International Trade Committee on Sept. 16th, 2024

[Elizabeth Kwan]

It's extremely important to create good jobs in the transition to a green economy, without a doubt.

[The Chair, Liberal, Judy Sgro]

Mr. Savard-Tremblay, you have six minutes.

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

Thank you.

I'd like to welcome all the witnesses and thank them for being here to share their testimony.

Mr. Breton, we saw each other recently at Electric Mobility Canada's national conference in Halifax. We even had the opportunity to eat seafood together. I was glad to see, during the sound checks, that the weather's still nice there.

Could you say more about your idea of applying the new tariffs to gas-powered cars from China? I gather that's not as big a deal geopolitically, because China isn't considered to be as big a player in that market, so targeting EVs is a much more effective way to restrain China.

[Daniel Breton]

You're right. Geopolitically, the issue of Chinese-made gas-powered vehicles is not as important as the issue of Chinese-made EV s. We have to be logical and consistent, though. Dealerships carry Chinese-made gas-powered vehicles imported by American automakers. What's good for the goose should be good for the gander, as they say. In other words, everyone should play by the same rules. It doesn't make a lot of sense for that not to be the case.

I want to point out something important that hasn't come up in this conversation: Chinese industrial espionage in Canadian research centres. I know for a fact that people in China have been spying on transportation electrification research centres in Canada. That's a significant aspect of unfair practices in an international trade context.

We want to protect jobs in assembly, manufacturing and steel. I completely agree with what Mr. Warren said earlier about wanting to protect our industries. My father worked in a factory that was relocated to a country with lower labour and environmental standards. We want to protect jobs here.

I think we mustn't overlook the issue of industrial espionage. There are top-notch research centres in Quebec and places like Nova Scotia. Dr. Jeff Dahn from Dalhousie University in Halifax was at our conference talking about all the leading-edge research that's going on.

There's no reason not to protect our jobs, our research and our innovation.

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

What you're saying is interesting because, the minute we talk about tariffs, people say that limits healthy competition, which is necessary in a market economy. One thing we know for sure is that industrial espionage negates true competition. That seems obvious to me.

Look at this from a historical perspective. In the 1980s, the Reagan administration, the driving force behind North American free trade, introduced tariffs on Japanese gas-powered vehicles. At the time, people said that, even though it would limit competition, Japan was very clearly engaging in trade practices that could not be described as healthy.

Forty years on, what impact have those tariffs had?

[Daniel Breton]

That's an interesting question. I'm old enough to remember the articles in Time and Newsweek about the Japanese invasion of the Toyotas, the Hondas, the Nissans, the Mazdas, and so on.

After that, governments adopted the practice of imposing tariffs of about 60% on imports, which ended up encouraging Japanese automakers to come to North America, particularly to the U.S. and Canada.

I can tell you right now that Chinese car, truck and bus manufacturers are coming to North America, so that's a factor in the current conversation and something people need to look at.

Unifor is one of our most important members. Its members are unionized employees who work in vehicle assembly plants. Apparently, a number of manufacturers are currently offering non-union jobs. Good working conditions include union membership. That has to be part of the equation.

When we talk about protecting our jobs, we also have to think about protecting Canadian consumers. One thing we're a little disappointed about is that some manufacturers that sell EVs in Canada, Europe, Asia and elsewhere don't offer the same choices here.

At the moment, some entry-level EVs aren't available on the Canadian market. For example, the Volkswagen ID.3 is available in Europe, but not here. If we want to boost EV sales, we need lower-cost entry-level vehicles. We would also like to create jobs.

An extremely important consultation is about to begin, not only on vehicles, but also on batteries, critical minerals and microprocessors.

We also want to—

[The Chair, Liberal, Judy Sgro]

Thank you very much. I'm sorry to have to interrupt.

Mr. Cannings, go ahead, please.

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

Thank you to all of the witnesses who are here today.

It's clear, I think, that we all agree this action is needed, that we need to impose these tariffs because of our relationship with the United States and what China's doing, but what a lot of Canadians are concerned about—and certainly I am—is how this will affect the necessary fight to reduce our emissions overall and promote the uptake of electric vehicles in Canada and the electric vehicle industry.

I will turn to Ms. Kwan, from the CLC. If I'm not mistaken, you made the point that these should be short-term, temporary measures to make sure that Canadian manufacturers step up to the plate and start producing low-cost vehicles that Canadians can afford. If they're so afraid of Chinese vehicles coming in that are cheaper than ours, this is what we should be striving for and this is what we should be using these tariffs to drive. Is that the point you were trying to make?

[Elizabeth Kwan]

Yes, that is exactly the point. This is basically a short, temporary reprieve for Canadian manufacturers in the EV supply chain to step up to the plate and build the things they promised to build—with investments of a lot of public dollars—and to actually get it started.

