Paulding company could be hurt by Canada’s attempt to unfairly subsidize its cement industry and target U.S. market
WASHINGTON, D.C. – Today, July 23, U.S. Sen. Sherrod Brown (D-OH) urged the Obama Administration to protect Paulding County’s cement industry and the thousands of local jobs it supports.
In a letter to United States Trade Representative (USTR) Michael Froman, Brown called for the Administration to crack down on Canada’s attempt to illegally subsidize a cement plant in Quebec, which would specifically target the U.S. market, hurting the ability of local manufacturers to compete. U.S. cement companies would be affected, including Lafarge North America, which has a plant in Paulding.
“Paulding County workers can compete with anyone when given a level playing field,” Brown said. “But if countries like Canada illegally subsidize their industries, and target the U.S. market, it gives their products an unfair advantage. I urge the administration to investigate the nearly $500 million subsidy package proposed for the Quebec plant, which will directly compete with Lafarge North America’s facility in Paulding. Actions must be taken in order to protect Paulding jobs and the economy of Northwest Ohio.”
Specifically, the Canadian federal government and Quebec are seeking to offer a nearly half billion dollar financial package to McInnis Cement to help its startup in Port-Daniel-Gascons, Quebec. The size and nature of these subsidies could violate Canada’s World Trade Organization (WTO) obligations and give its cement industry an unfair advantage in the U.S. market. That is why Brown is calling for the USTR to investigate these subsidies and put a stop to them in order to protect Paulding’s workers and businesses.
“Lafarge North America appreciates the inquiry to the United States Trade Representative to address a serious threat to U.S. cement producers and their workers,” said John Stull, President and Chief Executive Officer of Lafarge North America. “Given the excess cement capacity in the Province of Quebec, the McInnis Cement plant makes no economic sense. Lafarge believes that the plant would not be built without enormous support from the federal and provincial government. Lafarge joins Senator Brown in urging the U.S. government to engage with the Canadian government regarding the provision of subsidies that appear to be prohibited by WTO rules and threaten material harm to the U.S. cement industry.”
Brown continues to fight for Ohio manufacturers’ ability to compete on a level playing field. Described as “Congress’ leading proponent of American manufacturing,” Brown is a member of the Senate Manufacturing Caucus, currently vice-chair of the Senate Auto Caucus, and was recently named incoming chair of the Senate Steel Caucus. In April, bipartisan manufacturing jobs legislation introduced by Brown and U.S. Sen. Roy Blunt (R-MO) moved one step closer to becoming law. Brown-Blunt would establish a National Network of Manufacturing Innovation (NNMI) and create thousands of high-paying, high-tech manufacturing jobs while enhancing the United States’ role as the world’s leader in advanced manufacturing.
Brown’s letter to USTR Froman can be read in its entirety below:
The Honorable Michael Froman
United States Trade Representative
600 17th Street NW
Washington, D.C. 20508
Dear Ambassador Froman:
I write to express concerns about a proposed financial assistance package offered by the federal government of Canada and Quebec to McInnis Cement to build and start up a cement plant in Port-Daniel-Gascons, Quebec, Canada. The significant subsidies to be made available to McInnis may not be compliant with Canada’s international trade obligations and would have distorting ramifications in the Canadian and U.S. markets. I ask USTR to investigate the government-provided financial assistance being offered and to convey U.S. concerns about the proposal to your Canadian counterpart.
The Canadian federal government and Quebec have committed to provide nearly half a billion dollars in support to McInnis Cement to build a cement plant in the Gaspé region. Investment Quebec will contribute $100 million in equity, and the Quebec Deposit and Investment Fund, which manages the province’s public pension plans, will contribute another $100 million. Investment Quebec will also lend $250 million to the project, and the federal government will provide another $100 million in financing. Media reports indicate that a special electricity rate available to industrial users may also be available to McInnis. In addition, a tax holiday on provincial income tax for large investments in Quebec has also been reported as part of the financial assistance package. The proposed facility is expected to cost $1.1 billion. In addition to the scope and magnitude of the subsidy package, I have concerns that the Canadian government is aiding a plant whose production will be focused solely on the U.S. market and whose scale betrays the underutilized capacity currently in the Canadian cement market.
I request that you evaluate this subsidy package to determine if it would be a prohibited or actionable subsidy under the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures. The financial contributions from Quebec and Canada meet the WTO definition of a subsidy and would have tangible benefits for McInnis. Based on reports from others in the Canadian cement sector, much, if not all, of this financial assistance is specific to this project. In fact, Quebec has never before funded a greenfield cement plant. Moreover, Quebec currently has approximately 1.3 million tonnes of unused capacity in the sector. The McInnis plant will have the capacity to produce 2.2 million tonnes per year, which, the company has stated, will be targeted for the U.S. market. Given the oversaturation of the Quebec market and the McInnis plant’s focus on the U.S., I am concerned these subsidies may also be export- contingent.
Ohio has two cement plants, and thousands of workers are employed in concrete and cement jobs across the state. Our cement companies and their employees will not be able to compete against the heavily and unfairly subsidized McInnis plant. I ask you to evaluate the proposed government financial assistance package intended for the cement facility in Quebec and communicate to the highest levels of the federal and provincial governments our objections to the subsidy package.
Thank you for your quick consideration of this letter. I look forward to continuing to work with you to ensure U.S. producers and workers compete on a level playing field.
United States Senator