International Trade Committee on Sept. 18th, 2024

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

Mr. Simard, do you have any comments on the question I asked Ms. Cobden? Maybe you could give us the steel industry's point of view.

[Jean Simard]

The aluminum industry is 90% in Quebec and 10% in British Columbia, two different carbon pricing regimes. In British Columbia, it's a carbon tax, whereas in Quebec, it's a cap-and-trade system for greenhouse gas emissions. We remain very supportive of the Quebec carbon market, which allows the industry to seek reductions at the best possible cost. It's a market, so it's very efficient.

We're moving towards a world that will increasingly seek to decarbonize. The U.S. Inflation Reduction Act is an American-style way of doing that. What is behind this legislation—and we must not forget this—is that the U.S. administration, at least the one currently in place, is in the process of benchmarking its carbon indicator for large products such as steel and aluminum, and therefore establishing a carbon reference system in order to manage products from abroad. This mechanism isn't a replication of the European system, it's very different, but it's somewhat of an American replica of what Europe has put in place.

Our industry in Canada is at the crossroads of these two systems. With our carbon footprint, which is the lowest in the world at two tonnes of CO2 equivalent per tonne of aluminum, we are winners in both cases. So for us, it's a tried and tested system.

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

Thank you, Mr. Simard. I'm sorry, I said “steel”, but I meant “aluminum”.

[The Chair, Liberal, Judy Sgro]

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

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

Thank you.

Mr. Burton, let's continue our discussion, if you don't mind. You said earlier that, all things considered, there were many more Canadians and Quebeckers who were politically or economically linked to the Chinese Communist Party regime. I think that's probably true. However, you also said that it was impossible to verify.

We know that, in reality, a number of companies are fronts used by Chinese companies to hide their true identity. We also know that China is an empire that is progressing extremely skilfully and effectively, but no less ferociously.

Couldn't information from public sources help establish, for example in Crown corporations, better verification and due diligence measures? I'm throwing out some ideas, but do you have any ideas to help us ferret out these companies?

[Dr. Charles Burton]

With Bill C-70 there does seem to be more provision for CSIS to be able to advise elements outside of CSIS of information they have derived from intelligence about Chinese espionage activities and other ways that China is engaging in activities to obtain intelligence and undermine our democracy.

It's a very complicated issue. I think the Chinese government would like to drive a wedge between Canadians of Chinese heritage and the Canadian mainstream by on the one hand creating suspicion about Chinese researchers—that they might be collaborating with China—and on the other hand wanting to get persons of Chinese origin, who are Canadian citizens and therefore should be loyal to Canada only, to serve the Chinese interest in various ways, particularly if they have access to information that could serve the regime. There's a degree of coercion that's used if these people have family inside China who can be leveraged by the Chinese Communist regime.

It's a serious issue. I think we should be doing much more to expel agents of the Chinese regime under diplomatic cover who are coordinating this massive approach through the Chinese Ministry of State Security and the Chinese Communist Party's United Front Work Department.

I suspect that our intelligence agencies know a lot about these agents and people but that we are reluctant to expel diplomats even if they're engaged in activities inconsistent with their mandate as diplomats under the Vienna Convention. I'm just puzzled as to why we don't address this issue much more seriously and protect our Canadians of Chinese origin from harassment and coercion by a foreign state.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Burton.

We'll move on to Mr. Cannings for two and a half minutes.

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

Thank you.

I'm going to stay with Mr. Wallace.

I just wanted to add in, just to clarify about the states that have the ZEV mandates, the increasing things as Canada has, as British Columbia, etc., do: It's not just California. It's Washington, Oregon, Colorado, New Mexico, Maine, Vermont, Massachusetts, Rhode Island, Connecticut, New Jersey, New York, Delaware, Maryland and Washington, D.C. That's half of the American market right there who have these mandates. They don't seem to be worried too much.

There's a question I want to ask. In our last meeting we had a couple of witnesses suggest that since this tariff is ostensibly put in place to protect the North American market while we build this very important electric vehicle value chain and the whole system behind that, there should be some sort of phased-out part to it so there is some incentive for competition. You're suggesting that we should have lower tariffs to start with, but what about having a phased-out thing, starting with 100%, but moving year by year and ratcheting those tariffs down so there's some incentive for the North American market to actually do what we need it to do?

[Nate Wallace]

I would say that we would support a time limit to the tariffs or some sort of differentiation based on the year.

I think it's important to recognize the reason Chinese electric vehicles are cheaper. Of course, labour standards play a part of it. Subsidies play a part of it. Again, we also subsidize our industry.

One of the reasons they are cheaper is mainly that they're ahead of us technologically. I think it would be hubris if we didn't actually reckon with that.

One of the only incentives for having western automakers actually catch up is if they eventually will have to compete one day. Therefore, having some sort of time limit, I think, would ensure that legacy automakers.... They have a production bias for gasoline vehicles because those make them significantly higher profits. If it were up to them, they would want to delay the transition as much as possible to keep making those profits—

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Wallace. I'm sorry. Somehow, I always end up having to cut you off.

Mr. Baldinelli, you have five minutes, please.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

I'm going to go to Mr. Burton.

Last week, Dave McKay, CEO of the Royal Bank of Canada, spoke to the Canadian Club of Ottawa. According to the Financial Post, he's quoted as saying, “We are out of sync with the U.S. If you think about what the U.S. needs, it actually lines up really well with what we are good at; we are just not getting it done. The U.S. needs less rhetoric from Canada and just more getting stuff done.”

