Canadian government should implement CBAM on imported steel

Canadian CBAM

With the EU regulating imported steel through the Carbon Border Adjustment Mechanism (CBAM) and the U.S. tightening restrictions on Chinese steel imports ahead of the presidential election, there are growing calls in Canada for carbon regulations on imported steel.

Recently, the Canadian steel industry has been lobbying for stronger measures, such as increasing import tariffs on Chinese steel. With unions actively supporting this stance, it is expected that carbon regulations will soon become a reality.

Marty Warren, National Director of the United Steelworkers (USW) in Canada, said in a recent interview, "The Canadian government needs to implement CBAM on steel imports from countries without carbon pricing. In addition, the government should prioritize the use of domestic low-carbon steel in public infrastructure projects.

He continued, "In the midst of global efforts to reduce greenhouse gas emissions, Canada has an opportunity to rebuild public infrastructure with lower carbon emissions. The Canadian federal government has committed to achieving carbon neutrality by 2050, but a critical aspect of this strategy, such as a vision for the materials to be used, is currently missing."

Warren emphasized, "To achieve carbon neutrality, the Canadian government must ensure that all public infrastructure projects use relatively low-carbon steel. The government should also adopt a robust industrial policy to support the domestic steel industry and encourage collaborative investments in technology to further reduce the sector's carbon footprint."

He added: "As the government moves forward with plans for CBAM and carbon pricing, it must ensure that Canadian steel producers are not unfairly disadvantaged. The Canadian Steelworkers Union supports the imposition of CBAM on steel imports from countries without carbon pricing. Carbon border taxes are already in place in the EU and are being considered in the US.

The Canadian steel industry is currently struggling with increased imports as domestic steel production is displaced by foreign products. Imported steel accounts for a significant 61% of the Canadian market, and the market share of countries other than the U.S. and Mexico, with which Canada has free trade agreements, will double between 2015 and 2022. In particular, there has been a sharp increase in imports of low-cost Chinese steel.

Warren noted, "Recently, U.S. President Joe Biden decided to increase Section 301 tariffs on Chinese steel and aluminum products from the existing 0.0-7.5% to 25%, which I think is a very good decision. The Canadian government should similarly increase import tariffs on Chinese steel, strengthen carbon regulations, while working to prevent circumvention of these regulations".

He added, "For Canada to maintain a healthy steel industry in the future, it is critical to implement trade, climate and jobs policies together."

Meanwhile, with both labor and management in the Canadian steel industry advocating for strong import regulations, it is expected that the government will soon implement steel import regulations, including CBAM.