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.
Senior Fellow, University of Ottawa, As an Individual
Because it analyzes risks that are obviously there.
Liberal
Michael Ma Liberal Markham—Unionville, ON
Thank you.
My last question, then, is on your claim about forced labour in Xinjiang. Have you witnessed this yourself? Have you been there ever?
Senior Fellow, University of Ottawa, As an Individual
I've been to China many times—
Senior Fellow, University of Ottawa, As an Individual
—since 1979. No—
Liberal
Michael Ma Liberal Markham—Unionville, ON
I need just a short answer: Have you witnessed forced labour in Xinjiang, yes or no?
Liberal
Senior Fellow, University of Ottawa, As an Individual
—closely with Human Rights Watch where researchers did witness it.
Liberal
Michael Ma Liberal Markham—Unionville, ON
Thank you.
Professor Karaguesian, many of those opposed to our government's EV deal with China have expressed various talking points centred around the idea that somehow China is using the deal as “an opportunity to create a foothold in the Canadian auto market and then blow our sector away.” This idea is especially important to consider in the context of the ongoing affordability crisis and our domestic auto industry, which employs thousands of Canadian workers, including in my own riding of Markham—Unionville.
Professor, what are your thoughts on this matter? How would you respond to these talking points?
Visiting Lecturer, Department of Economics, McGill University, As an Individual
In terms of China using Canada as a foothold, my approach to this question, like any question, particularly political and geopolitical ones, is to pretend that I'm an alien coming to Earth, and I'm looking at every side.
From China's point of view, this is a day-and-a-half's worth of production. That's number one.
Number two, we don't make many EVs in Canada. We hope to. We do have a cost of living crisis. Automobiles are extremely expensive. You could buy a Tesla and—I'm not sure about the details of how Tesla's corporate plan works—perhaps help pay the $868-billion salary for Mr. Musk, or you could buy, or have at least the potential to buy, extremely efficient, very well-made electric vehicles from the rest of the world, including China, which makes 70% of the world's electric vehicles and accounts for 65% of the world's demand.
Liberal
Michael Ma Liberal Markham—Unionville, ON
Many of those opposed to our government's EV deal, as we said, have concerns about personal data and so forth, although today, our smart home devices have far more data than we would like to have, and in our cellphones and so forth, like our fingerprints and facial profiles. That is more dangerous than knowing where you've been with your car.
What is your response to these arguments? Do you believe that this will be a legitimate concern?
Visiting Lecturer, Department of Economics, McGill University, As an Individual
I don't.
To the point you made about smart devices, whoever has an iPhone in this room, we'd have to corroborate this, but I think 85% of iPhones have been assembled in China, along with other smart devices. If we're concerned about this, let's start with smart phones. If China wants to spy on us, as other big countries do spy on everybody, they could use their space station and all of the other technologies they have. I'm just wondering whether they're interested in my driving to my kid's hockey game and stopping at Tim Hortons, or wherever I stop. I just don't think that's a legitimate concern.
What I do think is a legitimate concern is the sheer size of China. They'd be the first ones to admit this. They have 1.425 billion people. At purchasing power parity, they're the largest economy in the world. They have heft, and dealing in any asymmetric relationship like this, one has to be careful, whether it's with the United States, India, China or even the EU, which has extensive protections on agriculture, which is one of our big comparative advantages in international trade.
Thank you.
Liberal
Michael Ma Liberal Markham—Unionville, ON
Thank you.
Further, you have written that “we have more to gain from this deal than we have to lose”, given that our relationship with our largest trading partner, as you said, has been upended. We need to upend our relationship, not hearken back to a past era.
What does the future of Canada's automotive industry look like with and without diversifying our trade?
Visiting Lecturer, Department of Economics, McGill University, As an Individual
Without diversifying our trade, our industry has been for the past 25 years in long-term, terminal decline. As I mentioned in my statement, we're down over 50% in production, which has been particularly brutal for Ontario and parts of Quebec. Our industry, without any kind of diversification with China, India and other countries, has taken a beating with a 60% decline in vehicle production.
With diversification, we're a natural resource superpower, and we can play to our advantage. We have critical minerals. We have inexpensive electricity production. The government of Prime Minister Mark Carney is expanding this electrification. We have critical minerals, electrification and a battery industry we could plug into the global industry. Mr. Trump's treasury secretary, Scott Bessent, and all of the other senior officials in that administration have made it clear to us that American automobiles will not be staying in Canada.
Japanese automakers have been very loyal to this country.
Liberal
The Chair Liberal Ben Carr
Mr. Karaguesian, I'm sorry to interrupt, but to be fair, we're now 45 seconds over the allotted time for Mr. Ma.
Mr. Ste‑Marie, you have the floor for six minutes.
Bloc
Gabriel Ste-Marie Bloc Joliette—Manawan, QC
Thank you, Mr. Chair.
I'd like to welcome the two witnesses. I'm very impressed with the level of information they bring. This is a very interesting panel. I'd like to ask them several questions. I'll have a second turn later, which will be shorter.
