Canadian steel not a national security threat on its own: U.S. commerce secretary

The U.S. commerce secretary says Canada is not a national security threat and that a revitalized NAFTA could make the Trump administration's tariffs on steel and aluminum go away.

Wilbur Ross also acknowledged Wednesday that the U.S. doesn't have a trade deficit on steel with Canada in fact, he says, it has a surplus with its northern neighbour in terms of dollar value.

Under grilling by Republicans and Democrats in Washington, Ross heard concerns that looming retaliatory tariffs by allies, including Canada, Mexico and the European Union, would kill American jobs and drive up prices for consumers.

He made the remarks to a U.S. Senate committee examining tariffs imposed by President Donald Trump on some of that country's closest partners, based on the premise they are threats to American national security under the controversial Section 232 of U.S. trade law.

Ross played down Trump's national security rationale, and instead linked the tariffs to the unresolved renegotiation of the North American Free Trade Agreement.

"The Canadian steel industry is not being accused of directly and individually being a security threat.... The national security implication is in the aggregate, all of the steel," Ross testified.

Ross said Canada and Mexico were initially exempted from the national security tariffs "pending negotiations of NAFTA overall."

"Unfortunately, those talks were not able to come to a conclusion," he said.

"Our objective is to have a revitalized NAFTA, a NAFTA that helps America and, as part of that, the 232s would logically go away, both as it relates to Canada and as to Mexico."

The sunset clause

The government for the most part maintains there is no connection between the tariffs and NAFTA, a point Foreign Affairs Minister Chrystia Freeland reiterated as recently as Tuesday. However, in a recent interview, Finance Minister Bill Morneau said the NAFTA renegotiation can't continue "under the threat of tariffs" from the U.S. or Canada's own planned retaliation.

For his part, Ross said U.S. trade czar Robert Lighthizer is optimistic NAFTA talks "could pick up steam" after Mexico's July 1 presidential election.

A Republican lawmaker from Pennsylvania was critical of Lighthizer's insistence on inserting a five-year sunset clause into NAFTA, a position long decried as a non-starter for the Trudeau Liberals.

"I'm very deeply concerned that the very provisions that Trade Representative Lighthizer is seeking would make NAFTA a much lesser agreement. It would weaken NAFTA. One of them is to have a sunset provision," said Sen. Pat Toomey, who added it would lead to a "departure of investment from the United States, which would be harmful."

No dollar trade deficit: Ross

Toomey said Trump's use of Section 232 was "wholly inappropriate" and he renewed a plea to fellow lawmakers to support the bill he has co-sponsored with fellow Republican Sen. Bob Corker that would give Congress not the president the authority to implement that national security provision.

"I wish we would stop invoking national security because that's not what this is about. This is about economic nationalism and an economic policy of managing trade."

Throughout Ross's testimony Wednesday, committee members criticized Trump's tariffs.

Democratic Sen. Michael Bennett challenged Ross to say whether the U.S. has a trade deficit with Canada on steel.

"We don't have a trade deficit of note (on steel)," Ross replied. "We have a surplus in dollars; we do not have a surplus in physical value."

Bennett also asked Ross to explain "the national security rationale for putting a tariff on the Canadian steel industry, with whom we have a trade surplus?"

Ross described the tariffs as a tool to persuade allies to reduce the amount of Chinese steel that passes through their countries and into the U.S. market.

Some partners, including Canada and the European Union, have already taken positive steps in that effort, he said.

"The only way we're going to solve the global steel overproduction and overcapacity is by getting all the other countries to play ball with us," Ross said of U.S. allies slapped with the tariffs.

"And while they're complaining bitterly about the tariffs, the fact is they're starting to take the kind of action, which if they had taken (it) sooner would have prevented this crisis."