Mr. Chair, thank you very much.
Honourable members, I appreciate the opportunity to appear before the committee today. The Global Automakers of Canada is a national trade association, representing the Canadian interests of 15 of the world's most respected automakers.
The GAC advocates for sound public policy to support a competitive and sustainable automotive market in Canada. Our members are committed to meeting the mobility needs of Canadians by providing greater consumer choice, offering leading-edge safety and environmental technologies, and eliminating unnecessary regulatory and trade barriers.
In 2017 the members of the association sold a record 1,160,000 vehicles, representing 57% of the Canadian automotive market. This represents growth in sales of 5.5% over 2016's record year. Two of our members actually produced 43% of the vehicles built in Canada. Importantly, these two member companies, Toyota and Honda, were respectively the largest and the third-largest producers of vehicles in Canada in 2017. Additionally, fully 58% of the vehicles sold by our member companies in Canada were built in the NAFTA region, demonstrating a commitment to building where they sell.
Our members have been at the vanguard of the introduction of advanced technology vehicles, whether the technologies be environmental, such as conventional hybrids, plug-in battery electric vehicles, pure battery electric vehicles, or hydrogen fuel cell electric vehicles, or vehicles incorporating the latest advanced driver assistance systems and increasingly high levels of automation.
At the outset, it's important to note that the Global Automakers of Canada has been fully supportive of all rules-based, trade-liberalizing agreements, despite the composition of our membership, which includes Japanese, European, and Korean manufacturers. This was the case with NAFTA, the Canada-Korea FTA, the Canada-EU CETA and, most recently, the CPTPP.
Our position is no different with respect to the proposed Canada-Mercosur FTA. Free trade with the Mercosur countries continues the trade diversification strategy that has been the hallmark of both the current government and the previous one. For the automotive industry in Canada, trade diversification is very important.
The five American and Japanese vehicle manufacturers currently producing vehicles in Canada established their operations to take advantage of sectoral free trade between Canada and the United States. It goes back more than 50 years, to the days of the Auto Pact. Sectoral free trade evolved into the Canada-U.S. Free Trade Agreement in the late 1980s, which evolved further into the North American Free Trade Agreement of the 1990s.
That short history of Canadian automotive production is simply to underscore the fact that from a vehicle production perspective, all plants in Canada were established to take advantage of the economies of scale of larger production runs for the North American market, such that roughly 85% of Canadian vehicle production is exported, and the vast majority of that to the United States.
With the resurgent automotive industry of the last few years, the North American market has absorbed virtually all the vehicles that can be produced from Canadian facilities. However, should access to that North American market become less certain or constrained, then the importance of having fair and unfettered access to other markets, such as the Mercosur countries, could be very important.
Right now, however, tariffs for vehicles and parts going into the Mercosur countries are in the 30% to 35% range, which is higher than almost anywhere else in the world. Such a high tariff structure has allowed countries like Brazil to become the eighth leading producer of vehicles in the world, producing almost three million vehicles in 2017. This is almost a million vehicles more than Canada, which ranks as the 10th largest producer in the world.
The Brazilian market is well represented, with more than 13 global manufacturers producing vehicles there. Under a Mercosur FTA, though, the elimination of tariffs on vehicle parts and supplies could present opportunities for Canadian parts makers and advanced technology companies. This may be particularly true for the technologies of the present and near future related to connected and automated vehicles and artificial intelligence, where Canada has expertise and a comparative advantage.
Finally, an FTA with the Mercosur countries would expand the Americas trade bloc. This, we believe, would make the whole of the Americas more resilient to the threats posed by China, which is currently producing roughly a third of the 100 million vehicles of global production.
With that I'll end my comments, and I look forward to your questions. Thank you very much for your time.
