By Ian Ross
After Algoma Steel was almost pushed to the brink of bankruptcy last year, industry officials now say the Canadian government must act immediately to enforce stringent trade laws against foreign steel dumpers and that the investigative processes should be streamlined to protect the home market.
Barry Lacombe, president of the Canadian Steel Producers Association, says the issue of steel dumping has been a "huge priority" for the industry, and the near demise of Canada's third-largest integrated mill should serve as a "wake-up call" for Ottawa.
Throughout the 1990s Canadian companies like Algoma have been hammered by waves of dumped offshore steel and as a result have launched 15 unfair trade complaints.
Dumping is the practice of exporting products to another market and selling them at a significantly lower price than they are sold on the home market. Canada Customs and Revenue Agency, the body responsible for reviewing these cases, takes months, and sometimes up to a year, to investigate the charge before passing the matter on to the Canadian International Trade Tribunal (CITT) for a preliminary ruling.
Under World Trade Organization (WTO) standards, Canadian steel producers have to demonstrate injury for at least six months before a case can be brought forward.
"You've got to sit there and take it on the chin and bleed pretty badly before you can go to the doctor and say give me some medicine," even though Canada maintains an effective surveillance system to monitor incoming product, says Lacombe.
Complaints from the industry have temporarily restored fair trade, but the international steel traders simply switch sources and find new countries not adhering to WTO rules, Lacombe says. It has been an ongoing domestic concern that the federal government has yet to fully take meaningful action on, he adds.
Algoma Steel president Sandy Adam says there needs to be retroactive duties forcefully applied against the traders and producers that dump with "sense of impunity."
Though penalties are on the books, he says, they are seldom applied.
The constant flow of cheap imports into the North American steel market has driven down prices to near-historic lows. It almost put Algoma, which was already dealing with high debts incurred through the building of a new rolling mill, out of business. Financial problems eventually caught up to the company during this economic downturn and it needed a $50-million loan guarantee to help it restructure.
In the U.S. almost 30 technologically older U.S. steelmakers have filed for Chapter 11 bankruptcy protection since 1997.
Adam would also like to see the "frustratingly slow" investigative procedures sped up and more rigorous rules of evidence applied in CITT hearings, a quasi-judicial process he calls "biased" against Canadian complainants.
"We've had situations where our senior marketing executives have been on the witness stand for days with the lawyers for these companies that are dumping grilling our guys," Adam says. "But we've never had the opportunity to put senior executives for their company on the stand."
In many cases the offending companies and steel traders either do not submit evidence, or are a no-show for the hearing for a cross-examination. "Then they should be presumed to have injured Canadian industry," says Adam. “You do that in the U.S. and you get hammered.
"We think there's a (CITT) bias in favour of world trade rather than protecting Canadian injury, which is their job."
A U.S. industry proposal to impose a 40 per cent tariff to keep dumped steel out of the U.S. market has had a positive impact by affecting the psychology of foreign producers, Adam says. And he is in favour of the Canadian equivalent, known as a safeguard action. Another issue at play is an underlying concern with world overcapacity in steel production, he adds.