Debates of Dec. 6th, 2010

Peter Kent Minister of State of Foreign Affairs (Americas)

moved that Bill S-5, An Act to amend the Motor Vehicle Safety Act and the Canadian Environmental Protection Act, 1999, be read the second time and referred to a committee.

Mr. Speaker, I am pleased today to present an amendment to change both the Motor Vehicle Safety Act and the Canadian Environmental Protection Act, 1999. These changes are being proposed in order to bring Canada into compliance with the automotive provisions of the North American Free Trade Agreement, known as NAFTA. These amendments will address the importation of used vehicles from Mexico in a manner that continues to both preserve the safety of Canadians and to protect our precious environment.

Although the North American Free Trade Agreement was signed in 1993, its provisions on the importation of used vehicles only came into effect on January 1, 2009. These provisions require that Mexico, the United States and Canada allow the importation of used vehicles from one another's countries. The requirement is to be implemented in a phased manner by each of the countries. The allowable importations will start with vehicles that are 10 years old and older. The age threshold for the vehicles will decrease by two years, every two years, until 2019 when countries may not adopt or maintain a prohibition or restriction on imports of used vehicles from each other.

The current wording of the Motor Vehicle Safety Act does not allow for this importation.

The Motor Vehicle Safety Act is the key enabling legislative tool that regulates the manufacture and importation of motor vehicles and motor vehicle equipment in order to reduce the risk of death, injury and damage to property and to the environment. It is the tool that the government uses to provide direction to manufacturers, to importers and to the general public, thus allowing us to work together to continually increase the level of road safety in Canada.

This act sets out a comprehensive minimum safety standard for vehicles manufactured or imported for use into Canada. It also sets the standards for new tires and for equipment used in the restraint of children and disabled persons within the vehicle. The Motor Vehicle Safety Act first came into effect in 1971, and was last amended in 1993.

The Motor Vehicle Safety Act enables the development of the motor vehicle safety regulations and the Canada motor vehicle safety standards. These regulations and standards help to ensure the current and the ongoing safety of Canadians on our roadways.

The Canadian Environmental Protection Act, 1999, came into force on March 31, 2000, following an extensive parliamentary review of the original l988 act. The Canadian Environment Protection Act, 1999 is the government's principal legislative tool to prevent pollution in order to protect the environment and human health. It provides a comprehensive approach to reducing harmful emissions from vehicles and equipment by considering vehicles, engines and fuels as integrated systems.

Even with a modern, efficient piece of legislation such as the Canadian Environment Protection Act, 1999, amendments are required from time to time to keep pace with various international commitments, such as the North American Free Trade Agreement. We believe it is important to move swiftly to meet our international commitments and to be compliant with the North American Free Trade Agreement. We believe it is also essential to demonstrate our continued good faith and to maintain our reputation with our trading partners.

Both the United States and Mexico have regimes in place that allow for the importation of these used vehicles.

Prior to the automotive provision of the North American Free Trade Agreement coming into force, the American government already had a program where it considered requests for importation of vehicles from other countries. A determination is made for each individual vehicle to see if it can be modified to meet American safety standards; therefore, its rules did not need to change in order to meet the North American Free Trade Agreement requirements.

On December 22, 2008, the President of Mexico issued a decree allowing for the duty-free entry of used light and heavy-duty weight vehicles from Canada and the United States that are 10 years old or older into Mexico. This decree entered into force on January 1, 2009.

I think all members of the House recognize the importance for Canada to meet its reciprocal obligations. Making these changes to the Motor Vehicle Safety Act and the Canadian Environmental Protection Act, 1999 will help to fulfill these commitments to our trading partner.

While there has not been a free trade challenge from Mexico so far, if we do not proceed with these changes, it raises the possibility of a challenge arising, as well as other retaliatory trade actions.

As such, I am proposing today that the Motor Vehicle Safety Act be amended to allow the importation of used vehicles from Mexico. This importation would be contingent on the condition that the vehicles can be modified to meet the Canadian safety and emission standards.

Vehicles imported for use in Canada that are 15 years old or older are not required to meet safety or emissions standards. These older vehicles have essentially been collectors' items, falling into the vintage vehicle category. Currently, under the Motor Vehicle Safety Act, for vehicles that are less than 15 years old, only those from the United States may be imported.

Subsection 7(2) of the current Motor Vehicle Safety Act allows for the importation of used vehicles purchased in the United States. We are proposing to modify it to include the importation of used vehicles from Mexico.

Changes to those subsections would also require that within a prescribed period the vehicle must be made to conform to the safety requirements and that it be inspected in accordance with our regulations. Finally, a condition would set out that before the vehicle is presented for licensing under the laws of any province, the vehicle would be certified in accordance with the regulations to so conform by any person who is designated by the regulations.

Our proposal also includes changes to the Motor Vehicle Safety Act with respect to the definition of “vehicle”. Currently the definition states:

any vehicle that is capable of being driven or drawn on roads by any means other than muscular power exclusively, but does not include any vehicle designed to run exclusively on rails.

This definition would change to “any vehicle that belongs to a prescribed class of vehicles”.

The purpose of this change would be to more closely align the definition in the Motor Vehicle Safety Act with that in the Canadian Environmental Protection Act, 1999. This change would be necessary since both acts regulate the automotive industry and the difference in the definition of vehicles could lead to confusion for the industry.