Would you agree with this view, particularly as it stands not only as an approach to creating our integrated EV supply chain and market but also as it impacts other policy areas that might ultimately impact our negotiations with the U.S. and Mexico and CUSMA?

[Dr. Charles Burton]

Yes, I appear on the U.S. media quite a bit, and I often feel uncomfortable with the idea that I'm saying things that make Canada look not so good, because we tend to do quite a bit of virtue signalling and not so much action.

One area that's of particular concern to me is the Indo-Pacific strategy, which is so poorly funded that we really can't, in any way, match up to Australia, the U.K. and the U.S. That's why we're not part of the AUKUS, and that's why we're not part of the Quad. However, we talk a very good line.

I think this rhetoric is really wearing thin in the United States. They're on to us, and they don't see us as a reliable ally, when we say one thing about decoupling and friendshoring—Mr. Champagne and Minister Freeland—in the United States, and then, when we get back to Canada, we're not talking about that anymore. They know. They're on to us, and it's not good for our overall relations with the United States and for getting those concessions we need to potential measures if the Trump administration comes in, like generalized 10% tariffs.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Would you agree that it possibly had an impact on decisions such as the increase in the softwood lumber duties?

[Dr. Charles Burton]

My feeling is that, yes, we're not generating goodwill with our American counterparts because we are not being honest and forthcoming enough.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you.

I'm going to go back to Brian, if I could.

Mr. Kingston, you spoke about your one recommendation about the 2035 sales mandate and your hope that the government would scrap that mandate. It's your notion of being a departure from that long-standing integration—the creation of the Auto Pact in the sixties—that we've worked together to create and how, again, it may negatively impact the Canadian auto sector and jobs.

When I talk about the GM facility, it's close to my heart. I spent four summers there. GM was good to me, so I'm good to them. I bought a 2022 GM Enclave. It was made in Michigan, but the engine was made in St. Catharines. I took great delight in seeing GM make that notification last year, saying that they were going to build EVs there. However, then they put the pause in, and they took out the V6 line that actually produced the engine in my vehicle. It could still be making engines there today, yet that's been stopped.

The mandate.... What we need to do is regulate the outcome, not the choice for the consumer. Would you not agree?

[Brian Kingston]

That's absolutely the right approach, and that's always been the approach. You set your emissions targets, because the end objective here, ultimately, is to reduce emissions. You then turn it over to industry to find out how to get there. That might be with hybrids and plug-in hybrids or battery electric or highly efficient gas engines.

That's the best approach. Mandating what a consumer can and can't buy is just doomed to fail.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

I would suggest that the carbon intensity that went into the production of my 2022 Buick Enclave is cleaner than that of a Chinese EV that would come into Canada today.

[Brian Kingston]

Just look at Chinese electricity production. The output is 70% coal. Compare that to production in Canada, where 80% of our grid is clean. It's not even close to comparable.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Sheehan is our last member.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you, Madam Chair.

This question is for Lana Payne.

Lana, when you were speaking, you mentioned how China not only has a poor environmental situation, but also has poor labour conditions in the sense that unions are not allowed to function as they do in Canada. You represented one of the largest unions in Canada. Would you expand on that?

The second piece is how we're talking about a lot of green and clean tech in the auto industry, steel industry and aluminum industry, but also in other industries. How important is it that the companies accessing the tax credits have to pay a union wage or union prevailing wages?

Could you please comment on those?

[Lana Payne]

Thank you for those questions.

Absolutely, China has a horrible record for workers. There's no doubt about it. All of your panellists have alluded to this today.

It's extremely important that we look at what we can do to stop imports at the border and give the tools to our CBSA to be able to make sure that we can do this, so that we're not importing products that have been made with forced labour. This is a huge problem that the United Nations and others have pointed out in China. We have to make sure we do our part to ensure that all countries in the world are uplifting workers, and making sure that all workers have good collective agreements and good collective bargaining rules, regulations and powers to be able to support themselves.

What we see here is that we have gotten ourselves into a situation in the world right now whereby we have to be honest about how things are. If we want to support Canadian workers, we have to look at what's going on in countries in the world where we're being asked to import.

Whether it's cars or buses from China, or whatever the case may be, I agree that we have to be concerned that they're being built with coal, as your previous speaker pointed out, and with forced labour.

We don't operate in a vacuum in Canada at all, Terry. We have to make sure that we're looking at all of these things and protecting Canadian jobs. This is all of our responsibility. It's the responsibility of everyone in the room there with you today, and it's my responsibility. We have 40,000 members who work in the auto sector and tens of thousands of others who depend on us to get this right, get trade right, get industrial policy right and get climate conditions right.

These are big decisions, and they're all linked. We have to make sure that we're doing everything we can to protect Canadian jobs in this process.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you for that.

Maybe you can comment on the tax credits related to paying a union wage or prevailing wage similar to a union wage.

[Lana Payne]

It's really important. We've seen this implemented by the current government when it comes to the construction of facilities in Canada, such as in the EV supply chain. We've also pushed for this to happen in the production of these facilities as well.

When we're building battery plants and critical mineral mines, and doing all of this in Canada, particularly when we're investing in these things with Canadian taxpayers' dollars, they should be tied to the return of getting good union jobs on the other side.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Brian, how important is it to have EV batteries close to the production for just-in-time delivery?

My understanding is that things are made more affordable as well. Do you want to comment on that?

[Brian Kingston]

Yes, it's hugely important. The battery is a very heavy component in an electric vehicle, so having a battery manufacturing facility close to the final vehicle assembly is extremely helpful. It allows for you to deliver the product to the assembly line just in time for production, and it reduces costs because you don't have to transport the battery over such long distances.