International Trade Committee on Feb. 24th, 2020

[Mark Nantais]

Is that question addressed to me, Mr. Lewis?

[Chris Lewis, Conservative, Essex, ON]

Yes, sir.

[Mark Nantais]

Again, our industry has been deeply integrated for many years. We've worked exceptionally closely with the Canada Border Services Agency. Following 9/11 for instance, we instituted FAST-related programs, so we address security.

Customs and the border are an extension of our just-in-time delivery system so we have made many developments over time. We are in pretty fair shape. Canada has responded quite favourably in that respect, but if we do see a thickening, then that will have some very severe consequences not just in our industry, but in many other sectors as well.

[Chris Lewis, Conservative, Essex, ON]

Thank you very much.

How much time is left, Madam Chair?

[The Chair, Liberal, Judy Sgro]

You have two minutes.

[Chris Lewis, Conservative, Essex, ON]

Thank you.

Thank you for your comments, Mr. Nantais.

I'm going to move to the dairy industry.

I'm reading here from the same economic impact statement from the C. D. Howe Institute. Data from pages 12 and 13 and tables 8 and 9 show the impact on dairy from the CUSMA. Page 12 shows Canadian figures. Canada's dairy will lose 2.62% of sector and $699 million U.S. in its domestic market to the U.S.

Wow. Given the negotiating dynamic and the tough spot Canada was in, what's left to do other than concede on these export caps? Are administrative measures really feasible?

[Jacques Lefebvre]

The administrative measures are feasible. They are to mitigate the impact of the caps.

I think it's important to understand, just to build on something that was said earlier, that the U.S. overproduces 15% in dairy, and their strategy—and they're very open about it—is to position themselves on the world market. What they've been able to achieve through this agreement is to eliminate competition coming from Canada.

The impact of that is major, and the time frames to adjust to that are very short. The minimum would be at least having year one apply starting August 1, to coincide with the dairy year, but when it comes to intellectual property, we see that the negotiations were granted some transition time, between 2.5 and 4.5 years. We look at that in dairy and say if we had to concede, it would have been nice to be able to transition over a longer period.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Ms. Bendayan.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much.

Thank you for coming to testify today.

My question is for Mr. Nantais.

In your statement, you said that the new NAFTA, Bill C-4, should be ratified expeditiously, and I believe you also noted the importance of obtaining certainty.

Is that certainty something that your members in the auto industry and the approximately half-million Canadians who work in the auto industry are asking for?

[Mark Nantais]

Absolutely. Certainty enables decision-makers to make decisions about investments not just in Canada but in the U.S. and Mexico. Our Canadian manufacturers are now entering another cycle of new investment. If they don't have that certainty, these decisions will be postponed and that's simply a lost opportunity. If we don't get these investments this cycle, for instance, they probably won't come forward in the foreseeable future. That is the downside that I referenced in my remarks. Some would even suggest that if we don't make these investments now, they will never come to Canada again, unless we address this broad spectrum of the high costs of operating in Canada.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you.

We also heard you mention that the auto sector represents approximately $54 billion in trade. Earlier in the committee's work last week, we heard the mayor of Windsor say that he saw potential for growth in the industry, particularly for auto parts suppliers and other smaller businesses in the value and supply chains.

Do you see potential for investment in those areas in Canada?

[Mark Nantais]

We can see scenarios where there would be potential expansion, if you will, or opportunities, but as I also said in my remarks earlier, CUSMA is simply the basis to move forward. It's the entrance fee, if you will, to continue doing what we're doing, but it does not provide that guarantee in the future unless many of these other things that I've mentioned, these other parameters, these other issues, get addressed as well.

So yes, we agree with that, but if one is walking away here thinking it's guaranteed, we cannot say that.

[Rachel Bendayan, Liberal, Outremont, QC]

I understand.

Perhaps with the time remaining we could touch on the importance of your members investing in zero-emission technology and where you see that going. Could you give us a short update on cars of the future?

[Mark Nantais]

How much time do we have? A short response is....

Well, to begin with, let's start with zero-emission vehicles. Basically, they're electric vehicles or fuel cell vehicles, absolutely, and they're already in the market now at a pace that is unprecedented. There are many more new models and many more sales. I think that's a given, particularly when you look at the GHG emission standards that we have to meet. We can't meet them without electrifying the fleet.