The issue is that we haven't really established or used the amount of investments to actually establish a solid foundation yet, so the introduction of cheap EVs, at this point, will be very damaging. What we're saying is that Canadians are competitive, and therefore we need to give ourselves a chance to actually build on investments. The tariffs or the surtaxes are really a stopgap approach to give everyone a chance to get things going.

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

Thank you.

I'll turn to you, Mr. Breton, and ask more or less the same question. I think you brought up a lot of those points.

My wife and I were looking at EVs this summer in lots in British Columbia. There are plenty available there. A lot of them are fairly expensive, but I think British Columbia is ahead of many other provinces because we have a provincial government that is supporting that shift to EVs with EV infrastructure and EV subsidies for purchase.

I'm just wondering if you could comment on that same question and perhaps add what vehicles we are making in Canada now—or planning to make—in the low-cost EV bracket. Or are we ignoring that bracket altogether?

[Daniel Breton]

Actually, we are. That is an issue. To tell you the truth, there were plans to build an electric pickup truck in Ontario, but Ford decided to postpone their plans to build an electric pickup truck and go with a gas pickup truck.

One thing that I found quite stunning, actually, is that now there's a Dodge Charger EV being assembled in Windsor, Ontario. Because there is regulation for EV sales in B.C. and Quebec, even though Ontario taxpayers are subsidizing the assembly of those cars in Ontario, they won't be able to have access to those cars. Only people in B.C. and Quebec will have access to those cars. That shows you the power of regulation.

It is an issue. Carmakers like Hyundai, Kia, VW, Ford, GM, VinFast, Tesla and others are talking about making more affordable electric cars between now and 2027. We just want to make sure that we have access to those cars in Canada, because right now, as I said in my opening statement, carmakers are not even making affordable gas cars. They're not providing them to Canadians anymore, so it is a big issue of affordability, even for gas fuel.

We want to make sure that we support our workers and that our workers start making more affordable gas and electric cars in Canada—and specifically electric cars—with the funding we're giving carmakers and suppliers.

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

You're suggesting that the three-year relief period should be used and that regulations should be in place to make sure the cars being produced in Canada do reflect that need for lower-cost EVs. The whole reason we're pushing to get EVs built is to bring down our emissions, and we can't do that if people can't afford them.

[Daniel Breton]

Yes, exactly.

Obviously, right now the price of EVs is getting more and more competitive with the price of gas cars. If you look at mid-market cars, they are very competitive now, but when you're looking at entry-level EVs, there's a gap. Actually, it was easier to buy an entry-level EV three, four or five years ago than it is now, because there was more choice then than there is now. Now, most car manufacturers are offering SUVs and pickup trucks that are more expensive. If my wife were to scrap her small electric car, she couldn't find anything—or hardly anything.

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir.

Mr. Baldinelli, please go ahead for five minutes.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

I would like to thank the witnesses for being here today.

I want to follow up with Mr. Warren.

You mentioned in your discussions that United Steelworkers represents about 225,000 members in the steel, aluminum and mining sector, and you mentioned that the workers are the backbone of Canada's EV supply chain.

I want to follow up on my colleague's earlier line of questioning. You mentioned that you were having discussions with parties about your concerns with the carbon tax ramping up in the coming years and the impact on the Canadian steel industry. What is the union specifically asking for? You mentioned a carve-out in your opening comments. Who are you speaking to? What have you requested from this government and what has been the response?

[Marty Warren]

That's been jointly with the steel producers. If you listen to the steel producers, they raise a lot of issues. They raise issues about investment, the technology and the further technology they will need to have to get where they need to go. I think every steel producer we're with wants to be a green steel producer. Again, it's the attraction of investment. If it's uncertain ground, there's a concern about investment.

The best I can say is that it's a work in progress. I think every party, all three parties that we visited—I did not visit the Bloc that day, my apologies—all understood how important a steel industry and an aluminum industry are to calling yourself a nation. I think it's going to take further discussions. Obviously, we're doing a lot of work in the Soo around electric arc furnaces, so that's going to be helpful.

Again, I think it's an open dialogue. I don't think you can say the current plan won't work, but we're just raising some flags to say, hey, sometimes one shoe doesn't fit all. The steel industry might need a longer ramp-up or some other things.

I think it's important to say that we and the steel producers all agree that producing green steel—

[Tony Baldinelli, Conservative, Niagara Falls, ON]

To your point, Mr. Warren, I think it is important that we have these discussions. You know, we don't operate in isolation, particularly when it comes to other issues and policies impacting the sector.

Specifically, back in November 2022, Ms. Gingrich appeared here when we were doing a study of the Inflation Reduction Act. During her testimony, she said, “we do have some concerns that the IRA's incentives for firms to invest in clean technology, absent any carbon tax, provide a double advantage to U.S. steel producers”. She also testified later on, “I think the combination of the lack of a price on carbon in the United States and the provisions of the IRA could put the Canadian steel industry at a disadvantage, including our members.”

