International Trade Committee on Sept. 16th, 2024

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I'm calling the meeting to order.

Welcome to meeting number 114 of the Standing Committee on International Trade. We're all very happy to be back and to see the group at the table. Everybody is ready to do the work we're here to do on international trade.

Before we begin, I need to ask all in-person participants to read the guidelines written on the updated cards that are on the table. These measures are in place to help prevent audio and feedback incidents and to protect the health and safety of all participants, including the interpreters. You will also notice a QR code on the card, which links to a short awareness video.

I'd like to remind all members of the following points. Please wait until I recognize you by name before speaking. All comments should be addressed through the chair. Also, members, please raise your hand if you wish to speak, whether participating in person or via Zoom. Thanks to all of you for your co-operation.

I have Mr. Savard-Tremblay, and then Mr. Cannings, before I start.

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

Good morning. I hope you all had a nice summer.

I have two short questions, Madam Chair.

We received a letter about a request to meet with Ecuadoran activists. Would it be possible to deal with it a little later?

[The Chair, Liberal, Judy Sgro]

Excuse me.

We're not getting any translation. We're not getting any sound at all.

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

Madam Chair, there is also a problem on my end: When I speak, I hear the interpretation in English, even though I made sure to select the French channel.

[The Chair, Liberal, Judy Sgro]

I'm not getting any sound.

Does everybody have this on the English channel?

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

Madam Chair, I had properly selected the French channel.

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

Good morning everyone.

Can you hear me?

It looks like you can, perfect.

[The Chair, Liberal, Judy Sgro]

Mr. Savard-Tremblay, would you speak about something—anything—that they can translate to make sure we've got it?

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

I can certainly talk about all kinds of things, Madam Chair. I won't ask my question now so that I won't have to repeat it later.

Can everyone hear me in the language of their choice?

[The Chair, Liberal, Judy Sgro]

Is everybody good? Okay.

Mr. Savard-Tremblay, go ahead.

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

I have two questions that I'll ask at the same time, Madam Chair.

We all received a letter asking for a meeting with members of an Ecuadoran delegation to discuss the issue of human rights, as we are studying the possibility of a free‑trade agreement with that country. Will we be able to deal with the letter a little later during the meeting?

Also, I noticed that we are using the old equipment. Could we get an explanation as to why we are not using the new equipment that had been installed?

[The Chair, Liberal, Judy Sgro]

Thank you very much.

I'll also acknowledge that Sophia has had her baby, and we have a new clerk, as you can see.

Grant, would you introduce yourself?

[The Clerk of the Committee, Mr. Grant McLaughlin]

Good morning, everyone. My name is Grant McLaughlin. I am taking on the committee for international trade. I'm happy to meet you all, and I look forward to working together. Of course, if you have any questions, don't hesitate to reach out, as that's what I'm here for.

[The Chair, Liberal, Judy Sgro]

I think you can answer the first question.

[The Clerk]

On the request from the delegation, my understanding is that we need to discuss that in the second half of the meeting.

[The Chair, Liberal, Judy Sgro]

It's October 2 that we're having the Ecuador.... There was a request from the Ecuadorean group that wanted to come, but we can discuss it further when we go into committee business.

What about the issue with the mics?

[The Clerk]

As to why we are using the old microphones and new headsets, that's a good question. I will have to ask management for the details to make sure I give you an accurate answer.

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

Perfect, thank you. Will you be sending us the answer once you've received it?

[The Clerk]

Yes, of course.

[The Chair, Liberal, Judy Sgro]

Thank you.

Mr. Cannings.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

My question was regarding the fact that I was getting no feed. It's the earpiece that was the problem.

[The Chair, Liberal, Judy Sgro]

Okay. It seems to be working.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Wednesday, August 21, 2024, the committee is commencing a study on protecting certain Canadian manufacturing sectors, including electric vehicles, aluminum and steel, against related Chinese imports and measures.

With us in person today we have, from the Canadian Labour Congress, someone who's here frequently, Elizabeth Kwan, senior researcher. From Electric Mobility Canada, we have Daniel Breton, president and chief executive officer, by video conference. From the United Steelworkers union, we have Marty Warren, national director; and Meg Gingrich, assistant to the national director, by video conference. As an individual, we have Lawrence Herman, counsel. Welcome to you all.

We'll start with opening remarks. Ms. Kwan, I turn the floor over to you for five minutes, please.

[Elizabeth Kwan, Senior Researcher, Canadian Labour Congress]

Thank you, Chair.

Good morning, committee members. It's my honour to be here with you today on the unceded territory of the Algonquin Anishinabe people.

The Canadian Labour Congress advocates on behalf of all workers in Canada. The 55 national and international unions affiliated with the CLC bring together over three million workers in virtually all sectors, industries, occupations and regions of this country.

The goal of a trade and industrial policy toward a net-zero economy is to ensure the future of an innovative, high-productivity and competitive manufacturing industry in Canada, providing good-paying union jobs and helping to meet Canada's Paris objective. Urgent protective measures are required to prevent lasting damage to the nascent ZEV industry from Chinese dumping, which poses risks to over 600,000 Canadian jobs, many of them unionized jobs, and jeopardizes the almost $53 billion announced by the federal government for the Canadian EV industry. This threatens Canada's trajectory to achieving net-zero emissions by 2050.

Chair, I'd like to highlight a few recommendations from our submission to the government's consultation on potential policy responses to unfair Chinese trade practices in EVs.

First, the CLC supports the government's surtax on EVs made in and imported from China.

Second, the CLC recommends that the government work with unions and establish a plan to support workers in all sectors that may be affected by China's retaliatory measures following Canada's policy responses to their unfair EV supply chain trade practices.

