International Trade Committee on Sept. 16th, 2024

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir. I'm sorry, but I have to cut you off. I apologize.

We'll go to Mr. Savard-Tremblay, please, for two and a half minutes.

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

I'll have to be very brief, because there's a lot to cover in these questions.

Mr. Breton, if I'm not mistaken, there are two models, or two companies, at least, that the tariffs in question would penalize. Given that the middle class is currently struggling with high prices, I gather these models are not for them.

I'd like you to answer with a simple yes or no, please.

[Daniel Breton]

Actually, the middle class can access these vehicles. The fact remains that, for the time being, $30,000 Chinese-made EVs aren't really available in Canada. These are vehicles that cost $50,000 or more.

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

Okay. So these tariffs aren't penalizing the middle class. Thank you.

All the same, I think it's clear that we can only proceed as a North American entity. The United States pressured Canada to introduce these tariffs. They're afraid of Canada. They complain, and rightly so, that it's a sieve and that there's negligence on many fronts.

Is the United States still our best ally? Are there any points we should urge the Canadian government to raise in its conversations with the Americans?

[Daniel Breton]

That's a great question.

Negotiations for the Canada-United States-Mexico Agreement, or CUSMA, will be happening next year. Canada will have to stand its ground because, at this point, it looks like we could come out on the losing end of that process if we're not careful.

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

Okay, thank you. I'm sure we'll have the opportunity to talk about it again, probably right here at this committee.

Could you talk to us about clean procurement?

[Daniel Breton]

Yes. People have been saying that Canada only has a stick, not a carrot. That's not true. We're spending billions of dollars subsidizing manufacturing of electric vehicles, electric vehicle components and batteries. We have a carrot and a stick. In that sense, I think Canada is doing a good job.

One thing we've been talking about for a few years is what's known as “clean procurement” or green bidding processes that are compatible with free trade agreements.

Canada could say that it will order greener components and vehicles manufactured in Canada. Strictly speaking, Canada would not be penalized for that under free trade agreements. It couldn't be. That would help Canadian businesses and workers.

Canada is not doing that right now, and it's a missed opportunity. A law research chair at the Université de Sherbrooke talked about it. We suggested this approach to the House of Commons. We would like to see clean procurement be part of Canadian policy.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go to Mr. Cannings for two and a half minutes, please.

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

Thank you.

I'm going to turn back to Ms. Kwan from the CLC.

You had a very short period of time to expand on your comments about labour provisions and details on the tax credits coming up. I'd like to give you more time to expand on those comments and say why it's important and what you hope to see for Canadian workers.

[Elizabeth Kwan]

Thank you very much for the question.

In the transition to a green economy, which is ramping up—with bumps, and that's why we're here today—we need to make sure that the jobs available at the other end of and during this transition are good-paying, high-skilled jobs.

Having said that, there are things that can be put into place, like the labour conditions of prevailing union wages and apprenticeship requirements, that would help maintain the levels of skilled labour and good-paying jobs in any part of the EV supply chain sector. What these will do is build a workforce that is highly skilled and has good-paying, unionized jobs.

It all grows communities. We saw this happen before, when auto manufacturing was first established in Canada. Suddenly, we had strong communities being built up and growing because there were those opportunities. That's why we have to make sure.... Why not add value to public investment in these supply chain hubs when we can, and make sure that everyone has a piece of that prosperity down the line?

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

I'm going to turn quickly to Mr. Breton again.

Tariffs will benefit the manufacturers that are being protected by them, but they'll also create revenue. Do you have any ideas for what that revenue should be put toward to incentivize this shift to more EV sales?

[Daniel Breton]

I'm not sure exactly what you mean by revenue. There won't be any revenue for.... Those tariffs mean that car manufacturers importing cars from China right now will stop importing them from China. They will import them either from the U.S. or from Europe. It's just going to stop the importation of electric cars made in China right now.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go to Mr. Jeneroux for five minutes, please.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thank you, Madam Chair.

It's good to be back and to see everybody again.

Thank you to the witnesses for taking the time to be here today.

Just quickly, for my colleague across the table here, Mr. Sidhu, his comments mentioned that Conservatives want to remove the carbon tax. You bet we want to remove the carbon tax. I'm glad that Mr. Sidhu has finally come on board in hearing the message on that, but I would stress to him that it's not just Conservatives who want to remove the carbon tax, but premiers across the country. Now, even in Mr. Cannings' home province of B.C., the premier is moving away from the carbon tax. This is what Canadians are asking for. At the end of the day, the carbon tax is driving up the cost of groceries, home heating and getting goods to market. I just want to make sure Mr. Sidhu knows that it's not just us asking for this. We're reflecting the thoughts of Canadians across the country.

I might just share a bit of my time at the end with my new colleague on the committee, Mr. Williams, but I want to quickly ask Mr. Herman a brief question.

You mentioned, as part of your opening comments, softwood lumber always being an issue. The fact is that it wasn't as big an issue under the Stephen Harper Conservative government as it is today. It wasn't until the agreement ended in October 2015. All this government has been able to do is to secure a moratorium for the softwood lumber agreement.

