Letter to Michael Froman, US Trade Representative - Protecting NY Companies Against Potentially Heavily Subsidized New Cement Exports from Canada
Letter
The Honorable Michael Froman
United States Trade Representative
600 17th Street NW
Washington, D.C. 20508
Dear Ambassador Froman:
We write to express our concerns regarding financial assistance offered by the Government of Canada and the Province of Quebec to the McInnis Cement Company for the construction of a cement plant in Port-Daniel-Gascons, Canada. The cement industry in our state has informed us that this financial assistance may be inconsistent with Canada's WTO obligations and may unfairly disadvantage U.S. cement producers. We urge USTR to look into this matter and communicate our concerns with the appropriate Canadian officials.
The cement industry in our state has informed us that the Province of Quebec has committed to providing around half a billion dollars in financing to McInnis Cement for a C$1.1 billion project. Such government financing may confer an industry specific and export targeted benefit to McInnis, which would be inconsistent with WTO obligations. The Province of Quebec has committed to providing a guaranteed loan of C$250 million, subordinate to private loans for the project, while the Province of Quebec's investment arm, has committed C$100 million in equity. Additionally, Quebec's public pension fund manager has committed C$100 million in equity to McInnis. News reports also indicate that the Government of Canada may contribute a total of C$100 million along with a special discounted electricity rate and additional financial incentives to McInnis.
Market conditions in Canada indicate that the McInnis plant's viability would depend on cheap exports to U.S. markets. Canadian government and industry officials have publicly indicated that the majority of the future plant's output would be exported to the U.S. The new McInnis cement plant would have an estimated annual production capacity of 2.2M metric tons. According to the Cement Association of Canada, cement plants in Québec already have an excess capacity of 1.3M tons and export 700,000 to the U.S.. Concurrently, McInnis's target market, the Northeastern U.S., has seen a decrease in cement production in the last decade. With no large projected increase in the Quebec region's demand for cement, the future plant's viability would depend on exporting heavily to the U.S.
The cement industry in New York is composed of three cement plants and ten terminals supporting nearly 300 jobs. One of our producers, Lafarge North America, is currently investing several hundred million dollars to continue their production in Ravena, New York. This plant's locally produced cement has been used for large projects across the state, including the Freedom Tower and the World Trade Center Memorial in Manhattan. Our cement companies and their employees in New York and across the country deserve to compete on a level playing field with their foreign competitors.
It is imperative that our nation pursue effective trade enforcement with Canada, our nation's largest trading partner, to ensure the integrity of our trade agreements. We urge you to investigate the details of the total incentives package provided by the Government of Canada and Province of Quebec. Once the details become available, USTR should evaluate the WTO-consistency of the governments' incentive package provided to McInnis. If Canada's WTO obligations are in question, we urge USTR to quickly address this issue with Canadian officials.
Thank you for your serious consideration of this matter. We must do all that we can to protect U.S. producers from unfair foreign competition.
Sincerely,
Charles E. Schumer
United States Senator
Kirsten Gillibrand
United States Senator
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