Third, the CLC supports the government excluding ZEV point-of-sale incentives for EVs made in and exported from China, regardless of whether they bear Chinese or non-Chinese brand marks, and based on thresholds of certain Chinese critical minerals and battery components.

Fourth, any federal government investment tax credits, production subsidies or construction and other supports must be directed toward the nascent Canadian EV supply chain and exclude EV companies from other countries, such as China, that lack high labour and environmental standards and use unfair trade policies and practices.

Fifth, the government needs to vigorously implement the ban of forced labour in the supply chain, as per article 23.6 of CUSMA.

Sixth, the CLC echoes the United Steelworkers of Canada's call to Canada to have a strategy on the materials used to build a clean low-carbon economy.

Seventh, CLC supports the government imposing surtaxes on Chinese steel and aluminum products.

Chair, cheap Chinese EVs, EV batteries and parts, steel and aluminum impact Canadians in the slower creation of net-zero jobs, possible job losses and fallout from the circumvention of CUSMA. The CLC supports the government's recent announcement to impose surtaxes to provide a short-term, temporary protection to allow the developing Canadian EV investments to establish and ensure the transition of workers to good, well-paying green jobs. Canadians and unions expect domestic manufacturers in the EV supply chain to use this temporary reprieve to ensure that high-quality Canadian-built ZEVs come on the market in growing numbers in the near term.

However, there are many serious considerations to be weighed in arriving at longer-term policy responses, including the faltering trajectory of domestic EV supply chain development and decarbonization efforts and the state of geopolitics, in particular the China and U.S. rivalry. In developing longer-term policy responses, Canada is strongly positioned. In 2024, Canada ranked first in EV supply chain potential in the world. The government must use every tool in its arsenal and work with unions to realize the full potential of growth opportunities to become a global leader in this space. But the road of transition will be bumpy. That is why the CLC supports the sustainable jobs act. We want greater continued investments in social protections and supports for workers and sectors at risk in the transition to a low-carbon economy.

Lastly, the CLC urges the government to include labour conditions of prevailing union wages and apprenticeship requirements in the new electric vehicle supply chain investment tax credit that will be detailed in the upcoming fall economic statement. The government must build on its commitment and obligations to foster an inclusive, worker-centred approach to trade in its climate-focused policies, investment tax credits and other supports toward a net-zero future.

Thank you. I look forward to your questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Breton, you have up to five minutes, please.

[Daniel Breton, President and Chief Executive Officer, Electric Mobility Canada]

Good morning, Madam Chair.

My name is Daniel Breton, and I am the CEO of Electric Mobility Canada. Thank you for allowing me to appear before the Standing Committee on International Trade to talk about tariffs on Chinese‑made electric vehicles. I want to start by saying that we are in favour of tariffs on Chinese‑made electric vehicles.

Electric Mobility Canada, the Canadian association for transportation electrification, has nearly 200 members, including manufacturers of cars, trucks, buses and all-terrain vehicles, as well as unionized workers. We are therefore very aware of the delicate nature of this issue.

On one hand, we want to ensure that Canadian workers and our local EV supply chain investments are protected from unfair labour practices from China. On the other, we want to ensure that Canadian consumers and end-users have access to more affordable light-, medium- and heavy-duty EVs that are, as much as possible, made here.

EMC and its members suggested a targeted approach that supports Canadian workers, innovation and our growing EV supply chain while addressing Chinese labour and environmental practices that have an impact on the Canadian auto industry.

China holds a dominant role in global smelting and refining of critical minerals, including most of the lithium and copper sourced from Chile and Australia. China also has a dominant position in battery technology and manufacturing. The global EV supply chain presently relies on this battery technology and certain components from China to function.

China could take significant retaliatory action in response to an across-the-board surtax. Canadian tariff actions in this regard should not be taken arbitrarily. EMC recommended that any surtax be phased in and be time-limited to allow affected EV manufacturers sufficient time to adjust their production plans. This would also have provided OEMs fair warning that they need to address issues of affordability and be prepared for competition.

This is why we recommended the following targeted actions.

One is to impose an import surtax on EVs as well as gas and diesel vehicles assembled in China, after having reviewed how China's practices impact the Canadian auto industry. There is no environmental value to keeping out Chinese EVs but allowing Chinese-assembled gas cars and diesel trucks to replace the EV stock.

In exchange for this program, the Ontario government should have been required to supply EV incentives and deploy EV infrastructure for light-duty vehicles to make sure that EVs are affordable in that province. With $40 billion in total government support for Honda, VW and Stellantis alone in Ontario, we feel that the Ontario government must do a lot more to support EV adoption in their province, which, believe it or not, is lagging behind not only Quebec and B.C. but even P.E.I. and Yukon.

As a growing number of carmakers are starting to offer more affordable versions of EVs in other countries, in order to encourage affordable EV availability in Canada for Canadian consumers, we recommend that the federal government provide a three-year relief period for automakers to offer more affordable EV alternatives. After that period, if an automaker does not offer any EVs or PHEVs at a 20% lower purchase price than it is offering right now for its electric and plug-in hybrid vehicles, it wouldn't be eligible for any EV or PHEV rebates for any of its vehicles.

For medium- and heavy-duty vehicles, we also recommend tariffs, but I'm running out of time, so I will explain during the question period.

Some automakers are currently offering more affordable EVs in other markets, but not in Canada, because they don't have to. In fact, the vast majority of automakers aren't even offering entry-level gas-powered cars in Canada anymore. Also, if we don't have a zero-emission standard, we'll never get there.

Thank you very much.