Thank you, Chair.
It's an honour to come and give testimony before this committee of Canada's House of Commons. It's a first for me. It's a pleasure and honour to be here. I'm not representing any institution, public or private or otherwise. I'm a former special adviser at the Canadian finance ministry. I currently teach economics at McGill University. I worked at Finance for over 25 years. I frequently provide commentary to Canadian and global media on economic issues. I am affiliated with no party. I have no official ideology.
My interest in accepting the invitation to come and speak to you today is with respect to Canada's long-term prosperity, the livelihood of everyday Canadians, and our children, who will inherit this fine country of ours. My comments are limited to the international aspects of the government's EV and other related policies, including the recent tariff agreement with China.
I'll start with the big picture. I don't think it's an overstatement to say that Canada is facing the biggest challenge to its economic model since the 1930s. The model we have is based on deep globalization and international trade, much of it particularly with the United States. This model is under attack from the Trump administration. The intentional weaponization of our integration with the United States has exposed what was once a good thing as now a far-reaching dependency. The auto and steel tariffs are the point of the spear of this weaponization of integration in trade. This comes at a time of converging crises in Canada and in some ways globally. We face severe housing and health care shortages and a cost of living crisis. There's geopolitical conflict in the world. There's climate change and more. We have our hands full. You have your hands full. The Government of Canada and its machinery of policy-making has its hands full.
This attack on our economic model should be seen in the longer and broader context of a U.S. border that has been thickening since the aftermath of the 9/11 attack in 2001. This and the U.S. withdrawal from the global system are longer-term trends, as is the decline of Canada's automobile sector. At the turn of the century, we produced three million vehicles a year. Twenty-five years later, we produce 1.2 million vehicles a year. We were the seventh-largest automobile producer in the world. We're not even in the top 10 now. Over this same time, much of this lost production has gone to Mexico. I have nothing against Mexico. That's where the production migrated. They've emerged as the world's fifth-largest automobile producer.
Much of the loss of our production has come from the Big Three, which now collectively produce only 300,000 vehicles in Canada. President Trump, with tariffs and other measures, aims to get the rest of this back to the United States, to get steel and automobiles back to the swing states, which are crucial for a permanent majority for MAGA. That's what they want. They're open about it.
Ontario and other parts of the country have felt the loss of this production in profound ways. The Czech Republic, or Czechia, with 11 million people, produces more vehicles than Canada.
With electric vehicles, Canada has an opportunity to start over and plug into global supply chains, not just North American ones, and to be a global player, not just a regional one. Canada has many of the key fundamentals to be part of global supply chains in a fundamental way, with critical minerals, mass electricity production and more. We have an emerging EV battery industry.
The federal government's new automobile strategy and the opening of our economy to Chinese EVs is a step in the right direction. The new tariff deal and the new strategic partnership agreed with China paves the way to diversifying our trade and investment, not just with the second-largest economy in the world—in purchasing power parity terms, the largest economy in the world—but also with the entire global south, where 75% of the world's population lives and over 55% of the global economy resides. Our future prosperity depends on trading with the entire planet and diversifying.
Some critics have made a big deal of the 49,000 Chinese EVs coming to Canada. Why? This is one and a half days of production in China and less than 3% of our market. They're a manufacturing superpower and we're a natural resource and energy superpower: We have a natural trading relationship. Surely, we could do much more both ways.
We need to have a quid pro quo. To build our export markets out and reduce our dependency, we have to trade with the entire planet, and there will be asks from the rest of the world. I believe this is in our vital national interest.
Why are we hesitant to do this as a nation? It's understandable. A big part of the reason is fear. We fear a reaction from certain powerful interests south of the border. The Trump administration, and previous administrations since about 2016, have created an anti-China narrative and a related fear, in some cases almost hysterical, of China. It's not a fact-based narrative, mostly. It's not a Canadian narrative. It was not made here. The point of this narrative, in my opinion, is to maintain leverage over Canada by preventing us from flexing our wings and trading with the rest of the world and reducing our excess—