Ms. McCuaig-Johnston, I'll start with you.
Obviously, the issue of Uyghur forced labour in China is very concerning. The Canadian economy can't encourage that. The argument that we'll have cheaper goods, such as vehicles, should never be used to justify this kind of practice.
My colleague Simon‑Pierre Savard‑Tremblay, my party's international trade critic, has introduced a bill inspired by what's being done in the U.S. Based on this bill, once forced labour is identified in a particular region, the onus would be on the exporter to prove that forced labour wasn't used to build or design the product, whether it's a vehicle, vehicle components or anything else.
Do you think Parliament should adopt this kind of policy or legislation?
Senior Fellow, University of Ottawa, As an Individual
I believe that law should be adopted. Last year, the government actually had two pieces of legislation in development. One was concerning the ban, and the other was concerning how you track any human rights infringements in the supply chain. Both of those pieces of legislation should go ahead, particularly given that we are now at a point where we have to demonstrate our commitment to forced labour prohibition enforcement under the section 301 investigation. This is a huge risk for Canada to get 25% tariffs across the board, so, yes, thank you for that.
There's also an agency that was promised a year ago. That should go forward as well.
Bloc
Gabriel Ste-Marie Bloc Joliette—Manawan, QC
Thank you very much.
The issue of information gathering through Chinese vehicles is also very concerning. As Mr. Karaguesian previously said, other types of devices, such as phones, computers, space stations, and so on, are already being used to spy on us. I think we have to avoid opening the door to further espionage. We need a framework around that.
You also said that in China, and this is also very concerning, there's a law that requires Chinese companies to hand over data upon request. I'm not an expert in this field, but, to my knowledge, the U.S. government has the same kind of policy in place for American companies. So far, the U.S. is still a democracy, but that remains a concern as well.
Are you also worried about this situation?
Senior Fellow, University of Ottawa, As an Individual
This is something that I think we need to look at carefully. It's why I recommend QNX by BlackBerry, which is Canadian technology. I served for 37 years in the Canadian government in science and technology policy programs and funding, interpreting between the scientists and engineers and the ministers and senior officials what the policy should be. I have an international relations degree, with a master's degree focused on China. I have studied China inside out since 1979, and I helped them develop their R and D capacity as they were developing.
Under Xi Jinping we have a very different form of government. At the same time, the U.S. has been shown to have at least some negative, if not malign—kidnapping citizens and so on—components to its policies, so we need to be cautious of that as well.
Bloc
Gabriel Ste-Marie Bloc Joliette—Manawan, QC
Thank you very much.
I'd like to turn to Mr. Karaguesian.
Your description of the current economic crisis is very interesting, as are your solutions.
The Canadian economy can thrive in the EV sector. The potential seems to be there. However, as you said, competition is fierce and China is by far the world leader in this area. In the U.S., the Biden administration made some progress, but it seems to have been completely stopped by the Trump administration. It seems Canada wants to compete directly with the American model. However, as you said, our comparative advantage is in the abundance of critical minerals and low-cost clean energy.
Shouldn't we maximize our processing and value-added efforts in critical minerals, where we have an abundance of energy, rather than in the final assembly line?
Would this be an opportunity to supply European companies with electric vehicles?
Visiting Lecturer, Department of Economics, McGill University, As an Individual
Thank you. I'll answer the questions, but maybe not in order.
My approach, just as a human, as a person, as an economist and as someone who was in a cadre at the Ministry of Finance, is this. It was beaten into us there to think of Canadian prosperity, and that's what I think of. I think, from the point of view of workers in this country, skilled manufacturing workers or any other Canadian, what's important is to have the means to have an income, to live in dignity, whether it's actually assembling a car; or being part of global supply chains; or manufacturing the cars for our high-speed rail and building a high-speed rail right across this country, like the regular rail that linked our country in the second half of the 1800s.
I'll say this generally, but I have a very particular affection for manufacturing. From the worker's point of view, from a family's point of view, if you're earning a good salary, does it really matter if it's in a car plant, manufacturing trains or being part of global supply chains? We are unable to compete globally. We were able to compete with the North American auto pact between Canada and the United States, in which we had 20% of the North American market. That pact has been over since 2001.
Having said that, my first interest is to protect our skilled workers in this country, and we have templates. We could go with industrial policy for our EV sector, and with limited importation of Chinese EVs. We could follow the Australian model, which is to shift their manufacturing workers into the defence industry, which has very high multiplier effects on economic growth. We are going in this direction to meet our new NATO commitments, and we've already achieved the 2% of GDP. We have lots of options. I think that government involvement is going to be critical in every option.
Liberal
The Chair Liberal Ben Carr
Thank you, Mr. Ste‑Marie.
Ms. Borrelli, the floor is yours for five minutes.
Conservative
Kathy Borrelli Conservative Windsor—Tecumseh—Lakeshore, ON
Ms. McCuaig-Johnston, I want to apologize for the member on the other side of the table—