I would like to ask you, Mr. Herman, if you see this as a bigger issue in terms of the relationship between the current government and the government down in the United States, coupling this with the digital sales tax that's come into force. Are these issues that will cause friction in that relationship?

[Lawrence Herman]

Well, frankly, I don't think the softwood lumber issue is something that would destabilize our relationship with the United States. I said earlier that it is an irritant, that it is a problem, and it can only be resolved, in my view, through a separate agreement between Canada and the United States to deal with these issues, but I don't see softwood lumber as a destabilizing element in our relationship. It is one of a series of difficulties we have with our major trading partner.

I would hope that both sides could come to some agreement on settling this, but at the end of the day, it's about the U.S. industry wanting to protect its market share, and as long as they have the money to pay lawyers, this dispute will go on. It might be a perpetual problem. I hope not, but that's where we are.

That said, just to repeat my earlier point, I don't think that, in itself, the softwood lumber case will destabilize our good relationship, generally speaking, with the Americans.

[The Chair, Liberal, Judy Sgro]

You have one minute and 30 seconds remaining, sir.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you, Madam Chair.

Thank you to the committee.

Ms. Kwan, we talk about union members and good workers in Canada. We want to protect those jobs. We're talking about the mining sector. Right now, this committee is debating tariffs on China. This government right now has not chosen to put tariffs on critical minerals from China, but 70% of cobalt and lithium is mined and refined there and bought by Canada here. Those aren't union jobs in Canada. Those are in China. Ninety per cent of the rare minerals that provide batteries and magnets for batteries are mined in China and brought here.

Can you tell me about the labour standards here in Canada versus China and why those unionized mining jobs in Canada should be protected?

[Elizabeth Kwan]

I'm not really that clear on what you're asking about, but definitely we have higher labour standards. In fact, because we have higher labour standards, we are attractive to the EU and to the U.S. I think that's very valuable to our trading relationships with the U.S. and the EU.

If you want to talk about labour standards, I believe that much of the extraction as well as the production of critical minerals for EV batteries is actually done in Xinjiang. You know very well that this is where a lot of forced labour is used. You know, I have absolutely no desire for our standards to get to those standards in terms of our future in the green economy.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We go now to Mr. Arya for the completion of the second round.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

Madam Chair, sometimes I have policy disagreements with our colleague Mr. Cannings, but I should state that I agree with the sentiments Mr. Cannings expressed during the first round of questioning.

In the bigger picture, the world order is changing, which started before COVID. That has since been accelerated. Globalization, as we know, is dead. So is free trade, almost. The free trade that benefited both developing countries and developed countries is on its way out. Protectionism is in.

We are focusing on onshoring, nearshoring and friendshoring, and obviously we all want to protect our domestic industries. Where that will lead and what impacts it will have will be known after quite some time, but the immediate impact—whatever policies we use to protect our industries—will also have an immediate effect on our other sectors within Canada that are export-dependent. The Canadian agricultural sector—Canadian agri-foods and agricultural produce—is the fifth-largest in the world. I think that sector is going to be impacted first by the decisions we have made. Probably the canola growers will be the first group of farmers who are going to be affected.

However, this is a reality. The United States is our biggest trading partner. Our economic prosperity is linked with and dependent on our trade with the United States. Once the United States took the decision to impose tariffs on EVs from China, it was inevitable that we would follow suit. As a Globe and Mail editorial recently stated, matching American tariffs would be the right decision, even though such tariffs are usually bad.

As I said, this is a new paradigm. We don't know where it will lead. It affects not only Canada but all the countries in the world, especially developed countries that have been the champions of free trade.

Mr. Lawrence Herman, I have a question for you. I read your article in the Globe and Mail on this issue and I also listened to your comments today. I don't know if you are 100% confident that the route we took using section 53 of the Customs Tariff act is the right one. Obviously, taking this route means that we are losing the WTO cover we could have used to reaffirm our commitment to the multilateral rules-based order.

In that article, you proposed that we could provide two arguments. I think one of those arguments would have necessitated what you just proposed today—that we amend section 53 of the Customs Tariff act by including reference to national security. Obviously, the decision that we have taken may not go to the court to face the challenges, so the intricacies of what route we took, why we didn't go through the WTO route or the route we took may not be challenged, but I want to ask you again: Are you confident that the route we have taken using section 53 is the right one?

[Lawrence Herman]

I am confident that it is the right route taken in this case.

Look, the world multilateral trading order is under tremendous stress. I think we've reached a point where it doesn't answer all of the challenges that countries face. In this case, Canada took steps, and those steps are, in my view, consistent with the right of governments, members of the WTO, to take exceptional measures to protect national security. We don't need to get into all the intricate legal arguments, but I think we did the right thing.

We have to recognize that some of the rules of the multilateral order—which were drafted many, many decades ago—need to be adjusted and need to take into account the contemporary trading environment, so we did the right thing.

As I said before, we're part of a trade agreement with the United States and Mexico. I think we need to consolidate our operations as well as we can and coordinate with our major trading partners. From a legal and policy point of view, my conclusion is that the section 53 tariffs were the right move in this case.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Herman.

That completes the two rounds.

We have booked for some committee business. This is our first meeting of the new section.

I will suspend so that we can go in camera.

[Proceedings continue in camera]