These amendments would increase choice for Canadian consumers by providing them additional importation options of specified used vehicles from Mexico. The modifications would also maintain the continued safety of the Canadian public by ensuring the timely modification of the vehicles to comply with Canadian motor vehicle safety standards, thereby ensuring the safety of the Canadian public.

I must emphasize that the safety of Canadians and all people travelling on Canadian roadways remains our first priority. While on the surface it may seem harmless to allow individuals to import non-conforming vehicles, it nevertheless has an incremental impact on the safety of other Canadian road users.

Canada has different driving conditions than other parts of the world, including Mexico. As such, our safety standards are developed to meet our own needs, while still harmonizing where appropriate. For example, our vehicles have a requirement for daytime running lights to deal with lower lighting levels in the winter, our speedometers need to measure vehicle speed in kilometres, and the mechanism to attach child restraints to the vehicle is stronger than required in most other countries except in the U.S.

Canadian vehicle safety standards are designed to minimize, to the extent reasonably possible, the risk of death, injury or collision resulting from vehicles and their use. While they may be similar, and in fact are frequently harmonized with those of the United States, Canadian standards reflect the unique circumstances of Canada.

The safety of Canadians remains paramount to the Government of Canada. As such, stringent requirements would be put in place to ensure that the safety of Mexican imported vehicles is equivalent to that provided by vehicles sold in Canada. The imported Mexican vehicles would be required to meet either the Canadian or American safety standards that were in place at the time of manufacture.

In 1995, in order to monitor and regulate the importation of vehicles from the United States, Transport Canada established the registrar of imported vehicles, under the purview of the Canada-United States Free Trade Agreement. This importation process ensures that vehicles purchased by Canadians at the retail level in the United States are made fully compliant with the Canadian federal vehicle safety requirements before these vehicles are presented for provincial and territorial licensing.

The registrar of imported vehicles is operated by a private contractor and is funded on a cost-recovery basis through fees charged to Canadian importers. In 2009, 124,000 used vehicles were imported into Canada from the United States.

In order to ensure that vehicle imports from Mexico meet Canadian safety requirements, the current registrar of imported vehicles program will be extended to cover those vehicles. This extension will not impose any additional cost on the Canadian taxpayer, given the cost-recovery system of the registrar.

The Canadian Environmental Protection Act, 1999 and its regulations allow the importation of used vehicles into Canada from the United States provided they meet Canadian or United States standards at the time of their manufacture. Amendments are required to the Canadian Environmental Protection Act, 1999 to provide the authority to develop regulations to address the importation of used vehicles from Mexico that are not compliant with Canadian standards at the time of their importation. These regulations will be developed with respect to North American free trade obligations, and any vehicles imported into Canada from Mexico will be required to be modified in compliance with the Canadian emission standards.

The amended Canadian Environmental Protection Act, 1999 provisions will allow the importation of used vehicles from Mexico that are not compliant with Canadian standards. However, the person importing the vehicle will need to make a declaration stating that the vehicle will be made to comply with the requirements, that an inspection will be carried out if required, and that the vehicle will be certified before it is presented for licensing.

As such, the revisions to the act will maintain Canadian environmental standards and not result in higher emissions than if the vehicles had originally been manufactured to those standards.

To ensure that used cars arriving from Mexico respect the emissions standards of Canada, an implementation program will be put in place. It will be consistent with the one put in place by Transport Canada and could include steps such as the review of supporting documents and inspections of imported vehicles.

As part of the regulatory process, consultations with stakeholders will be undertaken on the development of regulations allowing the importation of used vehicles from Mexico.

It should be noted that it is estimated that a minimum of one year to a maximum of two years after proclamation will also be needed to design the regulations and an implementation program under the Canadian Environmental Protection Act, 1999. I would note as important information that imported used vehicles from the United States meet Canadian environmental emissions standards because Canadian emissions standards are harmonized with those of the United States. As such, vehicles that comply with U.S. standards also comply with Canadian standards. Imported American vehicles bear the United States emissions control label.

Consultations on changes to the Motor Vehicle Safety Act started in 2002, with the release of a discussion paper. A range of potential changes to the Motor Vehicle Safety Act have been examined over the years, and the act is currently being assessed against today's operating environment.

However, given that we are not currently compliant with the North American Free Trade Agreement, we believe we should start with addressing this potential trade issue in advance of any other challenges. This will bring us into compliance with the North American Free Trade Agreement and avoid the possibility of a challenge by the Government of Mexico.

We have also consulted provincial and territorial governments, given that the imported vehicles will be licensed and operated in Canada. I would note that they did not express any concerns. In addition, commercial importers are supportive of the proposed changes.

I would also note that we continue to monitor the current United States Senate and House proposals to change the United States' motor vehicle safety act.

In conclusion, we believe these modifications to the Motor Vehicle Safety Act and the Canadian Environmental Protection Act, 1999 are crucial to maintaining our obligations under the North American Free Trade Agreement, our goodwill with our trading partner, and our broader international trade reputation.

The impact of imported vehicles from Mexico should not have an effect on the Canadian manufacturing and retail market as the importations would be for used vehicles and, to start with, permit only the entry of older used vehicles.

These changes would be implemented in a manner that would maintain the safety of Canadians on our roadways by ensuring that imported used vehicles from Mexico meet our Canadian safety standards.

In addition, these changes would continue to protect our environment by ensuring that used imported vehicles from Mexico respect our emissions standards.

These amendments are the proper thing to do. They would maintain our trade relationships, have potential benefits for Canadians and continue to protect our safety and environmental interests.

I call on my fellow parliamentarians to support this bill unanimously.