The Government of Québec supports the aluminum and steel sector producers affected by special tariffs

Aluminum and steel exported to the United States

MONTRÉAL, June 11, 2018 – The Government of Québec is announcing a modification to the ESSOR program to support Québec companies in the aluminum and steel industries that could require a short-term cash injection due to the American administration’s decision to impose tariffs of 10% on aluminum and 25% on steel exported by Canada to the United States.

This change makes it possible to attribute loans or loan guarantees at market rate, for a limited period, in order to bolster the working capital of eligible companies so that they can continue their export activities.  This measure, which takes effect today, does not exclude adjustments in response to the adverse effects that could appear over the coming weeks.

Dominique Anglade, Deputy Premier, Minister of Economy, Science and Innovation, and Minister responsible for the Digital Strategy, made the announcement today in the presence of some 40 representatives of the aluminium and steel industries, who were invited to a second work session in order to deploy all efforts necessary to defend workers in these key sectors for Québec’s economy and combat American protectionism. Following this meeting, the partners agreed to meet again, as early as next week, and to conduct regular, close monitoring of developments and the adverse effects of the tariffs on Québec’s aluminum and steel industries.

Quotes:

While they are facing the protectionist measures of American authorities, the companies and more than 30,000 workers in the aluminium and steel industries can count on the unwavering support of our government. In order to ensure the sustainability and growth of our industries, we are making an effective tool available to them today: the ESSOR program. This will allow us to quickly address any possible cashflow issues resulting from these export tariffs. In addition, we will continue to stand together with the representatives of Québec’s aluminum and steel sectors, unions, the different ministries involved, the Canadian government and our chief negotiator, Raymond Chrétien, until Canadian aluminum and steel is completely and permanently exempt from these tariffs.   We’re doing it for the workers in our industries, but also for their families and communities, and for the prosperity of our regions.

– Dominique Anglade, Deputy Premier, Minister of Economy, Science and Innovation and Minister responsible for the Digital Strategy

Key points:

• A first work session, bringing together representatives of the aluminium and steel industries and the Government of Québec, took place last March. It had among other things led to the extension of the mandate of Raymond Chrétien, OC, a partner and strategic advisor at the law firm Fasken, to implement a strategy in the United States to address the major consumers of Québec steel and aluminum and reassure American officials of Québec’s ability to supply American industry adequately and safely.
• The government’s goal is not only to obtain a permanent and complete exemption from export tariffs on steel and aluminum products, but also to demonstrate the negative repercussions of these tariffs on both sides of the border. It is estimated that for each job created in the United States in the aluminium and steel sectors thanks to the tariffs, 16 American jobs will be lost in other sectors.
• In April 2017, the US administration ordered the US Department of Commerce (DoC) to conduct studies on the repercussions of aluminum and steel imports on national security. The DoC filed its reports in January 2018, in which it also analyzed the effects of these imports on the US aluminum and steel industries. The findings of these reports were made public last February.
• On March 5, 2018, the US president, Donald Trump, said that Canada and Mexico’s temporary exemption from this tariff could be contingent on the signing of a new free trade agreement, which he considers fair, between the United States and these two countries. However, Québec and Canada still refuse to link discussions on aluminum and steel tariffs to the renegotiation of the North American Free Trade Agreement (NAFTA).
• On May 31, 2018, the US administration announced that it would end the exemption. As a result, since June 1, 2018, tariffs of 10% on aluminum and 25% on steel have been imposed for these Canadian exports to the United States.
• The Government of Québec strongly condemns this protectionist measure by the American administration and supports the decision of the federal government to impose retaliatory measures on imports from the United States and to contest the US tariffs before the governing bodies of the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO).
• More than 50% of the United States’ primary aluminum imports are from Québec, and roughly 60% of Québec steel exports are for the US market.
• In 2017, Québec exported over $7 billion worth of aluminum to the United States, nearly 90% of all Québec aluminum exports.
• In 2017, Québec exports to the United States of ferro-alloy products and products made from purchased steel accounted for $788 million and $291 million, respectively.
• In Québec, the aluminum industry generates about 30,000 jobs, more than 7,000 of which are in primary industries.
• The metal product manufacturing sector represents 42,000 jobs, while the steel industry and the manufacturing of steel products made from purchased steel generate more than 3,200 jobs.