By Canadian Press

Fight over metals tariffs focused Cdn industries on China: aluminum company CEO

May 23, 2019 | 9:36 AM

SEPT-ILES, Que. — American tariffs on Canadian aluminum cut into profits but didn’t slow production or hurt employment, says the CEO of the Quebec company whose plant Prime Minister Justin Trudeau visited Tuesday to boast about getting the duties removed.

In fact, Patrice L’Huillier said the trade dispute with the United States has pushed the industry to resist an influx of Chinese metals.

“We will die from the overflow of Chinese aluminum,” said L’Huillier, who runs Aluminerie Alouette in Sept-Iles, Que., about 550 km northeast of Quebec City. “The tariff was not a good thing but to control the metal flow and to understand the source of the metal … is quite a good idea.”

L’Huillier said China accounts for more than half of world aluminum production and each year, the country adds between two and three million tonnes of capacity. Chinese metals, such as aluminum, were illegally finding their way into the market, he said, undercutting the North American industry.

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China produced nearly 36 million tonnes of aluminum last year, according to official government figures. Canada produces about three million tonnes.

L’Huillier said Trump’s tariffs “put a lot of pressure into the system.” And as a result, he said the North American aluminum industry is coming up with a tracking process that will be “much more formalized with much more information. The system will be secured in such a way that you can prove aluminum has been produced in Sept-Iles.”

The U.S. slapped import taxes of 25 per cent on Canadian steel and 10 per cent on aluminum as a pressure tactic when negotiations on a new North American free-trade treaty got difficult, tariffs the Americans agreed to lift entirely last Friday.

The agreement says the U.S. and Canada will establish a process for monitoring the steel and aluminum trade between them. And Ottawa has also been working to demonstrate to Washington that it is stemming the flow of cheaper Chinese metals into Canada.

Canada’s retaliatory tariffs on American goods played a key role in restoring free access to the U.S. market for Canadian steel and aluminum, Trudeau said after touring the aluminum plant. Canada responded by putting taxes on U.S. metal products, but also on a range of others — from cucumbers to coffee to whisky to playing cards to lawn mowers. In many cases, these were grown, processed or manufactured in districts represented by key American politicians.

“We strategically put a significant number of American products and produce under tariffs and that had an impact on governors, on members of Congress, who continued to talk to the president and to members of the administration about lifting these tariffs,” Trudeau said.

L’Huillier said over the past year his company shipped more of its products to Europe instead of the United States, which ate into profits due to the added costs of sending aluminum across the Atlantic.

“We didn’t decrease production volumes, we didn’t remove jobs — in that way there was no direct impact,” L’Huillier said in an interview following his meeting with Trudeau. “But I think the tariffs, it’s more of an indirect, long-term impact if these taxes were not removed.”

Residents of Sept-Iles said they didn’t really feel the effects of the tariffs.

“Yes, they touched the industry, but everything was still working to full capacity,” said Isabelle Bond, who works at the town’s public library. “The big companies just lost money.”

She said people in Sept-Iles have been more positive about the industry in general over the past 12 months, as prices have improved.

Jean-Francois Fournier, owner of a beloved seafood restaurant by the shore of the St. Lawrence, said because there were no job losses over the past 12 months, his restaurant continued to do well.

“When the metals industry does badly we feel it because people spend less,” he said. But since last year, business is good. “I’ve actually seen more tourists because of the high American dollar.”

Trudeau said now that the tariffs have been lifted, the route is clear to finalizing the replacement for NAFTA.

Canada, the United States and Mexico signed the new trade treaty at the end of last year; it awaits ratification in each country’s national legislature.

“With the full lift of the steel and aluminum tariffs, the last major barrier against ratification has been taken away — on both sides, because it was also a barrier to the American ratification process,” Trudeau said.

But Canada remains entangled in a battle between the United States and China, since the RCMP arrested Chinese high-tech executive Meng Wanzhou on a U.S. extradition warrant last December.

China has since detained two Canadians — former diplomat Michael Kovrig and entrepreneur Michael Spavor — and begun to obstruct trade in Canadian products such as canola, soybeans and pork on various technical and administrative grounds.

“I speak to global leaders who are all very concerned about some of the decisions and some of the positionings that China has taken recently,” said Trudeau, who was asked about reports that Canada has sent a parliamentary delegation to aid in securing the release of the two men.

“Canada obviously is in a difficult situation with China right now but we’re going to continue to hold strong, we’re going to continue to stand up for our values and principles. We’re going to put the safety and security of Canadians first and foremost, as we always do, and we’re going to work with our allies to ensure that China understands that Canada is going to stay strong.”

Trudeau said diplomatic efforts to free the two Canadians are still underway, though they’ve been in custody since December and were formally arrested last week for allegedly undermining Chinese national security.

A group of MPs is on a visit to China now. The delegation includes Toronto Liberal Rob Oliphant, the parliamentary secretary to Foreign Affairs Minister Chrystia Freeland.

Oliphant “has raised Canada’s strong concerns regarding the arbitrary detention of Michael Kovrig and Michael Spavor during his meetings with Chinese government officials,” said Freeland spokesman Adam Austen.

Giuseppe Valiante, The Canadian Press