Today, U.S. Senators Charles E. Schumer and Kirsten Gillibrand called on the U.S. Trade Representative (USTR) to investigate the nearly half a billion dollars in potential unfair subsidies that the Province of Quebec, Canada is providing to build a C$1.1 billion cement plant in Quebec, Canada. Canadian officials have indicated that this future plant would export the majority of its product to the U.S., which would result in unfairly subsidized, and potentially artificially priced cement flooding the U.S. market, causing harm to the U.S. and, more specifically, New York State’s cement industry. The Senators explained that the financial assistance currently being offered by the Province of Quebec to the McInnis Cement Company for the construction of a cement plant in Port-Daniel-Gascons, Canada, may have market distorting consequences in U.S. markets. Schumer and Gillibrand said that this new plant’s viability would depend on the ability to export cheap cement to the U.S., which would undercut producers like Lafarge and Lehigh Hanson in New York State. Lafarge’s plant in Revena, located in Albany County, and Lehigh Hanson’s plant in Glens Falls, located in Warren County, are major producers of cement and concrete in New York State. In fact, Lafarge’s locally produced cement in particular has been used for large projects across the state, including 1 World Trade and the World Trade Center Memorial in Manhattan. The Senators said these potentially unfair trade practices could not only impact the two plants’ production, but could also have a negative impact on some of the nearly 300 workers directly employed by these two companies in the Capital Region. Schumer and Gillibrand noted that there are also more than 20,000 employees in New York connected to the cement and concrete industry who could be affected if the demand for U.S. cement products decreases. The Senators also explained that while cement consumption in New York, and across the country, dropped during the recession, in New York by around 30 percent from 2006 to 2010, consumption has been on a rise in recent years. The Portland Cement Association anticipates that cement consumption will increase 7.9 percent nationwide this year compared to 2013, and will further increase in 2015 and 2016. Schumer and Gillibrand said that the potential for this industry to rebound from the recession and past job loss further highlights the need for USTR to step in and investigate these potentially unfair subsidies so that it can protect the U.S. cement industry and ensure the integrity of Canada’s trade obligations.
“Upstate New York’s cement producers provide good-paying jobs to hundreds of New Yorkers, and we must make sure none of those jobs are put in jeopardy by unfairly subsidized competition from Canada,” said Senator Schumer. “That is why I am calling on the U.S. Trade Representative to investigate what is going on over the border and step in to protect local jobs. Lafarge and Lehigh Hanson play by the rules, and it is only fair that Canadian cement companies should too.”
“In order for local companies like LaFarge and Lehigh Hanson to continue to thrive we must do more to ensure they are on a level playing field with their foreign counterparts,” said Senator Gillibrand. “I urge the U.S. Trade Representative to help save jobs throughout New York State – by making it harder for other countries to corner the market through unfair and illegal trade. Dumping cheaper, and unfairly subsidized products into the U.S. market cannot be tolerated and I will continue to fight to protect New York’s companies from predatory international practices.”
“Lafarge North America is investing hundreds of millions of dollars to modernize our Ravena, New York cement facility because we are committed to competing in the U.S. market in a responsible manner,” said John Stull, Lafarge North America President and CEO. “New York is an advantageous location for Lafarge and our ongoing investment will allow us to continue contributing to building better cities and communities across the region. Lafarge appreciates Senators Schumer and Gillibrand for their inquiry to the United States Trade Representative and for their commitment to address a serious threat to U.S. cement producers and their workers.”
In addition to the nearly half a billion dollars being offered by the Province of Quebec for the new McInnis plant, news reports indicate that the Government of Canada may also contribute C$100 million in financing along with a special discounted electricity rate and additional financial incentives to McInnis. Schumer and Gillibrand said that these financial incentives could provide a heavy boost to the new Quebec producer, which could then undercut the New York State cement industry. The new McInnis plant is currently under construction, strategically being built in Port-Daniel-Gascons, Canada, where cement can be speedily shipped down both the St. Lawrence Seaway and the U.S. East Coast. According to the Cement Association of Canada, cement plants in Québec already have an excess capacity of 1.3M tons and export 700,000 tons to the U.S. These market conditions, along with statements from industry officials indicate that any future Quebec cement plant’s viability would likely depend on exporting, almost solely, to U.S. markets. The Senators said this is why the USTR must step in and ensure the Government of Canada adheres to its World Trade Organization (WTO) obligations and does not allow potential subsidies to unfairly distort the U.S. cement market. Schumer said that our cement companies and their employees across New York and the country deserve to be able to compete on a level playing field with their foreign competitors.
The Senators explained that, between the three Capital Region cement plants and ten terminals throughout Upstate New York, the cement and concrete-related industry contribute immensely to the local economy, generating $353.9 million in revenue in 2012. LaFarge North America, for example, is currently investing several hundred million dollars to continue their production in Ravena, New York, by upgrading their plant and transforming it into a new, state-of-the art facility. Schumer and Gillibrand said that these plants directly support nearly 300 local workers, while there are over 20,000 jobs connected to cement and concrete production in New York.
A copy of Senator Schumer and Senator Gillibrand’s letter to the USTR appears below:
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.
Charles E. Schumer
United States Senator
United States Senator