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U.S. urged to add steel-pipe makers to its target list of Canadian industries

Steel used in pipelines is emerging as the next skirmish in the trade battle between Canada and the United States, joining softwood lumber, dairy products and Bombardier Inc. single-aisle commercial jets in the sights of U.S. companies and industries.

Dan Bannister/Globe and Mail Update

Steel used in pipelines is emerging as the next skirmish in the trade battle between Canada and the United States, joining softwood lumber, dairy products and Bombardier Inc. single-aisle commercial jets in the sights of U.S. companies and industries.

The American Line Pipe Producers Association is urging the U.S. Commerce Department to include steel pipe produced by Evraz North America PLC in Regina in any decision that blocks or restricts steel imports that threaten U.S. national security.

The U.S. group says U.S. line pipe producers are considering filing anti-dumping and countervailing duty cases against Russian-controlled Evraz because the Canadian mill won a contract to supply pipe for the Midship Pipeline that will carry natural gas 318 kilometres from the middle of Oklahoma to that state's border with Texas.

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That complaint comes amid higher U.S. tariffs on softwood lumber, President Donald Trump's denunciation of Canada's dairy industry and the accusation by Boeing Co. that Bombardier is selling its C Series planes in the United States with the backing of illegal government subsidies.

At the same time, the Commerce Department is about to rule on whether imports of foreign steel threaten national security under section 232 of the 1962 Trade Expansion Act. Steel producers in Canada have asked for an exemption from any ruling.

On top of those specific issues is the future of the North American free-trade agreement after the United States officially notified its two partners that it wants to renegotiate the deal.

U.S. makers of steel pipe are operating at 30 per cent of capacity, Tim Brightbill, a lawyer for the association said from Washington.

Production is "at such low levels that it does threaten the ability of the U.S. industry to continue for the long term," Mr. Brightbill said.

He pointed the finger at Evraz, saying it's operating from a protected market at home because it was part of a group of steel companies that convinced Ottawa to slap duties on Chinese steel pipe last year and the Canada Border Services Agency earlier this month to initiate an investigation of South Korean pipe. Evraz won a verbal exemption from Mr. Trump that should allow its steel to be used on the Keystone XL pipeline.

Steel pipe is vital for critical infrastructure products and is also used in munitions, so if it's not available domestically it's a national security issue, John Stupp, chief executive officer of American Line Pipe Producers Association member Stupp Corp. of St. Louis, told a congressional committee hearing on the issue.

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Evraz North America spokesman Christian Messmacher said the steel maker has an efficiency and quality advantage as the only North American producer of large pipe that uses its own steel.

A $220-million (U.S.) upgrade to its Regina mill should further improve quality and efficiency, Mr. Messmacher said in an e-mail.

He noted that exports of large-diameter pipe from Turkey, South Korea, Germany and Greece exceeded those from Canada in 2016.

Veteran Canadian trade lawyer Larry Herman said he expects U.S. Commerce Secretary Wilbur Ross to exempt Canadian steel from any action the department takes.

"It's critical to separate the usual litany of U.S. trade complaints from national security issues," Mr. Herman said. "Just because an American industry has concerns about import competition, that doesn't translate into a national security issue."

The U.S. is imposing tariffs averaging 20% on Canadian softwood exports
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