Evidence of meeting #30 for Industry and Technology in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was china.
A recording is available from Parliament.
Liberal
Dominique O'Rourke Liberal Guelph, ON
That's perfect.
The other piece is that the current 3% of autos, the 49,000 that could be imported from China in the first year, would just set us back to where we were in 2023, when the vehicles coming in from China were primarily Teslas and Polestars.
Did you have the same concerns about those vehicles coming into Canada in 2023, and were they expressed at the time?
Senior Fellow, University of Ottawa, As an Individual
At that time, the answer is no.
One reason is that Teslas at that time did not have Baidu technology, and they do now. The other reason is that the Human Rights Watch report was written in 2024. It wasn't written in 2023—
Liberal
Senior Fellow, University of Ottawa, As an Individual
We know more now than we did in 2023.
Liberal
Dominique O'Rourke Liberal Guelph, ON
That's perfect, and we have some tools to address that. Thank you.
Dr. Karaguesian, I want to ask you something as well.
You were talking about Canada's long-term prosperity. I'm encouraged to hear you talk positively about Canada's EV strategy, from critical mineral extraction to energy to the entire supply chain. I'm thrilled with that.
I'm wondering if you want to talk about how the new tariff deal paves the way to diversifying our trade and investment more broadly.
Visiting Lecturer, Department of Economics, McGill University, As an Individual
The new tariff deal and the wider strategic partnership paves the way to diversifying our exports and our sources of investment, and also our imports, because we have to put something on the table as a nation.
China's trade with Canada represents 1% of its total trade. Our trade with China is less than 5% of our trade, so we're not talking about big numbers from the get-go. In absolute dollar terms, our two-way trade is $130 billion. To be able to build out this relationship, which has been narrowly circumscribed over eight or 10 years of geopolitical tensions, we have to put things on the table.
The deal that the Carney government got from the People's Republic of China was quite a good one. We're talking about a small number of vehicles, and to open up access to Chinese markets for our food products again from our western farms and eastern fisheries, we do have to put something on the table. At the same time, it is obviously my concern, and I think it's the concern of this committee, the government and all people in Canada, that we need manufacturing in this country. No country can be prosperous without manufacturing of some sort, so we need to build our trades and our industrial sector back up after 30 years or 40 years of deindustrialization.
If we're actually assembling autos, we can, but we will need a government industrial strategy to do this, as we will if we're making armoured vehicles for the defence sector or building high-speed railcars and streetcars for our cities for clean public transportation. I think people working in those industries will be happy if they have security and well-paid jobs.
I don't know if I answered your question, but I can continue.
Liberal
Dominique O'Rourke Liberal Guelph, ON
You did. I just want to sneak in another really quick one.
Earlier this week, the Conservative Party introduced an alternative auto plan or proposal in the House, and it suggested aligning with North American partners on Chinese tariffs.
What would the impact of a flip-flop like that be, and how damaging would a response like that be at this time?
Visiting Lecturer, Department of Economics, McGill University, As an Individual
A flip-flop like that would destroy any credibility we've built up over the past year as the Prime Minister zigzagged the world making trade deals. If we flip-flop like that, why would any partner out there in the world, particularly in the global south, trust us to have negotiations? That's number one.
Number two, I just don't think going deeper in the North American platform path is the right way for Canada, because it increases our dependence on a country. I'm very fond of the United States, very fond of Americans, but it would increase our dependence on a country that is not behaving in the way that it used to behave, and it has been doing this for a long time. We don't know what comes after President Trump, but the long-term trend is not good for Canada and is not good for our integration.
We need to diversify. It's a question of resilience. It's a question of sovereignty. It's actually a question of national security. If you go into decline, what kind of national security do you have if you have a weakening economy? What kind of national security do we have when a president, a single person and his officials, can weaponize trade and force concessions out of us? What kind of national security do we have when a president can tell the United Kingdom not to bring wind turbines in from China because they are going to spy on northern England, where the sheep are, or tells them not to let them build an embassy? What kind of national security are we going to have if we increase our dependence on a single nation?
I'm sorry to go off on a tangent like that. I'll leave it at that.
Liberal
The Chair Liberal Ben Carr
Thank you very much, Mr. Karaguesian. I appreciate the closing of the remark there.