If steelworkers aren't being undermined by the Liberals on carbon tax at home, they are being undermined by the Liberals letting artificially cheap Chinese-made EVs, steel and aluminum into Canada. For many years, they have been undermining Canada on both.

Do you agree? What are your comments on this?

[Marty Warren]

My initial comments would be that there have been two different approaches. In the U.S., there's been kind of a carrot approach with the amount of monies and different pots of monies they're offering up to incentivize a big industry to go green. The steel producers and other producers would say that Canada is using more of a stick approach: Fall in line, or else the costs will go up each year until 2030.

Again, I don't think I'm ready to throw the baby out with the bathwater, but I do believe this is an issue we'll continue to discuss to find out what's right and to find out how it works. I do want to say this, though it might not be the right spot: It's so important for every one of us on this call and for our kids and our grandkids. This is a chance to belong to a new economy. Quite frankly, we lost—

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Mr. Warren, if I could, what risk does the stick approach that the federal government has decided to take pose for those 225,000 members? What does it mean for Stelco, for example, in Hamilton, which was recently purchased by a firm in the United States? What does that stick approach and the cost in terms of carbon mean to those Canadian workers who live in Hamilton? What does that mean for them?

[Marty Warren]

The rest—

[The Chair, Liberal, Judy Sgro]

You have 10 seconds, sir, for an answer. I don't think you can get an answer in that particular time.

I will go on to Mr. Sidhu.

Go ahead, please.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you, Madam Chair.

Thanks to the witnesses for being here today.

Today we're hearing a lot about our Canadian carbon pricing mechanisms. Earlier today we also heard about the carbon border adjustments. For those watching, I'd like to read something for you just so you can understand what carbon border adjustments mean. I'll read right from the European Union's website:

The EU's Carbon Border Adjustment Mechanism (CBAM) is the EU's tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries.

By confirming that a price has been paid for the embedded carbon emissions generated in the production of certain goods imported into the EU, the CBAM will ensure the carbon price of imports is equivalent to the carbon price of domestic production, and that the EU's climate objectives are not undermined.

If the Conservatives are talking about removing carbon pricing, we know that for our exports and industries, the EU comprises a large market, close to half a billion consumers.

Ms. Kwan, the Canadian Labour Congress represents many of these industries that ship to the EU. If we remove carbon pricing in Canada and we don't have environmentally progressive policies in place, no doubt we will be hit with import taxes in the EU, which will unfairly target our industries and workers here in Canada. I'd like to hear your thoughts on that.

[Elizabeth Kwan]

I think that Canada's work on the carbon border adjustment front has been a little slow, and we need to do better on it. We have a lot to learn from the EU.

My understanding is that the way we have been talking about the CBA in Canada is not compatible or not integrated in a way that it would fit in with the CBAM. However, that doesn't mean that it's not working; it just means that we have to work harder to find ways of actually making the two systems work together.

You're right. If we don't meet some of the basic standards of the EU—or of the U.S., for that matter—we will be at a loss. Canada will be penalized, and jobs will be lost or manufacturing will be decreased because of that.

Therefore, one way or another, in order to actually build a sustainable, resilient green economy, we have to really take a long view and invest in not just the EV supply chain but a lot of other things. For instance, we have to invest in electrification and in charging infrastructure. We have to invest in a lot of technology as well.

We cannot just say that this particular response to the Chinese EVs is the end point; it is not. This is in fact, I would say, a pre-starting point. All of us need to work really hard to make sure that we have a very long-term view with long-term investments by government, manufacturers and Canadian workers to actually build a future for our children and grandchildren, as Mr. Warren said.

Thank you.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you for that, Ms. Kwan.

I'd like to turn to Mr. Warren now.

As we heard from Ms. Kwan today, that is why we stepped up with tariffs on imports from the Chinese EV sector. We want to make sure that we protect industry and workers and that we're all playing on a level playing field.

Mr. Warren, I'd like to hear your thoughts on the CBAM. Also, if we roll back our supports to the environment and our progressive policies, how could that impact exports to the European Union market and what we're doing here in Canada?

[Marty Warren]

I'd start by saying this, and probably acquitting what was just said: It can't be just a one-thing approach, whether it be melt and pour, strong enforcement at the border, hearing from workers at the trade hearings or these tariffs that we're talking about today. The first thing I would say is that our economy.... We're not a communist country. It takes time. It's a democratic country, and we have to convince consumers. We have to do stuff. We can't just make changes as of tomorrow. This is giving us some breathing time, allowing our companies—whether in steel, manufacturing or anything—to get set up and to get more prepared.

I will tell you that when we went to the global economy in manufacturing, we lost. Our kids lost. Canada lost about 1.5 million jobs in about a year and a half to three years. The U.S. lost millions upon millions of jobs. We can't have that again.

What was the cost of the $50 VCR? I can tell you. It wiped out every Zenith manufacturer and Canadian manufacturer. What we're trying to do with this—whatever element you want to pick—is build for the future, build an economy and take back our economy for our children—