Articles related to trade policy

CIAC meets with Ontario Premier Kathleen Wynne to discuss Ontario-U.S. chemistry industry trade issues

On May 5, CIAC hosted a roundtable with Ontario Premier Kathleen Wynne and representatives from the Sarnia-Lambton chemistry cluster at Lambton College to discuss the importance of the cluster to the local and the Ontario economy, the importance of unfettered access to the U.S. and global markets, as well as investment and growth opportunities to support the continued evolution of the cluster.

“I’m working with the Great Lakes governors to impress upon them how much we want to continue to have an open border and how important it is to us that we keep that integrated relationship that we’ve kept over the past decades,” Wynne said. “When it comes to trade, we need a two-prong approach where the industry and government are saying the same thing to U.S. officials.”

Ontario’s $22 billion chemistry sector is the Province’s third largest manufacturing sector.   The chemistry industry is also Ontario’s second largest manufacturing exporter. In 2016, Ontario chemistry sector trade imports from the U.S. totalled $23 billion, while exports to the U.S. totalled $16.1 billion. The top Ontario-U.S. trade partners include Texas, Ohio, New Jersey, and Pennsylvania., among others.

“More than 70 per cent of all the chemistry we make in Ontario is exported to the United States. In short, nothing is more important to our sector’s economic well-being than maintaining free and open access to our US markets,” said Bob Masterson, President and CEO of CIAC. “Ontario’s engagement in the issue is an important complement to the efforts of the federal government in Ottawa.”

At the roundtable, Don Fusco, CIAC’s Government and Stakeholder Relations – Ontario, noted that there have been over $1 billion in chemistry sector investments in Ontario over the past five years and acknowledged the Province’s support through programs, including the Jobs and Prosperity Fund.    Don emphasized that the industry is looking to continue to work with the Provincial officials and lever investment attraction programs to secure additional investments as our sector growth opportunities are aligned with the Province’s economic and innovation goals.  

Participants from the chemistry industry included anchor members and key partners in the Sarnia Lambton cluster, demonstrating the strength, integration, collaboration and diversity of the cluster: ARLANXEO, BioAmber, Cabot Canada, Imperial Oil, NOVA Chemicals, Shell Canada, Lambton College and Bioindustrial Innovation Canada. 

CIAC will continue to work with Ontario government officials to strengthen the Province’s competitiveness to achieve the shared objective of future investments and growth. 

Op-ed: Feds should pay more attention to Canada’s chemistry sector says CIAC President

On April 10th, 2017, the Hill Times published an opinion piece titled: “Feds should pay more attention to Canada’s chemistry sector,” by CIAC president and CEO Bob Masterson. This is the op-ed reproduced in full. 

As the Liberal government looks to attract considerably higher rates of foreign investment into innovative sectors with high growth prospects, significantly more coordinated attention needs to be paid to Canada’s chemistry sector. There are immediate opportunities to attract more than $11-billion in investments through four global scale projects. These projects would create hundreds of jobs, drive economic growth, and help the government reach its environmental targets. It is nearly certain that none of the anticipated, nor possible future projects, will advance without the direct involvement of the Government of Canada.

The chemistry industry is a proven solution to all the government’s objectives and with similar federal involvement in the chemistry sector investments the Liberals will be able to tick off not only a small win for themselves, but most importantly, for Canadians.

Globally, the chemistry industry is a large, fast growing industry providing critical inputs to 95 per cent of all manufactured goods on this planet. In Canada, chemistry is the fourth largest manufacturing sector with more than $55-billion in annual shipments, and is the second largest manufacturing exporter with 70 per cent of all shipments traded internationally. Structured in highly efficient and consolidated clusters, such as in Sarnia, Ont., and Fort Saskatchewan, Alta., the sector adds significant value to Canada’s energy and agricultural resources. Canada’s chemistry sector is also highly skilled. Thirty-eight per cent of the sector’s 90,000 employees hold university degrees, second only to Canada’s IT sector, and earn average annual salaries twice that of Canada’s manufacturing sector.

Contrary to misconception, the industry is also highly supportive of climate action. More than 30 years ago, Canada’s chemistry industry, with the assistance of its toughest critics, developed the Responsible Care initiative. Born in Sarnia, Responsible Care® is now a global success story practised in 62 countries around the world. Since 1992, Responsible Care® has driven significant improvements in the environmental performance of the sector, including the reduction of absolute green house gas (GHG) emissions by 68 per cent and a decrease in the release of toxic substances by 86 per cent. In turn, the industry is also the central solutions provider for innovative emissions reductions activities in other sectors, including transportation, buildings and agriculture.

Unfortunately, despite its proven track record on providing thousands of Canadians with high-paying jobs, adding billions to the Canadian economy, and reducing GHG emissions on its own, Canada has struggled to attract global investments in chemistry due to a lack of support from the federal government. Over the past five years, more than 300 global scale projects worth over $US 250 billion have been completed, are underway, or have been announced in North America, with 70 per cent of those representing foreign direct investment. Nearly all those investments, however, have occurred in the United States. Canada is lagging far behind its historical 40-year performance which traditionally saw our country capture a 10 per cent share of all North American chemistry sector investments. Canada should have had at least 30 global scale investments worth over $30-billion, but this has not been the case.

Despite limited investment success to date, Canada does have many of the key ingredients for investment success in place—established and highly integrated clusters, a talented workforce, access to low-carbon, cost-advantaged feedstock, and proximity to key markets. The Governments of Ontario and Alberta have identified this economic potential and have taken the lead on attracting billions in investments. Ontario’s $2.7-billion Jobs and Prosperity Fund identified chemistry investments as a priority sector and Alberta launched the Petrochemicals Diversification Program which attracted 16 proposals worth over $20-billion. Currently, there are two projects in Sarnia and two in Fort Saskatchewan with total value of over $12-billion that are targeted for provincial investment support. Without sustained federal engagement in the sector and these projects, however, they face steep odds to advance.