Thank you, Madam O'Rourke.
Mr. Ste‑Marie, you have the floor for two and a half minutes.
Bloc
Gabriel Ste-Marie Bloc Joliette—Manawan, QC
Thank you, Mr. Chair.
I'd like to turn to Mr. Karaguesian.
First, you said in a previous answer programs related to the military defence strategy have a high multiplier effect.
Could you provide us with more details on that through the clerk? We're studying that very topic.
The Economist recently published an article saying we had to be careful, because there wouldn't be that many repercussions on the manufacturing sector as a whole. If you have readings you'd like to suggest on the subject, I invite you to let us know. We're interested.
Second, on to another topic, I don't know if you've read the Foreign Policy article written by historian Nils Gilman and published earlier this week. In it, the author compares electrostates to petrostates. His thesis is that, previously, there were two blocs: the capitalist bloc and the communist bloc. He says to forget about them because the next confrontation will pit electrostates, led by China and based on renewable energy, against petrostates, which include not only Donald Trump's United States, but also Russia and the Gulf countries.
Have you ever heard of this dichotomy? If so, what are your thoughts on that?
The author was referring to the Prime Minister's speech about middle power countries having to decide what role they could play in this context. The same applies for non-aligned countries. He says the infrastructure needed to choose a side will make it difficult to change sides, given the fixed costs associated with such a decision.
What do you think of this new idea?
Visiting Lecturer, Department of Economics, McGill University, As an Individual
On the impact of defence and multiplier effects, if you look at the impact of the Second World War on the Canadian economy, you will see that we entered the Second World War not as a manufacturing nation and we emerged from that war—I'm not asking for war—as a manufacturing country. The multiplier effects are high. Making weapons is an investment in non-productive assets, but the immediate multiplier effects are high.
With respect to your second point, I align myself with Prime Minister Mark Carney's bid to become part of a middle power group that protects the rules-based international order. We need to find a so-called coalition of the willing to be able to do this, because Canada thrives when there are rules in this world. We're less than 1% of the world's population and less than 2% of the world economy. We need rules more than anything to be able to deal in this world. Other countries in the global south are also asking for this, as well as in Europe, Australia, Oceania and the United Kingdom. There are a lot of potential allies out there for this.
Liberal
The Chair Liberal Ben Carr
Thank you very much, Mr. Ste‑Marie.
Colleagues, we lost a little bit of time earlier during the proceedings, so I'm going to reduce this final round from five minutes to three minutes.
Mr. Guglielmin, you'll have three.
Mr. Bardeesy, you'll have three, and that will conclude....
The floor is yours, Mr. Guglielmin.
Conservative
Michael Guglielmin Conservative Vaughan—Woodbridge, ON
Thank you, Mr. Chair.
In January 2021, Canada announced new measures to help address the risk of being complicit in human rights abuses in [Inaudible—Editor] China and specifically mentioned the Uyghurs. Personally, I find it alarming and offensive that a Canadian member of Parliament uses his time not to protect Canadians but to defend a foreign country that has been well-documented by Human Rights Watch and even our own government for human rights abuses, and also to attack the credibility of one of the witnesses sitting before us today.
Ms. McCuaig-Johnston, I'll allow you some time to defend your credibility on this issue and maybe highlight why it's such a problem if we allow vehicles to be imported into Canada that are being developed through the use of forced labour.
Senior Fellow, University of Ottawa, As an Individual
Thank you very much.
As I said, I made my career in government in science and technology policy and programs and funding, helping China develop its R and D capacity. When I retired, I started publishing on China's S and T governance, start-up companies, joint ventures and so on. I became more and more concerned as I saw things like China's role in the Arctic. I've briefed across government on that, and on China's use of surveillance technologies in Xinjiang and now across the country. It's through the technology lens that I came to work on the Uyghur issue, and that's what got me sanctioned by China. They don't like me talking about the Uyghurs and they send their people out to harass me in my vehicle.
At the same time, we will always trade with China. They want our resources and we want their manufactured goods. It's 3.6% of our trade. It's often said that they are our second-biggest trading partner, with the largest being the U.S. at 76%, but our second-biggest is actually the EU, through CETA, at 8% of our trade.
