s overcapacity,” said Simard.
According to HARBOR Aluminum, an independent industry analyst, trade taxes could impact between 45,000 and 90,000 direct jobs in the manufacturing sector. It is estimated that every new job created would cost $12.5 million to the U.S. economy.
“On top of the retaliatory measures announced yesterday, the Government of Canada today requested WTO consultations with the United States regarding its imposition of punitive tariffs on imports of steel and aluminium from Canada, and more generally, on the United States’ improper use of national security pretexts for protectionist purposes,” added Freeland.
As a key NORAD and NATO ally of the United States, and as the number-one customer of American steel, Canada views the U.S. trade restrictions imposed on Canadian steel and aluminum as absolutely unacceptable. These unilateral tariffs, imposed under a false pretext of safeguarding U.S. national security, are inconsistent with the United States’ international trade obligations and WTO rules.
Since March 2018, Canada brought in regulatory changes that will improve Canada Border Services Agency’s (CBSA) ability to identify and stop companies that try to avoid duties, and that will give greater flexibility to CBSA to determine whether prices charged in the exporter’s domestic market is reliable in calculating duties.
Additionally, unions will now gain standing to participate in trade-remedy proceedings and CBSA’s funding has been increased. Finally, a marking regime for aluminium products will be aligned with the United States.
The AAC says it remains committed to the view that the Canada is an essential manufacturing partner for the United States by providing essential aluminium for U.S. manufacturers. The AAC is committed to work with customers in North America to ensure reliable supply of aluminium and mitigate consequences from the trade taxes imposed by the U.S.
“Canada will closely collaborate with the European Union, which also filed a WTO challenge today, as well as with other like-minded countries, on opposing these tariffs. Canada also intends to request the establishment of a NAFTA Chapter 20 panel to address the United States’ violation of NAFTA rules,” concluded Freeland.
“That request will also be filed today. It is entirely inappropriate to view any trade with Canada as a national security threat to the United States. Canada is a safe and secure supplier of fairly traded steel and aluminum for U.S. defence and security. Canada is recognized in U.S. law as a part of the U.S. National Technology and Industrial Base related to national defence.”