When we start getting into connected vehicles, and ultimately autonomous vehicles further down the line, obviously, we start getting into the shared economy. Autonomous vehicles and so forth and shared transportation services again are very much of the future, but a little farther out. There are many things we have to satisfactorily address, I might say. We have in Canada this little problem called winter, and some of our sensors don't work that well when they're covered with snow and so forth, just as a practical matter.

Even just on zero-emission vehicle technologies, I would say that literally hundreds of billions of dollars are being invested. Companies are definitely committed to seeing a return on their investment in that regard. They are very much our immediate to mid-term future.

[Rachel Bendayan, Liberal, Outremont, QC]

You referred to billions of dollars in investments, including in Canada?

[Mark Nantais]

Yes. Some of these other partnerships that I mentioned earlier in terms of software and sensors are very much a part of those vehicles. In other words, that's a component of the design cycle, or the design that goes into these vehicles, which is shared across these companies.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Savard-Tremblay, you have two and a half minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

I'm speaking to Mr. Nantais of the Canadian Vehicle Manufacturers' Association.

You federate all vehicle manufacturers of vehicles such as individual vehicles, but also manufacturers of other types of vehicles, isn't that right?

[Mark Nantais]

When you say larger vehicles, I'm not sure what you mean by that. I represent Fiat Chrysler, Ford and General Motors. These are some of the largest traditional vehicle manufacturers in Canada and in North America in multinationals.

Many of the things I've addressed today are things that all vehicle manufacturers, in many respects, support in Canada. I'm not going to speak for those others, but we have had discussions on a regular basis. Many of these issues are the same ones, and some of the solutions to these concerns are also the same ones that they support.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

So you're talking about efforts that are being made to reduce emissions. You're talking about efforts that are being made to, ideally, meet emission reduction targets, so the environmental concerns that the vehicle industry would have.

In your opinion, would it have been desirable for the agreement to have contained stronger environmental standards?

[Mark Nantais]

I would say no for this reason. When we talk about smog-related emission standards for instance, we've aligned with the United States. It is the most stringent national standard in the world. When we talk about GHG standards, it's also a very aggressive year-over-year improvement. Now, they may change—there's a very complicated issue unfolding in the United States—but we would continue to say that we must continue to align our regulations. That also applies to vehicle safety and technologies, where we are moving to a higher common denominator by aligning with the national standards of the United States.

In many respects, you really can't get better than that. There may be some examples in other jurisdictions, but when we talk about the integrated North American market, the need for scale and the integration of our market, these are things that.... Basically, if we develop technology that people can't afford, these technologies will not make it into the marketplace. That means we don't get the safety or environmental benefits.

We need the scale to make sure that prices of these technologies are affordable for consumers, and that those consumers can have maximum choice. If we don't have this, then, for one, many of these products may not come to Canada, and consumers, for affordability reasons, may not buy them either. Either way, we don't get the safety benefit and we don't get the environmental benefit.

[The Chair, Liberal, Judy Sgro]

Mr. Blaikie.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Those were along the line I wanted to go in terms of talking about some of the implementation on the auto side, and the question of regulations between Canada and the United States.

I'm also curious, because no one yet has talked about what was agreed to in the TPP with respect to auto. Is there any tension or friction between that and what was agreed to in CUSMA? How will that interact in the Canadian market?

Do you have reflections that you would like to share on that?

[Mark Nantais]

The CPTPP, which is what it ended being, is an agreement we didn't support. We didn't support it on the basis of having full reciprocal access to markets in the countries that are part of that agreement. Some of those countries, even while the negotiation was under way, were introducing more constraints and restricting access, such as Vietnam.

When we negotiate these international agreements, we should be looking at it through the lens of what is good for our domestic industry. That's what these countries are doing. If we can't gain full reciprocal access, which we have unsatisfactorily addressed to date, because of non-tariff barriers which they've introduced and continue to introduce, that is not helpful to our domestic industry. Ultimately, this could be very harmful to us.

In the United States, that's exactly what the Americans are doing. They're negotiating these international agreements through the lens of what is helpful to the long-term viability of their domestic industry. That's what we need to keep in mind when we're negotiating these other agreements.