We do need to diversify. The Indo-Pacific strategy is excellent for diversifying trade. I've been thrilled with the Prime Minister's diversification policy—
Conservative
Michael Guglielmin Conservative Vaughan—Woodbridge, ON
I just want to get in one more question. I'm almost out of time here.
We've been hearing a lot, even in the last meeting on this subject, that we should be more concerned with the threat from the United States to our security than with the threat from a country like China. Do you agree with that assessment?
Senior Fellow, University of Ottawa, As an Individual
No. I would say that we're at very serious risk with the section 301 investigation calling us out for our very weak enforcement of the Uyghur forced labour legislation. The U.S. legislation is very strong. The Bloc has made tremendous efforts to strengthen Canadian legislation, and others around this table have as well, and we should be doing that.
Liberal
The Chair Liberal Ben Carr
Unfortunately, I'm going to have to stop your time there, Mr. Guglielmin.
Mr. Bardeesy, you have three minutes. That will conclude round one.
Liberal
Karim Bardeesy Liberal Taiaiako'n—Parkdale—High Park, ON
Thank you.
I'll start with Ms. McCuaig-Johnston.
You described QNX as a Canadian technology that is currently in some Chinese EVs. Would it be a positive or worthwhile trade objective of Canada to encourage the adoption of more technologies like QNX in Chinese EVs?
Senior Fellow, University of Ottawa, As an Individual
I would love to see that. We need to have Canadian technology wherever we can. We need to ensure that the data is kept, if not in Canada, at least in North America, but not in China. They've demonstrated much more malign intent towards us than the United States, I would say.
Liberal
Karim Bardeesy Liberal Taiaiako'n—Parkdale—High Park, ON
In the past, we've had experts in the auto sector in front of this committee. One of the things we've heard from them is that the earlier model that was founded in the 60-year-old auto pact around assembly and manufacturing has now lent itself to a broader array of technologies, skills, talents and deployments in a vehicle.
When countries are doing trade negotiations, presumably the broad array of products in a sector like autos would then be discussed. Would you agree with that?
Senior Fellow, University of Ottawa, As an Individual
I would, but that's not the way the Chinese EVs operate.
Their firms bring kits, and they're simply assembled. You wouldn't have the opportunity for Canadian aluminum and steel, for example, to be used. They would have to completely reconfigure their approach to autos in order for us to do that. If we're going to manufacture Chinese EVs here, we would have to try to do that. We'd have to insist on Canadian parts in the vehicles, not aluminum from forced labour—
Liberal
Karim Bardeesy Liberal Taiaiako'n—Parkdale—High Park, ON
Some of the tools that Ms. O'Rourke referred to and that I'm referring to here would be part of the policy tool kit.
Actually, we might hear from a witness later who has an interesting take on China-Canada integration in this regard.
Professor Karaguesian, you spoke about the Australian experience in the auto sector, but you also spoke about your hunger for Canadian prosperity. In general, do middle powers like Canada benefit from a diversity of investment sources versus relying too much on a single investment source?
Visiting Lecturer, Department of Economics, McGill University, As an Individual
They do, absolutely.
I'll just speak about diversity in economics. Diversity is always a good thing. Our dependence on the United States until two decades ago, or 15 years ago, was a great thing, and we all thought it was going to last forever, but the train kept moving. We're on a train now, and the train's not neutral. It's going in a certain direction.
We have the opportunity right now as a rich country. We have the richest inheritance in the world of natural resources, of energy, of water. We also have a great population, an educated population, a kind population, and we can use this wealth now, before we go into a decline, a downward spiral, to protect our prosperity and build out our trading partners.
I just want to make a point, if I can, on national security. I share people's concern about foreign governments having our data. I'm also gravely concerned about groups of individuals that have our data, whether they're down south or anywhere else in the world. We also have to think about the dissemination of our data to private interests.
Thank you.
Liberal
The Chair Liberal Ben Carr
Thank you very much, Mr. Bardeesy.
Witnesses, thank you very much for being here today. Have a great rest of your day.
Colleagues, we are going to suspend for about five minutes to transition into the second panel.
The meeting is suspended.