The federal government’s interest and involvement is urgently needed if we are to have a reasonable chance for successful final investment decisions in 2017. If we can be successful in attracting these large-scale investments, it is calculated that the sector has further opportunities to attract an additional $10-billion to $20-billion in future years. As the Liberal government continues to balance climate change targets and economic goals, Canadians are continuously looking for greater opportunities. Last week the prime minister was in Windsor to announce his government’s financial support for Ford, amounting to $1-billion in investments. That pales to the opportunities that are sitting at Finance Minister Bill Morneau’s and Innovation Minister Navdeep Bains’ doorstep. The chemistry industry is a proven solution to all the government’s objectives and with similar federal involvement in the chemistry sector investments the Liberals will be able to tick off not only a small win for themselves, but most importantly, for Canadians.

A Trump presidency could mean anything but “business as usual’ for Canada’s chemistry industry

Since the stunning results of the U.S. election, I’ve been asked a number of times: “What affect do you think the Trump presidency will have on Canada’s chemistry industry and the broader Canadian economy?”

The easy answer, of course is that its too early to tell. And yet, the one thing we can say with some certainty is that the “business as usual” we are accustomed to, is unlikely to prevail.
Trump’s ‘no apologies’, ‘America first’ approach that has been the hall mark of his campaign and transition has raised expectations that the tepid economic growth over much of the past decade may give way to a renewed and more robust expansion in manufacturing sectors.

What does this mean for Canada’s chemistry industry? The business of chemistry continues to expand faster than broad-based GDP. And, with more than 60 per cent of Canada’s chemistry exports shipping to the U.S., there is good reason for us to expect a more bullish outlook in the months and years to come
But, there are also some potentially significant risks.

The first major area of concern is market access. Not only U.S. access to Canadian chemistry products, but also to primary, intermediate and finished goods produced in Canada. Canadian manufacturers purchase more than half of all chemicals produced in the country: from the auto sector, to the textile and forest products industries; to the energy sector, which is not only a significant consumer of our products, but also a important feedstock source. The domino effect from any disruption that impedes Canadian manufactured products and energy resources from reaching American markets is a threat to the well being of our industry. Whether its through renegotiation of trade agreements, tariffs, or an aggressive ‘Buy America’ strategy.

The second major risk would be adjustments to American taxation and regulatory regimes – changes that could put the U.S. even further ahead of Canada as a more attractive destination for investment. Changes in these areas could weaken or eliminate the one key advantage Canada has had for many years: competitive corporate tax rates (before US exemptions and adjustments) that are currently well below those of U.S. or other OECD jurisdictions.

The third risk is self-imposed in nature. With the exception of corporate tax rates, Canada’s competitiveness has been allowed to deteriorate as governments — at all levels and affiliations — have introduced a flurry of new regulatory activity that has imposed additional costs on business. At the same time, governments and society have been prone to near paralysis in decision making on major policies and projects. If this trend continues while the U.S. heads in the opposite direction, the impacts will be keenly felt.

If Canadian governments are unwilling to meet the competition head on and take measures to improve the investment climate, the downside risks of a Trump Presidency will far outweigh the upside opportunities for Canada’s chemistry sector.

Canadians and their governments have proven to be pragmatic and capable of course change in the past. With the New Year upon us, here’s hoping we remain capable of doing so in 2017.

Masterson: “More to be done to attract investments in Ontario’s chemistry industry”

In advance of the drafting of the 2017 Ontario Budget, the Chemistry Industry Association of Canada (CIAC) has been actively engaged in key advocacy initiatives on behalf of its members. On January 10th, Bob Masterson, CIAC President and CEO, had the opportunity to participate in a pre-budget roundtable discussion hosted by the Honourable Charles Sousa, Ontario Minister of Finance.

Hearing the fiscal concerns raised by participants in the roundtable, Masterson took the opportunity to highlight the ways in which the chemistry industry, as solutions provider, can make significant contributions to many areas of the Ontario economy. “To achieve those contributions however,” Masterson explains, “the province will need to encourage economic growth by improving the investment environment.” 

While the Chemistry industry has been in decline for more than two decades in Ontario, the sector does have several strengths to spur growth. These include: 

  • Sarnia’s proximity to cost-competitive shale gas production in the northeastern U.S.; 
  • established clusters with key infrastructure and skilled labour; 
  • the combined federal/provincial corporate tax rate of 25%; 
  • accelerated capital cost allowance treatment for manufacturing machinery; and 
  • the onset of commercialization of new technologies for producing chemicals from biomass. 

These strengths have contributed to CIAC member companies making over $1 billion in new production capacity in Ontario since 2012. However, the province has the potential to attract much more chemistry investment activity. Based on historical trends, it should have seen a further $8 to $10 billion worth of investments.

Only economic growth will deliver the solutions needed to address the investment gap and generate jobs and prosperity for Ontarians. Action in the areas of: taxation, environmental regulation, Ontario’s regulatory framework, the integrity of industrial lands, and industrial electricity rates could all improve the investment conditions.  

On January 20th, CIAC will have another opportunity to present its detailed recommendations in the identified areas when Don Fusco, CIAC’s Director, Government and Stakeholder Relations – Ontario, appears before Standing Committee on Finance and Economic Affairs as part of the 2017 pre-budget consultation. 

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