Thank you, Madam Chair.
Honourable members of the Standing Committee on Finance, thank you for the opportunity to appear before you during your pre-budget consultations.
This is an important time for Canada and one that requires a great deal of thought as we move forward. Of course, every budget has to be evaluated in the context of its times. This year's budget comes against the backdrop of the CUSMA review at a pivotal moment for the auto industry.
Canada's auto sector, our second-largest export industry, faces an urgent decision. The CUSMA review will determine whether Canadian vehicle assembly remains viable or declines rapidly. If tariffs persist, Canadian plants, 85% of whose production serves U.S. customers, cannot absorb the extra costs of those tariffs. It would result in plant closures, lost jobs and severe economic impacts, especially in smaller communities that support our supply chain.
However, listening very carefully to the concerns and negotiating objectives of all three CUSMA partners, I believe there is a path to renewal. A restructured fortress North America agreement based on strong regional rules of origin, harmonized regulations and fair treatment of North American content is possible. The detailed elements of what I believe should be in that policy are in my written submission to the committee.
Even a renewed CUSMA requires new national priorities. Strategic funding set aside for industrial transition must be deployed to retool plants and drive innovation in critical areas like powertrain, Internet-connected technology and services, and advanced manufacturing. However, the protection of a revised trade deal must not become a crutch for industry. We have to accelerate rapidly to regain global competitiveness and leadership.
Canada must act decisively, regardless of the outcome. To advance, we need to replace the current policy dissonance in Ottawa. We need a national automotive strategy treated as a strategic project, guided by clear goals, coordinated across government and integrated with trade, industrial, and environmental policies. This strategy should also address the growing threat of transshipment from non-regional players, particularly China, and protect our connected vehicle data and infrastructure.
On the other hand, if we abandon auto manufacturing in favour of expanded trade liberalization, much as Australia has done, a national strategy to transition manufacturers and workers out of the sector is going to be required. To answer the question that I'm sure is on everyone's mind, Canada has the financial resources to underwrite the shift either way. There are ample funds remaining in the strategic response fund and billions of dollars committed but unspent under the previous EV supply chain strategy. Additional funds could be recovered by terminating the federal iZEV program that currently subsidizes imported vehicles.
To me, the choice is clear. It's a choice of growth or decline. By moving quickly to secure a modernized trade framework and investing in innovation and transition, Canada can ensure that our auto industry remains a pillar of our economy, supporting prosperity, jobs and strategic capability for decades to come, but we have a very narrow window for those decisions to be made.
Thank you, Madam Chair. I look forward to any questions the committee may have.