The B.C. government is poised for a showdown with central Canada over the humblest of building components: rebar.
The Canadian International Trade Tribunal will convene on Dec. 15 in Ottawa to consider a bid by Canadian steel producers – mostly in Ontario – to impose stiff duties on rebar, the reinforcing rods used in concrete construction, from companies in South Korea, China and Turkey. Canadian producers allege those countries are dumping their product at a discount. A temporary duty has already been imposed pending the hearing.
It is rare for the B.C. government to get involved in another province's trade dispute, but its lawyers will be at the hearing to ask for an exemption.
B.C. has no rebar manufacturing industry of its own and high transportation costs make Ontario products uncompetitive, so imported steel rebar is a key component in the billions of dollars of investment the province hopes to secure, particularly from the nascent liquefied natural gas industry.
And the rebar dustup comes at an inauspicious time for Premier Christy Clark's government, which has invested its prime political capital in securing LNG investment. After intense negotiations in which the province gave up significant ground on its hoped-for tax windfall, prospective LNG investors are now putting the squeeze on contractors.
Last week, Petronas announced it has delayed making its final investment decision on plans to export LNG from B.C., warning that estimated construction costs are too high. The Malaysian energy giant expects to spend $11.4-billion on construction for the Petronas-led Pacific NorthWest LNG export terminal at Lelu Island.
B.C.'s construction industry warns that the proposed national duty on steel rebar – a key component in industrial, commercial and some residential construction – would drive up costs in all those sectors. It could also tip the balance against B.C. as a string of prospective LNG investors, such as Petronas, make that final call on whether to build or walk away.
A facility of the size that Petronas is proposing in Prince Rupert, on B.C.'s central coast, would likely require more than 11,000 tonnes of reinforcing steel. On average, rebar accounts for 8 per cent of the cost of a concrete structure.
"We are going to be collateral damage," warned Philip Hochstein, president of the Independent Contractors and Businesses Association of B.C. The ICBA will intervene in the hearing, arguing that B.C. taxpayers will be on the hook for increased construction costs for public infrastructure projects. A victory for Ontario's steelmakers will also discourage investment in B.C. at a critical time, he said.
"And it won't save one Canadian job."
Right now, the province's construction industry gets 60 per cent of its rebar from the U.S., and the rest from across the Pacific. Driving up the costs – some of the tariffs could reach 58 per cent if the steel industry wins its case – would simply mean the B.C. construction industry would simply buy more U.S. steel, Mr. Hochstein said.
Ron Watkins, president of the Canadian Steel Producers Association, would not comment on the specifics of the case in advance of the hearing. In general, it is about playing fair: "The point you have got to understand with these anti-dumping things is, they don't say you can't import, they just say you have to import at market prices."
Mr. Watkins noted that rebar production is a sizable part of the Canadian steel industry, with jobs in Ontario, Quebec and Alberta. The product itself isn't pretty – it is destined to be encased in concrete, after all – but it is important to the country's $14-billion steel sector.
Why isn't B.C. keen to buy Canadian? It's raw economics. Mr. Hochstein's organization, using 2013 prices, found domestic rebar was more than 40-per-cent more expensive than the offshore imports here in B.C.
The provincial Minister of International Trade, Teresa Wat, said her government will be fighting hard to shield B.C. from the fallout of this international trade dispute. Already, the provisional duties that have been imposed pending the January decision are driving up construction costs, she said.
"We are working to make sure they don't become permanent. This issue should be a concern to every British Columbian, as these costs get passed along to consumers."
Last month, Ms. Clark asked Ottawa to fight U.S. protectionist measures that would see a ferry terminal in Prince Rupert built by American workers with American steel. In political terms, that was an easy request. Asking Ottawa to reject a Buy Canada campaign is a much tougher sell.
Justine Hunter